TIDMDORE
RNS Number : 4710K
Downing Renewables & Infrastructure
02 September 2021
2 September 2021
Downing Renewables & Infrastructure Trust plc
("DORE" or "the Company")
Interim Report and Accounts
Downing Renewables & Infrastructure Trust plc (LSE: DORE)
announces its results for the period ended 30 June 2021.
Financial Highlights
-- Successfully raised gross proceeds of GBP122,500,000 through
a placing, an offer for subscription and an intermediaries offer at
an issue price of 100 pence per ordinary share at IPO
-- Net asset value ("NAV") of 100.2 pence per share, up 2.2
pence per share compared to the NAV immediately post IPO of 98
pence per share
-- Interim dividend per ordinary share of 1.0 pence declared
relating to the period from Admission to 30 June 2021, in line with
previous guidance
-- Target dividend from 1 July 2021 onwards has been increased
to 5 pence per share per annum(1)
Operational Highlights
-- Completion of two investments, investing GBP102 million (83%
of IPO proceeds) ahead of expectations indicated at IPO:
o portfolio of eight operational hydropower plants in central
and southern Sweden for EUR 65 million (GBP60 million); and
o a 96MWp portfolio of UK Solar PV assets for GBP42 million.
-- Portfolio generation of 101,211 MWh, 6.6% above expectations.
Strong performance meant operating profit of investments was 14.4%
above expectations
-- Strong pipeline of assets for future growth in the
hydropower, wind, solar and battery space, including the Lake V ä
nern Wind Project in Sweden announced 15 January 2021 and the
hydropower plants and electricity distribution assets from AB
Edsbyn Elverk
Hugh Little, Chair of DORE plc, said; "I am very pleased to
report strong portfolio performance, which has been driven by power
generation of the assets exceeding expectations and the
strengthening of long-term power prices. The combination of UK
solar and Swedish hydropower assets, whose generation and revenue
profiles show little correlation to one another, highlight the
benefits of the Company's diversification strategy which aims to
increase stability and reliability of returns to shareholders. As a
result, NAV has increased by 2.33% to 100.2p.
"The Company set out a dividend target of three interim
dividends totalling 3 pence per share for the period from IPO to 31
December 2021, rising to a target annualised dividend yield of 5%
for the financial year to 31 December 2022, with a progressive
dividend policy thereafter. Due to the rapid deployment of the IPO
proceeds and the strong performance of the assets, I am also
pleased to announce t he intention to increase the dividend to 5
pence per share for the year to 30 June 2022, representing a
dividend of 1.25 pence for the quarter ending September 2021 and
thereafter.(1)
"The Board is pleased with the progress made to date and,
alongside the Investment Manager, will continue to explore
opportunities for further value enhancement across the solar and
hydro portfolio. With 83% of the IPO proceeds now deployed, the
Company is considering an equity raise to fund further investments
and should it decide to proceed with an equity raise, a further
announcement with details will be made in due course."
Tom Williams, Partner, Head of Energy and Infrastructure at
Downing LLP, commented : "We are delighted with the strong
performance of the Company during the period. The majority of the
proceeds from the IPO were deployed quickly and the rate of
deployment remains ahead of expectations. The assets acquired are
of high quality and offer the diversification of technology,
geography and power market exposure that is central to the aims of
the Company. We believe we are very well placed to access
investments and pipeline that will take full advantage of DORE's
diversified strategy and allow the Company to grow to a level that
will meet its ambitions."
1. The dividend 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.
Contact details:
Downing LLP - Investment Manager to the Company
+44 (0)20 3954
Tom Williams 9908
Singer Capital Markets - Corporate Broker
Robert Peel, Alan Ray, Alaina Wong, Asha Chotai
(Investment Banking)
Sam Greatrex, Alan Geeves, James Waterlow, +44 (0)20 7496
Paul Glover (Sales) 3000
TB Cardew - Public relations advisor to the +44 (0)20 7930
Company 0777
Ed Orlebar +44 (0)7738 724
Tania Wild 630 / +44 (0)7425
536 903
DORE@tbcardew.com
About Downing Renewables & Infrastructure Trust plc
(DORE)
DORE is a closed-end investment trust that aims to provide
investors with an attractive and sustainable level of income, with
an element of capital growth, by investing in a diversified
portfolio of renewable energy and infrastructure assets in the UK
and Northern Europe. DORE has been awarded the London Stock
Exchange's Green Economy Mark in recognition of its contribution to
the global 'Green Economy'.
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
LEI: 2138004JHBJ7RHDYDR62
About Downing LLP
Downing LLP is a London-based investment management firm. It has
over 25,000 investors and has raised over GBP1.7 billion into
businesses across a range of sectors, from renewable energy, care
homes, health clubs, and children's nurseries, to technology and
sports nutrition. Downing has a demonstrable track record in
renewables, having made 133 investments into solar parks, wind
farms and hydroelectric plants since 2010.
For further details please visit www.downing.co.uk
Key Metrics
As at 30 June 2021
Market capitalisation GBP122.2 million
---------------------------------
Share price 99.75 pence per share
---------------------------------
Dividends approved with respect GBP1,225,000, equating to 1
to the period pence per share
---------------------------------
NAV GBP122.8 million
---------------------------------
NAV per share (pence) 100.2
---------------------------------
Environmental Performance Generation from the 3,254 assets
avoided 46,815 tonnes of CO(2)
and powered the equivalent of
83,783 homes
---------------------------------
Investment strategy
-- Deliver sustainable returns through diversification by
geography, technology, revenue and project stage
-- Target dividends: paid quarterly from September 2021: 5 pence
per share for the year to 30 June 2022, progressive policy
thereafter
-- Target total return on NAV: 6.5%-7.5% p.a. over the medium to long term
Investment policy summary
-- Build a diversified portfolio: of solar, hydro, wind,
geothermal and other infrastructure assets, with a focus on core
renewables and infrastructure projects in UK and Northern
Europe
-- Active asset management: aim to optimise asset operations,
data analysis and investor returns
-- Risk management: manage resource seasonality, market power
price exposure and regulatory risks to aim for more stable
returns
-- Geographical split: no more than 60% of Gross Asset Value in
assets will be located in either the UK or Northern Europe and
Ireland combined
The Company's full investment policy can be found in the
prospectus dated 12 November 2020 (the "Prospectus").
Chairman's Statement
On behalf of the Board, I am pleased to present the first
interim report of Downing Renewables & Infrastructure Trust PLC
covering the period since incorporation on 8 October 2020 to 30
June 2021 (the "Interim Report").
Initial Public Offering
On 10 December 2020 the Company's ordinary shares were admitted
to trading on the premium segment of the Main Market of the London
Stock Exchange following the Company's IPO. The IPO raised gross
proceeds of GBP122.5 million through which we were delighted to
welcome a very broad range of shareholders to the register.
Acquisitions
Our investment strategy is to invest in a diversified portfolio
of hydro, solar, wind, geothermal and other infrastructure assets
across the UK, Ireland and Northern Europe. The Company's ability
to invest in projects in these varying geographies and differing
technologies, with different asset lives and yield profiles, aims
to achieve a diversified set of long term, resilient and stable
revenues.
Investing in different technologies reduces our reliance on any
given natural resource and provides exposure to assets with
different economic lives. For instance, some assets such as our
Swedish hydropower plants can have very long lives if maintained
properly (more than 100 years), whereas assets such as solar or
wind projects can have much shorter lives (around 25-35+
years).
Investing across different geographies enables us to take
advantage of different natural resources and diversifies risk
across different energy markets, governmental policies and
regulatory regimes.
I am very pleased to report that the Investment Manager has made
great progress in deploying the IPO proceeds. Since incorporation
the Company has completed the acquisition of two portfolios, which
together accounted for 83% of the net IPO proceeds. Alongside these
acquisitions, the Company has also entered into two exclusivity
agreements in relation to future acquisitions. Further information
on these can be found in the Investment Managers Report below.
The combination of assets such as UK solar and Swedish
hydropower, whose generation and revenue profiles show little
correlation to one another, highlight the benefits of the Company's
diversification strategy which aims to increase stability and
reliability of returns to shareholders.
Health and Safety
The health and safety of our contractors and the public is a
fundamental part of our ESG activities, which are detailed below.
Throughout the period a range of work streams were completed with
the aim of further strengthening the Company's and Investment
Manager's approach to Health and Safety management.
A dam safety framework was established to ensure effective
management of the risks surrounding hydropower activities and
classified dams in Sweden. The framework, which is based on
industry best practice, focusses on regular inspections, the
expertise of operators and the frequency and content of
reporting.
Health and Safety audits are underway across the portfolio. The
Investment Manager has a process of continuous assessment and
feedback of site level and operator practices, ensuring effective
management systems are in place and adhered to.
Finally, the Company's incident monitoring process continues
across the portfolio to ensure effective communication, escalation,
and management of incidents.
Results
Over the period since IPO the NAV per ordinary share has
increased from 98 pence at admission (after costs) to 100.2 pence
at 30 June 2021. This increase reflects the net earnings and the
valuation uplift of both our hydropower and solar assets following
strong operational performance and increases in long term power
price forecasts.
The portfolio assets have generated revenues of GBP8.5 million
in the period from acquisition to 30 June 2021. The portfolio did
not distribute any amounts to the Company by way of dividends,
shareholder loan repayments or interest and as such the cash
generated was retained within the portfolio at period end and forms
part of the overall asset valuations.
The Company made a profit for the period from incorporation to
30 June 2021 of GBP2.8 million, resulting in an earnings per
ordinary share of 2.96 pence per share.
Portfolio Performance
The Board is pleased by the strong performance of the portfolio.
Generation has exceeded expectations (being the budget figures used
when acquiring the assets) by 6.6% and, in addition to strong
generation performance, the Company has benefited from
strengthening power prices in both jurisdictions, particularly
Sweden. Together, these factors have driven a significant increase
in revenue and cashflow over expectations.
Dividends and Returns
At IPO, the Company set out a dividend target of three interim
dividends totalling 3.0 pence per share in respect of the financial
period from IPO to 31 December 2021, rising to a target annualised
dividend yield of 5% in respect of the financial year to 31
December 2022 Thereafter, the Company intended to adopt a
progressive dividend policy.
The Board is pleased to have announced the declaration of an
interim dividend of 1 pence per share for the period from IPO to 30
June 2021. The dividend will be paid on 30 September 2021 to
shareholders on the register on 10 September 2021. The ex-dividend
date is 9 September 2021.
Following the rapid deployment of the IPO proceeds and the
strong trading performance since the two portfolios were acquired,
the Board is pleased to announce it is increasing its dividend
guidance. Following payment of the first interim dividend of 1
pence per share for the period to 30 June 2021, the Company intends
to increase the dividend to 5 pence for the year to 30 June 2022
(representing a dividend per share of 1.25 pence for the quarter
ending September 2021 and thereafter).
As of 30 June 2021, the Company's NAV was GBP122.8 million,
representing an increase of 2.3% from the opening NAV at admission
to the London Stock Exchange on 10 December 2020.
The NAV represents 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. 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.
Outlook
The Board is pleased with the progress made to date and with the
two investments made by the Company. The Board, alongside the
Investment Manager's in-house asset management team, will continue
to explore opportunities for further value enhancement across the
solar and hydro portfolio.
The Investment Manager is currently exploring options to
optimise the existing capital structure of the portfolio.
Discussions are nearing completion around the implementation of a
revolving credit facility ("RCF"). The Investment Manager is also
in the process of implementing limited recourse project finance
debt secured against the Company's hydro projects.
Our Investment Manager continues to take a discerning approach
to pursuing investment opportunities that will deliver the greatest
value to shareholders. The Company is actively progressing several
hundreds of millions of pounds of pipeline opportunities.
Opportunities span such sectors as UK and Nordic Hydro, Wind, Solar
and Nordic Utilities and Essential Infrastructure. With 83% of the
IPO proceeds now deployed by the Investment Manager, the Company is
considering an equity raise to fund further investments. Should the
Company decide to proceed with an equity raise, a further
announcement with details will be made in due course.
I would like to thank my fellow Directors and our Investment
Manager for their efforts since the Company's IPO and I would like
to thank shareholders for their support of the Company, which I am
confident is well placed to deliver its investment objectives.
Hugh W M Little (Chair)
1 September 2021
Downing Renewables & Infrastructure Trust PLC
Portfolio
DORE owns 121MWp of hydropower and solar assets with an annual
generation of around 200GWh. The portfolio is diversified across
3,255 individual installations and across three different energy
markets.
