Octopus Renewables continues to hike divi in line with inflation

(Sharecast News) - Octopus Renewables Infrastructure Trust delivered a positive net asset value total return of 2.5% in 2024, supported by stronger operational performance and progress on its capital allocation strategy. The London-listed company declared a fully covered dividend of 6.02p per share in its final results, up 4% on the prior year and in line with UK CPI for the third consecutive year.

Net asset value declined to £570.4m from £599m in 2023, as positive portfolio returns and disposals were offset by running costs and capital returned to shareholders.

Gross asset value rose to £1.03bn from £980.3m.

Shares ended the year at 68p, down from 90p in 2023, while NAV per share fell to 102.6p.

Operationally, performance improved across all major metrics.

Generation rose 7% to 1,240 GWh, revenue from the operational portfolio increased 12% to £131.7m, and EBITDA was up 16% to £85.5m.

The company highlighted the sale of its Swedish onshore wind farm Ljungbyholm for approximately €74m, delivering an 11.3% internal rate of return, and bringing total proceeds from asset recycling to £161m.

During the year, ORIT expanded its presence in Ireland with the acquisition of five newly constructed solar farms totalling 241 MW, creating the country's largest solar complex.

It also secured a new power purchase agreement at its Crossdykes wind farm in Scotland, with Sky UK, due to begin in April 2025.

ORIT said it continued to reshape its capital structure post year-end, extending its revolving credit facility maturity to 2028 and reducing its size, while replacing a portion of the facility with a £100m five-year term loan.

The changes reduced the company's borrowing rate from around 6.5% to 5.25%.

Looking ahead, ORIT said it was planning to reduce gearing below 40% of gross asset value by the end of 2025, execute at least £80m in further asset sales, and deploy capital selectively into accretive investments.

The company also announced a £20m extension to its share buyback programme and raised its 2025 dividend target by 2.5% to 6.17p, again tracking UK inflation.

"Over the last financial year we achieved a positive NAV total return and increased our fully covered dividend, in line with UK CPI," said chair Phil Austin.

"At the portfolio level, generation increased as well as gross revenue and EBITDA from operational assets, showing the positive impact of active portfolio management during 2024.

"During 2024, and to date, we have continued our disciplined approach to capital allocation, reducing debt, buying back shares, executing on strategic asset sales and making targeted investments where we see opportunity for future value creation."

Austin said the company was "steadfast" in its commitment to delivering value for shareholders, adding that the board, alongside Octopus Energy Generation, was actively evaluating enhanced strategic initiatives to unlock further growth.

"While short-term market dynamics remain challenging, the fundamentals for renewable energy infrastructure have never been stronger. ORIT is well-positioned to benefit from the energy transition, and we are confident that our strategic approach, diversified portfolio, and commitment to active asset management will drive sustainable long-term value."

At 0820 GMT, shares in Octopus Renewables Infrastructure Trust were up 1.72% at 64.59p.

Reporting by Josh White for Sharecast.com.