Octopus Renewables Infrastructure Trust H1 2025 Earnings Report

Octopus Renewables Infrastructure Trust EPS Results

• Actual EPS: GBX 3.61
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Octopus Renewables Infrastructure Trust Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Octopus Renewables Infrastructure Trust Announcement Details

• Quarter: H1 2025
• Date: 9/23/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, September 24, 2025
• Conference Call Time: 7:00AM ET

Octopus Renewables Infrastructure Trust (LON:ORIT) (“ORIT”) is an Impact Fund helping accelerate the transition to net zero. It is an investment company 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 across Europe, the UK and Australia.

Octopus Renewables Infrastructure Trust H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Diversified portfolio: ORIT holds 40 investments across five countries and technologies with nearly 800 MW capacity, offering balanced exposure and unique scale in renewables.
• Positive Sentiment: Strong H1 2025 performance: Delivered a 12.9% total shareholder return, with NAV at £0.995 per share and operational output powering ~160,000 homes.
• Positive Sentiment: Capital allocation strategy: £22 m of share buybacks (up to £30 m), leverage maintained at 47% with a goal to drop below 40%, and an £80 m target for asset recycling.
• Negative Sentiment: Operational headwinds: Onshore wind output ran ~15% below budget due to lower wind speeds and ~30 GWh of solar curtailed on the Irish grid, with limited compensation pending court-case outcomes.
• Positive Sentiment: ORIT 2030 strategy: Aims to grow to £1 bn assets by 2030 via organic construction and M&A, targeting 9–11% total returns alongside a progressive, fully covered dividend.

Presentation

[Moderator]

Good afternoon, ladies and gentlemen, and welcome to the Octopus Renewables Infrastructure Trust plc Investor Presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged; they can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, as usual, we would just like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I would now like to hand you over to Chris Gaydon. Chris, good afternoon, sir.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

Good afternoon, and thank you to everybody for joining us for this interim results presentation for Octopus Renewables Infrastructure Trust. My name is Chris Gaydon, and I'm joined today by my colleagues, David Bird, Genevieve Legg, and also Charlotte Edgar. For those of you who are less familiar with ORIT, we consider that ORIT is the only genuinely diversified investment trust of meaningful scale in the sector, and by that, I mean true diversification across both technologies and geography. Our portfolio today consists of 40 investments spread across five countries and five technologies, and we now have a generating capacity of almost 800 MW. This diversified portfolio was put together based on our mandate at IPO, and we're very pleased to have delivered on what we said at that point. The diversification is just one element of why ORIT is different.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

We're also lucky to be part of a wider fund management team called Octopus Energy Generation. We have around 150 specialist renewable energy investors. We hire people from industry who've got experience building and operating wind and solar projects all across the world. The third reason why ORIT is unique is because of the added value of the growth component in our mandate, which means that we're able to invest into construction projects and also back developers with the aim of securing an additional element of capital growth. Fourthly, the other benefit of backing developers is it gives us access to the pipeline of projects that they're developing. When those projects become ready to build, we have the option to invest in those, secure those projects, and importantly, do that outside of a competitive process.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

Finally, as ORIT's approach to sustainable investing, impact and ESG principles thread their way through pretty much everything we do at Octopus. It's something that is extremely important to us. We're an SFDR Article 9 product, and creating impact and additionality is something that we have always sought to do with this mandate. The combination of ORIT's current portfolio and our growth mandate means that we think ORIT is as relevant today as it's ever been. As I mentioned, the platform is now well-established with almost 800 MW of existing operational renewables. We continue to deliver stable financials with a 12.9% return during the first half of 2025. Our portfolio continues to produce clean, green renewable energy, and over the period, that's enough to have powered almost 160,000 homes. We'll come back to some of these key financials shortly.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I'm just going to touch on the corporate activity that has taken place during the period. Back in March 2025, we set out our capital allocation goals for the year, and it consisted of three key components. The first of those was extending our share buyback program to GBP 30 million. Now, as of today, we've bought back a little over GBP 22 million, and the remainder of that headroom is available for the Board to continue buying back shares as they see fit. The second pillar of our capital allocation strategy was to reduce debt to under 40% of gross asset value by the end of the year. As of the 15th of September, our leverage was 47%. That is flat period on period. As we continue with our asset recycling strategy, we look to bring that down, as I say, below 40%. Thirdly is that asset recycling strategy.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

We have said that we aim to sell at least GBP 80 million of assets. We have a number of sales processes which are currently underway, and we are confident that we remain on track to hit that target. Okay, so now just taking a look at the financial results. During the period, we saw relatively stable performance from the portfolio. Both NAV and NAV total return were slightly down as a result of both share buybacks and rising discount rates. That has led to NAV of GBP 540 million at the period end, or GBP 0.995 per share, and a -0.2% total return for the period. All of that means that NAV total return since IPO now stands at GBP 31.7 million. Total shareholder return during the period was 12.9%, and our gross asset value for the portfolio stands at a little over GBP 1 billion.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

