Downing Renewables & Infrastructure Trust declares dividend of 1.25p

11:09, 13th May 2022

Downing Renewables & Infrastructure Trust (DORE Follow | DORE) said its unaudited NAV was £150.9m or 110.1 pence per share as at 31 March 2022 - an increase of 6.4% from the previous quarter amid accretive acquisitions, increasing power prices, inflation and a solid financial performance.

Downing Renewables & Infrastructure Trust declares dividend of 1.25p

Downing Renewables & Infrastructure Trust (DORE) said its unaudited NAV was £150.9m or 110.1 pence per share as at 31 March 2022 - an increase of 6.4% from the previous quarter.

As a result of its performance, the Board has now declared an interim dividend in respect of the period from 31December 2021 to 31 March 2022 of 1.25 pence per Ordinary Share.

The closed-end investment trust outlined that including the 1.25 pence per share dividend paid during the quarter, the Company’s NAV total return for the period was 7.6%. By contrast, Downing’s NAV as at 31 December 2021 which was £141.8 million or 103.5 pence per share.

The Company says the increase in NAV during the period was attributable to several factors including accretive acquisitions, increasing power prices, inflation and financial performance.

Downing, which holds a diversified portfolio of renewable energy and infrastructure assets in the UK and Northern Europe, completed three acquisitions in 1Q, all of which were accretive.

The acquisitions comprised two river-run hydro portfolios located in the SE2 and SE3 pricing areas in central Sweden with c.48 GWh of average annual production, which accounted for £3.1 million (2.3pps) of the NAV uplift and an operational 46 MWp onshore wind project located in north-east Sweden, which accounted for £2.2 million (1.6pps) of theNAV uplift.

An agreement to acquire two further hydropower plants located in Sweden’s southern SE4 pricing region with an aggregate forecast annual production of c.18 GWh p.a. was entered into after the end of the quarter ending 31 March 2022 and it has since been completed.

Downing said hydropower, which is often overlooked as a source of renewable energy, is expected to be a key part of the energy transition “as it is possible to store water in reservoirs and use this to produce energy when supply from renewable sources elsewhere is low.”

The investment manager explained that this helps to reduce price volatility, mitigate price capture risk and maximise the value of the energy stored for end users and investors.

An increase in forecast future power prices contributed to £2.9m (2.1pps) of the NAV uplift.  UK outturn RPI for the

March quarter was 1.8%, considerably in excess of the Investment Manager’s annualised valuation assumption of 2.75% for the third successive quarter.

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2022 inflation forecasts have been increased to 7.8%, up from 2.75% in the UK, and 4% in Sweden, up from 1.8%.

Downing said this adjusted inflation forecasts contributed to £2.9 million (2.1pps) of the NAV uplift and that inflation assumptions beyond 2023 are unchanged.

During the quarter, the company’s financial performance came in above expectations and contributed to £0.5 million (0.4pps) of the overall NAV uplift. The Company cited the UK solar portfolio as a valuable factor, with generation and operating profit both c.14% above budget.

While Downing’s hydro and wind portfolio came below target generation and operating profits were also £0.2 million below budget, this was offset by a strong solar performance, it noted.

Downing says this morning’s declared interim dividend of 1.25 pence will be paid on or around 30 June 2022 to shareholders on the register on 27 May 2022. The Board is also targeting dividend payments totalling 5p per share for the financial year ending 31 December 2022.

Chairman, Hugh Little, Chairman, stated: “We are very pleased to provide a strong positive quarterly performance and significant NAV uplift, driven mainly by three accretive acquisitions completed during the period and positive movements in power price and inflation forecasts.

He commented: “Given the continuing increases in power prices since the quarter end, we believe that the Company will continue to benefit from the positive pricing tailwinds.

He added that Downing is considering the issue of new shares to raise additional capital to take advantage of this pipeline, “which should enhance the diversity of DORE’s portfolio.”

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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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