Investment Technology Date Acquired Location Power Market Installed Expected
/ Subsidy capacity annual
(MW) generation
(GWh)
Älvadalen,
Ugsi Hydro Feb 2021 Sweden SE3 / n/a 1.8 10
----------------- -------------- ----------------- ------------- --------- -----------
Älvadalen,
Båthusströmmen Hydro Feb 2021 Sweden SE3 / n/a 3.5 14
----------------- -------------- ----------------- ------------- --------- -----------
steby Hydro Feb 2021 Torsby, Sweden SE3 / n/a 0.7 3
----------------- -------------- ----------------- ------------- --------- -----------
Fensbol Hydro Feb 2021 Torsby, Sweden SE3 / n/a 3.0 14
----------------- -------------- ----------------- ------------- --------- -----------
Rödbjörke Hydro Feb 2021 Torsby, Sweden SE3 / n/a 3.3 15
----------------- -------------- ----------------- ------------- --------- -----------
Väls Hydro Feb 2021 Torsby, Sweden SE3 / n/a 0.8 3
----------------- -------------- ----------------- ------------- --------- -----------
Torsby Hydro Feb 2021 Torsby, Sweden SE3 / n/a 3.1 13
----------------- -------------- ----------------- ------------- --------- -----------
Tvärforsen Hydro Feb 2021 Torsby, Sweden SE2 / n/a 9.5 37
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Sutton Bridge solar Mar 2021 Somerset, England UK / ROC 6.7 7
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount Hampshire,
Andover Airfield solar Mar 2021 England UK / ROC 4.3 4
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Kingsland Barton solar Mar 2021 Devon, England UK / ROC 6.0 6
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Bourne Park solar Mar 2021 Dorset, England UK / ROC 6.0 6
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount East Sussex,
Laughton Levels solar Mar 2021 England UK / ROC 8.3 9
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Deeside solar Mar 2021 Flintshire, Wales UK / FiT 3.8 3
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Redbridge Farm solar Mar 2021 Dorset, England UK / ROC 4.3 4
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Iwood solar Mar 2021 Somerset, England UK / ROC 9.6 9
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
New Rendy solar Mar 2021 Somerset, England UK / ROC 4.8 5
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount Carmarthenshire,
Redcourt solar Mar 2021 Wales UK / ROC 3.2 3
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount Hampshire,
Oakfield solar Mar 2021 England UK / ROC 5.0 5
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
Kerriers solar Mar 2021 Cornwall, England UK / ROC 10.0 10
----------------- -------------- ----------------- ------------- --------- -----------
Ground mount
RSPCA Llys Nini solar Mar 2021 Swansea, Wales UK / ROC 0.9 1
----------------- -------------- ----------------- ------------- --------- -----------
Commercial portfolio Rooftop Solar Mar 2021 Various, England UK / FiT 0.3 0
----------------- -------------- ----------------- ------------- --------- -----------
Various, England
Commercial portfolio Rooftop Solar Mar 2021 & Wales UK / ROC 5.2 4
----------------- -------------- ----------------- ------------- --------- -----------
Various, N.
Commercial portfolio Rooftop Solar Mar 2021 Ireland SEM / NIROC 0.7 1
----------------- -------------- ----------------- ------------- --------- -----------
Belfast, N.
Bombardier Rooftop Solar Mar 2021 Ireland SEM / ROC 3.6 3
----------------- -------------- ----------------- ------------- --------- -----------
Residential
Residential rooftop Various, N.
portfolio solar Mar 2021 Ireland SEM / NIROC 13.1 10
----------------- -------------- ----------------- ------------- --------- -----------
121.5 199
------------------------------------------------------------------------------------------ --------- -----------
Investment Manager's Report
We are delighted with the activity of the Company during the
period. DORE was admitted to the London Stock Exchange's Main
Market on 10 December 2020. On the same day, the Financial Times
reported that DORE's IPO "may have been the first entirely virtual
IPO in the Square Mile", with significant savings in emissions.
The majority of the proceeds from the IPO were deployed quickly
and the rate of deployment remains ahead of expectations. In
addition to deploying capital quickly, the assets acquired by the
Company are of high quality and offer the diversification of
technology, geography and power market exposure that is central to
the aims of the Company.
Acquisitions
During the period the Company completed the acquisition of two
portfolios and entered into two exclusivity agreements.
Downing Hydro AB
DORE completed its first investment in a portfolio of eight
operational hydropower plants located in central and southern
Sweden on 1 February 2021 for GBP59.9 million.
The eight hydropower plants are located across three different
rivers in Sweden in two different price zones, with an expected
annual average production of 108 GWh. The portfolio has a robust
operating track record spanning more than five decades.
An illustrative guide to how hydropower technology works can be
seen in the interim report.
The hydropower plants were acquired from Fortum, a Nordic
electricity company, with a transitional services agreement. The
Investment Manager has made solid progress to separate out from
Fortum all aspects of management of the plants, a process expected
to be completed before year end 2021.
Chalkhill Solar Portfolio
On 19 March 2021 DORE completed its first UK investment, the
acquisition of a portfolio of solar PV assets located across the
UK. The portfolio was acquired for a consideration of GBP42
million. The acquisition target, Chalkhill Life Holdings Limited,
was acquired with GBP67.9 million senior debt from Aviva and
GBP10.8 million debt from Blackrock.
The portfolio, described as the "Seed Assets" in the Prospectus,
comprises:
-- 13 ground-mounted sites located across mainland Great Britain totalling c.73 MWp;
-- 28 commercial rooftop assets totalling c.10 MWp; and
-- 7 residential rooftop portfolios in Northern Ireland totalling c.13MWp.
Exclusivity Arrangements
Wind Assets
The Company has entered into an exclusivity agreement in
relation to a proposed investment in a 100 MW nearshore, shallow
water wind farm. The wind farm is to be constructed in Lake Vänern
in southern Sweden and was developed by Cloudberry Clean Energy
AS.
The exclusivity agreement gives the Company the option to enter
into a commitment for the wind farm once certain conditions have
been met. Once these conditions have been met, DORE would own c.40%
of the project.
The 100 MW wind farm project in Lake Vänern is the second wind
farm on the lake and it is situated close to existing grid
infrastructure. It includes 16 turbines with an estimated annual
power production around 350 GWh, significantly strengthening the
access to clean and renewable energy in the region.
This project forms part of the renewable energy and
infrastructure pipeline identified in the Prospectus.
Nordic Utility and hydropower portfolio
In May 2021, the Company signed an exclusivity agreement with AB
Edsbyns Elverk ("EE"), a local Swedish multi-utility, to buy EE's
subsidiary Elektra Nät AB ("Elektra") and a portfolio of three
hydropower plants. Elektra is a local regulated electricity
distribution company in Edsbyn, central Sweden.
The Company has submitted an indicative bid in excess of SEK 300
million (approx. GBP25.5 million), whose confirmation is subject to
final due diligence by the Company and approval by EE shareholders.
At EE's AGM on 29 June 2021, shareholders approved continued
commercial negotiations with DORE, with a divestment decision to be
returned for shareholder approval. Since the AGM, EE has also
received an unsolicited approach for Elektra Nät AB from a third
party.
The hydropower and electricity distribution assets are in line
with the investment strategy and the possible acquisition of
Elektra will be the Company's first acquisition of a utility
company. EE's portfolio of three hydropower plants, with a total
annual generation of c.33GWh, complement DORE's current hydropower
assets in Sweden and are located nearby.
This proposed acquisition by the Company would further diversify
the Companys portfolio and revenue, with the addition of long-term
regulated revenues from Elektra that are not exposed to merchant
power prices.
Portfolio Performance
The Company took economic benefit of both portfolios from 1
February 2021. For the period of operations between 1 February and
30 June 2021 generation across the portfolio was 101.2 GWh, 6.6%
above expectations.
Downing Hydro AB performed strongly during the period, total
generation for the hydropower assets was; 52.9 GWh, 11.2% above
forecasts. The UK solar assets have performed slightly better than
expectations, achieving total generation of 48.3 GWh, 2.0% above
budget.
Hydro
The significant outperformance of the hydropower portfolio was
attributable to both strong plant availability and a favourable
combination of precipitation and reservoir levels during the
period.
In addition to the strong levels of generation, power prices
across Sweden were relatively high, partly due to the long periods
of cold weather and the permanent closure of a nuclear power
reactor in January 2021. The combination of strong generation and
high power prices meant that revenue was c. 40% higher than
expected during the period.
Operational expenditure was managed well which meant that
operating profit for the period exceeded expectations by GBP510k
(69.2%).
Operational performance was good throughout the period, despite
the Båthusströmmens plant experiencing some power grid interference
during April and May which in turn led to some generation
disruption.
The Investment Manager is progressing a refinancing of Downing
Hydro AB, expected to be concluded during the second half of
2021.
Solar
Total generation for the period was 48,263 MWh, 2.0% above
budget. Irradiation levels across the portfolio were on average
3.6% higher than expectations. The slight negative deviation
between irradiation and generation was mainly driven by small
isolated incidents.
Slightly higher than forecast generation across the solar
portfolio, as well as steady power prices and strong cost control,
resulted in a higher than forecast operating profit for the period
of 6.8%.
Dividend
The Board has resolved to pay an initial interim dividend of 1
pence per share equivalent to GBP1.225 million. The Company has
chosen to designate part of this interim dividend as an interest
distribution. The dividend will be paid as 0.5 pence per share as
an interest payment and 0.5 as an ordinary dividend. 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. The dividend is as per the stated target and will be paid
in accordance with the timetable below:
Approved: 01-September-21
Ex-dividend Date: 09-September-21
----------------
Record Date: 10-September-21
----------------
Payment Date: 30-September-21
----------------
The Company intends 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.
With 83% the IPO proceeds deployed successfully during the first
quarter of 2021, combined with strong trading performance, the
Board has decided to increase its dividend guidance. Following
payment of a dividend of 1 pence per share for the period to June
2021, the Company intends to increase the dividend to 5 pence per
annum (representing a dividend per share of 1.25 pence for the
quarter ending September 2021 and thereafter).
Market development and opportunities
The UK market continues to show a high level of deal opportunity
within DORE's focus areas.
There continues to be a steady flow of opportunities within the
subsidised renewables space. Several portfolios of operational
solar assets are expecting to come to market during the second half
of 2021 and there is a steady trickle of smaller bolt-on
opportunities. DORE is seeing several opportunities that meet the
Company's return targets, which are generally assets that have been
operational for over five years.
There is an increasing market focus on construction of
unsubsidised wind and solar assets, generally supported by power
purchase agreements ("PPAs") with corporate entities to increase
revenue certainty. Activity is developing in this space, with both
utilities and large corporates running tender processes to secure
renewable capacity. Their requirement for "additionality" (i.e.
PPAs must lead to the build of a new asset) is expected to result
in the construction of larger solar and wind projects in the UK.
DORE is continuing to develop relationships with key offtakers and
developers to support a pipeline of opportunities.
In the Nordic region, markets continue to show a high level of
deal activity with opportunities matching the returns and
transaction size requirements of DORE.
The Nordic wind sector is especially active, where new
ready-to-build ("RTB") assets are brought to the market at regular
intervals. Developers are traditionally looking for long-term
owners prior to construction starting or during construction. In
addition to RTB assets, operational wind assets of various sizes
regularly come to the market.
The Nordic hydro market also continues to see reasonable levels
of activity. Opportunities include smaller portfolios of hydropower
plants, mainly in Sweden or Norway. These portfolios are frequently
divested by private owners or multi-utilities seeking to streamline
their holdings. DORE, through Downing Hydro AB, has established a
solid footprint in this market, enabling future bolt-on
acquisitions to its existing portfolio.
The Nordic utility and essential infrastructure sector is
fragmented, often with municipality or large multi-utility
ownership. Suitable opportunities in this sector appear from time
to time as existing owners seek to streamline their ownership
portfolios.
DORE is currently considering and actively working with
potential opportunities across the Nordic region in the sectors
described above, remaining selective about the opportunities to
ensure an attractive mix of assets in the portfolio, consistent
with the Company's investment objectives.
Foreign Exchange
The Company, together with its foreign exchange advisor, has
developed and implemented its foreign exchange risk management
policy. The policy targets hedging the medium-term distributions
(up to five years) that are not denominated in GBP on a "linear
reducing basis", whereby a high proportion of expected
distributions in year 1 are hedged and the proportion of expected
distributions that are hedged reduces in a linear fashion over the
following four years.
Power markets and exposure
DORE adopts a medium to long-term hedging policy for its
generation assets, providing a degree of certainty over the cash
flows over the hedged periods. The hedged generation position for
the portfolio as of 30 June 2021 is set out in the chart below. The
hedging positions are continuously reviewed to ensure an
appropriate position is maintained and new hedges are taken out as
appropriate.
United Kingdom
Prices across all power periods increased on average during the
second quarter, with some volatility in May 2021. Weather,
tightening gas supplies, post-vaccine global economic optimism and
carbon prices hitting new records have all helped lift short and
medium-term price levels. UK forward power prices for Winter 2021
and Summer 2022 have increased by more than 50% since December
2020. In contrast, the forecast of long-term power prices has been
adjusted downwards as a result of lower gas prices, increasing
power imports from the continent, reflecting new inter-connectors
coming on-line and increasing of offshore wind generation.
Nordics
Power spot prices in the quarter were higher than expected in
the Nordics, partly due to the prolonged cold weather and the
further closure of a Swedish nuclear power plant in January 2021.
Spot prices were also quite volatile in the first quarter, due to
the uncertainty surrounding how long the cold spell would last and
relatively high-water reservoir levels.
