48 slides from Renewables Infrastructure Group Limited GBP Red.Shs's earnings presentation, Feb 19, 2019
Slide 1: Annual Results Presentation: Year to 31 December 2018
The Renewables Infrastructure Group Annual Results Presentation: Year to 31 December 2018 19 February 2019 Generating Sustainable Value. trig-ltd.com
Slide 2: Presenters
wae ATRIG Helen Mahy CBE Richard Crawford Phil George TRIG InfraRed Capital Partners InfraRed Capital Partners Chairman Director, Infrastructure Director, Infrastructure Jaz Bains Chris Sweetman Renewable Energy Systems Renewable Energy Systems Group Commercial Director TRIG Operations Manager
Slide 3: Contents
Contents Section Slide Introduction & Financial Highlights 4 Strategy & Acquisitions 6 Portfolio Operations 14 Financials 21 Concluding Remarks 28 Appendices 30 Contacts / Important Information 47 3 trig-ltd.com
Slide 4: Introduction
Introduction A leading London-listed renewables investment company TRIG is invested in 62 wind, solar and battery projects in the UK & Europe, with 1,110MW of power output capacity London-listed investment company (IPO in 2013) established in Guernsey with an independent board of non-executive d
Slide 5: Financial Highlights – 2018
Financial Highlights – 2018 Strong NAV and earnings growth ▲ NAV per share: 108.9p (Dec 2017: 103.6p) ▲ Earnings per share: 11.7p (2017: 9.8p) ▲ Investment Commitments totalling £348m ▲ New equity raised of £236m ▲ NAV total return1: 11.6% for 2018 Dividends ▲ Achieved target 2018 aggregate dividend
Slide 6: Strategy & Acquisitions
Strategy & Acquisitions Hill of Towie, Scotland trig-ltd.com
Slide 7: Additions to the Portfolio
Additions to the Portfolio Over 289 MW of incremental capacity Date Project Technology Location Revenue Net Total Total Future Acquired Type2 Capacity Consideration Invested Commitments (MW) (£m) during the (£m) period (£m) Jan 2018 Clahane Onshore Wind Ireland FiT 55.0 £64.4 £64.4 - May 2018 Rosièr
Slide 8: Ersträsk
Ersträsk First investment in Nordics, enhancing diversification ▲ Dec 2018, acquisition of 75% interest in a 229.1MW 1 wind farm in Northern Sweden from Enercon ▲ Payments made on completion of phases – no construction risk Capacity1 Completion Consideration Phase 1 61 MW Feb 2019 £46m Phase 2 168 M
Slide 9: Nordic Renewables Market Fundamentals
Nordic Renewables Market Fundamentals Growth market Nordic market - forecast generation and capacity in GW1 ▲ Broad political support for renewables, low 120 regulatory risk (largely un-subsidised) 100 5 7 8 ▲ Significant wind development expected: 7 7 80 12 7 28 o ambitious renewable targets 7 16 2
Slide 10: Growth & Funding
Growth & Funding Enhancing diversification & scale advantages Equity Issuance Portfolio Evolution ▲ £236m raised through several issues at 105p – 110p Dec 2018 Dec 2017 Dec 2016 Projects 62 57 53 ▲ Strong pipeline, in excess of £250m at advanced stage Net capacity 1,110MW 821MW 710MW ▲ Potential sha
Slide 11: Market Developments: Asset Lives
Market Developments: Asset Lives (1) Asset Life review underway, NAV as at 28th Feb 2019 to be published Asset Lives ▲ TRIG’s approach is to consider asset lives on a project-by-project basis, taking into account expectations on: o Structural durability o Likelihood of obtaining planning and lease e
Slide 12: Market Developments: Offshore Wind
Market Developments: Offshore Wind (2) Offshore Wind market has matured rapidly Offshore wind The Board intends to put a proposal to shareholders at the AGM in May to amend the ▲ The offshore wind industry has matured significantly, to the point where investment policy such that Offshore Wind is ris
Slide 13: Market Developments: Market Evolution
Market Developments: Market Evolution (3) 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
Slide 14: Portfolio Operations
Portfolio Operations Altahullion, N. Ireland trig-ltd.com
Slide 15: Operational Overview
Operational Overview Diversified portfolio delivers strong performance despite low wind levels 2018 generation: 2,011 GWh1 Operational Highlights ▲ Portfolio continues to perform well ▲ Clahane extension, Rosières & Montigny, and Broxburn construction successfully completed ▲ 14% increase over 2017
Slide 16: Operational Detail
