ORIT Octopus Renewables Infrastructure Trust Plc

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).

*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:

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