Octopus Renewables reports 2pc first half NAV return

Octopus Renewables Infrastructure Trust reported a net asset value total return of 2% for the first half on Monday, an improvement from 0.9% in the same period last year.

The London-listed firm increased its target dividend for the full year 2024 to 6.02p per share, marking a 4% rise in line with the consumer price index (CPI).

It said dividends were expected to be fully covered by cash flows from the operating portfolio.

Dividend cover for the first half stood at a robust 1.33 times, up from 1.09 times in the prior year.

The company said its owned capacity grew to 808 megawatts (MW) by the end of June, compared to 668 MW a year earlier.

Financially, ORIT reported operating income of £14.6m, including a £4.1m negative movement in the fair value of investments.

Profit for the period amounted to £11.3m.

The operational asset portfolio generated EBITDA of £45.3m on gross revenue of £68.7m.

In June, the firm launched a share buyback programme with an initial allocation of up to £10m.

By the end of the reporting period, ORIT said it had repurchased over 1.2 million shares at an average price of 73.48p each, totalling £0.9m.

A dividend of 3.01p per share was declared for the period, aligning with the company's target.

On the operational front, February saw ORIT acquire a 100% interest in a 199 MW complex of four newly constructed solar farms located in Ballymacarney, Ireland, making it the largest solar complex in the country.

A fifth site at the complex was expected to complete commissioning tests in the third quarter of 2024, after which ORIT planned to acquire the asset.

In April, the company signed a power purchase agreement (PPA) with Sky UK for its Crossdykes wind farm, set to start in April next year.

The board said the agreement was anticipated to be accretive to NAV compared to previous power price assumptions, contributing an uplift of £5.5m.

ORIT also made a follow-on investment of £5.9m in Simply Blue Group, a developer specialising in floating offshore wind and sustainable fuels.

Additionally, construction was completed on the 67 MW Breach solar farm in the UK during June.

Since the period ended, ORIT completed the sale of the 48 MW Ljungbyholm onshore wind farm in Sweden in August, achieving an internal rate of return (IRR) of 11.3% over the investment's lifetime.

Since initiating the programme, the company said it had generated £161m from three investment exits.

It said the proceeds were primarily used to reduce the company's short-term debt facility, lowering total gearing to 43% as of 13 September.

The share buyback programme persisted beyond the reporting period, with three million shares repurchased by 11 September at an average price of 74.33p apiece, totaling around £2.2m.

“We are pleased that the company has maintained its trend of robust operational performance in the context of continued volatile market conditions,” said chairman Phil Austin.

“During the period, the company acquired a large solar complex in Ireland, signed a NAV-accretive power purchase agreement for the Crossdykes onshore wind farm with Sky UK, and made a follow-on investment of £5.9minto the Simply Blue Group, to further develop its large pipeline of offshore wind and sustainable fuels projects.

“Since the period-end, the company completed the sale of the Ljungbyholm onshore wind farm, which marked another significant milestone in our capital recycling programme, which to date has now generated £161m of proceeds through three accretive transactions.”

Austin said the recent cut to the base interest rate by the Bank of England was a “positive development” for ORIT and those in the investment companies sector, adding that it should begin to ease some of the tough macroeconomic conditions that had presented headwinds in recent years.

“The company's diversification and commitment to its capital recycling programme, in tandem with these improved conditions, provide us with an encouraging outlook for the wider renewables trust sector, with further opportunities to deliver sustainable value to the company's investor base.”

At 0812 BST, shares in Octopus Renewables Infrastructure Trust were down 0.37% at 79.51p.

Reporting by Josh White for Sharecast.com.