Octopus Renewables - Interim Results to 30 June 2023
21/09/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230921:nRSU1367Na&default-theme=true
RNS Number : 1367N Octopus Renewables Infra Trust PLC 21 September 2023
21 September 2023
LEI: 213800B81BFJKWM2JV13
OCTOPUS RENEWABLES INFRASTRUCTURE TRUST PLC
Interim Results to 30 June 2023
Octopus Renewables Infrastructure Trust plc ("ORIT" or the "Company") is
pleased to announce its unaudited interim results for the period from 1
January 2023 to 30 June 2023.
Key Points
As at 30 June 2023 As at 31 December 2022
(unaudited) (audited)
NAV per Ordinary Share (p) 107.67 109.44
Ordinary Share price (p) 92.50 100.00
Target dividend per Ordinary Share (p) FY2023(2) 5.79 5.24
Net asset value (£ million) 608 618
Gross asset value (£ million)(1,3) 1,120 1,073
Total value of all investments (£ million) 1,308 1,304
· Total shareholder return and NAV total return in the period from IPO
in December 2019 of 6.1% (December 2022: 11.6%) and 27.0% (December 2022:
25.9%) respectively¹ ⁴
· Total shareholder return and NAV total return in the six months ended
30 June 2023 of -4.9% (6 months to June 2022: -0.2%) and 0.9% (6 months to
June 2022: +11.3%), respectively¹ ⁴
· Increased target dividend to 5.79p for FY 2023, representing an
increase of 10.5% over FY 2022 in line with inflation (CPI)². Targeted
dividends are expected to be fully covered by the operating portfolio's
cashflows⁵.
· In February 2023, the Company successfully refinanced and increased
its multi-currency RCF to £270.8m (which was previously £150.0m committed,
pre-accordion) at an improved margin of 2.0%.
· Sarim Sheikh was appointed as an Independent Non-Executive Director
of the Company with effect from 1 June 2023. Mr. Sheikh has more than 25 years
of working in the energy sector across Europe, Latin America, Africa and Asia.
Operational Highlights
· The Company continued to diversify its sources of revenue and added
further long-term growth opportunities through the completion of two
transactions during the period.
· In January 2023 ORIT entered the battery storage market with the
acquisition of a 50% stake in the Woburn Road, a 12MW/24MWh ready-to-build
battery storage project in Bedfordshire, UK.
· In April 2023 ORIT agreed to invest up to £5m into HYRO Energy
Limited (HYRO), a new joint venture between ORIT, Sky (a fund managed by
Octopus Energy Generation) and renewable energy company, RES. HYRO has been
established to develop green hydrogen electrolysis projects and intends to
develop c.700MW of green hydrogen electrolyser capacity by 2030.
· During the period the Company completed construction works at the
Cumberhead Onshore Wind Farm in Scotland, with the site fully operational from
31 March 2023. Significant progress has been made on the construction of the
Breach Solar Farm, which is expected to complete by the end of September, with
energisation expected in Q4 2023.
· The Company entered into an inflation-linked Power Purchase Agreement
(PPA) with Iceland Foods over the electricity generated at the Breach Solar
Farm. The PPA will cover 14% of Iceland Foods' electricity needs for its UK
stores and will reduce Iceland's emissions by nearly 22,955 tonnes of CO2 a
year, equivalent to removing 12,590 petrol cars and planting 112,592 trees
every year.
· At the SPV level, the Company's operational portfolio generated
578GWh (6 months to June 2022: 403GWh) of electricity, generating revenue
of £61.7 million (6 months to June 2022: £38.4 million) in 6 months to
June 2023.
· 76% of forecast operational revenue is fixed (30 June 2022: 58%) for
the next two years (up to June 2025).
· Approximately 55% of the revenues forecast in the period to 30 June
2033 are now explicitly inflation linked (with reference to UK RPI, French
inflation and Polish CPI) (30 June 2022: 51%).
· As at 30 June 2023, the portfolio comprised 38(⁶) assets across
seven countries (UK, France, Ireland, Finland, Poland, Sweden and Germany) and
three technologies, as well as developer investments. Total capacity,
excluding conditional acquisitions, of 668 MW(⁶) (30 June 2022: 583 MW).
· Once fully invested, the portfolio has the potential to power the
equivalent of 536,000 homes with clean energy, an estimated 598,000 tonnes of
carbon emissions avoided, up from 521,000 homes and 482,000 tonnes of carbon
in 2022, respectively.
Post Period End
· ORIT has agreed to invest up to £2m to set up and fund a new
development business, focused on creating new ground-mounted solar PV and
co-located battery storage assets in the UK. ORIT will own 100% of the new
company, which will benefit from exclusive development services from BLC
Energy Limited ("BLCe").
Phil Austin, Chairman of Octopus Renewables Infrastructure Trust plc,
commented:
"The period under review was a successful half year for ORIT, considering the
volatile market conditions that have affected the whole subsector. The Company
brought another large project through construction, adding a significant
amount of much needed renewable energy to the Grid. Additionally, ORIT secured
a new corporate PPA with Iceland in 2023, continuing its track record of
helping major corporations transition to net zero, whilst assisting the
decarbonisation ambitions of the UK and Europe.
ORIT has continued to make selected strategic investments from its pipeline,
which have required limited capital commitment whilst diversifying its
portfolio and revenue streams into new areas such as green hydrogen. The
Company's exposure to developers offers both proprietary pipeline and
potential for NAV accretion through entering into projects at an earlier
stage. ORIT's clean energy portfolio has ensured the avoidance of c.598,000
tonnes of carbon emissions; a further 16,000 tonnes from last year, through
its energisation of key projects in the portfolio."
Results presentation today
There will be a presentation for sell side analysts at 9.00 a.m. today. Please
contact Buchanan for details on octopus@buchanan.uk.com
For further information please contact:
Octopus Energy Generation (Investment Manager) Via Buchanan
Chris Gaydon, David Bird
Peel Hunt (Broker) 020 7418 8900
Liz Yong, Luke Simpson, Huw Jeremy (Investment Banking)
Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris, Michael Bateman (Sales)
Buchanan (Financial PR) 020 7466 5000
Charles Ryland, Hannah Ratcliff, George Beale
Apex Listed Companies Services (UK) Limited (Company Secretary) 020 3327 9720
Notes:
1. These are alternative performance measures. Definitions of these and
other performance measures used by the Company, together with how these
measures have been calculated, are set out in the Interim Report.
2. The dividend target stated is a target only and not a profit
forecast. There can be no assurance that it will be met or that the Company
will make any distributions at all and it should not be taken as an indication
of the Company's expected future results. Accordingly, potential investors
should not place any reliance on this target in deciding whether or not to
invest in the Company and should decide for themselves whether or not the
target dividend is reasonable or achievable. Investors should note that
references to "dividends" and "distributions" are intended to cover both
dividend income and income which is designated as an interest distribution for
UK tax purposes and therefore subject to the interest streaming regime
applicable to investment trusts. The first interim dividend of 1.44 pence per
Ordinary Share in respect of the period from 1 January 2023 to 31 March 2023
was paid in June 2023, and the second interim dividend of 1.45 pence per
Ordinary Share in respect of the period from 1 April 2023 to 30 June 2023 was
announced and paid following the period end.
3. A measure of total asset value including debt held in unconsolidated
subsidiaries, but excluding any outstanding equity or debt commitments.
4. Total Shareholder return since IPO stated in sterling, including
dividends reinvested, from 9 December 2019 to 30 June 2023 and 31 December
2022 respectively.
5. Fully covered by cash generated in the portfolio of assets, after
deducting holding company costs and debt service. Dividend cover calculation
based on dividends declared for the period.
6. Excludes conditional acquisitions.
About Octopus Renewables Infrastructure Trust
Octopus Renewables Infrastructure Trust ("ORIT") is a closed-ended investment
company incorporated in England and Wales focused on providing investors
with an attractive and sustainable level of income returns, with an element of
capital growth, by investing in a diversified portfolio of renewable energy
assets in Europe and Australia. ORIT's investment manager is Octopus Energy
Generation.
Further details can be found at www.octopusrenewablesinfrastructure.com
(http://www.octopusrenewablesinfrastructure.com/)
About Octopus Energy Generation
Octopus Energy Generation ("OEGEN") is driving the renewable energy agenda by
building green power for the future. Its London-based, leading specialist
renewable energy fund management team invests in renewable energy assets and
broader projects helping the energy transition, across operational,
construction and development stages. The team was set up in 2010 based on the
belief that investors can play a vital role in accelerating the shift to a
future powered by renewable energy. It has a 12-year track record with
approximately £6 billion of assets under management (AUM) (as of March
2023) across 15 countries and total 3.2GW. These renewable projects generate
enough green energy to power 2.3 million homes every year, the equivalent of
taking over 1.2 million petrol cars off the road. Octopus Energy Generation is
the trading name of Octopus Renewables Limited.
Further details can be found at www.octopusenergygeneration.com
(http://www.octopusenergygeneration.com/)
About the Company
Octopus Renewables Infrastructure Trust plc ("ORIT" or the "Company") is a
closed-ended investment company incorporated in England and Wales.
The Company's investment objective is to provide investors with an attractive
and sustainable level of income returns, with an element of capital growth, by
investing in a diversified portfolio of Renewable Energy Assets in Europe and
Australia.
ORIT classifies itself as an impact fund with a core impact objective of
accelerating the transition to net zero through its investments. ORIT's
ordinary shares were admitted to the Official List of the Financial Conduct
Authority and to trading on the premium listing segment of the main market of
the London Stock Exchange on 10 December 2019.
ORIT is managed by one of the largest renewable energy investors in Europe,
Octopus Energy Generation (the "Investment Manager").
Highlights
For the six months ended 30 June 2023 (unaudited)
-4.9% +0.9% 5.79p +6.1%
Total YTD shareholder return(1 3) YTD NAV total return(1 2 3) Target Dividend per Ordinary Share for Total shareholder return since IPO (1.7% per annum)(1 3)
FY 2023
(6 months to June 2022: (6 months to June 2022: +11.3%)
(December 2022(4): +11.6%, 3.6% per annum)
-0.2%) (FY 2022: 5.24p)
+27.0% 107.7p £608m £1,120m
NAV total return since IPO (7.0% per annum)(1 2 3 4) NAV per Ordinary Share² Net Asset Value ("NAV") Gross Asset Value ("GAV")(1 5)
(December 2022: 109.4p) (December 2022: £618m)
(December 2022: +25.9%, 7.8% per annum) (December 2022: £1,073m)
£1,308m 1,801GWh 598k 536k
Total value of all investments(1 6) Potential Renewable Electricity(7) Estimated tonnes of carbon avoided(7) Equivalent homes powered by clean energy(7)
(December 2022: £1,304m) (December 2022: 1,740GWh) (December 2022: 580k) (December 2022: 522k)
(1 ) These are alternative performance measures
(2 ) The NAV as at 30 June 2023 is calculated on the basis of
564,927,536 Ordinary Shares in issue
(3 ) Total returns in sterling, including dividends
reinvested
(4 ) Restated from December 2022 KPI reported in the FY22
Annual Report
(5 ) A measure of total asset value including debt held in
unconsolidated subsidiaries
(6 ) Total asset value including total debt and equity
commitments
(7 ) All metrics are calculated based on an estimated annual
production of the whole portfolio once fully constructed. June 23 numbers
exclude the contingent acquisition in Spain following the re-negotiation of
the deal.
Alternative Performance Measures ("APMs")
The financial information and performance data highlighted in footnote 1 above
are the APMs of the Company. Definitions of these APMs together with how these
measures have been calculated can be found in the Interim Report.
Portfolio at a glance
Average asset
Capacity life remaining
Technology Country Sites (MW)* (years) Status Key information
Onshore wind Sweden 1 48 28.0 Operational Corporate PPA
France 1 24 29.4 Operational French CfD
UK 1 50 29.8 Operational Operational as of Q1 2023
UK 1 23 28.0 Operational Fixed pricing until end of 2025
Poland 2 59 28.2 Operational Polish CfD from Q3 2023
Germany 1 35 29.3 Operational German CfD
Finland 2 71 28.3 Operational Fixed pricing until end of 2025
Offshore wind UK 1 42 25.5 Operational ROC Subsidised
Solar PV UK 8 123 24.9 Operational ROC Subsidised
UK 1 67 40.0 Construction Expected to be
operational in H2 2023
France 14 120 28.9 Operational FiT Subsidised
Spain 4 175 35.0 Conditional Acquisition Expected to be
operational in 2024
Ireland 5 242 40.0 Conditional Acquisition 200MW expected to be operational in H2 2023
Battery UK 1 6 35.0 Construction Expected to be
operational in 2024
Developers Ireland n/a n/a n/a n/a Floating offshore wind
UK n/a n/a n/a n/a Onshore wind
UK n/a n/a n/a n/a Hydrogen
Finland n/a n/a n/a n/a Onshore wind/Solar PV
Acquired at construction stage
* Pro-rated by ownership
Portfolio at a glance
Onshore wind
Offshore wind
Solar
Battery
Developer
Total number of
assets(8 ) 38
Total capacity(8) 668 MW
(8) Excludes conditional acquisitions
Chair's Statement
Philip Austin MBE
Chair,
Octopus Renewables Infrastructure Trust plc
On behalf of the Board, I am pleased to present the interim report for Octopus
Renewables Infrastructure Trust plc (the "Company") for the period from 1
January 2023 to 30 June 2023 (the "Interim Report").
During the first half of 2023 the Company delivered a positive NAV return of
0.9%, demonstrating resilience despite unfavourable conditions in the
financial markets, relatively low wind speeds and falling power prices. The
high levels of fixed revenues in our portfolio have protected us from
declining power prices in the market and supported continued strong cash
generation. Net cash flows from operating activities totalled £17.8 million
in the period representing dividend cover of 1.1x, net of debt principal
repayments. Excluding scheduled debt amortisation the dividend cover was 1.7x.
In May 2023 the Company announced the appointment of a new independent
non-executive director, Sarim Sheikh, who joined the Board with effect from 1
June 2023. Sarim has over 25 years of experience in the renewables and energy
industry working with General Electric and Shell and is a passionate advocate
for energy transition. I have no doubt that he will be an extremely valuable
member of the Board and we very much look forward to working with him.
Investment Activity
The Company continued to build on its track record of leadership and
innovation, investing in new business lines to diversify and broaden its
portfolio and generate new options for future profitable growth. It completed
on its first battery storage investment, a 50% stake in the 12MW Woburn Road
battery construction project in Bedfordshire, UK, and committed to invest up
to £5 million into a joint venture, HYRO Energy Limited ("HYRO"), established
to develop green hydrogen electrolysis projects across the UK. HYRO intends to
develop c.700MW of green hydrogen electrolyser capacity by 2030 and its
strategy is aligned with the UK's wider decarbonisation ambitions, with the UK
Government targeting the construction of at least 5GW of green low carbon
hydrogen capacity by 2030.
In keeping with its active approach to power price risk management the Company
also entered into a 10-year power purchase agreement ("PPA") over the
electricity to be generated at Breach Solar Farm, a 67MW solar PV project
currently under construction in Cambridgeshire, UK. The PPA provides ORIT with
a UK inflation (CPI) indexed price for 100% of Breach's production each year
and provides protection against power prices and inflation.
During the period the Company also secured an amendment and extension to the
existing RCF from a group of four lenders with the total committed facility
increasing to £271 million. The three-year multi-currency facility includes
an additional uncommitted accordion, allowing it to be increased by up to
£150 million.
Dividends
In line with the Company's progressive dividend policy, the Board announced an
increase in the target dividend to 5.79 pence per Ordinary Share for 2023, an
increase of 10.5% in line with CPI. The fourth interim dividend of 1.31 pence
per Ordinary Share in respect of the period to 31 December 2022 was announced
and paid during the period.
The first interim dividend of 1.44 pence per Ordinary Share in respect of the
period to 31 March 2023 was paid in May 2023, and the second, of 1.45 pence
per Ordinary Share was announced and paid following the period end. The
dividend for the first half of the year was fully covered, however dividend
cover of 1.1x (after debt principal repayments) was lower than expected due to
the fall in power prices and below budget output of the wind portfolio in the
first half. In the second half of the year operational revenues and dividend
cover are expected to be boosted by the completion of the Irish solar
acquisitions, as well as including a full six months of production from the
Cumberhead wind farm. The Company is on track to deliver its dividend target
for financial year 2023 of 5.79 pence per Ordinary Share and expects the
dividend to be fully covered by cashflows arising from its portfolio of
assets.
