REG - Downing Renew& Infra - Annual Financial Report
26/03/2025 07:16
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RNS Number : 1450C Downing Renewables & Infrastructure 26 March 2025
Downing Renewables & Infrastructure Trust PLC
("DORE" or the "Company")
Annual Report and Accounts
Downing Renewables & Infrastructure Trust plc (LSE: DORE) announces its
Annual Report and Accounts for the financial year ended 31 December 2024 (the
"Annual Report").
The Annual Report is available to view on the Company's website at:
https://www.doretrust.com/investor-relations
(https://www.doretrust.com/investor-relations)
Highlights
• Recycling capital: Disposed of Gabrielsberget wind farm in Sweden,
crystallising a total return of 54% over the two year investment period.
• Operational excellence: Strong focus on revenue and portfolio optimisation, by
investing small amounts of capital in initiatives with material impact
including:
◦ Prequalifying two hydro-power assets for the frequency market.
◦ Achieved a positive capture price for the year of 110.9% by implementing our
dispatch strategy for our dispatchable hydropower assets.
• Acquired three Swedish hydropower plants and their associated storage
reservoirs for £5.8 million.
• Interim dividends of 5.80 pence per ordinary share declared in respect of the
year, in line with target.
• 2024 cash dividend cover of 1.20x(1) (2023: 1.21x), increasing to 1.88x (2023:
1.78x) using pre-debt service cashflows.
• Target dividend relating to financial year 2025 increased by 2.6% to 5.95
pence(2) per
ordinary share.
• Net Asset Value ("NAV") total return(1) of 3.8% for the year to 31 December
2024 and 39.3% since IPO in December 2020.
• NAV as at 31 December 2024 was £199.9 million (2023: £212.1 million) or
116.7 pence
(2023: 117.7 pence) per ordinary share.
• Reducing debt: Lowered leverage to 37%(1) (2023: 40%) by utilising divestment
proceeds to repay fully £26.7 million drawn debt under the RCF.
• The Company's renewable energy portfolio generated 343 GWh in 2024, avoided
161,620 tonnes of CO2e and powered the equivalent of 126,916 UK homes.
• Downing Hydro AB, a subsidiary of the Company, achieved 90 points out of 100
on its
GRESB sustainability performance rating ("GRESB") submission, surpassing the
GRESB average in all categories.
• Continued the buyback programme, purchasing 8.9 million ordinary shares (£7.1
million) during the year at an average price of 80.2 pence creating further
value and increasing NAV per ordinary share by 1.8 pps. In line with the peer
group, the shares traded at a discount during the year, however DORE continues
to provide additional market liquidity to help mitigate discount volatility.
• Appointment of a new non-executive Director, Astrid Skarheim Onsum who brings
extensive knowledge of the energy transition and renewable energy sectors
across various geographies.
(1) These are alternative performance measures.
(2)The dividend and return targets stated above are targets only and not
profit forecasts. There can be no assurance that these targets will be met, or
that the Company will make any distributions at all and they should not be
taken as an indication of the Company's expected future results.
Key Metrics
As at or for the year ending 31 December 2024 As at or for the year ending 31 December 2023
Market capitalisation £132m £162m
Share price 77.0 pence 90.0 pence
Dividends paid in the year £10.0m £9.7m
Dividends paid in the year per ordinary share 5.695 pence 5.285 pence
GAV(3,4) £319m £352m
NAV per share 116.7 pence 117.7 pence
NAV £200m £212m
NAV total return with respect to the year (3,4,5) 3.8% 3.5%
Total Shareholder Return with respect to the year (3,6) -6.8% -16.3%
NAV total return since inception (3,4,5) 39.3% 33.0%
Total Shareholder Return since inception (3,6) -7.4% 1.1%
Weighted average discount rate(7) 8.0% 7.7%
Environmental performance Assets avoided 161,620 tonnes of CO(2) and powered the equivalent of 126,916 Assets avoided 186,348 tonnes of CO(2) and powered the equivalent of 146,183
homes homes
(3) These are alternative performance measures.
(4) A measure of total asset value including debt held in unconsolidated
subsidiaries.
(5) Based on NAV at IPO of £0.98/share.
(6) Total returns in sterling, including dividend reinvested.
(7) This is the weighted average discount used in the valuation of underlying
investments.
A glossary of terms can be found in the full Annual Report.
Hugh Little, Chair, Downing Renewables & Infrastructure Trust PLC,
commented:
"The Board is pleased with DORE's performance during a challenging year and is
greatly encouraged by the returns crystallised by the sale of the
Gabrielsberget wind farm, which has enabled the Company to repay the RCF in
full. This has strengthened the Company's capital availability and enables
further opportunities to enhance the portfolio. Continued revenue generation
from hydropower and grid infrastructure assets provided further
diversification and stability of revenues, which is testament to the Company's
commitment to building a resilient portfolio. We are confident that DORE is
well positioned to navigate ongoing macroeconomic uncertainties, and it will
use all the tools available to continue delivering sustainable returns for
shareholders."
Tom Williams, Partner, Head of Energy and Infrastructure at Downing,
commented:
"Revenue and portfolio optimisation remained a strong focus for DORE, as we
leveraged the expertise of Downing's in-house asset management team to
optimise and deliver value from our assets. We are pleased with the further
diversification of the portfolio, having acquired hydro assets in new regions
across the Nordics and facilitated additional revenue streams from our entry
into the FCR markets. Looking ahead, we continue to see opportunities to
invest and further add value to the portfolio, whilst continuing to focus on
the optimisation of shareholder returns."
About DORE
DORE is a closed ended investment company incorporated in England and Wales.
The Company 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, Ireland and
Northern Europe.
The Company's strategy, which focuses on diversification by geography,
technology, revenue and project stage, is designed to deliver stability of
revenues and consistency of income to shareholders. For further details please
visit www.doretrust.com (http://www.doretrust.com/) .
The Company is an Article 9 fund pursuant to the EU Sustainable Finance
Disclosure Regulations ("SFDR"). The core sustainable Investment Objective of
the Company is to accelerate 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. This directly contributes to climate change mitigation.
DORE is a Green Economy Mark (London Stock Exchange) accredited company with
an ESG framework that aims to provide investors with attractive returns while
contributing to the successful transition to a net-zero carbon economy,
resulting in a cleaner, greener future.
As at 31 December 2024, the Company had 184,622,487 ordinary shares in issue
(of which 13,234,598 were held in treasury) which are listed on the FCA's
closed-ended investment funds category and traded on the London Stock
Exchange's Main Market.
DORE is managed by Downing LLP (the "Investment Manager" or "Downing").
About Downing
Downing is a responsible investment manager established in London in 1986.
Downing currently manages £2.1 billion of assets under a broad range of
investment mandates across our funds, investment trusts and tax-efficient
products. As a certified B Corporation, Downing is focussed on creating a
sustainable future, our key investment areas are renewable energy,
infrastructure, property and healthcare.
Downing has 90 professionals dedicated to renewable energy and infrastructure
and a proven track record in renewables. Since 2010, Downing has made more
than 200 investments and has over £920 million of assets under management
in this sector.
For further details please visit www.downing.co.uk (http://www.downing.co.uk/)
.
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.
Contact details:
Downing - Investment Manager to the Company +44 (0)20 3954 9908
Tom Williams
Singer Capital Markets - Joint Corporate Broker +44 (0)20 7496 3000
Alaina Wong, Jalini Kalaravy (Investment Banking)
Sam Greatrex, Alan Geeves, James Waterlow, William Gumpel (Sales)
Winterflood Securities Limited - Joint Corporate Broker +44 (0)20 3100 0000
Neil Morgan (Corporate Finance)
Darren Willis, Andrew Marshall (Sales)
Cardew Group - Public relations advisor to the Company +44 (0)20 7930 0777
Tania Wild +44 (0)7425 536 903 /
Liam Kline +44 (0)7827 130429
DORE@cardewgroup.com (mailto:DORE@cardewgroup.com)
LEI: 2138004JHBJ7RHDYDR62
Chairman's Statement
On behalf of the Board, I am pleased to present the Annual Report of Downing
Renewables & Infrastructure Trust PLC ("DORE") covering the year to 31
December 2024 (the "Annual Report"). Our commitment to investing in renewable
energy projects and resilient infrastructure has yielded robust financial
performance and substantial progress towards our long-term sustainability
goals, even in a time of greater market uncertainty. DORE's portfolio
diversification and strategic initiatives have positioned us well to continue
delivering value to our shareholders while contributing positively to the
global transition to a low-carbon economy.
Investment Activity
As noted in the Interim Report, the Investment Manager continued to prioritise
the delivery of additional value, with a series of portfolio initiatives aimed
at improved asset performance. In the second half of the year, further
progress has been made on these initiatives, the hydropower portfolio
continued to be built out through small acquisitions, and the Board was very
pleased to note the successful sale of the Gabrielsberget wind farm in Sweden,
at a significant uplift in value to its cost price just 2 years earlier in
2022. The Company received €36.0m (£29.8 million) from the sale proceeds
and dividends during its period of ownership, crystallising, a total return of
c.54%. A series of contractual and operational improvements undertaken by the
Company's asset management team over this period have been the principal
drivers behind this valuation uplift. The proceeds of the sale have enabled
the Company to fully repay its revolving credit facility ("RCF"), and to fund
further growth and re-investment across the Company's portfolio of assets in
the Nordic region.
