Downing Renewables &
Infrastructure Trust PLC
Annual report
for the period from incorporaon on 8 October 2020 to 31 December 2021
Contents
Company Overview
2
Highlights
4 Key Metrics
5 About Us
Strategic Report
6
Chairman’s Statement
10 Sustainability and Responsible Investment
26 Strategy and Business Model
35 The Investment Manager
37 Porolio Summary
38 Porolio
40 Investment Manager’s Report
55 Secon 172(1) Statement
59 Risk & Risk Management
65 Going Concern and Viability
Governance
68
Board of Directors
70 Directors’ Report
73 Corporate Governance Statement
82 Nominaon Commiee Report
83 Management Engagement Commiee Report
84 Audit and Risk Commiee Report
87 Directors’ Remuneraon Report
93 Statement of Directors’ Responsibilies
96 Independent Auditor’s Report
Financial Statements
104
Statement of Comprehensive Income
105 Statement of Financial Posion
106 Statement of Changes in Equity
107 Statement of Cash Flows
108 Notes to the Financial Statements
Other Information
139
Alternave Performance Measures
142 Glossary
144 Cauonary Statement
145 Company Informaon
146 Shareholder Informaon
Downing Renewables & Infrastructure Trust plc Annual Report | 1
Downing Renewables & Infrastructure Trust plc Annual Report | 2
Highlights
Successfully raised gross proceeds during the period of £137.4 million through
aplacing,anoerforsubscriponandanintermediariesoeratanissue
price of 100 pence per ordinary share at IPO in December 2020 (£122.5
million) and a placing at 102.5 pence per ordinary share in October 2021
(£14.9 million).
SwideploymentofthemajorityofIPOproceedsthroughthecompleonof
twoinvestments,invesng£102 million:
– porolioofeightoperaonalhydropowerplantsincentralandsouthern
Sweden for £60 million in February 2021; and
– a96MWpporolioofUKSolarPVassetsfor£42 million in March 2021.
Strong operaonalperformancemeantoperangprotofinvestmentswas
16.9%aboveexpectaons(beingthebudgetguresusedwhenacquiringthe
assets).Poroliogeneraonof195 GWh, 4.7%aboveexpectaons.
ReecngitsimpaculinvestmentsandspecicSustainableInvestment
Objecves,theCompanybecameanArcle9fundpursuanttotheEU
taxonomyandtheEUSustainableFinanceDisclosureRegulaons(“SFDR”).
Netassetvalue(“NAV”)as at 31 December 2021 of 103.5 pence per ordinary
share, up 5.5 pence per ordinary sharecomparedtotheNAVimmediatelypost
IPO of 98 pence per ordinary share.
Interim dividends per ordinary share of 2.25 pence paid during the period and a
further 1.25 pence per ordinary share declared (but not accrued)relangtothe
period to December 2021. Target dividend from 1 July 2021 onwards has been
increased against guidance at IPO to 5 pence per ordinary share per annum.
Cash dividend cover of 1.21x
1
1 Thesearealternaveperformancemeasures
Downing Renewables & Infrastructure Trust plc Annual Report | 3
Entered,viawhollyownedsubsidiaries,intotwoseparateloanfacilityagreements:
a £25 millionRevolvingCreditFacility(“RCF”)withSantanderUKplcandaseven-year
EUR 43.5 milliondebtfacilitywithSkandinaviskaEnskildaBankenAB(“SEB”)foritsSwedish
hydropower assets.
Post Year End Highlights
Acquiredtwooperaonalporoliosofhydropowerplants,locatedincentralSwedenfor
£20.1 million.
– Theporolioconsistsofc.12GWhpa ofhydropowerplantslocatedintheSE3electricity
pricingzoneandac.36GWhpa poroliolocatedintheSE2zone.
Completedtheacquisionofanoperaonal46MWonshorewindfarm located in north
eastern Sweden for £19.8 million.
– Theprojecthasbeenoperaonalsince2011andhasastrongoperaonaltrackrecord.
Theassetisexpectedtogeneratec.108GWhofelectricityperannum.
Downing Renewables & Infrastructure Trust plc Annual Report | 4
Key Metrics
As at or for period ending 31 December 2021
Total Shareholder Return
1,2
5.8%
NAV total return since IPO
1,2,3
7.9%
Share price 103.5 pence
Market capitalisaon £141.8m
GAV
1,4
£220.9m
Dividends per Ordinary share declared for FY21 3.5 pence
NAV £141.8m
NAV per share 103.5 pence
Environmental Performance
Assets avoided 90,523 tonnes of CO
2
and powered
the equivalent of 41,973 homes
1
Thesearealternaveperformancemeasures.
2
Total returns in sterling, including dividend reinvested.
3
BasedonNAVatIPOof£0.98/share.
4
A measure of total asset value including debt held in unconsolidated subsidiaries.
Downing Renewables & Infrastructure Trust plc Annual Report | 5
About Us
Downing Renewables & Infrastructure
TrustPLC(“DORE”orthe“Company”)
is a closed ended investment company
incorporatedinEnglandandWales.The
Company aims to provide investors with
anaracveandsustainablelevelof
income, with an element of capital growth,
byinvesnginadiversiedporolioof
renewable energy and infrastructure assets
intheUK,IrelandandNorthernEurope.
The Company’s strategy, which focuses
ondiversicaonbygeography,
technology,revenueandprojectstage,
is designed to deliver the stability of
revenues and the consistency of income
to shareholders.
TheCompanyisanArcle9fundpursuant
totheEUtaxonomyandtheEUSustainable
FinanceDisclosureRegulaons(“SFDR”).The
coresustainableInvestmentObjecveofthe
Companyistoacceleratethetransiontonet
zero through its investments, compiling and
operangadiversiedporolioofrenewable
energy and infrastructure assets to help
facilitatethetransiontoamoresustainable
future. This directly contributes to climate
changemigaon.
DOREisaGreenEconomyMark(London
StockExchange)accredited company with
anESGframeworkthataimstoprovide
investorswitharacvereturnswhile
contribungtothesuccessfultransionto
anet-zerocarboneconomy-resulngina
cleaner, greener future.
As at 31 December 2021, the Company
had 137,008,487 ordinary shares in issue
which are listed on the premium segment of
theOcialListandtradedontheLondon
StockExchange’sMainMarket.
DOREismanagedbyDowningLLP
(the“InvestmentManager”or“Downing”).