At the same time forward prices for the Summer of 2021
benefitted significantly from market conditions, with forward
pricing for Summer 2021 returning to pre-pandemic levels of
EUR30/MWh from lows of EUR15/MWh. Prices for Winter 2021 and Summer
2022 also increased.
Valuation of the portfolio
The Company's NAV increased by 2.3% from GBP120.1 million (98.0
pence per share) to GBP122.8 million (100.2 pence per share) as at
30 June 2021. This increase was driven by strong performance and
increases in long term power price forecasts.
The table below shows the movement in NAV during the period,
with each step explained further below.
Movement in NAV (GBP'm)
Opening NAV (10-Dec-20) 120.1
------------------------
Management fee (0.6)
------------------------
Other costs and charges (0.6)
------------------------
Performance 2.6
------------------------
Future power prices 1.9
------------------------
Inflation 0.1
------------------------
FX (0.1)
------------------------
Other (0.5)
------------------------
Closing (30-Jun-21) 122.8
------------------------
Opening
Represents the NAV at IPO net of launch costs.
Management Fee
Fees charged to the Company by the Investment Manager.
Other costs and charges
Charges incurred by the Company, and its immediate subsidiary UK
Hold Co, in its normal operations. Fees include fees paid to
professional advisors and Directors. No transaction costs are
included.
Performance
Represents the unwinding of the valuation models and the
movement in the balance sheet of each investment. Where cash is not
distributed, an increase in balance sheet working capital over and
above the previously modelled position represents performance above
expectations.
Power Prices
The Company uses long term, forward looking power price
forecasts from third party consultants for the purposes of asset
valuations. In both the UK and Sweden, an equal blend is taken from
the most recent central case forecasts from two leading
consultants. Where fixed price arrangements are in place, the
financial model will reflect this price for the relevant time
frame.
Where forward market pricing is liquid, these prices are also
considered for the purposes of near-term power price forecasts.
The impact of our short-term power hedging strategy is also
included in this step, with any benefit from short term hedging
included here.
Inflation
The Company uses a near-term inflation forecast of 2.75%, rising
to a medium-term inflation forecast of 3.0% for the purposes of UK
asset valuations. From 2030 onwards, this forecast reduces to 2.25%
as a result of the RPI reform recently announced by the UK
Government. Models are updated quarterly to reflect inflation to
date.
For the purpose of the Swedish asset valuations, a 2.0%
inflation forecast is used, reflective of the Swedish central
bank's target inflation rate.
Foreign Exchange
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 ten years,
at which point the exchange rate is held constant due to the
impracticalities of hedging currency further into the future.
Other
Reflects changes to operational contracts (such as insurance)
and other minor updates.
Asset life assumptions
Where land is leased from an external landlord, the operational
life assumed for the purposes of the asset valuations is valued to
the earlier of planning or lease expiry.
Where a project has an indefinite life, the land it is located
on is owned and there are no constraints regarding planning, asset
valuations are based on a perpetual life. This is the basis for the
valuation of the hydropower assets. When perpetual asset life
assumptions are applied, this is combined with the appropriate
capital expenditure forecasts to ensure the assets will remain
operational and in good condition.
Discount Rates
Discount rates used for the purpose of the valuation process are
representative of the Investment Manager's and the Board's
assessment of the rate of return in the market for assets with
similar characteristics and risk profile.
Discount rates in use across the portfolio are in the range of
5.5% to 7.5%, with the weighted value at 7.3%.
Valuation sensitivities
The NAV of the Company is comprised of the sum of the discounted
value of future cash flows of the underlying investments in solar
and hydro assets (being the portfolio valuation), the cash balances
of the Company and its holding Company and the other assets and
liabilities of the Group.
The portfolio valuation is the largest component of the NAV and
the key sensitivities to this valuation are considered to be
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 30 June
2021 was 7.3%.
The Investment Manager considers a variance of plus or minus
0.5% is to be a reasonable range of alternative assumptions for
discount rates.
Energy Yield
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 and wind assets. Given the long operational record of the
hydro assets, the annual production forecast is derived from
historic datasets and validated by technical advisors.
The Energy Yield sensitivities uses a variance of plus or minus
5% applied to the generation.
Power Prices
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
+/-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.
Inflation
The Company's Inflation assumptions are set out above. A
long-term inflation sensitivity of plus and minus 0.5% 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.
Financing
The Group adopts a prudent approach to leverage, with the aim
that each asset will be financed appropriately for the nature of
its underlying cashflows and their expected volatility. 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 30 June 2021, including project
level financing, the Group's leverage stood at 31.9%.
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 is progressing the establishment of an RCF, expected
to be concluded during the second half of 2021.The main purpose of
the RCF is to assist DORE in acquiring new assets from third
parties. Once the RCF is established, DORE will benefit from
additional flexibility to execute further transactions.
Financing of the Solar Assets
The solar assets identified as Seed Assets in the Prospectus are
owned by a group of SPVs with a single holding company. Within this
group there is currently debt totaling c.GBP78 million. Additional
detail on the financing of the solar assets can be found in the
Company's prospectus.
Financing of the Hydro Assets
The acquisition of Downing Hydro AB was made on an all-equity
basis, in order to reduce the cash drag at a fund level. The
Investment Manager has since progressed a debt financing strategy
for the hydropower portfolio to release cash for further
investments, either in further hydropower assets or in adjacent
sectors.
The borrower of the non-recourse project level debt will be
Downing Hydro AB. As hydropower assets require maintenance capital
expenditure, the financing strategy aims to secure availability of
funds to meet medium term capital expenditure requirements.
The refinancing is expected to be completed during the second
half of 2021.
Market outlook
"Renewable deployment geared up in 2020, establishing a "new
normal" for capacity additions in 2021 and 2022"(2)
According to a recent report published by the International
Energy Agency, renewables are expected to account for 90% of total
global power capacity increases in both 2021 and 2022. In Europe,
annual capacity additions are forecast to increase 11%. DORE is
well positioned to take advantage of the continued strong activity
in the renewables sector.
As DORE's investment mandate targets investments in the UK and
Northern Europe, there is a broad investment market with different
underlying market dynamics impacting revenues and costs. Having a
geographically mixed portfolio allows DORE to diversify risks
related to e.g. power prices and environmental legislation, that
may result from the expected large scale roll-out of renewable
energy.
As the world continues the recovery from the COVID-19 pandemic,
an unprecedented amount of capital has been allocated to these
economic recovery responses. So far only 2% of governments' COVID
recovery spending is going on clean energy transitions3. There
remains a big part to play in the energy transition for private
capital. The Company will continue to support this transition
through its diverse portfolio of renewable energy assets.
We look forward to deploying the remainder of the IPO and
proceeds of debt finance and are currently progressing several
additional investment opportunities on behalf of the Company,
including opportunities under exclusivity to the Company and/or the
Investment Manager.
The Investment Manager believes that it is well placed to access
investments and pipeline that will take full advantage of the
diversified strategy of the Company and allow the Company to grow
to a level that will meet its ambitions.
2 Renewable electricity - Renewable Energy Market Update 2021 -
Analysis - IEA
3 Key findings - Sustainable Recovery Tracker - Analysis -
IEA
Sustainability and responsible investment
Introduction
DORE is well positioned to play an increasingly important role
in Europe's transition to a low carbon economy and net-zero carbon
emissions targets with a significant renewable generation
portfolio, already representing an installed capacity of 121.5MWp
across the UK and Sweden.
Sustainability runs through the whole of DORE's responsible
investment framework, aiming to benefit the communities that its
assets serve, the wildlife that lives around them and the wider
environment.
Responsible investment considerations are embedded into the
screening of opportunities, investment decisions and the ongoing
monitoring of investments. This helps to identify, assess, monitor
and manage environmental, social and governance risks and
opportunities and also provides a framework to report progress
across DORE's activities.
Environmental performance Key Performance Indicators
Acquisition Ð
30 June 2021
3,255 Number of renewable generation assets
------------------------------------------------
121.5MW MW of installed renewable generation capacity
------------------------------------------------
101,211 MWh MWh energy generated
------------------------------------------------
46,814 GHG emissions avoided (tCO2e)
------------------------------------------------
83,783 homes powered
------------------------------------------------
4 Number of beehives
------------------------------------------------
12 Number of bird boxes
------------------------------------------------
10 Number of bat boxes
------------------------------------------------
Social performance
------------------------------------------------
GBP19,646 Annual community funding
------------------------------------------------
Governance
------------------------------------------------
10 Number of health and safety audits
------------------------------------------------
0 Number of accidents, injuries, serious
injuries
----------------------------------------------
Investment Manager's Approach to Responsible Investment
Downing is conscious that the assets it manages have
environmental and social impacts which need proactive management.
We take this responsibility seriously and continuously invest in
the portfolio to ensure we are meeting our aim of being a
responsible investor.
By internalising asset management, we believe we can exercise a
higher level of influence and so better manage ESG risks, identify
opportunities and ultimately deliver returns alongside a measurable
environmental impact.
The Investment Manager operates a responsible investment system
(the "Responsible Investment System") which:
(i) incorporates ESG issues into its investment analysis and decision-making processes;
(ii) partakes in 'active' ownership policies and practices;
(iii) seeks appropriate disclosures on ESG issues;
(iv) works to promote the principles and enhance their implementation; and
(v) reports on such activities and progress.
The Investment Manager's Responsible Investment System has been
established and operated with due consideration of (amongst others)
the PRI's six principles, the BVCA's Responsible Investment
Framework, the Investment Association Guidelines on Responsible
Investment Disclosure, GRESB criteria and the NPC's Impact Risk
Classification.
There are three Sustainable Development Goals that DORE actively
supports:
Goal 7 - Affordable & Clean Energy
Ensure access to affordable, reliable, sustainable and modern
energy for all
Goal 9 - Industry, Innovation & Infrastructure
Build resilient Infrastructure, promote inclusive and
sustainable industrialisation and foster innovation
Goal 13 - Climate Action
Take urgent action to combat climate change and its impacts
The Investment Manager reviews its Responsible Investment Policy
annually, to ensure it remains up to date and appropriate in light
of the rapidly changing policy and regulatory landscape associated
with ESG.
Principles for Responsible The Investment Manager has been
Investment a signatory to the Principles
for Responsible Investment since
UN Global Compact 2019 and scored an A for Strategy
& Governance in its unpublished
preliminary assessment.
In addition, as signatories
to the UN Global Compact the
Investment Manager has shown
a commitment to protect human
rights, the environment, and
promote fair labour and anti-corruption
practices.
The Green Economy DORE was proud to be awarded
The Green Economy Mark by the
London Stock Exchange (LSE)
as soon as it listed in December
2020.
The Green Economy Mark was introduced
in 2019 and recognises listed
companies and funds that derive
50% or more of their revenue
from environmental solutions.
The award is recognition that
DORE meets the required industry
standards of the trust's commitment
to a sustainable investment
approach. It also provides transparency
for investors, giving those
seeking a sustainable and strong
risk-adjusted returns the reassurance
that they are investing in a
greener future and supporting
the UK's commitment to a net-zero
economy.
-----------------------------------------
Environmental
Climate Change
The Investment Manager seeks to play an active part in investing
in a greener future and supporting the UK government commitment to
net-zero emissions target by 2050 , striving to achieve the best
possible sustainable outcome from investments and their operations.
DORE is part of galvanizing the societal shift that seeks to
transition away from fossil fuels by investing in sustainable
energy production.
Since DORE acquired its assets in early 2021, 46,815 tCO2e have
been avoided and we anticipate that a total of 2.16 million tCO2e
will be avoided during the remaining lifetime of the current
assets.
Resource Efficiency & Environmental Impact
The Investment Manager has also incorporated adaptations to our
working practices to factor in consideration of climate change,
potential carbon savings, and mitigating the impact on the
surrounding environment by working smarter and using innovative
schemes.
A total of 247 acres of land managed for the DORE portfolio is
grazed by sheep under grazing contracts with local graziers. This
multi-purpose use of the land maintains it in a sustainable way and
supports biodiversity of the area by avoiding the use of fuel
powered mowers and/or pesticides.
The Investment Manager currently has in place a number of
initiatives which seek to protect and enhance biodiversity,
reducing any impact on surrounding habitats and local fauna such as
fish preservation schemes, bird boxes, bat boxes, bee hives and
wildflower planting areas.
The Investment Manager recognises the need to be conscious of
the waste that may be associated with an asset. As such we consider
risks that may impact the surrounding environment including in day
to day waste management.
The Investment Manager monitors and adheres to any restrictions
specified by environmental permits and planning conditions and
actively engages with the terms laid out to ensure a minimal
adverse impact associated with any asset.
Many assets in DORE's portfolio have long term land, habitat and
drainage management plans which are managed by the Investment
Manager. These ensure our actions are tailored to support the local
environment most effectively.
As part of a collaboration with local branches of the British
Beekeepers Association, the Company has recently welcomed more bees
onto its sites. We have made a modest start to what we hope will be
a long association with beekeeping; the DORE portfolio currently
supports 4 hives. By offering a home for bees, DORE's land is
playing a vital role in pollination; essential for world food
production and the preservation of ecological balance.