In November, DORE acquired three further Swedish hydropower plants and their
associated storage reservoirs. The combined expected annual average production
is c.7 GWh, increasing the Company's hydropower portfolio to 37 assets with a
forecast annual average production of c.222 GWh. DORE has continued to
prioritise the aggregation, modernisation and digitalisation of its hydropower
portfolio through strategic acquisitions and active asset management.
Further details on the acquisitions and disposals during the year can be found
in the full Annual Report.
Revenue Optimisation
Notably, the Company continues to optimise its use of water storage in its
dispatchable hydropower portfolio, achieving a positive capture ratio of
110.9% for the 12 months to December 2024 (107.0% for the 12 months to
December 2023).
To provide further stable revenues, the Company successfully translated the
Icelandic Power Purchase Agreement ("PPA") from Icelandic Krona to Euro,
reducing volatility and providing constant inflation linked, eight-year 100%
pay-as-produce offtake payments from HS Orka, the third largest energy company
in Iceland.
Two hydropower assets have prequalified for the frequency market, enabling
entrance into an additional market which provides the opportunity for further
returns to shareholders. The Company has earned additional revenues from
Frequency Containment Reserve ("FCR") in the year and will look to expand its
use of these markets in the future. Furthermore, our largest hydropower asset
has been tested for suitability, and an application to sell Frequency
Containment Reserve - for Normal Operation market ("FCR-N") was submitted to
the Transmission System Operator ("TSO") for assessment during the year.
A contractual improvement for the grid infrastructure assets was completed in
August 2024. Mersey Reactive Power Limited, a UK-based, fully operational 200
MVAr shunt reactor renegotiated its contract with the National Grid to provide
additional reactive power. The project's annual revenue will increase up to
c.30% for the remainder of the nine-year contract, the equivalent of £300,000
per annum.
Blasjon Nat AB ("Blasjon") operates as the sole Electricity Distribution
System Operator ("DSO") in its concession area. Consequently, its tariffs to
customers are regulated by Ei, the Swedish regulator for all Swedish DSOs. Ei
has reached a final regulatory conclusion for the DSOs for Regulatory Period 4
(2024-2027). The regulatory conclusion allows Blasjon (and its industry peers)
to charge end users a 4.53% real Weighted Average Cost of Capital ("WACC")
over the next four-year period, the previous sector WACC was 3.4%.
Further details on the operational improvements during the year can be found
in the Investment Manager's Report in the full Annual Report.
Debt Facilities
In the interests of capital efficiency and to enhance the potential for income
returns and long-term capital growth, the Company is permitted to maintain a
conservative level of gearing. As at 31 December 2024, the total Portfolio's
gearing (expressed as a loan to value (LTV) ratio) was 37% (2023: 40%). The
Company has access to a £40 million RCF which was undrawn, there are also two
additional long-term debt facilities at asset level, a £74.3 million facility
which was fully drawn and a €68.5 million facility of which €54.2 million
was drawn at 31 December 2024.
During the year, the RCF allowed the Group the flexibility to pursue different
investment opportunities. As mentioned above, the RCF was repaid in full
during the year using the proceeds from the sale of Gabrielsberget. In total,
the sterling value of debt was £119.1 million as at 31 December 2024 (£140.0
million at 31 December 2023). The weighted average cost of debt across the
borrowings is 1.8% as at 31 December 2024.
Further information on these facilities can be found in the Investment
Manager's Report, and the Company's borrowing policy is laid out in the full
Annual Report.
Portfolio Performance
The underlying portfolio generated £22.8 million (2023: £24.7 million)
operating profit during the period(8), an 11.4% return (2023: 11.6%) on equity
capital deployed. The 4,860 core renewable energy assets produced
approximately 343 GWh of renewable electricity, enough to power 126,916 UK
homes annually, with the two new grid infrastructure assets in particular
performing well.
(8)Based on figures from underlying spv unaudited management accounts which
are not included within this report.
Financial Results
Despite the strong return on capital deployed, during the year the NAV per
ordinary share decreased marginally by 0.8% from 117.7 pence at 31 December
2023 to 116.7 pence at 31 December 2024. The reduction in NAV was largely
driven by future power prices being forecast to return to more normalised
levels more rapidly than anticipated at the start of the year. Including
dividends paid of 5.695 pence per ordinary share during the year, the NAV
total return in 2024 was 3.8% resulting from share buybacks in the year and
the payment of the dividend.
The NAV reflects the fair market valuation of the Company's portfolio based on
a discounted cash flow analysis over the life of each of the Group's assets
plus the value of the Company's other assets and liabilities. The assumptions
which underpin the valuation are provided by the Investment Manager and the
Board has satisfied itself with the calculation methodology and underlying
assumptions. Further details of the valuation changes are given in the full
Annual Report.
The portfolio companies distributed £17.7 million to the Company by way of
shareholder loan repayments and interest during the year.
The Company made a profit for the year to 31 December 2024 of £4.9 million,
resulting in earnings per ordinary share of 2.9 pence.
Dividends
The Company paid interim dividends to shareholders of 1.45 pence per share for
each of the first three quarters of 2024, and a further dividend of 1.45 pence
per share was announced on 19 February 2025 in respect of the quarter to 31
December 2024. Together, these amount to the 5.80 pence per share target for
the 2024 financial year, announced on 11 April 2024.
In cash terms, the Company and its subsidiary achieved a cash dividend cover
of 1.20x against the dividends of 5.695 pence per share actually paid during
the year. When amortisation of debt is added back, the dividend cover was
1.88x. Cash dividend cover has been calculated on the basis of cash actually
received by the Company and its immediate subsidiary, post the payment of any
debt service obligations.
The Company will target a dividend of 5.95 pence per share for the year to 31
December 2025, a 2.6% increase from 2024. The increased dividend is expected
to be covered by cash in excess of 1.15x by the current portfolio.
Capital Structure
Share prices across the broad renewable infrastructure investment company
sector remain depressed and the Company is trading at a discount to NAV. The
Board is closely monitoring the Company's share price discount and is
committed to buying back its own shares when deemed appropriate. While share
buybacks will not necessarily prevent the discount from widening, particularly
in times of market weakness or volatility, the Board believes that buybacks
enhance the NAV per share for existing shareholders, provide some additional
market liquidity and help to mitigate discount volatility which can damage
shareholder returns.
The Company has run a peer group leading(9) share buyback programme, which to
date has returned to shareholders 7.1% of the total shares in issue. During
the twelve months to 31 December 2024 the Company has bought back a total of
8,859,235 shares into treasury at a cost of £7.1 million. Since the year end,
a further 1,076,289 shares have been bought back into treasury at a cost of
£0.9 million. As at 25 March 2025, the Company had 184,622,487 shares in
issue (including 14,310,887 shares held in treasury, which are available to be
resold at a premium to NAV per ordinary share when the opportunity arises).
Alongside buybacks the Board has prioritised revenue optimisation initiatives.
The Company has utilised small amounts of capital to invest in opportunities
with large impact, increasing capital efficiency in particular in its
hydropower portfolio.
The Board continues to pursue further opportunities to expand its investment
in this strategy with the aim of increasing overall portfolio returns.
(9)In terms of proportion of capital repurchased.
Continuation Vote
In accordance with the Company's Articles of Association, an ordinary
resolution must be put to Shareholders for the continuation of the Company at
a general meeting to be held in December 2025, being five years after Initial
Public Offering in December 2020. The Board is seeking shareholder approval to
adopt the new Articles of Association (the "New Articles") to enable the
Company to bring forward the continuation vote and to present it at the AGM in
2025 rather than in December. The Board believes that putting forward the
continuation vote at the AGM is a logical step as it will (i) align the timing
of the proposed changes to the Company's investment policy with the timing of
the continuation vote and (ii) mean that the Company will not have to incur
unnecessary costs of holding an additional general meeting in December 2025 to
put forward the continuation resolution. There are no other changes to the
Articles being proposed.
The Company has traded at a discount to NAV in 2024, however the directors
believe that this weakness in the share price is in part as a result of
macroeconomic, market and geopolitical factors that affected the whole
renewable infrastructure sector. Since IPO, the Company has delivered a strong
NAV total return of 39.3%, including 18.2pps of dividends. The Board is though
mindful of the ongoing discount to NAV at which the Company's shares trade and
will continue to consider any appropriate actions to improve the share rating.
This includes DORE's share buyback programme, further asset disposals where
appropriate, debt repayment and potential corporate activity.
The Company will continue to implement its strategy to invest in a diversified
portfolio of renewable energy and infrastructure assets in the UK, Ireland and
Northern Europe. The proposed amendments to the investment policy (mentioned
below and to be detailed further in the Notice of AGM) will not fundamentally
change the Company's investment strategy.
Following a consultation with shareholders representing a significant
proportion of the Company's shares, where the majority expressed continued
support for the Company, the Directors are recommending that Shareholders vote
for the resolution for the continuation of the Company.