Just taking a look then at where we are on dividends. At the start of the year, the Board announced a target of GBP 0.0617 per share, and that represented an increase over 2024 in line with CPI of 2.5%. So far, we've made good progress. We declared a GBP 0.0308 per share dividend or interim dividend, and we also delivered relatively strong dividend cover at 1.19x. For those of you who are interested in dividend cover excluding debt amortization, that would stand at 1.81x for the period. Looking ahead, we expect to both meet our 2025 full-year dividend target and also to do that while remaining fully covered. This slide really just shows how the dividend has progressed over the years since IPO.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

We do have a progressive dividend policy, but over the past four years, we've been able to increase the dividend in line with CPI, and that was the same for this year as well. I think what's important for shareholders at the end of the period, the dividend yield was 8.4%, and based on today's share price, that dividend yield is closer to 10%, which we think is quite an attractive opportunity. Now, with that, I'm going to hand over to David.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Thank you, Chris, and hello to everyone joining online. I'm going to run through the performance of the operational assets within ORIT's portfolio that have generated the cash flows that have gone towards meeting those dividends and covering them, as Chris set out. During the first six months of 2025, those operational wind and solar assets delivered output of 654 GWh, and that's broadly the same as what we saw in the prior periods, so the first half of 2024. However, underneath that headline number, there were quite a lot of changes in the makeup of where that generation came from, reflecting the changes we've seen in the portfolio since the first half of 2024.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Taking solar, for example, we saw a 34% increase in output from our solar portfolio compared with the first half of 2024, and that was driven by the Breach Solar Farm in Cambridge here coming online in the middle of last year, as well as having a full period of generation from the Harlockstown site in Ireland. In contrast, on our onshore wind portfolio, we saw 18% less output than the first six months of 2024, and that's principally driven by the sale of our Ljungbyholm Wind Farm in Sweden, which completed in the second half of last year. Looking at how that generation flows through to revenue and EBITDA, revenue was GBP 68.7 million for the first six months and EBITDA GBP 44.3 million. Those figures are again broadly in line with the same period last year.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Overall, the output was 8% below budget, and I'll get into the reasons for that on the next few slides. That flowed through to revenue being 6% below budget and EBITDA 7%. You can see that the pricing we received for our generation was broadly in line with expectations, as were the operational costs, and the financial variances were driven by the lower than expected output. Going through the different technologies one by one, you can see the benefits of having both wind and solar in the portfolio came through in the first six months of the year because whilst as we'll get on to wind speeds were lower than expected, we saw really strong irradiance on our solar portfolio, particularly in the U.K. and Ireland.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

However, we were not able to fully capitalize on that higher than expected solar irradiance, principally because of curtailment on the Irish grid around our sites near Dublin. That meant that the full potential export of those sites was not able to be pushed out into the network. We do receive some compensation when this happens. However, of the roughly 30 GWh of lost production, only around 5 GWh were compensated in respect of Ireland. There is an ongoing court case in respect of the way the Irish grid operator manages compensation for curtailment and whether that's compliant with European law. There is a possibility that we do, in fact, recover the rest of that missing generation should the court case find favorably for our portfolio.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Looking at our wind portfolio, you can see that the roughly 15% below budget generation on our onshore wind fleet was overwhelmingly driven by the weather. In other words, the average wind speeds that we would expect were not met in the period. We saw lower wind speeds than we'd expect. You can also see some curtailment coming through on our wind portfolio. However, unlike the solar, we have been substantially fully compensated for any lost output there. The below budget wind speeds also affected the Lincs offshore wind farm in the North Sea. However, the variance there was much lower than what we saw on the onshore portfolio. All of that generation contributed to the positive impact that comes from ORIT's assets. The output of those sites was enough to power around 160,000 homes, and that avoided carbon dioxide emissions from displacing fossil fuel generation, totaling around 165,000 tons.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We have many more ways that we deliver impact through our portfolio. Throughout the period, we have continued to deliver on our impact initiatives, and more detail on the wide range of activities we are carrying out there are available on the ORIT website. Moving on now to the investment activity that we carried out in the company during the first six months of the year, in line with the 2025 capital allocation priorities which Chris mentioned earlier, we have been very selective and disciplined in terms of new investment during the first half of the year. The one material commitment that was made to a new project was a EUR 27 million commitment to acquire the Irishtown solar project in Ireland.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

This is a 33 MW site which will form the sixth site of our existing [Valley-Mccartney] complex just North of Dublin, and we will acquire that once it's operational in the second half of next year. We viewed this acquisition as being particularly attractive for our shareholders because we were able to agree a very attractive purchase price because this site needs to make use of the grid connections that we control at one of our existing sites. The remaining investment activity has been concentrated on our developer portfolio, which is where some of the highest potential returns are available.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

