REG - Octopus Renewables - Final Results to 31 December 2024
27/03/2025 07:15
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RNS Number : 4162C Octopus Renewables Infra Trust PLC 27 March 2025
27 March 2025
LEI: 213800B81BFJKWM2JV13
Octopus Renewables Infrastructure Trust plc
("ORIT" or the "Company")
Full Year Results to 31 December 2024
Positive NAV total return and fully covered dividend increased in line with UK
CPI
Progress made against capital allocation strategy
Octopus Renewables Infrastructure Trust plc ("ORIT" or the "Company"), the
diversified renewables infrastructure company, announces its audited results
for the 12 months ended 31 December 2024 ("FY 2024").
Highlights
As at 31 December 2024 As at 31 December 2023
(audited) (audited)
NAV per Ordinary Share (p) 102.6 106.0
Ordinary Share price (p) 68.0 90.0
Dividends declared per Ordinary Share (p) 6.02 5.79
Dividend Cover 1.24x 1.18x
Net asset value ("NAV") (£m) 570.4 599.0
Gross asset value ("GAV") (£m)(1) 1,028.8 980.3
NAV total return in the year +2.5% +2.1%
Generation (including compensation from curtailment) (GWh) 1,240 1,161
Revenue (operational portfolio) (£m) 131.7 117.4
EBITDA (operational portfolio) (£m) 85.5 73.8
Financial Highlights
· Positive NAV total return of +2.5% (2023: +2.1%)
· Dividend target of 6.02p met and fully covered by operating portfolio
cash flows
o Increase of 4% over 2023, in line with UK CPI for the third consecutive
year
· NAV reduced to £570.4m (2023: £599.0m), as returns on the
portfolio, including the positive impact from the sale of Ljungbyholm,
completion of construction at Breach solar farm and new PPAs, were offset by
running costs and the return of capital to shareholders
· GAV increased to £1,028.8m (2023: £980.3m)
Operational Highlights
Overall operational performance improved year on year across all three key
metrics
· Generation grew by +7%, revenue by +12% and EBITDA by +16%
Active portfolio management continued
· In February, the Company completed the acquisition of four newly
constructed solar farms in Ireland (Ballymacarney) totalling 199 MW
· Acquisition of fifth newly constructed 42 MW solar farm site,
Harlockstown, completed in October
o Together the acquisitions create largest solar complex in Ireland
· Crossdykes 46 MW wind farm in Scotland entered into a PPA with Sky
UK, set to commence April 2025
Capital allocation strategy executed
· £10 million share buyback announced in June as part of ongoing
capital allocation strategy (£8.7m deployed as at 25 March 2025)
· €7 million invested in a funding round for developer Simply Blue,
taking ORIT's stake to c.20%
· Swedish onshore wind farm, Ljungbyholm, sold to institutional
investor for approximately €74m
o The sale price delivered an IRR of 11.3% over the lifetime of ORIT's
ownership
o Takes total proceeds from capital recycling to £161m
Post Year End
· RCF maturity extended to June 2028 and size reduced from £270.8m to
£150m, saving c.£850k p.a.
· Signed a new £100m five-year term loan facility
o £98.5m of the RCF repaid, reducing the all-in borrowing rate to 5.25%
from c.6.5%.
· Three clear capital allocation goals announced:
o Share buyback programme extended by an additional £20 million
o Total gearing to be brought below 40% of GAV by the end of 2025
o A commitment to further asset sales of at least £80 million by the end of
2025; together with making selected accretive investments
· Commitment to assess the existing portfolio and investment strategy
and conduct a review of current fee arrangements
· Additional €3.4m invested into Nordic Generation ("Norgen"), a
specialist developer focused on the Finnish wind and solar market; deal
restructured to provide ORIT with a direct 30% stake in Norgen
· A further £1.5m invested into BLC Energy Limited, a UK development
business focused on creating new ground-mounted solar PV and co-located
battery storage assets
· Increased target dividend for FY 2025 by 2.5% to 6.17p, in-line with
UK CPI for fourth year running(2)
Phil Austin, Chair of Octopus Renewables Infrastructure Trust plc, commented:
"Over the last financial year we achieved a positive NAV total return and
increased our fully covered dividend, in line with UK CPI. At the portfolio
level, generation increased as well as gross revenue and EBITDA from
operational assets, showing the positive impact of active portfolio management
during 2024.
"During FY 2024, and to date, we have continued our disciplined approach to
capital allocation, reducing debt, buying back shares, executing on strategic
asset sales and making targeted investments where we see opportunity for
future value creation. We are steadfast in our commitment to delivering value
for shareholders, and the Board, alongside Octopus Energy Generation, is
actively evaluating enhanced strategic initiatives to unlock further growth.
"While short-term market dynamics remain challenging, the fundamentals for
renewable energy infrastructure have never been stronger. ORIT is
well-positioned to benefit from the energy transition, and we are confident
that our strategic approach, diversified portfolio, and commitment to active
asset management will drive sustainable long-term value."
Annual Report and Accounts
To view the Company's Annual Report and Accounts please visit ORIT's website
here:
https://www.octopusrenewablesinfrastructure.com/
(https://www.octopusrenewablesinfrastructure.com/) . The Annual Report and
Accounts will also shortly be available on the National Storage Mechanism,
which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Results presentation today
There will be a virtual presentation for sell-side analysts today at 11am.
Please contact Burson Buchanan for details on octopus@buchanan.uk.com
(mailto:octopus@buchanan.uk.com) .
The Company's management team will also provide a live presentation via the
Investor Meet Company platform, today at 1.30pm. The presentation is open to
all existing and potential shareholders. Questions can be submitted at any
time during the live presentation and a recording will be made available on
demand after the presentation has concluded. Investors can sign up to Investor
Meet Company for free here:
https://www.investormeetcompany.com/octopus-renewables-infrastructure-trust-plc/register-investor
(https://www.investormeetcompany.com/octopus-renewables-infrastructure-trust-plc/register-investor)
A new investor presentation relating to the annual results, will shortly be
published on ORIT's website as above.
Octopus Energy Generation (Investment Manager) Via Burson Buchanan or
Chris Gaydon, David Bird orit@octopusenergygeneration.com (mailto:orit@octopusenergygeneration.com)
Peel Hunt (Broker) 020 7418 8900
Luke Simpson, Liz Yong, Huw Jeremy (Investment Banking)
Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris
Burson Buchanan (Financial PR) 020 7466 5000
Charles Ryland, Verity Parker, Samuel Adams
Apex Listed Companies Services (UK) Limited (Company Secretary) 020 3327 9720
Notes to editors
1. A measure of total asset value including debt held in unconsolidated
subsidiaries, but excluding any outstanding equity or debt commitments.
2. The dividend target stated in this announcement is a target only and
not a profit forecast. There can be no assurance that this target 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. The Company's
actual returns will depend upon a number of factors, including but not limited
to the Company's net income and level of ongoing charges. Accordingly,
potential investors should not place any reliance on this target and should
decide for themselves whether or not the target dividend is reasonable or
achievable. Investors should note that references in this announcement 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.
About Octopus Renewables Infrastructure Trust
Octopus Renewables Infrastructure Trust ("ORIT") is a London-listed,
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. As an impact fund, ORIT is helping accelerate
the transition to net zero by investing in green energy, whilst also
contributing to a broader set of UN Sustainable Development Goals through its
impact initiatives. 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 is driving the renewable energy agenda by building
green power for the future. Its 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 14-year track record with approximately £6.8 billion of assets under
management (AUM) (as of 31 December 2024) across 18 countries and total 4.5GW.
These renewable projects generate enough green energy to power 2.6 million
homes every year, the equivalent of taking over 1.4 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/)
Chair's Statement
Philip Austin MBE
Chair, Octopus Renewables Infrastructure Trust plc
On behalf of the Board, I am pleased to present the annual report for Octopus
Renewables Infrastructure Trust plc for the 12 months ended 31 December 2024
(the "Annual Report").
Over the financial year we delivered a NAV total return of 2.5% (year to 31
December 2023: 2.1%) and increased our dividend in line with UK Consumer Price
Index ("CPI"), returning 6.02p per Ordinary Share to shareholders. We have
continued our disciplined approach to capital allocation, reducing debt,
buying back shares, executing on strategic asset sales and making targeted
investments where we see opportunity for future value creation. Our share
buyback programme, initiated in June 2024, added 0.5 pence to NAV per share
over the period to the end of the year. In total, including the dividends, we
returned £40.4 million to shareholders in FY 2024.
At the portfolio level, generation increased 7% over the year (including
compensation from curtailment). The resulting gross revenue from the
operational assets grew 12% over 2024, with EBITDA increasing by 16%, showing
the positive impact of active portfolio management during the year.
Despite this steady progress at the Company and portfolio level, we, like many
of our peers, remain frustrated that our share price has not kept pace, and we
are disappointed to report a decline in shareholder returns of -18.3% in this
financial year. With this in mind, post year end, we announced a series of
decisive capital allocation goals, as detailed later in my statement,
alongside a commitment to assess the existing portfolio and investment
strategy, and conduct a review of current fee arrangements as part of the
Company's longer-term plan to drive value for shareholders.
Reflecting on five years of ORIT
December 2024 marked five years since ORIT's IPO, so now represents an
opportune time to time to reflect on what we have achieved to date. In this
period we have successfully built a diversified and resilient portfolio in the
face of evolving, and challenging, market conditions. Despite several
sector-wide headwinds in recent years, we have also made a tangible impact on
society, and this is core to our purpose, as you can read in our feature
within the Company's Annual Report.
As a Board we remain acutely aware that shareholder returns over the five-year
period (-12.8%) have been disappointing. Notwithstanding this, as we turn into
our sixth year we believe that we offer something differentiated in our broad
diversification, developer and construction portfolio, and active approach to
investing in renewable energy infrastructure. Against a backdrop of investors
currently favouring other asset classes, such as government bonds, we know we
need to evolve and innovate to remain an attractive proposition. While UK
interest rates have started to come down, we are not passively waiting for a
change in market conditions to solely provide tailwinds for the Company.
Looking forward, the fundamentals of the Company remain strong. NAV total
return over the five-year period has been 31.9%, or 5.6% annualised, and while
a little shy of our target it is a solid return for a fund that has been
maturing. We have an experienced and quality manager in Octopus Energy
Generation ("OEGEN"), and a portfolio that we believe will deliver growth over
the longer term. To this end, the Board is working closely with the Investment
Manager to optimise existing assets and identify opportunities aligned with
the Company's investment objective to generate further growth, whilst also
maintaining a progressive fully covered dividend. Furthermore, the Board and
executive team will continue to talk and listen to our shareholders with a
view to fully understanding their perspectives. We are resolute in doing what
we can to shift the perception of your Company in the market and will take the
necessary action that we believe is in the best interests of shareholders.
Financial performance
We have made steady progress in the year to 31 December 2024 and have
delivered a NAV total return of 2.5%. This has been driven largely by the
dividend payments to shareholders, totalling £33.5 million.
The Company's net asset value declined from £599.0 million (106.0 pence per
Ordinary Share) to £570.4 million (102.6 pence per Ordinary Share) at year
end, reflecting several net movements across the Company and the portfolio.
Positive movements include an uplift from the sale of the Ljungbyholm wind
farm in Sweden, a small increase from the unwind of the construction risk
premium on Breach Solar Farm, and £5.6 million predominantly from the new
power purchase agreement ("PPA") signed with Sky UK Limited for the Crossdykes
wind farm (£5.4 million) and the extension of fixed pricing for some of the
UK ROC-subsidised solar assets (£0.2 million).
These movements were offset by a £1.1 million decrease due to adjustments in
price forecasts for future power, green certificate and capacity market
revenues, as well as a £1.6 million reduction from economic assumptions,
notably foreign exchange movements. Share buybacks also reduced the NAV,
however, as mentioned, the share buyback programme has also contributed
positively to NAV per share. We have materially mitigated the impact of power
price reduction forecasts through building a portfolio with a high proportion
of fixed power revenues. These movements are described in more detail,
alongside a NAV bridge chart, within the Company's Annual Report.
The Company's operating income for the period was £18.5 million (2023: £19.7
million), resulting in a total profit for the year of £11.8 million - a small
decline on the prior year's £12.7 million, attributable to a slightly larger
decrease in the fair value of the assets. This was underpinned by EBITDA from
the portfolio of operational assets totalling £85.5 million (2023: £73.8
million, arising from gross revenues of £131.7 million (2023: £117.4
million)). Besides year-on-year variations in performance of existing assets,
the key drivers of change in revenue and EBITDA from 2023 to 2024 were the
acquisition of the 241 MW of Irish solar and the start of operations of the 67
MW Breach solar farm, offset by the sale of the 48 MW Swedish wind asset.
Dividends
We are pleased to report that over the financial year we once again met our FY
2024 dividend target in full, returning to shareholders a total of 6.02 pence
per Ordinary Share - an increase of 4% over FY 2023's dividend of 5.79 pence
per Ordinary Share and in line with the CPI for the third year running. These
were delivered in four quarterly interim payments, with the latest being paid
on 28 February 2025. The dividend has been fully covered by cash flows arising
from the Company's portfolio of assets.
On the 31 January 2025, inline with the Company's progressive dividend policy,
we announced an increase in the target dividend to 6.17p per Ordinary Share
for the current financial year ("FY 2025"). Once again, this increase of 2.5%
over FY 2024's dividend target is in line with CPI and now marks the fourth
consecutive year the Company has increased its dividend target in line with
inflation. The FY 2025 dividend target is also expected to be fully covered by
cash flow generated from the Company's operating portfolio.
Portfolio generation
During 2024, including compensation from curtailment periods, ORIT's assets
produced 1,240 GWh of renewable electricity, representing an increase of 7%
compared with the previous year (1,161 GWh). Full information on electricity
generation in the period can be found within the Company's Annual Report.
While 13% below budget, largely due to lower wind speeds impacting performance
across the onshore wind assets, the portfolio continues to deliver strong
contributions to the energy transition.
Solar generated 457 GWh, 8% below budget, due in part to lower-than-expected
irradiance. However, generation was 66% higher year-on-year, reflecting the
positive impact of our Ballymacarney acquisition in Ireland and the Breach
farm in the UK, the first few months of operations of which have been strong.
Onshore wind (including six months of contribution from the Swedish asset sold
in August) produced 631 GWh, 18% below budget, with nearly half of the
variance attributed to weaker-than-expected wind conditions. Offshore wind
(ORIT's 15.5% stake in Lincs) generated 153 GWh, 4% below budget, as lower
turbine availability offset otherwise favourable wind conditions.
Despite short-term variability, ORIT remains focused on delivering
sustainable, long-term returns while supporting the global transition to net
zero. The Investment Manager continues to work with sites and assets to ensure
generation output is as efficient as it can be. As issues occur, as they
inevitably do, we are pleased to see OEGEN acting quickly to rectify these.
Further details on the portfolio's performance can be found within the
Company's Annual Report.
Capital allocation and enhancing shareholder value
During 2024, we refined our capital allocation strategy, balancing asset
sales, debt reduction, and share buybacks to enhance shareholder returns.
Having prioritised reducing short-term borrowings in the first half of the
year, in the second half we initiated a share buyback programme to take
advantage of the wide discount to NAV that the Company's shares are trading
at.
Over the remainder of the financial year, we repurchased a total of 9,268,762
shares for a consideration of £6.8 million, resulting in a NAV per Ordinary
Share increase of 0.5 pence. As announced on 11 March 2025, the Company has
extended the share buyback programme, assigning a further £20.0 million.
While we understand the benefits of investing in our heavily discounted
shares, we are mindful of maintaining the strength of our balance sheet at all
times, and buy backs will continuously form part of wider discussions around
and the best use of capital to drive value for shareholders.
Over the financial year, we continued our focus on bringing down debt and the
associated costs, and while total leverage increased in the first half due to
acquisitions, over the second half it reduced marginally from 46% to 45%.
However, this remains greater than our target of <40%. To this end we
continue to actively manage gearing within our structure and, I am pleased to
report that, in Q1 2025, we signed a new five-year term loan facility on
attractive terms, secured on assets, to be used to pay down materially the
more expensive short-term revolving credit facility ("RCF"). Subsequent to
this, we arranged a tenor extension and reduction in size of the Company's
RCF, in order to reduce costs further whilst retaining access to an
appropriate level of capital for the medium term. Earlier this month, we set a
clear objective to reduce gearing to below 40% by year-end 2025, through a
combination of asset sales (£80.0 million target), refinancing, and capital
recycling. At the same time, we will remain selective with new investments,
ensuring they align with our longer-term objectives.
As at 31 December 2024, the ORIT's cash balance was £11.9 million (2023:
£10.0 million).
Capital recycling and investment activity
ORIT maintains an active capital recycling programme, to ensure the portfolio
is continuously supporting the Company's objectives. In line with this, we
have continued with disciplined investment activity alongside carefully
considered disposals.
In August 2024 the Company completed the sale of Ljungbyholm onshore wind farm
in Sweden, marking the third milestone of the capital recycling programme (see
the Company's Annual Report for more details). The sale delivered an IRR of
11.3% over the lifetime of the investment and a valuation uplift of £0.8
million or +0.14 pence per Ordinary Share above the Investment Manager's
internal valuation as at 30 June 2024. The transaction provided further
evidence that the current share price discount to NAV is not reflective of the
underlying value of the Company's assets.
While the repayment of short-term borrowings remains a key capital allocation
priority for the Company, selective new investments are being pursued. As
reported in the 2024 Interim Report, during the first half of 2024, a £5.9
million follow-on investment was made into Simply Blue Group, one of ORIT's
developer stakes, as part of its most recent funding round. In February 2024,
ORIT completed the acquisition of the first four newly-constructed solar sites
totalling 199 MW in Dublin, Ireland (the Ballymacarney solar complex). In
October, the Company added a fifth, newly-constructed 42 MW solar farm,
Harlockstown, together with the earlier acquisition, creating the largest
solar complex in Ireland.
We have now recycled £161 million, the highest proportionate amount of the
peer group compared to the Company's size. We have prioritised selling assets
for attractive prices, and to date, these exits have achieved a weighted
average uplift to carrying value of 12%.
Construction and development
In the first half of the financial year, the Company completed the
construction of the 67 MW Breach solar farm in the UK, which is now the second
largest solar site in ORIT's portfolio after Fidorfe (68 MW, part of the
Ballymacarney solar complex), representing 12% of ORIT's solar capacity as at
31 December 2024.
Post period, a further 6 MW of capacity completed construction and is
undergoing commissioning, through ORIT's 50% share of the Woburn Road battery
storage asset. Further details on this asset can be found within the
Company's Annual Report.
Revenue management and optimisation
During the period, the Company signed a power purchase agreement ("PPA") for
Crossdykes onshore wind farm with Sky UK Limited (the media and telecoms
corporation), set to commence in April 2025. This agreement secures a CPI
linked fixed price for 69% of Crossdykes' production, resulting in a NAV
uplift versus the merchant power price case. This takes our total number of
corporate PPAs to five; four of which were originated in-house by the
Investment Manager.
Overall, with other fixed-price contracts and subsidies, ORIT's portfolio has
84% of its revenues fixed for the next two years. In addition, 48% of revenues
are inflation-linked for the next 10 years.
Corporate Governance and Board
The Board advocates robust corporate governance and stewardship in the running
of ORIT to promote the highest possible standards for stakeholders.
Since all the directors except Sarim Sheikh joined the Board at the Company's
inception and will reach their ninth anniversary simultaneously, ORIT has
embarked on gradual rotation of directors as part of its succession planning
to ensure stability and continuity.
As part of this process, I am pleased to announce the appointment of Sally
Duckworth, who joined the Board as an independent Non-Executive Director with
effect from 21 March 2025. Sally is a qualified accountant who has spent over
30 years' in financial services, with broad experience of investment trusts.
We look forward to welcoming her to the ORIT Board.
Sally will replace Audrey McNair who will step down at the Annual General
Meeting ("AGM") in June 2025 and will assume the role of chair of the Audit
and Risk Committee. On behalf of the Board I would like to thank Audrey for
her valuable contribution over this time and wish her the very best for the
future.
ESG & Impact highlights
We remain steadfast in our commitment to advancing our operations in line with
our ESG and Impact Strategy, ensuring that we continue to drive meaningful
change. In 2024, ORIT further strengthened its ESG approach by aligning with
TCFD recommendations and completing its first Carbon Disclosure Project
submission, achieving a B score, the highest possible for an SME. This year,
our portfolio avoided approximately 297 kt of CO₂ emissions, directly
contributing to the global effort to mitigate climate change. Our fully
operational portfolio is expected to generate enough clean electricity to
avoid around 383 kt of CO₂ emissions per annum. This is equivalent to
planting 1.9 million trees or supplying power to 362,025 homes each year - or
around 10% of all homes in London.
ORIT remains committed to delivering broader environmental and social
benefits. We continue working with impact partners such as Earth Energy
Education, Good Bees, and BizGive, while expanding our partnerships to include
organisations like Generation UK and Ireland. This partnership focuses on
upskilling for the energy transition, with ORIT supporting the launch of a new
solar installer programme to equip individuals facing barriers to employment
with the skills needed to enter the sector. These initiatives are funded
through ORIT's dedicated annual impact budget, which stood at £340,000 in
2024. Additionally, over £1 million was allocated to community benefit funds
linked to specific assets, ensuring our projects deliver tangible local
benefits. These funds have supported biodiversity initiatives on and around
ORIT sites (see infographic within the Company's Annual Report for more
detail), unlocking additional benefits across new sites in Ireland, and funded
numerous community initiatives detailed in the ESG & Impact Report.
Outlook
As we enter the second half of our first decade, we recognise both the
challenges and opportunities ahead. While market conditions remain volatile,
we are encouraged by positive structural tailwinds, including declining
interest rates and the continued global commitment to the energy transition.
The renewable energy sector is not only here to stay - it is accelerating,
with evolving technologies in renewables infrastructure playing a pivotal
role. Against this backdrop, the Board and Investment Manager remain confident
in the long-term opportunities ahead and ORIT's role in this transformation.
Whilst there has been some pull-back from oil and gas majors and US financials
in reaction to the change in sentiment from the new US administration, the
broader global momentum behind decarbonisation continues to build. Strong
policy support, corporate net-zero commitments, and increasing demand for
sustainable infrastructure assets are driving the energy transition forward.
Governments worldwide continue to push ambitious decarbonisation targets, with
the EU Green Deal and UK's Net Zero Strategy providing long-term policy
certainty and financial incentives for clean energy investment in ORIT's core
markets. In continental Europe, easing macroeconomic pressures - particularly
through declining interest rates - are expected to support infrastructure
valuations and bolster investor confidence. Power price volatility remains a
challenge, but a continued focus on fixed-price contracts, corporate PPAs, and
diversified revenue streams will help mitigate risk and stabilise returns.
Investment in energy storage and grid flexibility solutions is also gaining
momentum, reinforcing the long-term value of assets that integrate renewable
generation with energy storage capabilities. ORIT is well-positioned to
capture these opportunities, leveraging our broad and diversified portfolio
across technologies and geographies. We are steadfast in our commitment to
delivering value for shareholders, and the Board, alongside Octopus Energy
Generation, is actively evaluating enhanced strategic initiatives to unlock
further growth.
Engagement with our shareholders and stakeholders remains a priority, ensuring
our strategy aligns with investor expectations and market opportunities. A key
focus is ensuring ORIT's high-quality portfolio is fully recognised in
shareholder returns. Achieving this requires disciplined capital management,
including enhancing shareholder value through our share buyback programme,
aligning our investment strategy with market expectations, and selectively
pursuing high-value growth opportunities that strengthen our risk-adjusted
returns. Additionally, we are committed to deepening stakeholder engagement,
reinforcing ORIT's position as a leading player in the renewables sector. To
support this, OEGEN has bolstered its team with two new ORIT-dedicated hires
in the year: a senior asset management resource and an investor relations
lead.
While short-term market dynamics remain challenging, the fundamentals for
renewable energy infrastructure have never been stronger. ORIT is
well-positioned to benefit from the energy transition, and we are confident
that our strategic approach, diversified portfolio, and commitment to active
asset management will drive sustainable long-term value. I would like to
thank our shareholders for their continued trust and support, particularly
those who have been with us since IPO, as well as those who have joined us
more recently. As we approach our first continuation vote in June, we hope you
share our confidence in ORIT's potential.