Proposed Changes to the Investment Policy
To allow for continued growth and focus on value creation, the Board is
proposing various amendments to the Company's investment policy to allow for
limited investment into Assets that are in development, to increase the
Company's NAV threshold for geographic and technology limits, and to clarify
the classification of certain assets. The Board and the Investment Manager
confirm that the proposed investment policy changes will not result in a
fundamental change to the investment strategy.
Further details of the proposed amendments to the investment policy will be
set out in the Notice of AGM. In accordance with the UK Listing Rules,
shareholder approval will be sought for those amendments via an ordinary
resolution at the Company's AGM to be held in 2025.
Outlook
The Board is pleased with the acquisitions and divestment made in the year and
is encouraged by the full repayment of the RCF as the additional liquidity
will bolster capital availability and enable further opportunities to build
the portfolio.
The Company has an extensive pipeline of investments, including increasing our
exposure in Iceland and expanding our hydropower portfolio further into the
Nordics. The Board also recognises the success of the Grid Infrastructure
portfolio and the diversification and stability of revenues that it provides
to the overall portfolio. The Board is committed to building a diverse and
resilient portfolio to provide the greatest return to its shareholders.
The Company will continue to leverage the deep expertise of the Investment
Manager to deliver strong operational performance while placing its
sustainability goals at the centre of its operational objectives.
The Board is committed to building a diverse and resilient portfolio in order
to deliver optimal returns to investors, and also to addressing the continued
discount at which its shares continue to trade in relation to its Net Asset
Value.
I look forward to providing shareholders with further updates on progress made
toward these objectives.
Hugh W M Little
Chair
25 March 2025
Downing Renewables & Infrastructure Trust PLC
Financial Objectives
Objective KPI and Definition Relevance to Strategy Performance Explanation
Attractive and sustainable level of income Dividends per share (pence) The dividend reflects the Company's ability to deliver a low risk but growing The Company has paid dividends of 4.35 pence per share in respect of the year The Company successfully met the increased dividend
income stream from the portfolio. ending 31 December 2024. The Company has declared a further 1.45 pence per
share to be paid in respect of the period to 31 December 2024. guidance of 5.80 pence per share for the year to 31 December 2024. The
Company's annual dividend
target will increase by 2.6% for the year ended 31 December 2025 to 5.95(10)
pence per share.
Cash dividend cover Reflects the Company's ability to cover its dividends from the income received 1.20x The Company, through DORE Hold Co received distributions of £17.7m from the
from its portfolio. underlying projects enabling the Company to pay fully covered dividends.
£19.7 million was paid up via loan interest and principal repayments from
DORE Hold Co in the year.
Capital preservation with an element of capital growth NAV per share (pence) The NAV per share reflects our ability to preserve capital value and provide 116.7 pence per share 116.7 pence per share as at 31 December 2024. NAV has decreased since 31
an element of capital growth throughout the life cycle of our assets. December 2023 from 117.7 pence per share after taking into account dividends
paid.
Total NAV return (%) The total NAV return measure highlights the gross return to investors 3.8% The Company's NAV has decreased due to the downward revaluation of the
including dividends paid. Company's Investment in Hold Co, however the Total NAV return % increased due
to dividends received by shareholders.
Total Shareholder return since IPO The share price movement plus reinvested dividends over a period, is a measure -7.4% The Company's closing share price as at 31 December 2024 was 77 pence per
of a company's capital growth over the long term. share.
Ongoing charges ratio Ongoing charges shows the drag on performance caused by the operational 1.5% Company level budgets are approved annually by the Board and actual spend is
expenses incurred by the Company. reviewed quarterly.
(10)The dividend and return targets stated above are targets only and not
profit forecasts. There can be no assurance that these targets will be met, or
that the Company will make any distributions at all, and they should not be
taken as an indication of the Company's expected future results.
A glossary of terms can be found in the full Annual Report.
Objectives and Key Performance Indicators
The Company sets out above its KPIs which it uses to track the performance of
the Company over time against the objectives, as described in the
Sustainability section in the full Annual Report. The Board is of the opinion
that the KPIs detailed in the table above, alongside the environmental, social
and governance objectives set out in the full Annual Report provide
shareholders with sufficient information to assess how effectively the Company
is meeting its objectives. The Board will continue to monitor these KPIs on an
ongoing basis.
Portfolio Summary
At the year end, through its main subsidiary, DORE Holdco Limited, the Company
owned a renewable energy portfolio of hydropower and solar assets,
representing 159 MW of installed capacity with expected annual generation of
around 323 GWh.
The Company also owns a grid infrastructure portfolio including a shunt
reactor that regulates voltage on the UK Transmission System by absorbing
200MVAr reactive power per hour and a Swedish Electricity Distribution System
Operator which delivers electricity to c.1,500 domestic and business
customers.
The generating portfolio is diversified across 4,860 individual installations
and across six different energy markets. The grid infrastructure portfolio is
diversified across two geographies and technologies.
The Group currently has no exposure to any assets under construction.
Portfolio composition by valuation, as at 31 December 2024
Technology by GAV (%)
Hydro 48
Solar 44
Grid Services 7
Cash 1
Geographic Exposure by GAV (%)
Sweden 50
Great Britain 39
Northern Ireland 8
Iceland 2
Cash 1
Power Market Exposure by GAV (%)
Great Britain 33
Sweden - SE2 24
Sweden - SE3 20
Northern Ireland 9
No Exposure 7
Sweden - SE4 4
Iceland 2
Cash 1
Investment Technology Date Acquired Location Power Market / Subsidy Installed capacity (MW) Expected annual generation (GWh)
Ugsi Hydro Feb-21 Alvadalen, Sweden SE3/n/a 1.8 10.0
Bathusstrommen Hydro Feb-21 Alvadalen, Sweden SE3/n/a 3.5 13.7
Asteby Hydro Feb-21 Torsby, Sweden SE3/n/a 0.7 2.8
Fensbol Hydro Feb-21 Torsby, Sweden SE3/n/a 3.0 14.0
Robjorke Hydro Feb-21 Torsby, Sweden SE3/n/a 3.3 14.9
Vals Hydro Feb-21 Torsby, Sweden SE3/n/a 0.8 3.2
Torsby Hydro Feb-21 Torsby, Sweden SE3/n/a 3.1 13.2
Tvarforsen Hydro Feb-21 Torsby, Sweden SE2/n/a 9.5 36.9
Sutton Bridge Solar Mar-21 Somerset, England UK/ROC 6.7 6.7
Andover Airfield Solar Mar-21 Hampshire, England UK/ROC 4.3 4.2
Kingsland Barton Solar Mar-21 Devon, England UK/ROC 6.0 5.9
Bourne Park Solar Mar-21 Dorset, England UK/ROC 6.0 6.0
Laughton Levels Solar Mar-21 East Sussex, England UK/ROC 8.3 8.8
Deeside Solar Mar-21 Flintshire, Wales UK/FiT 3.8 3.4
Redbridge Farm Solar Mar-21 Dorset, England UK/ROC 4.3 4.2
Iwood Solar Mar-21 Somerset, England UK/ROC 9.6 9.3
New Rendy Solar Mar-21 Somerset, England UK/ROC 4.7 4.7
Redcourt Solar Mar-21 Carmarthenshire, Wales UK/ROC 3.2 3.2
Oakfield Solar Mar-21 Hampshire, England UK/ROC 5.0 4.7
Kerriers Solar Mar-21 Cornwall, England UK/ROC 10.0 9.7
RSPCA Llys Nini Solar Mar-21 Swansea, Wales UK/ROC 0.9 0.8
Commercial portfolio Solar Mar-21 Various, England and Wales UK/FiT 5.5 4.3
Commercial portfolio Solar Mar-21 Various, Northern Ireland SEM/NIROC 0.7 0.5
Bombardier Solar Mar-21 Belfast, N. Ireland SEM/ROC 3.6 2.8
Residential portfolio Solar Mar-21 Various, N. Ireland SEM/NIROC 13.1 10.1
Lemman Hydro Jan-22 Alvadalen, Sweden SE3/n/a 0.6 2.6
Ryssa Ovre Hydro Jan-22 Mora, Sweden SE3/n/a 0.7 2.6
Ryssa Nedre Hydro Jan-22 Mora, Sweden SE3/n/a 0.6 2.4
Rots Ovre Hydro Jan-22 Alvadalen, Sweden SE3/n/a 0.8 2.8
Rots Nedre Hydro Jan-22 Alvadalen, Sweden SE3/n/a 0.3 1.4
Vallhaga Hydro Jan-22 Edsbyn, Sweden SE2/n/a 2.6 12.8
Osterforsens Kraftstation Hydro Jan-22 Edsbyn, Sweden SE2/n/a 1.5 11.5
Bornforsen 1 Hydro Jan-22 Edsbyn, Sweden SE2/n/a 0.7 2.9
Bornforsen 2 Hydro Jan-22 Edsbyn, Sweden SE2/n/a 1.4 9.3
Fridafors Ovre Hydro May-22 Fridafors, Sweden SE4/n/a 2.3 10.0
Fridafors Nedre Hydro May-22 Fridafors, Sweden SE4/n/a 2.9 7.7
Hedvigsfors Hydro Oct-22 Sweden SE2/n/a 0.3 1.2
Gysinge Hydro Oct-22 Sweden SE3/n/a 0.3 2.5
Brattfallet Hydro Oct-22 Sweden SE3/n/a 0.5 3.7