During the period, the Simply Blue Group was able to receive additional external funding, not from ORIT, for its sustainable fuels business, and ORIT has retained a 22.5% in that newly hived out business, which is called Nova Sustainable Fuels, as well as retaining our existing stake in the remaining Simply Blue offshore wind business. The new money that ORIT has put into developers consisted of a EUR 3.4 million commitment to Nordic Generation, which is looking to bring onshore wind and solar projects through to ready to build in Finland, and also a GBP 1.5 million commitment to BLC Energy, who are developing solar and battery projects in the U.K. Both of these two developers have shown strong progress with their pipelines over the period, and each have projects that we would hope come through and are ready to build at some point during 2026.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Looking then at the portfolio at the end of the period, we have around 800 MW of operational generating capacity, which you can see here is spread out across a range of countries in Europe, important for that diversification against different weather patterns. The one material change during the period was that we did not take up the option to contribute to the construction costs of the Woburn Road Battery project in the U.K. That's the one small reduction in capacity compared with the start of the period. You can see here the diversification that we have in the portfolio through another lens, a good spread of countries and a roughly even balance between solar and wind generation, alongside 4% held in developers.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We do have around 96% of the portfolio in operational assets, and I'll come on to later how we think that might change as part of our newly launched ORIT 2030 strategy. Looking in more detail at the expected revenues from our portfolio, you can see that ORIT continues to benefit from a very high level of fixed-price revenues, not just in the next two years where 85% of the expected revenues are fixed-price in nature, but going right out into the early 2030s, we maintain a very high level of contracting. Indeed, because we have a number of newer assets, including some that we have successfully bought through construction, we have fixed-price revenues going right out into the early 2040s. That newer than average portfolio for the sector means that we have a far more stable long-term revenue profile than a portfolio concentrated on older legacy subsidy assets.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Those cash flows also benefit from a high level of inflation protection. Around 47% of our expected revenues from the portfolio of assets are explicitly contractually inflation-linked over the next 10 years. It's important to note with both of these last two slides that this represents the expected revenues from our current portfolio as it stands today. It does not take into account the asset sales that we expect to complete later in the year. Finally, in the portfolio, we continue to have a 4% allocation to development, which forms part of a maximum 5% in our investment policy. I've talked already a little bit about Simply Blue Group and Nova Fuels, as well as Nordic Generation and BLC.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

The remaining developers are Wind2, who are looking to bring through onshore wind projects in the U.K., and HYRO, which is a joint venture developing green hydrogen projects also in the U.K. We benefit from the right to fund projects as they come through to ready to build if we choose to, in proportion with the stake that we hold in the development business. If we look over the next four or five years, there's around 2 GW of that pipeline that we might reasonably expect to come through reaching ready to build, and around 1 GW which we'd class as advanced pipeline, having at least two of the three of land rights, planning, and grid. With that, I'm going to hand over to Gen to talk through the valuations.

[Gen Legg, Investment Director at Octopus Renewables Infrastructure Trust]

Thanks, David. As you can see from the NAV bridge, the NAV per share declined in the period and moved from GBP 1.026 at the year-end to GBP 0.995 at June 30, 2025, with total NAV at GBP 540 million. I'll touch on each of the movements left to right before going into a bit more detail on the next couple of slides. The key body movements in the period were changes to economic assumptions, which includes inflation effects and tax rates, which contributed to a GBP 0.02 uplift to NAV. The developer valuations were adjusted, and that's particularly downward revisions to the Simply Blue valuation, which was offset by gains at Norgen, which contributed a net GBP 0.007 decrease. Power prices and green certificates contributed -GBP 0.012, which reflected primarily lower near-term forward prices.

[Gen Legg, Investment Director at Octopus Renewables Infrastructure Trust]

Discount rates rose in the period in line with market evidence, which equated to a GBP 0.013 decrease to NAV. These downward movements were offset by the balance of portfolio return, which added GBP 0.025 to NAV, and that's mainly made up of the return on the portfolio as cash flows are brought forward six months later forward. This movement also includes some negative performance adjustments and minor updates to OpEx and CapEx assumptions. After dividends of GBP 0.03, the costs of GBP 0.02, and share buybacks, which had a net GBP 0.007 overall uplift, we finished the period at GBP 0.995. Looking at the macroeconomic assumptions, the assumptions used in the valuations were largely unchanged since the year-end. The couple of changes were that U.K. RPI for 2026-2029 was revised upwards to 3.25% from 3%, but the long-term assumption remains fixed at 2.25%.

[Gen Legg, Investment Director at Octopus Renewables Infrastructure Trust]

During the period, Finland's corporation tax rate was reduced from 20% to 18% from 2027, which increased valuations, and assumptions for France, Ireland, and Germany were unchanged. On power prices and green certificates, the valuations decreased by GBP 6.8 million over the period. On the near-term power prices, the roll forward of the use of forwards by one year was the single largest driver of the valuation reduction. Our methodology is that we'd always use transparent traded forwards for the near term before transitioning to consultants' longer-term forecasts, and using the forwards for an extra year, which had a lower price, had an impact on the valuations. The underlying forward prices also softened moderately across most of the markets, and this was partially offset by updates to green certificates and capacity markets, where we saw slight upward revisions to those prices.

