REG - Octopus Renewables - Q3 2023 Factsheet and Net Asset Value

Octopus Renewables Infrastructure TrustAnnouncement

06/11/2023 07:00

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RNS Number : 4003S  Octopus Renewables Infra Trust PLC  06 November 2023

6 November 2023

 

LEI: 213800B81BFJKWM2JV13

 

Octopus Renewables Infrastructure Trust plc

 

("ORIT" or the "Company")

 

Q3 2023 Factsheet and Net Asset Value

 

The Board of Octopus Renewables Infrastructure Trust plc announces that the
unaudited Net Asset Value ("NAV") of the Company as at 30 September 2023 on a
cum-income basis was £604.6 million or 107.02 pence per Ordinary Share (30
June 2023: £608.2 million or 107.67 pence per Ordinary Share).

 

                                                           Pence per Ordinary Share*
 Unaudited NAV as at 30-Jun-23                             107.67
 Power Prices                                              -0.99
 Inflation and FX                                          +1.11
 Q2 2023 Dividend                                          -1.45
 Conditional Acquisitions                                  +0.81
 Other movements                                           -0.08
 Unaudited NAV as at 30-Sep-23                             107.02

 

*Totals may not sum exactly due to rounding

Power Prices

ORIT continues to benefit from a high proportion of fixed or contracted
revenue and continues to actively manage exposure to short-term variability in
power prices. During the quarter, ORIT fixed the prices for 100% of the
production of two UK solar sites to September 2026 and a further three UK
solar sites to September 2028, helping to reduce the above impact from
reductions in forward power markets and increasing the valuation by c. +£0.4
million.

During Q3 2023, the price curves used in ORIT's portfolio valuations decreased
on average leading to a reduction in the portfolio valuation of £5.9 million.
The falls in power price forecasts were mainly over the short term and
predominantly affected a minority of ORIT's assets with near-term exposure to
power markets, particularly in Sweden which accounted for over 50% of the
impact.

As at 30 September 2023, 82% of ORIT's revenues over a 24-month period are now
fixed or contracted to 30 September 2025 (30 June 2023: 78% over the 24-month
period to 30 June 2025).

The net valuation impact of updating for recent power prices, hedging
arrangements and green certificate forecasts was a decrease of -£5.6 million
or -1.0 pence per Ordinary Share.

Inflation(1) and FX

During the period, inflation forecasts increased on average across the markets
in which ORIT's assets are located, resulting in a valuation increase of
+£3.3 million. ORIT retains a high proportion of inflation-linked cash flows
with 55% of revenues over a 10 year-period to 30 September 2033 explicitly
linked to inflation.

During the quarter, sterling depreciated against the Euro, leading to a
valuation impact of +£3.1 million (excluding the impact of currency hedges
at the Company level).

The combined impact of inflation and foreign exchange movements was a
valuation increase of +£6.4 million or +1.1 pence per Ordinary Share.

Dividend

 

The interim dividend (£8.2 million or 1.45 pence per Ordinary Share) in
respect of Q2 2023 was also paid in the quarter, in-line with the Company's
stated dividend target for the financial year from 1 January 2023 to 31
December 2023 of 5.79 pence per ordinary share.(2)

 

Conditional Acquisitions

 

The construction of four out of the five conditionally acquired Irish Solar PV
assets, is now considered to be substantially complete subject to testing,
which will trigger the acquisition of the 4 projects during Q4 2023. Given the
increase in the probability of completion and that the site is now receiving
revenues, the option value related to this transaction has increased slightly.
The fifth site is on track to complete construction during H1 2024, at which
point this site will also be acquired.

 

In addition the holding value related to the Spanish Solar PV assets which
ORIT holds an option to acquire upon the sites achieving to ready-to-build
status has been adjusted to reflect the latest expectation of the value of
that option.

 

The combined impact of a review of the Company's conditional acquisitions
resulted in a valuation increase of +£4.6 million or +0.8 pence per Ordinary
Share.

 

Other movements

 

A decrease of -£0.2 million was recorded from other valuation movements. This
reflects the net present value of future cashflows being brought forward from
30 June 2023 to 30 September 2023, offset by the Company's operating and
transaction costs, and net performance in the underlying portfolios, which was
slightly down on average primarily due to low wind speeds across the portfolio
as well as an updated wind yield assessment for the Ljungbyholm wind farm
following its first two years of operations.

( )

Portfolio Update

 

Additionally, in October 2023, all main-site construction activity on the
Breach solar plant was completed. The asset is now expected to become
operational between Q4 2023 and Q2 2024, subject to completion of the National
Grid connection.

 

Post-period, ORIT entered into a conditional agreement to sell the Krzecin and
Kuslin onshore wind farms in Poland to an affiliate of ORLEN S.A.. On
completion of the sale (which is subject to competition approvals), ORIT
expects to receive net proceeds, following the repayment of asset level debt
and termination of hedging arrangements, of between PLN 470 million and PLN
490 million (equivalent to approximately £88 million to £92 million). This
represents a 14% to 19% premium over the holding value of the Krzecin and
Kuslin wind farms of £77 million as at 30 September 2023, which would have
added a further c. 2 pence per Ordinary Share to the NAV as at 30 September
2023. The proceeds will initially be used to repay ORIT's short-term debt
facility and then the RCF. The loan maturity date for the short term facility
has been aligned to the transaction long-stop date of April 2024.

 

Notes

 

1              The 30 September 2023 valuation includes (i)
recent consensus UK inflation forecasts published by HM Treasury in August
2023; and (ii) inflation forecasts for the relevant European countries
published by the European Commission in August 2023.

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.

 

Factsheet

 

The Company's Q3 2023 factsheet has been published today and is available to
download at:

https://www.octopusrenewablesinfrastructure.com/all-reports-publications

 

 

For further information please contact:

 

 Octopus Energy Generation (Investment Manager)                                  Via Buchanan

 Chris Gaydon, David Bird

 Peel Hunt (Broker)                                                              020 7418 8900

 Liz Yong, Luke Simpson, Huw Jeremy (Investment Banking)

 Alex Howe, Chris Bunstead, Ed Welsby, Richard Harris, Michael Bateman (Sales)

 Buchanan (Financial PR)                                                           020 7466 5000

 Charles Ryland, George Beale

 Apex Listed Companies Services (UK) Limited (Company Secretary)                  020 3327 9720

 

 

Notes to editors

 

About Octopus Renewables Infrastructure Trust

 

Octopus Renewables Infrastructure Trust ("ORIT") is a premium-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 London-based, leading specialist renewable
energy fund management team invests in renewable energy assets and broader
projects helping the energy transition, across operational, construction and
development stages. The team was set up in 2010 based on the belief that
investors can play a vital role in accelerating the shift to a future powered
by renewable energy. It has a 13-year track record with approximately £6.0
billion of assets under management (AUM) (as of June 2023) across 13 countries
and total 3.3GW. These renewable projects generate enough green energy to
power 2.4 million homes every year, the equivalent of taking over 1.2 million
petrol cars off the road. Octopus Energy Generation is the trading name of
Octopus Renewables Limited.

 

Further details can be found at www.octopusenergygeneration.com
(http://www.octopusenergygeneration.com/)

 

 

 

 

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