Molnbacka Hydro Oct-22 Sweden SE3/n/a 1.8 3.8
Varan Ovre Hydro Oct-22 Sweden SE3/n/a 0.2 1.2
Varan Nedre Hydro Oct-22 Sweden SE3/n/a 0.2 1.2
Kristinefors Hydro Oct-22 Sweden SE3/n/a 0.1 0.7
Hogforsen Hydro Feb-23 Sweden SE2/n/a 0.35 2.5
Gottne Hydro Feb-23 Sweden SE2/n/a 0.7 5.8
AEE Renewables UK 13 Solar Apr-23 Devon, England UK/ROC/FiT 5.6 5.6
Gloucester Wind Solar Apr-23 Various, England and Wales UK/FiT 1.1 1.2
Hewas Solar Solar Apr-23 Various, England and Wales UK/FiT 2.0 1.9
Penhale Solar Solar Apr-23 Surrey, England UK/FiT 0.3 0.4
Priory Farm Solar Farm Solar Apr-23 Suffolk, England Great Britain UK/ROC 3.2 2.5
St Colomb Solar Solar Apr-23 Various, England and Scotland UK/FiT 0.8 0.6
Blasjon Nat Grid Jul-23 Sweden SE2 n/a n/a
Mersey Shunt reactor Nov-23 United Kingdom UK/n/a n/a n/a
Bruket Hydro Dec-23 Sweden SE2/n/a 0.9 3.9
Nylandsan Hydro Dec-23 Sweden SE2/n/a 0.55 1.6
Kallsjon Hydro Dec-23 Sweden SE2/n/a 0.25 0.7
Tunsjon Hydro Dec-23 Sweden SE2/n/a 0.25 0.6
Lagmansholm Hydro Dec-23 Sweden SE3/n/a 0.5 2.4
Urdarfellvirkjun Hydro Dec-23 Iceland IS/n/a 1.1 8.3
Gyttorp Hydro Nov-24 Sweden SE3/n/a 0.5 1.1
Hagby Hydro Nov-24 Sweden SE3/n/a 1.2 3.6
Hammarby Hydro Nov-24 Sweden SE3/n/a 0.55 2.2
TOTAL AS AT 31 DECEMBER 2024: 159.0 323.2
Investment Manager's Report
Introduction
We are delighted with the progress made in the portfolio during the year. The
Company continued to focus on revenue optimisation, renegotiating the shunt
reactor contract with National Grid by £300,000 per year and achieving a
capture ratio of 110.9% for the hydropower portfolio in 2024, as compared to
104.5% in 2023. The Company also disposed of Gabrielsberget wind farm
achieving returns of 54% and facilitating the full repayment of the RCF.
During the year, the Company also made further investments in the hydropower
portfolio. Active asset management and portfolio enhancement were also a key
focus, with optimisation initiatives diversifying fixed revenue streams and
enhancing shareholder returns.
Acquisitions and Capital Deployment
Sale of Gabrielsberget
The Company completed the sale of its entire interest in Gabrielsberget wind
farm in Sweden ("Gabrielsberget") to Angel Wind, a subsidiary of Bagnall
Energy, another fund managed by the Investment Manager. Completion of the sale
crystallises a total return of 54% over DORE's investment period in
Gabrielsberget.
The Company purchased Gabrielsberget in January 2022 for a total consideration
of £19.8m and has received £29.8m from the sale proceeds and dividends
during its period of ownership.
A series of contractual and operational improvements undertaken by the
Company's asset management team over this period have been the principal
drivers behind this valuation uplift.
The proceeds of the sale enabled the Company to fully repay its RCF, to fund
further growth and re-investment across the Company's portfolio of assets in
the Nordic region and to fund the Company's peer group leading share buyback
programme(11), which to date has returned to shareholders 7.1% of the total
shares in issue at the start of the programme.
Hydropower - Downing Hydro AB ("DHAB")
In November, the Company acquired three Swedish hydropower plants and their
associated storage reservoirs for c.£6 million. The combined expected annual
average production is c.7 GWh, with a potential increase of 0.5 GWh after
further upgrades have taken place.
All three hydro plants, Hagby, Gyttorp and Hammarby, are located on the
Norasjon River in the Orebro County in the SE3 price region in Sweden. Two of
the plants - Gyttorp and Hagby - were built in 1946 and 1952 respectively and
underwent extensive refurbishment in 2007. Hammarby was built in 1982 and
recently underwent a significant upgrade.
The transaction offers a strategic opportunity to extend the current portfolio
into a new geographical area of SE3. The three hydropower plants benefit from
storage and consequently allow the portfolio to benefit from an attractive
revenue profile, with a significant part of its production during the winter
months.
The Company's hydropower portfolio now comprises of 37 assets with a forecast
annual average production of c.222 GWh and reservoir capacity of 248.3Mm(3).
(11)Based on percentage of shares repurchased of total ordinary shares in
issue.
Portfolio Enhancement
Improved Contract and Revenue for Mersey Reactive Power
In August, Mersey Reactive Power Limited, a UK-based, fully operational 200
MVAr shunt reactor which the Company acquired in June 2023 renegotiated its
contract with the National Grid Electricity System Operator ("NGESO") to
provide additional reactive power.
The shunt reactor is now available to be called upon by the network operator
for unlimited use throughout the year, which will allow DORE to benefit from
increased revenues under the availability-based Pathfinder Contract, part of
National Grid's Stability Pathfinder Initiative. The Company expects the shunt
reactor to receive an increase in annual revenue of up to c.30%, which is the
equivalent of c.£300,000 per annum, for the remainder of the nine-year
contract, increasing the valuation by 5.8%.
Blasjon
Blasjon, a Swedish Electricity Distribution System Operator acquired by DORE
in July 2023, has reached a final regulatory conclusion with Ei, the Swedish
regulator for the electricity distribution sector. Blasjon and its industry
peers are allowed to charge end users 4.53% of its real Weighted Average Cost
of Capital (WACC) over the next four-year regulatory period, the previous real
sector WACC was 3.4%.
The transmission and distribution of electricity in Sweden is considered a
natural monopoly, which means its tariffs and charges to customers are subject
to regulation. Ei implements revenue caps for each distribution system
operator for a regulatory period of four years and has concluded the
regulatory decision for Regulatory Period 4 (RP4, 2024-2027) for Blasjon. As
part of the regulatory decision, Blasjon will be making investments during the
period totalling c.SEK 33.2 million (c.£2.5 million). The real WACC which
Blasjon is allowed to apply to its charges is set at 4.5%. As a comparison, Ei
concluded a real sector WACC of 3.4% for RP3 (2020 - 2023, restated from 2.3%
by Ei, following appeal by the industry).
Blasjon also announced the appointment of Jan Delin as its new Chief Executive
Officer ("CEO") following the retirement of Ingemar Persson after 27 years in
the role. Mr. Delin, who was previously CEO of regional Swedish utility Edsbyn
Elverk for nine years, has been a Board member of Blasjon for four years.
Creating Long-Term Attractive Returns through Strategic Digitalisation
The asset management team is dedicated to generating long-term attractive
returns by examining the hydropower portfolio and executing multiple projects
simultaneously as part of a comprehensive digitalisation strategy.
In the year, the Asset Manager has identified multiple positive business
cases, including the refurbishment of spill gates and local equipment to
enable more precise, flexible, and remotely controlled adjustments. These
initiatives, such as the refurbishment of five spill gates in reservoirs
upstream of flexible hydro power assets, have progressed. Additionally,
investments in to providing stations with Programme Logic Controllers enable
autopilot steering based on production values rather than surface level
steering, allowing us to improve our price-driven production strategy. The
Asset Manager has also centralised its dispatch and production planning
responsibilities, consolidating the dispatch responsibility for all Swedish
assets into one unified team.
The Asset Manager has worked on multiple ongoing digital projects during the
second half of the year. Local hardware has been installed at nearly all
Swedish station, connected to a Supervisory control and data acquisition
("SCADA") system. The system allows us to monitor full operations, from
reservoir surfaces and production plans to operational alarms, minimising
downtime and unnecessary losses. The roll out to all hydropower stations in
Sweden is expected to be completed during 1H 2025, including the stations
acquired in November 2024.
In the Interim Report, we laid out a case study on how Hydrogrid is being used
to enhance DHAB's dispatch strategy. Hydrogrid has now been integrated with
our SCADA system, providing real-time planning and dispatch strategies for our
hydro plants. It uses real-time generation data, hydrological modelling,
inflow forecasts, and power market data to produce optimal production plans
for each asset, both for short-term opportunities and seasonal planning. The
production plan is regularly updated based on real-time conditions, such as
weather forecasts and power prices, while ensuring regulatory compliance.
The improvements made in the year along with favourable weather conditions
allowed the Company to achieve a capture price ratio of 110.9%.