Operational Detail Diversification sustaining performance close to long-term expectations Technology Region Electricity Performance vs. P50 production (GWh) estimates 2018 2018 2017 ▲ Good UK wind generation relative to Wind GB 1,301 -4.2% +5.6% available resource NI & ROI 322 -5.3% -5.1% ▲ Benefits
Slide 17: Optimising Asset Performance
Optimising Asset Performance Active targeting of value-enhancing initiatives Technical Increasing the amount of energy produced & reducing associated costs ▲ Solar works performed over winter months, with enhanced monitoring ▲ Turbine uprating ▲ Utilising strategic spares held on site to minimise do
Slide 18: Environment, Social & Governance
Environment, Social & Governance A commitment to responsible investing TRIG and the Environment Minimising impact on the local and global environment ▲ 100% Renewable energy generator, committed to environmental sustainability ▲ Powering 650,000 homes, avoiding 550,000 tonnes of CO 2 emissions annua
Slide 19: Brexit Preparedness
Brexit Preparedness Brexit expected to have low impact Major 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 Supply chain fa
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Slide 21: Financials
Financials Broxburn, Scotland trig-ltd.com
Slide 22: Portfolio Valuation Bridge
Portfolio Valuation Bridge Valuation improvement in the year to 31 December 2018 £1,400m £1,200m -98.5 6.1 23.3 99.2 14.0 143.4 £1,000m £800m 1,268.7 £600m 1,126.1 1,169.5 1,126.1 1,126.1 1,132.2 1,146.2 1,081.2 1,081.2 £400m £200m £m 31-Dec-17 New Cash Rebased Changes in Changes in Reductions in Ba
Slide 23: Valuation – Key Assumptions
Valuation – Key Assumptions As at 31 Dec 2018 As at 31 Dec 2017 Discount Rate Weighted average 7.6% 8.0% Power Prices Weighted by market Based on third party forecasts Based on third party forecasts (See power curve on slide 9) Inflation UK 2019: 3.20% (ROCs only) 2018: 3.40% (ROCs only) 2020: 3.00%
Slide 24: Revenue Profile
Revenue Profile Medium-term project-level revenues retain a material fixed element Project Revenue by Type PPA Market Revenue 25% Indexed Fixed PPAs & FiTs 29% Next 12 PPA Market Revenue at months1 Floor 8% ROC Recycle and Other 4% Indexed ROC Buyout Split of Project Revenues by Contract Type for th
Slide 25: Summary Income Statement
Summary Income Statement Strong results, good valuation gain Year to 31 Dec 2018 Year to 31 Dec 2017 £m £m Statutory Basis Adjustments1 Expanded Basis Expanded Basis Total operating income 125.0 17.8 142.8 105.7 Acquisition costs - (1.5) (1.5) (0.8) Net operating income 125.0 16.3 141.3 104.9 Fund e
Slide 26: Summary Balance Sheet
Summary Balance Sheet NAV per share up 5.3p on good valuation gains As at 31 Dec 2018 As at 31 Dec 2017 £m £m Statutory Basis1 Adjustments Expanded Basis Expanded Basis Portfolio value 1,267.3 1.4 1,268.7 1,081.2 Working capital (0.2) (1.5) (1.7) (2.8) Debt - - - (106.4) Cash 16.8 0.1 16.9 10.8 Net
Slide 27: Summary Cash Flow
Summary Cash Flow Strong cash flow performance Year to 31 Dec 2018 Year to 31 Dec 2017 £m £m Statutory Basis Adjustments1 Expanded Basis Expanded Basis Cash from investments 54.6 43.9 98.5 73.0 Operating and finance costs (1.3) (12.7) (14.0) (9.9) Cash flow from operations 53.3 31.2 84.5 63.1 Debt a
Slide 28: Concluding Remarks
Concluding Remarks Montigny, France trig-ltd.com
Slide 29: TRIG: Generating Sustainable Value
TRIG: Generating Sustainable Value Strong NAV growth, earnings and a positive outlook Excellent operational and financial results ▲ Strong cashflow on the back of high achieved power prices, good asset performance & diversification, despite poor wind resource ▲ Portfolio enhancement initiatives ongo
Slide 30: Appendices
Appendices Breeding Wader. Management Area
Slide 31: Portfolio Operations
Portfolio Operations 1,110MW net capacity / 62 projects (February 2019) By Technology1 Battery 2% Solar PV 19% Onshore Wind 72% Offshore Wind 7% By Jurisdiction / Power market 1,2 Sweden 12% England (GB) 21% France 11% Republic of Wales (GB) Ireland (SEM) 8% 5% Northern Ireland (SEM) 4% Scotland (GB
Slide 32: Constructing a Balanced Portfolio
Constructing a Balanced Portfolio Understanding the range of revenue types available Range of Revenue Options within a balanced portfolio ▲ FiT & CFD contracts (France, Ireland, UK) typically have subsidy revenues of 15 years then market FiT/CfD ROC Unsubsidised revenues for the balance of a project