I look forward to engaging with as many of you as possible in the coming
months. The Board is always open to your views, and now more than ever, we
value your input as we shape ORIT's next chapter.
Investment Manager's Report
Investment Manager: Octopus Energy Generation
Octopus Energy Generation (trading name of Octopus Renewables Limited), part
of the Octopus Energy Group, is a specialist clean energy investment manager
with a mission to accelerate the transition to a future powered by renewable
energy.
Fund Managers
Chris Gaydon
Investment Director20+ years of experience
Chris joined Octopus Energy Generation as an investment director in 2015 and
is a long-standing member of the OEGEN's Investment Committee and Leadership
Team which has led the growth in OEGEN's fund management business. Having
previously led OEGEN's Investment Team, Chris now focuses on the origination
of acquisition opportunities and fundraising, as well as strategic investments
in related sectors.
Prior to joining the Octopus Group, Chris was a business development director
at Falck Renewables where he had a range of roles, including in M&A and
leading greenfield development in France and Poland. Chris holds a Bachelor of
Commerce (Finance) degree and a Bachelor of Engineering (Chemical) degree from
the University of Sydney.
David Bird Investment Director
15+ years of experience
David is an investment director who joined the Octopus Energy Generation team
in 2014 and works full-time on fund management for ORIT. As well as working in
the transaction team leading acquisitions and project finance debt raising in
the UK, France and Ireland, David has previously led the team responsible for
the management of OEGEN's bioenergy investments and has represented Octopus
Energy Generation on a number of industry panels convened by Ofgem, the GB
energy regulator.
Prior to joining the Octopus Group, David was a director at Walbrook Capital,
a boutique investment manager with a particular focus on renewables. He is a
chartered accountant having qualified at EY, and holds a Masters in
Mathematics from Oxford University.
Capital Allocation and Company Developments
Capital Allocation during 2024
1 £5.9m £6.8m 45%
Investment made during the year Total allocated capital to new investments in the year Shares repurchased leverage
Follow-on investment into developer Simply Blue Group Share buyback programme launched in June 2024 with an initial tranche of up to As a % of GAV
£10 million
(31 Dec 2023: 39%)
Capital Allocation post year end
Value-accretive investments Realise at least £80m £20m buyback extension <40% leverage target
To be considered where it is believed they will support the Company's ability From asset sales by the end of this financial year to fund capital allocation Announced in March 2025 and takes the total committed to £30 million Bring total gearing down to below 40% GAV by year end
to deliver attractive returns initiatives
£161m 12%
Total proceeds from capital recycling initiatives since launch Aggregate weighted average uplift to holding value
Company Developments during FY 2024 and to date
Simply Blue Group, follow-on investment Sale of 48 MW Ljungbyholm wind farm, Sweden Norgen commitment BLCe commitment
Invested €7 million (£5.9 million) in floating offshore wind and The sale completed in August 2024 and ORIT realised an IRR of 11.3% over the Post period, committed an additional €3.4 million (£2.8 million Post period, committed to a further £1.5 million investment into BLC Energy
sustainable fuels developer in latest funding round lifetime of its investment. equivalent) to Nordic Generation ("Norgen"). Limited ("BLCe").
Construction
6 MW
6 MW in construction in portfolio (pro-rata by ownership), through the stake
in the Woburn Road battery storage project
Debt management
£100m new term loan RCF Amend and Extend
Post-period Post-period
Signs five-year facility on attractive terms with net proceeds used to reduce Maturity date extended to June 2028
RCF
Impact highlights
£340,000 £1m
ORIT's dedicated Funding for local communities for specific projects
impact budget
Capital recycling programme
ORIT's capital recycling programme, launched in 2023 as part of its broader
capital allocation strategy, has remained a central focus during the financial
year. The programme's key aims are to recycle capital into repaying short-term
borrowings and to demonstrate that the Company's project NAVs are fair, all
while maintaining a well-diversified portfolio.
In August 2024, ORIT completed the sale of Swedish onshore wind farm,
Ljungbyholm, to DWS Infrastruktur Europa for €74 million. The sale price
delivered an IRR of 11.3% over the lifetime of ORIT's investment and the
proceeds represented a premium of £1.4 million to the prevailing valuation
prior to agreeing the sale. The proceeds of the transaction were used to
partially repay the Company's short-term debt facility.
Since its inception, three asset sales have been completed, generating
approximately £161 million in total proceeds. The assets selected for the
programme have been carefully chosen to ensure the portfolio remains aligned
with the Company's strategic objectives and balanced in terms of both
geographical distribution and technology mix.
While the programme is still ongoing, the results of the capital recycling
programme to date support the validity of ORIT's asset valuations, suggesting
that the share price discount to NAV does not accurately reflect the Company's
intrinsic value.
Post year end, as part of a capital allocation update, the Company announced
it would realise at least £80 million from asset sales by the end of the
current financial year. This cash would be recycled into paying down debt, and
reducing it to <40% of GAV, as well as buying back a further £20 million
shares, alongside selected accretive investments as part of the ongoing
capital recycling programme.
Case Study
Ljungbyholm Wind Farm: from acquisition of pre-construction project rights to
value-accretive disposal of a de-risked operational asset.
Ljungbyholm wind farm in Sweden was the first investment made by ORIT
following its IPO in December 2019. This case study illustrates ORIT's ability
to create value throughout the investment and ownership lifecycle, from
acquisition at pre-construction stage, through to operations, power
contracting, and an ultimately a successful sale as part of the capital
recycling programme.
Acquisition and construction: ORIT acquired the rights to the 48 MW project in
March 2020 for €68 million from OX2, a high quality developer with whom
OEGEN had an established relationship. A fixed-price turnkey contract was
negotiated with OX2, in order to provide ORIT with a high degree of budget
certainty and to minimise delivery risk. Despite the challenges posed by the
Covid-19 pandemic, construction of the 12 Nordex turbines progressed on
schedule and within budget under the tightly-controlled contract, with the
site reaching full operational status in June 2021.
Securing revenue certainty: Following construction completion, in November
2021 ORIT secured a 10-year power purchase agreement with Owens Corning, a
global Fortune 500 manufacturing company. This agreement was arranged through
OEGEN's specialist energy markets team, and provided the project with a
guaranteed floor price for 100% of the electricity generation whilst also
allowing upside exposure to high market prices.
Capital recycling and strategic sale: As part of its capital recycling
programme, ORIT identified Ljungbyholm as an attractive asset for disposal: by
2024 it was able to demonstrate over two years of reliable operational
performance, and its size and location in the high-demand/low-generation SE4
zone in Sweden made it an attractive asset for buyers. In mid-2024 ORIT agreed
to sell Ljungbyholm to DWS Infrastruktur Europa, German institutional
investor, for approximately €74 million. The transaction delivered an 11.3%
IRR to ORIT over the investment period, and was sold at a premium to ORIT's
holding valuation, which served to validate ORIT's internal valuation
methodology. Proceeds from the sale were primarily used to reduce short-term
debt, lowering ORIT's gearing from 46% to 43%.
Following its sale of the wind farm, ORIT opted to make an additional
contribution to the local community through a donation of 600,000 SEK
(c.£45,000) to Tvärskogs Bygdeförening, a non-profit association that runs
a community centre in nearby Tvärskog. This contribution is equivalent to
doubling the existing community contribution of the wind farm to the community
for the next five years.
The lifecycle of the project illustrates ORIT's ability, under OEGEN's
management, to acquire projects from high quality developers under attractive
terms and with tight construction contracts, then to operate the asset
effectively and to deliver a strategic exit that is value-accretive to
investors.
We expect the Ljungbyholm case to serve as a template that ORIT will repeat in
the future.
Portfolio Breakdown (as at 31 December 2024, including construction assets)
The Company's portfolio of assets and are not segmented by technology, phase
or jurisdiction for the Company's reporting purposes.
Whole site Remaining
capacity Start of asset life
Technology Country Site name (MW) Phase operations (years) Stake %
UK Cumberhead 50 Operational 31/03/2023 28 100%
France Cerisou 24 Operational 15/11/2022 28 100%
Onshore wind Finland Saunamaa 34 Operational 28/08/2021 27 100%
Suolokangas 38 Operational 29/12/2021 27 100%
Germany Leeskow 35 Operational 30/09/2022 28 100%
UK Crossdykes 46 Operational 30/06/2021 26 51%
Offshore wind UK Lincs 270 Operational 31/10/2013 24 15.5%
Wilburton 2 (Mingay) 19 Operational 29/03/2014 19 100%
Abbots Ripton 25 Operational 28/03/2014 29 100%
Ermine Street 32 Operational 29/07/2014 20 100%
Penhale 4 Operational 08/03/2013 28 100%
UK Chisbon 12 Operational 03/05/2015 26 100%
Westerfield 13 Operational 25/03/2015 20 100%
Wiggin Hill 11 Operational 10/03/2015 15 100%
Ottringham 6 Operational 07/08/2013 30 100%
Breach 67 Operational 25/06/2024 39 100%
Charleval 6 Operational 26/03/2013 28 100%
Cuges 7 Operational 17/04/2013 28 100%
Istres 8 Operational 18/06/2013 28 100%
La Verdière 6 Operational 27/06/2013 28 100%
Solar Brignoles 5 Operational 26/06/2013 28 100%
Saint Antonin du Var 8 Operational 28/11/2013 29 100%
Chalmoux 10 Operational 01/08/2013 29 100%
France lovi 1 6 Operational 17/07/2014 30 100%
lovi 3 6 Operational 17/07/2014 30 100%
Fontienne 10 Operational 02/07/2015 30 100%
Ollieres 1 12 Operational 19/03/2015 30 100%
Ollieres 2 11 Operational 19/03/2015 30 100%
Arsac 2 12 Operational 05/03/2015 18 100%
Arsac 5 12 Operational 30/01/2015 17 100%
Ballymacarney (31) 54 Operational 18/12/2023 39 100%
Fidorfe (31) 68 Operational 18/12/2023 39 100%
Ireland Muckerstown (31) 48 Operational 18/12/2023 39 100%
Kilsallaghan (31) 29 Operational 18/12/2023 39 100%
Harlockstown (31) 42 Operational 23/09/2024 40 100%
Battery UK Woburn Road 12 Construction - 35 50%
UK (HQ) Wind 2 - Developer - - 25%
UK (HQ) Hyro - Developer - - 25%
Developer Ireland (HQ) Simply Blue - Developer - - 19%
Finland (HQ) Norgen - Developer - - 50%
UK (HQ) BLCe - Developer - - 100%
(31) Note that these five sites are sometimes (in this report and elsewhere)
collectively referred to as 'the Ballymacarney solar complex'.
Portfolio Breakdown (as at 31 December 2024)
551 MW 203 MW 42 MW 6 MW 5
Across 28 solar plants Across 6 onshore wind farms Across 1 offshore wind farm Across 1 battery storage plant Investments in Developers
84% 48%
Fixed revenue for the next two years Inflation-linked revenue for the next ten years
Portfolio composition on a total value of all investments basis in line with
the Company's investment policy as at 31 December 2024. The investments are
valued on an unlevered basis and including amounts committed but not yet
incurred. Sum may not add up due to rounding.
£1,029m
Total value of all investments
Country
UK: 43%
Ireland: 18%
France: 16%
Finland: 12%
Germany: 7%
Developer: 4%
Technology
Solar: 47%
Onshore wind: 36%
Offshore wind: 14%
Developer: 4%
Battery storage: 0.4%
Asset phase
Operational: 96%
Developer: 4%
Construction: 0.04%
Portfolio composition broken down by MW of capacity pro rata for ORIT's
ownership on a current invested basis as at 31 December 2024
803 MW
Capacity owned
Country
UK: 39%
Ireland: 30%
France: 18%
Finland: 9%
Germany: 4%
Technology
Solar: 69%
Onshore wind: 25%
Offshore wind: 5%
Battery storage: 1%
Asset phase
Operational: 99%
Construction: 1%
Portfolio composition broken down by offtaker and O&M providers as a
percentage of total value of all investments as at 31 December 2024
£1,029m
Total value of all investments
Offtaker
Microsoft: 18%
EDF: 17%
British Gas: 14%
Eesti Energia: 12%
Kimberley Clark: 8%
Npower/Axpo(32): 8%
Alpix: 7%
Iceland: 5%
N/a: 4%
Octopus Energy: 4%
Sky Media: 4%
O&M provider
Statkraft: 18%
Nordex: 18%
Orsted: 14%
Vestas: 12%
Engie: 11%
Recurrent Energy: 6%
RES: 5%
SGRE: 5%
Goldbeck: 5%
N/a: 10%
Baywa: 11%
Having multiple offtakers offers advantages such as risk diversification and
offers local expertise in ORIT's key geographical markets
(32) Npower/Axpo: Sites sell ROCs and power to Npower but also have a
price-fixing arrangement with Axpo.
Portfolio performance
Operational portfolio technical and financial performance
This section reports on the performance of the Company's underlying
operational investments and the below table shows the metrics which form part
of the Alternative Performance Measures.
For the financial year ended 31 December 2024, the Company's operational
portfolio generated 1,149 GWh of electricity (2023: 1,110 GWh). Including
compensation primarily earned through economic curtailment periods (e.g.
negative pricing and balancing mechanism) the portfolio achieved a total
equivalent of 1,240 GWh of electricity generation in 2024, ‑13% vs budget
(2023: 1,161 GWh(33)). The most significant individual factor being lower wind
speeds which impacted performance across the onshore wind assets.
(33) This figure differs from the published figure of 1,110 GWh presented in
the December 2023 Annual Report as 1,161 GWh includes compensated generation
from curtailment, making for a like-for-like comparison with the 2024 figure
of 1,240 GWh.
Revenues of £131.7 million were achieved in the year (2023: £117.4 million),
-8% vs budget, as the benefit of our increased output, compared to 2023, was
reduced by declining power prices across Europe. Opex of £46.2 million
(2023: £43.6 million) was incurred in the year, 4% adverse to budget. The
resulting total EBITDA, across ORIT's operational portfolio, was £85.5
million (2023: £73.8 million), -11% vs budget.
During 2024 ORIT acquired its five solar assets in Ireland. Four were acquired
in February, with the fifth site, Harlockstown, being acquired in October. All
sites were acquired shortly after they became fully operational. The reported
performance of these assets includes production and revenues earned during the
commissioning phases where they have been secured for the benefit of ORIT. The
Swedish asset, Ljungbyholm, was sold during the year with a locked box date
for the transaction of 31 December 2023. Note that due to the acquisition and
sale of sites during 2024, comparisons made between performance in 2024 and
2023 are not on a like-for-like basis.
Performance of Company's underlying operational investments
Output(35) Revenue Opex EBITDA
Operational portfolio 1,240 GWh £131.7m £46.2m £85.5m
+7% vs 2023 +12% vs 2023 +6% vs 2023 +16% vs 2023
-13% vs budget -8% vs budget +4% vs budget -11% vs budget
(2023: 1,161 GWh(36)) (2023: £117.4m) (2023: £43.6m) (2023: £73.8m)
Solar 457 GWh £52.2m £13.3m £38.9m
+66% vs 2023 +47% vs 2023 +44% vs 2023 +48% vs 2023
-8% vs budget -6% vs budget +3% vs budget -8% vs budget
(2023: 275 GWh) (2023: £35.2m) (2023: £9.2m) (2023: £26.0m)
Onshore wind 631 GWh £40.3m £9.7m £30.6m
-14% vs 2023 -6% vs 2023 -19% vs 2023 -1% vs 2023
-18% vs budget -14% vs budget +12% vs budget -15% vs budget
(2023: 734 GWh) (2023: £42.7m) (2023: £12.0m) (2023: £30.7m)
Offshore wind 153 GWh £39.2m £23.2m £16.0m
+1% vs 2023 -1% vs 2023 +4% vs 2023 -6% vs 2023
-4% vs budget -4% vs budget +1% vs to budget -9% vs budget
(2023: 152 GWh) (2023: £39.5m) (2023: £22.4m) (2023: £17.0m)
Note: Totals may not add up due to rounding
(35) Amounts quoted are post-compensation generation values (actual output +
compensation for equivalent lost production ORIT is entitled to under
curtailment and/or contractual mechanisms).
(36) This figure differs from the published figure of 1,110 GWh presented in
the December 2023 Annual Report as 1,161 GWh includes compensated generation
from curtailment, making for a like-for-like comparison with the 2024 figure
of 1,240 GWh.
Solar
ORIT's solar portfolio, comprising 28 sites across the UK, Ireland and France,
generated 456.6 GWh in 2024, a decline of 7.6% (-37.6 GWh) vs the budgeted
494.2 GWh. However, the output represents a significant 66% increase compared
with 2023 (275 GWh), driven primarily by the acquisition of the 241 MW
Ballymacarney solar complex in Ireland and the connection of Breach, a 67 MW
site in the UK. The Ballymacarney complex comprises five sites (four were
acquired in February 2024, one in October 2024(37)) and generated over 40% of
ORIT's solar output. Breach's first few months of operations have been strong,
producing 23.6 GWh and exceeding its budgeted generation by 2%.
(37) Generation figures reported for Ballymacarney include data for January
2024, which is in line with the terms of our acquisition agreement which gave
us economic rights to that generation
Of the 37.6 GWh shortfall in generation, 34% (13.0 GWh) was due to
lower-than-expected irradiance (see glossary within the Company's Annual
Report for definition). The majority of the remaining 25 GWh reduction was
attributable to a few key events:
· The largest loss (after irradiation) was due to grid outages:
5.6 GWh across the UK ROC solar and Ballymacarney portfolios. The latter
accounts for 79% of these losses (4.4 GWh), and while the Investment Manager
cannot recuperate curtailment (reduction of generation due to grid or market
conditions) at Ballymacarney, the site has contractual protection in place for
constraints (physical restrictions on the network) on four of the five sites
which accounted for around 60% of the downtime.
· Another key event in 2024 was the repowering of
Saint-Antonin-du-Var, an 8 MW site in France, which suffered a fire in 2023.
The works (carried out under a warranty claim) were initially delayed by a
third party but successfully completed in mid-November 2024. The extra time
incurred, compared to initial expectations, contributed to a 5 GWh loss. Since
completion, performance has exceeded the original budget because the newly
installed panels have a higher power rating than the original ones.
· The final key loss event in 2024 was the spread of lichen on
panels at two solar farms in France, which lowered production efficiency and
accounted for 5 GWh of losses. Finding a solution has not been straightforward
due to environmental regulations, but a new, environmentally safe product is
now being tested with the goal of rolling it out in Q2 2025. Compensation for
losses incurred due to the issue is subject of negotiations with the
contractor.
The solar portfolio generated revenues of £52.2 million for 2024, -6% vs
budget (£3.6 million). 78% of the variance to budget was due to under
production (£2.8 million), the remaining 22% was due to movement in energy
prices in the UK portfolio (£0.8 million) which is exposed to merchant prices
(the French & Irish solar portfolios benefit from 100% fixed revenues
under feed-in-tariffs and corporate power purchase agreements respectively).
Revenues arising under fixed price contracts represented 97% of total revenue
from the UK, French & Irish solar portfolios in the year.
The portfolio realised an EBITDA of £38.9 million, -8% vs budget (£3.2
million) as a consequence of lower revenues, offset by savings on opex of 3%
(£0.4 million) primarily due to lower than anticipated business rates on the
Irish portfolio. Total opex amounted to £13.3 million.
2024 solar output variance to budget (GWh) is set out in pictorial form within
the Company's Annual Report.
Onshore wind
ORIT's onshore wind portfolio (seven sites across five countries in Europe,
including the Swedish asset sold in August 2024) generated 630.7 GWh of
renewable electricity in 2024(38). This was down 18.3% (-141.1 GWh) vs the
budget of 771.7 GWh, in part due to lower than projected wind resource over
the period, which was responsible for 42% of the variance (-59.7 GWh).
(38) Generation reported for Ljungbyholm is the for the period January to June
2024; the sale was announced on 18 July 2024.
The 630.7 GWh total production figure includes compensated production for
economic curtailments - generation volumes lost from switching production down
or off - resulting from negative pricing periods and the UK Balancing
Mechanism (91.7 GWh) (further information contained within the Company's
Annual Report). The equivalent total for 2023 was 734 GWh, including 39 GWh of
grid compensated generation noting there is a natural reduction given we sold
onshore wind farm, Ljungbyholm, in the financial year, and 2023 also included
six months of generation from the Polish sites sold in the second half of
that year. Other contributors were the main bearing failures at the two
Finnish sites (-30.6 GWh) - see case study within the Company's Annual Report
for further detail. All defective main bearings on Saunamaa, one of the two
sites, have now been replaced and 12.2 GWh of losses compensated.
The remaining 8.2 GWh of losses is expected to be compensated in 2025.
Rectification works on the second site, Suolakangas are progressing and
compensation for 10.2 GWh of losses 2024 is pending.
Another contributor to the generation loss over the period was a grid outage
at Cumberhead (9.3 GWh). The outage was initially scheduled for two months,
but OEGEN's active involvement and cooperation with the grid allowed the
Investment Manager to shorten it to under 20 days. As reported in the 2024
Interim Report, Cumberhead also experienced lower than expected availability
during the post-construction ramp-up period, leading to lost generation of
(10.1 GWh). These operational challenges have now been resolved and will be
compensated under the turbine operation and maintenance agreement, with H2
2024 technical performance significantly improved compared to earlier
performance.
The portfolio generated a total revenue of £40.3 million for 2024, -14% vs
budget (£6.8 million). Lower than expected production resulted in a £10.5
million decrease in revenue, this was offset by a £3.7m favourable variance
in average power prices vs budget.
The portfolio realised an EBITDA of £30.6 million, -15% vs budget (£5.4
million), as a consequence of the lower revenues achieved. Overall opex
amounted to £9.7 million, 12% favourable to budget (£1.4 million
underspend), the largest single contributor being business rates relief at
Cumberhead (£0.6 million).
2024 onshore wind output variance to budget (GWh) is set out in pictorial form
within the Company's Annual Report.
Offshore wind
The offshore wind portfolio (made up entirely of ORIT's 15.5% stake of the
Lincs asset), produced 153.2 GWh in 2024, a decline of 4% (-6.1 GWh) vs
budget of 159.3 GWh. Favourable wind conditions (+1.9 GWh) were offset by
lower turbine availability (-4.5 GWh) due to a number of breakdowns of
significant components. There were ten generators and three gearboxes which
required replacement in the period at the site across the 75 turbines. The
Investment Manager has requested root cause analysis, and, depending on the
outcome, is considering proactive replacement of all generators on site on a
phased basis over the next few years, the estimated cost of which is
incorporated in the valuations. An insurance claim is pending.
Lincs generated revenues of £39.2 million, -4% vs budget (£1.8 million).
This was due to lower than expected production.
EBITDA for 2024 totalled £16.0 million, -9% vs budget (£1.6 million). Opex
was £23.2 million, 1% favourable to budget (£0.2 million), due to lower
O&M spend in the year.
2024 offshore wind output variance to budget is set out in pictorial form
within the Company's Annual Report.
Asset management
Octopus Energy Generation actively manages ORIT's assets and follows a
proactive approach of identifying and mitigating risks to secure the long-term
performance of its growing and diverse global portfolio of renewable energy
assets.
Case Study: Fleetwide Main Bearing Fault Resolution at Finnish Wind Farms
Background Two operational wind farms in Finland experienced a fleetwide main bearing
fault, posing a significant operational and financial risk. The issue was
identified through routine maintenance and condition monitoring, which
highlighted early signs of component wear. While most turbines required a
straightforward bearing exchange, one turbine presented a more complex
challenge, with initial estimates suggesting a replacement timeline of 12-18
months. Given the potential impact on revenue and asset performance, swift and
strategic action was essential.
Strategic Response Recognising the urgency of the situation, a proactive management approach was
taken to minimise downtime and financial exposure. A comprehensive supply
chain strategy was implemented, leveraging key industry relationships to
expedite the procurement of necessary components. As a result, the complex
main bearing exchange was successfully completed within six months -
significantly ahead of initial projections.
In parallel, proactive condition monitoring measures were enhanced through the
integration of Onyx's advanced monitoring system. This enabled real-time data
analysis, allowing for earlier detection of potential failures across the
fleet. The system provided valuable insights, improving predictive maintenance
capabilities and reducing the impact of similar faults occurring in the
future.