Portfolio
Output for the operational performance was below budget in the period due to
unusually low wind speeds, mitigated slightly by the performance of the solar
portfolio. Revenue and EBITDA generation were also below budget due to the
reduced output and significant drops in power prices, especially in the
Nordics, since the end of 2022. However, the output and financial performance
show the significant growth in the portfolio when compared to the same period
last year, with revenues and EBITDA increasing by 61% and 32% respectively.
During the period the Company completed construction works at the Cumberhead
Onshore Wind Farm in Scotland, with the site fully operational from 31 March
2023. Significant progress has been made on the construction of the Breach
Solar Farm, which is expected to complete by the end of September, with
energisation expected in Q4 2023 subject to National Grid completing
connection works on schedule.
Discount Management
Share prices across the broad infrastructure investment fund sector are
depressed and the Company is trading at a discount to NAV. Total shareholder
return in the period was -4.9%. The Board is closely monitoring the discount,
which at present is more favourable than most of the renewables peer group,
and at this time the Board continues to believe that there are more attractive
NAV accretive opportunities than buy-backs available for investors; for
example, through repaying debt and potentially delivering capital growth from
development and construction stage investments. The Board will continue to
review all options for managing the discount to NAV.
Outlook
Despite the challenging current environment, the tailwinds for the sector
remain very strong: there are requirements for net zero, widespread public
support for renewables, and enhanced desires for better energy security. To
capitalise on these tailwinds, and to re-balance the portfolio towards assets
that offer greater opportunities for capital growth, the Investment Manager
has been reviewing the portfolio to identify candidates for asset sales. The
Company is considering the sale of a small number of assets and is seeing
strong buyer appetite which could result in cash proceeds being realised and
available for reinvestment in the coming months. Looking further ahead, we
expect to be able to raise additional funds through capital markets once
conditions improve, and we remain confident that there will be a healthy
pipeline of projects to pursue alongside the proprietary pipeline arising from
the Company's development stage investments.
Philip Austin MBE
Chair
Octopus Renewables Infrastructure Trust plc
20 September 2023
Investment Manager's Report
2 £5m £1,308m
Investments completed in the period Total allocated capital to new investments (includes future commitments) Total value of all investments
Company Developments
During the six-month period to 30 June 2023 the Company announced the
completion of two investments, hosted its first Capital Markets Event and
announced the appointment of an additional non-executive director. There was
strong cash generation from the portfolio of assets, up 34% on the equivalent
period in 2022, driven by successful delivery of projects through
construction, as well as the positive impacts of inflation linked revenues.
NAV return for the year to date was also positive despite the turbulent
economic climate.
Over the period, the Company has continued to diversify its sources of
revenue, and added further long term growth opportunities. In January 2023 the
Company entered the battery storage market with the acquisition of a 50% stake
in the Woburn Road, a 12MW/24MWh ready-to-build battery storage project in
Bedfordshire, UK. The consideration for the acquisition and the Company's
share of future construction costs is expected to be approximately £5.6
million.
In February 2023 the Company announced that its direct subsidiary ORIT
Holdings II Limited had refinanced and increased its multi-currency revolving
credit facility ("RCF"). The committed £270.8 million RCF (previously £246
million) has a three-year term to February 2026 and can be drawn in GBP, EUR,
AUD and USD. The RCF has an interest rate of 2.0% above SONIA (or equivalent
reference rate for other currencies), an improvement compared with the
previous facility's margin of 2.3%. It also has an uncommitted accordion
feature allowing the RCF to be increased in size by up to a further £150
million. The facility has been provided by a group of four lenders: National
Australia Bank, NatWest, Santander and Allied Irish Banks.
In March 2023 the Company announced that it had entered into a PPA with
Iceland Foods Limited over the electricity to be generated at Breach Solar
Farm, a c.67MW solar PV project currently under construction in
Cambridgeshire, UK. The PPA provides ORIT with a 10-year UK inflation (CPI)
indexed price for 100% of Breach's production each year and will provide
Iceland with green electricity for its operations in the UK.
On 2 March 2023, the contingent acquisition in the portfolio of Spanish PV
assets was re‑negotiated. From this date, the Company no longer has an
obligation to acquire the assets once they reach ready to build status, but
instead has the option to acquire them.
In April 2023 the Company announced that it had committed to invest up to £5
million into HYRO Energy Limited ("HYRO"), a new joint venture between ORIT
(co-invested alongside another fund managed by Octopus Energy Generation) and
Renewable Energy Systems ("RES"). HYRO has been established to develop green
hydrogen electrolysis projects in England, Scotland and Wales for industrial
offtake/consumption.
In June 2023, the Company completed on the second tranche of the follow-on
investment announced back in November 2022 of €6.25 million (£5.4m) into
Simply Blue Holdings Limited, the parent Company of the Simply Blue Group
("SBG"), an Irish developer of predominantly floating offshore wind projects.
The transaction increases ORIT's ownership to c.19%.
Also in June 2023 the Company hosted its first Capital Markets Event with the
objective to give greater insight on the Company's activities as well as the
future outlook of energy and renewables. The event was aimed at institutional
investors and sell side analysts and welcomed the participation of external
speakers. Among the topics covered were ORIT's differentiated strategy, its
approach to ESG and construction of assets.
Post period end, in July 2023, the Company announced that it had agreed to
invest up to £2 million to set up and fund a new development business,
focused on creating new ground‑mounted solar PV and co-located battery
storage assets in the UK. The business will benefit from exclusive development
services from BLC Energy Limited, a specialist developer managed by a team of
industry veterans with deep knowledge of the UK electricity grid, as well as
significant experience in securing land for building new renewable energy
projects.
Portfolio Breakdown (as at 30 June 2023)
The Company's portfolio of assets are not segmented by technology, phase or
jurisdiction for the Company's reporting purposes.
Total
Capacity Start of Remaining
Technology Country Site name (MW) Current status operations asset life Stake %
Onshore wind UK Cumberhead 50 Operational 31/03/2023 30 100%
France Cerisou 24 Operational 15/11/2022 29 100%
Sweden Ljungbyholm 48 Operational 30/06/2021 28 100%
Poland Krzecin 19 Operational 08/02/2022 28 100%
Kuslin 40 Operational 31/12/2022 29 100%
Finland Saunamaa 34 Operational 28/08/2021 28 100%
Suolokangas 38 Operational 29/12/2021 28 100%
Germany Leeskow 35 Operational 30/09/2021 29 100%
UK Crossdykes 46 Operational 30/06/2021 28 51%
Offshore wind UK Lincs 270 Operational 31/10/2013 26 15.5%
Solar UK Willburton 2 (Mingay Farm) 19 Operational 29/03/2014 21 100%
Abbots Ripton 25 Operational 28/03/2014 31 100%
Ermine Street 32 Operational 29/07/2014 21 100%
Penhale 4 Operational 18/03/2013 30 100%
Chisbon 12 Operational 05/03/2015 27 100%
Westerfield 13 Operational 25/03/2015 22 100%
Wiggin Hill 11 Operational 10/03/2015 17 100%
Ottringham 6 Operational 07/08/2014 31 100%
Breach 67 Construction n.a. n.a. 100%
France Charleval 6 Operational 26/03/2013 30 100%
Cuges-les-Pins 7 Operational 17/04/2013 30 100%
Istres 8 Operational 18/06/2013 30 100%
La Verdière 6 Operational 27/06/2013 30 100%
Brignoles 5 Operational 26/06/2013 30 100%
Saint-Antonin-du-Var 8 Operational 28/11/2013 30 100%
Chalmoux 10 Operational 01/08/2013 30 100%
Lovi 1 6 Operational 17/07/2014 31 100%
Lovi 3 6 Operational 17/07/2014 31 100%
Fontienne 10 Operational 02/07/2015 32 100%
Ollieres 1 12 Operational 19/03/2015 32 100%
Ollieres 2 11 Operational 19/03/2015 32 100%
Arsac 2 12 Operational 05/03/2015 19 100%
Arsac 5 12 Operational 30/01/2015 19 100%
Ireland Ballymacarney 54 Conditional acquisition H2 2023E 40 100%
Kilsallaghan 29 Conditional acquisition H2 2023E 40 100%
Muckerstown 48 Conditional acquisition H2 2023E 40 100%
Fidorfe 68 Conditional acquisition H2 2023E 40 100%
Harlockstown 42 Conditional acquisition H1 2024E 40 100%
Spain Spain I 44 Conditional acquisition 2024E 35 100%
Spain II 44 Conditional acquisition 2024E 35 100%
Spain III 44 Conditional acquisition 2024E 35 100%
Spain IV 44 Conditional acquisition 2024E 35 100%
Battery UK Woburn Road 12 Construction n.a. 35 50%
Developer Ireland Simply Blue n.a. Developer 19%
Finland Nordic Generation n.a. Developer 50%
UK Wind2 n.a. Developer 25%
UK HYRO n.a. Developer 25%
Portfolio Breakdown (total invested basis)(9)
Country
UK: 36%
France: 14%
Ireland: 14%
Poland: 10%:
Finland: 10%
Germany: 6%
Sweden: 6%
Developer: 3%
Spain: 2%
Technology
Onshore Wind: 45%
Offshore Wind: 12%
Solar: 40%
Developer: 3%
Battery: 0.2%
Asset phase
Operational: 92%
Construction: 6%
Developer: 3%
(9) The numbers above show the portfolio
composition broken down by total invested basis in accordance with the
Company's investment policy (including the amounts committed to the
conditional acquisitions of the Spanish and Irish solar PV assets) as at 30
June 2023. For the Spanish solar PV assets, invested amount is based on
expected purchase price excluding capital expenditure. The investments are
valued on an unlevered basis and including amounts committed but not yet
incurred. Sums may not add up due to rounding.
Portfolio Performance
Technical and Financial Performance
In the six-month period ending 30 June 2023 the Company's operational
portfolio generated 578GWh (30 June 2022: 403GWh) of electricity, 13% below
expectations predominantly due to unfavourable wind conditions across the
portfolio. Revenues of £61.7 million (30 June 2022: £38.4 million) were
generated in the period, 12% below budget, and total EBITDA across the
operating portfolio totalled £40.7 million (30 June 2022: £30.8 million).
Output has increased by 43% when compared to the same period in 2022 following
the acquisition of new investments and the successful completion of
construction assets. As a result, EBITDA of the portfolio has increased by 32%
showing significant growth in the portfolio.
Operational portfolio KPIs:
578GWh £61.7m £21.2m £40.7m
Output( ) Revenue Opex EBITDA
-13% vs budget -12% vs budget in line with budget -17% vs budget
These KPIs show the financial performance of the Company's underlying
investments and are not included in the Company's income and profit shown in
the Condensed Statement of Comprehensive Income.
Solar
ORIT's operational solar portfolio (22 sites across the UK and France)
generated 146GWh over the six-month period, in line with budget. High levels
of irradiance seen across the UK over the period were offset by reduced output
in France caused by a fire at one site, Saint-Antonin-du-Var ("SADV"). The
business interruption suffered from the fire at SADV is expected to be
recovered via insurance.
During the period, the portfolio generated revenues in line with budget of
£18.1 million. Favourable variances in operational expenditure following the
implementation of a new fixed-price O&M contract across the French assets,
lower than expected property taxes and savings on professional fees, resulted
in EBITDA for the six-month period of £13.8 million, 3% above budget.
Onshore Wind
Output for the onshore wind portfolio totalled 409GWh for the six-month period
to 30 June 2023, 17% below budget. This reduced output was predominantly due
to poor wind speeds and forced curtailment, including environmental
curtailments at Cerisou for bat protection, stops for negative pricing in
Finland and Germany and transmission grid constraint management stops under
the National Grid balancing mechanism at Crossdykes. The majority of these
stops are expected to be compensated at the same, or higher, unit rate than
production.
Lower than expected generation coupled with lower power prices across the
Nordics over the period resulted in total revenue generated by the portfolio
of £24.2 million, 27% below budget. Operational expenditure was 6% below
budget largely as a result of higher balancing grid costs at Crossdykes and
higher than expected rent and insurance costs at Leeskow, resulting in total
EBITDA of £18.8 million, 31% below budget.
Offshore Wind(10)
The Lincs offshore wind farm has produced 22.7GWh in the period, 4% below
budget, due to unfavourable wind conditions. Despite the reduced output, the
offshore wind farm benefitted from higher than expected power prices, leading
to revenues generated over the period of £19.1 million, 3% above budget.
Operational expenditure totalled £11.0 million, 7% below budget due to
increased O&M spend in the period, resulting in EBITDA of £8.1 million,
2% below budget.
(10) Figures in paragraph below reflect ORIT's ownership share of
Lincs offshore wind farm
Construction at Breach Solar Farm (UK)
Construction on the 67 MW solar farm is underway with EPC works progressing
well and expected to complete shortly, with energisation expected in Q4 2023.
Subject to updates to the grid connection agreement and planning consent, the
site has the potential to add a 50MW/100MWh battery project co-located to the
solar project. Connection of the solar farm to the transmission network is
dependent on National Grid completing connection works, which have been
delayed. At the date of this report these works are expected to be completed
during Q4, however there is a risk that they could be delayed further.
Revenues
Figure 1 on page 14 of the Interim Report illustrates the forecast revenue
breakdown by type from 2023 through to 2050. Over the next 15 years, the
portfolio benefits from substantial levels of fixed-price revenues, offering
protection against near-term wholesale price volatility.
Fixed price revenues arise both from government-backed subsidies (in the UK,
France, Germany and Poland) as well as from power price hedges, which result
from the Investment Manager's active approach to power price risk management.
A demonstration of this during the period of the latter is the 10-year fixed
price corporate PPA signed between the Breach solar farm (67 MW, UK) and
Iceland Foods. In light of the ongoing uncertainty with regard to inflation,
the Investment Manager has structured this PPA in a way which not only
provides price certainty, but also protection against inflation, which is
relatively uncommon within the corporate PPA market.
Figure 2 on page 15 of the Interim Report illustrates the share of fixed and
variable revenues for the portfolio, including projects in construction, over
the next 24 months. As at 30 June 2023, 76% of ORIT's forecast revenues over
the period to 30 June 2025 are fixed (31 December 2022: 68%). The
aforementioned corporate PPA with Iceland Foods has positively contributed to
movements in this metric, as have movements in the wholesale market.
In addition, 55% of the revenues forecast in the period to 30 June 2033 are
now explicitly inflation linked (with reference to UK RPI, UK CPI, French
inflation and Polish CPI).
Market Outlook
The future requirement for larger amounts of clean electricity generation,
coupled with an increasing focus on energy security, remain robust long-term
drivers for the market. We therefore have a buoyant outlook overall, despite
the difficult macro-economic backdrop which has characterised the first half
of 2023.
Inflation has remained high for a prolonged period, and subsequent rises to
central bank interest rates have only had a moderate impact, though there are
now signs that inflation rates may be softening to more normal target levels.
The corresponding rise in bond yields have put pressure on most real asset
investments, and renewable energy is no exception. While demand for Renewable
Energy Assets remains high, supporting valuations, investor returns have
become relatively less attractive compared to what is available through
generally lower-risk bonds. Higher discount rates are now feeding through into
renewable asset and portfolio valuations, but for ORIT the impact of this has
been significantly offset by the high degree of inflation-linked revenue,
alongside increases in the expected value of green certificates produced by
the portfolio.
Whilst wholesale power prices have cooled significantly since the peaks seen
in 2022 (a mild European winter and lower Asian demand has lowered gas
prices), they remain relatively high compared to long term historic averages.
This has been helpful to offset the significant challenges for projects that
have been exposed to inflation in construction costs and a tough supply chain
environment. Nevertheless, in the UK a high-profile offshore wind project was
recently shelved as a result of its CfD contract price being too low for the
project to remain viable and no offshore wind projects at all bid into the
fifth CfD allocation round due to the cap on prices being too low.
There are also policy changes happening. In Europe, the results of the
European Commission's consultation on electricity market reform (announced in
March) suggest that changes will be incremental, and the "Fit for 55"
initiative continues to drive support for new renewable generation projects.
The EU has also shown a desire to react to the success of the US Inflation
Reduction Act which is proving a successful way to stimulate investment
through tax incentives. In the UK, the market re-design process (the Review of
Electricity Market Arrangements, or "REMA") is ongoing and significant reform
such as a switch to locational marginal pricing (as opposed to the existing
single national market price system) is being proposed as an option. Such a
change to market pricing mechanics would require changes to the existing CfD
mechanism and to Corporate PPA markets to ensure new investment into
generation projects is not delayed. Reform of power markets is necessary as we
move to a system dominated by weather-dependent generation, but the varied
pace and direction of policy reform across different jurisdictions highlights
the value of ORIT's diverse mandate, which allows for flexibility in targeting
the most supportive markets for new investment.