Social
Communities
DORE's portfolio supports a number of Councils with community
benefits schemes, providing funding for environmental, educational,
charitable or amenity purposes. DORE makes a total of 5 payments
per year totaling GBP19,646.
Oakfield Solar Farm, a 4.99 MW farm in Hampshire, provided
community funding that enabled the local Parish Council to replace
footpath stiles with self-closing or kissing gates, making the
Parish's walking environments more accessible to people with
limited mobility.
DORE is also finalising a partnership with a local education
charity to deliver a programme of school outreach related to
practical renewable energy education.
Downing is mindful that likely climate changes could impact the
management of DORE's hydropower assets in Sweden and that we have a
responsibility to local communities to ensure that our plants are
managed effectively. Downing has recruited senior asset management
capability in the country to ensure relationships with local
stakeholders can be built and maintained effectively.
People
The Investment Manager contributes to the creation of jobs and
strives to achieve a safe working environment for all of its
assets. This year we have continued our strong track record in
health and safety, with no reported accidents, injuries or
fatalities during the period. Downing operates an ongoing health
and safety auditing process which aims to monitor and maintain safe
working practices across the assets.
Like many firms, Downing has had to rapidly adapt its operations
to the COVID-19 pandemic, with all sites adopting enhanced access
requirements to protect staff. Hygiene and social distancing
requirements were established quickly and had minimal impact on
operations enabling the strong performance of the portfolio.
The Investment Manager has committed to a staff training
programme which requires all employees to complete mandatory
training on ESG, to increase awareness and engagement and
strengthen our regular internal reporting on ESG.
Appointment of contractors associated with a project or assets
requires the consideration of sustainability factors, ensuring that
they are aligned with Downing's expectations on fair working and
equal opportunity. Downing are committed to ensuring our supply
chains are free of human rights abuses and in 2021 became a
signatory to the UK industry supply chain statement.
Governance
Board and Organisational Structure
In recognition of the importance of robust corporate governance
practices, DORE's Board selection takes into account the
requirements laid out in the UK Corporate Governance Code and the
AIC Code.
The Board comprises three Directors all of whom are
non-executive and independent of the AIFM, the Investment Manager,
and the other service providers.
Diversity of thought, skills and experience have been the
particular focus of Board member selection, to ensure appropriate
professional and technical skills to take overall responsibility
for the investment policy and strategy, review investment activity
and performance, and provide robust oversight and supervision of
the Investment Manager and other service providers.
The Board's skillset, which includes a combination of listed
fund experience, commercial and technical skills and diversity of
professional backgrounds complements and supports the Board's
role.
The Board comprises one female and two male Directors, and
therefore, whilst not required to, it meets the Hampton-Alexander
Review target for FTSE 350 companies to have reached 33% female
representation by the end of 2020.
Risk Management & Compliance
The Investment Manager's risk management system incorporates the
reporting capability of the Asset Manager, facilitating visibility
of potential risk areas, and allows any necessary remediation steps
to be implemented. This can involve oversight of third-party
contractors, Health & Safety audits and contributes to a data
universe of over 2.51 million data points being recorded and
monitored.
Extensive due diligence is conducted on any target investment to
ascertain previous compliance with anti-bribery and anti-money
laundering regulations, with a mandatory requirement that ongoing
compliance is expected as a minimum standard in key documentation.
The Investment Manager also requires the implementation of an
anti-bribery and corruption policy as part of its investments.
Business Ethics & Transparency
The Investment Manager seeks to ensure transparency at all
stages of the investment process and has in place a robust
Conflicts of Interest Policy, and a dedicated Conflicts Committee.
The Conflicts Committee has an independent Chair and its other
members include the Head of Compliance and COO at Downing.
In order to ensure the Investment Manager maintains a strong
governance culture it requires its employees to undertake mandatory
annual training on topics that include:
- Anti-Money Laundering
- Anti-Bribery & Anti-Corruption
- Data Protection
- Diversity & Inclusion
- Conflicts of Interest
- Cyber Security
Principal Risks and Uncertainties
It is not possible to eliminate all risks that may be faced by
the Company.
The objective of the Company's risk management framework and
policies adopted by the Company is to identify risks and enable the
Board to respond to risks with mitigating actions to reduce the
potential impacts should any of the risks materialise.
The Board, through the Audit and Risk Committee, regularly
reviews the Company's risk register, with a focus on ensuring
appropriate controls are in place to mitigate each risk. Taking
considered risk is the essence of all business and investment
activity.
The Board considers the following to be the principal risks
faced by the Company along with the potential impact of these risks
and the steps taken to mitigate them.
Risk Identified Risk Description Risk Impact Mitigation
Exposure to wholesale The Company makes Market demand The Investment
electricity prices investments in for electricity Manager closely
and risk to hedging Assets with revenue can be impacted monitors exposure
power prices exposure to wholesale by many factors, to power price
electricity prices. including changes movements. Sensitivity
The market price in consumer demand to long term forecasts
of electricity patterns, increased will be disclosed
is volatile and usage of smart to investors and
is affected by grids, a rise the Board on a
a variety of factors, in demand for regular basis.
including market electric vehicle Many assets are
demand for electricity, charging capacity expected to have
levels of electricity and residential a significant
generation, the participation proportion of
generation mix in renewable energy revenue that is
of power plants, generation. Such not linked to
government support changing dynamics power price forecasts
for various forms could have a material including subsidies
of power generation adverse effect such as Feed-in-tariffs.
and fluctuations on the Company's In addition, assets
in the market profitability, are geographically
prices of commodities the NAV and the diverse, spreading
and foreign exchange. price of the Ordinary exposure across
Shares. different power
To the extent markets and price
that the Company drivers. Short
or an SPV enters and medium term
into contracts exposure to power
to fix the price prices will be
it receives on managed by locking
the electricity power prices on
generated, or a rolling basis.
enters into derivatives
with a view to
hedging against
fluctuations in
power prices,
the Company or
SPV, may be exposed
to risk related
to delivering
an amount of electricity
over a specific
period.
If there are periods
of non-production
the Company or
an SPV may need
to pay the difference
between the price
it has sold the
power at and the
market price at
that time.
Exposure to the To the extent While the Company Natural hedging
transactional the Company invests and SPVs may enter of foreign exchange
effects of foreign in non-sterling into derivative exposure will
exchange rate jurisdictions, transactions to occur due to an
fluctuations and it may be exposed hedge such foreign element of costs
risks of foreign to foreign exchange exchange rate and debt (for
exchange hedging risk caused by exposures, there capital structuring
fluctuations in can be no guarantee purposes) being
the value of foreign that the Company linked to the
currencies when and/or SPVs will local currency.
the net income be able to, or The Company will
and valuations will elect to, hedge expected
of those operations hedge such exposures, income from foreign
in non-Sterling or that where assets up to 5
jurisdictions entered into, years in advance.
are translated will be successful.
into Sterling The Company and/or
for the purposes SPVs may be required
of financial reporting. to satisfy margin
calls in respect
of hedges and
in certain circumstances
may not have such
collateral readily
available. In
these circumstances,
the Company could
be forced to sell
an Asset or borrow
further funds
to meet a margin
call or take a
loss on a position.
To the extent
that the Company
and/or SPVs do
rely on derivative
instruments to
hedge exposure
to exchange rate
fluctuations,
they will also
be subject to
counterparty risk.
Any failure by
a hedging counterparty
to discharge its
obligations could
have a material
adverse effect
on the CompanyÕs
profitability,
the Net Asset
Value and the
price of the Ordinary
Shares.
Non-compliance As an approved If the Company The Company has
with the investment investment trust, fails to maintain contracted out
trust eligibility The Company is its investment the relevant monitoring
conditions under exempt from UK trust status from to appropriately
sections S1158/S1159 corporation tax HMRC, in such qualified professionals.
of the CTA 2010 on its chargeable circumstances, The Investment
gains and capital the Company would Manager also monitors
profits on loan be subject to relevant qualifying
relationships. the normal rates conditions.
of corporation The Investment
tax on chargeable Manager and the
gains and capital Company Secretary
profits arising report on regulatory
on the transfer matters to the
or disposal of Board on a quarterly
investments and basis. The assessment
other assets. of regulatory
Which could adversely risks forms part
affect the Company's of the Board's
financial performance, risk management
its ability to framework.
provide returns
to its Shareholders
or the post-tax
returns received
by its Shareholders.
Construction risks Projects that Should completion The Investment
for certain renewable are in the Construction of any project Manager will monitor
energy projects Phase or are construction overrun (both construction carefully
ready may be exposed in terms of time and report frequently
to certain risks, and budget), there to the Board and
such as cost overruns, is a risk that AIFM.
construction delays payments may be The Investment
and construction required to be Manager has an
defects that may made to (or withheld experienced asset
be outside the by) a counterparty management team
Company's control. in relation to including technical
the delay. If experts to oversee
the completion construction projects.
of a project overruns, The Investment
it would also Manager will undertake
result in a delayed an extensive due
start to receipt diligence process
of revenues, which prior to investment
could affect the with input from
Company's ability the Board (including
to achieve its technical expertise).
target returns, Third party experts
depending on the will be used as
nature and scale required to enhance
of such delay. knowledge and
Additional costs experience.
and expenses,
delays in construction
or carrying out
repairs, failure
to meet technical
requirements,
lack of warranty
cover and/or consequential
operational failures
or malfunctions
may have a material
adverse effect
on the Company's
profitability,
the Net Asset
Value and the
price of the Ordinary
Shares.
Reliance on third-party The Company, whose The third-party There are clear
service providers Board is non-executive, provider may prove service level
and which has to be insufficiently agreements in
no employees, skilled for the place for all
is reliant upon role or perform third-party providers
the performance the roles required and provisions
of third-party to an inadequate are in place that
service providers level, which may any provider can
for its executive cause the Company be replaced, subject
function. to underperform, to an initial
The Company relies to breach regulations, term or a breach
on the Investment or in extremis of the agreement
Manager and other to go into administration. occurring.
service providers They have all
and their reputation been chosen for
in the energy being skilled
and infrastructure and experienced
market. in their areas
of expertise.
The Board has
regular oversight
over all the other
providers.
Lack of availability Competition for If the Investment The Company has
of suitable renewable renewable energy Manager is unable an Investment
energy projects projects in the to source sufficient Manager in place
primary investment opportunities with a strong
or secondary investment within a reasonable track record,
markets, may result timeframe, whether who strengthened
in the Company by reason of fundamental their team ahead
being unable to change in market of the fund launch.
make investments conditions creating Through extensive
or on terms that lack of available industry relationships
enable the target opportunities, the Investment
returns to be too much competition Manager provides
delivered. or otherwise. access to a significant
A greater proportion pipeline of investment
of the Company's opportunities.
assets will be
held in cash for
longer than anticipated
and the Company's
ability to achieve
its Investment
Objective may
be adversely affected.
Conflicts of interest The Investment The appointment The AIFM and the
Manager and the of the AIFM is Investment Manager
AIFM may manage on a non-exclusive have clear conflicts
from time to time basis and each of interest and
other managed of the AIFM and allocation policies
Funds pursuing Investment Manager in place.
similar investment manages other Transactions where
strategies to accounts, vehicles it is perceived
that of the Company and funds pursuing that there may
and which may similar investment be potential conflicts
be in competition strategies to of interest are
with the Company. that of the Company. overseen by the
This has the potential Investment Manager's
to give rise to conflicts committee,
conflicts of interest. an independent
The Company may fairness opinion
also be in competition on valuation may
with other Downing also be commissioned
Managed Funds where deemed necessary.
for Assets. In The application
relation to the of allocation
allocation of policy is reviewed
investment opportunities. by the Investment
Managers Compliance
Department, and
by the Board on
annual basis.
Further information
on these procedures
can be found in
the Company's
prospectus dated
12 November 2020.
Risks relating The long-term Incorrect assumptions The Company will
to the Technical performance of against technical appoint third
performance of the assets acquired performance of party technical
assets does not match assets, or the advisors for every
the expectations availability of transaction. The
at the time of natural resources advisors will
the acquisition. may lead to additional undertake a review
costs and expenses, of the technology,
carrying out repairs, design, installation
or reduced revenues. (if applicable),
Any delays or and natural resource
reduction in the availability and
production or provide an analysis
supply of energy of expected long
may have a material term generation
adverse effect yields.
on the performance Where assets are
of the Company, going through
the Net Asset construction,
Value, the Company's appropriate contractual
earnings and returns guarantees will
to shareholders. be provided. Operators
will often provide
guarantees as
to the availability
or performance
of assets.
Counterparties' The Company's The failure by The Investment
ability to make revenue derives a counterparty Manager will look
contractual payments from the Renewable to pay the contractual to build in suitable
Energy Projects payments due, mechanisms to
in the portfolio, or the early termination protect the income
the Company and of a PPA by an stream from the
its SPVs will Offtaker due to relevant Renewable
be exposed to insolvency, may Energy Projects,
the financial materially affect which may include
strength of the the value of the parent guarantees
counterparties portfolio and and liquidated
to such projects could have a material damages payments
and their ability adverse effect on termination.
to meet their on the performance Exposure to defaults
ongoing contractual of the Company, may be further
payment obligations. the Net Asset mitigated by contracting
Value, the Company's with counterparties
earnings and returns who are public
to shareholders. sector or quasi-public
sector bodies
or who are able
to draw upon government
subsidies to partly
fund contractual
payments.
