The Renewables Infrastructure Group (TRIG) has announced its annual results for the year ended 31 December 2021, during which it has provided an NAV total return of 9.5%. Its chairman, Helen Mahy CBE, says that this sold performance reflects the Managers’ continuing work to enhance the portfolio (organically and through acquisitions), the sustained market demand for renewable energy generating assets, and an increase in current and near-term forward power prices. However, the impact of these factors was dampened by reductions in medium- to long-term power price forecasts, expected cuts to older solar feed-in tariffs in France and the increase in future corporation tax rates in the UK.
Key highlights
TRIG has provided the following key highlights from its annual results:
- NAV per ordinary share of 119.3p as at 31 December 2021 (December 2020: 115.3p). Growth driven by high near-term power prices, increased near-term inflation and active portfolio management
- NAV total return of 9.5% for the year and 8.3% since IPO (annualised)
- Earnings per ordinary share of 10.0p (2020: 5.9p) and profit before tax of £210m (2020: £100m)
- 2021 dividend target of 6.76p/share delivered and 2022 dividend target4 set at 6.84p/share
- Directors’ portfolio valuation of £2,726m as at 31 December 2021 (2020: £2,213m) following four diversification-enhancing acquisitions, including TRIG’s first investment in Spain
- Portfolio generated 4,125GWh of electricity in the year (2020: 3,953GWh)
- The Company is consulting on increasing TRIG’s Construction & Development Investment Policy Limit from 15% to 25% of portfolio value
- Responsible investment and sustainability at the core of the business:
- Generated enough clean energy in 2021 to avoid 1.4m tonnes of CO2 emissions and power 1.1m homes
- Supported 38 community funds with £1.2m of contributions
- Maintained a strong health and safety environment with 0.21 reportable lost time accidents per 100,000 hours worked
Two successful fundraises during the year
TRIG completed two successful fundraises in 2021 that raised £440m, in aggregate, from existing and new, institutional and retail investors. These fundraises were accretive to existing shareholders at an average issuance price of 7.7% premium to the NAVs prevailing at the time, and together with their related acquisitions provide further portfolio diversification and economies of scale (TRIG’s Ongoing Charges Ratio for 2021 was 0.97%). These fundraises has funded acquisitions that have provided further diversification of TRIG’s portfolio.
Dividend – cover of 1.06x, despite weak wind resource
Wind resource was unusually weak in 2021, with wind levels at their lowest in the UK and similar European latitudes (Ireland and Germany) since 2010. Despite this, dividend cover for the year was 1.06x, which with the benefit of scrip dividends rose to 1.12x cash cover (this is also after the repayment of £145m project-level debt). TRIG says that, if it hadn’t instead chosen the alternative model of not repaying debt on a systematic basis over each project’s subsidy life, then, for comparison purposes, dividend cash cover could have been 2.1x.
The dividend target for 2022 is 6.84p per share, which is an increase of 1.2% on the 2021 dividend. TRIG’s board says that, in setting the 2022 dividend target, it has considered positive factors including elevated near-term power prices and inflation, and was mindful of medium term political and regulatory headwinds, such as the increase in UK corporation tax rates, and the uncertainties in medium and longer-term power price forecasts relating to the rate of renewables deployment versus the growth rate of electricity demand.
Comments from Helen Mahy, CBE, Chairman of TRIG
“Active portfolio management by InfraRed and RES has delivered robust financial performance from TRIG in a year characterised by the ongoing Covid-19 pandemic, volatile commodity markets and the lowest wind resource in the Company’s history.
“As the Company approaches the ninth anniversary of its IPO, we have progressed the Board’s succession planning with the appointments of Erna-Maria Trixl and John Whittle. Shelagh Mason will be retiring from the TRIG Board at the end of February 2022 – on behalf of my fellow Directors, I thank her for her service to the Company. As the Board goes through this transition, my fellow Directors and I are grateful for another year of strong support from of TRIG’s shareholders as they continue to support the Company’s diversification strategy.
“The decarbonisation agenda remains central to public policy across Europe. Renewables play an essential role in providing affordable and clean electricity. This backdrop continues to ensure a bright outlook for the Company.”
Comments from Richard Crawford, Director, Infrastructure, InfraRed Capital Partners
“The Company’s geographical and technological diversification strategy continues to benefit the portfolio, with the Nordic wind and UK solar elements of the portfolio seeing considerably better weather resource than the wind levels experienced in the UK and Ireland.
“The Company’s first investment in a Spanish solar project is a major milestone in supporting our diversification strategy further, representing a new geography and a TRIG’s first investment in solar PV since 2016. We also increased the Company’s presence in Sweden, where we will almost double TRIG’s generation capacity in the Nordics region once in-construction assets become operational.
“To capture opportunities within these and other established markets, we will be consulting with shareholders on increasing the Construction & Development Investment Policy Limit from 15% to 25% of portfolio value. Both InfraRed and RES have deep expertise in managing construction and development activities across many decades and are well placed to ensure TRIG continues to invest in attractive projects across the Company’s key markets.”