Grid infrastructure remains a long-term challenge applicable to many
jurisdictions. In the UK there is evidence that National Grid are making
concerted attempts to address a backlog of over 200GW of projects waiting for
connections by changing the way that grid connection applications and queues
are handled.
The above factors have meant that market activity in the first half of 2023
has been somewhat slower than in the equivalent period in 2022, but
transactions are still taking place with strong competition, new projects are
starting construction and there is still reason to be highly optimistic over
the longer term with respect to the outlook for renewable energy investment.
One impact of the Ukraine war is that it has brought energy security firmly
into focus and this should, over a longer period of time, be a powerful
tailwind for renewables deployment alongside the requirement to achieve Net
Zero targets. Renewables are the cheapest form of electricity generation and
receive widespread public support. The rapid maturing of batteries as a
complementary technology will also assist with the deployment of intermittent
generation, in addition to storage itself being a route to further capital
deployment in its own right. Green hydrogen offers a route for renewable
electricity to service energy demand which is hard to electrify directly. We
can therefore be confident that there will be plentiful investment
opportunities for players that have the requisite expertise and resources
available to point towards an increasingly important sector.
Financing
ORIT debt summary as at 30 June 2023
Total Short term debt Long term debt
Debt as a % of GAV 46% 17% 29%
Committed Debt as a % of Total Value of all Investments 54% 21% 32%
% Hedged 59% 0% 86%
Average cost of debt 4.0% 6.7% 2.8%
Average remaining term 10.7 years 1.9 years 14.7 years
During February, the Company refinanced and increased its multi-currency RCF.
The committed £270.8m RCF has a three year term to 24 February 2026 and can
be drawn in GBP, EUR, AUD and USD and has an interest rate of 2.0% above
SONIA. It also has an uncommitted accordion feature allowing the facility to
be increased in size by up to a further £150m.
Summary of ORIT debt facilities as at 30 June 2023:
Short Term Long Term
Asset HoldCo HoldCo FR Solar FR Wind IRE Solar POL Wind GER Wind UK Offshore Wind
Debt terms
Currency GBP, EUR, AUD or USD GBP or EUR EUR EUR EUR PLN EUR GBP
Facility size £270.8m £50.0m € 125.7m € 43.2m € 91.0m PLN 318.8m € 61.0m £110.5m
Drawn at 30 June 2023 £140.4m £50.0m € 113.4m € 43.2m ‒ PLN 282.3m € 59.3m £82.3
Drawn at 30 June 2023 £m £140.4m £50.0m £97.3m £37.1m ‒ £53.3m £50.9m £82.3m
Initial Term (yrs) 3 1 18 20 20 18 18 15
Expiry Date 28/02/2026 17/11/2023 31/12/2038 30/09/2042 ‒ 31/08/2038 30/03/2041 30/09/2032
Facility date 28/02/2023 15/09/2022 22/01/2021 14/04/2021 ‒ 30/09/2021 30/09/2022 21/12/2017
Margin 2.00% 2.50% 1.25% 1.30% Y1-5 1.30% CfD period: 2.65% 0.83% - 1.75% 2023 - 2027:
Post CfD period: 2.85%
Y6-10 1.4% 1.65%
Y10+ 1.65% 2028 - 2043: 1.85%
Variable interest % SONIA SONIA EURIBOR EURIBOR EURIBOR WIBOR EURIBOR SONIA
Hedging
% hedged 0% 0% 85% 90% n/a 75% 100% 85%
Swap rate n/a n/a -0.12% 0.51% n/a 2.03% 0.12% 1.27%
Portfolio Valuation
Regular valuations are undertaken for the Company's portfolio of assets. The
process follows International Private Equity Valuation Guidelines using a
discounted cashflow ("DCF") methodology. DCF is deemed the most appropriate
methodology where a detailed projection of likely future cash flows is
possible. Due to the asset class and available market data over the forecast
horizon, a DCF valuation is typically the basis upon which renewable assets
are traded in the market. Key macroeconomic and fiscal assumptions for the
valuations are set out in Note 8 to the financial statements.
The fair value of the Company's portfolio of assets as at 30 June 2023 was
£796.1 million, reflecting acquisitions and capital injections during the
period of £64.3 million alongside changes to economic, wholesale energy and
asset specific assumptions and the return on the portfolio net of
distributions. Including the Company's and its intermediate holding companies'
other assets and liabilities of (-£187.9 million), the total portfolio value
as at 30 June 2023 is £608.2 million (£618.3 million as at 31 December 2022)
or 107.7 pence per Ordinary Share (109.4 pence per Ordinary Share as at
31 December 2022).
Figure 3 on page 19 of the Interim Report demonstrates ORIT's Equity Value
Bridge (£m).
Investments in the period
During the period, the Company announced new investments including up to £5
million into HYRO Energy Limited, a new joint venture between ORIT, Sky (a
fund managed by Octopus Energy Generation) and renewable energy company RES.
HYRO has been established to develop green hydrogen electrolysis projects and
intends to develop c.700MW of green hydrogen electrolyser capacity by 2030.
Elsewhere in the portfolio payments were made in relation to construction at
the Cumberhead Wind Farm and Breach Solar Farm. There were also consideration
payments made in relation to the developer investments in line with business
plans.
Distributions paid out of the portfolio of assets
This relates to the amount of cash paid out of the portfolio of assets and
received by the Company or its intermediate holding companies in the period
ending 30 June 2023.
Economic assumptions
During 2023, there were significant increases in inflation assumptions based
on recent independent economic forecasts and relevant government
announcements. Inflation remains significantly above 2022 levels. Inflation
forecasts for 2023 and 2024 have decreased slightly across the markets where
the Company's portfolio of assets is located, with the exception of Poland.
This has resulted in a net valuation decrease of £5.1 million.
The inflation inputs used to calculate the NAV per Ordinary Share as at 30
June 2023 has been sourced from: (i) recent consensus UK inflation forecasts
published by His Majesty's Treasury (May 2023); and (ii) inflation forecasts
for European countries published by the European Commission (May 2023).
During the period, sterling appreciated against the euro by approximately 3%,
leading to a negative valuation impact of £8.9 million. Euro-denominated
investments comprised 51% of the portfolio at the period end. The Investment
Manager regularly reviews the level of euro exposure and utilises hedges, with
the objective of minimising variability in shorter term cash flows. After the
impact of currency hedges held at Company level are taken into account, the
loss on foreign exchange reduces to £2.0 million.
The combined impact of inflation and foreign exchange movements represents a
valuation decrease of £13.9 million (excluding the impact of hedging).
Power prices and Green Certificates
Unless fixed under PPAs or otherwise hedged, the power prices used in the
valuations are based on market forward prices in the near term, followed by an
equal blend of two independent and widely used market consultants'
technology‑specific capture price forecasts for each asset. Previously an
equal blend of up to three market consultants' forecasts had been used,
however the number of forecasts in the blend ranged from one to three. As the
market consultants' forecasts are based on pan-European models, during the
first half of 2023 an exercise to align all markets to the same number of and
basis of forecasts was performed.
Heading into last winter, the key concern for European energy markets remained
gas storage. These concerns were exacerbated by prolonged outages among the
French nuclear fleet across much of 2022, the result of which was increased
gas-fired generation in order to compensate for this shortfall. However,
following the end of winter, European gas storage has realised a much better
position than had been previously expected. This has come as a consequence of
above average temperatures, reducing heating demand and, in turn, gas demand.
The continuing correlation between gas and power prices meant that power
prices, particularly in the near term, fell as a result.
More recently, French nuclear availability has rallied and applied further
downwards pressure to power markets. European power markets still, however,
remain substantially above the levels seen prior to Russia's invasion of
Ukraine. ORIT's high proportion of near-term fixed revenues means that its
revenues have been shielded, to a reasonable extent, from the fall in power
prices.
Decreases in the valuation due to updated power price forecasts were partially
offset by moderate increases to the average longer-term forecasts during the
first half of 2023. In addition, the Company had been applying additional
discounts to power price curves that were in excess of the normal discounts to
reflect the lower prices typically captured by solar and wind generators, to
reflect power price volatility and uncertainty over government regulations.
These have now been removed as this uncertainty has lifted.
The net impact of updating power price forecasts during the period led to a
valuation decrease of £13.8 million.
Green certificates (Renewable Energy Guarantees of Origin ("REGOs") in the UK
and Guarantees of Origin ("GoOs") in European markets) are sold by generators
to guarantee that purchased electricity is from a 'green' source. Prices for
green certificates have seen a significant increase over the past few years
which had not previously been reflected in the valuations, but this has now
been updated in line with third-party forecasts.
Overall, the impact of updating power price and green certificate forecasts
has led to a net £8.4 million increase in the value of the portfolio as at 30
June 2023.
Figure 4 on page 21 of the Interim Report shows the portfolio's forecasted
power only generation weighted prices ("Power only GWP") and the generation
weighted prices including subsidies and additional benefits ("Total GWP") for
the period from 2023 to 2050, expressed in £/MWh, real 2023 money. The curves
are blended across the markets which ORIT has invested in, weighted by the
portfolio generation mix and converted into £/MWh using the FX spot rate as
at 30 June 2023. On average, the graph shows Power only GWP of £54.74/MWh in
the period 2023-2027 and £39.35/MWh in the period 2027-2050. In addition to
this, where assets are eligible to sell green certificates and these are not
bundled with power under PPAs (or otherwise sold at a fixed price), the
valuations assume an average price of £5.12 per REGO and €4.65 per GOO in
the period 2023‑2027 and £3.62 per REGO and €4.11 per GoO in the period
2028-2050.
Construction Risk Premium
A valuation increase of £2.6 million resulted from the unwind of a portion of
the construction risk premium included in the discount rate applied to the
Cumberhead Wind Farm and the Breach Solar Farm, both in the UK, recognising
the significant construction progress made by the end of the period.
As at 30 June 2023, construction at the Cumberhead Wind Farm was substantially
complete with only final commissioning activities remaining. Breach Solar Farm
remains under construction and it is estimated that further value will be
crystallised as the project become substantially de-risked through the
completion of construction milestones.
Change in discount rates
A range of discount rates are applied in calculating the fair value of the
investments, considering the location, technology and lifecycle stage of each
asset as well as leverage and the split of fixed and variable revenues. The
weighted average discount rate as at 30 June 2023 is 7.7%, an increase of 0.2%
since 31 December 2022. The increase in discount rate over the first half of
the year, reflects that, whilst bond yields have fallen slightly in Europe,
they remain significantly higher than they were at the start of 2022 and are
continuing to increase in the UK.
31-Dec-21 30-Jun-22 31-Dec-22 30-Jun-23
UK Assets
Levered IRR 5.80% 5.90% 7.50% 7.60%
Gross Asset Value (GAV) 174 256 440 470
Leveraged % GAV 0% 15% 19% 17%
European Assets
Levered IRR 7.20% 6.80% 7.50% 7.80%
Gross Asset Value (GAV) 564 568 633 650
Leveraged % GAV 28% 32% 40% 37%
Total Portfolio
Levered IRR 6.80% 6.50% 7.50% 7.70%
Gross Asset Value (GAV) 738 824 1,073 1,120
Leveraged % GAV 22% 24% 31% 29%
Leveraged % GAV (plc - including short term debt) 22% 24% 42% 46%
Competition for renewable assets has remained high, dampening the extent to
which benchmark rate rises have fed through into asset discount rates.
Nevertheless, the Board and the Investment Manager considered it appropriate
to reflect an increase in the UK discount rates by 50bps. The impact of the
change in discount rates are discussed further in the section below. The
increases to these discount rates resulted in a decrease of -£14.1 million in
the portfolio valuation.
Balance of portfolio return
This refers to the balance of valuation movements in the period excluding the
factors noted above and represents an uplift of £25.3 million.
Of this, £25.0 million reflects the net present value of future cashflows
being brought forward from the valuation date used for the acquisitions to 30
June 2023.
£1.0 million of the increase resulted from entering into a 10-year
index-linked Power Purchase Agreement between Breach Solar Farm and Iceland
Foods Limited.
These movements were partially offset by financial and technical performance
during the period resulting in a net negative valuation impact of -£3.2
million.
The remaining amount of £2.5m relates to the reduction in the UK Generation
Levy liability as a result of the aforementioned decrease in UK power prices,
offset by updating business rates for UK assets and other smaller adjustments
at the project company level.
Portfolio valuation sensitivities
Figures 5 and 6 on pages 23-24 of the Interim Report show the impact of
changes to the key input assumptions on NAV with the X axis indicating the
impact of the sensitivities on the NAV per share. The sensitivities are based
on the existing portfolio of assets as at 30 June 2023 as well as cash flows
of conditional acquisitions, and as such may not be representative of the
sensitivities once the Company is fully invested and geared. For each of the
sensitivities shown, it is assumed that potential changes occur independently
with no effect on any other assumption. As such the sensitivities also do not
capture any potential benefit of a portfolio effect through diversification.
Discount rate
A range of discount rates are applied in calculating the fair value of the
investments, considering the location, technology and lifecycle stage of each
asset as well as leverage and the split of fixed and variable revenues. A
50bps increase in the levered cost of equity of the portfolio equates to an
increase in the implied WACC of 0.29%, holding the cost of debt and leverage %
constant. The weighted average discount rate as at 30 June 2023 is 7.7% (31
December 2022: 7.5%). The increase in the discount rate by approximately 20
basis points is primarily driven by the aforementioned increase to UK discount
rates by approximately 50bps, offset by the unwind of the construction
premiums included in the discount rate applied to the Cumberhead Wind Farm and
Breach Solar Farm. These movements were also partially offset by a decrease in
the underlying discount rate reflecting the greater proportion of fixed cash
flows arising from entering into the Power Purchase Agreement between Breach
Solar Farm and Iceland Foods.
Volumes (Energy Yield)
Each asset's valuation assumes a "P50" level of electricity output based on
yield assessments prepared by technical advisors. The P50 output is the
estimated annual amount of electricity generation that has a 50% probability
of being exceeded - both in any single year and over the long term - and a 50%
probability of being underachieved. The P50 provides an expected level of
generation over the long term.
The P90 (90% probability of exceedance over a 10-year period) and P10 (10%
probability of exceedance over a 10-year period) sensitivities reflect the
future variability of wind speed and solar irradiation and the associated
impact on output, along with the uncertainty associated with the long-term
data sources used to calculate the P50 forecast. The sensitivities shown
assume that the output of each asset in the portfolio is in line with the P10
or P90 output forecast respectively for each year of the asset life.
Power price curve
As described above the power price forecasts for each asset are based on a
number of inputs. The sensitivity assumes a 10% increase or decrease in power
prices relative to the base case for each year of the asset life.
Inflation
Sensitivity 1: The sensitivity assumes a 0.5% increase or decrease in
inflation relative to the base case for each year of the asset life.
Sensitivity 2: The sensitivity assumes a 2.0% increase or decrease in
inflation during 2023/2024 relative to the base case of the asset.
Foreign exchange
The Company seeks to manage its exposure to foreign exchange movements to
ensure that (i) the sterling value of known future construction commitments is
fixed; (ii) sufficient near term distributions from non-sterling investments
are hedged to maintain healthy dividend cover; (iii) the volatility of the
Company's NAV with respect to foreign exchange movements is limited; and (iv)
all settlements and potential mark-to-market payments on instruments used to
hedge foreign exchange exposure are adequately covered by the Company's cash
balances and undrawn credit facilities.
Of the portfolio as at 30 June 2023, 51% of the NAV is euro denominated. Euro
hedges are in place for all construction payments as well as forecast cash
generation from all Euro based investments for the first three years of
operations. The sensitivity highlighted in Figure 6 on page 24 of the Interim
Report shows the impact on NAV per share of a +/- 10% movement in the GBP:EUR
exchange rate.
Financial Review
The financial statements of the Company for the six-month period ended 30 June
2023 are set out in the Interim Report . These financial statements have been
prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 and the applicable legal
requirements of the Companies Act 2006. In order to continue providing useful
and relevant information to its investors, the financial statements also refer
to the "intermediate holding companies", which comprise the Company's wholly
owned subsidiary, ORIT Holdings II Limited and its indirectly held wholly
owned subsidiaries ORIT UK Acquisitions Limited and ORIT Holdings Limited.