[Gen Legg, Investment Director at Octopus Renewables Infrastructure Trust]

Crucially, though, the portfolio is well-protected in the near term with 85% of forecast revenues for the next 24 months either being fixed or contracted. That really limits our exposure to any market volatility. On discount rates, our weighted average discount rate implied by the valuations increased to 7.9% from 7.4% at year-end. We note that discount rates shown on this table are presented on a like-for-like basis, and the 7.9% quoted reflects a sterling fund return. The increase during the period mainly reflects persistent high interest rates across our core markets, as well as the introduction of a new project-level financing, which is our new U.K, whole co facility, which lifted the standard cost of capital on the U.K. portfolio.

[Gen Legg, Investment Director at Octopus Renewables Infrastructure Trust]

On an adjusted basis, after adding back the expected returns from our development assets and also the increased leverage from our RCF, that implies the discount rate is 8.2%. On debt, at the end of the period, total borrowings stood at GBP 417 million, which equates to a range of 47% of gross asset value. During the period, the RCF was resized and extended, and that cut our commitments from GBP 270 million to GBP 150 million. We also refinanced GBP 100 million of our RCF into the new U.K. whole co facility, which carries a lower borrowing rate. These two actions lowered our average cost of debt to 3.6%, down 0.4% at the end of December. At the same time, the portfolio is also now more highly hedged, so 71% overall, with project-level debt hedged at 85%, and that significantly reduces our exposure to movements in floating rates.

[Gen Legg, Investment Director at Octopus Renewables Infrastructure Trust]

We do acknowledge that gearing is temporarily elevated by buyback activity, but with asset sales underway, we remain on track to bring it down below 40% by the year-end. With that, I'll pass back to David.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Thanks, Gen. Now I'm going to talk about the new ORIT 2030 strategy that was announced alongside the results. This reflects acknowledgment that the renewables investment trust sector and ORIT have been suffering from very wide discounts to net asset value over recent years, and that something needs to be done to address that. I'll go into a bit more detail around the capital allocation priorities shortly. Firstly, I'll talk through what our strategy for ORIT 2030 is. This is built on four pillars: grow, scale, return, and impact. Taking the pillars as part of ORIT 2030 on investing for capital growth through deploying into construction and assets in particular, alongside continuing to support developers up to our 5% limit. This is really a refocus on the strategy that ORIT launched with back in late 2019.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We have always set ourselves apart by wanting to deliver capital growth alongside the attractive income, and doing that through successfully managing the market conditions that forced us to focus on buybacks and balance sheet management. Secondly, scale. We have heard very clearly from a large region that whilst we can deliver a significant portion through organic activity by growing NAV through delivering construction and development gains, in order to reach GBP 1 billion, we will also need to see inorganic growth, for example, M&A activity, mergers at the corporate level. In delivering this strategy, we believe we can deliver returns of 1% over the medium to long-term. This will continue to be underpinned by an attractive, growing, progressive dividend, which will be fully covered by operational cash flows.

[Moderator]

Thank you.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

I'm not sure if people can hear me still. Is there a problem with the audio?

[Moderator]

Hi, guys. We can hear you again.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Should I recover this slide?

[Moderator]

Yes, please.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Okay. Apologies if there's a bit of duplication here. I'm not sure what could and couldn't be heard, but I'll run through the four ORIT 2030 priorities once again. The four priorities here are grow, scale, return, and impact. The first of these, grow, this reflects a refocus on our original IPO objective of delivering more than just income, but also delivering capital growth through investing in construction projects. This is something that we have always had as part of our strategy and have delivered successfully historically, but have not been able to do so much of over the last couple of years because of market conditions. Secondly, scale. We have heard very clearly from investors that they would like to see larger, more liquid vehicles in this space, giving them access to the energy transition opportunity.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We'd set an ambition of growing ORIT to an asset value of at least GBP 1 billion by the end of 2030. That is a significant increase from where we are currently at around GBP 540 million. Whilst we can deliver a significant proportion of that through organic activity, through delivering NAV growth through construction and development gains, in order to reach GBP 1 billion, we will also have to deliver inorganic growth, so M&A merger activity at the corporate level, for example. Thirdly, on returns, we believe this strategy will enable us to deliver a 9%-11% total return to investors over the medium to long-term. That will continue to be underpinned by a dividend which grows progressively from where it is today, and with those dividends fully covered by operational cash flows.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We will also be adding that element of capital growth that comes from the construction and development activity. Lastly, impact. ORIT is an impact fund, and through refocusing on delivering new projects onto the grid, we will increase the impact that ORIT is delivering through those additional megawatts of generation and storage capacity coming through, helping to transition to an electrified green economy with wind and solar not only decarbonizing, but also delivering enhanced energy security as we reduce reliance on fossil fuels brought in from overseas states, and also in the long-term, reducing costs for consumers because wind and solar are the cheapest forms of generation available. How are we going to go around building the portfolio as we deliver the ORIT 2030 strategy? You can see here a marked contrast from where the portfolio sits today at 96% in operating assets.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We will continue to have a bedrock of operating assets to support the dividend, but we should expect to see construction increasing from where it sits today at effectively zero up to potentially 20% or more of the portfolio at any given time. Meanwhile, we will continue to maintain that investment policy limit of around 5% in developers. Looking at how ORIT 2030 sits together with those priorities that were set out earlier in the year for 2025, firstly touching on the return target. The IPO we launched with a return target of 7%-8%, but this was in an environment where base rates were close to zero and long-term risk-free rates were also very low. Frankly, that target had become stale.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

