TIDMDORE
RNS Number : 6660U
Downing Renewables & Infrastructure
27 November 2023
27 November 2023
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 30 September 2023.
Net Asset Value as at 30 September 2023
The Company's unaudited NAV was GBP217.1 million or 118.7 pence
per share as at 30 September 2023. This is an increase of 0.6% from
the Company's NAV per share as at 30 June 2023 (217.0 million or
118.0 pence per share). The NAV is presented after the payment of
the dividend of 1.345 pence per share, equivalent to GBP2.5 million
in aggregate, in respect of the period from 1 April 2023 to 30 June
2023.
The movement in NAV during the quarter was attributable to
several factors:
- Portfolio performance (+GBP4.7m, +2.5pps);
- Update to the long-term power price forecasts (-GBP6.4m, -3.5pps);
- Other movements including FX movement and dividend (+GBP1.8m, +1.2pps).
As at 30 September the Company's GAV was GBP328.3 million (30
June 2023: GBP319.4 million).
As announced on 16 November, the dividend in respect of the
period from 1 July 2023 to 30 September 2023 of 1.345 pence per
Ordinary Share has been declared and will be paid to shareholders
on the register on 1 December 2023 on or around 29 December
2023.
Operational Performance
During the period, energy generation was higher than expected
for the portfolio, largely due to the hydropower portfolio
experiencing strong water inflows as a result of rainfall levels
being much higher than the base case expectation. Generation in the
wind and solar assets were below budget as a result of lower than
expected availability.
Operating profit was lower than budgeted, due to lower
generation in the solar and wind portfolios and lower-than-expected
power prices in the Nordic region off the back of
higher-than-expected rainfall.
Power Prices and Inflation
The decrease in forecast future power prices caused a GBP6.4
million (-3.5pps) decrease in NAV, with the majority of the impact
felt in the Swedish hydropower and wind portfolios.
The power price forecasts 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 - 2023)
Figure 2: Comparison of weighted average forecast realised
prices in Sweden (real - 2023). Prices converted to GBP for
comparison purposes.
Inflation assumptions for 2024 have been updated to reflect
recently available government forecasts, with UK RPI at 3.46% and
Swedish RPI increasing to 4.6%. The UK inflation assumption from
2025-2030 remains at 3%, declining to 2.25% from 2030. The Swedish
inflation assumption from 2025 remains at 2%, which is reflective
of the Swedish central bank's target inflation rate.
Discount rates
There have been no material movements in our discount rates for
the period. Project BlueSea (see below) was brought into the
portfolio with a discount rate of 7.1%, reducing the weighted
average discount rate of the portfolio from 7.8% to 7.7%. Other
project discount rates have not been changed.
Recent deployment and acquisitions
In July 2023, DORE completed the acquisition of Project BlueSea,
a Swedish Electricity Distribution System Operator for GBP7
million. This regulated electricity distributor delivers 16-18 GWh
per annum of electricity through medium and low voltage lines to
its c.1,500 domestic and business customers in Stromsund, northern
Sweden. The acquisition was funded using drawings from the
Company's RCF.
Greater than expected earnings in this investment in the period
leading up to acquisition resulted in an uplift of GBP0.1m to the
Company's portfolio value.
In June 2023, DORE signed an agreement to acquire the Company's
first grid services asset, Mersey, with completion subject to
receiving approval from OFGEM. Approval was granted on 23 October
and the transaction was completed on 31 October. Mersey is a
UK-based, fully operational 200 MVAr shunt reactor purchased for
GBP11.0 million. The impact of the Mersey acquisition is not
included within the September NAV.
Update on hydropower portfolio upgrade and entry into frequency
markets
Downing Hydro AB ("DHAB") is working to upgrade its hardware and
software systems to enable up to 25 of the existing 28 hydropower
sites to participate in the Swedish Frequency Containment Reserve
("FCR") market.
As at mid-November 2023 the physical installations were
completed at eight sites. Work proceeds on certain software,
administrative, registration and pre-qualification processes, which
need to be completed before the assets can participate in the FCR
markets.
Capital allocation and delivering value for shareholders
The Board continues to keep the Company's share price discount
to NAV and capital allocation approach under close review and to
date has balanced accretive acquisitions and revenue optimisation
initiatives with employing its share buyback.
The Company has benefitted in particular from its hydropower
aggregation, modernisation and revenue optimisation strategy and
has further opportunities to expand its investment in this strategy
with the aim of increasing overall portfolio returns. The Company
has also secured opportunities to construct battery storage
projects on land owned by the hydropower facilities at projected
returns in excess of other investments held by the Company and in
excess of equivalent projects in the UK.
In light of the potential value to the Company of: (1) these
investment opportunities; (2) reducing borrowings under the RCF;
and (3) the value created through ongoing share buybacks, the
Company is in the very early stages of considering potential
co-investors for its existing Swedish hydropower assets.
Tom Williams, Partner, Head of Energy and Infrastructure at
Downing LLP, commented: "We are pleased with the Company's
performance in the third quarter and to have further diversified
the portfolio by adding grid services income to the revenue mix. We
are particularly pleased with the progress of the hydropower
portfolio upgrades which we hope will see us entering the frequency
containment markets for our first project by the end of the year,
demonstrating our ability to build out our energy platforms and add
value to existing assets. DORE's focus on maximising returns and
value for shareholders remains sharp in identifying accretive
opportunities both within the current portfolio and expanding
pipeline."
S
Contact details:
Downing LLP - Investment Manager to the
Company
Tom Williams +44 (0)20 3954 9908
Singer Capital Markets - Joint Corporate
Broker
Robert Peel, Alaina Wong, Jalini Kalaravy
(Investment Banking)
Sam Greatrex, Alan Geeves, James Waterlow,
William Gumpel (Sales) +44 (0)20 7496 3000
Winterflood Securities Limited - Joint
Corporate Broker +44 (0)20 3100 0000
Neil Morgan (Corporate Finance)
Darren Willis, Andrew Marshall (Sales)
TB Cardew - Public relations advisor +44 (0)20 7930 0777
to the Company
+44 (0)7738 724
Ed Orlebar 630 / +44 (0)7425
Tania Wild 536 903
DORE@tbcardew.com
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 GBP1.9 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.50 professionals dedicated to renewable energy and
infrastructure and a proven track record in renewables. Since 2010,
Downing has made more than 175 investments and has over c. GBP760
million of assets under management in solar, wind, hydro and
battery storage technology.
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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