The Renewables Infrastructure Group Limited (TRIG) Earnings Call Transcript & Summary

TRIG's performance in 2023 was robust with several key highlights. Pro forma portfolio EBITDA for the year was GBP 610 million. Operational cash flow of GBP 502 million, that is after interest, tax and fund expenses covered the cash dividend 2.8x with dividend cover of 1.6x net of the payment of nearly GBP 220 million of project-level debt. This and the 1.55x net dividend cover achieved in 2022 shows strong cash flows being generated by the portfolio. Now due to the macroeconomic situation within capital markets, including the prevailing interest rates, the company is working to reduce its floating rate borrowings on its revolving credit facility. During the year, the RCF was reduced by GBP 34 million through a combination of organic cash flows and disposal proceeds. This is in addition to the investments, mostly into construction projects of over GBP 100 million. Three assets were disposed of during the year at a premium to valuation, and we expect more asset disposals to accelerate the RCF reduction this year. Now this is all in line with our capital allocation policy, which prioritizes the completion of project builds and reducing the RCF borrowings followed by accretive investments such as the Fig Power acquisition announced in February. The payment of an attractive, resilient dividend to shareholders is a core priority, and the Board has reported a dividend target for 2024 and of 7.47p per share. This is an increase of 4% above the 2023 level. Now during the year, the portfolio's net asset value declined by 6.9p per share due to a significant decrease in near-term power price forecasts and an increase in the portfolio's weighted average discount rate to 8.1%, both affecting portfolio evaluation. And this has been mitigated by our active management of the portfolio, including the completion of construction projects as well as operational enhancements.

In 2023, TRIG's portfolio generated 6 terawatt hours of renewable energy, which is the capacity to power the equivalent of 1.9 million homes and avoid 2.3 million tonnes of carbon emissions per annum. Low wind speeds in Northern Europe, coupled with good outages and some maintenance activities impacted electricity generation in the period. Though the negative effects of this were partially moderated by TRIG's diversification with French and solar production above budget. Our development and construction projects continue to progress well with 300 megawatts of clean energy capacity constructed during the year across the 4 Cadiz solo projects in Spain, and the Grönhult onshore wind farm in Sweden. Across the portfolio, resupplies a structured framework to identify, appraise and implement commercial and technical enhancements. In 2023, this included improved pricing and scope on some key contracts, wind turbine blade enhancement works and project life extension and repowering activities.

TRIG's 2.8 gigawatt portfolio is diversified across geographies and technologies. Now for us, portfolio rotation is a key tool in the active management of the company. In the year, we sold 3 onshore wind farms in Ireland, generating over GBP 20 million proceeds at a 26% premium to carrying value. Portfolio rotation creates capacity for accretive acquisitions, such as Fig Power, a U.K. energy project developer, which continues the evolution of TRIG's strategy towards greater value-add investment activity. supporting capital and dividend growth. Fig Power brings dedicated development capability and a proprietary pipeline, which provides investment optionality at the build-out or post construction phases as well as limited risk exposure and high return expectations, significantly ahead of TRIG's portfolio discount rate. Within TRIG's portfolio, we have the opportunity to grow our generation capacity by over 1/3 by 2030 through our development pipeline totaling 1 gigawatt of capacity. The company's disciplined capital management provides thing with the balance sheet capacity to self-fund this growth without reliance on equity markets. This growth, in addition to our balanced portfolio of wind, solar and battery storage projects, which continue to perform well, deliver inflation correlated returns underpinned by strong operational cash flows. TRIG's growth is driven by the active management activities of its managers InfraRed and RES. And together, these characteristics position TRIG well to build on its decade-long track record.