Downing Renewables & Infrastructure Trust plc Annual Report | 6
Chairman’s Statement
On behalf of the Board, I am pleased to present the rst annual report of
Downing Renewables & Infrastructure Trust PLC covering the period since
incorporaon on 8 October 2020 to 31 December 2021 (the “Annual Report”).
Inial Public Oering & Equity
Issuance
On 10 December 2020 the Company’s
ordinaryshareswereadmiedtotrading
on the premium segment of the main
marketoftheLondonStockExchange
following the Company’s IPO. The IPO
raised gross proceeds of £122.5 million
through which we were delighted
to welcome a very broad range of
shareholders to the register.
Inordertoaidourconnuinggrowth
plans and to enable us to pursue value
creangopportunies, we issued a
further 14.5 million new ordinary shares
on 19 October 2021 at a price of 102.5
pence per share, raising gross proceeds of
£14.9 million.
Acquisions
During the period, the Company and its
wholly owned subsidiaries (the “Group”)
have successfully invested £102 million in
new porolioinvestments and a further
£39.9millionaertheyearend,viaDORE
Hold Co Limited, the main investment
vehicle for the Group. The Company now
hasaporoliothatisexpectedtogenerate
355GWhofrenewableelectricityper
year.Theseacquisionshaveenabledusto
deploy alltheproceedsofequity issuance
since incorporaonintoa porolio
diversiedbytechnologyandgeography.
In my Interim report to Shareholders on the
period to 30 June 2021, I commented on
how our investment strategy is to invest in
adiversiedporolioofhydropower,solar,
wind, geothermal and other infrastructure
assetsacrosstheUK,IrelandandNorthern
Europe.Invesngindierenttechnologies
reduces our reliance on any given
renewable energy resource and provides
exposuretoassetswithdierenteconomic
lives, leading to more stable returns.
I am very pleased to report that the
InvestmentManagerhasconnuedto
make great progress in deploying the
The well-publicised increases in power prices and
inflation create strong tailwinds for us and I am
confident that the Company is well positioned to benefit
from these factors as we move into a new phase of
growth with intended capital raising and deployment.
Downing Renewables & Infrastructure Trust plc Annual Report | 7
Company’sequityissuanceproceeds.
Since the period end, the Company has
completedtheacquisionofa46MWp
operaonalwindfarminnortheastern
Sweden for £19.8 million. The Company
hasalsoaddedtoitsexisnghydropower
poroliowiththeacquisionofa2.9MWp
porolioofsmall-scalehydropowerassets
and6MWpporolioofthreehydropower
plants in southern and central Sweden.
Theaddionalhydropowerassetswere
acquiredfor£20.1million.
Debt Facilies
Intheinterestsofcapitaleciencyandto
enhanceincomereturns,long-termcapital
growthandcapitalexibility,theCompany
ispermiedtomaintainaconservave
levelofgearing.Toallowexibilitywith
making new investments, the Company,
via wholly owned subsidiaries, entered into
twoseparateloanfacilityagreements:a
£25millionRCFwithSantanderUKplcand
aseven-yearEUR43.5milliondebtfacility
withSEB.Furtherinformaononthese
faciliescanbefoundintheInvestment
Manager’s Review.
TheRCFwillgivetheGrouptheaddional
exibilitytoenabletheInvestment
Manager to capitalise on its current
investment pipeline, whilst also facilitang
future growth.
Financial Results
DuringtheperiodtheNAVperordinary
share increased from 98 pence at
admission(aercosts)to103.5 pence
at 31 December 2021, an increase of
5.5 pence. Including dividends paid
to date of 2.25 pence per ordinary
share, gives aNAVtotalreturnsince
IPO of 7.9%.Thisincreasereectsthe
netearningsandthevaluaonupli
of both our hydropower and solar
assetsfollowingstrongoperaonal
performancesinceacquisionalongside
a favourable economic environment.
Theporoliocompanies distributed
£4.7 million to the Company by way of
shareholder loan repayments and interest
during the period. An element of this
cash, £2.6 million was retained in the
Company’ssubsidiaryDOREHoldCoand
formspartofthevaluaon.
TheCompanymadeaprotfortheperiod
fromincorporaonto31December2021
of £10.1million,resulnginearnings
per ordinary share of 9.4 pence. As per
theaccounngstandards,thisincludes
therevaluaonoftheassets.
Downing Renewables & Infrastructure Trust plc Annual Report | 8
Porolio Performance
The3,234operangassetsproduced
approximately 195 GWh of clean
electricityduringthereporngperiod.
TheBoardconnuestobepleasedby
thestrongoperaonalperformanceof
theporolio.Generaonhasexceeded
expectaonsby4.7%and,inaddion
tostronggeneraonperformance,
theCompanyhasbenetedfrom
strengthening power prices in both
jurisdicons,parcularlySweden.
Together, these factors have driven
asignicantincreaseinrevenueand
cashows.
Dividends and Returns
As I set out in the Company’s Interim
Report, at IPO the Company set out a
dividend target of three interim dividends
totalling 3 pence per ordinary share in
respectofthenancialperiodfromIPO
to 31 December 2021, rising to a target
annualised dividend yield of 5 pence per
ordinary share against the IPO price of
100 pence per ordinary share, in respect
ofthenancialyearto31December
2022.Thereaer,theCompanyintends to
adopt a progressive dividend policy.
As announced in September 2021,
following the rapid deployment of
theequityissuanceproceedsandthe
connuedstrongtradingperformance
sincethetwoporolioswereacquired,
theBoardannounceditwasincreasingits
dividend guidance to 5 pence per share per
annum from30June2021(represenng
a dividend per share of 1.25 pence for
thequarterendingSeptember2021and
thereaer).
In line with the improved guidance, the
Company has paid interim dividends to
Shareholders of 1 penny per share for
the period from IPO to 30 June 2021 and
1.25pencepershareforthequarterto
30 September 2021. I am pleased that a
further dividend of 1.25 pence per share
has been announced and will be paid for
thequarterto31December2021. The
Companyconnuestomeettheincreased
dividend guidance target.
The Company achieved a cash dividend
cover of 1.21x for the dividends of
2.25 pence per share paid during the
period. Dividend cover is presented
excluding dividends paid immediately
following the issuance of new shares.
If these are included, the dividend cover
would be 1.14x.