Ugsi - Case Study
This case study aims to highlight some significant improvements that are
possible with small-scale hydropower through simple and relatively inexpensive
investments. During 2024, Downing Hydro AB, a Swedish subsidiary of DORE has
made several such investments, and a comparison between electricity production
in January 2024 and January 2025 can illustrate the improvement. Historically,
the flexibility of small-scale hydropower generally lags behind large-scale
hydropower, but improvements in IT and technology make it viable to also use
smaller hydropower plants to regulate electricity production and support the
grid when needed. With increased volatility in the energy market due to higher
penetration of intermittent and renewable energy production, flexible
electricity production has become particularly advantageous, both from a
commercial and a security of supply perspective.
Ugsi was one of DORE's first hydropower investments, purchased in 2021. Figure
1 in the full Annual Report shows the production profile during January 2024
together with the spot price, showing slow reactions to peaks in power prices.
If the Asset Manager wished to change the power output, it was necessary to
send for personnel to site to manually make this change. Figure 1 in the full
Annual Report shows the price achieved mirroring the spot price with a 98.5%
capture price, the economic result was relatively poor considering the full
potential of the power plant.
To enable remote control with autopilot, the local programmable logic
controller needed to be replaced. This was completed in the autumn of 2024, so
by January 2025, there was increased flexibility, and a capture price of
134.4% was achieved. As can be seen in Figure 2 in the full Annual Report,
there is now a high correlation between the spot price and the production of
the hydropower plant, with output at its highest when the spot price is high.
By reducing production when prices are low, water is stored in reservoirs to
further take advantage of energy production when prices are high.
Market Development and Opportunities in the Frequency Regulation Markets
The Investment Manager continues to focus on deploying capital into areas of
the portfolio where the potential return on capital is the greatest, including
buying back its own shares.
Accordingly, the Investment Manager is pursuing opportunities to gain access
to the historically attractive Swedish Frequency Containment Reserve ("FCR")
market by building out the hydropower plants into power generation stations
through the installation of add-on equipment and software. The Investment
Manager has also been identifying sites for the installation of battery energy
storage systems ("BESS"), often located on land owned by the hydropower
portfolio, which will enable DORE to access the Fast Frequency Reserve ("FFR")
markets, thus creating additional revenue streams and increasing productivity
of the site.
The combination of an increasingly centralised operation system across the
hydropower portfolio together with software and hardware upgrades has enabled
the Asset Manager to regulate its power production to such an extent that it
can bid to participate in the FCR markets. The storage capability of
hydropower plants acts in a similar but slower manner to that of a battery,
allowing hydropower production to be adjusted relatively quickly (up or down)
to assist in stabilising the grid.
In 2024, the Investment Manager prequalified two hydro-power assets for the
frequency market, tapping into additional market channels for higher returns
on our flexibility. In the period where the two hydro power assets were
qualified for the frequency market, FCR made up c.6% of their revenues.
Following this success, DORE's largest hydropower asset has been tested, and
an application to sell FCR-N was submitted to the TSO for assessment in Q4
2024.
Portfolio Performance
For the year to 31 December 2024, the 4,860 core renewable energy assets
produced 343 GWh of renewable electricity, enough to power 126,916 UK homes
annually. From a financial perspective the portfolio generated an operating
profit of £22.8 million, which was slightly below expectations. This was
largely due to fluctuating weather patterns in the Nordic regions which
hindered generation of the wind and hydropower portfolios and caused lower
than expected power prices across these portfolios. The Company is seeking to
mitigate these fluctuations through its ancillary services projects.
Generation across the solar portfolio was 90GWh in 2024. This was lower than
expected, due to lower than average irradiation levels for the year and also
due to unexpected Distribution Network Operator ("DNO") outages at a small
number of sites. As previously reported the dynamic spare parts strategy
implemented in 2022 continues to support the solar portfolio in mitigating the
risk of downtime through prolonged equipment lead times. Inverter issues were
experienced at a small number of sites but the impact of these was mitigated
by the use of available spare parts. A number of the removed inverters are now
being repaired to be re-used as part of the wider portfolio spare parts
strategy. Operating profit across the solar portfolio was £15.1 million,
which was in line with expectations, with the impact of the lower than
expected generation being offset by efficient cost control resulting in lower
than predicted operating costs.
The hydropower portfolio generated 207 GWh in the year. This was slightly
lower than expected, partly due to lower than expected availability of the
sites due to a particularly harsh winter causing icing disturbances in some of
Sweden's rivers, followed by strong spring floods which carried debris and
clogged a number of intake channels requiring downtime for clearance.
Operating profit across the hydropower portfolio was £5.4 million. This was
below expectations and caused by power prices being lower than expected due to
the spot pricing experienced during times of high hydropower generation. This
was partially offset by dispatch control and hedging strategies which mitigate
these fluctuations by securing fixed prices. Operating costs were higher than
expected across the hydropower portfolio due to a strategic shift from a fixed
to variable maintenance cost model which caused a temporary rise in
maintenance costs due to incidents occurring later in the year. However, we
expect the long-term benefits of the new maintenance cost model to result in
more efficient and sustainable operations.
The grid infrastructure assets had an operating profit of £2.0 million, which
significantly exceeded expectations. The UK grid stability asset, Mersey,
performed particularly well during the year, driven by strong availability
which enabled the asset to benefit from its fixed revenue contract to provide
a reactive power stabilisation service to the National Grid. With proactive
asset management this contract was improved during the year to offer more
availability to provide reactive power services to the National Grid. The
Swedish electricity distribution grid Blasjon had an operating profit of
£625k which was in line with expectations.
The disposal of Gabrielsberget meant the period of economic interest ran from
1 January 2024 to 30 June 2024, the wind portfolio generated 46GWh of
renewable electricity and maintained good technical availability. This
generation figure was 15.1% lower than expected, due to a combination of lower
energy generation and lower than expected power prices.
Asset Operating Profit vs Budget (£)
Actual Operating Profit Expected Operating Profit
Electrical Grid 1,965,992 1,587,763
Hydro 5,396,191 6,189,468
Solar 15,148,200 15,194,032
Wind 430,352 529,262
Asset Generation vs Budget (MWh)
Actual Production Expected Production
Hydro 207,072 216,420
Solar 90,012 100,549
Wind 45,638 53,734
2024 2023
Hydro Wind (Jan - June) Solar Grid/Grid Stability Total Hydro Wind Solar Grid/Grid Stability Total
GWh generated 207.1 45.6 90.0 N/A 342.7 194.2 105.8 94.7 N/A 394.7
Average price per MWh €39.87 €29.38 £224.33 N/A £57.9 €55.98 €30.60 £216.0 N/A £49.0
Revenues (£m) 9.1 1.4 20.8 2.9 34.2 9.5 3.3 21.5 2.0 36.3
Operating profit (£m) 5.4 0.4 15.1 2.0 22.7 5.8 1.0 16.9 1.0 24.7
Portfolio and Asset Management
Downing has invested significantly in an in-house asset management team
capable of providing a full-scope service to a wide range of generation, grid
and storage technologies. Established in 2019, the team totals over 40 and
includes expertise across power markets, engineering, data analytics, finance
and commercial management.
Ancillary Services Projects
In response to opportunities identified in the ancillary market, the Asset
Manager has been pursuing several ongoing ancillary service projects during
the period. These services not only take advantage of additional revenue
streams when registered assets are requested to power up/down but also support
the relevant local grid with supply and demand challenges.
The digitalisation of the hydropower portfolio has continued to progress,
which has supported the optimisation of dispatching, including participation
in the FCR markets. To successfully participate in the provision of FCR
services, the hydropower portfolio must meet stringent technical demands and
as a result the Asset Manager has been iteratively and comprehensively
evaluating each site's suitability for FCR-N (for normal grid disturbances)
and FCR-D (for significant grid disturbances) to establish refurbishment plans
on a site-by-site basis. During the period, two hydropower sites successfully
met the requirements for participation in these markets: 0.7MW site Gottne is
now active in the FCR-N and FCR-D markets, and 0.5MW site Lagmansholm is now
active in the FCR-D market.
Simultaneously, Downing has been assessing and pursuing opportunities to
install Battery Energy Storage System ("BESS") at some of the Company's
hydropower sites. Installing BESS will enable DORE to participate in further
frequency regulation markets such as Fast Frequency Reserve ("FFR"), which
works similarly to FCR in that it actively assists on the management of grid
imbalances. Grid connection has been secured for three sites with plans in
development for them to operate both in the FFR market and the FCR market
independently of hydropower production.
Optimisation of Portfolio Service
The Asset Manager has continued to develop and implement performance and
proprietary data optimisation and power pricing strategies, enhancing DORE's
data-driven approach to asset management and unveiling further efficiencies.
Progress has been made to enable a price-driven production strategy within the
hydropower portfolio, with more precise, flexible, and remotely controlled
adjustments via modernised water spill gates and localised equipment. During
2024 the refurbishment of five spill gates in reservoirs upstream of our
flexible hydropower assets was completed. In addition, investment was made to
enable autopilot steering based on production values rather than surface level
steering. These flexibility advancements are now supported by a centralised
dispatch and production planning strategy which drives delivery of forecasting
and optimisation of production power.