By re-engaging with that construction element in our mandate and reflecting where risk-free rates now sit, we believe that the 9%-11% total return target is highly deliverable. Secondly, in FY 2025, we have been focused on buybacks in preference to investing in construction. Clearly, buybacks do deliver capital appreciation in terms of NAV per share, but it's a short-term tool, and what they certainly haven't been successful in doing either for ORIT or for other companies in the sector is driving any lasting improvement in the discount to net asset value. The other concern with buybacks is with assets such as ours, which are finite in life, if you are not reinvesting in new assets, bringing new assets into the portfolio, eventually cash flows start to run off and NAV declines over the long-term.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

In contrast, as part of ORIT 2030, by investing into construction and development assets, we keep refreshing the portfolio and we keep delivering NAV per share appreciation, and are therefore able to deliver more sustainable NAV per share accretion and better overall return outcomes to investors in the medium to long-term. We also set out as part of our 2025 priorities that we wanted to bring gearing below 40% of gross asset value, and that absolutely remains part of the strategy. We are on track to deliver that later on in 2025.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

As part of ORIT 2030, whilst we will make use of short-term borrowing to temporarily increase debt above 40% at times, we will always anchor gearing below 40%, and we can deliver that through selectively recycling existing, perhaps more mature operational assets in order to fund the construction activity and the reduction in borrowing that's needed to maintain the 40% anchor level. Lastly, ORIT 2030 clearly delivers a much more impactful contribution through bringing new capacity on alongside the benefits of the operational capacity. To wrap up before we go to questions, we lost connection again. Sorry, a minor technical issue there again. Apologies for that. To sum up everything we've talked about before we go to questions, we see ORIT and what we've delivered over the past five or six years as giving us a real solid base for moving on into the five years of ORIT 2030.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We have that almost 800 MW operational portfolio that delivers highly contracted revenues to support the dividend. That dividend has been growing consistently year on year, and we expect to be able to keep growing the dividend and keep fully covering that by operational cash flows. By shifting towards a renewed focus on construction activity, we can deliver ever more impact through bringing that new generation in. With that, I'll hand back to the IMC team briefly to talk through how to ask your questions.

[Moderator]

Perfect, guys. That's great. Thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. While the team take a few moments to review those questions that have been submitted already, I'd just like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can all be accessed via your investor dashboards. Guys, as you can see there, we have received a number of questions throughout your presentation this afternoon. Thank you to all of those on the call for taking the time to submit their questions.

[Moderator]

Charlotte, at this point, if I may hand over to you just to share the Q&A with the team, and if I look to pick up from you at the end, that'd be great. Thank you.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thank you. Thanks, team. A couple of questions. The first is on organic and inorganic growth, and there's a couple on this theme here. Slide 37 talks of a combination of organic and inorganic growth. Have you considered offering to reverse yourself into your sister company firm, who are flush with new IHT investor subscriptions and a set of over 425 MW gas peaker portfolio? On the same theme, we have another question. If scale is beneficial, why are the Board not considering corporate activity with some of your peer competitor trust? I think both be covered in the same answer.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Yeah. On the sort of specific one referring to firm, for those who are not familiar, firm trading is a business which receives management services from Octopus Investments. I appreciate that the sort of Octopus family of companies is increasingly sort of large and complex and perhaps not easy to follow. In fact, our team used to sit as part of Octopus Investments, but we now sit as part of Octopus Energy, which was related, is now a fully separate business from Octopus Investments. It's not strictly accurate to describe firm trading as a sister company, although there are definitely connections there, and indeed others in the Octopus Energy Generation team are involved in managing some of the energy assets in that trading business.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

