REG - Renew Infra Grp Ld - NAV & Capital Allocation Update – Q3 2024

Renewables InfrastructureAnnouncement

01/11/2024 07:00

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RNS Number : 5043K  Renewables Infrastructure Grp (The)  01 November 2024

 

 

1 November 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.

Net Asset Value and capital allocation update - Q3 2024

TRIG announces an estimated unaudited Net Asset Value ("NAV") per share as at
30 September 2024 of 121.6 pence, a decrease of (1.8) pence per share from the
Company's last announced NAV as at 30 June 2024. This reduction in NAV
principally reflects adverse changes in macroeconomic and power price
forecasts (together (1.1) pence per share). The balance of the reduction was
the result of portfolio performance in the quarter ((0.8) pence per share),
which has also impacted expected cash flows for H2 2024.

The TRIG Board reaffirms that the Company remains on track to pay the target
dividend for FY 2024 of 7.47 pence per share(1). Debt across the group is
expected to be reduced by c. £330m in 2024. A £50m share buyback programme
was commenced in the quarter and 13m shares have been repurchased to date.

The key drivers of the movement in NAV per share over the quarter are
summarised in the table below:

                                        Net Asset Value (pence per share)  Positive Movements  Negative Movements
 NAV per share at 30 June 2024          123.4p
 Q3 Portfolio performance                                                                      (0.8)p
 Q3 macroeconomic movements                                                                    (0.7)p
 Changes to revenue forecasts                                                                  (0.4)p
 Share buyback programme                                                   0.1p
 NAV per share at 30 September 2024(2)  121.6p

Q3 Portfolio performance

Portfolio performance was below forecast principally due to transmission grid
outages for the Merkur offshore windfarm and low power prices in Sweden.
Nordic hydrology levels have continued to be above long-term averages
depressing power prices.

Overall portfolio generation was 5% below budget, the largest components of
which were the aforementioned transmission outages as well as higher than
budgeted downtime at some of the older wind projects in France and Northern
Ireland that are being prepared for repowering. Generation from TRIG's
combined GB onshore and offshore wind portfolio was 1% above budget,
reinforcing that the portfolio's diversification reduces the impact of
challenges at any one asset or in one technology or country.

The transmission cable outage at the East Anglia 1 offshore windfarm was
repaired during October. Losses in the quarter are expected to be recovered
through commercial protections. Cash distributions from the Hornsea 1 and East
Anglia 1 projects remain impacted by the cable outages earlier in the year,
with both projects expected to recommence distributions at normalised levels
during the course of 2025.

TRIG continues to advance its development activities, with construction of the
Ryton battery project progressing well. Civil works have been completed and
balance of plant work are underway, including cable trenching and foundations
laying. Batteries are scheduled to be delivered on site in Q1 2025. Once
commissioned, TRIG's battery storage pipeline will enhance both portfolio
diversification and earnings.

Q3 Macroeconomic movements

There has been no change to valuation discount rates. The portfolio average
discount rate remains 8.3%.

Inflation in the EU has fallen faster than previously expected, and is now
projected to be 2.0% in 2024 compared 2.75% included in the forecast as at 30
June 2024. There has been no change to other inflation assumptions.

Sterling strengthened in the quarter relative to the Euro, with foreign
exchange hedges offsetting the majority of the impact on the portfolio
valuation.

Changes to revenue forecasts

During the quarter, the significant movements in project-level revenue
forecasts were as follows:

·      Power price forecasts for the GB market decreased. The main
driver was a reduction in one of the three forecast curves used for the GB
market, largely as a result of increased wind build out assumed in the 2030s
following the UK general election.

·      A three-year power price agreement was entered into for two
windfarms in France to supply electricity to a local green hydrogen producer.
60% of the power produced by the windfarms will be sold at a fixed price on a
pay-as-produced basis.

