Renewables Infrastructure Group (TRIG) has announced its annual results for the year ended December 31, 2022. Company Chairman Richard Morse says the results were the strongest in TRIG’s history since its inception
IPO is the abbreviation for initial public offering
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Macro, usually in the context of investing, refers to a worldview of economics and politics, and is short for macroeconomics.
” class=”glossary_term”>Macro-economic background, demonstrating the inherent quality of TRIGs
The invested financial assets a fund such as investment companyinvestment fund or OEIC.
” class=”glossary_term”>Portfolio and management.
Morse also says that against a backdrop of higher inflation and interest rates, TRIG’s diversified portfolio remains resilient and benefits from strong inflation
Correlation refers to the relationship between the values of two separate assets. Positive correlation means that the prices of the two assets move together in the same direction. Negative correlation means prices move in opposite directions. The price of something that is uncorrelated does not respond measurably to the price of the thing it is uncorrelated with.
Correlation, low correlation, non-correlation or negative correlation is an important factor in multi-asset investing and diversification.
” class=”glossary_term”>Correlation and increased electricity prices. infrared, as
The person or persons assigned the task of directing the company financial assets by the board of directors of the investment company.
” class=”glossary_term”>Investment Managerand RES, as operations manager, have continued to enhance TRIG’s portfolio both organically through value-add initiatives, including the construction of 378 MW of new generation capacity, and through acquisitions, with a total of 297 MW of generation capacity invested in operating assets during the year.
The main highlights of the results are as follows:
Strong Yields &
An abbreviation for net asset value
” class=”glossary_term”>NAV Perfomance:
- Earnings per common share of 21.5p (2021: 10p)
- NAV per common share of 134.6p as at 31 December 2022 (2021: 119.3p)
- Portfolio valuation of £3,737m at 31 December 2022 (2021: £2,726m)
- A NAV
Total return is the return generated by the movement in the stock price or net asset value including dividends or income.
When dividends are not included in the performance calculation, it is referred to as return on investment
” class=”glossary_term”>Total return for 2022 of 18.9%
Healthy operational cash generation:
- 2022
A distribution of money from a company. Most investment companies try to pay out dividends income but they are now allowed to pay dividends Capital city.
” class=”glossary_term”>Dividend 6.84p/share target met and 2023 dividend target set at 7.18p/share, up 5%
- Dividend coverage of 1.55x (2021: 1.12x), or 2.6x before the repayment of project-level debt, which totaled £174m during the year
- Strong reinvestment cash flows
- £694m in investments made
- A renewed revolving credit facility expanded to £750m
A diversified 2.8 GW renewable energy portfolio:
- Portfolio generated 5,376 GWh of electricity in the year (2021: 4,125 GWh)
- 9 million tons of CO2 avoided in 2022
- 6 million households (equivalent) with electricity from renewable sources
Rises in interest rates over the year and the impact of the UK’s mini-budget have meant property investment company share prices have traded at discounts to net asset values for an extended period. In the energy sub-sector in particular, government interventions have also weighed on investor sentiment. In this context, TRIG’s diverse portfolio, which has been stress-tested by the pandemic and the recent energy crisis, ensures that the company is strategically well-positioned to continue to add value in 2023
Investors in a company’s equity.
” class=”glossary_term”>Shareholders and contribute to greater energy security and faster decarbonization.
financial performance
TRIG’s NAV as at 31 December 2022 was 134.6 pence per share, up 15.3 pence per share over the year. Earnings for 2022 were 21.5 pence per share. The key drivers of this strong financial performance in the year were:
- The ongoing delivery of active asset management by managers to maximize operational performance and additional investments that allow for greater geographic and technological deployment
When portfolio managers speak of diversification, they describe holding assets that are not correlated (ie their values do not move in parallel). As an example, a portfolio full of shares in oil companies isn’t very diversified (and it is risk(ybecause something might happen that causes the entire portfolio to lose value, like a collapse in oil prices), but adding a technology company to the portfolio increases its diversification. The more different types of assets you add, the more diversified the portfolio becomes and the less risky it is. But an overly diversified portfolio will just work like one index.