The Asset Manager has reconceptualised the hydropower Operations &
Maintenance ("O&M") services by increasing in-house coordination of
O&M services, enabling it to work closely with a more agile network of
local technicians. The ambition is to maintain high quality asset management
with a more cost-effective model in a growing portfolio. Improvements can
already be seen in quality management and cost efficiency, for example the
Asset Manager has taken over the predetermined preventative maintenance
program and this is now streamlined and harmonized across the portfolio,
capturing some cost optimisation.
The Asset Manager continues to progress several optimisation projects to
replace and improve technical equipment within the UK ground-mounted solar
portfolio. This includes further enhancement of the dynamic spare parts stock
which aims to reduce downtime and maintain asset performance given prolonged
equipment lead times in the market. In the winter of 2024, one of DORE's spare
transformers was used to replace an old transformer which had failed,
accounting for approximately 1,000 MWh of renewable generation, or over
£150,000 of revenue. Without DORE's proactive spare parts strategy, a new
transformer would have had to have been purchased at the time of failure with
a lead time of 9 months. The inverter and panel spare parts also continue to
be used, reducing downtime across the portfolio.
The Asset Manager has continued to pursue a number of warranty claims against
solar panel manufacturers. These claims are being carried out preventatively
to address systematic defects before they cause any potential downtime. Across
three different sites the Asset Manager collected the relevant data using a
new high-resolution drone in combination with image recognition software to
photograph and categorise panels. This method has successfully allowed for the
collection and sorting of high-resolution photographs of 80,488 panels across
three sites at a significantly reduced cost. Feedback has been received from
all three sites where 36,205 panels were identified by the panel manufacturer
to be suffering from a systematic batch defect, that could impact upon future
generation. Replacement panels will be provided free of charge and the Asset
Manager will continue its program for replacing these throughout 2025. All
disused panels will be returned to the manufacturer for recycling.
Health and Safety
The health and safety of contractors and the public is a fundamental and
ongoing focus in asset management processes. Throughout the period, a range of
workstreams were carried out by the Asset Manager in line with the Company's
approach to Health and Safety management.
In order to ensure a consistent approach to health and safety management, the
Asset Manager has engaged a third-party expert to provide health and safety
support to assess systems in place and revise existing processes where
applicable. To further reinforce a positive health and safety culture, the
Asset Manager rolled out interactive health and safety training for Directors
of the Company's portfolio of assets. Implementation of improved policies and
processes will be rolled out during 2025.
A rolling programme of health and safety audits continues across the
portfolio. These audits are based on a two-tier approach, where risks and
procedures are audited at the site level and also at the asset operator level.
DORE has a process of continuous assessment and feedback of site and operator
practices, ensuring effective management systems are in place and adhered to.
Finally, IT systems are used to thoroughly track all incidents. These systems
not only act as tools for the enabling of performance measurement, and trend
analysis and learning, but also ensure the effective communication,
escalation, and management of incidents. This IT system also monitors
environmental incidents and near misses. This ensures environmental risk is
monitored and managed on a site basis as well as on a portfolio level. This is
developed further in the full Annual Report.
Financing and Capital Structure
The Company, through its subsidiary DORE Holdco Limited, adopts a prudent
approach to leverage. Its objective is that each asset will be financed
appropriately for the nature of its underlying cashflows. Long-term debt may
be used where appropriate at the SPV level to facilitate acquisitions,
refinancing, capital expenditure or construction of assets.
Total long-term structural debt will not exceed 50% of the prevailing Gross
Asset Value. At 31 December 2024, including project level financing, the
Company and its subsidiaries' leverage stood at 37%.
In addition, the Company and/or its subsidiaries may also make use of
short-term debt, such as a revolving credit facility, to assist with the
acquisition of suitable opportunities as and when they become available.
Revolving Credit Facility
The Group has entered into a loan agreement through its main subsidiary DORE
Hold Co Limited for a £40 million RCF with Santander UK plc. The RCF is
available until December 2025, with the possibility to be extended for a
further year. As at 31 December 2024, the facility was undrawn.
On 24 June 2024, the Company converted its total drawings under the RCF of
£18.6 million into a EUR denominated loan of €22.0 million. This allowed
the Company to take advantage of lower interest rates in Europe and provided a
natural hedge for the proceeds of the Gabrielsberget wind farm sale. The RCF
was drawn on two occasions during the year, £5 million on 21 August 2024 and
£3 million on 13 December 2024. The total drawn amounts of €22.0 million
and £8 million were fully repaid on 23 December 2024, utilising the proceeds
of the Gabrielsberget wind farm sale.
The terms of the RCF now includes a 'Green Projects' initiative, operating
under the Loan Market Association's (LMA) Green Loan Principles, a framework
of market standards and guidelines that provides a consistent methodology for
use across the green loan market.
Under the 'Green Projects' criteria, the RCF can only be used in connection
with assets that present environmental benefits and appropriate green
credentials. The RCF is available to be drawn for the funding of investments
and working capital requirements. Additional monitoring and reporting
obligations on the environmental benefits delivered by such assets will be
required, which comfortably aligns with DORE's current investment strategy as
an Article 9 fund.
The RCF has the additional benefit of being able to be drawn in both GBP and
EUR (with the ability to also be able to make use of funds in other
currencies) and is priced at the Sterling Overnight Index Average ("SONIA") or
Euro Interbank Offered Rate ("EURIBOR") plus 2.25% per annum.
Refinancing of Hydropower Assets
The Group initially acquired DHAB, its Swedish hydropower portfolio, on an
unlevered basis in February 2021, shortly after the Company's IPO. Given the
strong transaction pipeline and ongoing capital expenditure requirements, DHAB
entered into a seven-year bullet repayment €43.5 million debt facility with
SEB, a leading corporate bank in the Nordics.
In December 2023, the SEB facility was increased from €43.5 million to
€68.5 million to fund future capital expenditure requirements and further
acquisitions. The total all-in cost of the drawn debt for 2025 is c.3.3%,
benefitting from swaps until end of 2033.
As of 31 December 2024, DHAB has drawn down €54.2 million under the
facility, predominately as a source of funding for acquiring further
hydropower plants in Sweden during 2024 but also to fund some of the capital
expenditure in DHAB.
UK Solar Portfolio
Long term amortising debt (September 2034 maturity) is in place for the UK
solar portfolio and, as at 31 December 2024, comprised outstanding principal
amounts of £64.7 million lent by Aviva and £9.6 million lent by
institutional investors managed by Vantage Infrastructure.
Approximately 12% of this debt is nominal with a fixed interest rate of 3.37%.
The interest rate is fixed in real terms on the remaining balance at 0.5%. The
debt service of this larger debt tranche is inflation-adjusted, with
indexation tracking UK RPI.
A summary of the debt across the portfolio can be found in the table below:
2023
2024
Hydro Solar Grid Working capital Total Hydro Wind Solar Grid infra-structure Working capital Total
infra-structure
Equity value (£'m) 109.6 64.9 21.5 3.9 199.9 111.5 27.2 68.1 19.6 4.3 230.7
Debt (£'m) 44.8 74.3 0.0 0.0 119.1 42.8 0.0 78.7 0.0 0.0 121.5
GAV (£'m) 154.4 139.2 21.5 3.9 319.0 154.3 27.2 146.8 19.6 4.3 352.2
Foreign Exchange
The Group's generating assets in Sweden earn revenues in EUR and incur some
operational cost in SEK. Blasjon revenues and costs are in SEK. From 1 March
2024, Urdafellsvirkjun, our Icelandic asset, removed revenue exposure in ISK
and replaced with EUR. Assets in the UK operate entirely in sterling.
The Group, together with its foreign exchange advisor, has developed and
implemented its foreign exchange risk management policy in line with the
Prospectus. The policy targets hedging the short to medium-term distributions
(up to five years) from the portfolio of assets (that are not denominated in
GBP) on a "linear reducing basis", whereby a high proportion of expected
distributions in year one are hedged and the proportion of expected
distributions that are hedged reduces in a linear fashion over the following
four years. This is a rolling programme and each year further hedges are
expected to be put in place to maintain the profile.
In total, 55% of the Group's EUR dividend receipts from SPVs out to March 2028
were hedged as at the reporting date. In addition, 71% of the Group's EUR
denominated NAV is hedged.
Dividend hedges as a percentage of expected EUR distributions
Percentage of EUR denominated dividend receipts
12 months 65%
24 months 80%
36 months 25%
Power markets and exposure
Through its portfolio companies, the Group adopts a medium to long-term power
price hedging policy for its generation assets, providing an extra degree of
certainty over a portion of the Company's cash flows. The fixed price
generation position for the portfolio as of 31 December 2024 is set out in the
full Annual Report, showing the benefits of the combination of subsidy and
fixed income from power sales. The hedging positions are continuously reviewed
to ensure an appropriate position is maintained and new hedges are taken out
as appropriate. During the year, the portfolio removed its exposure to the
variable merchant revenue of Swedish Wind with the sale of Gabriel South. This
helped bring the total portfolio fixed inflation linked revenues up from 37%
to 42% for the period 2025-2032.
