29 January 2024
LEI: 213800B81BFJKWM2JV13
Octopus Renewables
Infrastructure Trust plc
("ORIT"
or the "Company")
Q4 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 31 December 2023 on a cum-income
basis was £599.0
million or 106.04 pence per
Ordinary Share (30 September 2023: £604.6
million or 107.02 pence per Ordinary Share).
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Pence per Ordinary
Share*
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Unaudited NAV as at 30-Sep-23
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107.02
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Power Prices
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-1.32
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Inflation and FX
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-0.69
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Change in discount rates
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-1.28
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Capital Recycling
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+3.14
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Q4 2023 Dividend
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-1.45
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Other movements
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+0.62
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Unaudited NAV as at 31-Dec-23
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106.04
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*Totals may not sum exactly due to rounding
Power Prices
During the quarter to 31 December
2023, the forecast power prices used in ORIT's portfolio valuations
decreased on average leading to a reduction in the portfolio
valuation of £7.5 million or -1.32 pence per Ordinary Share. 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.
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.
As at 31 December 2023, 81% of ORIT's revenues over a 24-month
period are now fixed or contracted to 31 December 2025 (30
September 2023: 82% over the 24-month period to 30 September
2025).
Unless fixed under PPAs or otherwise hedged,
the power prices used in the valuations are based on market forward
prices in the near term, followed by an equal blend of two
independent and widely used market consultants' technology-specific
capture price forecasts for each asset.
Inflation1 and FX
During the period, inflation
forecasts decreased on average across the markets in which ORIT's
assets are located, with the exception of France and Germany,
resulting in a net valuation decrease of -£3.6 million. ORIT
retains a high proportion of inflation-linked cash flows with 51%
of revenues over a 10 year-period to 31 December 2033 explicitly
linked to inflation.
During the quarter, sterling
appreciated slightly against the Euro, leading to a valuation
impact of -£0.3 million (excluding the impact of currency
hedges at the Company level).
The combined impact of inflation and
foreign exchange movements was a valuation decrease of -£3.9
million or -0.69 pence per Ordinary
Share.
Change in discount rates
In response to the Investment
Manager's continuous assessment of discount rates observed in
transactions as well as considering the fluctuations in Government
bond yields during FY23, the Board and the Investment Manager
consider it appropriate to reflect a further increase of c. 0.2% in
the discount rates applied to assets outside of the UK. This
resulted in a valuation decrease of -£7.2 million or -1.28 pence
per Ordinary Share.
No change to UK discount rates have
been made in Q4 2023, noting that UK discount rates were increased
by 0.5% during Q2 2023 given greater macro environmental pressures
in the UK than wider Europe.
Capital Recycling and Gearing
During December 2023, ORIT completed
the sale of the Krzecin and Kuslin onshore wind farms in Poland to
an affiliate of ORLEN S.A.. ORIT has received net proceeds,
following the repayment of asset level debt and termination of
hedging arrangements, of approximately £92 million resulting in a
gain on sale of approximately +2.8 pence per Ordinary Share. This
represented a 21% premium over the hedging value of the Krzecin and
Kuslin wind farms of £76 million as of 30 September
2023.
The proceeds have been used to repay
ORIT's short-term debt facility and partially repay its RCF. As at
31 December 2023, ORIT has drawn c. £130 million of its short-term
borrowing facilities and is 39.1% (46.7% as at 30 September 2023)
geared (total debt drawn as a % of gross asset value ("GAV"2).
Also in December 2023, ORIT elected
to terminate its option to acquire 175MW of ready-to-build solar
projects in Spain. ORIT has been refunded its initial deposit of €2
million and has in addition negotiated an additional €3 million
payment from the vendor. This has resulted in a net gain on the
investment of approximately £3.0m over the €2.0m initial deposit or
approximately £1.5m over the £3.2m holding valuation of the option
at Q3 2023, equivalent to a positive NAV impact of approximately
+0.3 pence per Ordinary Share.
The combined impact of gains on
asset sales and exits was +£17.8 million or +3.1 pence per Ordinary
Share.
Dividend
The interim dividend (£8.2 million
or 1.45 pence per Ordinary Share) in respect of Q3 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.3
Other movements
An increase of +£3.5 million or
+0.62 pence per Ordinary Share was recorded from other valuation
movements. This reflects the net present value of future cashflows
being brought forward from 30 September 2023 to 31 December 2023,
offset by the Company's operating and transaction costs, net
performance in the underlying portfolios which we note was below
budget due to low wind speeds across the portfolio and portfolio
specific adjustments.
The Company expects to publish its
Audited results for the 2023 financial year in late March
2024.
Notes
1
The unaudited 31 December 2023 valuation includes (i) recent
consensus UK inflation forecasts published by HM Treasury in
November 2023; and (ii) inflation forecasts for the relevant
European countries published by the European Commission in November
2023.
2
"Gross Asset Value" means the aggregate of (i) the fair value of
the Company's underlying investments (whether or not subsidiaries),
valued on an unlevered basis, (ii) the relevant assets and
liabilities of the Company (including cash) valued at fair value
(other than third party borrowings) to the extent not included in
(i) or (ii) above.
3
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 Q4 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)
Chris Gaydon, David Bird
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Via Buchanan
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Peel Hunt (Broker)
Liz Yong, Luke Simpson, Huw Jeremy
(Investment Banking)
Alex Howe, Chris Bunstead, Ed
Welsby, Richard Harris, Michael Bateman (Sales)
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020 7418 8900
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Buchanan (Financial PR)
Charles Ryland, George
Beale
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020 7466 5000
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Apex Listed Companies Services (UK) Limited (Company
Secretary)
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020 3327
9720
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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
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 13-year track record
with approximately £6.0 billion of assets under management (AUM)
(as of 30 September 2023) across 16 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