Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — FY2019 Earnings Presentation
45 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, March 2020
Slide 1: Annual Results Presentation: Year to 31 December 2019
The Renewables Infrastructure Group Annual Results Presentation: Year to 31 December 2019 Generating Sustainable Value. Substation at Merkur offshore windfarm, Germany trig-ltd.com
Slide 2: Important Information
Important Information By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This document is an advertisement and is not a prospectus. Any decision to purchase shares in The Renewables Infrastructure Compa
Slide 3: Speakers
Speakers Helen Mahy CBE Richard Crawford TRIG InfraRed Capital Partners Chairman Director, Infrastructure Jaz Bains Phil George Chris Sweetman Renewable Energy Systems InfraRed Capital Partners Renewable Energy Systems Group Risk and Investment Director Director, Infrastructure TRIG Operations Manag
Slide 4: TRIG in 2019
Generating Sustainable Value. TRIG in 2019 Powering 1 million homes with clean energy2 ▲ Solid financial and operational performance, benefitting from portfolio diversification. 1.1 million tonnes of CO2 avoided p.a.2 ▲ 2019 Dividend of 6.64p delivered. Target 2020 Dividend 6.76p1. Produced the firs
Slide 5: Contents
Contents Section Slide Introduction 6 Financial Highlights & Valuation 9 Operations and Sustainability 16 Strategy: Acquisitions & Portfolio Construction 21 Concluding remarks 27 Appendices 29 Contacts / Important Information 45 5 trig-ltd.com
Slide 6: The Renewables Infrastructure Group
The Renewables Infrastructure Group A London-listed FTSE 250 renewables investment company Purpose: To generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a zero-carbon future Diversified £2.1bn Portfolio Value2, portfolio 74 projects UK & E
Slide 7: Strong track record over seven years
Strong track record over seven years Sustainable dividend growth, continued financial outperformance, scaling portfolio Dividend increased by 13% over 7 years NAV per share increased by 17% over 7 years 8.0p 130 Target 6.76p 1 120 7.0p 110 6.0p 100 90 5.0p 80 70 4.0p 60 NAV TR 8.4%4 p.a. 3.0p 50 40
Slide 8: Financial Highlights & Valuation
Financial Highlights & Valuation Hill of Towie, Scotland trig-ltd.com
Slide 9: Financial Highlights I
Financial Highlights I Year ended 31 December 2019 115.0p 11.4p NAV per share, +6.1p Earnings per share (Dec 2018: 108.9p) (2018: 11.7p) £508m £530m Investments made1 Equity raised (2018: £348m) (2018: £236m) Merkur offshore, Germany 1. Cash invested in the year. New investment commitments were £612
Slide 10: Portfolio Valuation Bridge
Portfolio Valuation Bridge Valuation movement in the twelve months to 31 December 2019 £2,000m 507.8 £1,800m 221.6 £1,600m (128.8) (64.6) 56.3 37.4 (101.3) £1,400m (51.9) £1,200m £1,000m 1,745.2 £800m 1,583.1 1,268.7 £600m £400m £200m £m 31-Dec-18 New Cash Refinance Rebased Change in Change in Asset
Slide 11: Valuation I – Power prices
Valuation I – Power prices Power prices (-£101.3m) TRIG blended power curve1,2 ▲ Power price forecasts down – main factors are lower near term gas prices and an acceleration in assumed renewables 70 deployment (mainly UK). 60 Real 2019 GBP/MWh ▲ Reduction most marked in UK (down 11%), milder reducti
Slide 12: Valuation II – Other key items
Valuation II – Other key items Macroeconomic assumptions (-£51.9m before hedge benefit) ▲ FX loss £42.2m, offset by hedging to net loss of £21.5m – reflecting 6% strengthening in Sterling in the year. ▲ Forecast UK Corporation tax reduction from 19% to 17% reversed, Mainstreaming of the asset class
Slide 13: Financial Highlights II
Financial Highlights II Year ended 31 December 2019 £1,745m 6.76p 0.98% Portfolio Value1, +38% FY 2020 Dividend per share Ongoing charges target3, +1.8% percentage (Dec 2018: £1,269m) (2019: 6.64p) (Dec 2018: 1.12%) 1.2x £49m 1.9x Dividend cover2 Project finance debt Cash dividend cover repayments b
Slide 14: Investment Commitments
Investment Commitments Reconciliation of investment commitments and invested cash Equity funding and Investment ▲ Investment commitments entered into in 2019 - £612m across 7 investments (see p 21). ▲ Share Issuance Programme - announced and completed during the year raising c£530m. ▲ Cash invested
Slide 15: Operations & Sustainability
Operations & Sustainability Jädraås, Sweden trig-ltd.com
Slide 16: Production