TheNAVreectsthefairmarketvaluaon
oftheCompany’sporoliobasedona
discountedcashowanalysisoverthe
lifeofeachoftheGroup’sassets plus
the fair value of other assets and less the
Company’sliabilies.Theassumpons
whichunderpinthevaluaonareprovided
bytheInvestmentManagerandtheBoard
hassaseditselfwiththecalculaon
methodologyandunderlyingassumpons.
Outlook
TheBoardisverysasedwith the
£142.8milliondeployedintheve
investments made todate.Ataporolio
level,theInvestmentManager’sin-house
assetmanagementteamwillconnueits
focusondeliveringconnuedposive
operaonalperformance, along with
opmisaoniniaveswhereappropriate.
Downing Renewables & Infrastructure Trust plc Annual Report | 9
TheCompanywillconnuetoleverage
theexperseoftheInvestmentManager
todeliverstrongoperaonalperformance
whilst placing its sustainability goals at the
centreofitsoperaonalobjecves.
Thewell-publicisedincreasesinpower
pricesandinaoncreatestrongtailwinds
for the CompanyandIamcondent
thattheCompanyiswellposioned
tobenetfromthesefactorsaswe
move into a new phase of growth with
intended capital raising and deployment.
OurInvestmentManagerconnuesto
take a discerning approach to pursuing
investmentopportuniesthatwilldeliver
the greatest value to shareholders. The
Companyisacvelyprogressingseveral
hundreds of millions of pounds of pipeline
opportunies.OpportuniesspanUK
and Nordic hydropower, wind, solar and
baeries,Nordiculiesandessenal
infrastructure.
NetZerohasconnuedtodominate
the agenda during the period, with the
long-awaitedCOP26climatesummit
having takenplaceinGlasgow in
November 2021. The size and complexity
ofthechallengeisenormous,requiring
intervenonsacrossallsectors.
Despitesignicantheadwayonseveral
fronts,naonalclimateandnancing
commitmentssllfellshortofwhatis
needed to come to grips with the climate
challenge. It remains clear that more
renewableenergygeneraonisnecessary.
CountriessignalledtheirintenonatCOP26
tobeginthephasingoutoftradional
energy systems, and this means renewable
energies must take the place of fossil fuels.
Thescale-upofrenewablesneededwillbe
substanal.Aseconomiesaroundtheworld
move towards this carbon neutral future,
theCompanyiswellposionedtotake
advantageofthistransion.
In order to increase the Company’s
diversicaon,driveecienciesofscale
attheporoliolevel,spreadthexed
costs over a wider asset base and increase
liquidityforcurrentandfutureshareholders
theBoardintendsoverme to increase
the size of the Company through the issue
of further shares. Any such issuance will
be priced at a premium to the prevailing
net asset value and will be dependent
on demand from investors as well as the
availability of pipeline investments.
The Company and the Investment
Managerconnuetomonitortheongoing
conictbetweenRussiaandUkraineand
itseectonEuropeanpowermarkets.
I would like to thank my fellow Directors
and our Investment Manager for their
eortssincetheCompany’sIPOand
I would like to thank shareholders
for their support of the Company,
whichIamcondentiswellplacedto
connueitsgrowthanddeliveronits
InvestmentObjecves.
Hugh W M Lile
Chair
4 March 2022
Downing Renewables & Infrastructure
Trust plc
Downing Renewables & Infrastructure Trust plc Annual Report | 10
TheOECDesmatesthat$630billionof
newinvestmentisrequiredforeachyear
ofthenextdecadeinordertodeliverjust
a66%chanceoflimingtemperature
increase on the earth’s surface to below
2 degrees.
5
It is easy to be dwarfed by
the vast scale of eortneeded, however
by raising capital, deploying it into the
renewable energy sector and then
managingourgeneraoncapacityinthe
mostecientmanner,thecompanyis
makingatangiblecontribuon.
Meengtheworld’senergyneedswill
requirelargescalelandareastobe
converted for renewable energy use.
This highlights the need for responsible
stewardship of the land and strong
engagementwithlocalcommunies
6
.
These aspects are priority aspects of
the Company and Downing’s approach
to responsible development of energy
projects,andarealsocloselymonitoredby
theBoard.
Power density is the metric used to
describethequantyoftheearth’s
surfacerequiredtogenerateaunitof
energy.Typically,thepowerdensiesof
renewabletechnologiesaresignicantly
lower than fossil fuels
7
and therefore the
amountoflandrequiredishigher.
Sustainability and Responsible
Investment
Environmental performance
Acquision – 31 December 2021
Key Performance Indicators
3,255 Numberofrenewablegeneraonassets
121.4 MW MWofinstalledrenewablegeneraoncapacity
195GWh GWhenergygenerated
90,523 GHGemissionsavoided(tCO2e)
41,973 Equivalenthomes powered
4 Number of beehives
12 Number of bird boxes
10 Number of bat boxes
Social performance
£19,646 Annual community funding
Governance
14 Number of health and safety audits
0 Numberofaccidents,injuries,seriousinjuries
5
OECD(2017),InvesnginClimate,InvesnginGrowth,OECDPublishing,Paris,
hps://doi.org/10.1787/9789264273528-en.
6
hps://www.carboncommentary.com/blog/2020/8/23/how-much-space-will-a-100-renewables-uk-require
7
hps://net-zero.blog/book-blog/land-use-by-energy-source#:~:text=Power%20density%20is%20a%20
measure,%2C%20industry%2C%20and%20convenience%20living.
Downing Renewables & Infrastructure Trust plc Annual Report | 11
Beyondjustraisinganddeploying
capital, we have an important part to
play in raising awareness on climate
change,educangaroundthesoluons
andinvesnginthelandscapeand
communiesthatwe areprotecng.
Taken together, these aspects of how we
behave all add up to our social licence to
operate
8
.They are notjust‘nicetohaves’,
theyarecricalenablers.
Green Energy Educaon
The Company and Downing are pleased to
bepartneringwithEarthEnergyEducaon,
acompanydedicatedtogengchildren
outoftheclassroomandvisingthe
Company’s renewable energy sites across
theUKtohelpeducatethemaboutgreen
energy and inspire them about this sector.
Pursuingthedevelopmentandoperaonof
these renewableenergyprojects has now
becomeanintergeneraonalresponsibility.
Duringthe2021/22schoolyear,Earth
EnergyEducaonwillbefacilitang
10 schoolvisitstoseveralground-
mountedsolarprojectsownedbythe
Company. During these trips, the children
will learn what makes solar energy
renewableanditsenvironmentalbenets.
