Downing Renewables & Infrastructure Trust (DORE ) announced today interim results for the 6 months ended 30 June 2022 (H1 2022).
Operational highlights
Downing successfully raised £52.9m during the period through the issue of 47.6m shares at 111p/share. It deployed £57m through the completion of four investments.
The company acquired two hydropower plants in central Sweden for £20.1m: a 12GWh/year portfolio located in the SE3 electricity pricing zone, and a 36GWh/year portfolio SE2 zone. Downing also acquired two plants in southern Sweden (SE4) for £17m, with a combined forecast portfolio of 18GWh.
Additionally, Downing diversified its renewables portfolio with the acquisition of an operational 46 MW (108GWh/year) onshore wind farm located in northeastern Sweden for £19.8m.
Financial highlights
Downing's NAV was £214m as of 30 June 2022, equal to 115.9p/share, up 12.4p/share compared to its NAV on 31 December 31 2021. NAV total return was 14.1% for the referenced 6 month period, and 23.2% since IPO.
The interim dividend was 2.5/p during the period, and a further 1.25p/share declared (but not accrued) relating to the 3 months to June 2022, to be paid later this month.
Hugh Little, Chair, commented:
"We are delighted with what we have achieved in the first half of the year, both in terms of the performance of the assets and the quality of the acquisitions completed. In particular we are pleased to have introduced wind power to the portfolio, which further diversifies our energy generation in line with our investment strategy. The market response to our fundraise was very encouraging. We believe we are well-placed to deploy the remaining capital as we continue to review a strong pipeline of potential acquisitions that will drive efficiencies and help deliver a consistent income stream as the portfolio becomes more diversified. We look forward to updating the market to this effect in due course."
View from Vox
Downing's portfolio generated an impressive 172 GWh of renewable energy in H1 2022, avoiding 80.9 tonnes of CO2 and powering the equivalent of 59,400 UK homes for a year. As Europe struggles to tame soaring gas prices and accelerates commitment to renewables, Downing's diversified portfolio is well-positioned for continued growth. The increase in Downing's NAV during the period was driven primarily by accretive acquisitions, increased energy prices, and inflation.
Downing's £57m investments in hydro and wind generated strong cash flows in H1, with solar and wind coming in ahead of expectations. The company is committed to diversification to ensure stability of income, and is progressing on a pipeline of wind, hydro, solar, and utilities in lower price zones in the UK and Nordic countries.
Downing does not expect inflation to affect its costs significantly, as the renewables sector typically has low operating costs and high EBITDA margins. Inflation has had a considerable impact on the company's revenues, however, especially in the UK where it has a number of solar assets benefiting from long-term subsidies linked to the RPI. Overall, inflation was a major driver of Downing's NAV increase during the period.
Downing intends to continue increasing the size of its portfolio over time through the issue of further shares. Such future placements will be priced at a premium to the prevailing NAV and be dependent on demand from investors and availability of pipeline investments, the company said. Currently, Downing is well-funded and plans to deploy the remainder of capital raised in June 2022 in the near term.
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