Renewables Infrastructure Group’s net asset value (NAV) has declined four per cent since the start of the year as low power prices and weak energy generation have hit the investment trust.
The £2.5bn trust was launched in 2013 to invest in renewable energy generation and supporting infrastructure.
In its interim results today, it revealed that generation over the six months had been below budget, thanks in part to two cable outages at UK offshore wind farms, one of which has been repaired. Remedial works have been scheduled for the second site.
Despite the challenges, the Renewables Infrastructure Group said it still had a dividend cover of 1.1 times during the six months, though less than the 1.7 times the year before.
Meanwhile, it said that two-thirds of its projected portfolio revenues over the next 10 years would be at a fixed energy price, while 57 per cent were directly linked to inflation.
The group’s share price has failed to match even that of the wider renewable energy infrastructure trust sector over the past three years. It has slumped 10.7 per cent over the last three years compared to a 5.9 per cent average drop among all trusts.
Renewables Infrastructure Group’s share price is also currently trading at a discount to 20 per cent of NAV.
To help remedy this, the trust has also launched a £50m share buyback programme.
The trust’s valuation discount rates remained unchanged over the six months, but the weighted average portfolio discount rate increased by 0.2 per cent, thanks in part to the acquisition of Fig Power, a UK-based energy projects developer.
The group also agreed a sale of four wind farms across Ireland, UK (Scotland), and an upcoming sale in Germany, for £189m. The average sale premium booked on the assets was 10 per cent above book value.
Richard Morse, chair of the Renewables Infrastructure Group, said: “[Our] attractive dividend, which has been increased by 12.5 per cent over the past five years, is being supplemented by a £50m buyback programme in recognition of the company’s robust cash flows, balance sheet strength and the premium to carrying value achieved by the management team across £210m of successful divestments signed during the past 12 months.
“[The trust’s] management team takes a disciplined approach to implementing the board’s capital allocation priorities and actively manages TRIG’s balanced portfolio to deliver long-term value to shareholders.”