Net assets
Net assets have decreased from £618.3 million at 31 December 2022 to £608.2
million at 30 June 2023, largely due to a decrease in the fair value of
portfolio of assets as described in the Portfolio Valuation section above.
The net assets of £608.2 million comprise the fair value of the Company's
investments of £608.7 million and the Company's current assets balance of
£1.1 million, offset by £1.6 million of Company liabilities.
Included in the fair value of the Company's investments are net liabilities of
£187.5 million (31 December 2022: £135.0 million) held in the intermediate
holding companies. These comprise cash (£3.8 million), the amortised
transaction costs associated with the revolving credit facility at ORIT
Holdings II Limited (£3.4 million) and the positive mark-to-market value of
the FX hedges taken out to minimise the volatility of cashflows associated
with non-UK portfolios (£0.6 million), which are offset by bank, other loans
and interest (£192.0 million), accrued transaction costs (£1.6 million) and
other net liabilities of £1.8 million.
Results of the Company
30 June 31 December
2023
2022
£m
£m
Fair value of portfolio of assets 796.1 743.7
Cash held in intermediate holding companies 3.8 4.5
Bank loans and accrued interest held in the intermediate holding companies (192.0) (128.0)
Fair value of other net assets/(liabilities) in intermediate holding companies 0.8 (11.4)
Fair value of Company's investments 608.7 608.8
Company's cash 0.3 10.6
Company's other net liabilities (0.7) (1.1)
Net asset value 608.2 618.3
Number of shares 564.9 564.9
Net asset value per share (pence) 107.7 109.4
Income
In accordance with the Statement of Recommended Practice: Financial Statements
of Investment Trust Companies and Venture Capital Trusts ("SORP") issued in
July 2022 by the Association of Investment Companies ("AIC"), the statement of
comprehensive income differentiates between the 'revenue' account and the
'capital' account, and the sum of both items equals the Company's profit for
the period. Items classified as capital in nature either relate directly to
the Company's investment portfolio or are costs deemed attributable to the
long-term capital growth of the Company (such as a portion of the Investment
Manager's fee).
In the six-month period ending 30 June 2023, the Company's operating income
was £9.1 million (HY 22: £68.5 million), including interest income of £12.9
million (HY 22: £10.8 million), dividends received of £9.8 million (HY 22:
£11 million) and net loss on the movement of fair value of investments of
£13.6 million (HY 22: gain of £46.7 million). The operating expenses
included in the statement of comprehensive income for the period were £3.6
million (HY 22: £4.3 million). These comprise £2.8 million Investment
Manager fees (HY 22: £2.8 million) and £0.7 million operating expenses (HY
22: £1.5 million). The details on how the Investment Manager's fees are
charged are as set out in Note 13 to the financial statements.
Ongoing charges
The ongoing charges ratio ("OCR") is a measure, expressed as a percentage of
average net assets, of the regular, recurring annual costs of running the
Company. It has been calculated and disclosed in accordance with the AIC
methodology, as annualised ongoing charges (i.e., excluding acquisition costs
and other non-recurring items) divided by the average published undiluted Net
Asset Value in the period. For the year ended 31 December 2022, the ratio was
1.12% and it is anticipated that the full-year ratio for the year ended 31
December 2023 will remain at a similar level.
Dividends
During the period, interim dividends totalling £15.5 million were paid (1.31p
per share paid in respect of the quarter to 31 December 2022 in February 2023
and 1.44p per share paid in respect of the first quarter of 2023 in May 2023).
Post period end, a further interim dividend of 1.45p per share (totalling
£8.2 million) was declared on 7 August 2023 and paid on 1 September 2023 in
respect of the quarter to 30 June 2023 to shareholders recorded on the
register on 17 August 2023. As such, dividends totalling £16.3 million have
been paid in respect of the six-month period under review. These dividends are
fully covered from the operational cash flows of the underlying portfolios.
Dividend cover - operational cash flows (portfolio level)
Six-month period ending 30 June 2023
Actual
June 2023
£m
Operational cash flows excluding Irish Solar
UK Solar 7.8
French Solar 6.0
Swedish Wind 3.2
Finnish Wind 4.2
Polish Wind 5.1
French Wind 1.7
UK Wind 3.1
German Wind 1.5
UK Offshore Wind 8.1
40.7
Interest payable on external debt
French Solar, Polish Wind, French Wind, German Wind, UK Offshore Wind (4.5)
Operational cash flow pre debt amortisation 36.2
Company and intermediate holding company level expenses (8.1)
Net cash flow from operating activities pre debt amortisation 28.1
Dividends paid in respect of the period 16.3
Portfolio level operational cash flow dividend cover pre debt amortisation 1.72
External debt amortisation
French Solar, Polish Wind, French Wind, German Wind, UK Offshore Wind (10.3)
Net cash flow from operating activities 17.8
Dividends paid in respect of the period 16.3
Portfolio level operational cash flow dividend cover 1.1
Impact Report
As at 30 June 2023
£1,308m 1,801GWh 536k
Total value of all Potential renewable Equivalent homes powered
investments - all electricity by clean energy(11)
committed into renewables
598k 2,935k 328k
Estimated tonnes of Equivalent new trees Equivalent cars off the road to avoid the same carbon(14)
carbon avoided(12) required to avoid the
same carbon(13)
All metrics are calculated based on ORIT's share of the estimated annual
production of the whole portfolio once fully constructed, including the
conditional Irish acquisition but excluding the conditional acquisition in
Spain.
(11) Homes Powered is based on latest regional average household
consumption in the region of production
(12) Carbon avoided is calculated using the International Financial
Institution's approach for harmonised GHG accounting
(13) Trees equivalent is based on UK Woodland and Peatland carbon
statistics
(14) Equivalent cars is calculated using a factor for displaced cars
derived from the UK government GHG Conversion Factors for Company reporting
Foreword
In the first half of 2023, the world witnessed a stark and sobering reality as
global air and ocean temperatures reached unprecedented new highs, as reported
by the Copernicus Climate Change Service in July(15). This intensifies the
urgency for ensuring that governments' commitments to decarbonisation are met.
As the growth of renewable energy further accelerates, we recognise the
pivotal role it can play in realising our vision of a net zero society.
With November's COP28(16) summit on the horizon, we draw inspiration from the
lessons of the previous year's summit, in particular emphasising the need for
immediate action and the vital importance of safeguarding vulnerable
communities and promoting a "Just Transition". The July 2023 European heatwave
and the impact of the subsequent wildfires are a clear indication of the
urgency of this situation. COP28 marks the conclusion of the first formal
assessment of countries' progress towards achieving the targets set by the
Paris Agreement(17) (known as "the Global Stocktake"). ORIT's investors play a
crucial role in this collective endeavour, driving lasting positive change
through investments in renewable infrastructure and development companies. Our
Investment Strategy is designed not only to maximise financial returns but
also to foster a Just Transition, ensuring that communities are not left
behind in the shift to a low-carbon economy. Through educational initiatives
as outlined in the "People" case study of this impact report, ORIT actively
contributes to the well-being and empowerment of the communities we serve.
ORIT's responsibilities also extend to the protection of biodiversity at our
sites. A report from the Intergovernmental Science-Policy Platform on
Biodiversity and Ecosystem Services (IPBES) described the protection of
biodiversity against loss and the mitigation of climate change as "mutually
supporting goals"(18). The climate change and ecological emergencies are
interconnected and must be addressed in parallel. Biodiversity restoration is
an intrinsic part of society's journey to successfully limiting emissions and
adapting to climate impacts. Restoration enhances carbon sequestration,
promotes ecosystem resilience, and supports sustainable practices. We aim to
reduce our ecological footprint and, wherever possible, actively enhance
biodiversity. ORIT's commitments to restoring natural spaces and promoting
sustainable land management, whilst they could appear modest individually,
collectively make a meaningful contribution to national initiatives aimed at
protecting biodiversity.
The perception of biodiversity restoration within the industry is undergoing a
significant shift, transitioning from mere ecological concern to a crucial
aspect of risk management. The loss of biodiversity threatens the health of
ecosystems that provide other services to the economy. Even by the World
Bank's conservative estimates, the degradation of these natural processes
could see global GDP reduce by $2.7 trillion/year compared to projected levels
by 2030. ORIT embraces the emerging regulations aimed at addressing these
unaccounted risks, such as the Taskforce on Nature-related Financial
Disclosures (TNFD), that has now gone through final consultation stages. We
are pleased to provide an initial overview of the biodiversity dependencies
that influence ORIT's portfolio alongside the proactive measures we have in
place to mitigate these risks.
(15)
https://climate.copernicus.eu/july-2023-global-air-and-ocean-temperatures-reach-new-record-highs
(16) COP28: The 28th Conference of the Parties (COP28) is a major
international gathering where countries meet to address global environmental
issues, focusing on climate change. It's a key event under the United Nations
and shapes efforts to tackle climate change through negotiations and
agreements.
(17) Paris Agreement: The Paris Agreement, established in 2015 under
the UNFCCC, unites nations in combatting climate change by setting goals to
limit global temperature rise, striving to keep it under 2 degrees Celsius
above pre-industrial levels, with an even more ambitious target of
1.5 degrees Celsius.
(18)
https://www.ipbes.net/sites/default/files/2021-06/20210609_workshop_report_embargo_3pm_CEST_10_june_0.pdf
This interim impact report touches on some of the ESG and impact related
initiatives that have occurred during the period and we are excited to share
further information with ORIT's investors in our 2023 Annual Report. As
stewards of positive change, ORIT's Impact Strategy continues to evolve in
line with the needs of society and the environment. I am proud to share that
ORIT's sustained efforts have resulted in ORIT being shortlisted as a finalist
for "Best Impact Fund" in Investment Week's 2023 Sustainable Investment
Awards. We look forward to continuing to create meaningful and lasting
positive impact for our investors through these investment endeavours.
Philip Austin
Impact Strategy
ORIT is an impact fund with a core impact objective to accelerate the
transition to net zero through its investments, building and operating a
diversified portfolio of Renewable Energy Assets.
ORIT enables individuals and institutions to invest directly into a portfolio
of Renewable Energy Assets which generates a yield through renewable energy
generation. The renewable energy generated supports the transition to net zero
by replacing unsustainable energy sources with clean power. This intended
outcome is the Company's core impact objective.
The ability to invest in Renewable Energy Assets is a powerful tool, which not
only enables people to invest in line with their values, but also drives
change; facilitating the transition to a more sustainable future. More
information on this "Theory of Change" can be found in the Company's Impact
Strategy.
The Impact Strategy also considers all of ORIT's activities through three
lenses - Performance, Planet and People - to ensure that our activities
integrate ESG risks and bring to life additional impact opportunities. The
Impact Strategy defines ESG and Impact as:
● ESG - a vital risk management approach to identify and mitigate a
range of potential issues to protect, and hopefully enhance, the long-term
value of our investments
● Impact - what an investment does to the environment or society
The Company makes long-term investments that require a long-term view to be
taken both in initial investment decisions and in subsequent asset management;
adopting lasting and sustainable business practices. Beyond the core objective
of accelerating the transition to net zero, ORIT seeks to generate additional
impact through Performance, Planet and People impact initiatives.
More details and background information related to the Company's Impact
Strategy including information on our four impact themes of Stakeholder
engagement, Equality and Wellbeing, Innovation and Sustainable momentum can be
found in the separately published Impact Strategy.
Performance
Impact Objective: Build and operate a diversified portfolio of Renewable
Energy Assets, mitigating the risk of losses through robust governance
structures, rigorous due diligence, risk analysis and asset optimisation
activities to deliver investment return resilience and the maximum amount of
green electrons.
£1,308m 1,801GWh 38
Total value of investments of potential annual Assets
- committed into renewable energy
renewables generation, 1,421GWh
of which has and will be
additional generation
from construction assets(19)
Delivering the investment objective
The Board views the Impact Strategy as integral to the delivery of the core
investment objective, and not as a cost to the Company. ESG processes and
policies are a prudent risk management tool that improve the financial
performance of the Company while reducing risks. The ultimate aim is to
maximise the number of green electrons produced by the portfolio.
(19) Metric calculated based on an estimated annual production of the
portfolio once fully constructed, including the conditional Irish acquisition
but excluding the conditional acquisition in Spain.
Integration into the investment cycle
Every investment ORIT makes is assessed against our Performance, Planet and
People framework through an ESG scoring matrix. This ensures that our
investments adhere to ORIT's ESG Policy and minimum scoring threshold for
investment approval, which all transactions met in the period.
Aligning to Sustainable Regulatory Disclosures
● Task Force on Climate-related Financial Disclosures
ORIT is a supporter of the recommendations of the Task Force on
Climate-related Financial Disclosures and makes a TCFD disclosure in the
Annual Report.
● Sustainable Finance Disclosures Regulation ('SFDR')
ORIT is classified as an Article 9 Product. The core sustainable investment
objective of the Company is to accelerate the transition to net zero through
its investments, building and operating a diversified portfolio of Renewable
Energy Assets to help facilitate the transition to a more sustainable future.
This directly contributes to climate change mitigation. ORIT's SFDR - related
disclosures, including its Principal Adverse Impact statement is available on
its website.
● EU Taxonomy
ORIT has an aim of 100% EU Taxonomy aligned investments. A formal breakdown of
ORIT's investments alignment to the EU Taxonomy's environmental objectives and
"Do no significant Harm" criteria will be included in the Annual Report.
Performance initiatives
Delivering investment performance is fundamental to the Impact Strategy,
supporting the transition to net zero and to being an impact fund. Asset
optimisation initiatives, alongside robust ESG risk management, aim to improve
financial resilience and overall performance of the Company.
Projects
Our Investment Manager works with key partners to mitigate production risks
and maximise performance of ORIT's operational assets. Production losses are
investigated through a root cause analysis, delivering appropriate actions
that improve technical performance. This active management approach has
mitigated potential performance risks for ORIT over this period.
Project Outcome
Reduced repair times at Ottringham: Following strong performance by an A four-year extension to the O&M contract term will help facilitate smooth
O&M, OEGEN has extended their contract term, including enhanced terms on running of operations at the 6MWp site. Enhanced terms for remediation
remedial works. timeframes will require the O&M to fix all material outages within four
days. This new clause will minimise downtime at the site, improving overall
performance.
Stakeholder Engagement
Capacity Market scheme at Cumberhead: ORIT applied for the Scottish wind farm Successfully obtained short-term (2023-2024) and long-term (2026-2042)
to participate in the Capacity Market scheme. Capacity Market Agreements, securing additional injection of revenue over the
asset's lifetime. This scheme with the grid will additionally support the
green transition of the UK's electricity supply.
Sustainable Momentum
Improved analytics across the wind portfolio with i4see An advanced analytics software, i4see, is currently being rolled out across
the wind portfolio to facilitate identification of underperformance in
turbines that may not otherwise be found. Access to this data allows for
enhancements to be implemented that aim to optimise production and reduce the
downtime of the assets.
Innovation
Planet
Impact Objective: Consider environmental factors to mitigate risks associated
with the construction and operation of assets, enhancing environmental
potential where possible.
598k
84%
Equivalent tCO2 avoided(20) Generating sites on
renewable import tariffs
(20) Metrics based on an estimated annual production of the whole once
fully constructed, including the conditional Irish acquisition but excluding
the conditional acquisition in Spain. Carbon avoided is calculated using the
International Financial Institution's approach for harmonised GHG accounting
Maximise our positive environmental impact
ORIT recognises the fundamental role that renewable energy plays in meeting
net zero emissions targets, with an inherently positive impact on the
environment. Investing in Renewable Energy Assets enables investors to
generate returns from this transition to a cleaner future and directly support
climate change ambitions. On admission to the London Stock Exchange ("LSE"),
ORIT was awarded the LSE's Green Economy Mark(21), recognising the Company as
a significant contributor to the transition to a zero-carbon economy. This
prestigious recognition continues to be awarded to ORIT every year,
underscoring ORIT's consistent commitment to environmental sustainability and
its ongoing contributions to the green economy.
(21) The Green Economy Mark identifies London-listed companies and
funds that generate between 50% and 100% of total annual revenues from
products and services that contribute to the global green economy.
Carbon measurement and reporting
In its 2022 Annual Report, ORIT disclosed its third measurement of its carbon
footprint. Throughout 2023, ORIT is collaborating with outsourcers and
contractors to enhance data collection methods for more precise measurements.
As the company's portfolio expands, ORIT is committed to reducing its relative
emissions through stakeholder engagement and proactive asset management.