As part of the
acquisition process,
the Investment
Manager conducts
a thorough due
diligence process
on all projects.
Risks associated There exists an Increased regulation, Cyber security
with Cyber Security increasing threat laws, rules and policies and procedures
of cyber-attack standards related implemented by
in which a hacker to cyber security, key service providers
may attempt to could impact the are reported to
access the Company's Company's reputation the Board regularly
website or its or result in financial to ensure conformity.
secure data, or loss through the Thorough third-party
the computer systems imposition of due diligence
that relate to fines. Suffering is carried out
one of its Assets a cyber breach on all suppliers
and attempt to will also generally engaged to service
either destroy incur costs associated the Company. All
or use this data with repairing providers have
for malicious affected systems, processes in place
purposes. networks and devices. to identify cyber
If one or several security risks
Assets became and apply and
the subject of monitor appropriate
a successful cyber-attack, risk plans.
to the extent
any loss or disruption
following from
such attack would
not be covered
or mitigated by
any of the Company's
insurance policies,
such loss or disruption
could have an
adverse effect
on the performance
of the affected
Asset or Assets
and consequently
on the Company's
profitability,
the Net Asset
Value and the
price of the Ordinary
Shares.
Emerging Risks
Emerging risks are characterised by a degree of uncertainty and
the Investment Manager and the Board consider new and emerging
risks every six months, the risk register is then updated to
include these considerations. The Board has a process in place to
identify emerging risks, such as climate related risks, and to
determine whether any actions are required. The Board relies on
reports periodically provided by the Investment Manager and the
Administrator regarding risks that the Company faces. When
required, experts are employed to gather information, including tax
and legal advisers.
Climate Change
Environmental laws and regulations continue to evolve as the UK,
Europe and the rest of the world continue to focus their efforts on
the goals laid out by the Paris Agreement. In jurisdictions where
the Company's assets are located, newly implemented laws and/or
regulations may have an impact on a given Asset's activities.
These laws may impose liability whether or not the owner or
operator of the Assets knew of or was responsible. There can be no
assurance that environmental costs and liabilities will not be
incurred in the future. In addition, environmental regulators may
seek to impose injunctions or other sanctions on an Asset's
operations that may have a material adverse effect on its financial
condition and valuation. Climate change may also have other
wide-ranging impacts such as an increased likelihood of market
reform, insurance coverage availability and cost.
Climate change may also lead to increased variability in average
weather patterns such as periods of increased or reduced wind
speeds or rainfall as well as extreme events which may affect the
performance of the Company's investments.
Physical Effects of Climate Change
While efforts to mitigate climate change continue to progress,
the physical impacts are already emerging in the form of changing
weather patterns. Such as the recent heatwaves experienced in North
America and recent flash flooding seen throughout the UK and
Europe.
Extreme weather events can result in flooding, drought, fires
and storm damage, which may potentially impair the operations of
existing and future portfolio companies at a certain location or
impacting locations of companies within their supply chain.
Statement of Directors' Responsibilities
The Directors acknowledge responsibility for the interim results
and approve this Interim Report. The Directors confirm that to the
best of their knowledge:
-- the condensed financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" and give a
true and fair view of the assets, liabilities and financial
position of the Company as required by DTR 4.2.4R of the Disclosure
Guidance and Transparency Rules;
-- the interim management report, included within the Chairman's
Statement and Investment Managers Report, includes a fair review of
the information required by DTR 4.2.7R, being the significant
events for the period since incorporation and the principal risks
and uncertainties for the remaining six months of the period;
and
-- the condensed financial statements include a fair review of
the related party transactions, as required by DTR 4.2.8R.
The responsibility Statement has been approved by the Board.
Hugh W M Little (Chair)
1 September 2021
Condensed Statement of Comprehensive Income
For the Period from Incorporation to 30 June 2021
Revenue Capital Total
Notes 30 June 2021 30 June 2021 30 June 2021
GBP000s GBP000s GBP000s
Income
------------------- -------------- -------------- --------------
Return on investment 5 2,073 1,811 3,884
------------------- -------------- -------------- --------------
Total income 2,073 1,811 3,884
------------------- -------------- -------------- --------------
Expenses
------------------- -------------- -------------- --------------
Investment management fees 4 (643) - (643)
------------------- -------------- -------------- --------------
Directors' fees 13 & 17 (83) - (83)
------------------- -------------- -------------- --------------
Other expenses 6 (390) - (390)
------------------- -------------- -------------- --------------
Total expenses (1,116) - (1,116)
------------------- -------------- -------------- --------------
Profit before taxation 957 1,811 2,768
------------------- -------------- -------------- --------------
Taxation 7 - - -
------------------- -------------- -------------- --------------
Profit after taxation 957 1,811 2,768
------------------- -------------- -------------- --------------
Profit and total comprehensive income
attributable to:
------------------- -------------- -------------- --------------
Equity holders of the Company 957 1,811 2,768
------------------- -------------- -------------- --------------
Earnings per share - Basic & diluted (pence) 8 1.02 1.94 2.96
------------------- -------------- -------------- --------------
Condensed Statement of Financial Position
As at 30 June 2021
30 June 2021
Notes GBP000s
-------- ------------------
Non-current assets
Investments at fair value through profit and loss 9 106,365
--------------------------------------------------- -------- ------------------
106,365
Current assets
Trade and other receivables 10 206
Cash and cash equivalents 15 17,102
--------------------------------------------------- -------- ------------------
17,308
Total assets 123,673
Current liabilities
Trade and other payables 11 (907)
--------------------------------------------------- -------- ------------------
(907)
Total liabilities (907)
Net assets 122,766
--------------------------------------------------- -------- ------------------
Capital and reserves
Called up share capital 12 1,225
Special distributable reserve 13 118,773
Revenue reserve 957
Capital reserve 1,811
--------------------------------------------------- -------- ------------------
Shareholders' funds 122,766
--------------------------------------------------- -------- ------------------
Net asset value per ordinary share (pence) 14 100.22
The unaudited interim financial statements of Downing Renewables
& Infrastructure Trust PLC were approved by the Board of
Directors and authorised for issue on 1 September 2021 and are
signed on behalf of the Board by:
Hugh WM Little
Chair
Company registration number 12938740
Condensed Statement of Changes in Equity
For the Period from Incorporation to 30 June 2021
The Company's distributable reserves consist of the Special
distributable reserve, Capital reserve attributable to realised
gains and Revenue reserve. There have been no realised gains or
losses at the reporting date.
Notes Share Capital Share Premium Capital Revenue Special Total
Reserve Reserve Distributable
GBP000s GBP000s Reserve
GBP000s GBP000s GBP000s GBP000s
------ -------------- -------------- --------------- --------------- --------------- ---------
Balance at the - - - - - -
start of the
period
Gross proceeds
from share
issue 12 1,225 121,275 - - - 122,500
Bonus shares 12 - (52) - - - (52)
Share issue
costs 12 - - - - (2,450) (2,450)
Transfer to
special
distributable
reserve 13 - (121,223) - - 121,223 -
Return on
ordinary
activities - - 1,811 957 - 2,768
---------------- ------ -------------- -------------- --------------- --------------- --------------- ---------
Net assets
attributable
to
shareholders
at 30 June
2021 1,225 - 1,811 957 118,773 122,766
---------------- ------ -------------- -------------- --------------- --------------- --------------- ---------
Condensed Statement of Cash Flows
For the period from incorporation to 30 June 2021
Incorporation to
Notes 30 June 2021
GBP000s
Cash flows from operating activities
-------- -----------------
Profit before taxation 2,768
-------- -----------------
Adjusted for:
-------- -----------------
Interest income 5 (2,073)
-------- -----------------
Unrealised gains on investments at fair value 5 (1,811)
-------- -----------------
Increase in receivables (206)
-------- -----------------
Increase in payables 907
-------- -----------------
Net cash outflows from operating activities (415)
-------- -----------------
Cash flows from investing activities
-------- -----------------
Purchase of investments 9 (102,481)
-------- -----------------
Net cash outflows from investing activities (102,481)
-------- -----------------
Cash flows from financing activities
-------- -----------------
Gross proceeds of share issue 12 122,500
-------- -----------------
Bonus shares 12 (52)
-------- -----------------
Share issue costs 12 (2,450)
-------- -----------------
Net cash flows from financing activities 119,998
-------- -----------------
Increase in cash and cash equivalents 17,102
-------- -----------------
Cash and cash equivalents at the start of the period -
-------- -----------------
Cash and cash equivalents at the end of the period 15 17,102
-------- -----------------
Notes to the interim financial statements
1. General Information
The Company is registered in England and Wales under number
12938740 pursuant to the Companies Act 2006 and its registered
office Beaufort House, 51 New North Road, Exeter, England, EX4
4EP.
The Company was incorporated on 8 October 2020 and is a Public
Limited Company and the ultimate controlling party of the group.
The Company's ordinary shares were first admitted to the premium
segment of the Financial Conduct Authority's Official List and to
trading on the Main Market of the London Stock Exchange under the
ticker DORE on 10 December 2020.
The Company's objective is to generate an attractive total
return for investors comprising stable dividend income and capital
preservation, with the opportunity for capital growth through the
acquiring and realising value from a diverse portfolio of renewable
energy infrastructure projects.
The Company currently makes its investments through its
principal holding company and single subsidiary, DORE Hold Co
Limited ("Hold Co"), and intermediate holding companies which are
directly owned by the Hold Co. The Company controls the investment
policy of each of the Hold Co and its intermediate holding
companies in order to ensure that each will act in a manner
consistent with the investment policy of the Company.
The Company has appointed Downing LLP as its Investment Manager
(the "Investment Manager") pursuant to the Investment Management
Agreement dated 12 November 2020. The Investment Manager is
registered in England and Wales under number OC341575 pursuant to
the Companies Act 2006. The Investment Manager is regulated by the
FCA, number 545025.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006.
2. Basis of preparation
The financial statements included in this Interim Report have
been prepared in accordance with IAS 34 ÒInterim Financial
Reporting'. The interim financial statements have been prepared
under the historical cost convention, as modified by the
revaluation of financial assets and financial liabilities at fair
value through profit or loss.
The interim financial statements have also been prepared as far
as is relevant and applicable to the Company in accordance with the
Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP")
issued in October 2019 by the Association of Investment Companies
("AIC"). The interim financial statements are presented in
Sterling, which is the Company's functional currency and are
rounded to the nearest thousand, unless otherwise stated. They have
been prepared on the basis of the accounting policies, significant
judgements, key assumptions and estimates as set out below.
These financial statements do not include all information and
disclosures required in the annual audited financial
statements.
The financial statements are unaudited and do not constitute
statutory accounts as defined in section 434(3) of the Companies
Act 2006.
Estimates and underlying assumptions are reviewed regularly on
an on-going basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future
period affected. The significant estimates, judgement or
assumptions for the period are set out above.
There are no comparatives as this is the Company's first
accounting period.
Review
The Interim report has not been audited but has been reviewed by
the Company's auditor.
This Half Year Report has been reviewed by the Company's Auditor
in accordance with the International Standards on Auditing (ISAs)
(UK) and International Standard on Review Engagements
("ISREs").
Basis of Consolidation
The sole objective of the Company and through its subsidiary
Dore Hold Co Limited is to enter Renewable Energy Infrastructure
Projects, via individual corporate entities. Hold Co typically will
issue equity and loans to finance its investments.
The Directors have concluded that in accordance with IFRS 10,
the Company meets the definition of an investment entity having
evaluated the criteria that needs to be met (see below). Under IFRS
10, investment entities are required to hold subsidiaries at fair
value through profit or loss rather than consolidate them on a
line-by-line basis, meaning Hold Co's cash, debt and working
capital balances are included in the fair value of the investment
rather than in the Company's assets and liabilities. Hold Co has
one investor which is the Company. However, in substance, Hold Co
is investing the funds of the investors of the Company on its
behalf and is effectively performing investment management services
on behalf of many unrelated beneficiary investors.
Characteristics of an investment entity
There are three key conditions to be met by the Company for it
to meet the definition of an investment entity. For each reporting
period, the Directors will continue to assess whether the Company
continues to meet these conditions:
-- It obtains funds from one or more investors for the purpose
of providing these investors with professional investment
management services;
-- It commits to its investors that its business purpose is to
invest its funds solely for the returns (including having an exit
strategy for investments) from capital appreciation, investment
income or both; and
-- It measures and evaluates the performance of substantially
all its investments on a fair value basis.