Perhaps most importantly, the children
willlearnandunderstandtherelaonship
betweenclimateandenergyconsumpon
-importantknowledgewhenaddressing
climate change.
Addionally,EarthEnergyEducaonwill
bearrangingveclassroom“solartoy
design and make days” leading to one
biginter-schoolsolarcarraceday.By
construcngsolartoysandsun-fuelled
cars, children will get to grips with how
solartechnologycanbeusedinahands-
on session.
Finally,thegroupwillbeholdingve
“poweryourschool”workshops.Working
withaUK-widenetworkofsciensts,
children will have the opportunity to
record energy data in their school. They
will use this data to design the best
locaontoinstallsolarpanelsorwind
turbines. It will be a valuable exercise
for the children who will learn about the
ecienciesofinstallingrenewableenergy
generators.
In all, these vital sessions will reach and
hopefully inspire around 1,300 children.
Mul-purpose land use
During the period, the Company
alongside Downing has been working in
collaboraonwithlocalbranchesofthe
BrishBeekeepersAssociaontohouse
beesonitsUKSolarsites.Important
factors that had to be considered
8
hps://socialicense.com/denion.html
Downing Renewables & Infrastructure Trust plc Annual Report | 12
includeexibleaccessarrangementsfor
the beekeepers and apiary fencing so
that grazing sheep don’t get too close.
The ongoing goal is renewable energy
assets that enhance an ecosystem that
encompasses and encourages wildlife.
The world is increasingly looking for
sustainableandcyclicalbusinesspracces
thatbenettheplanetandallthe
creatures that live on it; sheep play an
important part in the maintenance of land
aroundtheCompany’sground-mounted
solar panels and the performance of
renewable energy assets.
Long grass can cause
shading on the panels and
reducetheireciency.The
underperformance of one panel
willaecttheproducvityof
all the other panels surrounding
it as they are connected in a
series.Itisessenaltokeepthe
grass around the solar panels
trimmed,butusingtradional
diesel-poweredmowersisme
consuming, expensive and not
environmentally friendly.
Sheep maintain the land in
afullysustainableandeco-
friendly way while enabling
dual purpose land use. The
sheep support the biodiversity
of the area by avoiding the use
ofpescides,thusallowing
local wildlife and pollinators
toourishandthrive.They
alsooeralowcostyethighlyeecve
method for stopping grass and weeds
from overgrowing. It also minimises
the risks of damaging the solar panel
infrastructurethatatradionalmower
can pose.
Weareproudtobedemonstrang
ourcommitmenttotheBRENaonal
Solar Centre’s Agricultural Good
Pracce Guidance for Solar Farms
9
and
the 10 Commitmentsofgoodpracce
establishedbytheUKSolarTrade
associaon.
10
We currently operate
8 grazing licences and 4 beehives across
247acresofmul-useland.
9
NSC_-Guid_Agricultural-good-pracce-for-SFs_0914.pdf(bre.co.uk)
10
SolarFarms:10Commitments•SolarEnergyUKh
Downing Renewables & Infrastructure Trust plc Annual Report | 13
“Stewardship is the responsible allocaon, management and
oversight of capital to create long-term value for clients and
beneciaries leading to sustainable benets for the economy,
the environment and society.”
UK Stewardship Code 2021
When we use the term ‘Responsible Invesng’ we are
principally referring to avoiding, migang and managing
risks on behalf of our investors and the environment and
society that we share. The base line for this approach is the
Downing exclusion policy.
Downing LLP’s investment exclusions are expressions of
principles that we share in common with our investors.
They are the lines in the sand that collecvely we will not
cross. Briey summarizing the policy; exclusions are not
applied on the basis of sectors but are informed by two
areas: products and behaviors.
There are certain corporate behaviors which we
believe that society in the form of customers, suppliers,
competors and regulators will not tolerate and therefore
avoiding these companies protects our investors from
reputaonal risk and poor performance outcomes. These
behaviors are typically ones which we would not condone
in our own business operaons or our supplier’s and we
are aligned with our investors in not wishing to associate
ourselves with them. Our framework for acceptable
Corporate Behavior is the United Naons Global
Compact. Dened breaches of the Global Compact would
constute an investment exclusion.
The Investment Manager is a Responsible Investor. This
responsibility is contextualized by two key commitments;
Downing is a signatory of the Principles for Responsible
Investment (supported by the United Naons) and the
Financial Reporng Council’s UK Stewardship Code.
Both commitments share in common the integraon
of Environmental, Social and Governance factors in
investment decision-making and the principle of acve
ownership.
ESG Integraon is the systemac and explicit inclusion
by investment managers of Environmental, Social and
Governance (ESG) factors into nancial analysis.
Acve ownership is the use of the rights and posion
of ownership to inuence the acvies or behaviour of
investee companies.
We believe that ESG factors are nancially material and
present both risks and opportunies for investors. Acvely
managing material risks and opportunies is how we protect
and enhance value for our investors.
The terms ‘Responsible’ and ‘Sustainable’ are frequently
used interchangeably but we believe that they mean
subtly dierent things. As Investment Manager we are
responsible to our investors for the execuon of their
investment mandate. We put our investor’s interests
ahead of our own. However, our responsibility is not just
owed to our investors, as responsible stewards of capital
we have a broader responsibility to society too:
Downing’s Approach to
Sustainability
Downing Renewables & Infrastructure Trust plc Annual Report | 14
There are some products which although we cannot
uninvent them, we can refuse to fund their producon.
These products are typically those where there is
sucient internaonal consensus that refusing to invest
is a meaningful act, that supports the containment of
a product which we believe has no legimate purpose.
Product level exclusions would apply to companies
deriving revenue from dened controversial weapons, the
manufacture of tobacco products and companies with
specic types and levels of fossil fuel exposure.
When we talk about Responsible Investment, we
recognize the natural relaonship between exclusion,
engagement and divestment. Whilst adherence to the
principles of the UN Global Compact Is a key tenet
of our exclusion policy, proacvely encouraging best
pracce across the themac areas of the compact Is the
foundaon for our rm-wide engagement policy.
We are used to thinking about our responsibility to our
investors, it is implicit in our duciary duty. It is also
not unusual for us to be thinking about our investor’s
beneciaries too because our investors are frequently
invesng for their children’s future.
The same principle applies to society; when we think
about our responsibility to society, in the context of
Sustainability we are also thinking about the society of the
future.
“Sustainable development is development that meets
the needs of the present without compromising the
ability of future generaons to meet their own needs.”