” class=”glossary_term”>Diversification.
- Increases in wholesale electricity prices and inflation, which feed into the company’s earnings and portfolio valuation.
These were partially offset by:
- A 50 basis point increase in valuation discount rates on a weighted average basis across the portfolio. The long-term, inflation-correlated and lower-risk, sustainable nature of renewable energy infrastructure underpins demand for assets.
- Interventions by governments across Europe in the power generation sector, notably the UK Government’s generator levy and the European Council imposed cap on inframarginal (non-gas) generator revenues announced in November 2022 and September 2022 respectively.
Strong inflation link
TRIG says that over the next decade, 63% of its projected revenue is directly linked to inflation through subsidy support mechanisms, with the majority of the remaining revenue being indirectly linked to inflation due to the relationship between electricity prices and inflation indices, providing strong inflation protection. TRIG comments that the combination of high levels of fixed income, strong inflation correlation and energy price forecasts that fully account for government intervention serves to mitigate the risks posed by a volatile macroeconomic outlook.
TRIG says it has limited interest rate and refinancing exposure. Interest rates on borrowed funds in the portfolio investments are essentially fixed. The company has no structural short to medium term debt and the interest paid on the Group’s revolving credit facility (“RCF”) is linked to overnight interest rates. At the time of publication, the RCF has been drawn down at £413m, with significant headroom compared to its extended £750m committed capacity, and is due in December 2025.
Projected cash flows from the portfolio indicate that the majority of these drawdowns can be repaid over the RCF term from reinvestment cash flows.
Dividends – 5% increase on 2023 target
According to TRIG, strong realized power prices and near-budget availability of assets, mitigated by under-budget generation, contributed to strong dividend coverage in 2022. After operating and financing costs, net cash flow covered the cash dividend 1.5 times or 2.6 times times before project-level debt was repaid.
TRIG has set its 2023 dividend target at 7.18 pence per share, a 5.0% increase over the total dividend for 2022. TRIG has completed five projects from reinvested excess cash flows, including Arenosas, El Yarte and Blary Hill in 2022, and continues to fund construction commitments for the Ranasjö and Salsjö onshore wind farms in Sweden from portfolio revenues.
investment activity
TRIG’s largest investment during the period was a 10% stake in the UK’s 1.2GW Hornsea One offshore wind farm. The Group also made an additional investment in the Merkur offshore wind farm in Germany. Each of TRIG’s six offshore wind projects benefits from protected cash flows for the life of their government support agreements, which reduces the sensitivity of their equity returns to changes in electricity price levels. These investments help facilitate the addition of unsubsidized projects with higher returns to the portfolio, such as: B. the acquisition of a 49 percent stake in the Valdesolar solar park in Spain in March 2022, while maintaining the overall electricity price sensitivity of the portfolio.
TRIG says construction and development assets also offer a source of higher risk-adjusted returns. In 2022, TRIG acquired four battery storage sites under development, which will provide approximately 700 MWh / 350 MW of flexible capacity after construction. Flexible capacity, which includes battery storage, is critical to the energy transition and complements TRIG’s renewable generation assets as they respond to, and benefit financially from, fluctuations in renewable energy and electricity prices
Volatility, in the investing world, is a descriptive term for how much the value of something moves up and down over a period of time.
” class=”glossary_term”>Volatility. At the end of the period, construction and development exposure represented 8% of the total portfolio.
portfolio performance
Total power generation for the portfolio was 5% under budget for the year due to worse than expected weather resources in some regions and downtime resulting from both expansion activities and unscheduled maintenance.
78MW of generating capacity was built during the year at the Haut Vannier and Blary Hill onshore wind farms, with Blary Hill in Scotland funded entirely from reinvestment proceeds. A capacity of 301 MW is currently being commissioned, with the Grönhult onshore wind farm and solar projects in Cadiz well advanced and nearing completion; both are in the final stages of commissioning and are exporting electricity. A further 471 MW capacity is under construction or under development.
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