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Octopus Renewables Infrastructure Trust (LSE:ORIT) reported a 2% net asset value total return for the first half of the year, up from 0.9% during the same period last year. The London-listed company has raised its target dividend for 2024 to 6.02p per share, reflecting a 4% increase aligned with the consumer price index (CPI). Dividends are anticipated to be fully supported by cash flows from the operating portfolio. The dividend cover for the first half improved to 1.33 times, compared to 1.09 times in the previous year.
The company’s owned capacity grew to 808 megawatts (MW) by the end of June, up from 668 MW a year earlier. ORIT reported operating income of £14.6m, which included a £4.1m decrease in the fair value of investments. Profit for the period was £11.3m. The operational asset portfolio generated EBITDA of £45.3m on gross revenue of £68.7m.
In June, ORIT launched a share buyback programme with an initial allocation of up to £10m. By the end of the reporting period, over 1.2 million shares had been repurchased at an average price of 73.48p each, totaling £0.9m. A dividend of 3.01p per share was declared for the period, meeting the company’s target.
Operationally, ORIT acquired a 100% interest in a 199 MW complex of four newly constructed solar farms in Ballymacarney, Ireland, in February, 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, ORIT signed a power purchase agreement (PPA) with Sky UK for its Crossdykes wind farm, set to begin in April next year. This agreement is anticipated to be beneficial to NAV compared to previous power price assumptions, contributing an uplift of £5.5m. The company also made a follow-on investment of £5.9m in Simply Blue Group, a developer specializing in floating offshore wind and sustainable fuels.
Additionally, construction on the 67 MW Breach solar farm in the UK was completed in June. Post-reporting period, ORIT sold 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. The proceeds from three investment exits totaled £161m, primarily used to reduce short-term debt, lowering total gearing to 43% as of September 13.
The share buyback programme continued beyond the reporting period, with three million shares repurchased by September 11 at an average price of 74.33p each, totaling around £2.2m.
Chairman Phil Austin expressed satisfaction with the company’s robust operational performance amidst volatile market conditions. He highlighted recent strategic moves, including the acquisition of the large solar complex in Ireland, the NAV-accretive PPA for the Crossdykes wind farm, and the investment in Simply Blue Group. Austin noted that the recent reduction in the base interest rate by the Bank of England is a positive development for ORIT and the broader renewables trust sector, potentially easing some of the tough macroeconomic conditions experienced in recent years.
At 0812 BST, shares in Octopus Renewables Infrastructure Trust were down 0.37% at 79.51p.
