Greencoat Renewables (GRP) has published results for 2024. Its NAV return for the period was 4.5%. Its share price return is nowhere to be seen in the announcement, the annual report, or the results presentation, but – for interest – the share price fell from 101.6 cents to 82.3 cents, factoring in the dividend for the year of 6.74 cents (up 5.0% on the previous year), the return to shareholders was -12.4%.
The problem was a widening discount as the shares moved from trading on a 9.4% discount to a 25.5% discount. The chairman says “given that valuations across the listed renewable infrastructure market remain subdued, our priority will be on actions that may help reduce the share price discount to NAV. With a strong balance sheet and high cash generation capacity, the company expects to continue to recycle assets and proactively manage gearing through organic cashflows, whilst optimising its operating performance.”
Other highlights were:
- 3,443 GWh of clean electricity generated in the period with total capacity of 1.5GWh across 39 renewable generation and storage assets in five European countries
- Generation was 10% behind budget thanks to low wind resource and unexpected grid outages. Forecast wind speeds have been reduced, taking 1.1 cents off the NAV.
- Cash generation of €148.61m (2023: €196.7m), delivering gross dividend cover of 2.0x (2023: 2.7x)
- NAV per share of 110.5 cents (2023: 112.4 cents) with +4.5% total return including dividends paid
- €100m distributed to shareholders via dividends and share buyback representing c.8% of opening NAV
- Completed first asset sale of Kokkoneva wind farm in Finland at a premium to NAV with proceeds used to repay debt. Should complete sale of Andella wind farm in Spain soon.
- Completed the acquisition of the South Meath solar farm, the company’s first investment into the Irish solar market, under forward sale agreement committed to in July 2022
- Aggregate Group Debt reduced to €1,263m (2023: €1,342m), equivalent to 51% of GAV, as a result of debt repayments using a combination of operating cashflow and proceeds from disposals
- New €150m five-year term debt facility agreed in the period used to repay RCF and early agreement to extend €235m of Facility A maturing in October 2025 for additional 5-year term
- Two long-term power purchase agreements (PPAs) with strong counterparties in Ireland, highlighting growing presence in the market and the increasing demand for clean energy from Big Tech and AI
- The portfolio generated renewable energy sufficient to power approximately 775,000 homes, preventing around 1.4m tonnes of CO₂ emissions – a 7% increase from 2023
A €25m buyback announced in May 2024 was completed in October. 27.7m shares were bought back at an average discount of 19%. The manager’s statement says “The company will continue to evaluate potential future buybacks as part of its balanced capital allocation approach”.
The investment management fee has been reduced. 50% of the fee will be based on NAV and 50% on the lower of NAV and market cap. The revised arrangements come into force from 1 April 2025. [There is an acknowledgement here of the importance of bringing the discount down but investors might be disappointed that the basis for calculation for the whole fee has not shifted to lower of market cap and NAV.]
GRP : Greencoat Renewables cuts fee
