Renewables Infrastructure Group Limited GBP Red.Shs · LSE:TRIG
Renewables Infrastructure Group Limited GBP Red.Shs — The Renewables Infrastructure Group — Investor Presentation (September 2019)
48 slides from Renewables Infrastructure Group Limited GBP Red.Shs's investor presentation, Sep 27, 2019
Slide 1: Investor Update 27th September 2019
The Renewables Infrastructure Group Investor Update 27th September 2019 Generating Sustainable Value. Rosières, France trig-ltd.com
Slide 2: Contents
Contents Section Slide Introduction 4 Strategy and Acquisitions 7 Portfolio and Operations 17 Financials 22 Concluding Remarks 27 Appendices 29 Contacts / Important Information 47 2 trig-ltd.com
Slide 3: Introduction
Introduction A leading London-listed renewables investment company Purpose: To generate sustainable returns from a diversified portfolio of renewables infrastructure that contribute towards a zero-carbon future TRIG is invested in 71 wind, solar and battery projects in the UK & Europe, with 1.5G
Slide 4: Strong track record over six years
Strong track record over six years Dividend growth, financial outperformance, scaling portfolio Progressive dividend (pence per share) Share price outperformance and low Beta3 6.80p Target2 170p 2.5 Cumulative Total Return 6.60p 160p 6.40p 2 150p 6.20p 140p 1.5 6.00p Beta 130p 5.80p 120p 1 5.60p 5.4
Slide 5: Financial Highlights
Financial Highlights Six months to 30 June 2019 Ongoing Strong Performance ▲ NAV per share: 115.0p (Dec 2018: 108.9p) ▲ Earnings per share: 9.3p (H1 2018: 4.8p) ▲ £302m of equity raised as part of Share Issuance Programme ▲ Annualised TSR1 10.4% since IPO Dividends ▲ On track for 2019 target dividen
Slide 6: Sustainability and Responsible Investment
Sustainability and Responsible Investment TRIG’s ESG achievements Powering 1 million homes with clean energy 1 million tonnes of CO2 avoided p.a. Local contractors at Solwaybank, Scotland £750k spent on community projects p.a. £10m spent with local contractors on construction projects to date Bee me
Slide 7: Strategy and Acquisitions
Strategy and Acquisitions Pallas, Republic of Ireland trig-ltd.com
Slide 8: Growth and Equity Funding, H1 2019
Growth and Equity Funding, H1 2019 Portfolio additions balancing revenue risks, enhancing diversification Additions to the Portfolio ▲ Investment commitments in H1 2019 of £417m across 5 projects Date of commitment Project Location Equity share Net Capacity (MW) Revenue Type1 March 2019 Jädraås onsh
Slide 9: 2019 addition: Jädraås, Sweden
2019 addition: Jädraås, Sweden (10% of the portfolio1) TRIG’s largest investment to date ▲ Acquisition of 100% interest in a 213MW wind farm, TRIG’s largest investment to date (€207m) ▲ Majority of revenues from power sales: hedging Ersträsk agreements in place for 5 years covering c.70% of expected
Slide 10: 2019 addition: Gode Wind 1, Germany
2019 addition: Gode Wind 1, Germany (8% of the portfolio1) TRIG’s first asset in Germany, an important market for offshore wind ▲ Acquisition of 25% interest in a 330MW offshore wind farm in the German North Sea ▲ Siemens Gamesa 6MW turbines ▲ Developed by Ørsted, who provide a 20 year O&M contract
Slide 11: Portfolio construction (1) – illustrative revenue types
Portfolio construction (1) – illustrative revenue types Understanding the range of revenue types available Range of revenue options within a balanced portfolio ▲ FiT & CFD contracts (France, Ireland, Germany & UK) typically have subsidy revenues of 15 years then market FiT/CfD UK ROC Unsubsidised re
Slide 12: Portfolio construction (2) – balancing revenue risk
Portfolio construction (2) – balancing revenue risk Incorporating subsidy free projects without increasing portfolio sensitivity ▲ The range of revenue types (Fit, CfD, ROC and unsubsidised Impact on equity return of change in power price1 projects) available within UK & Europe aids a balanced portf
Slide 13: Benefits of investment choice – Better portfolio construction
Benefits of investment choice – Better portfolio construction Combining UK & Europe provides a richer asset choice ▲ UK >20GW: significant growth in offshore wind, a core market for TRIG. New unsubsidised onshore limited by economics ▲ Europe >100GW: Germany growing in all sectors, with offshore win
Slide 14: Benefits of diversification – Reducing risk
Benefits of diversification – Reducing risk Uncertainties make it desirable to spread country exposure ▲ Challenges to investment stability since 2013 Proposed Change to Investment Policy TRIG currently has an investment limit of 50% non-UK, with − increased political uncertainty, more extreme polit
Slide 15: Benefits of scale – Liquidity up, OCR down