Case Study:
ORIT Planet Case Study: Assessing Biodiversity Risk
Loss and/or depletion of biodiversity is increasingly being recognised as an
issue of risk rather than corporate responsibility. Frameworks, such as the
Taskforce of Nature-related Financial Disclosures (TNFD), which encourage the
disclosure of biodiversity risk for investors, are expected to form part of a
new wave of regulations aimed at reorientating capital flow towards nature
positive solutions.
ORIT's "Planet" objective already aims to consider and mitigate biodiversity
risks associated with the construction and operation of assets.
What is biodiversity risk?
Biodiversity risk is informed by "dependencies" and "impacts":
● Dependency on biodiversity: A decline in ecosystem services (e.g.
pollination) can create physical risk to businesses that depend on them,
leading to cost increases or loss of revenue.
● Impact on biodiversity: Negative impacts on biodiversity caused by a
business's activities can create regulatory risk (e.g. environmental
non-compliance leading to fines) or reputational risks (e.g. environmental
misconduct leading to decreased brand value).
ORIT already mitigates its "impact on biodiversity" risk by:
● Ensuring a robust HSE management system is in place across its
assets and associated third parties, monitoring environmental incidents, and
sharing learnings where appropriate to minimise frequency of future incidents.
● Managing assets in line with the Investment Manager's biodiversity
mission statement(22) and policies, ensuring environmental impacts are
assessed by ecologists, and implementing site-specific mitigation measures as
part of normal land-management services.
● Implementing additional biodiversity initiatives at the sites that
support local ecosystem services, such as beehives and wildflower meadows (see
case study in the Interim Report ).
Measuring "dependency on biodiversity" is not a new concept, but the
systematic approach to quantifying and assessing these dependencies has gained
prominence in recent years due to the increasing recognition of the importance
of biodiversity conservation and sustainable development. Frameworks like TNFD
and supporting tools (such as WWF's Biodiversity Risk Filter(23) and
ENCORE(24)) have been developed to help institutions measure these
dependencies. Sectors differ in their dependencies due to their different
business activities. For example, an agricultural business will have a
dependency on pollination ecosystem services whereas a telecommunications
business might not.
The Investment Manager has carried out an initial analysis to explore the
potential dependencies that renewable energy technologies in ORIT's portfolio
face.
(22)
https://a.storyblok.com/f/154679/x/02325cb1f1/biodiversity-statement.pdf
(23) https://riskfilter.org/biodiversity/home
(24) ENCORE is a tool developed by the Natural Capital Finance
Alliance in partnership with UNEP-WCMC. The tool highlights the most material
nature capital assets of specific sub-industries and production processes.
(https://encore.naturalcapital.finance/en/explore?tab=dependencies)
The WWF and Encore tools have highlighted climate regulation, flood and storm
protection and mass stabilisation and erosion control as high materiality
dependencies for solar and wind assets. This suggests that the degree of
protection offered by these ecosystem services are critical and irreplaceable
for the continued generation of wind and solar energy. Whilst the degree of
protection offered will vary based on the exact location of the assets, the
Investment Manager is confident that these risks are reflected in their
current risk mitigation strategy, with mitigation measures already considered
(see Table 1).
Table 1: Solar and wind biodiversity dependencies against ORIT's existing
considerations.
Biodiversity dependency Existing consideration
Climate regulation: Nature regulates the climate through mechanisms like ORIT's sustainable objective is to accelerate the transition to a net zero
carbon sequestration, ocean circulation, and the water cycle, which help future, mitigating the effects of climate change. ORIT considers the impacts
maintain a stable environment for life. The impact of these processes on of climate change as part of normal risk management, as outlined in ORIT's
renewable energy production can be significant, as wind and solar rely on TCFD disclosure in the latest Annual Report.
specific weather patterns and climatic conditions.
Flood and storm protection: Natural and planted vegetation offer flood and Flood risk is usually assessed as part of the site's feasibility assessment
storm protection by providing shelter, and reducing or weakening the intensity and permitting process. Mitigation measures implemented where necessary and
and impact of floods and storms. insurance cover secured.
Mass stabilisation and erosion control: Ground movement, landslides and For solar, spot inspections would be included in site visits to identify any
subsidence could damage solar and wind sites, impact the longevity of the movement to panel structures. If there is movement the structures can be
site, equipment alignment, and have health and safety implications. re-enforced.
Wind farms with potential subsidence risk undergo stability assessments. For
instance, wind sites on peatland conduct annual peat slide assessments to
identify areas of concern. Risk assessment and monitoring plans are
established during the early phases of the wind project. In the UK, these
assessments follow guidelines outlined by SEPA and EA, while other EU
countries comply with regulations from their local authorities.
The Investment Manager remains committed to evaluating the biodiversity risks
connected with ORIT's assets, with a focus on aligning these assessments with
the guidelines outlined by the TNFD. Initial analysis suggests that the
primary dependencies that may significantly impact the portfolio are accounted
for in current risk management processes. Following TNFD guidelines for
additional disclosures is expected to improve transparency, standardization,
and facilitate a better understanding of the portfolio's biodiversity risk
exposure.
Planet Initiatives
Maximising the Company's positive contribution to the environment is core to
the Impact Strategy. Planet initiatives contribute to solutions to combat
climate change.
Nurturing Nature at Chisbon Solar Farm, a photographic case study.
Chisbon Solar Farm in Clacton on Sea demonstrates the integration of renewable
energy technology and environmental conservation. This 12 MWp site, previously
arable agricultural land, has been transformed into a thriving solar farm with
a focus on enhancing biodiversity. By introducing new bees into the ecosystem
and promoting sustainable land management, Chisbon showcases how renewable
energy projects can contribute positively to nature and provide valuable
educational opportunities for local schools.
Ecological Enhancements:
Once dominated by monoculture crops, Chisbon now features a rich ecosystem
thanks to thoughtful ecological enhancements. A blend of conservation
wildflower seeds was sown to attract wildlife, and local tree and hedgerow
species were planted to expand species diversity and strengthen the site
boundary.
Bee Integration and Impact:
In January 2023, Chisbon introduced four beehives, with bees successfully
introduced in May 2023. Thriving wildflower meadows help sustain the bees,
enabling efficient pollination of surrounding plant life. This integration
will continue to support ecosystem services in the local area.
Sustainable Land Management:
Chisbon embraces sustainable land management practices, primarily employing
organic methods and minimizing herbicide use for weed control. This commitment
to eco-friendly practices ensures minimal ecological impact.
Environmental Education Initiatives:
Chisbon also serves as an educational hub, hosting visits for local schools.
During a visit in May 2023, 60 students from Years 5 and 6 engaged in
activities focused on solar farm features and biodiversity. They observed
beehives and learned about site management and biodiversity conservation from
the Landowner.
Conclusion:
Chisbon Solar Farm clearly demonstrates coexistence of renewable energy and
environmental stewardship. Its efforts to enhance biodiversity through bee
integration, sustainable land management, and educational initiatives set an
example for other renewable energy projects on how renewable energy
initiatives can further contribute towards a greener future.
Who? How much? What? Impact Theme
Chisbon Solar Farm · 4 beehives · Ecological Enhancement Sustainable Momentum
· 16.9 Ha of wildflowers · Bee Integration and Impact
· 400m of hedgerow with trees · Sustainable Land Management
· 60 students · Environmental Education Initiatives
UN SDG specific contributions
7 Affordable and clean energy
SDG 7.2 & 7a Increase renewable energy in the mix and stimulate
investments into the renewable sector:
Provided renewable energy to the grid and provided renewable investment
opportunities. Construction underway to add renewable energy capacity.
13 Climate Action
SDG 13.1 Strengthen resilience and adaptive capacity to climate related
hazards and natural disasters:
Technical due diligence carried out on all new investments. Biodiversity and
habitat management plans proposed for most sites as planning requirement.
Physical climate change risks considered and mitigated (e.g., flood risk
mitigation strategy) and transition risks forecasted (e.g., low power price
scenarios).
15 Life on Land
SDG 15.1 & 15.5 Conserve ecosystems and threatened species and take action
to reduce the loss of biodiversity and degradation of habitats:
Threatened and non-threatened species monitored through ecological surveys and
biodiversity plans. Additional biodiversity initiatives implemented beyond
planning requirement, such as the integration of beehives at Chisbon.
People
Impact Objective: Evaluate social considerations to mitigate risks and promote
a 'Just Transition' to clean energy.
327 232 0
Students benefits from Estimated full-time RIDDORs
social initiatives equivalent ("FTE")
jobs created
Managing our impact on society
Investing in renewable energy yields benefits for individuals and society as a
whole. By investing into climate change mitigation, investors are helping to
prevent one of the biggest threats of our time. Climate change impact is
having a growing impact on society in the fields of peace, security and
defence. As Jean-Pierre Lacroix, Under-Secretary-General for Peace Operations,
said "environmental degradation and extreme weather events - amplified by
climate change - have increasingly challenged the United Nations peace
operations' ability to carry out their mandates."
It is also important that the Company mitigates any potential adverse impacts
and risks to people as the Company invests, constructs and operates our
portfolio of renewable assets. ORIT has clear policies and governance
structures to achieve this. Some social factors that ORIT and our Investment
Manager consider to be the most important during due diligence and ongoing
monitoring of assets include:
· Health and safety
· Social licence
· Local employment
· Diversity and inclusion
ORIT's statement on principal adverse impacts can be found on its website
here:
(https://uploads-ssl.webflow.com/64a55577b7ba05bd07aebc7c/64c0125d37e5f743fe905f4a_20230630%20Principle%20Adverse%20Impacts%20Statement%202022%20Annex%201.pdf)
https://uploads
(https://uploads-ssl.webflow.com/64a55577b7ba05bd07aebc7c/64c0125d37e5f743fe905f4a_20230630%20Principle%20Adverse%20Impacts%20Statement%202022%20Annex%201.pdf)
- ssl.webflow.com/64a55577b7ba05bd07aebc7c/64c0125d37e5f743fe905f4a_2023063
(https://uploads-ssl.webflow.com/64a55577b7ba05bd07aebc7c/64c0125d37e5f743fe905f4a_20230630%20Principle%20Adverse%20Impacts%20Statement%202022%20Annex%201.pdf)
0 Principle Adverse Impacts Statement 2022 Annex 1.pd
(https://uploads-ssl.webflow.com/64a55577b7ba05bd07aebc7c/64c0125d37e5f743fe905f4a_20230630%20Principle%20Adverse%20Impacts%20Statement%202022%20Annex%201.pdf)
f
Health and Safety Approach
ORIT recognises its health and safety responsibilities and keeping people safe
remains its highest priority. ORIT has put arrangements in place with its
Investment Manager to ensure that health and safety risks are managed
effectively.
The Investment Manager employs specialist Health, Safety and Environment
('HSE') consultants and additionally has employed a Head of Health and Safety
to ensure that health and safety procedures are embedded into ORIT's model of
investing and managing assets.
This integration is achieved through:
· Technical compliance standards
· Diligence and benchmarking of contractors
· Audits and ongoing oversight
· Data collection and continuous improvement
Where minority stakes in businesses are held, the Investment Manager still
tracks performance via Board meeting attendance.
The Investment Manager actively tracks and monitors various accident and
incident classifications from events where there is a statutory requirement to
report to the UK Health & Safety Executive (RIDDORs) or other local
government bodies. This includes incidents classified as accidents, near
misses, dangerous occurrences, and general safety observations.
Where accidents occur on overseas assets that would merit reporting as a
RIDDOR if they were to occur in the UK, we flag them as "RIDDOR-like" events.
All notifications of HSE incidents are investigated by the Investment
Manager's in‑house asset management team and where necessary the 3rd-party
HSE advisor and the Investment Manager ensure that out-sourced HSE managers
close out all incidents with root cause analysis and establish lessons learned
and where necessary change processes and procedures. Where weaknesses in
underlying procedures and systems are identified, the HSE advisor works with
businesses to implement appropriate remedies.
RIDDORs Lost time injuries (>7 days) Near misses Personal injuries Minor equipment damage incidents
0 0 11 3 8
The overall safety performance was positive during the reporting period, with
no significant risks to highlight. There were three minor first-aid injuries
to report across the portfolio, as well as eleven near misses, eight
damage-only incidents, and four environmental incidents. Incidents have been
satisfactorily resolved, and applicable lessons have been learned.
Diversity and Inclusion
Equality and wellbeing are fundamental to ORIT's impact ambitions. This is
reflected in our Company policies and in the way that the Company operates
externally, through understanding the approach that our third party providers
take to diversity and inclusion, and suggesting ways to improve this wherever
possible.
The Company's Board is made up of a complementary mixture of social
backgrounds, gender diversity and ethnicity. The Company' complies with the
FCA's diversity targets on the representation of women and ethnic minorities:
· At least 40% of the board should be women.
· At least one of the senior board positions or Senior Independent
Director (SID) should be a woman.
· At least one member of the board should be from an ethnic
minority background excluding white ethnic groups (as set out in categories
used by the Office for National Statistics).
The Investment Manager shares ORIT's values and places diversity and inclusion
at the heart of them, which is demonstrated through the initiatives
implemented. The Investment Manager provides directors to the underlying
subsidiary companies and ensures diversity is considered when appointing them.
People initiatives
Alongside keeping people safe, ORIT considers our potential impact on people.
People initiatives contribute to solutions to engage communities and promote a
"Just Transition" to clean energy.
Case Study:
Educational Outreach
ORIT is committed to educational outreach, recognising the importance of
engaging with the local community and maximising the potential of its sites as
valuable learning resources. To achieve this goal, ORIT partnered with its
asset managers and Earth Energy Education, an organization that specialises in
educational site visits, in-school workshops, and bespoke resources to inspire
the next generation of scientists and engineers and foster a sense of pride
towards local solar or wind farms.
ORIT and Earth Energy Education organised workshops and site visits to Chisbon
solar farm and Westerfield Solar Farm. The events welcomed over 200 students
from nearby primary schools, including Alresford Primary, All Saints Church of
England, Micklenton Primary, Burford Primary, and St John the Evangelist
Primary. The participating students, from years 4-6, learned about renewable
energy sources and how they work, the environmental benefits, and the efforts
made to support biodiversity on the sites. As part of the programme, the
students were invited to participate in interactive sessions on electricity
generation, encouraging greater engagement with the subject.
"Thank you so much for the wonderful experiences you gave my class this week.
They were the most excitable I have seen in a long time. They loved using the
solar circuits and they were amazed by the energy stick when we created a
class circuit. The trip was brilliant. Please thank all the staff at the site
for making it as safe as possible for the class. They loved seeing the
biodiversity at the green power station. We would love to do it again next
year if this is possible."
Teacher from Alresford Primary
ORIT's outreach also included a STEM live webinar. Volunteers from ORIT's
Investment Manager shared insights into their respective careers. The audience
comprised of year groups 7-12 from Wadebridge and Woodroffe schools. The
webinar aimed to provide an inclusive perspective on various career
opportunities in the energy sector, encouraging students to consider careers
in finance, science and engineering.
In collaboration with OX2 (ORIT's asset manager in Sweden), two site visits
took place in May at Ljungbyholm wind farm. The events catered to 100
twelve-year-olds from Ljungbyholmsskolan, Pårydsskolan, and Hagbyskolan
schools. The students were accompanied by two wind turbine engineers from
Nordex, who provided insights into the workings of the wind turbines.
The site visit included a presentation on renewable energy and wind power, a
tour of the wind farm and other educational activities. These activities
included a "Wind Power Quiz" where the winners were able to name a turbine, an
exercise estimating the length of a wind turbine blade, and a session around
the logistics behind ow wind turbines are built. The classes received LEGO
kits of wind turbines as souvenirs. Feedback from the schools after the visit
was positive, with some students even expressing their aspiration to become
wind power technicians in the future.
The positive response from students and teachers highlights the significance
of such initiatives in creating awareness about clean energy and inspiring the
next generation into green jobs. ORIT plans to continue investing in
educational outreach, hoping to expand their impact in the future.
Impact Tracking
Who? How much? What? Impact Theme
Students from Micklenton 327 Site Visits Innovation
Primary, Burford Primary, Workshops Equality and Wellbeing
St John the Evangelist STEM Webinar
Primary, Alresford Primary,
All Saints Church of England
Primary, Wadebridge
School, Woodroffe School,
Ljungbyholmsskolan,
Parydsskolan and
Hagbyskolan.
UN SDG specific contributions
4 Quality Education
4.1 and 4.7 Provide free, quality education leading to relevant and effective
learning outcomes that can also promote sustainable development:
Partnership with asset managers and Earth Energy Education to provide free
education programmes and site visits to local schools.
