Net Asset Value – Q4 2023
9 February 2024
The Renewables Infrastructure Group Limited
"TRIG" or "the Company", a London-listed investment company advised by InfraRed Capital Partners ("InfraRed") as Investment Manager and Renewable Energy Systems ("RES") as Operations Manager.
Q4 2023 Net Asset Value, 2024 dividend target and notice of results
TRIG announces that its estimated unaudited Net Asset Value as at 31 December 2023 is 127.7 pence per share, a decrease of 3.3 pence per share to the Company's last announced Net Asset Value as at 30 September 2023, principally due to a reduction in near-term power price forecasts.
Cash generation from TRIG's well-diversified portfolio remained strong in Q4 with net dividend cover for the full year of 2023 remaining healthy at 1.6x, which is stated after the repayment of £219m project level debt (gross dividend cover was 2.8x*).
The key drivers of the movement in Net Asset Value per share in the quarter are summarised in the table below with further details following:
|
|
Net Asset Value (pence per share) |
Positive Movements |
Negative Movements |
|
NAV per share at 30 September 2023 |
131.0p |
|
|
|
Decrease in forecast power prices |
|
|
(3.4)p |
|
Q4 inflation and foreign exchange movements |
|
|
(0.7)p |
|
Value Enhancements & Other items |
|
0.8p |
|
|
NAV per share at 31 December 2023** |
127.7p |
|
|
*The dividend cover implied on operational cashflow generated before the repayment of portfolio level debt.
**NAV per share at 31 December 2023 presented after unwind of the discount rate, company costs and payment of the dividend, which in aggregate sum to net nil impact.
Decrease in forecast power prices
Power price projections assumed in the valuation have decreased materially from those at 30 September. Forecast prices over the next three to five years are lower across each of the markets in which TRIG invests, tracking lower global gas prices. Longer term forecast prices are broadly unchanged in real terms.
The impact of lower power price assumptions has been mitigated by the interaction with government windfall taxes introduced in late 2022, which are levied in the UK and some other jurisdictions, on higher power price levels.
Q4 inflation and foreign exchange movements
UK and European inflation decelerated during the quarter, ending at levels lower than had been assumed in the 30 September 2023 valuation, reducing the 31 December 2023 valuation. This has been partly offset by gains on the Company's foreign exchange hedges due to narrowing near term UK / Eurozone interest rate expectations.
The portfolio is well-positioned to handle different possible paths for inflation. 51% of the Company's forecast revenue over the next ten years is directly indexed to inflation.
Other items
Other items in the quarter include actual portfolio performance, a small increase to forecast REGO pricing and adjustments to energy budgets at a small number of projects.
Capital allocation
During Q4, the sale of three onshore wind farms in Ireland announced in August was successfully completed, raising gross proceeds of £22m at a 26% premium to carrying value, reflecting the Company's disciplined approach to balance sheet management. The Company is actively progressing with further divestment opportunities. Initial offers have been consistent with or above the Portfolio Valuation and the Company expects to provide updates on these in due course.
The Board and Managers continue to prioritise paying an attractive, sustainable and resilient dividend to shareholders, fulfilling existing investment commitments and reducing RCF drawings, which are currently £364m. Over the next twelve months, the Company expects to be able to reduce RCF drawings to about £150m, which is within 5% of Portfolio Value, using proceeds from disposals and organic cashflows. The Company may also make accretive investments where there is a compelling rationale to further the Company's strategic priorities. In the absence of compelling investments, the Company may consider share buybacks.
Dividend
The Board has set the dividend target for 2024 at 7.47p per share, representing a 4% growth on the 2023 dividend. This increase reflects strong cash generation, but also recognises inflation has reduced materially from its peak and that future cash flows are expected to be moderated by reductions in power prices (with average forwards for 2024 lower than wholesale prices seen in 2023 across TRIG's markets). Maintaining healthy dividend cover provides the Company with optionality to fund organic investment in the portfolio to enhance total returns for shareholders.