In satisfying the second criterion, the notion of an investment
timeframe is critical. An investment entity should not hold its
investments indefinitely but should have an exit strategy for their
realisation. The Company intends to hold its renewable energy
infrastructure assets for the remainder of their useful life to
preserve the capital value of the portfolio. However, as the
renewable energy infrastructure assets are expected to have no
residual value after their useful lives, the Directors consider
that this demonstrates a clear exit strategy from these
investments.
Subsidiaries are therefore measured at fair value through profit
or loss, in accordance with IFRS 13 "Fair Value Measurement", IFRS
10 "Consolidated Financial Statements" and IFRS 9 "Financial
Instruments".
The Directors believe the treatment outlined above provides the
most relevant information to investors.
Going concern
The Directors have adopted the going concern basis in preparing
the Interim Report. The following is a summary of the Director's
assessment of going concern status of the Company. In reaching this
conclusion, the Directors have considered the liquidity of the
Company's portfolio of investments as well as its cash position,
income and expense flows. As at 30 June 2021, the Company had net
assets of GBP122.8 million including cash balances of GBP17.1
million which are sufficient to meet current obligations as they
fall due.
In the period since incorporation, COVID-19 has continued to
have a negative impact on the global economy. As the United Kingdom
and the developed world continue to roll out their vaccination
programmes, the outlook for both the UK and global economy is
beginning to look more positive. Though it should be noted, with
the potential for additional variants of the virus to become more
prevalent, COVID-19 continues to raise potential uncertainties and
additional risks for the Company.
The Directors and the Investment Manager continue to actively
monitor this and its potential effect on the Company and its
investments.
In particular, they have considered the following specific key
potential impacts:
-- Unavailability of key personnel at the Investment Manager or
Administrator; and
-- Increased volatility in the fair value of investments.
In considering the above key potential impacts of COVID-19 on
the Company's operations, the Directors have assessed these with
reference to the mitigation measures in place. The key personnel at
the Investment Manager had successfully implemented business
continuity plans prior to incorporation to ensure business
disruption was minimised, including remote working, and all staff
are continuing to assume their day-to-day responsibilities.
Based on the assessment outlined above, including the various
risk mitigation measures in place, the Directors do not consider
that the effects of COVID-19 have created a material uncertainty
over the assessment of the Company as a going concern.
On the basis of this review, and after makingdue enquiries, the
Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for at
least 12 months from the date of approval of this report.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements.
Segmental reporting
The Chief Operating Decision Maker (the "CODM") being the Board
of Directors, is of the opinion that the Company is engaged in a
single segment of business, being investment in renewable energy
infrastructure.
The Company has no single major customer. The internal financial
information to be used by the CODM on a quarterly basis to allocate
resources, assess performance and manage the Company will present
the business as a single segment comprising the portfolio of
investments in renewable energy infrastructure assets.
Critical accounting judgements, estimates and assumptions
In the application of the CompanyÕs accounting policies, which
are described in Note 2, the Directors are required to make
judgements, estimates and assumptions about the fair value of
assets and liabilities that affect reported amounts. It is
possible, that actual results may differ from these estimates.
The preparation of the Initial accounts requires management to
make judgements, estimates and assumptions that affect the
application of the accounting policies and the reported amount of
assets, liabilities, income and expenses. Estimates, by their
nature, are based on judgement and available information, hence
actual results may differ from these judgements, estimates and
assumptions.
Estimates such as the cash flows are believed to be reasonable
under the circumstances, the results of which form the basis of
making judgements about the fair value of assets not readily
available from other sources. Discount rates used in the valuation
represent the Investment Manager's and the Board's assessment of
the rate of return in the market for assets with similar
characteristics and risk profile. The discount rate is deemed to be
one of the most significant unobservable inputs and any change
could have a material impact on the fair value of investments.
The Company's investments in unquoted investments are valued by
reference to valuation techniques approved the Directors and in
accordance with the International Private Equity and Venture
Capital ("IPEV") Guidelines.
As noted above, the Board have concluded that the Company meets
the definition of an investment entity as defined in IFRS 10. This
conclusion involved a degree of judgement and assessment as to
whether the Company meets the criteria outlined in the accounting
standards.
New, revised and amended standards applicable to future
reporting periods
There were no new standards or interpretations effective for the
first time for periods beginning on or after incorporation that had
a significant effect on the CompanyÕs financial statements.
Furthermore, none of the amendments to standards that are effective
from that date had a significant effect on the financial
statements.
New and revised standards not applied
Interest Rate Benchmark Reform - Phase 2 was issued and will
become effective for accounting periods beginning on or after 1
January 2021. The amendments require additional disclosures that
address issues that might affect financial reporting after the
reform of an interest rate benchmark, including its replacement
with alternative benchmark rates. They also provide relief to the
Company in respect of certain loans whose contractual terms are
affected by interest benchmark reform.
Other accounting standards and interpretations have been
published and will be mandatory for the Company's accounting
periods beginning on or after 1 January 2021 or later periods. The
impact of these standards is not expected to be material to the
reported results and financial position of the Company.
3. Significant Accounting Policies
Financial Instruments
Financial assets and financial liabilities are recognised on the
Company's Statement of Financial Position when the Company becomes
a party to the contractual provisions of the instrument. Financial
assets are to be de-recognised when the contractual rights to the
cash flows from the instrument expire or the asset is transferred,
and the transfer qualifies for de-recognition in accordance with
IFRS 9 Financial Instruments and IFRS 13 Fair Value
Measurement.
Financial assets
The Company classifies its financial assets as either
investments at fair value through profit or loss or financial
assets at amortised cost. The classification depends on the purpose
for which the financial assets are acquired. Management determines
the classification of its financial assets at initial
recognition.
Investments at fair value through profit or loss ("FVTPL")
The fair value of investments in renewable energy infrastructure
projects is calculated by discounting at an appropriate discount
rate future cash flows expected to be received by the Company's
intermediate holdings, from investments in both equity (dividends
and equity redemptions), shareholder and inter-company loans
(interest and repayments).
Estimates such as the cash flows are believed to be reasonable
under the circumstances, the results of which form the basis of
making judgements about the fair value of assets not readily
available from other sources. Discount rates used in the valuation
represent the Investment Manager's and the Board's assessment of
the rate of return in the market for assets with similar
characteristics and risk profile. The discount rate is deemed to be
one of the most significant unobservable inputs and any change
could have a material impact on the fair value of investments.
Investments are designated upon initial recognition as held at
fair value through profit or loss. Gains or losses resulting from
the movement in fair value are recognised in the Statement of
Comprehensive Income at each valuation point. As shareholder loan
investments form part of a managed portfolio of assets whose
performance is evaluated on a fair value basis, loan investments
are designated at fair value in line with equity investments. The
Company's loan and equity investments in Hold Co are held at fair
value through profit or loss. Gains or losses resulting from the
movement in fair value are recognised in the Company's Statement of
Comprehensive Income at each valuation point.
Financial assets are recognised/derecognised at the date of the
purchase/disposal. Investments are initially recognised at cost,
being the fair value of consideration given. Transaction costs are
recognised in the Consolidated Statement of Comprehensive Income as
incurred. Fair value is defined as the amount for which an asset
could be exchanged between knowledgeable willing parties in an
arm's length transaction. Fair value is calculated on an unlevered,
discounted cashflow basis in accordance with IFRS 13 and IFRS
9.
Financial assets at amortised cost
Trade receivables, loans and other receivables are measured at
amortised cost using the effective interest method, less any
impairment. They are included in current assets, except where
maturities are greater than 12 months after the reporting date, in
which case they are to be classified as non-current assets. The
Company's financial assets held at amortised cost comprise "trade
and other receivables" and "cash and cash equivalents" in the
statement of financial position.
Impairment
Impairment provisions for loans and receivables are recognised
based on a forward-looking expected credit loss model. All
financial assets assessed under this model are immaterial to the
financial statements.
Financial liabilities
Financial liabilities are classified as other financial
liabilities, comprising:
-- loans and borrowings which are recognised initially at the
fair value of the consideration received, less transaction costs.
Subsequent to initial recognition, loans and borrowings are to be
stated at amortised cost, with any difference between cost and
redemption value being recognised in the Statement of Comprehensive
Income over the period of the borrowings on an effective interest
basis; and
-- other non-derivative financial instruments, including trade
and other payables, which are to be measured at amortised cost
using the effective interest method.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
Equity instruments
The Company's Ordinary Shares are classified as equity and are
not redeemable. Costs associated or directly attributable to the
issue of new equity shares are recognised as a deduction in equity
and are charged from the special distributable reserve, created on
court cancellation of share premium account.
Finance expenses
Borrowing costs are recognised in the Statement of Comprehensive
Income in the period to which they relate on an accruals basis.
Taxation
The Company is approved as an Investment Trust Company ("ITC")
under sections 1158 and 1159 of the Corporation Taxes Act 2010 and
part 2 Chapter 1 Statutory Instrument 2011/2999. The approval is
subject to the Company continuing to meet the eligibility
conditions of the Corporation Tax Act 2010. The Company intends to
ensure that it complies with the ITC regulations on an ongoing
basis and regularly monitors the conditions required to maintain
ITC status.
Under the current system of taxation in the UK, the Company is
liable to taxation on its operations in the UK. Current tax is the
expected tax payable on the taxable income for the period, using
tax rates that have been enacted or substantively enacted at the
date of the Statement of Financial Position.
Dividends
Dividends to the Company's shareholders are recognised when they
become legally payable. In the case of interim dividends, this is
when they are paid. In the case of final dividends, this is when
they are approved by the shareholders at the Annual General
Meeting.
Income
Income includes investment income from financial assets at FVTPL
and finance income.
Investment income from financial assets at FVTPL is recognised
in the Statement of Comprehensive Income within income when the
Company's right to receive payments is established.
Finance income comprises interest earned on intercompany loans.
Finance income is recognised on an accruals basis.
Expenses
Expenses are accounted for on an accruals basis. Share issue
expenses of the Company directly attributable to the issue and
listing of shares are charged to the Special Distributable Reserve.
The Company's investment management fee, administration fees and
all other expenses are charged through the Statement of
Comprehensive Income. In respect of the analysis between revenue
and capital these items are presented and charged 100% as revenue
items.
Foreign currency
Transaction denominated in foreign currency are translated into
pounds sterling as actual exchange rates as at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currency at the period end are reported at the rates of exchange
prevailing at the period end. Any gain or loss arising from a
change in exchange rates subsequent to the date of transaction is
included as an exchange gain or loss to capital or revenue in the
Statement of Comprehensive income as appropriate.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held
on call with banks and other short-term highly liquid deposits with
original maturities of three months or less.
Deposits to be held with original maturities of greater than
three months are included in other financial assets. There are no
expected credit losses as the bank institutions will have high
credit ratings assigned by international credit rating
agencies.
Seasonal and cyclical variations
The Company's results do not vary significantly during reporting
periods as a result of seasonal activity.
4. Investment management fees
Under the terms of the Investment Management Agreement, the
Investment Manager is entitled to a management fee from the
Company, which is calculated quarterly in arrears at 0.95% of NAV
per annum up to GBP500 million and 0.85% per annum of NAV in excess
of GBP500 million.
There were no investment management fees paid in the period, but
investment management fees of GBP643,428 were accrued at the period
end.
No performance fee is payable to the Investment Manager under
the Investment Management Agreement and there are no provisions
that would entitle the Investment Manager to a performance fee in
respect of future periods.
5. Return on investment
30 June 2021
GBP000s
Unrealised movement in fair value of investments (Note 9) 1,811
Interest due on loans to investment (Note 9) 2,073
------------------------
3,884
6. Other expenses
30 June 2021
GBP000s
Alternative investment fund manager fee 57
Auditor fee
- Statutory audit services accrual 14
- Initial accounts audit 85
Company secretarial fee 33
Legal fees 47
Depositary fee 25
Hedging advisory 26
Marketing fee 20
Broker fee 28
Retainer fee 28
Other fees 27
------------------------
390
7. Taxation
Taxable income during the period was offset by expenses and the
tax charge for the period ended 30 June 2021 is GBPnil.
As described above, the Company is recognised as an ITC for
accounting periods and is taxed at the current main rate of 19%. To
the extent that there is insufficient group tax relief available to
eliminate taxable profits, the Company may make interest
distributions to reduce taxable profits to nil.
(a) Analysis of charge in the period
For the period ended
30 June 2021
Revenue Capital Total
GBP000s GBP000s GBP000s
Corporation tax - - -
Taxation - - -
---------------- ---------------- ------------------ ----------------------
(b) Factors affecting total tax charge for the period
The effective UK corporation tax rate applicable to the Company
for the period is 19%. The tax charge differs from the charge
resulting from applying the standard rate of UK corporation tax for
an investment trust company. The differences are explained
below.
Revenue Capital Total
GBP000s GBP000s GBP000s
Profit on ordinary activities before taxation 957 1,811 2,768
Corporation tax at 19% 182 344 526
Net gain on investments at fair value
through profit and loss - (344) (344)
Subject to group relief/designated as
interest distributions (182) - (182)
Tax charge for the period - - -
----------------------------------------------- ---------------- ------------------ ----------------------
HM Revenue & Customs ("HMRC") has granted approval to the
Company's status as an investment trust and it is the Company's
intention to continue meeting the conditions required to obtain
approval in the foreseeable future. Investment companies which have
been approved by HMRC under section 1158 of the Corporation Tax Act
2010, as amended are exempt from tax on capital gains.