Lessons Learned & Implementation Following the completion of the main bearing replacements, a structured
lessons learned review was conducted in collaboration with the contractors.
The insights gained have been systematically incorporated into the ongoing
asset management strategy ensuring that potential failures can be addressed
before they escalate into major operational disruptions.
Financial & Contractual Protection Strong contractual protections were in place, safeguarding the wind farms.
Liquidated Damages clauses were successfully enforced, providing financial
compensation for the downtime incurred. This contractual robustness not only
mitigated revenue loss but also reinforced the importance of well-structured
agreements in minimising risk exposure for investors.
Conclusion The successful resolution of the fleetwide main bearing fault demonstrates the
value of OEGENs proactive asset management, strategic supply chain engagement,
and leveraging the latest technology. By implementing these measures, downtime
was significantly reduced, long-term reliability was improved, and financial
losses were mitigated.
Construction and development portfolio update
Central to ORIT's strategy is the principle of additionality - actively
increasing renewable energy capacity. By investing in construction assets and
developer companies, ORIT's investors have the opportunity to access an
element of capital growth alongside the income generated by the Company's
operational portfolio. These construction and development investments also
align with ORIT's impact objective, ensuring investors directly contribute to
new renewable energy projects, driving the energy landscape towards net zero.
490 MW 109 MW
Constructed since inception New capacity connected in the year
Construction achievements since inception As of 31 December 2024, ORIT has successfully built 448 MW of renewable
capacity across 12 sites, comprising 309 MW from solar sites and 181 MW from
onshore wind. These construction efforts have generated a total uplift of
£15.8 million to Net Asset Value since inception, driven by yield compression
as assets transition and are de-risked from construction to operational
status.
Construction in FY2024 A key milestone in the year was the connection to the grid of the 67 MW Breach
solar farm, marking the start of its 10-year Power Purchase Agreement ("PPA")
with Iceland Foods. While construction was completed on schedule for the
planned energization in October 2023, the grid connection was delayed until
June 2024 due to National Grid constraints. The project was managed by a
dedicated OEGEN construction manager, supported by an external owner's
engineer.
Additionally, construction was completed at Harlockstown (42 MW), the fifth
site within the Ballymacarney solar complex. ORIT oversaw the construction
phase and subsequently acquired the site in Q3 2024 following successful
commissioning tests.
Constructed portfolio Currently, 6 MW of capacity is under construction, representing ORIT's 50%
share of the Woburn Road battery storage asset. The construction costs are
fully funded by ORIT's JV partner, Sky, another fund managed by OEGEN.
Completion is expected in April 2025, with ORIT having until May 2025 to
choose to contribute to its share of the costs. This decision will be based on
an assessment of the investment's expected returns versus other capital
allocation priorities. If ORIT opts not to contribute, its stake will transfer
to Sky.
Developer investments overview
5 15 GW Preferential access to fund construction-ready sites Potential for higher returns
Developer investments Combined pipeline of renewable energy generation projects Arising from development pipelines Than asset investments
Developer investments overview
Simply Blue Group · 19% stake ORIT first invested in Simply Blue in August 2021 for a 12% stake, with later
increases in stake to 15.5% and 19% through follow-on investments. ORIT
· Floating offshore wind invested alongside Sky (a private fund managed by Octopus Energy Generation)
through a joint venture.
· UK and Europe
The latest funding was provided in June 2024, in which ORIT provided €7
million (structured as a convertible loan) to enable Simply Blue to continue
developing its large pipeline of offshore wind and sustainable fuels projects
whilst it seeks to raise long-term strategic funding to bring these projects
through to the construction-ready phase.
Further updates on the external fundraising processes for Simply Blue are
expected later in 2025.
Wind2 · 25% stake In December 2021, ORIT committed up to £10 million in development funding for
9 newly formed joint venture onshore wind farms, with Wind2 providing
· Onshore wind development services. This investment was made through a joint venture with
Sky.
· UK
By the end of 2024, the Wind2 team have made good progress compared to the
business plan set at acquisition, with the total development pipeline reaching
approximately 1 GW. 83 MW of pipeline capacity had been submitted for
planning, with the first ready-to-build milestone now expected for 2026.
Capital deployment remains below forecast, principally as a result of planning
delays.
BLC Energy · 100% stake ORIT entered into a development services agreement with BLC Energy to fund up
to £2 million to support the development of solar and battery storage
· Solar and battery storage projects across the UK, through a vehicle called Trio Power Limited.
· UK In 2024, the BLC Energy team originated several new English solar projects
bringing the total pipeline under development to c. 1 GW across solar &
BESS. Of the current pipeline, c. 400 MW has both heads of terms signed for
land rights and grid applications submitted.
Nordic generation · 50% stake In April 2022, ORIT co-invested with Sky in a joint venture to support
renewable energy development in Finland.
· Solar and onshore wind
The Norgen development team had a successful 2024, progressing its pipeline of
· Finland 9 secured projects, whilst also identifying various new pipeline and strategic
opportunities in the market. At the end of 2024, the projects under
development totalled c. 1 GW across wind and solar, with three projects having
received planning approval for a combined 353 MWp. Building permit
applications are currently in progress, and efforts are focused on the final
stages of development.
HYRO · 25% stake ORIT agreed to invest up to £5 million into HYRO, a JV between ORIT and Sky
and the global developer company, RES. HYRO was established to develop green
· Green hydrogen production electrolysis projects in England, Scotland and Wales for industrial
offtake/consumption.
· UK
Hyro is currently progressing with late-stage development work for the
Northfleet hydrogen production project, which was awarded a contract in the UK
Government's first hydrogen allocation support ("HAR1") in December 2023. It
is expected to complete the detailed design phase and reach ready-to-build
status in 2025.
Market outlook
Commentary ORIT's position and opportunity
Clean energy transition: broad picture In 2024, the global clean energy transition advanced significantly, with As has been the case since launch, ORIT is well positioned to capture value in
global investment in low-carbon energy surpassing $2 trillion for the first this environment, given its technological and geographical mandate. The
time(40). China led the surge, installing a record 357 GW of wind and solar Company's ability to invest in operational and pre-construction assets, as
power, exceeding its renewable energy targets ahead of schedule(41). well as developers, remains a key differentiator, enabling value creation
across the full asset life cycle.
In Europe, for the first time, solar-generated power exceeded the output from
coal, with renewables now accounting for 47% of the EU's electricity mix(42). OEGEN, as Investment Manager, continues to leverage its deep expertise and
Despite this positive progress, investment into the energy transition declined industry relationships to execute on high-quality opportunities.
by 6.5% in the EU and 12% in the UK, primarily due to policy uncertainties and
infrastructure challenges(43).
In the United States, Donald Trump's re-election in 2024 marked a significant
shift in energy policy. The administration has prioritised fossil fuel
production, including expanded drilling and tax incentives for oil, gas, and
coal, while rolling back environmental regulations and suspending offshore
wind projects(44).
On a global basis, however, consensus remains that the direction of travel and
the global momentum towards the clean energy transition remains strong.
Macro-economic environment In the UK, Consumer Price Index ("CPI") inflation fell to 1.7% in September ORIT's assets benefit from a high degree of inflation-linked revenue, and
2024, marking its lowest point since April 2021. The decline prompted the Bank volatility in inflation is therefore well protected. High interest rates
of England to reduce the base rate by 0.25% to 5% in August, followed further remain a headwind, and more-so, high government bond yields, since these tend
cuts to 4.75% in November and then to 4.5% in February 2025. In Europe there to apply negative pressure to share prices as investors consider these
was a steady decrease in inflation rates over the year. By September 2024, investments over equities.
inflation had fallen to 1.7%, marking the first time it dipped below the ECB's
2% target since 2021, and the ECB has cut rates accordingly. The wider investment trust sector has suffered from this dynamic with many of
these companies experiencing share price declines over the year and subsequent
Government bond yields in the UK exhibited notable volatility throughout 2024 widening of discounts to NAV.
and in January 2025, yields on 10-year UK gilts reached 4.83%, the highest
level since the 2008 financial crisis. Consensus is that there will be more
rate cuts in 2025, and therefore expectation for bond yields to also fall.
Indeed gilt yields have fallen to around 4.5% at the end of February 2025, but
the environment of relatively high risk-free rates may put upward pressure on
valuation discount rates for UK assets.
Outlook in the UK The UK government advanced several key initiatives in 2024, with the Clean These aggressive UK targets mean that there will be large volumes of renewable
Power 2030 Action Plan ('CP30'), launched at the end of the year, mapping out energy infrastructure projects requiring funding in the UK over the next few
a pathway to achieve a decarbonised and cost-effective energy system by 2030. years. Even if the ambitious GW capacity targets are not met the Department
Additionally, the UK government's Review of Electricity Market Arrangements for Energy Security and Net Zero ("DESNZ") predicts a requirement of £40
("REMA") initiative progressed, with confirmation of key changes to the system billion a year of funding from the private sector. Subject to being able to
- including locational (or "zonal") pricing - expected in mid-2025, before the manage the evolving regulatory environment, there will be ample opportunity
implementation phase starts. for ORIT to deploy into UK projects.
Significant efforts have also been made by National Energy System Operator The technological and geographical diversification within ORIT's UK portfolio,
("NESO"), the public body that manages the UK's energy systems, to streamline together with widespread acceptance of the importance of maintaining investor
grid connection processes and help projects connect to the grid more quickly confidence, means that any market design changes from REMA are not currently
and easily. expected to have a material impact on ORIT's portfolio.
Overall, the UK government aims to increase solar capacity from 17 GW to 45
GW, onshore wind from 16 GW to 27 GW, and offshore wind from 15 GW to 50 GW by
2030.
Outlook in Europe Over the medium to long term, robust tailwinds mean that growth is expected to ORIT maintains a diversified presence across European markets, with
prevail in Europe, despite the slight slow-down in 2024 mentioned earlier. The investments in multiple countries. Leveraging OEGEN's deep market expertise
June 2024 EU elections saw a broad shift to the right, raising concerns about and strong industry relationships, the Company is well positioned to navigate
potential softening of climate policies. However, the long-term commitment to regulatory changes and capitalise on new opportunities in Europe, once capital
decarbonisation remains intact, with renewables now accounting for around half becomes available.
of total EU electricity generation.
Power prices and green certificates European power markets remained volatile over 2024, with weather and ORIT remains well-insulated from movements in wholesale power prices, with 84%
geopolitical risks being key to driving movements. For further details, see of its revenues fixed for the two years up to 31 December 2026. These fixed
the "Power Prices Landscape" section. price revenues derive from fixed price PPAs (with corporate and utility
offtakers) which the Investment Manager has originated and from government
Negative day-ahead prices were frequently observed across many European power subsidies (UK, France and Germany).
markets in 2024. This was due to multiple reasons, including assets on
favourable subsidies and inflexible distributed generation. For more On a net present value basis and taking into account the overall expected
information concerning how ORIT's portfolio is protected against negative asset lifetimes, 55% of the portfolio's value is derived from fixed price
prices, please see the Negative Power Prices case study in ORIT's 2024 Interim revenues, and 45% from variable revenues.
Report.
ORIT's power price hedges remain fixed on an entirely pay-as-produced basis,
meaning that the assets do not assume the additional risks involved with
baseload or fixed shape hedges, where the assets are required to buy back
power from the market (often at very high prices) during periods of low
production. In addition, ORIT's diversification across several markets brings
some natural protection against volatility across different geographic power
markets.
Investment Trust landscape The investment trust sector continues to face headwinds, with persistent ORIT implemented a share buyback programme in June 2024, and in March 2025
discounts to NAV across most sectors including renewables. As a result, (post-period) it extended this to £30 million. Assets have already been sold
fundraising remains difficult, and it is possible we will see more as part of a capital recycling programme, and further disposal activity is
consolidation across the investment trust sector. expected with a target of £80 million of further sales in 2025. Proceeds
will be used to fund the share buybacks as well as to reduce debt: the Company
There has also been activist pressure emerging, in particular from US hedge has announced a commitment to reduce debt to below 40% of GAV by the end of
fund Saba Capital Management ("Saba"), which launched an effort to take over 2025. Post-period, the Company also refinanced £100 million of its
several UK investment trusts at the end of 2024. Building stakes in some short-term debt with less expensive, longer-term debt in order to reduce
companies trading at wide discounts, Saba attempted to reconstitute boards and costs.
potentially replace investment managers at a number of these firms, though was
unsuccessful in shareholder votes. In addition, February 2025 saw the launch Aside from the focus on share buybacks and improving the debt position, ORIT
of Achilles Investment Company, a specialist activist investor which is remains alive to new investment opportunities where they will support the
seeking to engage with boards and management companies of underperforming or Company's ability to deliver attractive returns to investors.
undervalued trusts.
(40) Source:
https://www.reuters.com/business/energy/global-energy-transition-investment-exceeded-2-trln-last-year-report-shows-2025-01-30/?utm_source=chatgpt.com
(41) Source:
https://apnews.com/article/wind-solar-energy-china-climate-carbon-emissions-b337503abfacfd9b7829fd7bbcd507e9
(42) Source:
https://ember-energy.org/latest-insights/european-electricity-review-2025/
(43) Source:
https://www.ft.com/content/a08742d9-f94c-46d8-8e17-e1fdaffc7ea3?utm_source=chatgpt.com
(44) Source:
https://www.aljazeera.com/economy/2024/12/11/trump-will-throw-us-clean-power-into-question?utm_source=chatgpt.com
Financing and risk management
As part of a disciplined capital allocation strategy, the Company remains
focused on its debt management, prioritising the reduction of relatively
expensive short-term debt. This is being achieved through a combination of
repayment using proceeds from asset sales, alongside negotiating a
re-financing of a portion of the existing RCF drawn balance with lower cost,
longer-term debt secured against the portfolio of assets.
During the financial year to 31 December 2024, total leverage increased from
39% to 45% as a result of pre-existing investment commitments. ORIT's
outstanding debt can be grouped under the following two categories:
(i) Short-term Debt:
As at 31 December 2024, ORIT had £151.2 million drawn on its RCF (out of a
total available £270.8 million total facility size). The Company's RCF is
considered short-term in nature as it is primarily used for working capital
and near-term funding. It allows a high degree of flexibility with the ability
to draw, repay and re-borrow funds as needed. As there is less certainty over
timing of RCF drawings and repayments, the interest rate is variable and
linked to benchmark rates, leading to fluctuating borrowing costs.
Short-term financing increased by £21.2 million during the year. Borrowings
increased primarily due to the completion of the acquisition of the five sites
making up the Ballymacarney solar complex and introduction of a £10 million
share buyback programme, both of which were partially funded through the RCF.
However, following completion of the sale of the Ljungbyholm onshore wind farm
in Sweden the net proceeds were used to partially repay the RCF by £64
million during September 2024.
Post period end the Company's direct subsidiary ORIT Holdings II Limited
secured an amendment to the existing RCF with the total committed facility
decreasing to £150 million. The three-year multi currency facility is
provided by National Australia Bank, NatWest, Santander and Allied Irish Bank
and has an interest margin of 2.0% and commitment fees of 0.7%. The RCF
includes an additional uncommitted accordion, allowing the facility to be
increased by up to £100 million without requiring the consent of any existing
lenders not participating in the increase.
(ii) Long-term Debt:
At the project level, ORIT has a number of structured term loan facilities in
place, amounting to a total drawn debt balance of £307.2 million. Debt at
this level is considered long-term as it is typically used for funding
specific investments and has a fixed term with scheduled principal payments
(amortisation) over the life of the loan. Given that the repayment profiles
for these loans are predictable, the Company uses hedging in order to fix
interest rates, reducing the overall risk exposure for long-term debt
significantly. The Company's term loans are 92% hedged on average.
In the period, long-term financing increased following the acquisition of the
five sites that make up the Ballymacarney solar complex. The total acquisition
cost of €198 million was in part financed using a €104 million debt
facility provided by Allied Irish Banks and La Banque Postale. The increase in
term loan debt was partially offset following scheduled amortisation payments
amounting to £20.4 million.
Continued focus on deleveraging
Repayment of short-term debt remains a strong capital allocation option for
the Company and to date, the proceeds of disposals have been used to reduce
the Company's level of short-term borrowings and related exposure to high
variable interest rates (the all-in rate on the RCF at 31 December 2024 was
6.75%).
Alongside further asset sales, the Company recently (post-period) put in place
a new debt facility with three out of four of its existing RCF lenders,
against the UK operational solar and onshore wind assets that have long-term
fixed and contracted revenue streams. This new £100 million five-year
facility provides a lower interest rate than the revolving credit facility
borrowings it will replace, with the average cost of debt for decreasing from
4.0% to 3.7% post transaction.
The RCF balance now stands at £52.7 million as at latest practicable date
("LPD") and should no further investments or asset sales take place, and all
cash flows not required to pay the Company's costs and continue growing the
dividend were used to pay down debt, the Company's gearing is expected to fall
to around 20% over a 10 year period.
Given the high interest rate environment, the Board and Investment Manager
have committed to reduce total gearing levels to below 40%, which the Company
considers to be a reasonable long-term gearing level. Although there will be
periods where gearing exceeds this level, the Company would not exceed this
for prolonged periods of time. In order to contribute to the reduction in debt
by the end of 2025, the Company has announced that it will target to realise
at least £80 million from asset sales by the end of this financial year.
ORIT debt summary as at 31 December 2024:
Total Short-Term Debt Long-Term Debt
Debt as a % of GAV 45% 15% 30%
% Hedged 62% 0% 92%
Average cost of debt 4.0% 6.8% 2.7%
Average remaining term (years) 10.0 1.2 14.3
Summary of ORIT debt facilities as at 31 December 2024:
Short- Long-Term
Term
Asset HoldCo FR Solar FR Wind IRE Solar GER Wind UK Offshore Wind
Debt Terms
Currency GBP or EUR EUR EUR EUR GBP
EUR
Term loan £270.8m €125.7m €43.2m €91.0m €61.0m £110.5m
Drawn at 31 December 2024 £151.2m €91.6m €42.6m €90.5m €51.7m £69.3m
Drawn at 31 December 2024 £151.2m £75.6m £35.2m £82.4m £44.7m £69.3m
£m
Initial Term (yrs) 3 18 20 20 18 15
Expiry Date Feb-26 Dec-38 Sep-42 Jun-42 Mar-41 Sep-32
Facility date Nov-20 Jan-21 Apr-21 Jul-21 Sep-22 Dec-17
Y1-5 1.30% 2017-2022:
1.45%;
Margin 2.0% 1.25% 1.30% Y6-10 0.83%-1.75% 2023-2027:
1.40% 1.65%
Y10+ 1.65% 2028-2032:
1.85%
Variable interest % SONIA EURIBOR EURIBOR EURIBOR EURIBOR SONIA
Hedging
% hedged - 85% 90% 100% 100% 85%
Swap rate n/a -0.12% 0.51% 3.30% 0.12% 1.27%
As well as the interest rate hedging associated with the Company's borrowings,
foreign exchange hedging has been implemented to limit the impact of exchange
rate movements on the cashflows and valuation of the Company. On an unhedged
basis, the value of the Company's portfolio of assets declined by £17.1
million during the year as a result of foreign exchange movements. However the
value of the FX hedging instruments increased by £14.6 million during the
period, thereby offsetting over three quarters of the underlying valuation
movement.
Portfolio Valuation
£570m 102.6p £1,029m £1,029m
Net Asset Value NAV per Ordinary Share Gross Asset Value Total value of all
(2023: £599m) (2023: 106.0p) (2023: £980m) investments
(2023: £1,127m)
In calculating the Company's NAV, quarterly valuations are undertaken for the
Company's underlying portfolio of assets. The process follows International
Private Equity Valuation Guidelines using a discounted cashflow ("DCF")
methodology for operational assets. DCF is deemed the most appropriate
methodology where a detailed projection of likely future cash flows is
possible. Due to the asset class, availability of market data and the ability
to project the asset's performance over the forecast horizon, a DCF valuation
is typically the basis upon which renewable assets are traded in the market.
Investments into developers and development-stage projects are typically held
at cost or the price of recent investment until a material change occurs in
relation the investment. Examples of material events could include, inter
alia, the achievement or failure of significant milestones or further
investment rounds.
Key macroeconomic and fiscal assumptions for the valuations are set out in the
notes to the financial statements. Including the Company's and its
intermediate holding companies' net liabilities (which mostly comprises
Holding Company debt and cash), the total NAV as at 31 December 2024 is
£570.4 million or 102.6 pence per Ordinary Share. The key valuation drivers
are shown in the graph below:
Plc NAV Bridge
Movements in the fair value of the underlying portfolio of assets
1. Gain on Holding Value (+0.2 pence per Ordinary Share)
As previously disclosed, during the second half of 2024, the Company completed
the sale of the Ljungbyholm onshore wind farm in Sweden for a total
consideration of €73.7 million, delivering an IRR of 11.3% over the lifetime
of ORIT's investment. This transaction resulted in a valuation uplift of £1.4
million or 0.2 pence per Ordinary Share.
2. Construction risk premium (+0.2 pence per Ordinary Share)
A valuation increase of £0.9 million or 0.2 pence per Ordinary Share resulted
from the unwind of a portion of the construction risk premium included in the
discount rate applied to the Breach Solar Farm, to reflect that construction
activity is complete following being connected to National Grid during Q2
2024.
3. New PPAs (+1.0 pence per Ordinary Share)
During the year, as part of the Investment Manager's active revenue management
strategy, the Crossdykes onshore wind farm in Lanarkshire, Scotland, signed a
PPA with Sky UK Limited, who will purchase 69% of the output at a CPI-linked
fixed price for a period of 10 years from 1 April 2025. The PPA is
NAV-accretive when compared with the power price assumptions included in the
NAV and resulted in an uplift of £5.4 million or 1.0 pence per Ordinary
Share. Additionally in the second half of 2024, the extension of fixed pricing
for a portion of the UK Solar assets led to further NAV accretion of £0.2
million.
4. Power Prices, Green Certificates and Capacity Market (-0.2 pence per
Ordinary Share)
Power Prices
Where prices are not fixed under power price agreements 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. The power prices used in the valuations include the relevant 'capture
price' discount to baseload prices derived from the independent market
consultants' forecasts, and do not include any further discounts. For wind
assets, where site-level technological and geographical characteristics can
contribute greatly to variability between sites, a site-specific capture price
forecast is used in order to more accurately forecast expected cash generation
per project.
Over the year, the price forecasts used in valuations saw a drop in the short
term as a result of movements in forward prices. In the medium and longer
term, the advisors' long term price forecasts saw movements as a result of
revisions to commodity price forecasts, EV and electrolyser demand and
renewable buildout, however, were broadly stable on average. Updating power
price forecasts during the year led to a valuation decrease of -£1.0 million.
Green Certificate and Capacity Market forecasts
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. Green certificate forecasts
used in the valuations are based on market forward prices in the near term
(which are updated quarterly), followed by a single longer term third-party
forecast (which is refreshed by the market consultant annually). This single
forecast used to value the green certificates is provided by one of the market
consultants used for the blended power price curve. The market forecast was
refreshed during the second quarterly valuation cycle of 2024.
Capacity Market revenues provide certain generators with payments for ensuring
electricity supply security. Where relevant, the valuations incorporate
near-term forecasts based on market auction results and a longer-term
projection from a third-party consultant (one of the market consultants used
for the blended power price curve).
Overall, updating for Green Certificate and Capacity Market forecasts has led
to a small net decrease of -£0.1 million in the value of the portfolio as at
31 December 2024.
5. Changes in economic assumptions (-0.3 pence per Ordinary Share)
The combined impact of inflation and foreign exchange movements represents a
decrease of -£1.6 million or -0.3 pence per Ordinary Share on the portfolio
valuation as at 31 December 2024 (including the impact of FX hedging).
Inflation
During 2024, inflation forecasts have shown limited movement. Whilst inflation
forecasts for outturn 2024 had decreased on average across the jurisdictions
that ORIT's portfolio of assets are located in, inflation forecasts over the
following years (2025 to 2028) have increased slightly. There has been no
change to long-term inflation assumptions. This has resulted in a net
valuation increase of c. £1.1 million.
