Octopus Energy Regulatory News (ORIT)

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).

\* 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.

Inflation1 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:

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 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