Octopus Renewables Infrastructure Trust (ORIT) has released its results for the 12 month period ending 31 December 2023.
- Over those 12 months ORIT generated a NAV total return of 2.1%, and a negative share price total return of (4.4%) due to its widening discount.
- ORIT’s total NAV decreased from £618m to £599m during the year, driven primarily by falling power price and inflation forecasts, together with an increased discount rate.
- ORIT paid 4 quarterly dividends totalling 5.79p, a 10.5% increase on the prior year’s and inline with CPI inflation. ORIT’s dividend was 1.18x covered by cashflows.
- ORIT has increased its target dividend of 6.02p for the 2024 financial year.
- ORIT made three acquisitions over 2023, for a total value of c.£7m. These included 2 new technologies, a battery storage asset and a green hydrogen production development, and an investment into a UK-focused solar and storage developer platform.
- 2 disposals were made over the year, which generated a NAV uplift of 3.1p per share. Two Polish onshore wind farms were sold for £92m, a 21% premium over their prior valuation. A strategic decision was also made to terminate an option to acquire four Spanish solar assets in exchange for a termination payment to the vendor.
- ORIT produced a total of 1,110 GWh, 14% below its target of 1,291, and generated a revenue of £117.4m, 16% below its target of £139.8m. This is largely attributable to onshore wind production being 20% below target, combined with the impact of lower-than-expected power prices.
- Post period-end, ORIT completed the acquisition of four newly-constructed operational solar farms located close to Dublin.
Phil Austin, chairman, commented:
“ORIT has demonstrated resilience in its FY 2023 performance despite a challenging backdrop both for the asset class and the investment trust sector as a whole. The Company generated a positive NAV total return and delivered a dividend fully covered by operational cashflows, thanks in the main to the high proportion of fixed revenues which bodes well for future payments.
“The Company achieved successful exits at attractive prices from its Polish wind assets and from its Spanish solar option, as part of its capital recycling programme which remains ongoing. It also increased its diversification through expanding into two new technologies – a battery storage asset and a green hydrogen production development platform.
“Our Investment Manager has delivered value enhancement through negotiating optimal energy pricing strategies, and the portfolio now has high quality corporate PPA partners in Kimberly-Clark, Iceland Foods and Microsoft. The team continues to manage the final stages of the Breach solar farm construction, which we expect to be able to confirm completion of in Q2 this year.
“Despite the market challenges experienced in the investment trust sector in recent months, the fundamental driving forces behind clean energy investment are stronger than ever, and we believe that ORIT is very well placed to continue its contribution to the transition to net zero whilst ensuring an attractive level of returns for our shareholders.”