TRIG reports fall in portfolio value over 2024

(Sharecast News) - The Renewables Infrastructure Group (TRIG) reported a decline in its portfolio valuation for 2024 on Tuesday, reflecting lower power price forecasts, operational adjustments, and higher discount rates. Its net asset value per share fell by 11.8p to 115.9p, while the weighted average discount rate for portfolio valuation rose to 8.6% from 8.1%, driven by increased return rates in the UK and changes in the portfolio mix.

Despite the external pressures, TRIG said it maintained a resilient operational performance.

Pro-forma portfolio EBITDA stood at £493m, down from £610m in 2023, reflecting a return to more typical power price levels after the highs of 2022 and 2023.

Gross cash cover was 2.1x, while net dividend cover declined to 1.0x from 1.6x, following the repayment of £206m in project-level debt.

The company set a dividend target of 7.55p per share for 2025, representing a 1.1% increase on the previous year's payout.

TRIG said it continued to prioritise balance sheet management and shareholder returns.

It sold four wind farms - Little Raith, Forss, Pallas, and a partial stake in Gode 1 - for a total of £185m, achieving an average premium of over 10%.

The company also tripled its share buyback programme from £50m to £150m, representing around 8% of its shares in issue.

To date, 36 million shares had been repurchased at a cost of £33m.

Looking ahead, TRIG said it saw strong cash flow visibility, with 80% of projected revenues in 2025 at fixed prices per unit of generation and 60% of forecast revenues over the next decade linked to inflation indices.

The company said it was advancing over £300m in divestments and financings to support its expanded buyback programme, reduce floating-rate debt, and fund investment commitments.

TRIG's current share price implied a 10% dividend yield and a base case annualised return of 12%, offering a significant equity risk premium relative to UK and European risk-free rates.

"Against a challenging operational and market backdrop, the company's diversified portfolio has delivered healthy cash flow generation, enabling the continued reduction of portfolio debt, the share buyback programme and increasing dividends to shareholders," said chairman Richard Morse.

"In addition to the accretive sales the company has already announced, the Manager is pursuing further asset sales and financings in 2025 in order to reduce short-term debt further and fund the tripling of the company's share buyback programme."

Morse said the board was "highly cognisant" of the challenging market backdrop for shareholders, adding that it was the company's priority to execute its capital allocation priorities to drive greater shareholder returns.

"In this spirit, we have also reached an agreement with the company's nanagers to change the basis of the management remuneration to one that secures better value and that is also appropriate for the long-term success of the company."

At 0837 GMT, shares in The Renewables Infrastructure Group were up 0.14% at 73.8p.

Reporting by Josh White for Sharecast.com.