Funding of multiple charities through BizGive to promote STEM learning and a
deeper understanding of renewable energy.
8 Decent Work and Economic Growth
8.5 Provide full and productive employment and decent work for all:
Extensive Health and Safety measures ensures employees are not exposed to
risk.
Interim Management Report
The Directors are required to provide an Interim Management Report in
accordance with the Financial Conduct Authority ("FCA") Disclosure Guidance
and Transparency Rules ("DTR"). The Chair's Statement and the Investment
Manager's Report in this interim report provide details of the important
events which have occurred during the period and their impact on the financial
statements. The following statements on principal risks and uncertainties,
related party transactions, going concern and the Directors' Responsibility
Statement below, together constitute the Interim Management Report for the
Company for the six months ended 30 June 2023. The outlook for the Company for
the remaining six months of the year ending 31 December 2023 is discussed in
the Chair's Statement and the Investment Manager's Report.
Risk and Risk Management
The Company's approach to risk governance and its risk review process are set
out in the risks and risk management section of the 2022 Annual Report. The
principal risks to the achievement of the Company's objectives are unchanged
from those reported on pages 100 to 106 of the 2022 Annual Report, with the
key principal risks being:
• Changes to inflation and interest rates - the Company's
investments are partially index linked and therefore changes to inflation
rates will impact the Company' cashflows. Changes in interest rates may affect
the valuation of the investment portfolio by impacting the valuation discount
rate and also impact the cost of financing available to the Company. This
continues to be a heightened risk in the current macro-economic environment.
• Power prices - the risk that the income and value of the Company's
investments may be adversely impacted by changes in the prevailing market
prices of electricity and prices achievable for off-taker contracts. Given the
nature of the investments, valuations are sensitive to movements in power
prices. To mitigate the impact of this risk, the Investment Manager has fixed
76% of revenues to 30 June 2025.
• Risks associated with borrowing - the use of leverage may increase
the volatility of the Company NAV, may significantly increase the Company's
investment risk and could lead to an inability to meet financial obligations.
Risks include refinancing risk, covenant breaches, over-gearing and possible
enhanced loss on poor performing assets.
• Asset specific risks - circumstances may arise that adversely
affect the performance of the relevant Renewable Energy Asset. These include
health and safety, grid connection, material damage or degradation, equipment
failures and environmental risks.
The experience of the Company's Investment Manager and the diversification of
the Company's portfolio continue to be the key mitigation for these risks. The
Performance section of the Impact Report details examples of specific projects
that the Investment Manager has undertaken to mitigate some of these risks in
the period.
Task Force on Climate-related Financial Disclosures ("TCFD")
The Financial Conduct Authority ("FCA") issued a rule, effective for periods
beginning on or after January 2021, for UK premium listed companies to start
to report against the TCFD, with other companies to follow. Whilst not
currently mandated to make a TCFD disclosure, being excluded as an Investment
Trust, ORIT supports the TCFD's aims and objectives and has decided to
voluntarily report in line to adopt best practice disclosures. Material
climate‑related financial disclosures can help support investment decisions
as we move towards a low-carbon economy. The Company is acutely aware of the
risks of climate change and through its investment mandate, believes it is
well placed to contribute to solutions and harness the opportunities that
arise from a transition to net zero. However, no company is isolated from
climate change, and the disclosures below outline the climate-related risks
ORIT faces.
Our TCFD approach is detailed on pages 107 and 131 of the 2022 Annual Report.
The Company is pleased to confirm that it has included climate-related
financial disclosures aligned with the four recommendations and the eleven
recommended disclosures provided in the TCFD's 2021 report 'Implementing the
Recommendations of the Task Force on Climate-related Financial Disclosures',
which included additional guidance for Asset Owners and Asset Managers.
Appointment of new non-executive Director
In May 2023 the Company announced the appointment of a new independent
non-executive director, Sarim Sheikh, who joined the Board with effect from 1
June 2023. Sarim has over 25 years of experience in the renewables and energy
industry working in Europe, Latin America, Africa, and Asia with General
Electric & Shell. Sarim has deep domain expertise in energy markets, and
technology (onshore/ offshore wind, solar, hydro, biomass) from various
commercial, business development, projects, and operational roles.
Sarim has served as chair/non-executive director on boards of several listed
and non-listed companies in the Netherlands, Croatia, Oman, and Pakistan and
on non-profit boards. Under his leadership, his company was awarded the
Pakistan Stock Exchange's ´Top Companies Award´ for corporate governance,
financial performance, shareholder value, and sustainability.
Sarim is a passionate advocate for energy transition and holds an MBA from
London Business School.
Sarim was hired following a recruitment process for which the Board appointed
an external recruitment consultancy, Nurole Ltd. Nurole Ltd has no other
connection with the Company and is considered independent.
Related party transactions
The Company's AIFM is considered a related party under the Listing Rules.
Under the Management Agreement, the AIFM receives from the Company a
management fee of 0.95% per annum of Net Asset Value up to and including £500
million and 0.85% per annum of Net Asset Value in excess of £500 million,
payable quarterly in arrears. No performance fee or asset level fees are
payable to the Investment Manager under the Management Agreement.
Details of the amounts paid to the Company's AIFM and the Directors during the
period are included in the Note 13 to the Interim Financial Statements.
Going concern
The Directors, in their consideration of going concern, have reviewed
comprehensive cash flow forecasts prepared by the Company's Investment Manager
which are based on prudent market data and believe, based on these forecasts,
that it is appropriate to prepare the financial statements of the Company on
the going concern basis.
In arriving at their conclusion that the Company has adequate financial
resources, the Directors were mindful that the Group had unrestricted cash of
£4.1 million as at 30 June 2023 and available headroom on its revolving
credit facility ("RCF") of £131 million. The Company's net assets at 30 June
2023 were £608.2 million and total expenses for the period were £3.6
million, which when annualised, represented approximately 1.2% of average net
assets during the period. At the date of approval of this document, based on
the aggregate of investments and cash held, the Company has substantial
operating expenses cover.
The Company receives revenue in the form of dividends and interest from its
portfolio of assets. These revenues are derived from the sale of electricity
through power purchase agreements in place with large and reputable providers
of electricity to the market. A prolonged and deep market decline could lead
to falling values to the underlying business or interruptions to cashflow,
however the Directors do not foresee any immediate material risk to the
Company's investment portfolio and income from underlying assets. The
Directors are also satisfied and are comfortable that the Company would
continue to remain viable under downside scenarios, including decreasing
government regulated tariffs and a decline in long term power price forecasts.
In instances where underlying investments have external debt finance, the
covenants associated with these facilities have been tested and are not
expected to be breached, even in downside scenarios.
The major cash outflows of the Company are the payment of dividends and
commitments payable for construction projects and contingent acquisitions. In
November 2023, the £50 million short term debt facility falls due for
repayment and will be funded by the RCF. The covenants of the RCF have been
tested over the next 12-24 months and are not expected to be breached, even in
downside scenarios. Plausible downside scenarios include a decrease in
wholesale energy prices, or a decrease in output. While in some downside
scenarios, the headroom available on the RCF will be lower, the Directors
remain confident that the Company has sufficient cash balances and headroom in
the RCF held by an intermediate holding company, in order to fund the
commitments detailed in note 15 to the financial statements, should they
become payable.
Having performed the assessment of going concern, the Directors considered it
appropriate to prepare the financial statements of the Company on a going
concern basis.
Responsibility Statement of the Directors
The Directors acknowledge responsibility for the interim results and approve
this Interim Report. The Directors confirm that to the best of their
knowledge:
a) the condensed financial statements have been prepared in accordance with
IAS 34 "Interim Financial Reporting" and give a true and fair view of the
assets, liabilities and financial position and the profit of the Company as
required by the FCA's Disclosure Guidance and Transparency Rules. DTR 4.2.4R;
b) the interim management report, included within the Chair's Statement and
Investment Manager's Report, includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R.
This responsibility statement has been approved by the Board.
Philip Austin
Chair
20 September 2023
Financial Statements
Condensed Statement of Comprehensive Income
For the six-month period ended For the six-month period ended
30 June 2023
30 June 2022
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Investment income 3 22,661 ‒ 22,661 21,813 ‒ 21,813
Movement in fair value of investments ‒ (13,621) (13,621) ‒ 46,734 46,734
Total net income 22,661 (13,621) 9,040 21,813 46,734 68,547
Investment management fees 4 (2,109) (703) (2,812) (2,118) (706) (2,824)
Other expenses (612) (104) (716) (636) (729) (1,365)
Net finance income 42 ‒ 42 49 ‒ 49
Net foreign exchange losses ‒ (29) (29) ‒ (132) (132)
Profit/(loss) before taxation 19,982 (14,457) 5,525 19,108 45,167 64,275
Taxation 5 (184) 184 ‒ (297) 297 ‒
Profit/(loss) and total comprehensive income for the period 19,798 (14,273) 5,525 18,811 45,464 64,275
Earnings/(loss) per Ordinary share (pence) - basic and diluted 7 3.50p (2.53p) 0.97p 3.33p 8.05p 11.38p
The 'Total' column of this statement is the profit and loss account of the
Company and the 'Revenue' and 'Capital' columns represent supplementary
information prepared under guidance issued by the Association of Investment
Companies. All expenses are presented as revenue items except 25% of the
investment management fee, which is charged as a capital item within the
Statement of Comprehensive Income. Costs incurred on aborted transactions are
charged as capital items within the Statement of Comprehensive Income.
All revenue and capital items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of these financial statements.
Condensed Statement of Financial Position
Notes As at As at
30 June 2023
31 December 2022
(unaudited) (audited)
£'000
£'000
Non-current assets
Investments at fair value through profit or loss 8 608,697 608,799
Current assets
Trade and other receivables 855 775
Cash and cash equivalents 282 10,603
1,137 11,378
Current liabilities: amounts falling due within one year
Trade and other payables (1,585) (1,917)
(1,585) (1,917)
Net current (liabilities)/assets (448) 9,461
Net assets 608,249 618,260
Capital and reserves
Share capital 9 5,649 5,649
Share premium account 217,283 217,283
Special reserve 10 339,500 339,500
Capital reserve 23,642 37,915
Revenue reserve 22,175 17,913
Equity attributable to owners of the Company 608,249 618,260
Net assets per Ordinary Share (pence) 11 107.67p 109.44p
The unaudited interim financial statements were approved by the Board of
Directors and authorised for issue on 20 September 2023 and were signed on
its behalf by:
Philip Austin
Chair
The accompanying notes are an integral part of these interim financial
statements. Incorporated in England and Wales with registered number 12257608.
Condensed Statement of Changes in Equity
For the period ended 30 June 2023 (Unaudited)
Notes Share Share Special Revenue Capital Total
capital premium reserve reserve reserve shareholders'
£'000 account £'000 £'000 £'000 funds
£'000 £'000
Opening equity as at 1 January 2023 5,649 217,283 339,500 17,913 37,915 618,260
Profit and total comprehensive income/ (expense) for the period ‒ ‒ ‒ 19,798 (14,273) 5,525
Dividends paid 6 ‒ ‒ ‒ (15,536) ‒ (15,536)
Closing equity as at 30 June 2023 5,649 217,283 339,500 22,175 23,642 608,249
For the period ended 30 June 2022 (Unaudited)
Notes Share Share Special Revenue Capital Total
capital premium reserve reserve reserve shareholders'
£'000 account £'000 £'000 £'000 funds
£'000 £'000
Opening equity as at 1 January 2022 5,649 217,283 339,500 12,751 2,506 577,689
Profit and total comprehensive income for the period ‒ ‒ ‒ 18,811 45,464 64,275
Dividends paid 6 ‒ ‒ ‒ (14,463) ‒ (14,463)
Closing equity as at 30 June 2022 5,649 217,283 339,500 17,099 47,970 627,501
The Company's distributable reserve consists of the special reserve, capital
reserve attributable to realised gains and revenue reserve.
The accompanying notes are an integral part of these financial statements.
The issued capital and reserves are fully attributable to the shareholders of
the Company.
Condensed Statement of Cash Flows
For the For the
six-month six-month
period ended period ended
30 June 2023 30 June 2022
(unaudited) (unaudited)
Notes £'000 £'000
Operating activities cash flows
Profit before taxation 5,525 64,275
Adjustments for:
Movement in fair value of investments 8 13,621 (46,734)
Investment income from investments 3 (22,661) (21,813)
Operating cash flow before movements in working capital (3,515) (4,272)
Changes in working capital:
Increase in trade and other receivables (80) (60)
Decrease in trade payables (332) (37)
Distributions from investments 8 9,800 17,121
Net cash flow from operating activities 5,873 12,752
Investing activities cash flows
Costs associated with acquiring the portfolio of assets (658) (67,173)
Net cash flow used in investing activities (658) (67,173)
Financing activities cash flows
Dividends paid to Ordinary Shareholders 6 (15,536) (14,463)
Net cash flow used in financing activities (15,536) (14,463)
Net (decrease)/increase in cash and cash equivalents (10,321) (68,884)
Cash and cash equivalents at start of period 10,603 93,946
Cash and Cash equivalents at end of period 282 25,062
Notes to the Condensed Unaudited Financial Statements
For the period ended 30 June 2023
1. General information
Octopus Renewables Infrastructure Trust plc ("ORIT" or the "Company") is a
Public Company Limited by Ordinary Shares incorporated in England and Wales on
11 October 2019 with registered number 12257608. The Company is a
closed‑ended investment company with an indefinite life. The Company
commenced its operations on 10 December 2019 when the Company's Ordinary
Shares were admitted to trading on premium segment of the London Stock
Exchange. The Directors intend, at all times, to conduct the affairs of the
Company as to enable it to qualify as an investment trust for the purposes of
section 1158 of the Corporation Tax Act 2010, as amended.
The registered office and principal place of business of the Company 6th
Floor, 125 London Wall, London, EC2Y 5AS.
The Company's investment objective is to provide investors with an attractive
and sustainable level of income returns, with an element of capital growth, by
investing in a diversified portfolio of Renewable Energy Assets in Europe and
Australia.
The interim condensed unaudited financial statements of the Company (the
"interim financial statements") are for the six‑month period ended 30 June
2023 and comprise only the results of the Company, as all of its subsidiaries
are measured at fair value through profit or loss following the amendment to
IFRS 10 as explained below in Note 2. The comparatives shown in these interim
financial statements refer to the six-month period ended 30 June 2022 and as
at 31 December 2022.
The Company has appointed Octopus AIF Management Limited to be the alternative
investment fund manager of the Company (the "AIFM") for the purposes of
Directive 2011/61/EU of the European Parliament and of the Council on
Alternative Investment Fund Managers. Accordingly, the AIFM is responsible for
the portfolio management of the Company and for exercising the risk management
function in respect of the Company. The AIFM has delegated portfolio
management services to Octopus Renewables Limited (trading as Octopus Energy
Generation), the Company's Investment Manager (the "Investment Manager").
Apex Listed Companies Services (UK) Limited (the "Administrator") provides
administrative and company secretarial services to the Company under the terms
of the Administration Agreement between the Company and the Administrator.
During the year 2022, Apex Group plc acquired Sanne Fund Services (UK) Limited
and subsequently the name of the Company's Administrator and Company Secretary
changed from Sanne Fund Services (UK) Limited to Apex Listed Companies
Services (UK) Limited.
The annual financial statements of the Company for the year ended 31 December
2022 were approved by the Directors on 28 March 2023 and are available on the
Company's website https://octopusrenewablesinfrastructure.com/.
2. Basis of preparation
The interim financial statements included in this report have been prepared in
accordance with UK-adopted international accounting standard IAS 34 Interim
Financial Reporting and the applicable requirements of the Companies Act 2006.
The interim financial statements have been prepared under the historical cost
convention, as modified by the revaluation of financial assets and financial
liabilities at fair value through profit or loss.
The interim financial statements have also been prepared as far as is relevant
and applicable to the Company in accordance with the Statement of Recommended
Practice: Financial Statements of Investment Trust Companies and Venture
Capital Trusts ("SORP") issued in July 2022 by the Association of Investment
Companies ("AIC").
The interim financial statements are presented in sterling, which is the
Company's functional currency and are rounded to the nearest thousand, unless
otherwise stated. The accounting policies, significant judgements, key
assumptions and estimates are consistent with those used in the latest audited
financial statements to 31 December 2022 and should be read in conjunction
with the Company's annual audited financial statements for the year ended 31
December 2022.