Over the course of 2024, power prices across the UK and Europe reverted to
those seen before the Russian invasion of Ukraine. With sanctions on Russian
exports, the gas market saw a higher demand in Asia and Europe for LNG. This
led to increases in power prices during maintenance of terminals and during
weather events that affected shipping routes. The market was also highly
sensitive to political news throughout the year, with any suggestion of
further unrest causing mini rallies to the gas and power price.
Nordic power market
As is common in Nordic markets, electricity and gas prices were dominated by
seasonality and weather events during the course of 2024. The start of 2024
was unseasonably cold in the Nordics, resulting in the highest demand in four
years. This caused an uplift to the forward market, however as weather became
milder in northern Europe during February and March, the market subsequently
settled. Spring-time saw strong winds and high precipitation, bringing spot
prices down and a subsequent delayed spring flood which brought prices up. The
Nordic summer vacation brought lowered demand and prices throughout July.
Heading into winter, the market saw a rally due to calm and cold weather, with
prices closing at their highest point since January's cold snap. There were
some concerns surrounding gas supply into November as a cold snap and low
renewable generation caused increases in future markets. Ultimately, forward
prices ended the year lower than the start of 2024, due to a combination of
settling gas prices and reports of the highest hydrological balance seen in
the Nordics in three years.
UK power market
Weather and Liquified Natural Gas ("LNG") supply dominated the evolution of
forward power prices in the UK throughout the year. A cold snap early in the
year pushed prices up, followed by lower demand, strong renewable generation
and increasing LNG imports bringing prices down. Fluctuating wind generation
had a strong influence on spot prices and news of conflict in the Middle East
impacted future markets. During spring, power prices trended upwards due to
intense Asian LNG demand along with news of further Russian attacks on Ukraine
and political instability due to several elections. Later in the year saw
relatively stable prices, with some fluctuations in the spot price due to high
levels of renewable generation. Heading into winter, forward prices were
variable due to political news and nuclear outages, and fears that Gazprom
would cut gas supplies into Europe. These fears subdued into December and
downside was seen in the market as gas supplies in the UK and Europe were
reported to be high and weather reports suggested no cold snaps in sight. The
latter half of December saw increasing prices due to rallies in the gas market
with some price periods rising to their highest in 14 months as low wind
across the UK and Europe increased gas prices.
Dividends
The Company achieved a cash dividend cover of 1.20x post debt service and
1.88x before debt service for dividends of 5.695 pence per share paid during
the year. Cash dividend cover has been calculated on a cash basis of income
received by the Company and its immediate subsidiary.
The target dividend for the year from 1 January 2025 has been increased by
2.6% to 2.95(12) pence per ordinary share. On a three year average basis,
future dividend cover is expected to exceed 1.15x.
The Board has resolved to pay the Company's fourth interim dividend of the
year of 1.45 pence per share, equivalent to £2.5 million, in respect of the
three months to 31 December 2024. This will bring total dividends paid in
respect of the financial year to 5.80 pence per share, which is in line with
the Company's dividend guidance. The fourth interim dividend is not reflected
in the accounts to 31 December 2024.
The Company has chosen to designate part of each interim dividend as an
interest distribution for UK tax purposes. Shareholders in receipt of such a
dividend will be treated for UK tax purposes as though they have received a
payment of interest in respect of the interest distribution element of this
dividend. This will result in a reduction in the corporation tax payable by
the Company.
Dividends in respect of the financial year to 31 December 2024 are as follows:
For the Period Ended Dividend Paid No. of Shares Total Dividend (pence per share) Interest Element (pence per share) Dividend Element (pence per share)
March 2024 June 2024 177,092,226 1.45 1.0875 0.3625
June 2024 September 2024 174,426,751 1.45 1.0875 0.3625
September 2024 December 2024 171,867,888 1.45 1.16 0.2900
December 2024 March 2025 171,387,889 1.45 1.2325 0.2175
The Company intends to continue to pay dividends on a quarterly basis, with
dividends typically declared in respect of the quarterly periods ending March,
June, September and December. Payment of the relevant dividend declared is
expected be made within three months of the relevant quarter end.
(12)The dividend and return targets stated above are targets only and not
profit forecasts. There can be no assurance that these targets will be met, or
that the Company will make any distributions at all and they should not be
taken as an indication of the Company's expected future results.
Net Asset Value and Portfolio Valuation
The Company's NAV decreased by 5.7% during the year from £212.1 million to
£199.9 million. The NAV movement comprised a positive contribution of £10.2
million from valuation gains, offset by dividends and share buybacks of £17.1
million combined, and management and other costs of £5.2 million.
At a per share level, the effect of the share buyback was to increase the NAV
per share by 1.8 pence, partially offsetting the overall NAV per share
decrease of 0.8% from 117.7 pence per share to 116.7 pence per share as at 31
December 2024.
The bridge below shows the movement in NAV during the period, with each step
explained further below.
NAV Movement Bridge (£)
Opening NAV (1-Jan-24) 212.1m 117.6p
Performance 10.3m 5.7p
Power Curve -3.2m -1.8p
Inflation -0.5m -0.3p
FX 1.1m 0.6p
Acquisition 0.5m 0.3p
Other 2.0m 1.1p
Dividend -10.0m -5.6p
Share Buybacks -7.1m 1.8p
Management Fee -2.0m -1.1p
Other Costs -3.2m -1.8p
Closing Nav (31-Dec-24) 199.9m 116.7p
Opening
Represents the NAV at 31 December 2023.
Performance(13)
Represents the difference between the expected performance, and actual
performance of the portfolio companies throughout the year.
Power Prices(13)
The Company uses long-term, forward-looking power price forecasts from third
party consultants for the purposes of asset valuations. In the UK an equal
blend is taken from the most recent central case forecasts from two leading
consultants, whilst in Sweden an equal blend is taken from the most recent
central case forecasts from three leading consultants. This is then blended
with actual pricing for forward market trades for the next four years in
Sweden and the next three years in the UK enabling a more holistic view of the
power market to be included in the valuation. Where fixed price arrangements
are in place, the financial model will reflect this price for the relevant
time frame. The impact of our short-term power hedging strategy is also
included in this step.
The consultant power price forecasts that are used in the valuations are set
out in the full Annual Report, alongside a comparison against the last
reporting period.
Inflation(13)
2025 inflation forecasts were revised during the period reflecting the
increasing rate of inflation and in line with a consensus of over 50
forecasting bodies.
The Group is now using a near-term (calendar year 2025) RPI inflation forecast
of 3.30% for the purposes of UK asset valuations, falling to a medium-term
inflation forecast of 3.00% from 2026. From 2030 onwards, this forecast
reduces to 2.25% in line with the RPI reform announced by the UK Government.
A near-term inflation (calendar year 2025) forecast of 1.9% is applied to euro
denominated revenues, whereas SEK denominated costs are inflated by 2.0%. For
both currencies, the forecast in the medium term (2026 onwards) to long term
remains at 2.0%, in line with the long term Swedish central bank's target
inflation rate.
Models are updated quarterly to reflect historic inflation.
FX(13)
The impact of foreign exchange movements on underlying investment valuations.
The impact of the foreign exchange hedging activity is included in this
movement.
Cashflows from assets that are generated in a non-sterling currency are
converted in each period they are earned using the actual hedges in place,
with the residual amounts converted at the relevant exchange rate.
The relevant exchange rate is taken from a forward curve provided by the
Company's foreign exchange advisors for four years, at which point the
exchange rate is held constant due to the impracticalities of hedging currency
further into the future.
Other items reflect changes to the underlying valuations as a result of
changes to long-term capital expenditure assumptions and long-term debt
pricing, along with other minor changes including increases relating to
improved spot rates and impact from increasing the size of the facility.
Acquisitions(13)
The difference between the original cost of an investment and the revaluation
of that investment throughout the year.
Dividends
Distributions paid by the Company in the period.
Share buybacks
This is the cost of repurchasing shares in the market.
Management Fee
Fees charged to the Company by the Investment Manager.
Other costs and charges
Charges incurred by the Company, and its immediate subsidiary DORE Hold Co
Limited, in its normal operations. No transaction costs are included. Includes
cost of borrowing related to the RCF.
(13) This is a component of the Fair Value of Investment.
Asset Life
Where the land is owned by an external landlord, which is the case for the UK
solar and Icelandic Hydro, asset operations have been modelled to the earlier
of the expiry of the planning or permit, and the lease agreement. As well as
these factors, life assumptions are also capped at the useful economic life of
the specific equipment installed on site.
An average useful economic life of 25 years is used for the UK solar
portfolio. It is noted that over the last few years the market has started to
assign economic value to years 25-40 for solar assets, where lease and
planning arrangements allow. DORE has and will continue to explore
opportunities with local councils and landlords to extend existing planning
permissions and lease agreements. In several cases this has been successful
and extensions to planning permission have been granted.
Where the land is owned with the asset, which is the case for the Swedish
hydro assets, there are no constraints in terms of lease agreements that need
to be considered in the valuation. Also, due to the nature of hydro as an
asset class, the assets have a very long life assuming an appropriate level of
capex to maintain the equipment and dams etc.