The Brundtland Commission, Our Common Future
Sustainability, on the face of it is just about the rate at which
something can be maintained. Its most frequently used
to describe resource eciency. However, within nancial
regulaon, ‘Sustainable Investment’ is a dened term:
‘Sustainable investment’ means an investment
in an economic acvity that contributes to an
environmental objecve… or… a social objecve…
provided that such investments do not signicantly
harm any of those objecves and that the investee
companies follow good governance pracces.
EU Sustainable Finance Disclosure Regulaon
The Company was proud to be awarded The Green
Economy Mark by the London Stock Exchange at IPO 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
soluons. The award is recognion that the Company
meets the required industry standards of the Company’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 invesng in a greener future and
supporng the UK’s commitment to a net-zero economy.
Porolio alignment to EU taxonomy
Aligned
Not
Aligned
46%
31%
22%
Electricity generaon
from Hydropower
Electricity generaon
photovoltaic
technology using Solar
Cash
In addion to a high degree of taxonomy alignment,
the United Naons Sustainable Development Goals are
frequently used to describe the posive contribuon that
our investments make to help solve some of the most
pressing needs facing our environment and society.
Downing Renewables & Infrastructure Trust plc Annual Report | 15
maximised through the proacve monitoring
and incident response within the asset
management team. Long term generaon
prospects are improved through ensuring
long term maintenance strategies are
appropriate to keep the assets working
eecvely. In addion, the program
underway to extend the generang life
of the ground mount solar assets will
substanally increase the ancipated
generaon from exisng assets.
Target 9.4:
By 2030, upgrade infrastructure and
retrot industries to make them sustainable,
with increased resource-use eciency
and greater adopon of clean and
environmentally sound technologies and
industrial processes, with all countries taking
acon in accordance with their respecve
capabilies
Since acquiring the UK solar porolio the
asset manager has undertook an upgrade
to its infrastructure by parcipang in the
Energy Network’s Associaon program
to ensure compliance with its engineering
recommendaons. These changes designed
to help Naonal Grid ESO operate the
electricity network more eciently, reduce
balancing costs and therefore provide
savings to electricity customers.
Target 13.3:
Improve educaon, awareness-raising and
human and instuonal capacity on climate
change migaon, adaptaon, impact
reducon and early warning
In December 2021 Downing is pleased to
be partnering with Earth Energy Educaon,
a company dedicated to geng children
out of the classroom and vising renewable
energy sites across the UK to educate them
about green energy. During the 2021/22
school year, Earth Energy Educaon will
be facilitang 10 school visits to several
ground-mounted solar projects managed by
Downing. During these trips, the children will
learn what makes solar energy renewable
and its environmental benets. Perhaps
most importantly, the children will learn
Target 7.1:
By 2030, ensure universal access to
aordable, reliable and modern energy
services
The UK solar porolio is highly diversied
across individual assets and geographies.
A signicant level of solar generaon from
the commercial and residenal rooops
assets is provided on a free or discounted
basis to the property owner. During the
period of ownership, 9,908 MWh was
made available to residenal occupants at
no cost. In addion, 7,263 MWh has been
made available to commercial landlords on a
discounted basis.
Although not all energy generated is used
by the property and any excess is exported
to the grid, the retail value of the electricity
generated is in excess of £2.8m.
Our hydropower porolio also provides
electricity to local residents.
Target 7.2:
By 2030, increase substanally the share of
renewable energy in the global energy mix
The renewable generaon porolio is
proacvely managed to maximise nancial
return from each asset, oen meaning
that generaon is increased over the short
and long term. Short term generaon is
Downing Renewables & Infrastructure Trust plc Annual Report | 16
and understand the relaonship between
climate and energy consumpon – important
knowledge when addressing climate change.
Target 15.5:
Take urgent and signicant acon to reduce
the degradaon of natural habitats, halt the
loss of biodiversity and, by 2020, protect and
prevent the exncon of threatened species
Across our ground mount solar porolio, we
are now stewards of 358 acres of land. Over
preceding generaons, intensive farming
pracces, the use of ferlisers, herbicides
and pescides have had a detrimental
impact on farmland birds, pollinators, and
the ower-rich habitats themselves
11
.
Our ongoing land management plans
have seen the sewing of region-specic
wildower seed mixes, the re-introducon
of pollinators through partnership with
local branches of the Brish Beekeepers
Associaon and specic measures to
encourage UK Internaonal Union for
Conservaon of Nature Red list species
back onto the land. Going forward, we are
planning an ongoing program of ecological
site surveys to idenfy rene and opmise
our contribuon to SDG 15.
Target 15.9:
By 2020, integrate ecosystem and
biodiversity values into naonal and local
planning, development processes, poverty
reducon strategies and accounts
Target 15.a:
Mobilize and signicantly increase nancial
resources from all sources to conserve and
sustainably use biodiversity and ecosystems
Environmental, Social and Governance Objecves
Over the period, we have agreed a set of ESG KPIs against which we intend to track the ESG performance of our
investments over me.
Environmental Social Governance
Renewable energy capacity Jobs supported Board independence & experse
Renewable electricity / heat generated
Number of accidents, injuries and
fatalies
Rao male to female board members
(where funds do not control investments)
GHG emissions avoided
Existence of a formal community
engagement / complaints handling
process
ABC policies in place and regularly
reviewed
GHG emissions (scope 1 and 2)
Number of engagements with
stakeholders including local community
complaints
Material contractor due diligence
Proporon of purchased energy from
renewable sources
Ability to host educaon visits
Acon taken to avoid or minimise
habitat degradaon
Educaon/community visits
Natural habitat creaon / restoraon Community fund contribuons
Environmental incidents including non-
compliance with permits / regulaons
11 State-of-Nature-2019-UK-full-report.pdf (nbn.org.uk)
Downing Renewables & Infrastructure Trust plc Annual Report | 17
Task Force for Climate Related Financial
Disclosures (“TCFD”)
The TCFD Recommendaons are designed to encourage
consistent and comparable reporng on climate-
related risks and opportunies by companies to their
stakeholders. The TCFD Recommendaons are structured
around four content pillars: (i) Governance; (ii) Strategy; (iii)
Risk Management; and (iv) Metrics & Targets. Throughout
this report, the Company has reported in line with TCFD
recommendaons.
The Company strives to maintain the highest
standards of corporate governance and eecve risk
management at both a Company and a porolio level.
