REG - Atrato Onsite Energy - Net Asset Value - 30 September 2022

Atrato Onsite EnergyAnnouncement

31/10/2022 07:00

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RNS Number : 5765E  Atrato Onsite Energy PLC  31 October 2022

31 October 2022

LEI: 213800IE1PPREDIIZB62

Atrato Onsite Energy plc

(the "Company")

Net Asset Value as at 30 September 2022

 

Atrato Onsite Energy plc (LSE: ROOF), the renewables investment trust focusing
on UK commercial onsite solar, announces its unaudited net asset value ("NAV")
as at 30 September 2022 and an investment and pipeline update.

Net Asset Value

The Company's NAV as at 30 September 2022 was £139 million (92.8 pence per
Ordinary Share).

The NAV reflects the valuation of the Company's portfolio and incorporates the
costs associated with the Company's Initial Public Offering ("IPO"), ongoing
running costs and dividend distributions.

The Company has invested one-third of its IPO proceeds to date. These assets
are performing in line with expectations and together with higher realised
inflation, made a positive contribution to NAV. This has been offset by the
first year's dividend, fund management fees and a prudent increase to the
valuation discount rate.

Elevated macro-economic volatility, higher inflation expectations and UK
political uncertainty over recent weeks has led to an increase in long-term UK
government bond yields. Given the scale of the movements, Atrato Partners
Limited (the "Investment Adviser") and the Board have conservatively valued
the portfolio based on a weighted average unlevered discount rate of 6.6%.
This discount rate is materially higher than the average unlevered discount
rates observed in the UK renewables market. The increase in the discount rate
equated to a reduction in the NAV of 6.5 pence per share.

The Company's future pipeline will be underwritten based on this increased
discount rate. As such the company expects to deliver a return in-line with
its original target as set out at IPO.

Market Backdrop

A multitude of factors have driven UK wholesale electricity prices to historic
highs. Daily prices reached almost £600/MWh in August 2022. For August as a
whole, the average auction price exceeded £370/MWh, compared to £107/MWh
last year and £37/MWh in August 2020.

This was followed by UK legislation that provided financial support for
businesses struggling with higher energy costs. Further legislation has been
proposed to impose an effective cap on the revenues earned by non-fossil fuel
generators. While the level and scope of such a cap remains to be determined,
the energy price cap is expected to be set higher than the typical rate for
the Company's PPAs. The Company is therefore confident that its PPA rates will
continue to offer significant economic savings to clients.

Investment Update

At the time of the interim results, the Company published a selected pipeline
of near-term projects to be completed by September 2022 (worth £39m), and a
further batch of projects that were due to be completed by December 2022
(worth £86m, the "December Selected Pipeline").

The initial target was met in September with the Company successfully
committing a total of £49m, amassing a portfolio with a total capacity of
62MWp. Highlights of the portfolio include:

·    37 sites across the UK, in six industries, including pharma,
manufacturing and grocery

·    > 90%(( i  (#_edn1) )) of the forecast energy generation
contracted under minimum purchase obligations

·    Weighted average unexpired Power Purchase Agreements ("PPA") term of
19 years.

·    c. 40% of revenue benefits from uncapped inflation and c. 50% from
fixed annual uplifts(( ii  (#_edn2) )).

·    Free cash flow generated from the portfolio covers c. 50% of the
Company's target dividend.

 

Pipeline Update

The December Selected Pipeline remains broadly intact. However, the recent
market backdrop of economic and political instability has led in some cases
for the Company and in other cases the off-taker, to delay the decision to
execute on those deals. The Company has revised its deployment timeline and
now expects be fully deployed by CY 2Q23. The Investment Adviser has also
increased its selected near-term pipeline from £86m to £100m, out of a total
pipeline worth £360m. A more detailed update on the pipeline will be provided
at the Company's full year results announcement which will be published on 29
November.

Outlook

Whilst the recent weeks have been challenging, there are now encouraging signs
of stability. The recent increase in the cost of capital is reflected in all
new PPA proposals. The Investment Adviser is confident that these costs can be
passed through whilst still offering corporates compelling financial savings.

The Company's strategy is at the confluence of two major global macroeconomic
investment themes, structurally higher energy prices and corporate and
government commitments to reach net zero. The investment case underpinning
these two long-term thematics continues to strengthen and hence the Company is
very well positioned for the future.

 

 

ENQUIRIES

 Atrato Partners                                                                                                    +44 (0)20 3790 8087
 Limited

 Gurpreet Gujral

 Francisca Wiggins

 Christopher Fearon

 Alvarium Securities Limited                                                                                        +44 (0)20 7016 6711

 Mark                                                                                                               +44 (0)20 7016 6713
 Thompson

                                                                                                                  +44 (0)20 7016 6704
 Eddie
 Nissen

 Oliver Kenyon

 Kaso Legg Communications                                                                                           atrato@kl-communications.com

 Charles Gorman                                                                                                     +44 (0)20 3995 6673

 Millie Steyn                                                                                                       +44 (0)20 3995 6671

 

Notes to Editors

Atrato Onsite Energy plc (LSE: ROOF) is an investment company focused on
onsite green energy generation, providing new renewable energy capacity with
100% carbon traceability to industrial and commercial counterparties. The
Company focuses on UK commercial rooftop solar, helping its corporate
clients achieve net zero and reduce their energy bills. It raised £150
million in a significantly oversubscribed IPO in November 2021. Atrato
Onsite Energy provides investors with attractive capital growth and secure,
index-linked income, targeting a 5% dividend yield and a total shareholder
return of 8 - 10% iii  (#_edn3) . Its shares were admitted to trading on the
premium segment of the Main Market of the London Stock Exchange on 23
November 2021. Atrato Partners Limited is the Company's investment adviser.

Further information is available on the Company's website, www.atratoroof.com
(http://www.atratoroof.com/) .

 i  (#_ednref1) The minimum contracted amount of energy (kWh) to be consumed
in that year / forecast annual generation (kWh) from the first operational
year following financial close

 

 ii  (#_ednref2) Proportionate revenues are projections based on our first
full year of operations (2024)

 

 iii  (#_ednref3) The target dividend and target NAV Total Return set out
above are targets only and are not profit forecasts. There can be no assurance
that these targets can or will be met. These targets have been developed based
upon assumptions with respect to future business decisions and conditions that
are subject to change, including the Company's execution of its investment
objective and strategies, as well as growth in the sector and markets in which
the Company operates. As a result, the Company's actual results may vary from
the targets set out above and those variations may be material. The target
dividend yield reflects the IPO price of 100 pence per Ordinary Share.

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