I think if you step back and look at both questions around M&A activity, we think that within the renewables investment trust sector, there are still more vehicles than there need to be. We don't need multiple vehicles with very similar single country, single technology mandates, certainly not as many as there are. We think there are clear benefits of having a smaller number of larger, more liquid vehicles, and that is part of why we have set that large ambitious target for 2030. We also strongly believe that for these renewables companies to be successful in the long run, they need to be delivering value-add activity. They need to be bringing new assets through rather than just sitting on existing operational assets.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

ORIT is one of very few companies in the sector which has that as a core part of its mandate and where we have the track record. We've delivered around 500 MW of capacity through into construction, either in ORIT's ownership or with ORIT oversight as part of forward purchases. The Octopus Energy Generation team has way more experience than that. Around 3 GW of construction projects have been brought through in our team's management. We think ORIT is particularly well-placed to be a consolidator, and we have in the past sought to drive this. Our Board have absolutely been considering the possibility for merger activity in the past, and it's absolutely part of the strategy that we pursue similar activity as well.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

It is not straightforward to make that happen quickly, but ORIT 2030 is a five-year roadmap, and we absolutely hope and expect that in that period that we will be able to drive some consolidation activity. I think the question around firm, it's not what we're thinking about when we think about driving that activity because we think the investment trust structure is something that makes a lot of sense for this asset class, and ORIT is a sort of clear candidate to be one of the consolidators in that structure.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thank you. Next question, and I can probably make a start on this. If we assume that exit billion of private equity investments with Octopus Energy are all in the same type of assets as those of ORIT, I don't understand why those private equity investors don't just buy ORIT shares to effectively get those same assets at the chunky 30% discount. I think that's a fair question, but what we found is that a lot of the investors in the private funds, they don't like the volatility of the share price, so they hold the assets at NAV, but agree, it doesn't always make sense that they want to hold at NAV versus the 30% discount. However, I think there's just a slightly different investor that comes into those types of vehicles.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I totally agree with that. We speak to private investors a lot across a number of topics, including how they can cooperate with ORIT, both at an asset level and at the PLC level. Certainly, these sorts of investors do not want to be marking their book on a daily basis and be exposed to some of the risks which create share price volatility, which are not always tied to the underlying value of the assets. I think the other thing I would say, certainly on the face of it, it looks attractive at a 30% discount, but if someone was to make a meaningful investment into ORIT, then I think that 30% discount would contract quite quickly.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thank you, Chris. Question on the assets being prioritized for disposal. Which types of assets are being prioritized, and at what discount or premium to book value do you expect sales to occur?

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

I can happily take that one. Which type of assets are being prioritized for disposal? Essentially, when we're doing our asset selection for disposal, we look at those assets which will allow us to maintain various key metrics at the portfolio level. For example, we don't want to start to have a big impact on the diversification. We don't want to increase our exposure to wholesale energy prices. That is sort of the guiding principle for how we choose assets. If you look at our disposal history to date, we've sold the Ljungbyholm Wind Farm in Sweden. That one was selected partly because it met the criteria I just mentioned, but also because it was a good opportunity for us to prove the buy, build, operate, and sell strategy, which is core to ORIT's mandate.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

If you look at the Polish wind farms that we've sold, they were more opportunistic, where we found a buyer who was willing to both transact quickly and also to be very attractive premium to our holding value. The option to build the solar farms in Spain that we exited, again, there we had some quite unique leverage in those agreements that allowed us to exit those options at a premium. In terms of the processes which are currently underway, I can't really say a lot about them at the moment. We did say in our capital allocation strategy that we're looking to complete those sales by the end of this year, touch wood, we remain on track. In terms of premium to book value, we mark our book to our view of what the market is. I think it's going to be, I think time will tell.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

I think it's a bit difficult to say that we'll sell at a premium given we are marking them to market. I guess we always expect to sell in line with book value and hope to do slightly better than that, and that's sort of where we are with these processes. I think the other point I'd just add on the selection is clearly and linked to the ORIT 2030 strategy is, whilst Gen talked through the average sort of expected return on the current portfolio, there is a range within there. There are certain assets where we have delivered uplift through construction, and in having delivered that increase in value, the forward-looking return starting from today's values is slightly lower than when we invested. Recycling out of assets where we've already delivered a lot of value and there's potentially lower forward-looking return expectations, less value to be added.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

With the proceeds, looking to reinvest into new opportunities where there's higher return expectations, more value to be added.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thanks, both. I've got a couple of questions on the longer-term performance of ORIT. One question cites that NAV has fallen by 9% over the last three years. What are the reasons for this and what are your plans to reverse the trend? Similar question, presentation appears to suggest that everything is on track in terms of shareholder returns, but I can see that the net asset value per share is decreasing over time as well as the share price, even if dividends are strong. What is causing this? Are the shares being priced by the market on a different basis to NAV, for example, on a yield basis?