Benefits of scale – Liquidity up, OCR down Diversifying risk and increasing operational efficiencies A larger portfolio: Greater number of projects increases operational efficiencies 100 1,800 ▲ Diversifies project-specific operational performance and 90 1,600 risks. 80 71 1,400 70 62 1,200 58 ▲ Ena
Slide 16: Proposed New Equity Issue
Proposed New Equity Issue Second placing under the 2019 Share Issuance Programme ▲ New Issue announced 27th September. Latest time and Supplementary prospectus published / pIacing 27 September 2019 date for placing commitments 10.30am 3 October opens ▲ 123p issue price per ordinary share (7% premium
Slide 17: Portfolio and Operations
Portfolio and Operations trig-ltd.com
Slide 18: Portfolio – Increased Diversification
Portfolio – Increased Diversification 1,509MW net capacity / 71 projects (30 June 2019, including commitments) By Jurisdiction / Power Market1 2 Portfolio Overview Solar Onshore wind Offshore wind Battery storage Total Jun-19 23% 28% 4% 5% 13% 19% 8% Projects 28 40 2 1 71 Dec-18 29% 39% 4% 5% 11% 12
Slide 19: Revenue profile of portfolio
Revenue profile of portfolio Medium-term project-level revenues mainly fixed and indexed Project Revenue by Type PPA Market Indexed Fixed Revenue PPAs & FiTs 20% 43% PPA Market Revenue at Next 12 Floor 6% Months1 ROC Recycle and Other 4% Indexed ROC Buyout 27% £400m Split of Project Revenues by Cont
Slide 20: Operational Performance (1)
Operational Performance (1) Benefits from increased geographic diversification Wind and solar variation H1 2019 versus long-term average ▲ H1 2019 generation: 1,429GWh Electricity production Technology Region Performance vs P50 (GWh) ▪ 42% increase over H1 2018 due to increased Wind UK & Ireland 799
Slide 21: Operational Performance (2)
Operational Performance (2) Enhancements continue to deliver value Commercial ▪ O&M tenders achieved significant cost reductions ▪ Improved PPA contracts Technical ▪ Pro-active yaw ring replacement at Forss Maintenance at Churchtown1 ▪ Engagement with grid operator led to significantly reduced upgra
Slide 22: Financials
Financials Garreg Lwyd, Wales trig-ltd.com
Slide 23: Portfolio Valuation Bridge H1 2019
Portfolio Valuation Bridge H1 2019 Valuation movement in the six months to 30 June 2019 1,620.9 £1,600m (63.2) 1,487.6 90.9 (64.6) 29.1 37.4 £1,400m (30.9) 6.8 1,268.7 346.7 £1,200m £1,000m £800m 1,552.1 1,487.6 1,530.0 1,456.7 1,456.7 1,463.5 712.3 £600m £400m £200m £m 31-Dec-18 Cash 1 Cash Refinan
Slide 24: Valuation – Key Assumptions
Valuation – Key Assumptions Discount rates remain firm, longer asset lives, slight power price reduction As at 30 June 2019 As at 31 December 2018 Discount Rate Weighted average 7.5% 7.6% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts UK 2.75% 2.75% Lon
Slide 25: Summary of H1 2019 Financial Statements
Summary of H1 2019 Financial Statements Strong Results - NAV per share up 6.1p on valuation gains Income Statement Balance Sheet Cash Flow Statement Six months to Six months to Six months to Six months to 30 June 2019 30 June 2018 30 June 2019 30 June 2018 30 June 2019 31 Dec 2018 £m £m £m £m £m £m2
Slide 26: Acquisitions in H1 2019
Acquisitions in H1 2019 Reconciliation of Investment Commitments and Invested Cash Investment Commitments entered into in H1 2019 - £417.2m (see page 8) Cash invested in H1 2019 - £346.7m (£347.3m including costs, see page 25) (£m) Outstanding Cash invested Outstanding Commitments Timing Date of inv
Slide 27: Concluding Remarks
Concluding Remarks Garreg Lywd, Wales trig-ltd.com
Slide 28: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Continued strong NAV and earnings growth Excellent financial performance H1 2019 ▲ Strong operating performance despite poor UK wind resource, showing benefits of diversification and focussed O&M enhancements ▲ Valuation gains from active portfolio management also
Slide 29: Appendices
1 _ Appendices: Sheringham Shoal, England
Slide 30: The Team
The Team Experienced Management Independent Board Investment Manager Operations Manager Key roles: Key Roles: Helen Mahy CBE (Chair) Sourcing and approving new investments Providing operational management services for the portfolio Advising the Board on investment strategy and dividend policy
Slide 31: InfraRed Capital Partners – Investment Manager
InfraRed Capital Partners – Investment Manager Over 20 years’ pedigree in infrastructure London (Infrastructure and Real Estate) Seoul New York (Representative) Real asset expertise across infrastructure & real estate (Infrastructure) Hong Kong 25 years $12bn 17 (Real Estate) track record equity man
Slide 32: RES – Operations Manager
