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Atrato Onsite looking for ways to grow, maybe alongside strategic investors

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Atrato Onsite Assets reports that for the 12 months ended 30 September 2023, its NAV total return was 4.6%. The NAV per share slipped slightly from 92.8p to 92.0p but the dividend was increased from 3.01p to 5.0p. The dividend target for the current financial year is 5.5p and the board says that the 12-month forward looking dividend cover will be in excess of 1.3x. Operational assets produced 36.3GWh over the year, 0.7% above budget thanks to higher than forecast solar irradiation levels.

The statement says that the investment adviser is monitoring opportunities to recycle capital from operational assets into installation assets which provide greater opportunities for capital growth. The company is also working with its advisers to identify potential strategic investors who could provide capital to the company through a variety of different structures.

Some highlights:

“The leading commercial and industrial solar platform in the UK “

  • £72m investment in the year, increasing to £149m since end September
  • Increased capacity from 62MW to 147MW at year end and 182MW today
    • 28MW installation for Britvic under innovative sleeved Power Purchase Agreement (PPA)
    • 20MW installation for Nissan – the UK’s largest private wire solar installation
    • Energised its 19th Tesco store plus new framework agreement on 70 further sites
    • Acquired 34MW operational private wire solar portfolio (the “ASG portfolio”)
  • 93% of revenue is contracted generating the lowest sensitivity to merchant prices in the sector
  • 11-year average unexpired contract revenue term, longest in the sector
  • 92% is subject to annual inflation or fixed uplifts, of which 47% benefits from annual uncapped RPI or CPI uplifts
  • Weighted average remaining asset life of 23 years
  • 79% of the portfolio fully operational and 21% under installation
  • Energisation of remaining installation assets expected by March 2024

Portfolio financial performance

  • £15m gain from installation assets revaluation generated, equivalent to 10p per share
  • Portfolio valued at £99.3m (as at 30 September 2023), reflecting an increase to the unlevered weighted average discount rate of 7.4% from 6.6% – driving down the NAV by 7.7p

Balance sheet   

  • Gearing of 29.1% as at 10 January 2024 (0% as at balance sheet date)
  • £30.0m revolving credit facility (RCF) signed at a margin of 1.3% over SONIA, one of the lowest in the sector
  • Post year end, first £17m drawdown of the RCF, to fund new acquisitions
  • £47.1m of term debt, acquired as part of the ASG portfolio
  • Further £20m of available liquidity via RCF accordion
  • As at 10 January 2024:
    • 3.2% weighted average cost of debt
    • 72.9% of drawn debt fixed

Sustainability

  • Forecast 173GWh annual clean energy generation, equivalent to:
    • 37,000 tonnes of carbon avoided
    • 64,000 homes powered by clean energy

[I was intrigued by the mention of seeking potential strategic investors to help grow the company. Following on from Bluefield’s tie up with GLIL, that would help demonstrate the degree of interest in these sorts of assets and underscore the illogicality of the discounts that currently plague the sector. Basically, the companies are saying if shareholders can’t or won’t step up, we’ll go out and find other investors that will.]

ROOF : Atrato Onsite looking for ways to grow, maybe alongside strategic investors

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