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Yes, NAV has declined. I think if you look at the headline NAV movements, it's important to remember that there have been share buybacks in the last sort of year to 18 months, which clearly reduced NAV, but can be accretive to NAV per share. Also, that we have been paying out dividends, so over GBP 0.06 a share last year and that's GBP 0.0308 in respect to the first half of this year. Although NAV might be declining, that doesn't necessarily imply that NAV total return is negative. It was broadly flat, about -0.2% in the first six months of the year. I guess what that is showing is that the return on the assets is not keeping up with the dividend in the way that we would like.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

There's a few things behind that. Gen talked, for example, about the increase in discount rates that we saw in the first half of the year. That reflects that underlying rates have gone up, and that does not necessarily perfectly one-for-one, but it does eventually flow through into what people are willing to buy and sell these assets for. There does need to be some risk premium over bonds and similar. We've seen a few things that have weighed on performance in the last three years, so discount rates rising is one of them. I think in that three-year period as well, you're going back to 2022 when power prices were at that peak. We all expected power prices to fall from those peaks, but they fell faster than expected in 2023 and 2024. Again, that's weighed on returns as well.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

The other thing we had ticked in the early part of that period was a dramatic increase in borrowing costs. Again, the return that was coming through in terms of the cash flows from the assets was able to service the dividend, but then when you factor in also the borrowing costs, that was slightly outweighing the return that was coming off the assets. Looking forward, why do we think that we can deliver a 9%-11% NAV return? Effectively, not only paying out a dividend that might be in the order of 6%-7% of the NAV, but also adding return in terms of capital growth on top of that. Partly, it comes down to the opportunities we're seeing in the market. It is probably an easier market to buy assets at good prices than it is to sell assets right now.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We are working very hard on the asset sales and confident that we can deliver good outcomes, but it is harder to achieve than it might have been a few years ago. That gives lots of reasons to be optimistic about those construction opportunities. We've seen perhaps the gains that can be delivered from constructions, the sort of spread on returns between a construction asset and an operational asset, slightly increasing in the same period as well. There's lots of opportunity out there, and we're confident that we can go and deliver it.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thank you. Looking at the ORIT 2030 strategy, with the five-year plan to increase exposure to construction assets, which won't initially generate income, can you talk about how you will manage dividend cover and maintain the progressive dividend policy?

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Yeah. There's obviously a lot of work and scenario analysis that sits behind this. Absolutely, construction assets are not going to contribute to dividend cover for that period from when we start construction through to when they come into operations. However, the work we're already doing with the asset sales, and again, there was a question on how do we select assets for sale, and I talked about return profile. Dividend yield is one element of that return profile, so making sure that when we're recycling assets, that we are potentially selecting assets that have a lower contribution to dividend cover for what we might sell in the immediate near term. Also looking at the use of those proceeds.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

We have assets with long-term amortizing debt facilities where those facilities were put in place a number of years ago and have quite high levels of scheduled debt payments in 2027, 2028, 2029, for example. We're able to target some of the proceeds from asset sales once we've paid down the RCF to effectively reshaping the debt profile on some of the remaining assets. That gives us a lot of breathing room to be able to then incur borrowing potentially to fund construction without jeopardizing the ability to pay a covered dividend. It is a huge part of the active management that we have to deliver as part of this portfolio.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Staying on ORIT 2030, and I think we've broadly covered it, just so we're absolutely explicit here, buybacks have been a worthwhile strategy, is the starting comment. Will ORIT 2030 require this to be undone by issuing new shares in the future to fund this approach to construction?

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

ORIT 2030 at its core is not dependent on new equity issuance. We can deliver the construction activity through a combination of short-term borrowing and then selective asset recycling in order to keep gearing at the right sort of level and maintain a robust and resilient balance sheet. Clearly, we would all like to get back to a place where we can issue new equity and can effectively fund construction from that, but we don't need to do that to deliver the investment for growth and the return parts of ORIT 2030. I think if you look at the scale element of ORIT 2030, again, equity issuance is one route to that increased scale. We are not sitting here assuming that that is going to come through in a meaningful way, certainly not in the next couple of years.

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

Five years is a long time, and we certainly hope to be back there. If not, we have talked already around consolidation as the other route for inorganic growth in the scale of the company. Short answer is no, we're not reliant on equity issuance, but yes, we would love to get back to that place if we can.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Turning to asset sales, how is the market for disposals currently? There are a lot of investors trying to offload assets. Is there still plenty of demand?

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

It's a good question, and it has become very much a buyer's market at the moment, in particular in the U.K., where the traditional buyer of renewable energy assets were the listed investment trusts, which, as we know, are all, they're not buyers at the moment. That has led to us looking further afield for buyers for the assets that we're looking to sell. We know that there is still capital available at our valuations because our private strategy, which has very similar targets to ORIT, is still raising lots of capital. For us, it's the matter of speaking to those sorts of investors. I'm not sure what else to add to that really.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Cool. Thanks, Chris. Please, could you share your view on why the forward curves have been falling recently? Do you feel they've fallen enough? Do you have a view of where they might go in the short to medium term?

