Net Asset Value and Operational Update
30 May 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 31 March 2023.
Net Asset Value as at 31 March 2023
The Company's unaudited NAV was £213.8 million or 115.8 pence per share as at 31 March 2023. This is a decrease of 2.3% from the Company's NAV as at 31 December 2022 which was £218.9 million or 118.6 pence per share. The NAV is presented after the payment of the dividend of 1.25 pence per share, equivalent to £2.3 million, which was declared on 23 February 2023.
The movement in NAV during the quarter was attributable to several factors:
- Portfolio performance (+£4.5m, +2.5pps);
- Update to the long-term power price forecasts (-£7.3m, -4.0pps);
- Accretive acquisitions (+£0.3m, +0.2pps);
- Other movements including dividend (-£2.6m, -1.5pps).
The diversified portfolio of generating technologies balanced out the natural variances in resource and continued to provide stable generation across the period, in line with expectations.
Operating profit for the quarter was below expectations, principally due to lower than anticipated power prices in Sweden.
Power Prices and Inflation
Actual inflation for the period was marginally higher than expected. Our inflation assumptions remain unchanged from the assumptions included within the Q4 2022 valuation, being 6.4% in the UK and 3.8% in Sweden for 2023 and 3% in the UK and 2% in Sweden from 2024 onwards.
The decrease in forecast future power prices across the portfolio caused a £7.3 million (-4.0pps) decrease in NAV, with the majority of the impact felt in the UK solar portfolio.
The power price forecasts used in the Company's valuation are set out below in GBP.
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.
There have been no material movements in our discount rates for the period. The weighted average discount rate of the portfolio remains at 7.7%.
Recent deployment and acquisitions
In February and March 2023, DORE completed the acquisition of two operational hydropower plants with expected annual generation of 8.3GWh, located in Sweden for £5.1 million. The acquisitions were funded through Downing Hydro AB using available cash reserves.
The value accretion generated from valuing these assets within the hydropower portfolio was £0.3m (+0.2pps).
On 27 April 2023, DORE completed an acquisition of a 13 MWp portfolio of operational solar PV assets located in the UK. The total investment amount was c. £12.6 million, and the acquisition increases the number of solar assets in the portfolio to c.4,800, up from 3,200. The acquisition was funded using available cash reserves. The impact of this solar acquisition is not included within the March NAV.
Following this acquisition, the Company has deployed substantially all its remaining cash and expects to draw on its £40 million revolving credit facility to make future acquisitions.
As at 31 March 2023, the Company's Gross Asset Value (GAV) was £305.3 million (31 December 2022: £310.4 million.
Tom Williams, Partner, Head of Energy and Infrastructure at Downing LLP, commented:
"The recent investments in hydro and solar demonstrate our continued focus on building out a truly diversified portfolio of assets, by energy type, geography and technology, designed to provide stable power generation and revenue streams. It shows the strength of the Company that our discount rate is among the highest in the sector,"
Downing LLP - Investment Manager to the Company
+44 (0)20 3954 9908
Singer Capital Markets - Joint Corporate Broker
Robert Peel, Alaina Wong, Alex Emslie (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 to the Company
+44 (0)20 7930 0777
+44 (0)7738 724 630 / +44 (0)7425 536 903
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
About Downing LLP
Downing is a responsible investment manager established in London in 1986. We currently manage £1.9 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. £760 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