Net Asset Value and Operational Update

Downing Renewables & Infrastructure

10 June 2024

 

10 June 2024

Downing Renewables & Infrastructure Trust plc

Net Asset Value and Operational Update

The Board of Downing Renewables & Infrastructure Trust plc (the "Company" or "DORE") is pleased to announce the Company's unaudited Net Asset Value ("NAV") as at 31 March 2024.

Net Asset Value as at 31 March 2024

The Company's unaudited NAV was £212.3 million or 119.2 pence per share ("pps") as at 31 March 2024. This is an increase of 1.3% from the Company's NAV per share as at 31 December 2023 (£212.1 million or 117.7pps) following payment of the £2.4m (1.3pps) quarterly dividend.

The movement in NAV during the quarter was attributable to several factors:

-     Portfolio performance (+£3.2m, +1.8pps);

-     Update to the long-term power price forecasts (-£5.0m, -2.8pps);

-     FX movement (+£4.0m, +2.2pps);

-     Life extension project (+£3.2m, +1.8pps)

-     Share buybacks (-£1.9m, +0.4pps)

-     Dividend (-£2.4m, -1.3pps); and

-     Other movements (-£0.9m, -0.5pps).

As at 31 March 2024 the Company's GAV was £351.0 million (31 December 2023: £352.2 million).

As announced on 22 May 2024, the dividend in respect of the period from 1 January 2024 to 31 March 2024 of 1.45pps has been declared and will be paid to shareholders on the register on 31 May 2024 on or around 28 June 2024. The target annual dividend for 2024 of 5.8pps represents a 7.85% increase from the 2023 dividend.

Operational Performance

During the period, which represents 24% of annual budgeted revenues, operating profits were 19% higher than budget. Generation in the hydropower portfolio was in line with expectations and the solar and wind portfolio generated slightly less than expected. Lower generation was more than offset by higher than expected achieved power prices. Revenue from the grid infrastructure portfolio was also above budget.

Power Prices and Inflation

The decrease in forecast future power prices caused a £5.0 million (-2.8pps) decrease in NAV, with the majority of the impact felt in the Swedish hydropower and wind portfolios. 

The average forecast captured power prices (incl. hedges) used in the Company's valuation are set out below in GBP (real 2023). Where prices are in Euros they are converted back to GBP for the purposes of comparison. 

Figure 1: Comparison of weighted average forecast realised prices in the UK (real - 2024)

Figure 2: Comparison of weighted average forecast realised prices in Sweden (real - 2024). Prices converted to GBP for comparison purposes

The Company continues to reduce exposure to merchant power pricing with 73% of the Company's UK revenues fixed for the next 10 years (45% of the Company's total revenues fixed for that period) and 74% of the Company's total revenues fixed for the remainder of 2024.

Inflation assumptions remain unchanged. For 2024, UK CPI is forecast at 2.38% (RPI at 3.5%) and Swedish inflation at 4.6%. The UK inflation assumption (CPI) from 2025 onwards remains at 2.25%. The Swedish inflation assumption from 2025 onwards remains at 2%, which is reflective of the Swedish central bank's target inflation rate.

Discount rates

There have been no movements in discount rates for the period, the weighted average discount rate of the portfolio has remained at 7.7%.

Hydropower portfolio

Out of the existing portfolio of 34 hydropower plants in Sweden, hardware has been installed in 20 stations in order to facilitate participation in the frequency markets. DORE is continuing the work with the system operator on prequalification.

Wind Portfolio

In the period following the acquisition of the Gabrielsberget Syd Wind Farm in 2022, the asset manager has been exploring the possibility of extending the useful life of the project from 30 to 35 years.  The first stage of this project is now complete for c.37MW of the 46MW capacity, giving rise to the wind asset life extension uplift of £3.2m (1.8pps) for the quarter. The remaining c.8MW requires lease extensions which were under negotiation as at the quarter end.

Tom Williams, Partner, Head of Energy and Infrastructure at Downing LLP, commented: "We are pleased with the Company's performance during the first quarter, which has yet again demonstrated the importance of having a diversified portfolio in order to deliver stable returns. Our focus continues to be on unlocking value in the portfolio with thoughtful investment of time and capital. The modernisation and operational improvements continue apace in the Company's hydropower portfolio and we are particularly pleased to see the significant value uplift in the wind portfolio as a result of the efforts of our asset management team.  "

ENDS

Contact details:

Downing LLP - Investment Manager to the Company Tom Williams	[phone]
Singer Capital Markets - Joint Corporate Broker Robert Peel, Alaina Wong, Jalini Kalaravy (Investment Banking) Sam Greatrex, Alan Geeves, James Waterlow, William Gumpel (Sales)	[phone]
Winterflood Securities Limited - Joint Corporate Broker	[phone]
Neil Morgan (Corporate Finance) Darren Willis, Andrew Marshall (Sales)
TB Cardew - Public relations advisor to the Company Ed Orlebar Tania Wild	[phone] [phone] / [phone] [e-mail]

About Downing Renewables & Infrastructure Trust plc (DORE)

DORE is a closed-end investment trust that aims to provide investors with an attractive and sustainable level of income, with an element of capital growth, by investing in a diversified portfolio of renewable energy and infrastructure assets in the UK and Northern Europe. DORE has been awarded the London Stock Exchange's Green Economy Mark in recognition of its contribution to the global 'Green Economy' and also in 2022 DORE won 'Renewables Fund of the Year' at the Sustainable Investment Awards.

The Board classifies DORE as a sustainable fund with a core objective of accelerating the transition to net zero through its investments, compiling and operating a diversified portfolio of renewable energy and infrastructure assets to help facilitate the transition to a more sustainable future. The Company believes that this directly contributes to climate change mitigation.

DORE's strategy, which focuses on diversification by geography, technology, revenue and project stage, is designed to increase the stability of revenues and the consistency of income to shareholders. For further details please visit www.doretrust.com

LEI: 2138004JHBJ7RHDYDR62

About Downing LLP

Downing is a responsible investment manager established in London in 1986. We currently manage over £2 billion of assets under a broad range of investment mandates across our funds, investment trusts and tax-efficient products. As a certified B Corporation, we are focussed on creating a sustainable future, our key investment areas are renewable energy, infrastructure, property and healthcare.

Downing has c.60 professionals dedicated to renewable energy and infrastructure and a proven track record in renewables. Since 2010, Downing has made more than 190 investments in this sector, with over £900 million of assets under management.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.

For further details please visit www.downing.co.uk

 

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