Production Geographic diversification continues to benefit 2019 generation: 3,036GWh2 ▲ 51% increase over 2018 due to increased capacity. ▲ Impacted by low GB wind speeds and Irish curtailment. ▲ Total generation kept to 4% below budget. ▲ Continued strong solar generation. Photo to be sourced 2019
Slide 17: Weather and Operational Highlights
Weather and Operational Highlights Geographic diversification continues to benefit Wind and solar variation to long-term average 50% 30% 10% -10% Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 -30% -50% GB Wind Offshore Wind Solar & Storage France Wind Ireland Wi
Slide 18: Value enhancements
Value enhancements Enhancements continue to deliver value Commercial enhancements ▲ New Irish PPAs secured delivering a £2m revenue uplift. ▲ UK solar O&M scopes cost-effectively increased to include inverter maintenance. Activity planning at Churchtown1 Technical enhancements ▲ Enhanced solar monit
Slide 19: Responsible Investment
Responsible Investment Our ESG Approach TRIG’s Environmental, Social, and Governance Goals ▲ To mitigate climate ▲ To preserve the natural ▲ To positively impact the ▲ To maintain ethics and change environment communities we work in integrity in governance 4,000m3 of concrete saved Considerate Habit
Slide 20: Strategy: Acquisitions & Portfolio Construction
Strategy: Acquisitions & Portfolio Construction Merkur offshore, Germany trig-ltd.com
Slide 21: Portfolio additions
Portfolio additions Investment commitments of £612m in 2019, plus Blary Hill Jan 2020 Net Capacity % of portfolio Date of commitment Project Location Equity share Revenue Type1 value2 (MW) 2019 Investments February 2019 Jädraås onshore wind farm Sweden 100% 212.9 Market with hedge1 9% March 2019 Ven
Slide 22: Jädraås, Sweden: TRIG's second investment in Scandinavia
Jädraås, Sweden TRIG’s second investment in Scandinavia Nordics Market ▲ Broad political support for renewables, low regulatory risk. Ersträsk ▲ Favourable economics for wind farms. Sweden Jädraås ▲ Mature and liquid power market. Stockholm Jädraås ▲ Acquisition of 100% interest in a 213MW wind farm
Slide 23: A leading investor in operational offshore wind
A leading investor in operational offshore wind TRIG’s first investments in Germany German offshore ▲ 2nd largest offshore market, after UK. ▲ Pricing set by international investors (versus smaller German onshore renewables which tends to be led by local investors). Gode Wind 1 ▲ Acquisition of 25%
Slide 24: Portfolio construction: Key characteristics maintained
Portfolio construction: Key characteristics maintained Key sensitivities and portfolio vintage maintained since IPO Portfolio has grown in scale Power price sensitivity reduced since IPO NAV impact of a -10% reduction power prices 2,000 80 1,800 70 1,600 2019 60 1,400 1,200 50 1,000 40 2018 800 30 6
Slide 25: Portfolio – Increased Diversification
Portfolio – Increased Diversification 1,664 MW net capacity / 74 projects (31 Dec 2019 plus Blary Hill) By Jurisdiction / Power Market1 2 Top 10 largest assets2 Dec-19 23% 28% 4% 3% 10% 17% 15% Dec-18 29% 39% 4% 5% 11% 12% Jädraås 9% Dec-17 36% 41% 5% 6% 12% Erstrask 8% England & Wales Scotland Nort
Slide 26: Concluding Remarks
Concluding Remarks Jädraås, Sweden trig-ltd.com
Slide 27: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Delivering stable and sustainable dividends together with NAV resilience Solid financial performance ▲ Diversification benefiting the generation levels and mitigating impact of power price forecast reductions. ▲ Valuation gains from active portfolio management and
Slide 28: Appendices
Appendices Altahulion, Northern Ireland trig-ltd.com
Slide 29: Summary December 2019 Financial Statements
Summary December 2019 Financial Statements Strong Results - NAV per share up 6.1p on valuation gains Income Statement Balance Sheet Cash Flow Statement Year to Year to Year to Year to 31 December 31 December 31 December 31 December 31 December 31 December 2018 2019 2019 2018 2019 2018 £m £m £m £m2 £
Slide 30: Net zero: destination clear, path uncertain
Net zero: destination clear, path uncertain Multiple net zero targets across Europe, but little clarity on route Net-zero by 2050 Other 4% ▲ The UK has made law a target to reach net zero greenhouse Energy emissions by 2050. supply 26% ▲ The EU has proposed the same target to members, though this is
Slide 31: Valuation – Key Assumptions
Valuation – Key Assumptions Power price reductions offset by longer asset lives and reduced discount rates As at 31 December 2019 As at 31 December 2018 Discount Rate Weighted average 7.25% 7.6% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK 2.75% 2.