The inflation inputs used to calculate the NAV per Ordinary Share as at 31
December 2024 are set in reference to independent economic forecasts from a
variety of sources including His Majesty's Treasury, European Commission,
Central Banks and others where appropriate.
Foreign Exchange ("FX")
During the year, sterling appreciated against the euro by approximately 5.0%,
leading to a negative valuation impact of £17.1 million. Euro-denominated
investments comprised 47% of the portfolio at the year 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 c. £2.6 million.
6. Balance of portfolio return
This refers to the balance of portfolio valuation movements in the period
excluding the factors noted above and represents an increase of £30.6 million
or 5.4 pence per Ordinary Share.
Of this, £47.0 million reflects the net present value of future cashflows
being brought forward from 31 December 2023 to 31 December 2024.
These movements were partially offset by:
· Financial and technical performance during the period
resulting in a net negative valuation impact of -£5.1 million;
· During Q4 2024, as part of a review of development stage
assets, the value of ORIT's investment in Nordic Generation was increased by
£2.0 million, in order to reflect its significant progress ahead of its
business plan. Offsetting this, the valuations of Simply Blue and Hyro were
reduced by £4.5 million in aggregate to account for a higher than anticipated
rate of attrition in the underlying pipeline projects. These adjustments
resulted in a net valuation decrease of £2.4 million; and
· The remaining amount relates to adjustments to the project
company level forecasts, which resulted in an overall net decrease of -£8.9
million. The majority of this balance relates to adjustments to forecast
settlement payments related to recently completed construction sites (Breach
Solar farm and Cumberhead wind farm) and minor changes to expected Operating
Costs at some sites.
Movements in the fair value of the plc and Holding Companies
7. Dividends paid in the period
Dividends paid totalling £33.5 million in respect of Q4 2023 to Q3 2024 were
paid during the 12-month period to 31 December 2024.
8. Plc and Holding Company running costs
Running costs of the plc and Holding Companies totalling £24.2 million were
paid during the year, mostly comprising RCF interest and financing costs,
management fees and general running costs.
9. Share buybacks
Since the start of the share buyback programme, £6.8 million has been spent
on the repurchase of Ordinary Shares at a discount to NAV has resulted in an
increase in NAV per Ordinary Share of +0.5 pence per Ordinary Share.
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.
Although a high-inflationary environment remains in the UK and Europe and bond
yields continue to be elevated versus pre-2022 levels, inflation appears to
have stabilised and rate cuts have now been announced in the UK, Europe and
the US. Despite this backdrop, competition for renewable assets has remained
high and the Company has successfully delivered three asset sales (Polish
wind, Spanish solar and Swedish wind investments), all at a premium to, or in
line with, the most recently calculated holding values, giving confidence in
the Investment Manager's valuation assumptions. As a result, no changes have
been made to the discount rates applied to ORIT's portfolio of assets during
the period.
The Investment Manager acknowledges the upward trend in bond yields observed
towards the end of 2024, which although they have moderated, are higher than
at the end of the year. The Investment Manager will actively monitor movements
in risk free rates and their impact on discount rates implied by market
transactions as part of the quarterly valuation process throughout 2025.
In line with expectations, the weighted average discount rate has remained
broadly in line with prior periods, decreasing slightly by 0.2% to 7.0% versus
the discount rate of 7.2% as at 31 December 2023 and flat versus the discount
rate of 7.0% at the Interim Results. The primary reasons for the marginal
decrease in the overall blended rate is the inclusion of the Irish solar
portfolio which attracts a relatively low discount rate given its highly fixed
revenue profile, the derisking of the portfolio through the signature of the
Crossdykes 10-year PPA (which now attracts a lower discount rate due its
higher proportion of fixed revenues) as well as unwind of the construction
risk premium included in the discount rate for Breach solar farm.
The weighted average discount rate does not include any contribution from the
following, each of which would be expected to increase the return achieved on
the Company's portfolio of assets: (i) the return expected on the Company's
investment into development stage assets, which are not valued on a discounted
cashflow basis; (ii) the return enhancement associated with the Company's FX
hedging programme; (iii) the increased return associated with the additional
leverage from the RCF.
31-Dec-24 31-Dec-23
UK Assets
Levered IRR 7.6% 7.5%
Gross Asset Value (GAV) (£m) 460 491
Asset Leverage %GAV 16% 17%
European Assets
Levered IRR 6.6% 6.9%
Gross Asset Value (GAV) (£m) 569 488
Asset Leverage %GAV 42% 36%
Total Portfolio
Levered IRR 7.0% 7.2%
Gross Asset Value (GAV) (£m) 1,029 980
Asset Leverage %GAV 30% 26%
Fund Leverage %GAV 15% 13%
Total Leverage %GAV 45% 39%
Weighted average discount rate as at 31 December 2024 7.0%
(i) Return expected on the Company's investments into development stage assets +0.3%
(ii) Return enhancement associated with the Company's FX hedging programme +0.4%
(iii) Increase in return associated with the additional leverage from the RCF +0.4%
Adjusted average discount rate as at 31 December 2024 8.1%
Energy yield assessments and asset maturity
ORIT's asset valuations are underpinned by generation projections based on
third-party yield assessments, providing a robust and independent basis for
financial forecasting.
ORIT's portfolio consists of a range of assets at different stages of
operational maturity. Compared to some industry peers, a number of ORIT's
assets are relatively young, with a limited operational track record. As a
result, while we anticipate that a handful of assets may require yield reviews
in the near term, others may not be expected to undergo reassessment for
several years.
Industry practice typically suggests conducting post-construction yield
assessments once an asset has accumulated at least three years of operational
data to ensure accuracy. While some assets could be reviewed after a minimum
of two years, early assessments may be affected by ramp-up phases and
site-specific factors. For older, more established sites, yield assessments
have already been conducted and would be revisited if there were a material
change in performance.
Given ORIT's asset mix, we expect a phased approach to yield reviews, aligning
with each asset's operational history and ensuring that assessments are
conducted at the most appropriate stage in their lifecycle.
Asset Operational Track Record
The table below outlines the operational track record of ORIT's assets:
Years of Operational Track Record Assets
<1 year (newly constructed assets) Breach (UK Solar), Ballymacarney solar complex (Irish solar)
1-3 years Cumberhead (UK Wind), Leeskow (German Wind), Cerisou (French Wind)
3-5 years Crossdykes (UK Wind), Saunamaa and Suolokangas (Finnish Wind)
5+ years Dawn (French Solar), Ilios (UK Solar), Lincs (Offshore Wind)
Post-construction yield assessments have
been completed on these assets
Although some assets have a sufficient operational track record for yield
reassessment over the near term, others are still in early operational stages,
meaning formal reviews may not be expected for several years.
Portfolio valuation sensitivities
A torpedo chart on: NAV sensitivities per Ordinary Share is contained within
the Company's Annual Report
The chart shows 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 31
December 2024 including 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.
1. Discount rate (levered cost of equity)
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.
2. Volumes
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.
3. 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.
4. Inflation
The sensitivity assumes a 0.5% increase or decrease in inflation relative to
the base case for each year of the asset life.
5. 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 31 December 2024, 47% 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 applied above shows the impact on NAV per share of
a +/- 10% movement in the EUR/GBP exchange rate.
Power Prices and Green Certificates
Power Prices Landscape
The forwards prices used in ORIT's valuations are presented in the below
graphs on prices in order to illustrate movement in European power markets
over the year.(45)
A weather-driven bearish start to 2024 for European gas and power markets was
contrasted with a bullish end to the year, driven by cold temperatures and low
wind speeds. Throughout the year, power markets continued to be heavily
impacted by geopolitics (activities in the Middle East as well as the ongoing
Russia-Ukraine war), with observed price spikes at key points of uncertainty.
The LNG market also continued to play an important role, with the resurgence
of Asian LNG demand and coincident outages at a number of key LNG facilities
having a notable impact in Q2.
EUA and UKA prices (the certificates traded within the continental European
and UK carbon market) saw a similarly bearish start to the year, with the mild
2023/24 winter leaving gas storages full. Across the year, weak economic
activity weighed on industrial demand and the industrial sector's CO(2)
emissions. Demand for EUAs was further dampened by the strong performance of
EDF's nuclear fleet.
2024 Day-Ahead Prices
(45) While the Ljungbyholm (Sweden SE4 pricing zone) onshore wind
asset sale was completed during Q3, Sweden SE4's Q4 forwards prices have been
included for completeness.
Electricity Forwards Prices
Generation-Weighted Price
The combination of forward market prices and independent long-term power price
forecasts described above, together with the PPAs which the Investment Manager
has executed, make up the portfolio's forecasted power only
generation-weighted price ("Power only GWP"). The generation-weighted price
for a specific technology and location reflects the actual power price that
such generation can expect to earn. It differs from the time-weighted average
price due to its generation profile and the impact of other generation that is
likely to be generating at the same time. The generation-weighted price
including subsidies and additional benefits ("Total GWP") is derived by
including subsidies and additional benefits, such as green certificates. The
Power only GWP and Total GWP for the period to 2050 are shown in pictorial
form in the Company's Annual Report. The curves are blended across the markets
in which the portfolio's generation assets are located, weighted by the
portfolio generation mix and converted into £/MWh. On average, the graph
shows power only GWP of £56.23/MWh in the period 2025-2029 and £45.19/MWh in
the period 2030-2050. The movements in the power-only GWP from 12 months prior
are primarily driven by the acquisition of the solar assets in Ireland (with
their 15-year Microsoft PPAs and favourable merchant price expectations after
PPA expiry), with the sale of the Ljungbyholm wind farm (in Sweden) and the
signing of the corporate PPA with Sky at Crossdykes also having a positive
impact.
In addition, a summary of the capture price discounts utilised in the assets'
valuations is presented in the below table(46). The percentages are the
average differences between the generation-weighted and time-weighted power
prices. These assumptions are provided by third party advisors and use
site-specific assumptions for onshore and offshore wind.
Capture price discounts assumptions
2025- 2030- 2035- 2040- 2045-
Value Market Technology Units 2029 2034 2039 2044 2050
£/MWh
Baseload price Great Britain (real 2024) 74 72 70 66 65
Capture price discount Great Britain Solar % 18% 23% 23% 25% 27%
Capture price discount Great Onshore % 9% 18% 22% 25% 26%
Britain Wind
Capture price discount Great Offshore % 9% 18% 22% 24% 25%
Britain Wind
Baseload price France EUR/MWh 77 79 76 72
(real 2024)
Capture price discount France Onshore % 10% 11%
Wind
Capture price discount France Solar % 40% 39% 40% 42%
Baseload price Finland EUR/MWh 54 60 63 62 61
(real 2024)
Capture price discount Finland Onshore % 17% 20% 20% 18% 18%
Wind
Baseload price Germany EUR/MWh 81 77
(real 2024)
Capture price discount Germany Onshore % 23% 27%
Wind
Baseload price Ireland EUR/MWh 85 85
I-SEM(47) (real 2024)
Capture price discount Ireland I-SEM(47) Solar % 21% 23%
(46) Values are not shown where the relevant asset has no merchant exposure
in three or more years in the relevant period.
(47 )I-SEM is the Integrated Single Electricity Market, which is the
wholesale electricity market arrangement for Ireland and Northern Ireland
Portfolio Revenue Forecasts
ORIT's forecast revenues through to 2050, categorised by price structure, is
presented in pictorial form in the Company's Annual Report. The revenues are
categorised as fixed via either subsidy (Fixed - Subsidy) or fixed price PPA
(Fixed - Power) and the variable revenues derive from power being sold on a
merchant basis (Variable - Power) or from other sources of variable revenue
(Variable - Other). 84% of ORIT's forecast revenues for the 24 months up to 31
December 2026 are fixed, which represents an increase of three percentage
points compared with ORIT's position 12 months ago (81% fixed revenues for the
two years up to 31 December 2025 as at 31 December 2023). Key to achieving
this has been the Investment Manager's continued active approach to revenue
risk management, having secured a long-term inflation-linked corporate PPA
with Sky for the Crossdykes onshore wind farm in Q2 2024 as well as other
shorter term power price hedges across the portfolio. In addition, the
acquisition of the Ballymacarney and Harlockstown solar farms has introduced
another source of long term fixed price revenues into the portfolio (via their
corporate PPAs with Microsoft) and the sale of the Ljungbyholm onshore wind
farm has reduced the portfolio's exposure to variable power prices.
As outlined in the Power Prices Landscape section, European power markets have
remained volatile, which impacts asset valuations where an asset has exposure
to merchant power prices in the near term. ORIT's high proportion of near-term
revenues which are fixed means that it can offer a high degree of protection
against movements in wholesale power prices.
Another notable feature of ORIT's portfolio is the high proportion of its
revenues which are inflation-linked (see the bar graph entitled
Inflation-linked revenue forecast (as at 31 December 2024) in the Company's
Annual Report. ORIT's inflation-linked revenues derive either from
inflation-linked subsidies or from bespoke PPAs which the Investment Manager
has originated, such as the aforementioned inflation-linked corporate PPA with
Sky which the Crossdykes onshore wind farm benefits from. As at 31 December
2024, 48% of ORIT's forecast revenues over the 10 years to 31 December 2034
are contractually inflation-linked.
Financial Review
The financial statements of the Company for the year ended 31 December 2024
are set out in the Company's Annual Report. The 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 £599.0 million as at 31 December 2023 to
£570.4 million as at 31 December 2024, largely due to a decrease in the fair
value of portfolio of assets as described in the Portfolio Valuation section
above.
The net assets comprise the fair value of the Company's investments of £561.3
million (2023: £592.1m) and the Company's cash balance of £11.9 million
(2023: £10.0m), offset by £2.8 million (2023: £3.1m) of Company's other net
liabilities.
Included in the fair value of the Company's investments are net liabilities of
£138.3 million (2023: liabilities of £113.9m) held in the intermediate
holding companies. These comprise assets of cash £7.1 million (2023:
£13.2m), the positive mark-to-market value of the FX hedges taken out to
minimise the volatility of cashflows associated with non-UK portfolios of
£7.1 million (2023: £2.3m), other debtors of £Nil (2023: £2.4m) and
amortised transaction costs associated with bank loans of £1.1 million (2023:
£1.9m). This is offset by the principal and interest outstanding on the bank
loans of £152.4 million (2023: £131.3m), and other liabilities of £0.9
million (2023: £2.4m) predominantly relating to accrued transaction costs not
yet paid and outstanding VAT liabilities.
Results as at 31 December
2024 2023
£m £m
Fair value of portfolio of assets 699.6 706.0
Cash held in intermediate holding companies 7.1 13.2
Bank loans and accrued interest held in the intermediate holding companies -151.2 -130.0
Fair value of other net assets/(liabilities) in intermediate holding companies 5.8 2.9
Fair value of Company's investments 561.3 592.1
Company's cash 11.9 10.0
Company's other net liabilities -2.8 -3.1
Net asset value as at 31 December 570.4 599.0
Number of shares 555.7 564.9
Net asset value per share (pence) 102.65 106.04
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 year. 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 financial year ending 31 December 2024, the Company's operating income
was £18.5 million (2023: £19.7m), including interest income of £25.5
million (2023: £25.9m), dividends received of £17.0 million (2023: £16.8m)
and net loss on the movement of fair value of investments of £24.0 million
(2023: £23.0m loss). The operating expenses included in the statement of
comprehensive income for the year were £7.0 million (2023: £7.1m). These
comprise £5.5 million of Investment Manager fees (2023: £5.6m), transaction
and abort costs of £Nil (2023: £0.1m) and other operating expenses of £1.6
million (2023: £1.4m). The details on how the Investment Manager's fees are
charged are set out in Note 17 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 year. For the year ended 31 December 2024, the ratio was
1.21% (2023: 1.16%).
Dividends
During the year, interim dividends totalling £33.5 million were paid (1.45p
per share paid in respect of the quarter to 31 December 2023 in February 2024
(2023: February), 1.50p per share in respect of the first quarter of 2024 paid
in May 2024 (2023: June), 1.51p per share paid in respect of the second
quarter of 2024 in August 2024 (2023: September) and 1.50p per share paid in
respect of the third quarter of 2024 in November 2024 (2023: December).
Post year end, a further interim dividend of 1.51p per share was paid on 28
February 2025 in respect of the quarter ending 31 December 2024 to
shareholders recorded on the register on 14 February 2024. As such, dividends
totalling £33.7 million have been paid in respect of the year under review.
These dividends are fully covered from the operational cash flows of the
underlying portfolios.
Dividend cover - operational cash flows (portfolio level)
During 2024, the Company's net cash flows from operations, pre debt
amortisation of £62.3 million, and post external debt amortisation of £41.9
million supported the payment of £33.7 million dividends to shareholders for
the period, resulting in a dividend coverage of 1.85x and 1.24x respectively.
ORIT's key portfolio characteristics of diversification, high proportion of
fixed revenues and inflation-linkage help maintain a growing, covered
dividend. Following the year-end, in line with the Company's progressive
dividend policy, ORIT announced a further increase in the target dividend to
6.17p(48) per ordinary share for the financial year from 1 January 2025 to 31
December 2025.This increase of 2.5% over FY 2024's dividend target is in line
with the increase to the Consumer Price Index (CPI) for the 12 months to 31
December 2024 and marks the fourth consecutive year the Company has increased
its dividend target in line with inflation. The FY 2025 dividend target is
expected to be fully covered by cash flow generated from the Company's
operating portfolios.
(48) The dividend target is a target only and not a profit forecast. There can
be no assurance that this target 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. The Company's actual returns will depend
upon a number of factors, including but not limited to the Company's net
income and level of ongoing charges. Accordingly, potential investors should
not place any reliance on this target and should decide for themselves whether
or not the target dividend is reasonable or achievable. Investors should note
that references in this announcement 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.
Year ended 31 December
2024 2023
£m £m
Operational cash flows
UK Solar 18.7 14.8
French Solar 10.6 11.2
Swedish Wind (includes lock-box interest only to 30-Jun-24)(49) 2.2 4.4
Finnish Wind 11.1 7.1
Polish Wind - 4.9
French Wind 2.3 3.1
German Wind 3.1 3.0
UK Wind 11.7 8.2
UK Offshore Wind 14.5 17.0
Irish Solar 9.7 8.5
83.9 82.2
SPV level taxes
French Solar, Finnish Wind, Polish Wind, UK Offshore Wind(50) -1.4 -2.8
Interest payable on external debt
French Solar, Polish Wind, French Wind, German Wind, UK Offshore Wind, Irish -8.7 -7.9
Solar
Operational cash flow pre debt amortisation 73.8 71.5
Company and intermediate holding company level expenses(51) 2.5 -10.1
Interest and fees payable on RCF and short-term facility -14.1 -12.3
Net cash flow from operating activities pre debt amortisation 62.3 49.1
Dividends paid in respect of year 33.7 32.7
Portfolio level operational cash flow dividend cover pre debt amortisation 1.85x 1.5x
External debt amortisation
French Solar, Polish Wind, French Wind, German Wind, UK Offshore Wind, Irish -20.4 -10.4
solar
Net cash flow from operating activities 41.9 38.7
Dividends paid in respect of year 33.7 32.7
Portfolio level operational cash flow dividend cover 1.24x 1.18x
Note: Totals may not add up due to rounding.
(49) Given the sale of the Ljungbyholm wind farm which completed post-period
with an economic transfer date of 31 December 2023, the headline dividend
cover does not include any operational cash flows related to the asset however
it does include accrued 'locked box' interest between 31 December 2023 and 27
August 2024.
(50) Taxes falling due on operational asset trading profits (e.g. Corporation
Tax in the UK).
(51) Company and intermediate holding company level income and expenses
includes receipt of favourable mark-to-market movements on foreign currency
forward contracts.
ESG & Impact As at 31 December 2024
ESG & 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 engage with the energy
transition. The renewable energy generated from ORIT's portfolio of assets
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 ESG & Impact Strategy considers all of ORIT's culture, values and
activities through three lenses: Performance, Planet and People - to ensure
that ORIT's activities integrate ESG risks and bring to life additional impact
opportunities.
For a more in-depth understanding of ORIT's ESG & Impact Strategy,
encompassing definitions of ESG and Impact, along with detailed insights into
four impact themes (Stakeholder engagement, Equality and wellbeing,
Innovation, and Sustainable momentum), please refer to the separately
published ESG & Impact Strategy.
Stewardship and Engagement
The Investment Manager manages ORIT's investments in line with its Engagement
and Stewardship Policy. Where ORIT has 100% ownership stakes, the Investment
Manager has direct control of the underlying assets, usually through
directorship services. As well as decision making oversight, the Investment
Manager carries out service reviews on each material third-party service
provider. In circumstances where ORIT does not hold a controlling interest in
the relevant Investee Company, the Investment Manager will secure shareholder
rights through contractual and other arrangements, to, inter alia, ensure that
the renewable energy asset or portfolio company is operated and managed in a
manner that is consistent with ORIT's investment and ESG Policy. The
Investment Manager will always take up portfolio investment Board seats,
attend Board meetings and will directly use its influence to monitor and
support investee companies on relevant matters to galvanise other shareholders
in line with ORIT's ESG Policies.
ORIT aims for investment-specific active stewardship, regardless of ownership
percentage. The Company consistently exercises shareholder rights, overseeing
approval and reserved matters. The ORIT Board receives regular reports on
investee performance, including environmental and social issues. The
Investment Manager collaborates on industry risks to drive positive
stewardship outcomes with various stakeholders.
The initiatives and case studies presented in the ESG & Impact section of
the Annual Report and the separately published ESG & Impact Report provide
examples of the application of the Engagement and Stewardship Policy.
The Investment Manager's full Engagement and Stewardship Policy can be viewed
at
https://assets.octopusenergygeneration.com/x/d557d65717/oegen-engagement-and-stewardship-policy-august-2024-v-f.pdf
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 energy.
£1,029m 41
Total value of sustainable investments - 100% investments committed into Assets
renewables(53)
(2023: 37 assets)
(2023: £1,127m)
1,389 GWh 1,240 GWh
Potential annual renewable energy generation, 818 GWh of which has and will be Renewable energy generated in the year(54)
additional generation from construction assets
(2023: 1,161 GWh)(55)
(2023: 1,569 GWh)
100% UN SDGs(56)
Of investments adhere to ORIT's ESG Policy and all transactions in the year
met ORIT's minimum ESG matrix threshold
(2023: 100%)
(53) Total asset value including total debt and equity commitments.
(54) 1,240 GWh considers both actual (1,143 GWh) and compensated (97 GWh)
generation.
(55) This figure differs from the published figure of 1,110 GWh presented in
the December 2023 Annual Report as 1,161 GWh includes compensated generation
from curtailment, making for a like-for-like comparison with the 2024 figure
of 1,240 GWh.
(56) More detail on how ORIT has contributed to these UN SDGs is included in
the separately published ORIT ESG & Impact Report.
Regulatory Disclosures
The TCFD disclosures can be found in the Risk and Risk Management Statement
section of the Annual Report.
ORIT is classified as an Article 9 product under the EU Sustainable Finance
Disclosure Regulation ("SFDR") regulation. Please refer to page 108 of the
Annual Report and to the ORIT website for ORIT's SFDR disclosures.
ORIT remains committed to transparent ESG reporting and aligning with leading
sustainability disclosure frameworks. This year, ORIT completed its first
Carbon Disclosure Project ("CDP") disclosure and achieved a "B" score-the
highest possible for an SME (a small and medium-sized enterprise). This
recognition underscores ORIT's proactive approach to climate-related risk
management and emissions reporting.
The Investment Manager is keeping up with recent developments in new
regulatory frameworks aimed at increasing transparency in environmental and
social factors. This includes the Taskforce for Nature-related Financial
Disclosures ("TNFD") and the UK's Sustainable Disclosure Requirements ("SDR").
Recognising the complexity and the depth of insight required to meet the TNFD
standards, the Investment Manager has concentrated on understanding both
direct operational dependencies and those within ORIT's supply chain. Initial
analysis indicates that primary dependencies likely to significantly impact
the portfolio's direct operations are integrated into ORIT's current risk
management frameworks (refer to ORIT 2023 Interim Report page 37).
Furthermore, a summary of the Investment Manager's analysis regarding supply
chain dependencies is detailed in the 2023 ESG & Impact Report. This
foundational phase of research is essential for establishing a solid base for
comprehensive TNFD disclosure.