Portfolio Valuation Sensitivities
The NAV reflects the fair market valuation of the Company's portfolio based on
a discounted cash flow analysis over the life of each of the Group's assets
plus the cash balances of the Company and its holding Company and other cash
and working capital balances in the Group.
The portfolio valuation is the largest component of the NAV, and the key
sensitivities to this valuation are considered to be the discount rate and the
principal assumptions used in respect of future revenues and costs.
A broad range of assumptions are used in the Company's valuation models. These
assumptions are based on long-term forecasts and are generally not affected by
short-term fluctuations in inputs, whether economic or technical.
The Investment Manager exercises its judgement and uses its experience in
assessing the expected future cash flows from each investment.
The impact of changes in the key drivers of the valuation are set out below.
Discount Rate
The weighted average discount rate of the portfolio at 31 December 2024 was
8.0% (2023: 7.7%).
The Investment Manager considers a variance of plus or minus 1.0% is to be a
reasonable range of alternative assumptions for discount rates.
Energy Yield / Availability
For the solar assets, our underlying assumption set assumes the so called P50
level of electricity output based on reports by technical advisors. The P50
output is the estimated annual amount of electricity generation that has a 50%
probability of being exceeded and a 50% probability of being underachieved.
For hydropower assets, the expected annual average production is applied to
the valuation, similar to the P50 assumption applied to solar assets. Given
the long operational record of the hydropower assets, the annual production
forecast is derived from historic datasets and validated by technical
advisors.
Grid infrastructure assets do not generate energy. For Mersey, a shunt
reactor, availability is used as a comparable sensitivity. Blasjon is not
dependent on availability, as the regulator sets the total revenue cap and
therefore its result does not vary in this sensitivity.
The Energy Yield sensitivities uses a variance of plus or minus 5% applied to
the generation.
Price
The power price sensitivity assumes a 10% increase or decrease in power prices
relative to the base case for each year of the asset life.
While power markets can experience volatility in excess of plus or minus 10%
on a short-term basis, the sensitivity is intended to provide insight into the
effect on the NAV of persistently higher or lower power prices over the whole
life of the portfolio, which is a more severe downside scenario.
Grid infrastructure assets do not generate energy and are therefore not
reliant on power prices. Mersey is reliant on a contract with National Grid
which is currently in place until 2032. After this agreement expires the price
is unknown; pricing after 2032 has been sensitised relative to the base case.
Blasjon is reliant on the WACC assumption which is set by the regulator and
drives the regulatory cap. The WACC assumption can be used as a comparable
sensitivity for pricing.
Inflation
The Company's inflation assumptions are set out above. A long-term inflation
sensitivity of plus and minus 1.0% is presented below.
Foreign Exchange
The Company's foreign exchange policy is set out above. A sensitivity of plus
and minus 10% is applied to any non-hedged cashflows derived from non-sterling
assets. The Company will also try to ensure sufficient near-term
distributions from any non-sterling investments are hedged.
NAV Movement (PPS)
Negative directional change to assumption Positive directional change to assumption
FX (+/-10%) -3.08 5.87
Inflation (+/-1%) -7.93 8.76
Power Prices (+/-10%) -10.08 10.29
Generation (+/-5%) -9.28 9.15
Discount rate (+/-1%) 13.43 -11.28
Non-Statutory Accounts
The financial information set out below does not constitute the Company's
statutory accounts for the year ended 31 December 2024 but is derived from
those accounts. Statutory accounts for the year ended 31 December 2024 will be
delivered to the Registrar of Companies in due course. The Auditor has
reported on those accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the Auditor drew attention by way
of emphasis without qualifying their report and (iii) did not contain a
statement under Section 498 (2) or (3) of the Companies Act 2006. The text of
the Auditor's report can be found in the Company's full Annual Report on the
Company's website at:
https://www.doretrust.com/investor-relations
(https://www.doretrust.com/investor-relations)
Statement of Comprehensive Income
For the year from 1 January 2024 to 31 December 2024
Revenue Capital Total Revenue Capital Total
Notes* 31 December 2024 31 December 2024 31 December 2024 31 December 2023 31 December 2023 31 December 2023
£'000s £'000s £'000s £'000s £'000s £'000s
Income
Return on investment 5 10,888 (2,702) 8,186 10,872 (564) 10,308
Total income 10,888 (2,702) 8,186 10,872 (564) 10,308
Expenses
Investment management fees 4 (1,967) - (1,967) (2,043) - (2,043)
Directors' fees 18 & 22 (164) - (164) (150) - (150)
Other expenses 6 (1,082) - (1,082) (1,191) - (1,191)
Total expenses (3,213) - (3,213) (3,384) - (3,384)
Profit before taxation 7,675 (2,702) 4,973 7,488 (564) 6,924
Taxation 7 - - - - -
Profit after taxation 7,675 (2,702) 4,973 7,488 (564) 6,924
Profit and total comprehensive income attributable to:
Equity holders of the Company 7,675 (2,702) 4,973 7,488 (564) 6,924
Earnings per share - Basic & diluted (pence) 8 4.4 (1.5) 2.9 4.1 (0.3) 3.8
The total column of this statement is the Statement of Comprehensive Income of
the Company prepared in accordance with UK-adopted international accounting
standards. The supplementary revenue return and capital columns have been
prepared in accordance with the Association of Investment Companies Statement
of Recommended Practice (AIC SORP).
Statement of Financial Position
As at 31 December 2024
31 December 2024 31 December 2023
Notes* £'000s £'000s
Non-current assets
Investments at fair value through profit and loss 9 199,517 212,030
199,517 212,030
Current assets
Trade and other receivables 10 416 337
Cash and cash equivalents 15 778 1,778
1,194 2,115
Total assets 200,711 214,145
Current liabilities
Trade and other payables 11 (782) (2,083)
(782) (2,083)
Total liabilities (782) (2,083)
Net assets 199,929 212,062
Capital and reserves
Called up share capital 12 1,846 1,846
Share Premium 65,910 65,910
Special distributable reserve 13 99,717 107,341
Treasury Account (11,172) (4,065)
Revenue reserve 11,509 6,209
Capital reserve 32,119 34,821
Shareholders' funds 199,929 212,062
Net asset value per ordinary share (pence) 14 116.65 117.65
The audited financial statements of Downing Renewables & Infrastructure
Trust PLC, which can be found in the full Annual Report, were approved by the
Board of Directors and authorised for issue on 25 March 2025 and are signed on
behalf of the Board by:
Hugh W M Little
Chair
Company registration number 12938740
Statement of Changes in Equity
For the year ending 31 December 2024
Share Capital Share Premium Capital Reserve Treasury Account Revenue Reserve Special Distributable Reserve Total
Notes* £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Net cash attributable to shareholders at 31 December 2022 1,846 65,910 -
35,385 1,140 114,618
218,899
Shares bought back - - - (4,065) - - (4,065)
Dividends - - - - (2,419) (7,277) (9,696)
Total comprehensive income for the year - - (564) - 7,488 -
6,924
Net assets attributable to shareholders at 31 December 2023 1,846 65,910 34,821 (4,065) 6,209 107,341 212,062
Shares bought back 12 - - - (7,107) - - (7,107)
Dividends 20 - - - - (2,375) (7,624) (9,999)
Total comprehensive income for the year - - (2,702) - 7,675 - 4,973
Net assets attributable to shareholders at 31 December 2024 1,846 65,910 32,119 (11,172) 11,509 99,717 199,929
The Company's distributable reserves consist of the Special distributable
reserve, Capital reserve attributable to realised capital gains and Revenue
reserve. There have been no realised gains or losses at the reporting date.
Total reserves available for distribution were £111,226k (2023: £113,897k).
Statement of Cash Flows
For the year ending 31 December 2024
Year to Year to
Notes* 31 December 2024 31 December 2023
£000s £000s
Cash flows from operating activities
Profit before taxation 4,973 6,924
Adjusted for:
Interest income 5 (9,888) (9,872)
Unrealised loss on investments at fair value 5 2,702 564
(Increase)/Decrease in receivables (79) 230
(Decrease)/Increase in payables (1,302) 221
Loan Interest Received 9 9,490 11,500
Net cash outflows from operating activities 5,896 9,567
Cash flows from investing activities
Loan advanced to DORE Holdco Limited 9 - (17,356)
Loan repaid by DORE Holdco Limited 9 10,210 -
Net cash inflow/(outflows) from investing activities 10,210 17,356
Cash flows from financing activities
Amounts paid in respect of share buybacks (7,107) (4,065)
Dividends paid 20 (9,999) (9,696)
Net cash flows from financing activities (17,106) (13,761)
Decrease in cash and cash equivalents (1,000) (21,550)
Cash and cash equivalents at the start of the year 1,778 23,328
Cash and cash equivalents at the end of the year 15 778 1,778
*The references to the Notes to the Financial Statements are available to view
in the full Annual Report.
National Storage Mechanism
A copy of the Annual Report in full unedited text will be submitted shortly to
the National Storage Mechanism ("NSM") and will be available for inspection at
the NSM, which is situated at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) in accordance with
DTR 6.3.5(1A) of the Financial Conduct Authority's Disclosure Guidance and
Transparency Rules.
ENDS
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