Going concern
The Directors, in their consideration of going concern, have reviewed
comprehensive cash flow forecasts prepared by the Company's Investment Manager
which are based on prudent market data and believe, based on these forecasts,
that it is appropriate to prepare the financial statements of the Company on
the going concern basis.
In arriving at their conclusion that the Company has adequate financial
resources, the Directors were mindful that the Company had unrestricted cash
of £0.28 million as at 30 June 2023 and available headroom on its RCF of
£131 million. The Company's net assets at 30 June 2023 were £608.2 million
and total expenses for the period were £3.6 million, which when annualised,
represented approximately 1.2% of average net assets during the period. At the
date of approval of this document, based on the aggregate of investments and
cash held, the Company has substantial operating expenses cover.
The Company receives revenue in the form of dividends and interest from its
portfolio of assets. These revenues are derived from the sale of electricity
through power purchase agreements in place with large and reputable providers
of electricity to the market. A prolonged and deep market decline could lead
to falling values to the underlying business or interruptions to cashflow,
however the Directors do not foresee any immediate material risk to the
Company's investment portfolio and income from underlying assets. The
Directors are also satisfied and are comfortable that the Company would
continue to remain viable under downside scenarios, including decreasing
government regulated tariffs and a decline in long-term power price forecasts.
During the period, the Company's intermediate holding company successfully
refinanced its RCF to an increased facility of £270.8 million and extended
its term to February 2026. In November 2023, the £50 million short term debt
facility falls due for repayment and will be funded by the RCF. The covenants
of the RCF have been tested and are not expected to be breached, even in
downside scenarios.
Plausible downside scenarios include a decrease in wholesale energy prices, or
a decrease in output. While in some downside scenarios, the headroom available
on the RCF will be lower, the Directors remain confident that the Company has
sufficient cash balances and headroom in the RCF held by an intermediate
holding company, in order to fund the commitments detailed in note 15 to the
financial statements, should they become payable.
As such, the Directors are satisfied that the Company has sufficient resources
to continue to operate for the foreseeable future, a period of not less than
12 months from the date of this report. Accordingly, they continue to adopt
the going concern basis in preparing these financial statements.
Critical accounting judgements, estimates and assumptions
The preparation of the interim financial statement requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed regularly on an on‑going basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected. There have been no
changes to the significant estimates, judgements and assumptions to those set
out on pages 191 to 194 of the 2022 Annual Report; a summary of these is
provided below.
Key estimation: Fair value estimation for investments at fair value
The Company's investments at fair value are not traded in active markets. Fair
value is calculated by discounting at an appropriate discount rate future cash
flows expected to be received by the Company's intermediate holdings. The
discounted cashflow models use observable data, to the extent practicable.
However, the key inputs require management to make estimates. Changes in
assumptions about these factors could affect the reported fair value of
investments.
The discount rates used in the valuation exercise represent the Investment
Manager's and the Board's assessment of the rate of return in the market for
assets with similar characteristics and risk profile. The discount rates are
reviewed quarterly and updated, where appropriate, to reflect changes in the
market and in the project risk characteristics. Details of the areas of
estimation in the calculation of fair value are disclosed in Note 8.
Key judgement: Equity and debt investment in ORIT Holdings II Limited
The evaluation of the performance of the Company's investments is done for the
entire portfolio on a fair value basis, as is the reporting to the key
management personnel and to the investors. In this case, all equity,
derivatives and debt investments form part of the same portfolio for which the
performance is evaluated on a fair value basis together and reported to the
key management personnel in its entirety.
As such, the Directors have satisfied themselves that the equity and debt
investments into its direct wholly owned subsidiary, ORIT Holdings II Limited,
share the same investment characteristics and, therefore, constitute a single
asset class for IFRS 7 disclosure purposes.
Key judgement: Basis of non-consolidation
The Company has adopted the amendments to IFRS 10 which states that investment
entities should measure all of their subsidiaries that are themselves
investment entities at fair value (in accordance with IFRS 9 Financial
Instruments: Recognition and Measurement, and IFRS 13 Fair Value Measurement).
Being investment entities, ORIT and its wholly owned direct subsidiary, ORIT
Holdings II Limited are measured at fair value as opposed to being
consolidated on a line‑by-line basis, meaning their cash, debt and working
capital balances are included in the fair value of investments rather than the
Group's current assets.
The Directors believe the treatment outlined above provides the most relevant
information to investors.
3. Investment income
For the six-month period ended For the six-month period ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Dividend income from investments 9,800 ‒ 9,800 11,000 ‒ 11,000
Interest income from investments 12,861 ‒ 12,861 10,813 ‒ 10,813
Total investment income 22,661 ‒ 22,661 21,813 ‒ 21,813
4. Operating expenses
For the six-month period ended For the six-month period ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 2,109 703 2,812 2,118 706 2,824
Directors' fees 101 ‒ 101 93 ‒ 93
Company's auditor fees:
- in respect of audit services 90 ‒ 90 95 ‒ 95
Other operating expenses 421 104 525 448 729 1,177
Total operating expenses 2,721 807 3,528 2,754 1,435 4,189
Further details on the Investment Manager's agreement have been provided in
Note 13.
The Company has no employees. Full detail on Directors' fees is provided in
note 13. The Directors' fees exclude employer's national insurance
contribution which is included as appropriate in other operating expenses.
There were no other emoluments.
5. Taxation
(a) Analysis of charge/(credit) in the period
For the six-month period ended For the six-month period ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax 184 (184) ‒ 297 (297) ‒
Tax charge/(credit) for the period 184 (184) ‒ 297 (297) ‒
(b) Factors affecting total tax charge for the period:
The effective UK corporation tax rate applicable to the Company for the period
is 22% (2022: 19%). The tax charge/ (credit) differs from the charge/(credit)
resulting from applying the standard rate of UK corporation tax for an
investment trust company. The differences are explained below:
For the six-month period ended For the six-month period ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit/(loss) before taxation 19,982 (14,457) 5,525 19,108 45,167 64,275
Corporation tax at 22% (2022: 19%) 4,396 (3,181) 1,215 3,631 8,582 12,213
Effects of:
Expenses not deductible for tax purposes ‒ 2,997 2,997 ‒ ‒ ‒
Income not taxable (2,156) ‒ (2,156) (2,090) (8,879) (10,969)
Dividends designated as interest distributions (2,058) ‒ (2,058) (1,244) ‒ (1,244)
Movement in deferred tax not recognised 2 ‒ 2 ‒ ‒ ‒
Total tax charge/(credit) for the period 184 (184) ‒ 297 (297) ‒
6. Dividends
For the six-month period ended For the six-month period ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Pence per Revenue Pence per Revenue
Ordinary reserve Total Ordinary reserve Total
Share £'000 £'000 Share £'000 £'000
Q4 2022 Dividend - paid 24 February 2023 (2021: 4 March 2022) 1.31 7,401 7,401 1.25 7,062 7,062
Q1 2023 Dividend - paid 2 June 2023 (2022: 27 May 2022) 1.44 8,135 8,135 1.31 7,401 7,401
Total 2.75 15,536 15,536 2.56 14,463 14,463
On 7 August 2023, the Company declared an interim dividend in respect of the
period from 1 April 2023 to 30 June 2023 of 1.45 pence per Ordinary Share,
paid on 1 September 2023 to Shareholders on the register at 18 August 2023. On
that record date, the number of Ordinary Shares in issue was 564,927,536 and
the total dividend paid to Shareholders amounted to £8,191,449 million. The
dividend has not been included as a liability at 30 June 2023.
7. Earnings per Ordinary Share
Earnings per Ordinary Share is calculated by dividing the profit attributable
to equity shareholders of the Company by the weighted average number of
Ordinary Shares in issue during the period as follows.
For the six-month period ended For the six-month period ended
30 June 2023 (unaudited)
30 June 2022 (unaudited)
Revenue Revenue Total Revenue Capital Total
Profit/(loss) attributable to the equity holders of the Company (£'000) 19,798 (14,273) 5,525 18,811 45,464 64,275
Weighted average number of Ordinary Shares in issue (000) 564,928 564,928 564,928 564,928 564,928 64,275
Earnings/(loss) per Ordinary Share (pence) - basic and diluted 3.50p (2.53p) 0.97p 3.33p 8.05p 11.38p
There is no difference between the weighted average Ordinary or diluted number
of Shares.
8. Investments at fair value through profit or loss
As set out in note 2, the Company accounts for its interest in its wholly
owned direct subsidiaries as an investment at fair value through profit or
loss.
a) Summary of valuation
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
£'000 £'000
Opening balance 608,799 485,417
Portfolio of assets acquired 658 79,194
Additional investment in intermediate holding companies ‒ 4,386
Distributions received from investments (9,800) (38,108)
Investment income 22,661 40,307
Movement in fair value of investments (13,621) 37,603
Total investments at the end of the period/year 608,697 608,799
b) Reconciliation of movement in fair value of portfolio of assets
The table below shows the movement in the fair value of the Company's
investments. These assets are held through intermediate holding companies.
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
£'000 £'000
Opening balance 743,714 485,417
Portfolio of assets acquired 64,344 209,666
Distributions received (20,140) (40,129)
Movement in fair value 8,231 88,760
Fair value of portfolio of assets at the end of the period/year 796,149 743,714
Cash held in intermediate holding companies 3,837 4,509
Bank loans held in intermediate holding companies (190,408) (127,200)
Fair value of other net assets in intermediate holding companies (881) (12,224)
Fair value of Company's investments at the end of the period/year 608,697 608,799
c) Investment (losses)/gains in the period/year
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
£'000 £'000
Movement in fair value of investments (13,621) 37,603
Fair value of portfolio of assets
The Investment Manager has carried out fair market valuations of the
investments as at 30 June 2023.
The Directors have satisfied themselves as to the methodology used, the
discount rates applied and the valuation. All investments are in Renewable
Energy Assets and are valued using a discounted cash flow methodology. The
Company's holding of an investment represents its interest in both the equity
and debt instruments of the investment. The equity and debt instruments are
valued as a whole using a blended discount rate and the value attributed to
the equity instruments represents the fair value of future dividends and
equity redemptions in addition to any value enhancements arising from the
timing of loan principal and interest receipts from the debt instruments,
while the value attributed to the debt instruments represents the principal
outstanding and interest due on the loan at the valuation date.
The weighted average costs of capital applied to the portfolio of assets
ranges from 5.5% to 9.1%.
The following economic assumptions were used in the discounted cash flow
valuations:
As at 30 June 2023 As at 31 December 2022
UK - long-term inflation rate 6.2% during 2023, declining to 3.00% 6.7% during 2023, declining to 3.00% in 2027 and then to 2.25% from 2030
(year-on-year)
in 2027 and then to 2.25% from 2030 onwards.
onwards.
UK - long-term inflation rate (annual average) 9.1% during 2023, declining to 3.00% in 2027 and then to 2.25% from 2030 9.8% during 2023, declining to 3.00% in 2027 and then to 2.25% from 2030
onwards. onwards.
UK - corporation tax rate 19.00% to April 2023; 25.00% thereafter. 19.00% to April 2023; 25.00% thereafter.
Sweden - long-term inflation rate 2.00% 2.00%
Sweden - corporation tax rate 20.60% 20.60%
France - long-term inflation rate 2.00% 2.00%
France - corporation tax rate 25.00% 25.00%
Poland - long-term inflation rate 2.50% 2.50%
Poland - corporation tax rate 19.00% 19.00%
Finland - long-term inflation rate 2.00% 2.00%
Finland - corporation tax rate 20.00% 20.00%
Euro/sterling exchange rate 1.1654 1.1277
Zloty/sterling exchange rate 5.1648 5.3009
Energy yield assumptions P50 case P50 case
Other key assumptions include:
Power Price Forecasts
Unless fixed under PPAs or otherwise hedged, the power price forecasts used in
the valuations are based on market forward prices in the near-term, followed
by an equal blend of up to three independent and widely-used market expert
consultants' relevant technology-specific capture price forecasts for each
asset.
Asset Lives
The length of the period of operations assumed in the valuation is determined
on an asset-by-asset basis taking into account the lease agreements, permits
or planning permissions in place as well as any extension rights, renewal
regimes or wider policy considerations, together with the technical
characteristics of the asset.
Decommissioning Costs
Where applicable, the present value of the estimated costs to restore the land
back to its original use are included in the valuations as a cash outflow at
the end of the asset life.
Fair value of intermediate holding companies
The other net assets in the intermediate holding companies substantially
comprise working capital balances, therefore the Directors consider the fair
value to be equal to the book values. The sensitivity to unobservable inputs
is based on management's expectation of reasonable possible shifts in these
inputs. The valuation sensitivity of each assumption is shown in Note 12.
9. Share capital
As at 30 June 2023 As at 31 December 2022
(unaudited)
(audited)
Allotted, issued and fully paid: Number of Nominal value of shares (£) Number of Nominal value of shares (£)
shares
shares
Opening balance 564,927,536 5,649,275 564,927,536 5,649,275
Allotted following admission to LSE
Movement - - - -
Closing balance 564,927,536 5,649,275 564,927,536 5,649,275
10. Special reserve
As indicated in the Company's prospectus dated 19 November 2019, following
admission of the Company's Ordinary Shares to trading on the London Stock
Exchange, the Directors applied to the Court and obtained a judgement on
18 February 2020 to cancel the amount standing to the credit of the share
premium account of the Company.
As stated by the Institute of Chartered Accountants in England and Wales
("ICAEW") and the Institute of Chartered Accountants in Scotland ("ICAS") in
the technical release TECH 02/17BL, The Companies (Reduction of Share Capital)
Order 2008 SI 2008/1915 ("the Order") specifies the cases in which a reserve
arising from a reduction in a company's capital (i.e., share capital, share
premium account, capital redemption reserve or redenomination reserve) is to
be treated as a realised profit as a matter of law. The Order also disapplies
the general prohibition in section 654 on the distribution of a reserve
arising from a reduction of capital. The Order provides that if a limited
company having a share capital reduces its capital and the reduction is
confirmed by order of court, the reserve arising from the reduction is treated
as a realised profit unless the court orders otherwise.
The amount of the share premium account cancelled and credited to the
Company's special distributable reserve is £339,500,000, which can be
utilised to fund distributions to the Company's Shareholders, which can be
utilised to fund distributions by way of dividends to the Company's
shareholders.
11. Net assets per Ordinary Share (pence)
As at As at
30 June 2023 31 December 2022
(unaudited) (audited)
Total shareholders' equity (£'000) 608,249 618,260
Number of Ordinary Shares in issue ('000) 564,928 564,928
Net asset value per Ordinary Share (pence) 107.67p 109.44p
12. Financial instruments by category
The Company held the following financial instruments at fair value at 30 June
2023. There have been no transfers of financial instruments between levels of
the fair value hierarchy. There are no non-recurring fair value measurements.
As at 30 June 2023 (unaudited)
Financial assets at amortised cost Financial assets at fair value through profit or loss Financial liabilities at amortised cost Total
£'000 £'000 £'000 £'000
Non-current assets
Equity Investments at fair value through profit or loss ‒ 608,697 ‒ 608,697
Current assets
Trade and other receivables 855 ‒ ‒ 855
Cash and cash equivalents 282 ‒ ‒ 282
Total assets 1,137 608,697 ‒ 609,834
Current liabilities
Trade and other payables ‒ ‒ (1,585) (1,585)
Total liabilities ‒ ‒ (1,585) (1,585)
Net assets 1,137 608,697 (1,585) 608,249
As at 31 December 2022 (audited)
Financial assets at amortised cost Financial assets at fair value through profit or loss Financial liabilities at amortised cost Total
£'000 £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss ‒ 608,799 ‒ 608,799
Current assets
Trade and other receivables 775 ‒ ‒ 775
Cash and cash equivalents 10,603 ‒ ‒ 10,603
Total assets 11,378 608,799 ‒ 620,177
Current liabilities
Trade and other payables ‒ ‒ (1,917) (1,917)
Total liabilities ‒ (1,917) (1,917)
Net assets 11,378 607,799 (1,917) 618,260
The above table provides an analysis of financial instruments that are
measured subsequent to their initial recognition at fair value as follows:
Level 1: fair value measurements are those derived from quoted prices Level 2: fair value measurements are those derived from inputs other than Level 3: fair value measurements are those derived from valuation techniques
(unadjusted) in active markets for identical assets or liabilities; quoted prices included within Level 1 that are observable for the asset or that include inputs to the asset or liability that are not based on observable
liability, either directly (i.e., as prices) or indirectly (i.e., derived from market data (unobservable inputs).
prices); and
There were no Level 1 or Level 2 assets or liabilities during the period.