The Company supports "anti-greenwashing" efforts associated with the SDR
however is not in scope for a label. This is because the Company is managed by
an EU (Irish) AIFM, which falls outside the scope of the FCA's ESG rules.
Performance initiatives
Delivering investment performance is fundamental to the ESG & Impact
Strategy, to supporting the transition to net zero, and to being an impact
fund. Asset optimisation initiatives and robust ESG risk management aim to
improve financial resilience and overall performance of the Company,
maximising the amount of green electricity the Company generates.
The Investment Manager works with key partners to mitigate production risks
and maximise performance of ORIT's operational assets. Examples of projects
that contributed to this objective are laid out in the below case study.
Planet
Impact Objective: Consider environmental factors to mitigate risks associated
with the construction and operation of assets, enhancing environmental
potential where possible.
383k 6.42t 888t
Estimated annual equivalent CO(2)e per MW estimated carbon Worth of carbon purchased in
tCO(2) avoided once fully intensity (direct and indirect) Pending Issuance Units
operational(57) (2023: 55.47) (2023: 553t)
(2023: 400k)
99.4% 91% 0
Investments qualify as sustainable in line with EU Taxonomy Generating sites on renewable Environmental incidents
import tariffs(58)
(2023: 100%)
(2023: 4)
(2023: 93%)
UN SDGs 1.9m 195k
Equivalent new trees required to avoid same carbon(57) Equivalent cars off the road required to avoid same carbon(57)
(2023: 2.0m) (2023: 203k)
Based on actual annual renewable energy generation during the year
297k 1.5m 151k
Equivalent tCO(2) avoided Equivalent new trees required Equivalent cars off the road
(2023: 302k) to avoid same carbon required to avoid same carbon
(2023: 1.5m) (2023: 153k)
Further information on the KPIs can be found in the separately published ESG
& Impact Report.
(57) Based on potential annual renewable energy generation once fully
operational. As no generation assets were in construction as at 31 December
2024, this metric is representative of the whole operational portfolio.
(58) As at 31 December 2024.
Maximising ORIT's positive environmental impact
ORIT recognises the critical role that renewable energy plays in meeting net
zero emissions targets, with an inherently positive impact on the environment.
This is demonstrated by the equivalent tCO(2)e avoided by the renewable energy
generated during the year.
Figures for carbon avoided use country-specific grid intensity factors, which
are updated on a periodic basis to reflect the changing composition of the
grid's energy sources.
ORIT's LSE's Green Economy(59) demonstrates the Company significant
contribution to the transition to a zero-carbon economy.
The Investment Manager can also confirm that 99.4% of ORIT's assets directly
contribute to or enable climate change mitigation in line with the EU Taxonomy
criteria. The EU Taxonomy is a classification system for sustainable
activities designed to help investors identify "green" environmentally
friendly activities. This is aimed to demonstrate investments that are
sustainable; for example ones that make a substantial contribution to climate
change mitigation, while avoiding significant harm to other environmental
objectives and complying with minimum safeguarding standards. This calculation
was based on the full market value of the investee companies. Specifically,
the percentage of each company's turnover associated with activities aligned
to the EU Taxonomy was used to determine the proportion of its market value
considered as aligned.
ORIT has adjusted its EU Taxonomy alignment target from 100% to 85% to account
for any potential cash holdings that are not instantly accessible and
consequently may be considered ineligible for EU Taxonomy alignment (following
a clarification made by the EU Commission in July 2024) and for investments
that may be ineligible, partially eligible, or not yet aligned due to unmet
"do no significant harm" ("DNSH") criteria. For example, small development
platforms with limited employees may lack required policies or processes to
meet DNSH but will implement them over time. Additionally, some development
platforms providing certain development services on renewable energy projects
may align with sustainability objectives but remain ineligible under the EU
Taxonomy.
More information on the Investment Manager's screening and assessment approach
can be found in ORIT's ESG & Impact Strategy.
There were 3 environmental incidents recorded were but these were not
reportable due to how minor they were. One of the recorded incidents was in
relation to very small amounts of oil/fuel leakage. Two of the recorded
incidents were related to fly tipping and tagging near the assets. The
required mitigation response was deployed and the events had no lasting
negative impacts.
Carbon measurement and reporting
In 2024 the Investment Manager on behalf of the Company engaged with
Altruistiq to help calculate and validate the Greenhouse Gas ("GHG") emissions
footprint for ORIT. ORIT has quantified and reported organisational GHG
emissions in line with the iCI and ERM Greenhouse Gas Accounting and Reporting
Guide for the Private Equity Sector (2022). This methodology was developed to
complement both the World Resources Institute's Greenhouse Gas Protocol
Standards and the Partnership for Carbon Accounting Financials' Standard for
the financial industry. This approach consolidates the organisational boundary
according to the equity control approach. For more information on the carbon
footprint methodology and definitions for terms used in this section, please
refer to ORIT's ESG & Impact Strategy.
(59) 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.
The Company has no direct employees, owned or leased real estate, or direct
assets, and therefore the Company has no Scope 1 or 2 emissions. Scope 1 and 2
emissions for the portfolio arise mainly from on-site fuel combustion and
imported electricity. The majority of emissions are Scope 3. For the
portfolio, Scope 3 emissions largely stem from purchased goods and services
alongside indirect activities like waste management, transportation, and
travel. For the Company, they relate to purchased services acquired, such as
legal and investment management services.
Scope Portfolio Company Total Emissions % of Total
Emissions Emissions (tCO(2)e)
(tCO(2)e) (tCO(2)e)
1 - Direct Emissions 33.2 0 33.2 0.6
2 - Indirect Emissions (market-based)(60) 854.1 0 854.1 15.6
3 - Indirect Emissions 4,437.0 137.7 4,574.7 83.8
- Fuel & Energy Related Activities 355.4 0 355.4 6.5
- Purchased Goods and Services 3,420.4 137.7 3,558.2 65.1
- Travel and Transport(61) 637.6 0 637.6 11.7
- Waste 23.4 0 23.4 0.4
Total 5,324.2 137.7 5,462.0
Note: Totals may not add up due to rounding
ORIT's overall carbon intensity was calculated to be 6.42 tCO(2)e per MW.
ORIT's weighted average carbon intensity ("WACI") for the year was calculated
to be 7.84 tCO(2)e/£m revenue(62).
The following table separates ORIT's carbon emissions into UK and non-UK based
emissions in line with the Streamlined Energy and Carbon Reporting framework
("SECR").
2024 2023 2022 2021
UK Emissions Non-UK Emissions UK Emissions Non-UK Emissions UK Emissions Non-UK Emissions UK Non-UK Emissions
Emissions
Scope 1 tCO(2)e 30.7 2.5 218.0 5.4 0.0 0.6 0.0 0.0
Scope 2 Market based tCO(2)e 116.4 737.7 126.5 602.5 0 885.2 0.0 5.0
Location based tCO(2)e 424.8 485.7 342.1 471.3 190.4 836.5 192.2 62.4
Energy consumption MWh 2,120.6 3,516.3 11,221.7 2,550.1 1,568.4 2,724.9 905.2 1,150.5
Scope 3 tCO(2)e 2,532.6 1,904.3 29,262.2 6,749.9 5,706.4 1,261.4 710.9 1,500.7
(60) Using a location-based approach, ORIT's portfolio Scope 2 emissions
equate to 910.5 tCO(2)e.
(61) This category includes upstream transportation and distribution, employee
commuting, business travel and contractor travel.
(62) A market-based approach as used to calculate the WACI. The WACI using a
location-based approach is equal to 10.07 tCO(2)e/£m revenue.
The Investment Manager has disclosed the different categories of data points
used to calculate the Company's carbon footprint to transparently convey both
the quality and accuracy of the carbon footprint reported. The table below
shows the split between the defined(63) categories of data:
SCOPE Real Estimate Proxy
Total 68.6% 31.3% 0.1%
Scope 1 47.5% 52.5% 0.0%
Scope 2 86.3% 13.7% 0.0%
Scope 1 & 2 84.9% 15.1% 0.0%
Scope 3 65.5% 34.4% 0.2%
The Investment Manager refined its data quality methodology to align with
industry practice. Instead of reporting the percentage of data points
classified as real, estimated, or proxy, the updated approach reflects the
percentage of total emissions derived from each data type, broken down by
scope. This provides a more accurate and meaningful assessment of data
quality, weighted by emissions impact.
The Investment Manager has high confidence in over 99% of reported emissions,
as they are based on either real data (68.6%) or high-quality estimates
(31.3%) provided by asset managers or investee companies using robust
assumptions. Proxy data (0.1%), estimated by the Investment Manager, is
minimal. It is encouraging to see strong data quality across Scope 3, with
65.5% real data, which is notably high given the complexity of value chain
emissions. As expected, data quality is even higher for direct emissions, with
84.9% real data across Scope 1 and 2.
Carbon reduction
The Company's aim is to reduce its emissions through stakeholder engagement
and proactive management of its assets. As the Company improves data quality,
especially for assets in construction, the Investment Manager will continue to
explore opportunities to reduce emissions associated with embodied carbon.
The carbon intensity metric based on the MW capacity of the portfolio has
decreased significantly since 2023, reflecting a sharp drop in Scope 3
emissions, particularly in the purchased goods and services category. In 2023,
most emissions came from construction-related services and purchases for
Cumberhead Wind Farm and Breach Solar Farm. Now that these assets are
operational, their purchased goods and services associated emissions have
fallen significantly, contributing to the overall reduction in portfolio
carbon intensity.
2024 2023 2022 2021
6.42 tCO(2)e/MW 55.47 tCO(2)e/MW 8.48 tCO(2)e/MW 5.23 tCO(2)e/MW
(63) Please refer to ORIT's ESG & Impact Strategy for definitions of these
terms.
Carbon offsetting
Whilst carbon reduction remains the priority in ORIT's carbon strategy, ORIT
does still commit to offsetting any residual direct emissions relating to its
Scope 1 and 2 emissions.
Last year, ORIT purchased 553 tonnes worth of carbon in "Pending Issuance
Units"(64). These units have been secured both to future-proof ORIT's carbon
units in light of increasing prices and low availability of "Woodland Carbon
Units"(65) and also to support new woodland creation in the UK. The Investment
Manager purchased an additional 888 PUIs to cover the emissions relating to
ORIT's 2024 Scope 1 and 2 emissions.
Supporting the planting of new UK woodland helps plant new trees today, but
these woodlands do not deliver "offset" credits immediately. Only once the
woodland biomass has grown sufficiently will its carbon credits be verified
and converted from ex-ante PIUs to ex-post WCUs. Only then can only then be
used as official offsets.
In recognition of the carbon impact of ORIT's operations, ORIT has decided to
invest in a UK woodland carbon project that will capture 1,841 tonnes worth of
CO(2) over the next 30 years. The units are derived from a "Forest Carbon"
project in Acheilidh, Tain, Highlands. The new native broadleaf woodland is
expected to deliver all 1,841 tonnes of carbon (associated with ORIT's 2023
and 2024 Scope 1 and 2 emissions) by 2055 and 75% of its carbon units by 2050.
The Board will reassess if the purchase of additional PIUs will be necessary
on a year-to-year basis.
The growing trees will also provide wider co-benefits beyond climate
mitigation, including water quality improvements, habitat creation,
employment, and cleaner air. Through ORIT's support for UK woodland creation,
the Company is helping the country to meet its long-term international climate
targets in a way that also benefits wider society and nature.
Planet initiatives
Maximising the Company's positive contribution to the environment is core to
the ESG & Impact Strategy. Planet initiatives contribute to solutions to
combat climate change. Projects undertaken in the year are outlined in the
separately published ESG and Impact Report.
(64) A Pending Issuance Unit ("PIU") is effectively a 'promise to deliver' a
Woodland Carbon Unit in future, based on predicted sequestration. It is not
'guaranteed' and cannot be used to report against UK-based emissions until
verified. However, it allows companies to plan to compensate for future
emissions or make credible statements in support of woodland creation.
(65) A Woodland Carbon Unit ("WCU") is a tonne of CO(2)e which has been
sequestered in a Woodland Carbon Code-verified woodland. It has been
independently verified, is guaranteed to be there, and can be used by
companies to report against emissions or to use in claims of carbon neutrality
or Net Zero emissions.
People
Impact Objective: Evaluate social considerations to mitigate risks and promote
a 'Just Transition' to clean energy.
13,261 4,763 0
People benefitting from social initiatives, of which 7,261 are students Direct beneficiaries from the projects funded through the BizGive platform RIDDORS (or equivalent)
(2023: 7,827 students) (2023: 7,849) (2023: 0)
176 UN SDGs
Estimated FTE jobs created
(2023: 169)
Managing our impact on society
Investing in renewable energy has natural positive impacts on people and for
the wider society by benefitting the economy. By channeling capital towards
"homegrown renewables" ORIT is also contributing to energy security,
preventing future energy crises resulting from reliance on unsustainable
global fossil fuel markets.
It is also vital the Company mitigates any possible negative impacts and risks
to people as the Company invests, constructs, and operates the portfolio of
renewable assets. ORIT has clear policies and governance structures to achieve
this. Some social factors that ORIT and the Investment Manager consider to be
the most important during due diligence and ongoing monitoring of assets
include:
· Health and safety
· Diversity and inclusion
· Promoting a Just Transition (workers, community and
customers)
ORIT also supports initiatives that contribute to solutions to engage
communities and promote a "Just Transition" to clean energy (see "People
Initiatives" section below).
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 HSE consultants and additionally has
employed a Head of Health and Safety to ensure that health and safety
procedures are embedded into its model of investing and managing assets.
This integration is achieved through:
· Technical Compliance Standards
· Contractor diligence and benchmarking
· Audits and ongoing oversight
· Data collection and continuous improvement
Even with minority stakes, performance is tracked through board meeting
attendance. The Investment Manager monitors various accident and incident
classifications, including those reportable to the UK Health & Safety
Executive ("RIDDORs") or equivalent local bodies. International incidents
comparable to RIDDORs are flagged under the Investment Manager's statutory
reporting guidance to ensure a consistent approach wherever possible outside
the UK. HSE incidents are investigated by the in-house Asset Management Team
and third-party HSE advisors. Root cause analysis, lessons learned, and
necessary procedural changes are ensured.
RIDDORs Lost time injuries Near misses Personal injuries Minor equipment
(<7 days) damage incidents
0 1 13 1 first aid 17
The organisation's safety performance during the year has been positive, with
no significant risks to highlight. All incidents were investigated, and
appropriate actions were taken.
Diversity and inclusion
Equality and wellbeing are fundamental to ORIT's impact ambitions. This is
reflected in the Company's policies and in the way that the Company operates
externally, through understanding the approach that its third-party providers
take to diversity and inclusion, and suggesting ways to improve this wherever
possible.
The Investment Manager provides directors to the underlying subsidiary
companies and ensures diversity is considered when appointing them.
Board Investment Manager
The Company's Board is made up of a complementary mixture of social The Investment Manager shares ORIT's values and places diversity and inclusion
backgrounds, gender diversity and ethnicity. The Company' complies with the at the heart of them, which is demonstrated through initiatives implemented.
FCA's diversity targets on the representation of women and ethnic minorities: These initiatives include:
· At least 40% of the board should be women. · Recruitment Enhancements: Established hiring guidelines and
unconscious bias training; diversified candidate pools through broader job
· At least one of the senior board positions or Senior advertising and inclusive job descriptions.
Independent Director ("SID") should be a woman.
· Workplace Attractiveness: Updated parental leave policies for
· At least one member of the board should be from an ethnic diverse family structures, increased fully paid paternity leave to four weeks
minority background excluding white ethnic groups (as set out in categories complementing the shared parental leave policy which offers up to six months
used by the Office for National Statistics). per parent; proactive monitoring of gender pay gaps.
· Promotion Process Reforms: Revised promotion process for
greater transparency and decision-making diversity at the team level.
· Workplace Adjustments: Implemented necessary adjustments and
encouraged open communication for supporting diverse workplace needs.
· Focus on Neurodiversity: Adjusted the recruitment and
interview process to be more inclusive; provided additional resources to
support line managers in managing neurodiverse team members.
· Internship Programme: Successful participation in the Octopus
Energy Equality Internship, leading to full-time roles for several interns.
· Progress in gender representation: Female representation at
the director level has increased by 6% (from 31% to 37%) since January,
advancing towards the FCA and Energy Leader's Coalition target of 40% by 2030.
Promoting a "Just Transition"
A "Just Transition" refers to the equitable distribution of benefits in the
shift to clean energy. ORIT actively engages with workers, local communities
and customers, focusing on job creation, community benefits and fair access to
green energy.
Strategy's aim: Performance KPIs:
Workers - Job Creation Enhance socio-economic distribution and equity by supporting the creation of · 176 estimated FTE jobs supported
decent jobs through ORIT's partners and subcontractors.
· 12% local
This is achieved by their commitment to adhere to standards of equal
opportunities, workplace best practices, diversity, and inclusion, coupled
with a focus on promoting local employment opportunities.
Community - Engagement, Voice and Benefit Empower local communities by establishing avenues for benefits such as through · Over £1m per year of community benefit funds
community benefit schemes, educational engagement with local schools via
workshops and site visits, and support of local charities. As ORIT's portfolio · 13,261 people (of which 7,261 are students) benefitting from
expands, these impact partnerships are designed to create a more significant social initiatives
and lasting impact across a diverse range of beneficiaries. Applicability of
community initiatives will be determined on a portfolio-by-portfolio basis. · 4,763 direct beneficiaries from the projects funded through
Proactively engaging with communities and stakeholders from the outset, ORIT the BizGive platform.
aims to secure social license for its investments, particularly in extending
the operational lifespan of its assets.
Customers - Affordable Green Energy Deliver societal benefits by supplying affordable, clean energy to the grid. (· ) 284,247 equivalent number of homes powered by
This not only aims to lower energy bills but also to enhance energy security ORIT's assets (based on actual production generated during the year).
in regions with ORIT's assets.
People initiatives
Alongside keeping people safe, ORIT considers its potential impact on people.
People initiatives contribute to solutions to engage communities and promote a
"Just Transition" to clean energy. ORIT exhibits a variety of social
considerations across its assets and beyond, utilising the experience and
approach developed by the Investment Manager to maximise benefits. Projects
undertaken in the year are outlined in the separately published ESG &
Impact Report.
Risk and Risk Management
Risk Appetite
The Board is ultimately responsible for defining the level and types of risk
that the Company considers appropriate. In the context of the Company's
strategy, risk appetite is aligned to the Investment Policy and this provides
the framework for how capital will be deployed to meet the Company's
investment objective. The limits set out in the Investment Policy represent
the amount of risk the Company is willing to take and the constraints that the
Board determines that the Investment Manager must adhere to on behalf of the
Company. This covers the principal risks the Company faces including, amongst
other things, the level of exposure to power prices, financing risks and
investment risks. Beyond this, risk limits and tolerances are monitored and
set by the AIFM as part of the AIFM's risk management services. These are
documented in the AIFM's Risk Management Policy for the Company covering
credit, liquidity, counterparty, operational and market risks. Adherence to
these risk limits is reported regularly to the Board through the quarterly
AIFM risk management report.
Principal risks and uncertainties
The Company has carried out a robust assessment of its principal and emerging
risks and the procedures in place to identify any emerging risks are described
below.
Procedures to identify principal or emerging risks:
Well managed risks are key to generating long-term shareholder returns. The
purpose of the risk management framework and policies adopted by the Company
is to identify risks and enable the Board to respond to risks with mitigating
actions to reduce the potential impacts should the risk materialise.
The Board regularly reviews the Company's risk matrix, with a focus on
ensuring appropriate controls are in place to mitigate each risk. The
experience and knowledge of the Board is important, as is advice received from
the Company's service providers.
The following is a description of the procedures for identifying principal
risks that each service provider highlights to the Board on a regular basis.
1. Alternative Investment Fund Manager ("AIFM"): On 31 July 2024, the
Company appointed Octopus Energy AIF Management Limited to be the Alternative
Investment Fund Manager of the Company (the "AIFM") for the purposes of UK
AIFM Directive. Previously, Octopus AIF Management Limited was the appointed
Alternative Investment Fund Manager of the Company. Accordingly, the AIFM is
responsible for the portfolio management of the Company and for exercising the
risk management function in respect of the Company. As part of this the AIFM
has put in place a Risk Management Policy which includes stress testing
procedures and risk limits. As part of this risk management function, the AIFM
maintains a register of identified risks including emerging risks likely to
impact the Company. This is updated quarterly following discussions with the
Investment Manager and highlighted to the Board.
2. Investment Manager: Portfolio Management has been delegated by the
AIFM to the Investment Manager. There is a comprehensive due diligence process
in place to ensure that potential investments are screened against the
Company's objectives, and that financial and economic analysis is conducted
alongside a full risk analysis. Any potential transaction must be granted
approval in principle ("AIP") by the Octopus Energy Generation Investment
Committee ("OEGEN IC") and the due diligence budget signed off by the Board.
Once due diligence and negotiations of final terms are substantially complete,
the final proposal including the risk analysis will be presented to OEGEN IC
for a decision on whether the Company should proceed with investment, subject
to approval from the Board. The Investment Manager also provides a report to
the Board at least quarterly on asset level risks, industry trends and insight
to future challenges in the renewable sector including the regulatory,
political and economic changes likely to impact the renewables sector.
3. Broker: The Broker provides regular updates to the Board on Company
performance advice specific to the Company's sector, competitors and the
investment company market whilst working with the Board and Investment Manager
to communicate with shareholders.
4. Company secretary and auditors: The Board receives briefings on
forthcoming legislation/regulatory change that might impact on the Company.
The auditors also have specific briefings at least annually.
Procedure for oversight
The Audit and Risk Committee undertakes a review at least three times a year
of the Company's risk matrix and a formal review of the risk procedures and
controls in place at the AIFM and other key service providers to ensure that
emerging (as well as known) risks are adequately identified and - so far as
practicable - mitigated.
Principal risks
The Board considers the following to be the principal and other risks faced by
the Company along with the potential impact of these risks and the steps taken
to mitigate them.
Economic, political and climate risks
Income and value of the Company's investments may be affected by future
changes in the economic and political environment, alongside risks associated
with climate change.
Risk Potential Impact Mitigation
Inflation and interest rates The revenue and expenditure of the Company's investments are frequently Inflation and interest rate assumptions are reviewed and monitored regularly
partially index-linked and therefore any discrepancy with the Company's by the AIFM and the Investment Manager in the valuation process. Assumptions
inflation expectations could impact positively or negatively on the Company's are set by the Valuations Consistency Group and the AIFM's valuation
cashflows. committee.
Changes in interest rates may affect the valuation of the investment portfolio It is expected that a natural hedge may occur where higher interest rates are
by impacting the valuation discount rate and could also impact returns on cash also accompanied by higher inflation rates due to subsidies being inflation
deposits and the cost of borrowing. linked.
In the event that actual inflation differs from forecasts or projected levels, The Company can utilise interest rate swaps or fixed rate financing to
the profitability of the Company may be impaired leading to reduced returns to mitigate interest rate risks.
shareholders.
Increased inflation and a higher cost of living can adversely impact investor
appetite.
Foreign currency While the Company's functional currency is Sterling, some of its investments The Company implements a hedging policy to minimise cash flow volatility in
are in countries where the local currency differs. non- GBP currencies.
Therefore, fluctuations in foreign exchange ("FX") rates may impact investment The RCF can be drawn in multiple currencies, enabling debt to be matched with
values. underlying assets.
OEGEN monitors FX exposures using short and long-term cash flow forecasts.
The Board, AIFM and OEGEN regularly assess portfolio concentrations and
currency holdings.
Tax risk (Regulatory and Compliance) Changes in tax laws or government policies may impact the Company's tax The Company monitors changes in tax legislation and engages with external tax
position, potentially affecting returns and structuring. advisors to assess potential impacts and adapt its tax strategy accordingly.
Additionally, failure to comply with tax regulations, errors in tax The Designated Person for Regulatory Compliance at the AIFM maintains the
computations, or late filings could lead to penalties, tax leakage, reporting compliance calendar to monitor tax filing deadlines.
reputational damage, and potential personal liability for Directors.
OEGEN has in-house taxation expertise to provide tax advice and perform tax
calculations, ensuring compliance with obligations.
