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4Q23 Results: Finance Income Continues Uptrend

RE Royalties reported its 4Q23 results. During the conference call hosted by management, the company said it continues to see substantial new quality investment opportunities, including solar projects in Asia. The company also mentioned a potential “tidal wave” in EV battery charging and storage opportunities in North America. The company reported 4Q23 revenue of C$2.6 million, up 64.7% Y/Y. Finance income was the key driver, up C$1.1 million Y/Y to C$2.4 million during the quarter due to investment portfolio expansion and resulting finance income from additional loans advanced. Royalty revenue of C$0.2 million was down Y/Y due to the net effect of reduction in royalty income in FY23 from the royalty buyout from Jade in December 22 and the royalty received in 4Q22 from Nomad offset against the increase in royalty revenue from new transactions. Operating expenses decreased by 3.5% Y/Y to C$0.7 million, driven by a decrease in admin and legal costs offset by an increase in wages and benefits, which were higher due to additional hiring to support the business. Finance expenses increased to C$0.9 million, compared with C$0.5 million in 4Q22, driven by the issuance of Series-3 Green Bonds in 1Q23 offset by lower convertible notes expense driven by the repayment of the convertible notes in January 2023. Overall, RE reported a net loss attributable to shareholders of C$1.1 million or (C$0.02)/share in Q423, compared with a net loss of C$0.8 million or (C$0.01)/share) in 4Q22. On balance, higher income was offset by higher finance expenses, FX loss, equity-settlement share base payments, and certain SG&A expenses. RE affirmed that it has sufficient liquidity to fund new projects and earn royalties through lending for the upcoming fiscal year. At the end of FY23, cash stood at C$14.4 million, while debt outstanding was at C$36.2 million. RE’s debt increased, driven by the issuance of C$20 million in green bonds at the start of the year.