Notice of Annual Results
The Company has announced that it plans to release its Full Year Results for the year ended 31 December 2023 on Wednesday, 28 February 2023.
Enquiries
InfraRed Capital Partners Limited +44 (0) 20 7484 1800
Richard Crawford
Phil George
Minesh Shah
Mohammed Zaheer
Brunswick +44 (0) 20 7404 5959 / TRIG@brunswickgroup.com
Mara James
Investec Bank Plc +44 (0) 20 7597 4000
Lucy Lewis
Tom Skinner
BNP Paribas +44 (0) 20 7595 9444
Virginia Khoo
Carwyn Evans
The Company
The Renewables Infrastructure Group ("TRIG" or the "Company") is a leading London-listed renewable energy infrastructure investment company. The Company seeks to provide shareholders with an attractive long-term, income-based return with a positive correlation to inflation by focusing on strong cash generation across a diversified portfolio of predominantly operating projects.
TRIG is invested in a portfolio of wind, solar and battery storage projects across six countries in Europe with aggregate net generating capacity of over 2.8GW; enough renewable power for 1.9 million homes and to avoid over 2.4 million tonnes of carbon emissions per annum. TRIG is seeking further suitable investment opportunities which fit its stated Investment Policy.
Further details can be found on TRIG's website at www.trig-ltd.com.
Investment Manager
InfraRed Capital Partners is an international infrastructure investment manager, with more than 170 professionals operating worldwide from offices in London, New York, Sydney, Seoul and Madrid. Over the past 25 years, InfraRed has established itself as a developer and steward of infrastructure assets that play a role in supporting communities. InfraRed manages US$14bn of equity capital1 for investors around the globe, in listed and private funds across both core and value-add strategies.
A long-term sustainability-led mindset is integral to how InfraRed operates as it aims to achieve lasting, positive impacts and deliver on its vision of Creating Better Futures. InfraRed has been a signatory of the Principles of Responsible Investment ("PRI")2 since 2011 and has achieved the highest possible infrastructure rating for eight consecutive PRI assessments, having secured a 5-star rating for the 2023 period3. It is also a member of the Net Zero Asset Manager's Initiative and is a TCFD supporter.
InfraRed is part of SLC Management, the institutional alternatives and traditional asset management business of Sun Life. InfraRed represents the infrastructure equity arm of SLC Management, which also incorporates BGO, a global real estate investment management adviser, and Crescent Capital, a global alternative credit investment asset manager.
[1] Uses 5-year average FX as at 30th September 2023 of GBP/USD of 1.2944; EUR/USD 1.1291. EUM is USD 13.597m
2 Principles for Responsible Investment ("PRI") ratings are based on following a set of Principles, including incorporating ESG issues into investment analysis, decision-making processes and ownership policies. More information is available at https://www.unpri.org/about-the-pri
3 In the 2023 Principles for Responsible Investment ("PRI") assessment, InfraRed achieved a 5 star rating for the Policy Governance and Strategy and Infrastructure and a 4 star rating for the newly created Confidence Building Measures. Please find InfraRed's report available for download on our website here: https://www.ircp.com/sustainability/
Operations Manager
TRIG's Operations Manager is RES ("Renewable Energy Systems"), the world's largest independent renewable energy company.
RES has been at the forefront of wind energy development for over 40 years, with the expertise to develop, engineer, construct, finance and operate projects around the globe. RES has developed or constructed onshore and offshore wind, solar, energy storage and transmission projects totalling more than 23GW in capacity. RES supports over 12GW of operational assets worldwide for a large client base. Headquartered in Hertfordshire, UK, RES is active in 14 countries and has over 2,500 employees engaged in renewables globally.
RES is an expert at optimising energy yields, with a strong focus on safety and sustainability. Further details can be found on the website at www.res-group.com.
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