Government policy changes The Company's investments in Renewable Energy Assets are remunerated by both The Company holds a diversified portfolio of Renewable Energy Assets and so it
government support schemes and private PPAs - the terms of these may be is unlikely that all assets will be impacted equally by a change in
impacted by government changes or policy or even terminated in certain legislation.
circumstances. This would adversely impact the value of the Company's
investments. There is also strong public demand for support of the renewables market to hit
"net zero" carbon emission targets.
Geopolitical risks Ongoing geopolitical tensions, such as the conflict in Ukraine and related The Investment Manager conducts due diligence on all counterparties prior to
sanctions, may impact the Company's target returns. Key risks include: conducting business with them.
Potential disruption to third-party contractors managing the Company's assets. Counterparty due diligence is continuously reviewed to confirm no material
exposure to sanctioned entities.
Assets located in nearby jurisdictions may be impacted by the conflict.
OEGEN will remain agile in assessing geopolitical developments and redefining
Increased volatility in power prices, potentially leading to political mitigation strategies.
intervention, price regulation, or windfall taxes.
Additional risk mitigations for power prices and cybersecurity are detailed in
The conflict may lead to an elevated risk of cyber-attacks. subsequent sections.
Risks associated with climate change Climate related risks relate to transition risks and physical risks. The Investment Manager has engaged with third party advisors on how climate
related risks are being modelled in long-term power price forecasts. There are
The prominent transition risk relates to oversupply of renewables over time, likely to be opportunities associated with the transition to a low carbon
which may cause downward pressure on long-term power price forecasts setting future including growth in the market, government interventions and technology
lower capture prices, including the risks associated with periods of negative advancements that could counterbalance the transition risks of climate change
power prices and power price volatility. This could ultimately lead to a on the Company.
shortfall in anticipated revenues to the Company.
The Board and the Investment Manager periodically assess the Company's
The prominent physical risks relate to long‑term changes to weather portfolio of assets for potential transition risks within the jurisdictions
patterns, which could cause a material adverse change to an asset's energy that it currently operates. The Investment Manager works with third-party
yield from that expected at the time of investment. asset managers to ensure an appropriate level of equipment spares to minimise
downtime associated with damaged equipment.
Physical risks associated with acute and chronic temperature change could lead
to flooding, storms, and high winds. This could damage equipment and force There is growing demand for consistent, comparable, reliable, and clear
operational downtime resulting in reduced revenue capability and profitability climate related financial disclosure from many participants in financial
of the portfolio of assets. markets. The Board, AIFM and Investment Manager have included TCFD as part of
the Company's ESG & Impact Strategy.
Company: operational risks
Risk that target returns and Company objectives are not met over the longer
term.
Risk Potential Impact Mitigation
Capital allocation and deployment There is a risk that capital may not be allocated optimally, leading to The Investment Manager conducts detailed market analysis to ensure investment
investments that do not achieve target returns due to evolving market decisions align with prevailing and forecasted market conditions
conditions, inaccurate forecasts or unforeseen economic changes.
The Board and OEGEN apply a disciplined capital allocation framework, ensuring
Strong competition in the infrastructure market or other market-driven investments are benchmarked against alternative opportunities to optimise
factors, such as sustained high interest rates, may limit the ability of the risk-adjusted returns.
Company to acquire assets in line with target returns.
Capital allocation decisions and deployment risk could ultimately impact
shareholder returns.
Capital recycling through asset sales Trading at a discount to NAV Selling assets may impact the Company's ability to maintain its dividend The Company has an experienced Investment Manager within the sector and the
targets and adhere to investment policy limits. Investment team has a good understanding of the M&A market and investor
landscape. The Company has a strong track record of executing asset sales over
Unsuccessful transactions could also result in abort costs and potential the prior years.
reputational risks.
The Investment Manager has an Investment Committee to approve asset sales in
principle and sign off transaction budgets. These costs are reported to the
board. Reliance is placed on due diligence reports prepared by professionals
appointed by the Investment Manager and therefore the Company could claim for
losses if necessary.
Risks associated with the share buyback programme The effectiveness of the Company's share buyback programme in narrowing the The Board regularly reviews the buyback programme and its impact on the share
discount to NAV and enhancing shareholder value is subject to market price and NAV discount.
conditions, investor sentiment, and capital availability.
The Company's Broker provides market insights and shareholder sentiment
If unsuccessful, the discount may persist or widen, and excessive buybacks analysis to guide decisions.
could impact liquidity, investment capacity, or dividend cover.
Buybacks are conducted within financial limits to preserve capital for
investments and dividends.
The Board maintains flexibility to adjust the strategy based on market
conditions and alternative capital uses.
Reliance on third-party service providers The Board has contractually delegated to third-party service providers day to Each contract was entered into after full and proper consideration of the
day management of the Company. A deterioration in the performance of any of quality and cost of services offered, including the financial control systems
the key service providers including the Investment Manager, AIFM and in operation in so far as they relate to the affairs of the Company. All of
Administrator could have an impact on the Company's performance and there is a the above services are subject to ongoing oversight by the Board and, where
risk that the Company may not be able to find appropriate replacements should applicable, the AIFM and the performance of the key service providers is
the engagement with the service providers be terminated. reviewed on a regular basis. The Board, through the Management Engagement
Committee monitors key personnel risks as part of its oversight of the AIFM
and Investment Manager and the Company's key service providers report
periodically to the Board on their control procedures.
Liquidity Risk The Company may face challenges in meeting financial obligations if liquidity The Board and the Investment Manager regularly monitor liquidity levels to
is constrained due to limited cash reserve, restricted access to capital ensure sufficient cash reserves and funding capacity. The Company maintains a
markets or difficulty in selling assets. Insufficient liquidity could impact RCF, providing flexibility to manage short-term liquidity needs. Prudent
the Company's ability to fund new investments, meet operational commitments, financial planning ensures commitments, including dividends and Capex are
or sustain dividend payments. aligned with within available capital. The Investment Manager has a strong
track record in asset sales should the Company need to realise capital to meet
commitments.
Valuations Valuation of the portfolio of assets is based on financial projections and The Investment Manager has significant experience in the valuation of
estimations of future results. Actual results may vary significantly from the renewable assets and conducts a quarterly valuations process.
projections, which may reduce the profitability of the Company leading to
reduced returns to shareholders. The AIFM has a valuations committee separate to the Investment Manager to
provide valuations consistency on macro assumptions and to provide oversight
and challenge to the valuations.
The Board and AIFM review the valuations provided quarterly and they are
audited annually.
Dividend cover and ratios are regularly monitored by the Investment Manager
and reported to the AIFM.
ESG policy Material ESG risks may arise such as slave labour in the supply chain, health ESG is embedded in the investment cycle with a formal ESG matrix including a
and safety, unfair advantage, bribery, corruption and environmental damage. If minimum target ESG score required for approval of any new investments. Ongoing
the Company fails to adhere to its public commitments as stated in its ESG operational and construction ESG risk management is reviewed periodically by
Policy and ESG & Impact Strategy this could result in shareholder the Investment Manager, who work closely with service providers on ESG and
dissatisfaction and adversely affect the reputation of the Company. impact standards reporting.
ESG Policy is reviewed and approved by the Board.
Conflicts of interest The AIFM and Investment Manager manage multiple funds with similar investment The AIFM and Investment Manager have clear conflicts of interest and asset
strategies, creating the potential for conflicts of interest. allocation policies in place.
Additionally, Board and counterparty conflicts may arise. OEGEN's Conflicts Committee oversees transactions where conflicts may arise
with independent fairness opinions being commissioned where necessary.
The Board retains final approval rights on all transactions.
Conflict management policies are regularly reviewed and disclosed in
accordance with the Listing Rules and Company's prospectus dated 10 June 2021.
Board effectiveness and compensation Inadequate Board composition or a weak evaluation process could lead to poor The Nomination Committee is responsible for ongoing monitoring of Board
decision making and reputational damage. composition and oversees succession planning.
Board compensation structures may incentivize excessive risk-taking or lead to An externally facilitated Board effectiveness review is commissioned every 3
difficulties in retaining knowledgeable Board members. years, with the next review scheduled for later in 2025.
The Remuneration Committee conducts external benchmarking on Board
compensation and provides transparency on findings in the annual Renumeration
Report.
The Company meets FCA diversity disclosure requirements, with further details
provided on pages 139 and 140 of the Company's Annual Report.
Trading at a discount to NAV The Ordinary Shares have been trading at a discount to NAV, limiting The Company's Broker monitors market trends, shareholder demographics and
shareholders' ability to realise their investments through the secondary changes to the share registerer, reporting regularly to the Board.
market at NAV which could lead to a loss of market confidence in the Board
and/or Investment Manager. Regular shareholder communications and investor roadshows ensure updated
information is available to the market/shareholders. Post-period, the Company
A failure to adapt to changing investor demands could reduce the demand for released a capital allocation update identifying key strategic goals for the
shares and widen the discount further. year, ensuring full transparency to investors.
In an effort to manage the prevailing discount, the Company has exercised its
powers to buy back shares (see below risk) with a view to correcting any
imbalance between the supply of and demand for the Ordinary Shares. The
Company has held all of the shares bought back to date as treasury shares.
Corporate M&A and other growth initiatives Unsuccessful corporate M&A activity could impact Company reputation, and The Company has an experienced Investment Manager within the sector and
lead to abort costs in the event of an unsuccessful transaction. External accordingly there is an investment team in place which has a good
growth activity is partially driven by external market factors. understanding of the M&A market and investor landscape. In addition, the
Company's Broker provides independent support for corporate M&A activity
taking into account target performance, investor sentiment and market
conditions.
Cyber security Attempts may be made to access the IT systems and data used by the Investment Cyber security policies and procedures implemented by key service providers
Manager, Administrator and other service providers through a cyber-attack or are reported to the Board and AIFM periodically to ensure conformity. The
malicious breaches of confidentiality that could impact the Company reputation Investment Manager has a robust 3 lines of defence risk model in place in
or result in financial loss. place to implement, check and audit technology controls. Thorough third-party
due diligence is carried out on all suppliers engaged to service the Company.
All providers have processes in place to identify cyber security risks and
apply and monitor appropriate risk plans.
Portfolio of assets: operational risks
The risk that the portfolio underperforms and, as a result the target returns
and Company objectives are not met over the longer‑term.
Risk Potential Impact Mitigation
Power prices The income and value of the Company's investments may be adversely impacted by The Investment Manager has a specific Energy Markets Team that monitors energy
changes in the prevailing market prices of electricity and prices achievable price forecasts and puts in place mitigating strategies. This could be through
for off-taker contracts. There is a risk that the actual prices received vary the use of short-term PPA contracts to fix the electricity prices where
significantly from the model assumptions, leading to a shortfall in possible, or to hedge the exposure of fluctuating electricity prices through
anticipated revenues to the Company. derivative instruments. Model assumptions are based on quarterly reports from
a number of independent established market consultants to inform on the
electricity prices over the longer‑term.
Construction Construction project risks associated with the risk of inaccurate assessment The Investment Manager monitors construction carefully and reports on
of a construction opportunity, delays or disruptions which are outside the construction projects frequently to the Board and AIFM. The Investment Manager
Company's control, changes in market conditions, and the inability of undertakes extensive due diligence on construction opportunities and has in
contractors to perform their contractual commitments could impact Company place clear approval processes for any material construction cost overruns and
performance. contingency spend.
Development Development projects face risks of delays, increases in costs or failure to The Company's maximum exposure to development is limited to 5% of GAV.
progress to a construction-ready stage, which could impact capital efficiency
and expected returns. The Investment Manager monitors progress of development projects carefully and
ensures all costs are managed appropriately. A clear approval processes is in
place for any material project cost overruns and contingency spend. Cost and
progress analysis of development projects is reported frequently to the Board
and AIFM. The Investment Manager also monitors exposure to any one developer
to ensure this is kept within reasonable limits.
Asset-specific risks, including production and HSE risks Circumstances may arise that adversely affect the performance of the relevant The Company's experienced Investment Manager oversees and manages asset and
renewable energy asset. These include health and safety, grid connection, site level issues. Third-party O&M contractors are engaged to carry out
material damage or degradation, equipment failures and environmental risks. regular preventative maintenance and a level of spares is maintained from
diversified manufacturers. The Investment Manager uses established
relationships with relevant DNOs and works closely with them to maintain grid
connection.
A SH&E Director is employed by the Investment Manager to oversee and
advise on the HSE system for renewable assets. The Company has comprehensive
insurance coverage to protect against losses and damage.
Contractor default risk Given the current economic climate, there is an increased risk that key The Company and the Investment Manager will seek to mitigate the Company's
service providers may default on their contractual obligations or experience exposure to contract default risk through carrying out qualitative and
financial distress, leading to potential project disruptions. quantitative due diligence on counterparties. Contract structuring includes
risk mitigation provisions, such as performance guarantees, contractual
safeguards and contingency planning.
Compliance and regulatory risks
Failure to comply with relevant regulatory changes, tax rules and obligations
may result in reputational damage to the Company or have a negative financial
impact.
Risk Potential Impact Mitigation
Non-compliance with FCA, Listing Rules, UK AIFM regulations, MAR and Failure to comply with relevant regulatory requirements including Section 1158 The Board monitors reports on compliance and related regulatory matters which
investment trust eligibility conditions of the Corporation Tax Act, the FCA's Listing and Prospectus Rules, the are provided by the Company Secretary, the AIFM and the Investment Manager on
Companies Act 2006, MAR, UK AIFM Directive, Accounting Standards, GDPR and a quarterly basis. The assessment of regulatory risks forms part of the
other regulations, could result in financial penalties, loss of investment Board's risk management framework. All of the Company's service providers are
trust status, legal proceedings against the Company and/or its Directors, and appropriately qualified professionals and ensure that they remain informed of
reputational damage. Failure to comply with any relevant regulatory rules all developments or updates to relevant legislation.
including Section 1158 of the Corporation Tax Act, the rules of the FCA,
including the UK Listing Rules and the Prospectus Rules, Companies Act 2006,
MAR, UK AIFM Directive, Accounting Standards, GDPR and any other relevant
regulations could result in financial penalties, loss of investment trust
status, legal proceedings against the Company and/or its Directors or
reputational damage.
Financial risks
Various types of risk associated with financing and liquidity. Further
financial risks are detailed in Note 16 of the financial statements.
Risk Potential Impact Mitigation
Risks associated with borrowing and derivatives can impact on Company The Company's investment policy involves the use of long-term and short-term The Board monitors debt covenants, gearing limits appropriate to the Company
performance debt. The use of leverage may increase the volatility of the Net Asset Value, and reviews any debt facilities before financial close.
may significantly increase the Company's investment risk and could lead to an
inability to meet financial obligations. Portfolio allocations are monitored on an ongoing basis by the AIFM to ensure
compliance with borrowing policy and limits stated in the investment policy.
The Company may be unable to obtain borrowing facilities at appropriate levels
impacting returns. The Company has the ability to enter into hedging transactions in relation to
interest rates for the purpose of efficient portfolio management to protect
Risks include refinancing risk, covenant breaches, poor management of assets the Company from fluctuations of interest rates. Read more above in interest
and liabilities, over-gearing and counterparty risk on derivative positions. rate, currency and power price risks.
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 market data and believe, based on those forecasts, the
assessment of the Company's subsidiaries' banking facilities and the
assessment of the principal risks described in this report, 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
£19 million as at 31 December 2024 (2023: £23m) and available headroom on
its RCF of £97 million (2023: 141m). The Company's net assets at 31 December
2024 were £570 million (2023: £599m) and total expenses for the year ended
31 December 2024 were £7.0 million (2022: £7m). 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 Directors have fully considered each of the Company's investments. The
Directors do not foresee any immediate material risk to the Company's
investment portfolio and income from underlying SPVs. A prolonged and deep
market decline could lead to falling values to the underlying business and
interruptions to cash flow, however the Company currently has more than
sufficient liquidity to meet any future obligations.
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, a decrease in output and an increase in the discount
rate applied to the underlying cash flow forecasts. 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 19 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. The Directors
have also considered that the Company is subject to a continuation resolution
at this year's AGM to be held on 13 June 2025. Following discussions that the
Company's Broker and Investment Manager have held with several shareholders,
the Directors believe that the Continuation Resolution will be passed at the
forthcoming AGM. The Board believes there are several significant factors that
support the Directors' view of a positive vote for the Company's continuation
as detailed below:
· The Company's Investment Manager is one of the largest renewable
energy investors in Europe, and provides the Company with access to a range of
opportunities for achieving long-term growth;
· The Company's portfolio continues to provide strong returns and
dividend cover. This has enabled the Board to recently announce an increase of
2.5% to its dividend target for 2025;
· The Company's portfolio is well positioned, with all of its
construction projects completed, and a high proportion of fixed revenues over
the near to medium term;
· The Company's ongoing capital recycling programme continues to
progress well, with recent asset sales supporting ORITs asset valuations with
the proceeds being utilised to pay down debt, buyback shares and make selected
accretive investments.
· The Directors acknowledge that the share price, as at the date of
this report, continues to trade at a discount to NAV, but this is noted as
being in line with the Company's sector peers.
· Since October 2024, and up to the date of this report, the
Investment Manager and Broker have spoken with shareholders representing over
50% of the register, and whilst there can be no guarantee that shareholder
views will not change before the AGM, a significant majority of those
consulted were supportive of the continuation of the Company.
Accordingly, the Directors have concluded that there are no material
uncertainties in respect of going concern and that it remains appropriate to
continue to adopt the going concern basis in preparing these financial
statements.
Viability statement
In accordance with the UK Corporate Governance Code and the UK Listing Rules,
the Directors have assessed the prospects of the Company over a longer period
than the 12 months required by the "Going Concern" provision.
In reviewing the Company's viability, the Directors have assessed the
viability of the Company for the period to 31 December 2029 (the 'Period').
The Board believes that the Period, being approximately five years, is an
appropriate time horizon over which to assess the viability of the Company,
particularly when taking into account the long-term nature of the Company's
investment strategy, which are modelled over five years. Based on this
assessment, the Directors have a reasonable expectation that the Company will
be able to continue to operate and to meet its liabilities as they fall due
over the period to 31 December 2029.
In their assessment of the prospects of the Company, the Directors have
considered each of the principal risks and uncertainties set out in this
report and the solvency of the Company. The Directors have considered the
Company's income and expenditure projections, along with the Group's access to
banking facilities and financial markets.
The Company receives revenue in the form of dividends and interest from its
portfolio of assets. These revenues are predominantly derived from the sale of
electricity and green certificates through power purchase or other similar
agreements, as well as subsidies in some cases. 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, particularly given the level of geographic and technological
diversification, and significant portion of fixed revenues. The Directors are
also satisfied and are comfortable that the Company would continue to remain
viable under downside scenarios, including a decline in long-term power price
forecasts.
The major cash outflows of the Company are the payment of dividends,
commitments payable for construction projects and contingent acquisitions. The
Directors are confident that the Company has sufficient cash balances and
headroom in the RCF held by an intermediate holding company, to fund all
outstanding commitments as they become payable over the Period.
The covenants associated with the RCF have been tested and are expected to be
compliant, even in downside scenarios. While the RCF falls due for repayment
in June 2028, the Directors are confident that they have sufficient access to
debt finance and equity markets to cover all cash outflows after this date.
The Directors do not expect there to be any material increase in the annual
ongoing charges of the Company over the period and as the Company grows the
annual ongoing charges ratio is expected to decrease. The Company's income
from investments provide substantial cover to the Company's operating
expenses, and any other costs likely to be faced by the Company over the
period of the assessment.
Based on this review, the Directors confirm that they have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the five-year period to December 2029.
Auditors' information
Each of the Directors at the date of the approval of this report confirms
that:
· so far as the Director is aware, there is no relevant audit
information of which the Company's auditors are unaware; and
· the Director has taken all steps that he/she ought to have
taken as director to make himself/herself aware of any relevant information
and to establish that the Company's auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the
provisions of Section 418 of the Companies Act 2006.
Statement of Directors' Responsibilities
Statement of directors' responsibilities in respect of the financial
statements
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the directors to prepare financial statements for each
financial year. Under that law the directors have prepared the financial
statements in accordance with UK-adopted international accounting standards.
Under company law, directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the company and of the profit or loss of the company for that period. In
preparing the financial statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures disclosed and
explained in the financial statements;
· make judgements and accounting estimates that are reasonable
and prudent; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the company will continue in
business.
The directors are responsible for safeguarding the assets of the company and
hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the company's transactions and
disclose with reasonable accuracy at any time the financial position of the
company and enable them to ensure that the financial statements and the
Directors' Remuneration Report comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity of the
company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors' confirmations
Each of the directors, whose names and functions are listed in the Corporate
Governance Statement confirm that, to the best of their knowledge:
· the company financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit of the
company; and
· the Directors' Report includes a fair review of the
development and performance of the business and the position of the company,
together with a description of the principal risks and uncertainties that it
faces.
For and on behalf of the Board
Philip Austin MBE
Chair
Financial Statements
Statement of Comprehensive Income
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Investment income 4 42,541 - 42,541 42,694 - 42,694
Movement in fair value of investments 9 - -24,030 -24,030 - -22,976 -22,976
Total net income/ (expense) 42,541 -24,030 18,511 42,694 -22,976 19,718
Investment management fees 5 -4,104 -1,368 -5,472 -4,232 -1,411 -5,643
Other expenses 5 -1,563 - -1,563 -1,368 -107 -1,475
Net finance income 301 - 301 126 - 126
Net foreign exchange losses - - - - -29 -29
Profit/(loss) before taxation 37,175 -25,398 11,777 37,220 -24,523 12,697
Taxation 6 -342 342 - -364 364 -
Profit/(loss) and total comprehensive income/(expense) for the year 36,833 -25,056 11,777 36,856 -24,159 12,697
Earnings/(loss) per Ordinary Share (pence) - basic and diluted 8 6.55p -4.45p 2.10p 6.52p -4.28p 2.24p
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 and
investment acquisitions 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.
Statement of Financial Position
As at As at
31 December 31 December
2024 2023
Note £'000 £'000
Non-current assets
Investments at fair value through profit or loss 9 561,296 592,121
Current assets
Trade and other receivables 10 23 143
Cash and cash equivalents 11,852 10,012
11,875 10,155
Current liabilities: amounts falling due within one year
Trade and other payables 11 -2,801 -3,237
-2,801 -3,237
Net current assets 9,074 6,918
Net assets 570,370 599,039
Capital and reserves
Share capital 12 5,649 5,649
Share premium account 12 217,283 217,283
Special reserve 13 332,590 339,500
Capital reserve -11,300 13,756
Revenue reserve 26,148 22,851
Total shareholders' funds 570,370 599,039
Net assets per Ordinary Share (pence) 14 102.65p 106.04p
The financial statements on pages 163 to 194 of the Company's Annual Report
were approved by the Board of Directors and authorised for issue on 26 March
2025 and were signed on its behalf by:
Philip Austin MBE
Chair
The accompanying notes are an integral part of these financial statements.
Incorporated in England and Wales with registered number 12257608
Statement of Changes in Equity
Year ended 31 December 2024
Share Total
Share premium Special Revenue Capital shareholders'
capital account reserve reserve reserve funds
Note £'000 £'000 £'000 £'000 £'000 £'000
Opening equity as at 1 January 2024 5,649 217,283 339,500 22,851 13,756 599,039
Shares bought back and held in treasury - - -6,837 - - -6,837
Costs on share buybacks - - -73 - - -73
Profit/(loss) and total comprehensive income/(expense) for the year - - - 36,833 -25,056 11,777
Dividends paid 7 - - - -33,536 - -33,536
Closing equity as at 31 December 2024 5,649 217,283 332,590 26,148 -11,300 570,370
Year ended 31 December 2023
Share Total
Share premium Special Revenue Capital shareholders'
capital account reserve reserve reserve funds
Note £'000 £'000 £'000 £'000 £'000 £'000
Opening equity as at 1 January 2023 5,649 217,283 339,500 17,913 37,915 618,260
Profit/(loss) and total comprehensive income/(expense) for the year - - - 36,856 -24,159 12,697
Dividends paid 7 - - - -31,918 - -31,918
Closing equity as at 31 December 2023 5,649 217,283 339,500 22,851 13,756 599,039
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.