Slide 32: Portfolio (1) – Constructing a Balanced Portfolio
Portfolio (1) – Constructing a Balanced Portfolio Understanding the range of revenue types available ▲ FiT & CFD contracts (France, Ireland, Germany and UK) typically have subsidy revenues of 15-20 years then market revenues for the balance of a project’s life o Least revenue risk (early on), scope
Slide 33: Portfolio construction: power price sensitivity maintained
Portfolio construction: power price sensitivity maintained Incorporating subsidy free projects without increasing portfolio sensitivity Impact on equity return of change in power price1 ▲ Acquisitions comprise a range of Fit, CfD and unsubsidised -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% projects, with
Slide 34: Portfolio (2) – Revenue Profile
Portfolio (2) – Revenue Profile Medium-term project-level revenues mainly fixed and indexed Project Revenue by Type PPA Market Revenue Indexed and 19% Fixed PPAs & FiTs 49% PPA Market Revenue at Floor 5% Next 12 ROC Recycle Months and Other 3% Indexed ROC Buyout 24% Split of Project Revenues by Cont
Slide 35: Risks relating to the outcome of UK negotiations with the EU
Risks relating to the outcome of UK negotiations with the EU Outcome of negotiations with EU on a trade deal expected to have low impact Key EU trade deal risks Key Mitigants • Managers well resourced Workforce skills shortage • Wide range of subcontractors in place mitigates individual asset risks
Slide 36: The Team
The Team Experienced Management Independent Board Helen Mahy CBE (Chair) Investment Manager Operations Manager Key roles: Key Roles: Sourcing and approving new investments Providing operational management Shelagh Mason services for the portfolio (SID) Advising the Board on investment strategy
Slide 37: InfraRed Capital Partners – Investment Manager
InfraRed Capital Partners – Investment Manager Over 25 years’ pedigree in infrastructure Key statistics across infrastructure and real estate London 25 year $12bn 17 (Infrastructure & track record equity funds Real Estate) Seoul managed raised New York (Investors) (Infrastructure) Hong Kong Mexico (
Slide 38: RES – Operations Manager
RES – Operations Manager 38+ years experience in renewables 38 years 270+ track record projects delivered worldwide 2500+ 17GW employees developed and/or constructed 5.5GW 300MW Operational assets energy storage projects supported World’s largest independent renewable energy company Operating ac
Slide 39: Diversified shareholder base
Diversified shareholder base TRIG has a high quality institutional shareholder base as well as retail investors Shareholders by Type, as % of Register1 ▲ Top five holders account for 30% of TRIG’s issued share capital ▲ Top 10 holders account for 44% of TRIG’s issued share capital ▲ Over one third i
Slide 40: NAV sensitivities
NAV sensitivities Based on portfolio at 31 December 2019 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.1p 4.4p Output P90 / P10 (10 year) -11.5p 10.7p Power price -/+ 10% -8.5p 8.5p Inflation -/+ 0.5% -4.7p 5.1p Reduction in assumption Operating costs +/- 10% -4.5p 4.5p
Slide 41: Counterparty Exposure
Counterparty Exposure Broad spread of counterparties monitored regularly Electricity off-takers Equipment manufacturers2 Maintenance suppliers3 40% 19 7 Number of associated projects 17 % of Portfolio Valuation of associated projects¹ 30% 9 20% 19 6 29 4 10% 1 1 4 2 4 1 3 2 4 5 4 5 4 2 3 5 14 1 1 1
Slide 42: Approach to Gearing
Approach to Gearing Disciplined approach Term Project Debt TRIG’s portfolio at 31 December Gearing1 2019 Project Category ▲ Limited to 50% of portfolio enterprise value typically (Younger = <10yrs) Average % of # of available gearing1 portfolio projects2 ▲ Fully amortising within the subsidy period
Slide 43: Short-Run Marginal Cost Supply Curve (Merit Order)
Short-Run Marginal Cost Supply Curve (Merit Order) Key elements of the power price: natural gas and Gas-fired power tends to set the marginal price carbon prices £/MWh £/MWh, Real 2019 Min. Average Max. 100 70 Demand Demand Demand 60 Peaking 80 plant 50 45 40 60 Gas Coal 30 40 Biomass & 20 Interconn
Slide 44: Key Facts
Key Facts Fund Structure ▲ Guernsey-domiciled closed-end investment company Performance ▲ Dividends to date paid as targeted for each period ▲ NAV per share 31 December 2019 of 115.0p Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market Capitalisation c. £2.2bn (31 Dec
Slide 45: Contacts
Contacts Investment Manager Other Advisers InfraRed Capital Partners Limited Administrator / Company Secretary Registrar 12 Charles II Street London SW1Y 4QU Aztec Financial Services (Guernsey) Ltd Link Asset Services (Guernsey) Ltd East Wing Mont Crevelt House Trafalgar Court Bulwer Avenue +44 (0)2
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