67% of the forecast revenues across TRIG's portfolio are fixed per unit
generation over the next 10 years through government or corporate-backed
contracts. The Managers continue to seek opportunities to forward fix power
prices, which includes in relation to Guarantees of Origin certificates where
the Managers are seeing opportunities to forward fix at price levels above
that included in the valuation.

Capital allocation

Progress in respect of TRIG's capital allocation priorities:

·      Whilst operational cash flows for H2 2024 are less than
previously projected due to lower generation and Nordic power prices in the
quarter, the Board and Managers continue to expect the 2024 dividend to be
covered.

·      Debt across the group is expected to be reduced by c. £330m in
2024:

o  Project level borrowings are expected to be reduced by £200m in 2024 in
line with amortisation profiles. There remains limited interest rate and
refinancing risk in relation to the vast majority of borrowings across the
group.

o  Floating rate borrowings under the Company's Revolving Credit Facility
("RCF") are expected to be reduced to £230m once proceeds from the partial
sale of TRIG's stake in the Gode offshore wind farm have been received
(expected in Q4 2024). RCF drawings are expected to be higher than projected
in the 2024 Interim Results as a result of the lower expected operational cash
flows.

·      Since the commencement of a £50m share buyback programme on 9
August 2024, £13m has been spent acquiring 13m shares, recognising the
attractive investment opportunity presented by TRIG's shares trading at their
current discount to Net Asset Value.

(1) Past performance is not a reliable indicator of future results. There can
be no assurance that targets will be met or that the Company will make any
distributions, or that investors will receive any return on their capital.
Capital and income at risk.

(2) NAV per share at 30 September 2024 presented after unwind of the discount
rate, company costs and payment of the second quarterly interim dividend.

Enquiries

InfraRed Capital Partners
Limited                              +44 (0) 20
7484 1800

Minesh Shah

Phil George

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

Notes

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
2.7GW; enough renewable power for 1.8 million homes and to avoid 2.2 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
(http://www.trig-ltd.com) .

 

Investment Manager

 

InfraRed Capital Partners is an international infrastructure investment
manager, with more than 160 professionals operating worldwide from offices in
London, New York, Sydney, Seoul and Madrid. Over the past 25 years, InfraRed
has established itself as a highly successful developer and custodian of
infrastructure assets that play a vital role in supporting communities.
InfraRed manages US$13bn+ of equity capital(1) for investors around the
globe, in listed and private funds across both income and capital gain
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 since 2011 and has achieved the highest possible PRI
rating(2) for its infrastructure business for seven consecutive assessments,
having secured a 5-star rating for the 2023 period(3). 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
BentallGreenOak, a global real estate investment management adviser, and
Crescent Capital, a global alternative credit investment asset manager.

Further details can be found on InfraRed's website at www.ircp.com
(http://www.ircp.com/)

 

(1) Uses 5-year average FX as at 31st March 2024 of GBP/USD of 1.2839; EUR/USD
1.1179. EUM is USD 12.927m.

 

(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 (https://www.unpri.org/about-the-pri%C2%A0%0d3) ) ( )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/
(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 is the world's largest independent renewable energy company, working
across 24 countries and active in wind, solar, energy storage, biomass, hydro,
green hydrogen, transmission, and distribution. An industry innovator for over
40 years, RES has delivered more than 24GW of renewable energy projects across
the globe and plans to bring more than 22GW of new capacity online in the next
five years.

As a service provider, RES has the skills and experience in asset management,
operations and maintenance (O&M), and spare parts - supporting 41GW of
renewable assets across 1,300 sites. RES brings to the market a range of
purposeful, practical technology-based products and digital solutions designed
to maximise investment and deployment of renewable energy. RES is the power
behind a clean energy future where everyone has access to affordable zero
carbon energy bringing together global experience, passion, and the innovation
of its 4,500 people to transform the way energy is generated, stored and
supplied.

Further details can be found on the website at www.res-group.com
(http://www.res-group.com/) .

 

 

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