Statement of Cash Flows
Year ended Year ended
31 December 31 December
2024 2023
Note £'000 £'000
Operating activities cash flows
Profit before taxation 11,777 12,697
Adjustments for:
Movement in fair value of investments 9 24,030 22,976
Investment income from investments 4 -42,541 -42,694
Operating cash flow before movements in working capital -6,734 -7,021
Changes in working capital:
Decrease in trade and other receivables 120 632
(Decrease)/increase in trade payables -436 1,320
Distributions from investments 9 49,913 41,979
Net cash flow generated from operating activities 42,863 36,910
Investing activities cash flows
Costs associated with acquiring the portfolio of assets 9 -577 -5,583
Net cash flow used in investing activities -577 -5,583
Financing activities cash flows
Dividends paid to Ordinary Shareholders 7 -33,536 -31,918
Shares bought back and held in treasury -6,837 -
Costs on buybacks -73 -
Net cash flow used in financing activities -40,446 -31,918
Net increase/(decrease) in cash and cash equivalents 1,840 -591
Cash and cash equivalents at start of year 10,012 10,603
Cash and Cash equivalents at end of year 11,852 10,012
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 31 December 2024
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 the main market 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 is 4th
Floor, 140 Aldersgate Street, London, EC1A 4HY.
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 audited financial statements of the Company (the "financial statements")
are for the year ended 31 December 2024 and comprise only the results of the
Company, as all of its subsidiaries are measured at fair value in accordance
with IFRS 10. The comparatives shown in these financial statements refer to
the year ended 31 December 2023.
The Company has appointed, as of 31 July 2024, Octopus Energy AIF Management
Limited to be the alternative investment fund manager of the Company (the
"AIFM"), for the purposes of the Alternative Investment Fund Managers
Regulations 2013 and the Commission Delegated Regulation (EU) No 231/2013 of
19 December 2012 (as it applies in the UK by virtue of the European Union
(Withdrawal) Act 2018). 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 previous AIFM up to 30 July 2024 was Octopus AIF
Management Limited. 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.
2. Basis of preparation
These financial statements have been prepared in accordance with UK-adopted
International Accounting Standards and with the requirements of the Companies
Act 2006 as applicable to companies reporting under those standards.
The 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 financial statements are prepared on the historical cost basis, except for
the revaluation of investments measured at fair value through profit or loss.
The principal accounting policies adopted are set out below. These policies
are consistently applied.
The financial statements are presented in Sterling, which is the Company's
functional currency and are rounded to the nearest thousand, unless otherwise
stated. They have been prepared on the basis of the accounting policies,
significant judgements, key assumptions and estimates as set out below.
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 market data and believe, based on those forecasts, the
assessment of the Company's subsidiary's banking facilities and the assessment
of the principal risks described in this report, 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
£19 million as at 31 December 2024 (2023: £23m) and available headroom on
its revolving credit facility ("RCF") of £97 million (2023: £141m). The
Company's net assets at 31 December 2024 were £570 million (2023: £599m) and
total expenses for the year ended 31 December 2024 were £7.0 million (2023:
£7.1m), which represented approximately 1.2% (2023: 1.2%) of average net
assets during the year. 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 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 expected
to be compliant, even in downside scenarios.
The major cash outflows of the Company are the payment of dividends and
commitments payable for construction or development projects. Since the year
end, the Company's direct subsidiary, ORIT Holdings II Limited, successfully
refinanced its RCF, reducing the facility size to £150 million and extending
its term to June 2028. The reduction in size was funded by a new £100m debt
facility taken out by an indirect subsidiary of the Company. The covenants of
the RCF have been tested and are expected to be compliant, even in downside
scenarios. Plausible downside scenarios include a decrease in wholesale energy
prices, a decrease in output and an increase in the discount rate applied to
the underlying cash flow forecasts. 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
ORIT Holdings II Limited in order to fund the commitments, detailed in note 19
to the financial statements, as they fall due.
As set out in the Company's Articles of Association, the Directors are
required to propose an ordinary resolution at the next annual general meeting,
due to be held on 13 June 2025, for the Company to continue its business as
presently constituted ("the Continuation Resolution"). This will be the first
Continuation Resolution since the Company's incorporation and is required
every five years. If the resolution is not passed, the Directors are required
to put forward proposals, as soon as reasonably practicable, to shareholders
for the reconstruction or reorganisation of the Company's operations.
The Directors, with support from the Company's Broker and Investment Manager,
have therefore conducted a thorough assessment of the potential outcomes of
this vote, including engagement with shareholders, to understand views, and
gauge sentiment, on the Continuation Resolution.
Feedback received by the Broker and Investment Manager indicated that,
notwithstanding concerns regarding the price at which the Company's shares
have been trading, there remains strong support for the Company continuing its
business, with a majority of those consulted being in favour of continuation.
This feedback aligns with the general sentiment of shareholders gained through
broader discussions and at events held in recent months.
Based on the results of the shareholder engagement efforts and feedback
obtained, from shareholders representing over 50% of the register as at the
date of this report, the Directors expect that a majority of shareholders will
vote in favour of the continuation of the Company. While the Directors
acknowledge that no binding commitments have or will be made by shareholders
ahead of the vote and that sentiment and voting intentions can change, they do
not believe that the Continuation Resolution will impact the Company's ability
to continue as a going concern.
Having performed the above assessment of going concern, the Directors have
considered whether a material uncertainty exists in respect of going concern,
and have concluded that, based on the results of the actions performed above,
that a material uncertainty does not exist and it is therefore appropriate to
prepare the financial statements of the Company on a going concern basis.
Critical accounting judgements, estimates and assumptions
The preparation of the financial statements 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. Significant estimates,
judgements and assumptions for the period are set out as follows:
Key estimation and uncertainty: 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.
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 up to two independent and widely used market consultants'
technology-specific capture price forecasts for each asset. Power prices are
updated quarterly in line with the release of updated forecasts. There is an
inherent uncertainty in future wholesale electricity price projection.
Electricity output is based on specifically commissioned yield assessments
prepared by technical advisors. Each asset's valuation assumes a "P50" level
of electricity output, which 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 short to medium-term inflation inputs used in the valuations are set in
reference to independent economic forecasts from a variety of sources
including His Majesty's Treasury, European Commission, Central Banks and
others where appropriate. In the longer-term, an assumption is made that
inflation will increase at a long-term rate. The estimates and assumptions
that are used in the calculation of the fair value of investments is disclosed
in Note 9.
The impact of physical and transition risks associated with climate change is
assessed on a project by project basis and factored into the underlying cash
flows as appropriate. Further details can be found in the Impact Report.
Further considerations on currency risks, interest rate risks, power price
risks, credit risks, and liquidity risks are detailed in Note 16.
Key judgement: Equity and debt investment in ORIT Holdings II Limited
The Company classifies its investments based on its business model for
managing those financial assets and the contractual cash flow characteristics
of the financial assets. The portfolio of assets is managed, and performance
is evaluated, on a fair value basis.
The Company is primarily focused on fair value information and uses that
information to assess the assets' performance and to make decisions. The
Company has not taken the option to irrevocably designate any equity
securities as fair value through other comprehensive income. The contractual
cash flows of the Company's debt securities are solely principal and interest,
however, these securities are not held for the purpose of collecting
contractual cash flows. The collection of contractual cash flows is only
incidental to achieving the Company's business model's objective.
Consequently, all investments are measured at fair value through profit or
loss.
The Company considers the equity and loan investments to share the same
investment characteristics and risks and they are therefore treated as a
single unit of account for fair value purposes (IFRS 13) and a single class
for financial instrument disclosure purposes (IFRS 9). As a result, 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.
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).
Under the definition of an investment entity, the Company should satisfy all
three of the following tests:
i. the Company obtains funds from one or more investors for the
purpose of providing those investors with investment management services;
ii. the Company commits to its investors that its business purpose is
to invest funds solely for returns from capital appreciation, investment
income, or both; and
iii. the Company measures and evaluates the performance of substantially
all of its investments on a fair value basis.
In assessing whether the Company meet the definition of an investment entity
set out in IFRS 10 the Directors note that:
i. the Company has multiple investors and obtains funds from a
diverse group of shareholders who would otherwise not have access individually
to invest in renewable energy infrastructure investments due to high barriers
to entry and capital requirements;
ii. the Company intends to hold its investments for the remainder of
their useful lives for the purpose of capital appreciation and investment
income. The portfolio of assets are expected to generate renewable energy
output for 30 to 40 years from their relevant commercial operation date and
the Directors believe the Company is able to generate returns to the investors
during that period; and
iii. the Company measures and evaluates the performance of all of its
investments on a fair value basis which is the most relevant for investors in
the Company. Management use fair value information as a primary measurement to
evaluate the performance of all of the investments and in decision making.
The Directors are of the opinion that the Company meets all the typical
characteristics of an investment entity and therefore meets the definition set
out in IFRS 10. The Directors are satisfied that investment entity accounting
treatment appropriately reflects the Company's activities as an investment
trust.
The Directors have also satisfied themselves that the Company's wholly owned
direct subsidiary, ORIT Holdings II Limited, meets the characteristics of an
investment entity. ORIT Holdings II Limited has one investor, ORIT, however,
in substance ORIT Holdings II Limited is investing the funds of the investors
of ORIT on its behalf and is effectively performing investment management
services on behalf of many unrelated beneficiary investors.
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.
New standards, interpretations and amendments
A number of amendments to existing standards became effective in the year
ending 31 December 2024. None of these had a material impact on the reported
results, or financial position, of the Company.
A number of new standards, amendments to standards will also become effective
for periods beginning on or after 1 January 2025. None of these are expected
to have a significant effect on the measurement of the amounts recognised in
the financial statements of the Company. The Company intends to adopt the
standards and interpretations in the reporting period when they become
effective and the Board does not anticipate that the adoption of these
standards and interpretations in future periods will materially impact the
Company's financial results in the period of initial application although
there may be revised presentations to the financial statements and additional
disclosures.
New standards and amendments issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Company's financial statements
are disclosed below. These standards are not expected to have a material
impact on the entity in future reporting periods and on foreseeable future
transactions.
Lack of Exchangeability (Amendments to IAS 21)
The amendments to IAS 21 (The Effects of Changes in Foreign Exchange Rates)
clarify how an entity should assess whether a currency is exchangeable and how
it should determine a spot exchange rate when exchangeability is lacking, as
well as require the disclosure of information that enables users of financial
statements to understand the impact of a currency not being exchangeable. A
currency is considered to be exchangeable into another currency when an entity
is able to obtain the other currency within a time frame that allows for a
normal administrative delay and through a market or other readily available
exchange mechanism that creates enforceable rights and obligations. If a
currency is not exchangeable into another currency, the entity is required to
estimate the spot exchange rate at the measurement date. The amendments are
effective for periods beginning on or after 1 January 2025, with early
application permitted.
3. Material accounting policies
a) Financial instruments
Financial assets and financial liabilities are recognised on the Company's
Statement of Financial Position when the Company becomes a party to the
contractual provisions of the instrument. Financial assets are derecognised
when the contractual rights to the cash flows from the instrument expire or
the asset is transferred, and the transfer qualifies for derecognition in
accordance with IFRS 9 Financial Instruments: Recognition and Measurement.
Financial assets
As an investment entity, the Company is required to measure its investments in
its wholly owned direct subsidiaries at fair value through profit or loss
('FVTPL'). As explained in note 2, the Company has made a judgement to fair
value both the equity and debt investment in its subsidiary together.
Subsequent to initial recognition, the Company measures its investments on a
combined basis at fair value in accordance with IFRS 9 Financial Instruments:
Recognition and Measurement and IFRS 13 Fair Value Measurement. Valuation of
development and early-stage assets is considered in further detail in Note 9c.
Trade receivables, loans and other receivables that are non-derivative
financial assets and that have fixed or determinable payments that are not
quoted in an active market are classified as financial assets at amortised
cost. These assets are measured at amortised cost using the effective interest
method, less allowance for expected credit losses. The Company has assessed
IFRS 9's expected credit loss model and does not consider any material impact
on these financial statements.
They are included in current assets, except where maturities are greater than
12 months after the year end date in which case they are classified as
non-current assets.
Regular purchases and sales of investments are recognised on the trade date -
the date on which the Company commits to purchase or sell the investment.
Financial assets at FVTPL are initially recognised at fair value. Transaction
costs are expensed as incurred within the Statement of Comprehensive Income.
Financial assets are derecognised when the rights to receive cash flows from
the investments have expired or the Company has transferred substantially all
risks and rewards of ownership.
Subsequent to initial recognition, all financial assets and financial
liabilities at FVTPL are measured at fair value.
Gains and losses arising from changes in the fair value of the 'financial
assets at FVTPL' category are presented in the Statement of Comprehensive
Income within Movement in fair value of investments in the period in which
they arise.
Income from financial assets at FVTPL is recognised in the Statement of
Comprehensive Income within investment income when the Company's right to
receive payments is established.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
The Company's financial liabilities include trade and other payables and other
short-term monetary liabilities which are initially recognised at fair value
and subsequently measured at amortised cost using the effective interest rate
method.
Financial liabilities are initially measured at fair value, net of transaction
costs. Financial liabilities are subsequently measured at amortised cost using
the effective interest method, with interest expense recognised on an
effective interest rate method.
The Company derecognises financial liabilities when, and only when, the
Company's obligations are discharged, cancelled or they expire.
Ordinary Shares are classified as equity. An equity instrument is any contract
that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs. Direct issue
costs are charged against the value of ordinary share premium.
b) Taxation
Investment trusts which have approval under Section 1158 of the Corporation
Tax Act 2010 are not liable for taxation on capital gains. The Company has
successfully applied and has been granted approval as an Investment Trust by
HMRC.
Irrecoverable withholding tax is recognised on any overseas income on an
accrual basis using the applicable rate of taxation for the country of origin.
The underlying intermediate holding companies and project companies in which
the Company invests provide for and pay taxation at the appropriate rates in
the countries in which they operate. This is taken into account when assessing
the value of the subsidiaries.
c) Segmental reporting
The Board is of the opinion that the Company is engaged in a single segment of
business, being investment in renewable energy infrastructure assets to
generate investment returns whilst preserving capital. The financial
information used by the Board to manage the Company presents the business as a
single segment.
d) Investment income
Investment income comprises interest income and dividend income received from
the Company's subsidiaries. Interest income is recognised in the Statement of
Comprehensive Income using the effective interest method. Dividend income is
recognised when the Company's entitlement to receive payment is established.
e) Expenses
All expenses are accounted for on an accrual basis. In respect of the analysis
between revenue and capital items presented within the Statement of
Comprehensive Income, all expenses are presented as revenue items except as
follows:
Investment Management fees
As per the Company's investment objective, it is expected that income returns
will make up the majority of ORIT's long-term return. Therefore, based on the
estimated split of future returns (which cannot be guaranteed), 25% of the
investment management fee is charged as a capital item within the Statement of
Comprehensive Income.
Abort costs
Costs incurred on aborted transactions are charged as capital items within the
Statement of Comprehensive Income.
f) Foreign currency
Functional currency and presentation currency
The financial statements are presented in Pounds Sterling which is the
Company's functional and presentation currency, and rounded to the nearest
thousand. The Board of Directors considers Sterling the currency that most
faithfully represents the economic effect of the underlying transactions,
events and conditions. Sterling is the currency in which the Company measures
its performance and reports its results, as well as the currency in which it
receives subscriptions from its investors.
Transactions and balances
Transactions denominated in foreign currencies are translated into Sterling at
actual exchange rates as at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the year end are reported at
the rates of exchange prevailing at the year end. Any gain or loss arising
from a change in exchange rates subsequent to the date of the transaction is
included as an exchange gain or loss to capital or revenue in the Statement of
Comprehensive Income as appropriate. Foreign exchange movements on investments
are included in the Capital account of the Statement of Comprehensive Income.
g) Cash and Cash Equivalents
Cash and cash equivalents includes deposits held with banks and other
short-term deposits with original maturities of three months or less. It is a
highly liquid investment and readily convertible to a known amount of cash,
and carries an insignificant risk of changes in value.
h) Dividends payable
Final dividends payable to equity shareholders are recognised in the financial
statements when they have been approved by shareholders via ordinary
resolution and become a liability of the Company. Interim dividends are
recognised in the period in which they are paid.
i) Treasury shares
Treasury shares represent shares repurchased by the Company. They are
recognised at cost and presented as a deduction in equity. Treasury shares do
not carry voting rights and are not entitled to dividends. Any proceeds from
the reissue of treasury shares are recognised as an increase to equity, net of
directly attributable transaction costs. No gain or loss is recognised in
profit or loss on the purchase, sale, issue or cancellation of the Company's
own shares.
4. Investment income
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Dividend income from investments 17,000 - 17,000 16,800 - 16,800
Interest income from investments 25,541 - 25,541 25,894 - 25,894
Total investment income 42,541 - 42,541 42,694 - 42,694
5. Operating expenses
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fees 4,104 1,368 5,472 4,232 1,411 5,643
Directors' fees 252 - 252 209 - 209
Company's auditors' fees:
- in respect of audit services 319 - 319 376 - 376
Other operating expenses 992 - 992 783 107 890
Total operating expenses 5,667 1,368 7,035 5,600 1,518 7,118
Further details on the Investment Manager's agreement have been provided in
Note 17.
In addition to the fees disclosed above, £198,168 (2023: £163,500) is
payable to the Company's auditors in respect of audit services provided to
unconsolidated subsidiaries and therefore is not included within the Company's
expenses above.
Included within other operating costs is an amount of £Nil (2023: £107,000)
relating to transaction costs associated with the acquisition of portfolio of
assets and abort costs.
The Company has no employees. Full detail on Directors' fees is provided in
Note 17. The Directors' fees exclude employer's national insurance
contribution which is included as appropriate in other operating expenses.
There were no other emoluments.
6. Taxation
(a) Analysis of charge/(credit) in the year
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Corporation tax 342 -342 - 364 -364 -
Tax charge/(credit) for the year 342 -342 - 364 -364 -
(b) Factors affecting total tax charge/(credit) for the year:
Per the enactment of the Finance Act 2021, the rate of UK corporation tax was
increased from 19% to 25% since April 2023. The effective UK corporation tax
rate applicable to the Company for the year is 25% (2023: 23.5%). 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:
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Profit/(loss) before taxation 37,175 -25,398 11,777 37,220 -24,523 12,697
Corporation tax at 25% (2023: 23.5%) 9,294 -6,350 2,944 8,747 -5,763 2,984
Effects of:
Expenses not deductible for tax purposes - 6,008 6,008 - 5,399 5,399
Income not taxable -4,250 - -4,250 -3,948 - -3,948
Dividends designated as interest distributions -4,706 - -4,706 -4,437 - -4,437
Movement in deferred tax not recognised 4 - 4 2 - 2
Total tax charge/(credit) for the year 342 -342 - 364 -364 -
The Directors are of the opinion that the Company has complied with the
requirements for maintaining investment trust status for the purposes of
section 1158 of the Corporation Tax Act 2010. This allows certain capital
profits of the Company to be exempt from UK tax. Additionally, the Company may
designate dividends wholly or partly as interest distributions for UK tax
purposes. Interest distributions are treated as tax deductions against taxable
income of the Company so that investors do not suffer double taxation on their
returns.
The financial statements do not directly include the tax charges for any of
the Company's intermediate holding companies or subsidiaries as these are held
at fair value. Each of these companies are subject to taxes in the countries
in which they operate.
The Company has an unrecognised deferred tax asset of £16,503 (2023:
£10,071) based on the excess management expenses of £66,010 (2023: £40,284)
at the prospective UK corporation tax rate of 25% (2023:25%). A deferred tax
asset has not been recognised in respect of these management expenses and will
be recoverable only to the extent that the Company has sufficient future
taxable profits.
7. Dividends
The dividends reflected in the financial statements for the year are as
follows:
Year ended 31 December 2024 Year ended 31 December 2023
Pence per Revenue Pence per Revenue
Ordinary reserve Total Ordinary reserve Total
Share £'000 £'000 Share £'000 £'000
Q4 2023 Dividend - paid 23 February 2024 (2023: 24 February 2023) 1.45 8,191 8,191 1.31 7,401 7,401
Q1 2024 Dividend - paid 31 May 2024 (2023: 2 June 2023) 1.50 8,475 8,475 1.44 8,135 8,135
Q2 2024 Dividend - paid 30 August 2024 (2023: 1 September 2023) 1.51 8,493 8,493 1.45 8,191 8,191
Q3 2024 Dividend paid 29 November 2024 (2023: 1 December 2023) 1.50 8,377 8,377 1.45 8,191 8,191
Total 5.96 33,536 33,536 5.65 31,918 31,918
The dividend relating to the year/period, which is the basis on which the
requirements of Section 1159 of the Corporation Tax Act 2010 are considered is
detailed below:
Year ended 31 December 2024 Year ended 31 December 2023
Pence per Revenue Pence per Revenue
Ordinary reserve Total Ordinary reserve Total
Share £'000 £'000 Share £'000 £'000
Q1 2024 Dividend - paid 31 May 2024 (2023: 2 June 2023) 1.50 8,475 8,475 1.44 8,135 8,135
Q2 2024 Dividend - paid 30 August 2024 (2023: 1 September 2023) 1.51 8,493 8,493 1.45 8,191 8,191
Q3 2024 Dividend - paid 29 November 2024 (2023: 1 December 2023) 1.50 8,377 8,377 1.45 8,191 8,191
Q4 2024 Dividend - paid 28 February 2025 (2023: 23 February 2024) 1.51 8,379 8,379 1.45 8,191 8,191
Total 6.02 33,724 33,724 5.79 32,708 32,708
On 31 January 2025 the Company declared an interim dividend of 1.51p per
Ordinary Share in respect of the three months to 31 December 2024, amounting
to £8.4 million. The ex-dividend date was 13 February 2025, the record date
was 14 February 2025, and the dividend was paid on 28 February 2025.
8. Earnings/(loss) per Ordinary Share
Earnings/(loss) per Ordinary Share is calculated by dividing the profit/(loss)
attributable to equity shareholders of the Company by the weighted average
number of Ordinary Shares in issue during the year as follows:
Year ended 31 December 2024 Year ended 31 December 2023
Revenue Capital Total Revenue Capital Total
Profit/(loss) attributable to the equity holders of the Company (£'000) 36,833 -25,056 11,777 36,856 -24,159 12,697
Weighted average number of Ordinary Shares outstanding (000) 562,473 562,473 562,473 564,928 564,928 564,928
Earnings/(loss) per Ordinary Share (pence) - basic and diluted 6.55p -4.45p 2.10p 6.52p -4.28p 2.24p
There is no difference between the weighted average Ordinary or diluted number
of Shares.
9. 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 subsidiary as an investment at fair value through profit or loss.
a) Summary of valuation
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Opening balance 592,121 608,799
Portfolio of assets acquired - -
Additional investment in intermediate holding companies 577 5,583
Distributions received from investments -49,913 -41,979
Investment income 42,541 42,694
Movement in fair value of investments -24,030 -22,976
Total investments at the end of the year 561,296 592,121
The additional investment in the intermediate holding companies include
acquisition costs associated with the purchase of the portfolio of assets
totalling £Nil (2023: £2.1m), which have been expensed to the profit and
loss in these companies and £0.6 million (2023: £3.4m) of other expenses
paid by the Company on behalf of the intermediate holding companies.
b) Reconciliation of movement in fair value of the Company's investments
The table below shows the movement in the fair value of the Company's
investments. These assets are held through intermediate holding companies.
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Opening balance 705,970 608,799
Portfolio of assets acquired 104,229 65,224
Asset disposal -62,077 -91,817
Distributions received -69,006 -37,489
Movement in fair value 20,488 161,253
Fair value of portfolio of assets at the end of the year 699,604 705,970
Cash held in intermediate holding companies 7,075 13,209
Bank loans held in intermediate holding companies -151,243 -130,043
Fair value of other net assets in intermediate holding companies 5,860 2,985
Fair value of Company's investments at the end of the year 561,296 592,121
On 27 August 2024, the Company announced the completion of the sale of the
Ljungbyholm wind farm (totalling 48 MW) in Sweden, realising net proceeds of
approximately £62 million (6% of total value of all investments at 30 June
2024) - realising a £1.4 million premium over the holding value of the assets
at the time of sale. The disposal was for 100% of ORIT's share.
c) Investment (loss)/gains in the year
Year ended Year ended
31 December 31 December
2024 2023
£'000 £'000
Movement in fair value of investments -24,030 -22,976
Loss on investments -24,030 -22,976
Of the total distributions received from investments, £43.7 million (2023:
£23.9m) relates to income originated from the Company's UK investments and
£25.3 million (2023: £16.3m) relates to income originated from its European
investments.