Although the Company is not required to report under
the recommendaons of the TCFD, many of those
recommendaons are followed in order to enhance the
Company’s disclosures.
Governance
Governance is the responsibility of the Board, with key
funcons delivered through delegated commiees with
the oversight of the Board and the ongoing support of the
Investment Manager.
The Board meets on at least a quarterly basis, with
addional ad-hoc meengs arranged as appropriate.
Informaon relang to the Company’s acvies in fullling
its sustainable Investment Objecve are presented on
at least a quarterly basis. This data enables the Board
to sasfy itself that it is fullling the climate migaon
obligaons explicit in the Company’s sustainable Investment
Objecve; “to accelerate the transion to net zero through
its investments, compiling and operang a diversied
porolio of renewable energy and infrastructure assets to
help facilitate the transion to a more sustainable future.
This directly contributes to climate change migaon.”
On at least an annual basis the Board reviews climac
data, specic to the geographies and asset types in the
porolio, in order to review and develop the Company’s
strategy in relaon to the risks and opportunies from
climate change.
The remit of the Board and its Commiees are set out in
more detail in the Corporate Governance Statement on
pages 73 to 81. However, specically the role of the Audit
and Risk Commiee is to monitor the eecveness of the
Company’s nancial reporng, service providers, systems
of internal control and risk management, and the integrity
of the Company’s external audit processes. In fullling
this purpose, the Commiee has oversight of nancial
disclosures, including TCFD reporng.
In addion to the Board’s oversight funcons, the
Directors have appointed an Investment Manager and
delegated the day-to-day management of the Company
to the Investment Manager. Rather than creang new
structures to govern and oversee the management of
climate change risks and opportunies, the Investment
Manager has integrated climate change into its exisng
structures, processes and risk registers. On the instrucon
of the Board, the Investment Manager gathers porolio
data on an ongoing basis, that enables the board to
oversee the delivery of the Company’s sustainable
Investment Objecve.
The Investment Manager also provides dedicated subject
maer experse to support the Board’s annual review and
development of strategy in relaon to climate change risks
and opportunies. The Investment Manager integrates
Environmental, Social and Governance factors into its
investment processes, with climac factors forming
integral components of the investment thesis. Finally, the
Investment Manager operates an Investment Commiee
to oversee and approve the acquision and disposal of
assets on behalf of the porolio. Climac factors are
reviewed as crical components of the investment thesis.
Downing Renewables & Infrastructure Trust plc Annual Report | 18
Strategy
Scenario Analysis for Strategy Development
In order to analyse the potenal range of risks and
opportunies associated with climate change, the Board
selected three scenarios from the potenal six developed
by The Central Banks and Supervisors Network for
Greening the Financial System (“NGFS”). Selecng one
scenario from each of the available boxes, enabled the
board to consider the possible combinaons of physical
and transional risks.
NGFS Scenarios
Physical risks arise from the changes in weather and
climate that impact infrastructure and economic acvity.
They are typically sub-divided into acute risks like extreme
weather events or chronic risks like rising sea levels,
dierenated by the me taken to have a given eect.
Transion risks are the societal changes arising from a
transion to a low-carbon economy. They could arise
from changes in public sector policies, innovaon or the
aordability of certain technologies, investor or consumer
senment towards behaviours or products.
The three selected scenarios are:
1. The Current Policies Scenario (Base Case)
assumes that only currently implemented policies
are preserved, leading to high physical risks.
Emissions grow unl 2080 leading to about 3°C
of warming and severe physical risks. This includes
irreversible changes like higher sea levels. This
scenario will be updated to reect progress made
at COP26 but remains the base case scenario with
the greatest probability.
2. The Delayed Transion Scenario assumes global
annual emissions do not decrease unl 2030.
Strong policies are then needed to limit warming
to below 2°C. Negave emissions are limited.
This scenario assumes new climate policies are
not introduced unl 2030 and the level of acon
diers across countries and regions based on
currently implemented policies.
Downing Renewables & Infrastructure Trust plc Annual Report | 19
3. The Net Zero 2050 Scenario is an ambious
scenario that limits global warming to 1.5°C
through stringent climate policies and innovaon,
reaching net zero CO₂ emissions around 2050.
Some jurisdicons such as the US, UK, EU and
Japan reach net zero for all greenhouse gases by
this point. This scenario assumes that ambious
climate policies are introduced immediately.
Physical risks are relavely low, but transion risks
are high.
Scenario Probabilies
These scenarios are not predicons and instead are
presented as hypothecal outcomes. However, an analysis
of their relave probability indicates how strategy may
develop over me or indeed where the Board focused
their analysis.
At this point in me, the Net Zero 2050 Scenario is
assessed to be the least probable of the three scenarios
recognizing the lack of sucient internaonal consensus,
co-operaon and investment. The Net Zero 2050
Scenario is dependent upon near term variables and so
without signicant change, its probability will drop sharply
in the near term.
Whilst the Current Policies Scenario will be updated to
reect progress made at COP26, it remains the base case
scenario with the greatest probability. If policy progress
remains limited, the probability aributed to this >3˚C
scenario will increase over me.
The probability of achieving a Delayed Transion Scenario
is dependent upon future unknown variables, therefore
without any signicant change over the medium term, its
probability will reduce over me.
Recognising that the Current Policies Scenario is
considered the most probable, the Board’s analysis of
Climate risks was focused on an assumpon of higher
physical risks and lower transional risks. The relave
probability of these scenarios will be reviewed on at
least an annual basis and will inform future strategy
development.
Downing Renewables & Infrastructure Trust plc Annual Report | 20
Analysis Periods for Strategy Development
Recognising the internaonal climate policy focus on the next 30 years and the projected lifespan of a number of the
assets within the Company’s porolio, the Board’s scenario analysis was considered over a 30-year period, sub divided
into three me horizons: short-term 2022-2030; medium term 2031–2040; and long-term 2041-2050.
The illustrave table below shows how the relave combinaons of physical and transional risks might be expected to develop
over me and why the Board’s analysis focused on physical risks.
Illustrave Risk Composion over me
Risk Composion Short Term
2022 - 2030
Medium Term
2031 - 2040
Long Term
2041 - 2050
Current Policies Physical High Higher Highest
Transional Low Low Low
Delayed Transion Physical High Higher Low
Transional Low Highest High
Net Zero 2050 Physical Low Lower Lowest
Transional Low Lower Lowest
Physical Factors, Porolio Impacts and Modelling
Whilst climate change is a complex phenomenon, physical risks and opportunies to the porolio were idened across
four principal factors: air temperature change, wind speed change, precipitaon level change and change to incidence rate of
extreme weather events.