RES – Operations Manager 37+ years experience in renewables A world leader in renewables 37 years 270+ track record projects delivered worldwide 2000+ 16GW employees developed and/or constructed 5GW 300MW Operational assets energy storage projects supported World’s largest independent renewable en
Slide 33: Board and Senior Management Team
Board and Senior Management Team Over 100 years of relevant experience on the TRIG Advisory Committee TRIG Independent Board Helen Jonathan Klaus Shelagh (Non-Executive) Mahy CBE Bridel Hammer Mason (Chairman) TRIG Investment Werner Chris Tony Jon Committee von Richard Richard Harry Gill Roper Entra
Slide 34: UK Renewables Policy Outlook
UK Renewables Policy Outlook Cross-party support for renewables despite economic and political uncertainty Party Discernible position on Renewables • Committed to net-zero emissions by 2050 Conservatives • Committed to offshore wind, very limited support for onshore development • New Prime-Minister
Slide 35: Brexit Preparedness
Brexit Preparedness Brexit expected to have low impact Key Brexit Risks Key Mitigants • Managers well resourced Workforce skills shortage • Wide range of subcontractors in place mitigates individual asset risks • All key suppliers reviewed for approach to anticipated challenges and uncertainties Sup
Slide 36: TRIG's Currency Exposure
TRIG’s Currency Exposure Hedges dampen currency exposure on Non-UK investments TRIG’s increasingly diversified portfolio mitigates risks. Currency exposures arise on both the UK and Non-UK investments. UK investments: Variables £↗ €↗ ▲ An indirect exposure arises due to power prices being influenced
Slide 37: NAV sensitivities
NAV sensitivities Based on portfolio at 30 June 2019 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -4.3p 4.6p Output P90 / P10 (10 year) -13.6p 12.9p Power price -/+ 10% -9.0p 9.0p Inflation -/+ 0.5% -4.5p 4.9p Reduction in assumption Operating costs +/- 10% -4.5p 4.5p 1 I
Slide 38: Approach to Gearing
Approach to Gearing Disciplined approach Term Project Debt Gearing1 TRIG’s portfolio at 30 June 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 Youn
Slide 39: Counterparty Exposure
Counterparty Exposure Broad spread of high quality equipment, maintenance and off-take counterparties Electricity off-takers Equipment manufacturers2 Maintenance suppliers3 40% 13 30% Relative valuation of associated projects (%) 7 Number of projects 13 20% 2 5 13 4 10% 4 24 3 2 4 3 4 1 4 8 3 14 5 2
Slide 40: 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 32% of TRIG’s issued share capital ▲ Top 10 holders account for 48% of TRIG’s issued share capital 6% ▲ Nearly 800 re
Slide 41: Renewables continue to see strong policy support
Renewables continue to see strong policy support The “following wind” of the imperative to decarbonise positively influences regulations ▲ Policy support is strong: ▪ EU renewables 2030 target increased to 32% ▪ Paris 2015 commitments “ratcheting” ▪ UK support for clean energy; supported by labour a
Slide 42: Scale of the Global Market for Renewables
Scale of the Global Market for Renewables Renewables is now mainstream Renewables as % of global power capacity1 Global energy related CO2 emissions (Gt)2 80% 76% Renewable 70% 35 share of global capacity 60% 61% 30 additions 50% 25 49% 47% 49% Renewable 43% power % of all 20 40% 37% capacity 15 30%
Slide 43: Market Developments: Costs Declining
Market Developments: Costs Declining Grid parity altering the shape of the European renewables market Maintaining technological diversification ▲ Falling costs mean that solar (as well as wind) can be viable without subsidies in the best locations – moving the investment focus from subsidies to unde
Slide 44: Short-Run Marginal Cost Supply Curve (Merit Order)
Short-Run Marginal Cost Supply Curve (Merit Order) Illustrative Gas-fired power tends to set the marginal price £/MWh Min Demand Ave Demand Max Demand 100 80 Peaking plant 60 Coal Gas 40 Biomass & Interconnectors 20 Nuclear Renewables 0 0 10 20 30 40 50 60 70 80 Cumulative Capacity (GW) Note: Schema
Slide 45: Constituents of Power Prices
Constituents of Power Prices Illustrative £/MWh 70 60 50 50 Scarcity uplift 40 Transmission charges and BSUoS Carbon price 30 Impact of Gas price 20 Lower marginal cost production impact 10 0 -10 Note: Schematic only for illustration. 45 trig-ltd.com
Slide 46: 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 30 June 2019 of 115.0p Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market Capitalisation c. £1.9bn (30 June 20
Slide 47: 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
Slide 48: 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
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