Fair value of portfolio of assets
Investment Manager has carried out fair market valuations of the investments
as at 31 December 2024.
The Directors have satisfied themselves as to the methodology used, the
discount rates applied and the valuation. All operational investments are in
renewable energy assets and are valued using a discounted cash flow
methodology. As explained in note 3a, the equity and debt instruments are
valued as a whole. This is done using a blended discount rate and the value
attributed to debt investments represents their face value, with the residual
value attributed to equity investments. The discount rate (cost of equity)
applied to the portfolio of assets ranges from 6.1% to 8.3%. For development
and early-stage assets, investment values are held at cost or Price of Recent
Investment for up to one year from the initial or most recent investment,
provided there are no material changes to the business plan set at
acquisition. After this period, a detailed evaluation of the portfolio
investments will be performed on a semi-annual basis, during which any
material changes to the investments shall be thoroughly assessed through
Octopus Energy Generation's Framework for evaluating early-stage investments.
The following assumptions were used in the discounted cash flow valuations:
As at 31 December 2024 As at 31 December 2023
UK RPI (year-on-year) 3.5% during 2024, 3.0% to 2029 and then 2.25% from 2030 onwards 3.7% during 2024, declining to 3.00% in 2028 and then to 2.25%
from 2030 onwards
UK RPI (annual average) 3.6% during 2024, 3.0% to 2029 and then 2.25% from 2030 onwards 4.4% during 2024, declining to 3.00% in 2028 and then to 2.25%
from 2030 onwards
UK - corporation tax rate 25.00% 25.00%
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%
Finland - long-term inflation rate 2.00% 2.00%
Finland - corporation tax rate 20.00% 20.00%
Germany - long-term inflation rate 2.00% 2.00%
Germany - corporation tax rate 15.83% 15.83%
Sterling/Euro exchange rate 1.2115 1.1539
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 two independent and widely-used market expert
consultants' relevant technology-specific capture price forecasts for each
asset, see Figure 15 in the Market Outlook section and, Figure 12 in the
Portfolio valuation section of the Company's Annual Report, respectively.
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 15
10. Trade and other receivables
As at As at
31 December 2024 31 December 2023
£'000
£'000
Other receivables 23 143
Total 23 143
11. Trade and other payables
As at As at
31 December 2023
31 December 2024
£'000 £'000
Accrued expenses 2,801 3,237
Total 2,801 3,237
12. Share capital
Year ended 31 December 2024
Allotted, issued and fully paid: Number of Nominal value of Number of Nominal value of
shares
shares with treasury shares in
voting rights shares treasury
(£) (£)
Opening balance 564,927,536 5,649,275 - -
Share bought back and held in treasury -9,268,762 -92,688 9,268,762 92,688
Closing balance 555,658,774 5,556,587 9,268,762 92,688
As at 31 December 2024, the Company had total issued share capital of
£5,649,275, represented by outstanding shares (£5,556,587) and those held by
the Company in treasury (£92,688).
Year ended 31 December 2023
Allotted, issued and fully paid: Number of Nominal value of Number of Nominal value of
shares
shares with treasury shares in
voting rights shares treasury
(£) (£)
Opening balance 564,927,536 5,649,275 - -
Allotted following admission to LSE
Share issuance - - - -
Closing balance 564,927,536 5,649,275 - -
As at 31 December 2024, the Company had total share premium of £217.3 million
(2023: £217.3m).
13. 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 an 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 reserve was £339.5 million, which can be utilised to fund
share buybacks or distributions by way of dividends to the Company's
shareholders.
As at 31 December 2024, the Company had a special reserve remaining of £332.6
million. The reduction of £6.9 million in the year ended 31 December 2024
represents the total cost of share buybacks (inclusive of stamp duty and
associated fees) completed in the period.
14. Net assets per Ordinary Share (pence)
As at As at
31 December 2024 31 December 2023
Total shareholders' equity (£'000) 570,370 599,039
Number of Ordinary Shares in issue ('000) 555,659 564,928
Net asset value per Ordinary Share (pence) 102.65p 106.04p
15. Financial instruments by category
As at 31 December 2024
Financial Financial Financial Total
assets at
amortised cost assets at liabilities at £'000
£'000 fair value amortised
through
cost
profit or loss
£'000
£'000
Non-current assets
Investments at fair value through profit or loss - 561,296 - 561,296
Current assets
Trade and other receivables 23 - - 23
Cash and cash equivalents 11,852 - - 11,852
Total assets 11,875 561,296 - 573,171
Current liabilities
Trade and other payables - - -2,801 -2,801
Total liabilities - - -2,801 -2,801
Net assets 11,875 561,296 -2,801 570,370
As explained in Note 3a, the Company values its investments as a whole. In the
tables above of the total figure of £561.3 million for financial assets at
fair value through profit or loss, £506.5 million relates to the face value
of debt investments. Investments at fair value through profit and loss takes
into account additions and disposals in the year, see section Investments and
capital recycling programme within the Company's Annual Report.
As at 31 December 2023
Financial Financial Financial Total
assets at
amortised cost assets at liabilities at £'000
£'000 fair value amortised
through
cost
profit or loss
£'000
£'000
Non-current assets
Investments at fair value through profit or loss - 592,121 - 592,121
Current assets
Trade and other receivables 143 - - 143
Cash and cash equivalents 10,012 - - 10,012
Total assets 10,155 592,121 - 602,276
Current liabilities
Trade and other payables - - -3,237 -3,237
Total liabilities - - -3,237 -3,237
Net assets 10,155 592,121 -3,237 599,039
As explained in Note 3a, the Company values its investments as a whole. In the
table above of the total figure of £592.1 million for financial assets at
fair value through profit or loss, £513.3 million relates to the face value
of debt investments.
In the tables above, the fair value of the financial instruments that are
measured at amortised cost do not materially differ from their carrying
values.
IFRS 13 requires the Company to classify its investments in a fair value
hierarchy that reflects the significance of the inputs used in making the
measurements. IFRS 13 establishes a fair value hierarchy that prioritises the
inputs to valuation techniques used to measure fair value. The three levels of
fair value hierarchy under IFRS 13 are 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)
As at 31 December 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets
Investments at fair value through profit or loss - 10,496 550,800 561,296
Total financial assets - 10,496 550,800 561,296
As at 31 December 2023 (as restated)
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Assets
Investments at fair value through profit or loss - 28,139 563,982 592,121
Total financial assets - 28,139 563,982 592,121
There were no Level 1 or Level 2 assets or liabilities during the year. There
were transfers between Level 2 and 3 during the year of £22.7 million. There
were no transfers between Level 1 and 2 or Level 1 and 3 during the year.
Included within investments at fair value through profit or loss is an amount
of £Nil in relation to derivative options associated with the conditional
acquisitions in Ireland (2023: £20.0m) recognised in an intermediate holding
company.
The restatement in the table above is to reclassify Investments at fair value
through profit or loss of £28.1 million from Level 3 to Level 2, as these
were incorrectly classified in the prior year. There has been no other impact
of this restatement on the financial statements.
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 (all classified as Level 3)
is given in Note 9.
The fair value of the investments at fair value through profit or loss
includes the use of Level 3 inputs. Refer to Note 9 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 0.50% in the discount rate (levered cost of equity) would cause
a decrease in total portfolio value of 5.4p per Ordinary Share (5.3%
decrease) and a decrease of 0.50% in the discount rate would cause an increase
in total portfolio value of 5.9p per Ordinary Share (5.8% increase).
Inflation rate
The sensitivity of the investments to movement in inflation rates is as
follows:
A decrease of 0.50% in inflation rates would cause a decrease in total
portfolio value of 3.8p per Ordinary Share (3.7% decrease) and an increase in
inflation rates would cause an increase in total portfolio value of 4.0p per
Ordinary Share (3.9% increase).
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 8.6p per Ordinary Share (8.4% decrease) and an increase of 10% in
power price would cause an increase in the total portfolio value of 8.6p per
Ordinary Share (8.4% increase).
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 -16.6p per Ordinary Share (16.1% decrease). 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 16.4p per Ordinary Share (16.0% increase).
Foreign exchange
The sensitivity of the investments to movement in FX rates is as follows:
An increase of 10% in EUR/GBP FX rates would cause a decrease in total
portfolio value of 1.2p per Ordinary Share (1.2% decrease) and a decrease of
10% in FX rates would cause an increase in total portfolio value of 1.2p per
Ordinary Share (1.2% increase).
Of the portfolio as at 31 December 2024, 58% (2023: 52%) of the NAV is
denominated in non-sterling currencies.
16. Financial risk management
The Company's activities expose it to a variety of financial risks; including
foreign currency risk, interest rate risk, power price risk, credit risk and
liquidity risk. The Board of Directors has overall responsibility for
overseeing the management of financial risks, however the review and
management of financial risks are delegated to the AIFM. Each risk and its
management are summarised below.
(i) Currency risk
Foreign currency risk is defined as the risk that the fair values of future
cashflows will fluctuate because of changes in foreign exchange rates. 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.
The portfolio of assets in which the Company invests all conduct their
business and pay interest, dividends and principal in sterling, with the
exception of the euro investments which at 31 December 2024 comprised 59%
(2023: 46%) of the total value of all investments. The valuation sensitivity
to FX rates is shown in Note 15.
(ii) Interest rate risk
The Company's interest rate risk on interest bearing financial assets is
limited to interest earned on cash and loan investments into project
companies, which yield interest at a fixed rate. The portfolio's cashflows are
continually monitored and reforecast, both over the near future and the
long-term, to analyse the cash flow returns from investments.
The Group may use borrowings to finance the acquisition of investments and the
forecasts are used to monitor the impact of changes in borrowing rates against
cash flow returns from investments as increases in borrowing rates will reduce
net interest margins. The Group's policy is to ensure that interest rates are
sufficiently hedged to protect the Group's net interest margins from
significant fluctuations when entering into material medium/ long-term
borrowings. This includes engaging in interest rate swaps or other interest
rate derivative contracts.
The Company's interest and non-interest bearing assets and liabilities are
summarised below:
As at 31 December 2024
Interest Non-interest
bearing bearing Total
£'000 £'000 £'000
Assets
Cash and cash equivalents 11,852 - 11,852
Trade and other receivables - 23 23
Investments at fair value through profit or loss 506,485 54,811 561,296
Total assets 518,337 54,834 573,171
Liabilities
Trade and other payables - -2,801 -2,801
Total liabilities - -2,801 -2,801
As at 31 December 2023
(as restated)
Interest Non-interest
bearing bearing Total
£'000 £'000 £'000
Assets
Cash and cash equivalents 10,012 - 10,012
Trade and other receivables - 143 143
Investments at fair value through profit or loss 513,280 78,841 592,121
Total assets 523,292 78,984 602,276
Liabilities
Trade and other payables - -3,237 -3,237
Total liabilities - -3,237 -3,237
In the tables above, the interest bearing asset value for investments at fair
value through profit or loss relates to the face value of debt investments.
The restatement in the 2023 table above is to reclassify cash and cash
equivalents of £10.0 million from noninterest bearing to interest bearing as
the Company earns interest. There has been no other impact of this restatement
on the financial statements.
(iii) Power Price risk
The wholesale market price of electricity and gas is volatile and is affected
by a variety of factors, including market demand for electricity and gas, the
generation mix of power plants, government support for various forms of power
generation, as well as fluctuations in the market prices of commodities and
foreign exchange. Whilst some of the Company's renewable energy projects
benefit from fixed prices, others have revenue which is in part based on
wholesale electricity and gas prices. The Investment Manager continually
monitors energy price forecast and aims to put in place mitigating strategies,
such as hedging arrangements or fixed PPA contracts to reduce the exposure of
the Company to this risk.
Further information on the impact of power prices over the year is provided in
the Portfolio Valuation section of the Investment Manager's report within the
Company's Annual Report.
(iv) Credit risks
Credit risk is the risk that a counterparty of the Group will be unable or
unwilling to meet a commitment that it has entered into with the Group. The
credit standing of subcontractors is reviewed, and the risk of default
estimated for each significant counterparty position. Monitoring is on-going,
and year end positions are reported to the Board on a quarterly basis. As at
31 December 2024 the Group has no credit risk exposures on a project exceeding
1% of total value of all investments (2023: 1% of total value of all
investments with Goldbeck Solar Limited on Breach Solar).
The Group 's investments enter into Power Price Agreements ("PPA") with a
range of providers through which electricity is sold. The largest PPA provider
to the portfolio at 31 December 2024 was Microsoft Ireland Energy Limited who
provided PPAs to projects in respect of 18% of the portfolio by total value of
all investments (2023: EDF: 25%).
Credit risk also arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions. The Company
and its subsidiaries mitigate their risk on cash investments and derivative
transactions by only transacting with major international financial
institutions with high credit ratings assigned by international credit rating
agencies.
The Company has assessed IFRS 9's expected credit loss model and does not
consider any material impact on these financial statements. No trade and other
receivables balances are credit-impaired at the reporting date.
(v) Liquidity risks
Liquidity risk is the risk that the Group may not be able to meet its
financial obligations as they fall due. The AIFM and the Board continuously
monitor forecast and actual cashflows from operating, financing, and investing
activities to consider payment of dividends, repayment of trade and other
payables or funding further investing activities. The Group ensures it
maintains adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
The Group's investments are generally in private companies, in which there is
no listed market and therefore such investment would take time to realise, and
there is no assurance that the valuations placed on the investments would be
achieved from any such sale process.
Financial assets and liabilities by maturity at the year are shown below:
31 December 2024
Less than 1 More than 5
year 1-5 years years Total
£'000 £'000 £'000 £'000
Assets
Investments at fair value through profit or loss - - 561,296 561,296
Trade and other receivables 23 - - 23
Cash and cash equivalents 11,852 - - 11,852
Liabilities
Trade and other payables -2,801 - - -2,801
9,074 - 561,296 570,370
31 December 2023
Less than 1 More than 5
year 1-5 years years Total
£'000 £'000 £'000 £'000
Assets
Investments at fair value through profit or loss - - 592,121 592,121
Trade and other receivables 143 - - 143
Cash and cash equivalents 10,012 - - 10,012
Liabilities
Trade and other payables -3,237 - - -3,237
6,918 - 592,121 599,039
Capital management
The Company's capital management objective is to ensure that the Company will
be able to continue as a going concern while maximising the return to equity
shareholders. 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 the UK, Europe and Australia.
The Company considers its capital to comprise ordinary share capital, share
premium, special reserve and retained earnings. The Company is not subject to
any externally imposed capital requirements. The Company's total share capital
and reserves shown in the Statement of Financial Position are £570.4 million
(2023: £599.0m).
The Company has implemented an efficient financing structure that enables it
to manage its capital effectively. The Company's capital structure comprises
equity only (refer to the statement of changes in equity).
The Company's direct subsidiary, ORIT Holdings II Limited, as at 31 December
2024 had a £270.8 million revolving credit facility with Allied Irish Banks,
National Australia Bank, NatWest and Santander. The facility was £151.2
million drawn at 31 December 2024 (2023: £130.0m). As detailed in Note 20,
the revolving credit facility has been extended and resized post year-end.
The Board, with the assistance of the Investment Manager, monitors and reviews
the Company's capital on an ongoing basis.
· Share capital represents the 1 penny nominal value of the
issued share capital.
· The share premium account arose from the net proceeds of
issuing new shares.
· The capital reserve reflects any increases and decreases in
the fair value of investments which have been recognised in the capital column
of the Statement of Comprehensive Income.
17. Related party transactions
During the year, interest totalling £25.5 million (2023: £25.9m) was earned,
in respect of the long-term interest-bearing loan between the Company and its
subsidiaries. At the year end, no interest earned was outstanding.
AIFM and Investment Manager
The Company has appointed, from 31 July 2024, Octopus Energy 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
previous AIFM up to 30 July 2024 was Octopus AIF Management Limited. The AIFM
has delegated portfolio management services to Octopus Renewables Limited
(trading as Octopus Energy Generation), the Company's Investment Manager.
The AIFM is entitled to a management fee of 0.95% per annum of Net Asset Value
of the Company up to £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 AIFM under the Management Agreement.
During the year, the Investment management fee charged to the Company by the
AIFM was £5.47 million (2023: £5.64m), of which £2.27 million (2023:
£2.83m) remained payable at the year-end date.
Directors
The Company is governed by a Board of Directors (the "Board"), all of whom are
independent and non-executive. During the year, the Board received fees for
their services of £252,000 (2023: £209,000) and were paid £8,000 (2023:
£6,000) in expenses. As at the year 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 Shares Ordinary Ordinary
as at date of
Shares as at
Shares as at
this report
31 December 2024
31 December 2023
Philip Austin MBE 165,518 165,518 165,518
James Cameron 65,306 65,306 65,306
Elaina Elzinga - - -
Audrey McNair 50,437 50,437 50,437
Sarim Sheikh 279 279 -
18. Subsidiaries, joint ventures and associates
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, joint ventures and associates are
listed below:
Place of Registered Ownership
Name Category business Office(75) interest
ORIT Holdings II Limited Direct Intermediate Holdings UK A 100%
ORIT Holdings Limited Intermediate Holdings UK A 100%
ORIT UK Acquisitions Limited Intermediate Holdings UK A 100%
ORIT UK Acquisitions Midco Limited(74) Portfolio-level 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%
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%
Ballymacarney Renewable Energy Limited(76) Project company Ireland B 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%
Simply Blue Energy Holdings Limited Portfolio-level Holdings Ireland I 19%
ORI JV Holdings 2 Limited Portfolio-level Holdings UK A 50%
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 T 25%
Wind 2 Project 5 Limited Project company UK J 25%
Wind 2 Project 3 Limited Project company UK T 25%
Kirkton Wind Farm Limited Project company UK J 25%
Bwlch Gwyn Wind Farm Limited Project company UK T 25%
Wind 2 Project 6 Limited Project company UK J 25%
Lairdmannoch Energy Park 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%
Haaponeva SPC Oy Project company Finland G 50%
BHill SPC Oy Project company Finland G 50%
Luola S SPC Oy Project company Finland G 50%
Mikkeli S SPC Oy Project company Finland G 50%
Eero S SPC Oy Project company Finland G 50%
S Tuuli SPC Oy Project company Finland G 50%
KNorgen SPC Oy Project company Finland G 50%
ORI JV Holdings 4 Limited Portfolio-level Holdings UK A 50%
Gridsource (Woburn Rd) Limited Project company 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%
Crossdykes WF Limited Project company UK O 51%
ORI JV Holdings 6 Limited Portfolio-level Holdings UK A 50%
HYRO Energy Limited Portfolio-level Holdings UK R 25%
Green Hydrogen 11 Limited Project company UK S 25%
Green Hydrogen 2 Limited Project company UK R 25%
Green Hydrogen 3 Limited Project company UK R 25%
Green Hydrogen 4 Limited Project company UK R 25%
Green Hydrogen 5 Limited Project company UK R 25%
Green Hydrogen 6 Limited(77) Project company UK R 25%
Green Hydrogen 7 Limited(77) Project company UK R 25%
Green Hydrogen 8 Limited(77) Project company UK R 25%
Green Hydrogen 9 Limited(77) Project company UK R 25%
Green Hydrogen 10 Limited(77) Project company UK R 25%
Blota Germany GmbH Portfolio-level Holdings Germany N 100%
Blota GP GmbH Portfolio-level Holdings Germany M 100%
UKA Windenergie Leeskow GmbH Portfolio-level Holdings Germany L 100%
UGE Leeskow Eins GmbH & Co. KG Umweltgerechte Energie Portfolio-level Holdings Germany M 100%
Infrastrukturgesellschaft Leeskow mbH & Co. KG Project company Germany L 70%
Burwell 11 Solar Limited Project company UK A 100%
ORIT Lincs Holdco Limited Portfolio-level Holdings UK A 100%
ORI Lincs Holdings Limited Portfolio-level Holdings UK A 50%
UK Green Investment Lyle Limited Portfolio-level Holdings UK K 50%
Clyde SPV Limited Portfolio-level Holdings UK K 50%
Lincs Wind Farm (Holding) Limited Portfolio-level Holdings UK P 15.5%
Lincs Wind Farm Limited Project company UK Q 15.5%
Trio Power Limited Portfolio-level Holdings UK A 100%
(74 ) New addition in the year.
(75 ) Registered offices are listed within the Company's Annual Report
(76) New addition in the year.
(77) New company in the year.
Registered offices:
A - Uk House, 5th Floor, 164-182 Oxford Street, London, United Kingdom,
W1D 1NN
B - 1 Stokes Place, St. Stephen's Green, Dublin 2, Dublin, D02 DE03,
Ireland
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 - c/o Nordic Generation Oy, Tekniikantie 14, 02150 ESPOO
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 - Dr.-Eberle-Platz 1, 01662 Meißen
M - Lena-Christ-Straße 2, 82031 Grünwald
N - Lorenzgasse 2a, 01662 Meißen
O - 58 Morrison Street, Edinburgh, United Kingdom, EH3 8BP
P - 5 Howick Place, London, United Kingdom, SW1P 1WG
Q - 13 Queens Road, Aberdeen, Scotland, AB15 4YL
R - Beaufort Court, Egg Farm Lane, Kings Langley, United Kingdom, WD4
8LR
S - Third Floor, Stv, Pacific Quay, Glasgow, United Kingdom, G51 1PQ
T - Linden House Wrexham Road, Mold Business Park, Mold, Wales, CH7 1XP
As shown in Annual Report, ORIT Holdings II Limited is the only direct
subsidiary of the Company. All other subsidiaries are held indirectly.
19. 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 31 December 2024, the Company has guarantees in respect of the future
investment obligations associated with the Breach Solar plant totalling £1.0
million (2023: £4.1m).
As at 31 December 2024 the Company's subsidiaries had future investment
obligations totalling £1.5 million relating to final wind farm post
construction costs (2023: £175.6m relating to wind farm post construction
costs and conditional acquisitions in Ireland). The intermediate holding
companies have provided guarantees in respect of these commitments.
20. Post-year end events
On 31 January 2025 the Company declared an interim dividend in respect of the
three months ended 31 December 2024 of 1.51 pence per Ordinary Share for £8.4
million based on a record date of 14 February 2025, an ex-dividend date of
13 February 2025 and the number of Ordinary Shares in issue being
554,933,774. This dividend was paid on 28 February 2025.
On 6 February 2025, the Company announced that it had committed an additional
€3.4 million (£2.8 million equivalent) to Nordic Generation ("Norgen"), a
specialist developer focused on the Finnish wind and solar market to provide
continued support for its increased development pipeline. This follows the
initial commitment of €3.4 million (c. £2.9 million) made in April 2022 and
which, as at the date of this report, is €2.5 million drawn.
On 28 February 2025, the Company announced that it had secured a new five-year
term loan facility of £100 million, secured over the Company's UK-based
operational assets. The facility has been agreed with a group of three
existing lenders: National Australia Bank, Santander and Allied Irish Banks.
The facility has been utilised to repay a significant portion of the revolving
credit facility ("RCF"). The facility has provided the Company with additional
flexibility to underpin ongoing working capital commitments and capital
allocations. The facility also improves the overall borrowing costs of the
Company and contains normal market terms and financial covenants.
On 11 March 2025, the Company announced that it had extended its share buyback
programme by assigning an additional £20 million to repurchases, increasing
the total allocation since commencement of the programme to £30 million. On
the same day, the Company also announced that it had committed to a follow-on
investment of £1.5 million into BLC Energy Limited, a development business,
focused on creating new ground-mounted solar PV and co-located battery storage
assets in the UK.
On 17 March 2025, the Company announced that it had extended its
multi-currency RCF. The committed RCF has a reduced size of £150 million, a
revised 39-month term to 30 June 2028 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). The facility continues to be provided by a group
of four lenders: National Australia Bank, NatWest, Santander and Allied Irish
Banks.
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