REG - Downing Renew& Infra - Net Asset Value and Operational Update

Downing Renewables & Infrastructure TrustAnnouncement

25/11/2024 07:00

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RNS Number : 4175N  Downing Renewables & Infrastructure  25 November 2024

25 November 2024

 

Downing Renewables & Infrastructure Trust plc

Net Asset Value and Operational Update

 

The Board of Downing Renewables & Infrastructure Trust plc (the "Company"
or "DORE") is pleased to announce that the Company's unaudited Net Asset Value
("NAV") as at 30 September 2024 was £202.6 million or 117.3 pence per share
("pps") as at 30 September 2024. This is a decrease of 0.5% from the Company's
NAV per share as at 30 June 2024 (£207.6 million or 117.9pps) which also
takes into account the payment of the £2.5m (1.45pps) quarterly dividend.

 

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

 

·      Portfolio performance (+£1.3m, +0.6pps);

·      Update to the long-term power price forecasts (+£2.2m, +1.3pps);

·      Inflation (-£1.4m, -0.8pps);

·      Share buybacks (-£2.6m, +0.7pps);

·      Dividend (-£2.5m, -1.4pps); and

·      Other movements (-£2.0m, -1.1pps).

 

As at 30 September 2024 the Company's GAV was £342.0 million (30 June 2024:
£347.8 million).

 

Operational Performance

 

Energy generation was 6.7% higher than expected overall. Higher generation in
the hydropower and wind portfolios was marginally offset by lower than
expected generation across the solar assets.

 

The grid infrastructure saw slightly higher revenues than expected but lower
than expected power pricing in Sweden resulted in operating profits being 9%
lower than budgeted.

 

Power Prices and Inflation

 

The increase in forecast future power prices generated a £2.2 million
(+1.3pps) increase in NAV, with the majority of the impact felt in the Swedish
hydropower.

 

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

 

 

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

 

 

 

 

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

 

 

The Company continues to manage exposure to merchant power pricing effectively
with 65% of the Company's UK revenues fixed for the next 10 years (39% of the
Company's total revenues fixed for that period).

 

As part of the 30 September 2024 valuation, the inflation forecasts for 2024
and 2025 have been updated to align with the latest market consensus. The full
year expectations for the RPI rate remained unchanged for 2024, with 2025
expectations moderately increasing. CPI expectations are slightly increased
for  both 2024 and 2025. Swedish CPI rates for both 2024 and 2025 remained
unchanged. Lastly, expectations for the European CPI rate for 2024 have been
reduced, however they remain unchanged for 2025.

 

Discount rates

 

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

 

Hydropower portfolio

 

DORE is delighted to announce that the previously announced acquisition of
three hydropower plants, Hagby, Gyttorp and Hammarby, occurred on 21(st)
November 2024 . DORE now has 37 assets within the hydropower portfolio with a
forecast annual average production of c. 222 GWh.

 

Wind portfolio

 

Generation in the wind portfolio was 23% ahead of budget, however this was
offset by materially lower than budgeted prices.

Grid portfolio

During the quarter, the investment manager's in-house asset management team
created additional value to the portfolio by renegotiating the Mersey shunt
reactor contract, which drove a 30% uplift to long term contracted revenues.
Additionally, Blåsjön's real WACC for this regulatory period increased to
4.5%, up from 3.6%, resulting in increased future revenues for DORE.

 

Tom Williams, Partner, Head of Energy and Infrastructure at Downing LLP,
commented:

"Our focus continues to be on capital allocation and value creation and in
particular we are pleased to see further value through portfolio enhancements
realised in this quarter's NAV.  We are also pleased with the Company's
recent hydropower acquisitions which provide further opportunities to create
value for shareholders through our digitalisation and revenue optimisation
programme. Portfolio assets continue to perform well with energy generation
ahead of expectations albeit in challenging power price conditions. "

 

 

 

ENDS

 

LEI: 2138004JHBJ7RHDYDR62

 

Contact

 

 

 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

 Henry Crane                                                         +44 (0)7918 207157

                                                                     DORE@cardewgroup.com (mailto:DORE@cardewgroup.com)

About Downing Renewables & Infrastructure Trust plc

 

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'.

 

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 (http://www.doretrust.com/) .

 

About Downing

 

Downing is a responsible investment manager established in London in 1986.
We currently manage £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, we are focussed on creating a
sustainable future, our key investment areas are renewable energy,
infrastructure, property and healthcare.

 

Downing has c.80 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.

 

 

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