In addion to the data above, porolio eciency, micro and macro-economic data is reported to the Board on a quarterly basis.
Data relang to generaon and porolio eciency is ulised to assess the eect of any physical risks to the porolio and the
company’s delivery of its sustainable Investment Objecve. Micro and macro-economic data, for example energy commodity
prices, carbon emissions allowance prices and subsidy rates are ulised to assess the impact of transional risks.
For each risk factor, the porolio technology and geographic exposure were considered to assess the potenal impact on the
porolio. An appropriate modelling input was then idened to enable the Board to assess the potenal impact of the factor.
For example, the table below describes how a projected change in precipitaon may require changes to ground maintenance
acvity associated with the solar porolio and therefor how operaonal costs could change over me to reect this.
Meanwhile changes to precipitaon rates could aect generaon from hydropower assets.
Downing Renewables & Infrastructure Trust plc Annual Report | 21
Physical Factors, impact and modelling table
Physical Factors
Solar Hydropower
Impact on Porolio Assumpon to ex Impact on Porolio Assumpon to ex
Air Temperature Δ Change in tech eciency
due to temperature
uctuaons
Performance rao Timing of spring melt Generaon prole
Wind Δ Mounng structure
maintenance, potenal to
reduce surface temperature
of modules
Operaonal costs Nil N/A
Precipitaon Δ Ground maintenance
acvity, potenal to impact
on surface dust of modules
Operaonal costs
relang to land
management
More water ow and
generaon capability
Generaon
Extreme Weather Δ Damage to equipment Operaonal costs
(insurance premiums) /
Capex on drainage
Spill (eciency during
high water ow) /
equipment damage
Generaon / Capex
A worked example - precipitaon change under the current policies scenario
The company’s solar assets are predominantly located in the United Kingdom. The le and middle maps show the projected
change in Precipitaon (in %) in United Kingdom since the reference period 1986-2006, in the years 2030 and 2050 under a
NGFS current policies scenario. The third map shows the dierence between the two.
Precipitaon Change UK
Downing Renewables & Infrastructure Trust plc Annual Report | 22
Short Term: Solar modules are typically hydrophobic, making it unlikely that increased precipitaon would result in mineral
build-up on the modules, however prolonged periods of cloud cover may marginally reduce generaon over the short term.
Increased precipitaon could increase growth of vegetaon around module arrays and require more frequent maintenance
as a result. To monitor these short-term eects, the eciency of modules and their generaon proles are monitored on an
ongoing basis with this data built into ongoing porolio valuaons. Valuaon models already allow for ad hoc maintenance
costs within operaonal expenditure.
Medium Term: Consistently higher precipitaon rates may require addional capital expenditure to improve site drainage.
The Company’s hydropower assets are predominantly located in Sweden. The le and middle maps show the projected
change in Precipitaon (in %) in Sweden since the reference period 1986-2006, in the years 2030 and 2050 under a
NGFS current policies scenario. The third map shows the dierence between the two.
Precipitaon Change Sweden
Short, Medium and Long Term: Increased precipitaon rates are likely to have a posive eect on generaon from
hydropower assets. Marginal increases to roune maintenance are likely to be oset by increased generaon.
This worked example focused solely on projected precipitaon changes in isolaon from other factors, across two technology
types and geographies. When considered alongside other factors like changes in air temperature and wind speed, the potenal
future variaon in water supply to Nordic hydropower assets was assessed to have a more signicant potenal impact on
porolio valuaons than the marginal impact from UK based solar assets. For this reason, signicant work is undertaken
before the acquision of the hydropower porolio and the forecast impact of climate change on the specics assets was
included within nancial pricing models.
Downing Renewables & Infrastructure Trust plc Annual Report | 23
Increased precipitaon, both on an annual basis and on shorter meframes can challenge the ability to handle high
water ow. Temperature drives the melng of snow reservoirs and milder winters can result in earlier spring oods and
increased ow during the winter months.
When the data is available, we consider using seasonal inow a more accurate measure than precipitaon alone as it
reects the dimensioned ow that the power plant will get, both in terms of producon and excess water ow.
The projected changes to the climate bring several other consideraons in terms of potenal impact to asset valuaons.
Increased inow during winter months can be benecial if it connuous to correlate with higher electricity market prices,
although changes can also impact the level of wind generaon and changing demands for heat.
The relave impact of Physical and Transional risks
Changes to physical factors are projected from modelled greenhouse gas emissions, extrapolated principally from
populaon growth, economic acvity, energy ulisaon and the generaon mix. Many of these physical factors are omni-
direconal and the potenal eects are assessed to be gradual.
Transional factors can have a much wider spread of potenal outcomes as a result of concentrated human decision-
making. For example, populaon growth is inuenced by billions of unconnected human decisions and therefore the
probability of direconal changes to populaon growth over the short term are extremely low. In contrast policy changes
to government subsidies can be inuenced by a relavely small number of people over a short period of me.
Across each of the three scenarios there is an assumpon that policies and consumer preferences are likely to become
more supporve of renewable energy generaon over me. Whilst harder to project than the porolio eects of physical
risks, transional factors are likely to remain supporve of porolio valuaons.
Porolio Sensivity Analysis
Building on the scenario modelling and assumpons set out above, and data provided by NGFS for the most likely scenario we
are able to quanfy the impact on environmental factors over an appropriate meframe.
Metric 2022 -
2030
2031 -
2040
2041 -
2050
Solar - UK
Air Temperature Δ
temperature of air masses two meters above the
Earth's surface
0.3% 0.6% 0.8%
Wind Δ
velocity of an air mass 10 metres above ground
(0.3%) (0.8%) (1.7%)
Precipitaon Δ
mass of water (both rainfall and snowfall) falling on
the Earth's surface
(0.1%) 2.0% 2.9%
Extreme Weather Δ
percentage change in the cost of damage from such
events
6.9% 15.3% 23.3%
Downing Renewables & Infrastructure Trust plc Annual Report | 24
Metric 2022 -
2030
2031 -
2040
2041 -
2050
Hydropower - Sweden
Air Temperature Δ
temperature of air masses two meters above the
Earth's surface
0.4% 0.9% 1.2%
Wind Δ
velocity of an air mass 10 metres above ground
(0.1%) (0.8%) (1.2%)
Precipitaon Δ
mass of water (both rainfall and snowfall) falling on
the Earth's surface
0.8% 1.5% 1.9%
Extreme Weather Δ
level of damage from river oods that is expected to
occur every year, measured in USD
16.0% 56.0% 34.8%
Taking the changes into account and making appropriate adjustments to valuaon assumpons, through generaon
proles and levels, operaonal expenditure (including insurance premiums) and capital expenditure provides us with an
esmate of the potenal nancial impact of climate change to the Company. As all climate related consideraons are
already included within our investment case, the esmated impact on the NAV of the Company would be approximately
0.74 pence per share.
