28 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.
Announcement of 2023 Annual Results
TRIG announces its Annual Results for the Company for the year ended 31 December 2023. The Annual Report and Accounts are available on the Company’s website: www.trig-ltd.com
Highlights
For the year ended 31 December 2023
Strong underlying performance with modest decline in valuation
– Robust pro-forma portfolio EBITDA of £610m1 (2022: £677m) reflecting strong achieved power prices.
– Healthy cash flow generation with dividend cover of 1.6x (2022:1.5x); or 2.8x (2022: 2.6x) before the repayment of £219m of project-level debt.
– 6.9p reduction in NAV per share2 to 127.7p (31 December 2022: 134.6p) driven by lower power price forwards and higher valuation discount rates.
– Power prices trended down during 2023 following reductions in gas prices. Since the balance sheet date, forwards for 2024-2026 have further reduced by c. 20%. Over a five-year horizon, a 10% reduction in power prices would reduce the Company’s NAV by 2.2p/share4.
– The weighted average Portfolio Valuation3 discount rate as at 31 December 2023 has increased to 8.1% (31 December 2022: 7.2%), reflecting the higher return environment.
Disciplined capital allocation
– Reduction in project-level gearing to 37% (31 December 2022: 38%), following debt repayment of £219m. Project-level debt is fixed rate and amortises over the subsidy periods.
– Retained cashflows and disposals helped reduce Revolving Credit Facility (“RCF”) drawings by £34m. In 2024, the Company expects to be able to reduce RCF drawings to about £150m.
– Construction projects completed, with 301MW of capacity delivered during the year across five projects. All construction spend in 2023 was funded from retained cash flows.
– 2024 dividend target5 set at 7.47p/share, a 4% increase on 2023’s achieved dividend of 7.18p/share, balancing the strength of the Company’s inflation-correlated cash flows with moderating power prices and inflation.
Opportunity for capital growth
– TRIG has an exclusive development pipeline of 1GW by 2030 from repowering, co-location & extensions and new site developments.
– Investing in development activities offers strong prospective risk-adjusted returns, significantly ahead of the portfolio weighted average discount rate, and provides optionality to take projects forward through build and into operations.
– Investment decisions consider an elevated return hurdle rate, which includes the return offered by the buying back the Company’s own shares, portfolio construction and the Company’s funding position.
– TRIG has the potential to fund the delivery of the development pipeline without the need for equity issuance, through retained cash, divestment proceeds and structural debt capacity. Company’s durable balance sheet and amortising debt is projected to see portfolio gearing reduce to 23% by 2030 on the current portfolio, whilst 38% of the portfolio remains ungeared.
– Operational and technical enhancements deliver capital growth through improving the generation output of TRIG’s existing portfolio. Examples include AeroUp, which has delivered a 5% energy yield increase at the initial trial site.
1 The unaudited EBITDA figures presented are based upon the aggregation of SPV-level revenues and operating costs measured on a consistent basis across regions.
2 The NAV per share as at 31 December 2023 is calculated on the basis of the 2,484,343,784 Ordinary Shares in issue as at 31 December 2023 (see Note 11 of TRIG’s 2023 Annual Report) plus a further 800,776 Ordinary shares to be issued to the Managers in relation to part payment of the Managers fee for H2 2023 (see Note 18 of TRIG’s 2023 Annual Report).
3 On an Expanded basis. Please refer to the Financial Review section of TRIG’s 2023 Annual Report for an explanation of the Expanded basis.
4 Sensitivity as set out in the Valuation of the Portfolio section of the 2023 Annual Report
5 This is a target only and not a profit forecast. There can be no assurance that this target will be met.
Richard Morse, Chairman of TRIG, said:
“It has been an important year in the Company’s history. The underlying performance of the Company is strong and cash generation has never been healthier, whilst the Managers have been working hard to create additional value from within portfolio. This is against a challenging backdrop for the share price, with tighter monetary conditions contributing to a decline in the Company’s valuation and a sustained discount to net asset value as market return requirements have increased. If the interest rate cycle continues as expected, the coming year is showing signs of a more benign macroeconomic environment for the Company.
It is also an important year from a personnel perspective. After a decade at the helm of TRIG’s investment management team, Richard Crawford is retiring from full time duties in the summer and will be handing over the reins to Minesh Shah at InfraRed with effect from 1st July 2024. My Board colleagues and I are extremely grateful for Richard’s contribution to TRIG’s success over all these years and we’re very pleased to continue with Minesh, with whom the Board has worked closely over the last few years. We are pleased that TRIG will continue to benefit from Richard’s long history with the Company as he remains a key part of TRIG’s investment and advisory committees.”
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