The March 2021 Budget announced a further increase to the main
rate of corporation tax to 25% from 1 April 2023. This rate has
been substantively enacted at the balance sheet date.
There is no unrecognised deferred tax asset or liability at 30
June 2021.
8. Earnings per share
30 June 2021
GBP000s
Revenue and capital profit attributable to equity holders of the Company 2,768
------------------------
Weighted average number of ordinary shares in issue 93,487
------------------------
Basic and diluted earnings per share (pence) 2.96
------------------------
Basic and diluted earnings per share are the same as there are
no arrangements which could have a dilutive effect on the Company's
ordinary shares.
9. Investments at fair value through profit and loss
Total
GBP000s
Fair value at start of the period -
Loan advanced to Dore Hold Co Limited 94,481
Shareholding in Dore Hold Co limited 8,000
Unrealised gain on investments at FVTPL 1,811
Loan interest 2,073
---------
Fair value at end of the period 106,365
There is a loan agreement between the Company and DORE Hold Co
Limited for GBP120,000,000. At the reporting date GBP94,481,000 had
been advanced. The rate of interest on the loan is a rate agreed
between DORE Hold Co Limited and the Company and has been set at 6%
per annum. Interest accrued at the period end and outstanding at
the reporting date amounted to GBP2,072,853. Interest is repayable
at the repayment date, of 31 December 2030 unless otherwise agreed
between the parties to repay earlier.
The Company owns nine shares in DORE Hold Co Limited that were
purchased for a consideration of GBP8,000,000.
Fair value measurements
IFRS 13 "Fair Value Measurement" requires disclosure of fair
value measurement by level. The level of fair value hierarchy
within the financial assets or financial liabilities ranges from
level 1 to level 3 and is determined on the basis of the lowest
level input that is significant to the fair value measurement.
The fair value of the Company's investments is ultimately
determined by the underlying net present values of the SPV
("Special Purpose Vehicle") investments. Due to their nature, they
are always expected to be classified as level 3 as the investments
are not traded and contain unobservable inputs.
There have been no transfers between levels during the period.
The fair value hierarchy consists of the following three
levels:
-- Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2 - Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices).
-- Level 3 - Inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
The following table analyses the Company's assets at 30 June
2021:
Level Level Level Total
1 2 3 GBP'000 s
GBP'000 GBP'000 GBP'000
s s s
Investment portfolio
summary
Unlisted investments
at fair value through
profit and loss - - 106,365 106,365
Total - - 106,365 106,365
The determination of what constitutes 'observable' requires
significant judgement by the Company. Observable data is considered
to be market data that is readily available, regularly distributed
or updated, reliable and verifiable, not proprietary, and provided
by independent sources that are actively involved in the relevant
market.
The only financial instruments held at fair value are the
instruments held by the Group in the SPVs, which are fair valued at
each reporting date. The investments have been classified within
level 3 as the investments are not traded and contain unobservable
inputs. The Company's investments are all considered to be level 3
assets.
As the fair value of the Company's equity and loan investments
in Hold Co is ultimately determined by the underlying fair values
of the SPV investments, the Company's sensitivity analysis of
reasonably possible alternative input assumptions is the same as
for the Group.
There have been no transfers between levels during the
period.
Valuations are derived using a discounted cashflow methodology
in line with IPEV Valuation Guidelines and take into account, inter
alia, the following:
i. due diligence findings where relevant;
ii. the terms of any material contracts including PPAs;
iii. asset performance;
iv. power price forecasts from leading market consultants; and
v. the economic, taxation or regulatory environment.
The DCF valuation of the Group's investments represents the
largest component of GAV and the key sensitivities are considered
to be the discount rate used in the DCF valuation and assumptions
in relation to inflation, energy yield, foreign exchange and power
price.
The shareholder loan and equity investments are valued as a
single class of financial asset at fair value in accordance with
IFRS 13 Fair Value Measurement.
Sensitivity
Sensitivity analysis is produced to show the impact of changes
in key assumptions adopted to arrive at the valuation. For each of
the sensitivities, it is assumed that potential changes occur
independently of each other with no effect on any other base case
assumption, and that the number of investments in the portfolio
remains static throughout the modelled life.
Accordingly, the NAV per share impacts shown below assume the
issue of further shares to fund these commitments.
The analysis below shows the sensitivity of the portfolio value
(and its impact on NAV) to changes in key assumptions as
follows:
Discount rate
The weighted average valuation discount rate applied to
calculate the portfolio valuation is 7.3%
An increase or decrease in this rate by 0.5% points has the
following effect on valuation.
NAV per Total portfolio NAV per
Discount rate share impact -0.5% change Value +0.5% change share impact
GBP000 GBP000 GBP000
Directors' valuation
- Jun 2021 4.57 5,602 106,365 (5,103) (4.17)
Energy yield
The table below shows the sensitivity of the portfolio valuation
to a sustained decrease or increase of energy generation by minus
or plus 5% on the valuation, with all other variables held
constant. The fair value of the solar investments is based on a
"P50" level of electricity generation for the renewable energy
assets, being the expected level of generation over the long term.
For hydropower assets, the expected annual average production is
applied to the valuation, similar to the P50 assumption applied to
solar and wind assets.
A change in the forecast energy yield assumptions by plus or
minus 5% has the following effect.
NAV per Total portfolio NAV per
Energy Yield share impact -5% change Value +5% change share impact
GBP000 GBP000 GBP000
Directors' valuation
- Jun 2021 (5.85) (7,165) 106,365 7,546 6.16
Power prices
The sensitivity considers a flat 10% movement in power prices
for all years, i.e. the effect of adjusting the forecast
electricity price assumptions in each of the jurisdictions
applicable to the portfolio down by 10% and up by 10% from the base
case assumptions for each year throughout the operating life of the
portfolio.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect.
NAV per Total portfolio NAV per
Power Prices share impact -10% change Value +10% change share impact
GBP000 GBP000 GBP000
Directors valuation
- Jun 2021 (6.29) (7,705) 106,365 7,737 6.32
Inflation
The projects' income streams are principally a mix of subsidies,
which are amended each year with inflation, and power prices, which
the sensitivity assumes will move with inflation. The projects'
operating expenses typically move with inflation, but debt payments
are fixed. This results in the portfolio returns and valuation
being positively correlated to inflation. The weighted average
long-term inflation assumption across the portfolio is 2.4%.
The sensitivity illustrates the effect of a 0.5% decrease and a
0.5% increase from the assumed annual inflation rates in the
financial model for each year throughout the operating life of the
portfolio.
NAV per Total portfolio NAV per
Inflation share impact -0.5% change Value +0.5% change share impact
GBP000 GBP000 GBP000
Directors' valuation
- Jun 2021 (2.41) (2,956) 106,365 3,038 2.48
Foreign exchange
The Company, where appropriate, seeks to manage its exposure to
foreign exchange movements, the objective being, ensuring that the
Sterling value of known future investment commitments is fixed. The
Portfolio Valuation assumes foreign exchange rates based on the
relevant foreign exchange rates against GBP at the reporting date.
A change in the foreign exchange rate by plus or minus 10% (Euro
against Swedish Krona, has the following effect on the NAV, with
all other variables held constant. The effect is shown after the
effect of current level of hedging which reduces the impact of
foreign exchange movements on the Company's NAV.
NAV per Total portfolio NAV per
Foreign Exchange share impact -10% change Value +10% change share impact
GBP000 GBP000 GBP000
Directors' valuation
- Jun 2021 (1.49) (1,826) 106,365 2,059 1.68
10. Trade and other receivables
30 June 2021
GBP'000 s
Prepayments 27
VAT 179
------------------------
206
11. Trade and other Payables
30 June 2021
GBP'000 s
Amounts due to Downing LLP - VAT 111
Accruals 796
------------------------
907
Included in the accruals amount at the period end, GBP643,428
relates to the Management Fee charged by Downing LLP during the
period.
12. Called up share capital
Allotted, issued and fully Number of Shares Nominal value
paid: of shares (GBP)
Opening Balance at 8 October - -
2020
Allotted upon Incorporation
Ordinary Shares of 1p
each 1.00 0.01
Management Shares 50,000 50,000.00
Allotted /redeemed following
admission to LSE
Ordinary Shares issued 122,499,999 122,499,999.99
Management Shares redeemed (50,000) (50,000.00)
Closing Balance of Ordinary
Shares at 30 June 2021 122,500,000 122,500,000.00
The initial placing of 122,500,000 ordinary shares took place on
10 December 2020, raising gross proceeds of GBP122,500,000. Each
ordinary share has equal rights to dividends and has equal rights
to participate in a distribution arising from a winding up of the
Company.
Following the court approval on 20 April 2021, the share premium
cancellation was effective. Bonus shares with a consideration of
GBP52,123 were issued and allocated to the Share Premium
account.
The share premium account of GBP121,223,000 at 20 April 2021 was
transferred to a special distributable reserve account. The issue
costs of GBP2,450,000 relating to the initial listings were offset
against the special distributable reserve account. At 30 June 2021
the special distributable reserve account was GBP118,773,000.
13. Special distributable reserve
As indicated in the Company's prospectus dated 12 November 2020,
following admission of the Company's Ordinary Shares to trading on
the London Stock Exchange, the Directors applied to the Court and
obtained a judgement on 20 April 2021 to cancel the amount standing
to the credit of the share premium account of the Company.
As stated by the Institute of Chartered Accountants in England
and Wales ("ICAEW") and the Institute of Chartered Accountants in
Scotland ("ICAS") in the technical release TECH 02/17BL, The
Companies (Reduction of Share Capital) Order 2008 SI 2008/1915
("the Order") specifies the cases in which a reserve arising from a
reduction in a company's capital (i.e., share capital, share
premium account, capital redemption reserve or redenomination
reserve) is to be treated as a realised profit as a matter of
law.
The Order also disapplies the general prohibition in section 654
on the distribution of a reserve arising from a reduction of
capital. The Order provides that if a limited company having a
share capital reduces its capital and the reduction is confirmed by
order of court, the reserve arising from the reduction is treated
as a realised profit unless the court orders otherwise.
The amount of the share premium account cancelled and credited
to the Company's Special reserve is GBP121.2 million which can be
utilised to fund distributions by way of dividends to the Company's
shareholders.
14. Net asset value per ordinary share
The basic total net assets per ordinary share is based on the
net assets attributable to equity shareholders as at 30 June 2021
of GBP122,765,264 and ordinary shares of 122,500,000 in issue at 30
June 2021.
There is no dilution effect and therefore no difference between
the diluted total net assets per ordinary share and the basic total
net assets per ordinary share.
15. Cash and Cash equivalents
At the period end, the Company had cash of GBP17.1 million. This
balance was held by the Royal Bank of Scotland.
16. Financial Risk Management
The Company's investment activities expose it to a variety of
financial risks; including, interest rate risk, foreign exchange
risk, power price risk, credit risk and liquidity risk. The Board
of Directors has overall responsibility for overseeing the
management of financial risks, however the review and management of
financial risks are delegated to the AIFM.
Each risk and its management are summarised below.
Foreign exchange risk
Foreign exchange risk is defined as the risk that the fair value
of future cash flows will fluctuate because of changes in foreign
exchange rates. The Company monitors its foreign exchange exposures
using its near-term and long-term cash flow forecasts. Its policy
is to use foreign exchange hedging to provide protection to the
level of sterling distributions that the Company aims to pay over
the medium-term, where considered appropriate. This may involve the
use of forward exchange. The Company's sensitivity to foreign
exchange risk can be seen in Note 9.
Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair values of
financial instruments. The Company is exposed to interest rate risk
on its cash balances held with counterparties, bank deposits,
advances to counterparties through loans to its subsidiaries. The
Company may be exposed to changes in variable market rates of
interest as this could impact the discount rate and therefore the
valuation of the projects as well as the fair value of the loan
receivables. The Company is not considered to be materially exposed
to interest rate risk.
The Company's interest and non-interest bearing assets and
liabilities as at 30 June 2021 are summarised below:
Interest Non-Interest
Bearing bearing Total
Assets GBP000 GBP000 GBP000
Cash and cash equivalents 17,102 - 17,102
Trade and other receivables - 206 206
Investments at fair value through
profit and loss 94,481 11,884 106,365
Total assets 111,583 12,090 123,673
----------------------------------- ----------------- --------------------------- ----------
Liabilities
Accrued expenses - (907) (907)
Total liabilities - (907) (907)
----------------------------------- ----------------- --------------------------- ----------
Liquidity risk
Liquidity risk is the risk that the Company may not be able to
meet its financial obligations as they fall due. The Investment
Manager, AIFM and the Board continuously monitor forecast and
actual cash flows from operating, financing, and investing
activities to consider payment of dividends, repayment of trade and
other payables or funding further investing activities.
The Company ensures it maintains adequate reserves and will put
in place banking facilities and it will continuously monitor
forecast and actual cash flows to seek to match the maturity
profiles of financial assets and liabilities.