There were no transfers between Level 1 and 2, Level 1 and 3 or Level 2 and 3
during the period. In the table above, financial instruments are held at
carrying value as an approximation to fair value unless stated otherwise.
Reconciliation of Level 3 fair value measurement of financial assets and
liabilities
An analysis of the movement between opening to closing balances of the
investments at fair value through profit or loss is given in Note 8.
The fair value of the investments at fair value through profit or loss
includes the use of Level 3 inputs. Refer to Note 8 for details on the
valuation methodology.
Valuation Sensitivities
Discount rate
The discount rate is considered the most significant unobservable input
through which an increase or decrease would have a material impact on the fair
value of the investments at fair value through profit or loss.
An increase of 0.5% in the discount rate (levered cost of equity) would cause
a decrease in total portfolio value of 8.0 pence per Ordinary Share and a
decrease of 0.5% in the discount rate would cause an increase in total
portfolio value of 7.3 pence per Ordinary Share.
Inflation rate
The sensitivity of the investments to movement in inflation rates is as
follows:
A decrease of 0.5% in inflation rates would cause a decrease in total
portfolio value of 6.3 pence per Ordinary Share and an increase of 0.5% in
inflation rates would cause an increase in total portfolio value of 6.7 pence
per Ordinary Share.
Power price
Wind and solar assets are subject to movements in power prices. The
sensitivities of the investments to movement in power prices are as follows:
A decrease of 10% in power price would cause a decrease in the total portfolio
value of 11.8 pence per Ordinary Share and an increase of 10% in power price
would cause an increase in the total portfolio value of 11.7 pence per
Ordinary Share.
Generation
Wind and solar assets are subject to power generation risks. The sensitivities
of the investments to movement in level of power output are as follows:
The fair value of the investments is based on a "P50" level of power output
being the expected level of generation over the long-term. An assumed "P90"
level of power output (i.e. a level of generation that is below the "P50",
with a 90% probability of being exceeded) would cause a decrease in the total
portfolio value of 24.1 pence per Ordinary Share and an assumed "P10" level of
power output (i.e. a level of generation that is above the "P50", with a 10%
probability of being achieved) would cause an increase in the total portfolio
value of 23.4 pence per Ordinary Share.
Foreign exchange
The sensitivity of the investments to movement in FX rates is as follows:
A decrease of 10% in FX rates would cause a decrease in total portfolio value
of 2.5 pence per Ordinary Share and an increase of 10% in inflation rates
would cause an increase in total portfolio value of 2.5 pence per Ordinary
Share.
Of the portfolio as at 30 June 2023, 51% of the NAV is denominated in
non-sterling currencies.
13. Related party and key advisor transactions
During the period, interest totalling £12.9 million was earned, in respect of
the long-term interest-bearing loan between the Company and its subsidiaries.
At the period end, the full amount was outstanding.
AIFM and Investment Manager
The Company has appointed Octopus AIF Management Limited to be the Alternative
Investment Fund Manager of the Company (the "AIFM") for the purposes of
Directive 2011/61/EU of the European Parliament and of the Council on
Alternative Investment Fund Managers. Accordingly, the AIFM is responsible for
the portfolio management of the Company and for exercising the risk management
function in respect of the Company. The AIFM has delegated portfolio
management services to Octopus Renewables Limited (trading as Octopus Energy
Generation), the Company's investment manager (the "Investment Manager").
The AIFM is entitled to a management fee of 0.95% per annum of Net Asset Value
of the Company up to and including £500 million and 0.85% per annum of Net
Asset Value in excess of £500 million, payable quarterly in arrears. There
are no performance fee or asset level fees are payable to the AIFM under the
Management Agreement.
During the period, the management fee charged to the Company by the AIFM was
£2,109,000, of which £1,404,000 remained payable at the period end date.
Directors
The Company is governed by a Board of Directors (the "Board"), all of whom are
independent and non-executive. During the period, they received fees for their
services of £96,333 and were paid £6,147 in expenses. As at the period end,
there were no outstanding fees payable to the Board.
The Directors had the following shareholdings in the Company, all of which
were beneficially owned.
Ordinary Ordinary
Shares as at
Shares as at
date of this 30 June 2023
report
Philip Austin MBE* 165,518 165,518
James Cameron 65,306 65,306
Elaina Elzinga - -
Audrey McNair** 50,437 51,383
Sarim Sheikh*** - -
* with effect from 23 November 2021, Mr. Austin's shares have been
held jointly with Mrs. J Austin, a PCA of Mr. Austin
** with effect from 8 August 2023, Mrs. McNair's shares have been held
jointly with Mr. McNair, a PCA of Mrs. McNair.
*** Appointed 1 June 2023
14. Subsidiaries
As a result of applying Investment Entities (Amendments to IFRS 10, IFRS 12
and IAS 27), no subsidiaries have been consolidated in these financial
statements. The Company's subsidiaries as at 30 June 2023 are listed below:
Name Category Place of Registered Office* Ownership
business
interest
ORIT Holdings Limited Intermediate Holdings UK A 100%
ORIT Holdings II Limited Intermediate Holdings UK A 100%
ORIT UK Acquisitions Limited Intermediate Holdings UK A 100%
Abbots Ripton Solar Energy Limited Project company UK A 100%
Chisbon Solar Farm Limited Project company UK A 100%
Jura Solar Limited Project company UK A 100%
Mingay Farm Limited Project company UK A 100%
NGE Limited Project company UK A 100%
Sun Green Energy Limited Project company UK A 100%
Westerfield Solar Limited Project company UK A 100%
Wincelle Solar Limited Project company UK A 100%
Heather Wind AB Project company Sweden B 100%
Solstice 1A GmbH Portfolio-level Holdings Germany C 100%
SolaireCharleval SAS Project company France D 100%
SolaireIstres SAS Project company France D 100%
SolaireCuges-Les-Pins SAS Project company France D 100%
SolaireChalmoux SAS Project company France D 100%
SolaireLaVerdiere SAS Project company France D 100%
SolaireBrignoles SAS Project company France D 100%
SolaireSaint-Antonin-du-Var SAS Project company France D 100%
Centrale Photovoltaique de IOVI 1 SAS Project company France D 100%
Centrale Photovoltaique de IOVI 3 SAS Project company France D 100%
Arsac 2 SAS Project company France D 100%
Arsac 5 SAS Project company France D 100%
SolaireFontienne SAS Project company France D 100%
SolaireOllieres SAS Project company France D 100%
Eylsia SAS Portfolio-level Holdings France E 100%
CEPE Cerisou Project company France F 100%
Cumberhead Wind Energy Limited Project company UK A 100%
ORIT Irish Holdings 2 Limited Portfolio-level Holdings UK A 100%
ORIT Irish Holdings Limited Portfolio-level Holdings UK A 100%
Copernicus Windpark Sp. Z.o.o Project company Poland G 100%
Forthewind Sp. Z.o.o Project company Poland G 100%
Nordic Power Development Limited Portfolio-level Holdings UK A 100%
Saunamaa Wind Farm Oy Project company Finland H 100%
Vöyrinkangas Wind Farm Oy Project company Finland H 100%
ORI JV Holdings Limited Portfolio-level Holdings UK A 50%
ORI JV Holdings 2 Limited Portfolio-level Holdings UK A 50%
Simply Blue Energy Holdings Limited Portfolio-level Holdings Ireland I 15.5%
South Kilbraur Wind Farm Limited Project company UK J 25%
Windburn Wind Farm Limited Project company UK J 25%
Wind 2 Project 2 Limited Project company UK J 25%
Wind 2 Project 5 Limited Project company UK J 25%
Wind 2 Project 3 Limited Project company UK J 25%
Kirkton Wind Farm Limited Project company UK J 25%
Bwlch Gwyn Wind Farm Limited Project company UK J 25%
Wind 2 Project 6 Limited Project company UK J 25%
Wind 2 Project 4 Limited Project company UK J 25%
ORI JV Holdings 3 Limited Portfolio-level Holdings UK A 50%
Nordic Renewables Limited Portfolio-level Holdings UK A 50%
Nordic Renewables Holdings 1 Limited Portfolio-level Holdings UK A 50%
ORI JV Holdings 4 Limited Portfolio-level Holdings UK A 50%
ORI JV Holdings 5 Limited Portfolio-level Holdings UK A 51%
ORI JV Holdings 5 Holdco Limited Portfolio-level Holdings UK A 51%
ORI JV Holdings 6 Limited Portfolio-level Holdings UK A 50%
ORIT Lincs Holdco Limited Portfolio-level Holdings UK A 100%
ORI Lincs Holdings Limited Portfolio-level Holdings UK A 67%
Clyde SPV Limited Portfolio-level Holdings UK K 50%
Blota Germany GmbH Portfolio-level Holdings Germany L 100%
Blota GP GmbH Portfolio-level Holdings Germany L 100%
UKA Windenergie Leeskow GmbH Portfolio-level Holdings Germany M 100%
UGE Leeskow GmbH & Co. KG Project company Germany M 100%
Umweltgerechte Energie Infrastrukturgesellschaft Leeskow mbH & Co. KG Project company Germany M 100%
Burwell 11 Solar Limited Project company UK A 100%
Crossdykes WF Limited Project company UK N 51%
UK Green Investment Lyle Limited Portfolio-level Holdings UK K 50%
Lincs Wind Farm (Holding) Limited Portfolio-level Holdings UK O 15.5%
Lincs Wind Farm Limited Project company UK P 15.5%
Hyro Energy Limited Portfolio-level Holdings UK Q 25%
Green Hydrogen 1 Limited Project company UK Q 18.75%
Green Hydrogen 2 Limited Project company UK Q 18.75%
Green Hydrogen 3 Limited Project company UK Q 18.75%
Green Hydrogen 4 Limited Project company UK Q 18.75%
Green Hydrogen 5 Limited Project company UK Q 18.75%
Gridsource (Woburn Rd) Limited Project company UK A 50%
* Registered offices:
A - Uk House, 5th Floor, 164-182 Oxford Street, London, United Kingdom, W1D
1NN
B - Lilla Nygatan 1, 111 28 Stockholm, Sweden
C - Maximilianstraße, 3580539 München, Germany
D - 52 Rue de la Victoire 75009, Paris, France
E - 4 Rue de Marivaux, 75002 Paris, France
F - Z.I de Courtine, 330 rue du Mourelet, 84000. Avignon, France
G - Wojska Polskiego 24-26, 75-712 Koszalin,
H - Teknobulevardi 3-5, 01530 Vantaa, Finland
I - Woodbine Hill, Kinsalebeg, Youghal, Co. Cork, Ireland
J - Wind 2 Office, 2 Walker Street, Edinburgh, Scotland, EH3 7LB
K - 8 White Oak Square, London Road, Swanley, Kent, United Kingdom, BR8 7AG
L - c/o Ashurst LLP, OpernTurm, Bockenheimer Landstraße 2-4, 60306 Frankfurt
M - Dorfstraße 20a, 18276 Lohmen
N - 58 Morrison Street, Edinburgh, United Kingdom, EH3 8BP
O - 5 Howick Place, London, United Kingdom, SW1P 1WG
P - 13 Queens Road, Aberdeen, Scotland, AB15 4YL
Q - Beaufort Court, Egg Farm Lane, Kings Langley, United Kingdom, WD4 8LR
ORIT Holdings II Limited is the only direct subsidiary of the Company. All
other subsidiaries are held indirectly.
15. Guarantees and other commitments
The Company guarantees the foreign exchange hedges entered into by its
intermediate holding companies to enable it to minimise its exposure to
changes in underlying foreign exchange rates.
As at 30 June 2023, the Company has guarantees in respect of the future
investment obligations associated with the Breach Solar plant totalling £7.6
million (2022: £41.5 million).
16. Post period end events
Post period end in July 2023 the Company announced that it had agreed to
invest up to £2 million to set up and fund a new development business,
focused on creating new ground-mounted solar PV and co-located battery storage
assets in the UK. The business will benefit from exclusive development
services from BLC Energy Limited, a specialist developer managed by a team of
industry veterans with deep knowledge of the UK electricity grid, as well as
significant experience in securing land for building new renewable energy
projects.
On 7 August 2023 the Company declared an interim dividend in respect of the
three months ended 30 June 2023 of 1.45 pence per Ordinary Share for £8.2
million based on a record date of 18 August 2023 and ex-dividend date of
17 August 2023 and the number of Ordinary Shares in issue being 564,927,536.
This dividend was paid on 01 September 2023.
17. Status of this report
These interim financial statements are not the Company's statutory accounts
for the purposes of section 434 of the Companies Act 2006. They are unaudited.
The unaudited interim financial report will be made available to the public at
the registered office of the Company.
The report will also be available in electronic format on the Company's
website, https://octopusrenewablesinfrastructure.com/.
The interim financial report was approved by the Board of Directors on 20
September 2023.
Other Information
Alternative Performance Measures
In reporting financial information, the Company presents alternative
performance measures, "APMs", which are not defined or specified under the
requirements of IFRS. The Company believes that these APMs, which are not
considered to be a substitute for or superior to IFRS measures, provide
stakeholders with additional helpful information on the performance of the
Company. The Directors assess the Company's performance against a range of
criteria which are viewed as particularly relevant for closed-end investment
companies. The APMs presented in this report are shown below:
Gross asset value (GAV)
The Company's gross assets comprise the net asset values of the Company's
Ordinary Shares and the debt held in unconsolidated subsidiaries
As at As at
30 June 2023 31 December 2022
£million £million
NAV a 608.2 618.3
Debt b 511.9 454.3
Total GAV a + b 1,120.1 1,072.6
Total value of all investments
A measure of committed asset value including total debt and equity commitments
As at As at
30 June 2023 31 December 2022
£million £million
GAV a 1,120.1 1,072.6
Commitments on existing portfolio b 11.0 68.3
Commitments on conditional acquisitions c 199.2 177.0
GAV excluding cash (a+b+c) = d 1,330.3 1,317.9
Less Company and holding company assets e 4.1 (1.7)
Less asset level cash f (26.1) (15.5)
Total value of all investments d + e + f 1,308.3 1,304.2
Total return since IPO
A measure of performance since IPO that includes both income and capital
returns. This takes into account capital gains and reinvestment of dividends
(where beneficial) paid out by the Company into the Ordinary Shares of the
Company on the ex-dividend date.
30 June 2023 Share price NAV
Value at IPO (10 December 2019) - pence a 100.00 98.00
Value at 30 June 2023 - pence b 92.50 107.67
Benefits of reinvesting dividends - pence d (1.30) 1.92
Dividends paid in the year - pence c 14.86 14.86
Total return (b+c+d)÷a -1 6.1% 27.0%
Annualised total return 1.7% 7.0%
31 December 2022 Share price NAV
Value at IPO (10 December 2019) - pence a 100.00 98.00
Value at 31 December 2022 - pence b 100.00 109.44
Benefits of reinvesting dividends - pence d - 1.8
Dividends paid in the period - pence c 12.11 12.11
Total return (b+c+d)÷a -1 12.1% 25.9%
Annualised total return 3.8% 7.8%
YTD total returns
A measure of performance for the year to date that includes both income and
capital returns. This takes into account capital gains and reinvestment of
dividends (where beneficial) paid out by the Company into the Ordinary Shares
of the Company on the ex-dividend date.
30 June 2023 Share price NAV
Value at 1 January 2023 - pence a 100.00 109.44
Value at 30 June 2023 - pence b 92.50 107.67
Benefits of reinvesting dividends - pence d (0.15) 0.03
Dividends paid in the year - pence c 2.75 2.75
Total return (b+c+d)÷a -1 -4.9% 0.9%
31 December 2022 Share price NAV
Value at 1 January 2022 - pence a 110.80 102.26
Value at 31 December 2022 - pence b 100.00 109.44
Benefits of reinvesting dividends - pence d 0.35 0.26
Dividends paid in the year - pence c 5.18 5.18
Total return (b+c+d)÷a -1 -4.8% 12.3%
(Discount)/Premium to NAV
The amount, expressed as a percentage, by which the share price is more than
the NAV per Ordinary Share.
As at As at
30 June 2023 31 December 2022
NAV per Ordinary Share - pence a 107.67 109.44
Share price - pence b 92.50 100.00
Discount (b ÷a)-1 -14.1% -8.6%
For further information contact:
Secretary and registered office:
Apex Listed Companies Services (UK) Limited
6th Floor, 125 London Wall, London, EC2Y 5AS
Tel: 020 3327 9720
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR EAFNEALLDEAA