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I'm assuming this relates to forward curves for power prices. I'm not 100% sure, so apologies if that's not the right interpretation. I think we've seen a bit of volatility actually in forward curves over the course of the year. They rose quite steeply in the middle of Q1 before coming down again towards the end. In case it wasn't clear, I think one of the reasons that forward curves had a noticeable impact on valuations in the first half of the year is, as Gen described, the approach we take to valuations, which uses forwards for the first few years. When we extend the period on which we're taking forwards, it happens at the moment that structurally in Finland in particular, the forward curve has been quite flat and is lower than where long-term forecasters think power prices will go.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I think one of the big drivers there is, I think we're all pretty confident that there is a significant growth in energy demand coming through, or electricity demand in particular coming through from a huge range of sources, including the momentum that is already there on rollout of electric transport, particularly in the smaller and medium weight vehicles. We're seeing, again, particularly in the Nordics, lots of movement towards electrification of heating as well in a market where there's a lot of biomass at the moment. There's a huge amount of growth expected in data center demand, not all of it from AI. There's already a lot of data center growth in the Nordics, but the timing of that is always a little uncertain.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I think what we've seen over the last few years is new generation has been built out slightly more quickly than was expected, and those new sources of demand, whilst they have started to come through, are not coming through quite quickly enough to offset. The other thing we've seen, again, is gas storage in Europe, which was a real concern a couple of years ago on our ability to have enough gas in storage to meet winter requirements, particularly with not wanting to use Russian supplies. Actually, Europe's done a very good job of getting gas into storage, and that's brought down power prices as those pressures have alleviated. The other big factor is hydro. There's a huge range of factors. There's always room for forwards to move up and down, but I don't think we see huge.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

They're already at a pretty low level in the markets where it's relevant to us at the moment. It's not to say there's no risk, but there's a lot more upward potential in terms of just where the level is, but there's always a risk that always could fall further.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thanks. We've got time for a couple more questions. This one I think has been covered earlier, but might still be worth reiterating very quickly. With operational asset sales, will your dividend cover reduce, and if so, what is your target for this metric?

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

Dividend cover in the first half of the year, as we said, was 1.19x. We expect also to have a fully covered dividend for the full year, and we do not expect dividend cover to be compromised as part of either the asset sales or the shift to a more construction-focused strategy. We don't have an explicit target level for dividend cover, but a level of around 1.2x, 1.3x is a level that we think is appropriate given the high level of contracted revenues that we have. If we were to target a really high level of post-debt service dividend cover of pushing 2x or something like that, I think it would be a sign for us that we are not doing enough of the growth-focused activity to drive capital growth into the portfolio.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thank you. Question on the portfolio mix. How do you see the technology mix evolving given strong solar output but weaker wind performance?

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I don't want to get involved in pseudoscience because I know there's a lot of discussion around what will be happening to wind speeds as a result of global warming. Certainly, there's been a few years of lower wind speeds. That's something we and many others continue to look at. For the time being, we maintain a fairly even split between wind and solar in the portfolio. I think what investors could expect to see is the introduction of some batteries, and that's because we think that there is an interesting natural hedge between batteries and intermittent generating technology. Our analysts are doing a lot of work working out what is the optimal technology mix in each of the markets where we're operating and also ensuring that we continue to maximize the benefits of diversification.

[Chris Gaydon, Investment Director at Octopus Renewables Infrastructure Trust]

I think for the time being, wind and solar are roughly even split, but expect to see some flexibility coming to the portfolio.

[Charlotte Edgar, Head of Investor Relations at Octopus Renewables Infrastructure Trust]

Great. Thanks, Chris. We're at time, so perhaps one of you could give some closing remarks?

[David Bird, Investment Director at Octopus Renewables Infrastructure Trust]

I think with the questions, if there are questions out there we haven't had time to answer, hopefully we'll be able to get those from the IMC team and potentially publish a follow-up. Hopefully we've covered the main base. From our point of view, we just want to say thank you to everybody for joining, and hopefully the ORIT 2030 strategy is something that people find as exciting as we do. We think there's a huge opportunity here for investors in this sector, and particularly where discounts are now, we see there's plenty of value that people can find. We look forward to updating people on the strategy as it develops over the coming years. I'll hand back to the IMC team to cover any last admin.

[Moderator]

Perfect, guys. That's great. Thank you very much indeed for updating investors this afternoon. Of course, you'll be able to get back all of the questions that came in this afternoon for you to review afterwards. Apart from that, guys, thank you very much for your time. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order for the management team to better understand your views and expectations. This will only take a few moments to complete, but I'm sure it will be greatly valued by the company. On behalf of the management team of Octopus Renewables Infrastructure Trust plc, we would like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.

Participants

Executives

• Gen Legg, Investment Director
• David Bird, Investment Director
• Chris Gaydon, Investment Director
• Charlotte Edgar, Head of Investor Relations

Analysts

• Moderator