At the period end, the Company's investments were in secured
loan and equity investments in private companies, in which there is
no listed market and therefore such investments would take time to
realise, and there is no assurance that the valuations placed on
the investments would be achieved from any such sale process. The
Company's Hold Co is the entity through which the Company holds its
investments, the liquidity of Hold Co is reflective of the
investments in which it holds.
Credit risk
Credit risk is the risk that a counterparty of the Company will
be unable or unwilling to meet a commitment that it has entered
into with the Company. It is a key part of the pre-investment due
diligence. The credit standing of the companies which the Company
intends to lend or invest is reviewed, and the risk of default
estimated for each significant counterparty position. Monitoring is
on-going, and period end positions are reported to the Board on a
quarterly basis.
Credit risk may also arise from cash and cash equivalents and
deposits with banks and financial institutions. The Company and its
subsidiaries may mitigate their risk on cash investments by only
transacting with major international financial institutions with
high credit ratings assigned by international credit rating
agencies.
The carrying value of the investments, trade and other
receivables and cash represent the Company's maximum exposure to
credit risk.
The Company's credit risk exposure as at 30 June 2021 is
summarised below:
As at 30
June 2021
GBP000
Cash and cash equivalents 17,102
Total 17,102
--------------------------- -----------
Price risk
Price risk is defined as the risk that the fair value of a
financial instrument held by the Company will fluctuate.
Investments are measured at FVTPL. As at 30 June 2021, the Company
held two investments through its intermediate holding company. The
value of the underlying renewable energy investments held by Hold
Co will vary according to a number of factors, including discount
rate used, asset performance and forecast power prices.
Capital risk management
The capital structure of the Company at the year end consists of
equity attributable to equity holders of the Company, comprising
issued capital and reserves. The Board continues to monitor the
balance of the overall capital structure so as to maintain investor
and market confidence. The Company is not subject to any external
capital requirements.
Market risk
Returns from the Company's investments are affected by the price
at which the investments are acquired. The value of these
investments will be a function of the discounted value of their
expected future cash flows, and as such will vary with, inter alia,
movements in interest rates, market prices and the competition for
such assets. The Investment Manager carries out a full valuation
quarterly and this valuation exercise takes into account changes
described above.
17. Unconsolidated subsidiaries, associates and joint
ventures
The following table shows subsidiaries of the Group. As the
Company is regarded as an Investment Entity as referred to in note
2, these subsidiaries have not been consolidated in the preparation
of the financial statements:
Ownership
Interest as
at 30 June
Investment Place of Business 2021
Dore Hold Co Limited 4 England 5 100%
Downing Hydro AB 6 Sweden 7 100%
Abercomyn Solar Ltd(9) England(5) 100%
Andover Airfield Solar Developments
Ltd(6) England(5) 100%
Appleton Renewable Energy 8 England(5) 100%
Appleton Renewables(9) England(5) 100%
Beeston Solar Energy Ltd 9 England(5) 100%
Beeston Solar Ltd(9) England(5) 100%
Bourne Park Solar Ltd(10) England(5) 100%
Brookside Solar Ltd(9) England(5) 100%
Brown Argus Trading Lt(6) England(5) 100%
Chalkhill Commercial PV Ltd(6) England(5) 100%
Chalkhill Life Holdings Ltd(6) England(5) 100%
Deeside Solar Farm Ltd(11) England(5) 100%
Emerald Isle Solar Energy Ltd
(12) Northern Ireland(5) 100%
Emerald Isle Solar Ltd(9) Northern Ireland(5) 100%
Greenacre Redbridge Ltd(10) England(5) 100%
Greenacre Solar Energy Ltd(13) England(5) 100%
Greenacre Solar Ltd(9) England(5) 100%
Heulwen Solar Ltd(9) England(5) 100%
Hulse Energy Ltd(9) Northern Ireland(5) 100%
Hulse Renewable Energy Ltd (14) Northern Ireland(5) 100%
KPP132 Ltd(11) England(5) 100%
KPP141 Ltd(12) Northern Ireland(5) 100%
Moray Energy Ltd (15) Northern Ireland(5) 100%
Moray Power (UK) Ltd(11) Northern Ireland(5) 100%
Moray Power Ltd(9) Northern Ireland(5) 100%
Newton Solar Energy Ltd (16) England(5) 100%
Newton Solar ltd(9) England(5) 100%
Penarth Energy Ltd(9) England(5) 100%
Ridgeway Solar Energy Ltd(17) England(5) 100%
Ridgeway Solar ltd(9) England(5) 100%
Ringlet Trading Ltd(6) England(5) 100%
ROC Solar (UK) Ltd(18) Northern Ireland(5) 100%
ROC Solar ltd(9) Northern Ireland(5) 100%
Solar Finco 1 Limited(19) England(5) 100%
Solar Finco 2 Limited(20) England(5) 100%
Solar Finco 3 Limited(6) England(5) 100%
TGC Solar Oakfield Ltd(8) England(5) 100%
Triumph Renewable Energy Ltd(12) Northern Ireland(5) 100%
Triumph Solar Energy ltd (21) Northern Ireland(5) 100%
Triumph Solar ltd(9) Northern Ireland(5) 100%
Voltaise (UK) Ltd(23) England(5) 100%
Voltaise ltd(9) England(5) 100%
Wakehurst Renewable Energy Ltd
23 Northern Ireland(5) 100%
Wakehurst Renewables Ltd(9) Northern Ireland(5) 100%
York NIHE Ltd(10) Northern Ireland(5) 100%
York Renewable Energy Ltd 24 England(5) 100%
York Renewables Ltd(9) Northern Ireland(5) 100%
4 DORE Hold Co is the intermediate holding company of the Group, this is 100% owned by DORE PLC
5 The Registered office is St Magnus House, 3 Lower Thames Street, London EC3R 6HD
6 These Companies are 100% owned by DORE Hold Co Limited
7 The registered office is c/o Cirio Advokatbyra Box 3294, 103 65 Stockholm
8 Appleton Renewable Energy Ltd is 100% owned by Appleton
Renewables, Appleton Renewable Energy Ltd, in turn owns 100% of
Andover Airfield Solar Developments Ltd
9 These companies are 100% owned by Solar Finco 1 Ltd
10 Bourne Park Solar is 100% owned by Penarth Energy Ltd
11 These companies are 100% owned by Chalkhill Life Holdings Ltd
12 Emerald Isle Solar Energy Limited is 100% owned by Emerald Isle Solar Ltd
13 Both companies are 100% owned by Greenacre Solar Ltd
14 Hulse Renewable Energy Ltd is 100% owned by Hulse Energy Ltd
15 Moray Energy Ltd and Moray Power (UK) are 100% owned by Moray
Power Ltd, Moray Power (UK) Ltd owns 100% of KPP 132 Ltd
16 Newton Solar Energy is 100% owned by Newton Solar Ltd
17 Both companies are 100% owned by Ridgeway Solar Ltd
18 ROC Solar (UK) ltd is 100% owned by ROC Solar Ltd
19 Solar Finco 1 Ltd is 100% owned by Solar Finco 2 Ltd
20 Solar Finco 2 Ltd is 100% owed by Solar Finco 3 Ltd
21 Triumph Solar Energy is 100% owned by Triumph Solar Ltd,
Triumph Solar Energy Ltd in turn owns 100% of Triumph Renewable
Energy Ltd and KPP 141 Ltd.
22 Voltaise (UK) Limited is 100% owned by Voltaise Ltd.
23 Wakehurst Renewable Energy Ltd is 100% owned by Wakehurst Renewables Ltd
24 These Companies are 100% owned by York Renewables Ltd
18. Employees and Directors
The Company is governed by a Board of Directors, all of whom are
independent and non-executive. During the period, they received
fees for their services of GBP83,333. The Company has 3
non-executive Directors.
19. Dividends declared
As outlined in the IPO prospectus on 12 November 2020, the
Company is targeting an initial annualised dividend yield of 3% by
reference to the IPO price of GBP1.00, in respect of the financial
period from IPO on 10 December 2020 to 31 December 2021 (equating
to 3 pence per share), rising to a target annualised dividend yield
of 5% by reference to the IPO price in respect of the financial
year to 31 December 2022. Thereafter, the Company intends to adopt
a progressive dividend policy.
The Board declared an interim dividend of 1 pence per share on 1
September 2021 with respect to the period ended 30 June 2021. The
Dividend is expected to be paid on or around 30 September 2021 to
shareholders on the register on 10 September 2021. The Ex-dividend
date is 9 September 2021. The Company has chosen to designate part
of this interim dividend as an interest distribution. The dividend
will be paid as 0.50 pence per share as an interest payment and
0.50 as an ordinary dividend. 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.
20. Events after the balance sheet date
On 1 September 2021, The Board declared an interim dividend of 1
pence per share with respect to the period ended 30 June 2021.
The Dividend is expected to be paid on or around 30 September
2021 to shareholders on the register on 10 September 2021. The
ex-dividend date is 9 September 2021.
21. Related party transactions.
The amounts incurred in respect of the Investment Management
fees during the period to 30 June 2021 was GBP643,428. These were
unpaid at 30 June 2021.
The amounts incurred in respect of Directors fees during the
period to 30 June 2021 was GBP83,333. These amounts had been fully
paid at 30 June 2021. The amounts paid to individual directors
during the period were as follows:
Hugh Little (Chair) - GBP33,333
Jo De Montgros - GBP23,333
Ashley Paxton - GBP26,667
Tony McGing and Tom Williams were Directors of the Company from
8 October 2020 to 28 October 2020, they received no remuneration
during the period.
Acquisition of the Seed Assets
As identified in the Company's prospectus dated 12 November
2020, the Company benefited from an option to acquire a portfolio
of c.96 MWp of operational solar PV projects located in the UK. The
Seed assets were previously owned by Bagnall Energy Limited, a
Downing Managed Fund, managed by the Investment Manager on a
discretionary basis. This acquisition of the Seed Assets
represented a conflict of interest as the Investment Manager
provided investment management services to both the Company and
Bagnall Energy Limited.
In order to mitigate this conflict, the Investment Manager put
in place several procedures, including disclosure of the relevant
conflicts to the independent boards of both the Company and Bagnall
Energy Limited, separate buy and sell side external legal advisers
and a fairness opinion, addressed to the Company, on the value of
the Asset to be acquired was sought from an independent expert.
Cautionary Statement
The Review Section of this report has been prepared solely to
provide additional information to shareholders to assess the
Company's strategies and the potential for those strategies to
succeed. These should not be relied on by any other party or for
any other purpose.
The Review Section may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms "believes", "estimates",
"anticipates", "expects", "intends", "may", "will" or "should" or,
in each case, their negative or other variations or comparable
terminology.
These forward-looking statements include all matters that are
not historical facts. They appear in a number of places throughout
this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment
Manager concerning, amongst other things, the investment objectives
and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity,
prospects, and distribution policy of the Company and the markets
in which it invests.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual investment performance, results
of operations, financial condition, liquidity, distribution policy
and the development of its financing strategies may differ
materially from the impression created by the forward-looking
statements contained in this document.
Subject to their legal and regulatory obligations, the Directors
and the Investment Manager expressly disclaim any obligations to
update or revise any forward-looking statement contained herein to
reflect any change in expectations with regard thereto or any
change in events, conditions or circumstances on which any
statement is based. In addition, the Review Section may include
target figures for future financial periods. Any such figures are
targets only and are not forecasts.
This Half Year Report has been prepared for the Company as a
whole and therefore gives greater emphasis to those matters which
are significant in respect of Downing Renewables &
Infrastructure Trust PLC and its subsidiary undertakings when
viewed as a whole.
Company Information
Directors (all non-executive) Hugh W M Little (Chair)
Joanna de Montgros
Ashley Paxton
Registered Office Beaufort House
51 New North Road
Exeter
EX4 4EP
AIFM and Administrator Gallium Fund Solutions Limited
Gallium House
Unit 2
Station Court
Borough Green
Sevenoaks
Kent
TN15 8AD
Investment Manager Downing LLP
6(th) Floor
St Magnus House
3 Lower Thames Street
London
EC3R 6HD
Sponsor and Financial Adviser Singer Capital Markets LLP
One Bartholomew Lane
London
EC2N 2AX
Company Secretary Link Company Matters Limited
Beaufort House
51 New North Road
Exeter
EX4 4EP
Solicitors to the Company Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registrar Link Group
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Depositary Gallium P E Depositary Limited
Gallium House
Unit 2
Station Court
Borough Green
Sevenoaks
Kent
TN15 8AD
Auditor BDO LLP
55 Baker Street
London
W1U 7EU
National Storage Mechanism
A copy of the Half-Yearly Report 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 .
Legal Entity Identifier: 2138004JHBJ7RHDYDR62
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR DDGDCSGGDGBB
(END) Dow Jones Newswires
September 02, 2021 02:00 ET (06:00 GMT)
Downing Renewables & Inf... (LSE:DORE)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Downing Renewables & Inf... (LSE:DORE)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