Slide 33: Power price sensitivity unchanged post acquisitions
Power price sensitivity unchanged post acquisitions Incorporating subsidy free projects without increasing portfolio sensitivity Portfolio Power Price Sensitivity Unchanged following 2018 acquisitions1 ▲ Acquisitions in 2018 comprised a range of Fit, CfD and Impact on equity return of change in powe
Slide 34: NAV sensitivities
NAV sensitivities Based on portfolio at 31 December 2018 -300.0p -200.0p -100.0p 0.0p 100.0p 200.0p 300.0p Discount rate +/- 0.5% -3.5p 3.7p Output P90 / P10 (10 year) -12.3p 11.9p Power price -/+ 10% -8.2p 8.2p Inflation -/+ 0.5% -4.8p 5.3p Operating costs +/- 10% -4.3p 4.4p Exchange rate -/+ 10% -
Slide 35: Counterparty Exposure
Counterparty Exposure Broad spread of counterparties monitored regularly Electricity off-takers Equipment manufacturers2 Maintenance suppliers3 40% 7 Number of associated projects 13 % of Portfolio Valuation of associated projects¹ % of Portfolio Valuation 30% 7 13 20% 2 5 13 4 10% 4 24 3 2 4 3 4 1
Slide 36: Debt Structure
Debt Structure Disciplined approach Term Project Debt Gearing1 TRIG’s portfolio at 31/12/2018 ▲ Limited to 50% of portfolio enterprise value Project Category typically (Younger = <10yrs) Average % of # of available gearing1 portfolio projects2 ▲ Fully amortising within the subsidy period Younger sol
Slide 37: Dividend Track Record
Dividend Track Record Aggregate dividend target of 6.64p per share for 2019 Annual Interim dividends Period dividends per Payment timing per share share Q4 2019 1.66p Target 3/2020 Q3 2019 Target 6.64p 1.66p Target 12/2019 Annual Dividend Per Share Q2 2019 1.66p Target 9/2019 6.80p Q1 2019 1.66p Tar
Slide 38: Renewables continue to see strong policy support
Renewables continue to see strong policy support …… ▲ Policy support is strong: ▪ EU renewables 2030 target increased to 32% ▪ Paris 2015 commitments “ratcheting” ▪ UK support for clean energy; supported by labour and conservatives, not Brexit dependent Carbon emissions and carbon budget ▲ Sector’s
Slide 39: 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 CO2)2 80% 35 76% 70% 30 60% 61% 25 50% 49% 49% 47% 20 43% 40% 37% 15 30% 20% 18% 10 14% 16% 11% 13% 10% 9% 10% 11% 8% 10% 5 7% 5% 6% 6% 0% 0 2012 2
Slide 40: Short-Run Marginal Cost Supply Curve (Merit Order)
Short-Run Marginal Cost Supply Curve (Merit Order) Gas-fired power tends to set the marginal price £/MWh Min. Demand Average 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: Schematic onl
Slide 41: Constituents of Power Prices
Constituents of Power Prices Key elements: natural gas and carbon prices £/MWh, Real 2018 2020 2030 70 60 60 50 50 Scarcity uplift 40 Transmission charges and BSUoS Carbon price 30 Impact of Gas price Lower marginal cost production impact 20 10 0 -10 Note: Schematic only for illustration. 41 trig-lt
Slide 42: The Team
The Team Access to Experienced Management Independent Board Investment Manager Operations Manager Key roles: Key Roles: Helen Mahy CBE (Chair) Sourcing and approving new Providing operational management investments services for the portfolio Advising the Board on investment Implementing the
Slide 43: 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 $10bn 17 (Real Estate) track record equity man
Slide 44: RES – Operations Manager
RES – Operations Manager 37+ years experience in renewables An experienced leader in the renewables industry 37 years 300 track record projects delivered worldwide 2000+ 16GW employees capacity developed / managed 300MW energy storage projects constructed or under contract The world’s largest inde
Slide 45: 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) Investment matters Operational TRIG Investment Werner Chris Tony Jon Richard matters Commi
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 31 December 2018 of 108.9p Issue / Listing ▲ Premium listing of ordinary shares on the Main Market of ▲ Market Capitalisation c. £1.334bn (31 D
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 +44 (0)20 7484 1800 Trafalgar Court Bu
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