Strategic Implicaons and Resilience of DORE’s Climate Change strategy
The physical risks of climate change present manageable risks to the porolio, as described throughout the rst secon
of this report, however society’s transion to a lower carbon economy presents signicant opportunies and upside
potenal for the Company. The Company’s investment objecve is to provide investors with an aracve and sustainable
level of income returns, with an element of capital growth, by invesng in a diversied porolio of renewable energy and
infrastructure assets in the UK, Ireland and Northern Europe.
Signicant growth in renewable energy and its associated infrastructure is crical to meeng the required emission reducons
across an expanding electricity generaon sector. This posions the Company well to connue delivering value to investors
through its robust climate change strategy.
Risk Management
The ongoing performance of the company’s porolio and all material factors aecng valuaon are reviewed on a quarterly
basis. Market, climac factors and events aecng valuaon are constantly monitored by the Investment Manager, with any
extraordinary events leading to material changes to valuaon, communicated to investors.
The Investment Manager ulises in-house subject maer experse to prepare reports for the board throughout the reporng
period. These reports incorporate policy perspecves and data sourced from respected third-party policy experts. On the
basis of these reports, the board undertake an annual review and development process in support of the company’s climate
change strategy, idenfying and evaluang the principal climate risks and opportunies.
The board’s standard reporng pack contains data that enables them to oversee the delivery of the company’s sustainable
investment objecve, explicitly delivering output that supports Climate Change Migaon.
Downing Renewables & Infrastructure Trust plc Annual Report | 25
Metrics and Targets
The following data is currently ulised to support modelling of risks and opportunies in relaon to the porolio’s technical
generaon mix and geographic exposure. The three common factors across analysis of the porolio are air temperature, wind
speed and precipitaon. In addion to these three common factors a fourth data source has been selected for each geography
and porolio technology, as a proxy for potenal changes to costs of extreme weather events. The common source of the
data is the NGFS Current Policies Scenario and the me period selected aligns to the short, medium and long term horizons
idened during scenario analysis for strategy development.
Projected Air Temperature Change (UK and Sweden)
Projected Wind Speed Change (UK and Sweden)
Projected Precipitaon Rate Change (UK and Sweden)
Projected annual % change in cost of expected damage from tropical cyclones (UK)
Projected annual % change in cost of expected damage from river oods (Sweden)
These data sources will be updated and reviewed on an at least an annual basis to connue to support scenario analysis
and strategy development. Over me, addional data sources may be selected to reect the porolio’s diversicaon by
technology and geography.
In addion to the data above, porolio eciency, micro and macro-economic data is reported to the board on a quarterly basis.
Data relang to generaon and porolio eciency is ulised to assess the eect of any physical risks to the porolio and the
company’s delivery of its sustainable investment objecve. Micro and macro-economic data, for example energy commodity
prices, carbon emissions allowance prices and subsidy rates are ulised to assess the impact of transional risks.
Scope 1 Emissions: When considering the direct emissions of the company, we assess these to be negligible, recognising
that over the reporng period, all company’s business has been conducted virtually.
Scope 2 Emissions: The Scope 2 emissions of the porolio are esmated to be 4,325 kg C02e. These emissions stem
principally from electricity ulised by the hydropower assets within the porolio and are esmated on the basis of electricity
usage and geographically specic residual grid emissions factors.
Scope 3 Emissions: The Scope 3 emissions of the porolio are esmated to be 13,033 kg CO2e. These emissions are
esmated principally on the basis of grass-cung and panel cleaning across the Ground Mounted Solar poron of the
porolio and the accrued mileage of contractors making roune site visits throughout the reporng year.
Downing Renewables & Infrastructure Trust plc Annual Report | 26
Strategy and Business Model
The Board is responsible for the Company’s Investment Objecve and Investment
Policy and has overall responsibility for ensuring the Company’s acvies are in
line with such overall strategy. The Group’s Investment Objecve and Investment
Policy are published below.
Corporate Summary
The Company is a closed ended investment
company incorporated in England and
Wales with registraon number 12938740.
The Company aims to provide investors
with an aracve and sustainable level of
income, with an element of capital growth,
by invesng in a diversied porolio of
renewable energy and infrastructure assets
in the UK, Ireland and Northern Europe.
As at 31 December 2021, the Company had
137,008,487 ordinary shares in issue which
are listed on the premium segment of the
Ocial List and admied to trading on the
London Stock Exchange’s Main Market.
Investment Objecve
The Company’s investment objecve is to
provide investors with an aracve and
sustainable level of income returns, with an
element of capital growth, by invesng in a
diversied porolio of renewable energy
and infrastructure assets in the UK, Ireland
and Northern Europe.
The core sustainable investment
objecve of the Company is to accelerate
the transion to net zero through its
investments, compiling and operang a
diversied porolio of renewable energy
and infrastructure assets to help facilitate
the transion to a more sustainable future.
The Company believes that this directly
contributes to climate change migaon.
The Company has made disclosures
under the EU’s Sustainable Finance
Disclosure Regulaon (“SFDR”) as part
of its commitment to sustainability. The
Company is an Arcle 9 fund under SFDR.
Investment Policy
The Company will seek to achieve its
Investment Objecve through investment
in a diversied porolio of renewable
energy and infrastructure assets in the UK,
Ireland and Northern Europe, comprising
(i) predominantly assets which generate
electricity from renewable energy sources;
and (ii) other infrastructure assets and
investments in businesses whose principal
revenues are not derived from the generaon
and sale of electricity on the wholesale
electricity markets (“Other Infrastructure”)
(together “Assets” and each project being
an “Asset”). Assets may be operaonal,
in construcon or construcon-ready, at
the me of purchase. In-construcon or
construcon-ready Assets are assets which
have in place the required grid access rights,
land consents, planning, perming and
regulatory consents in order to commence
construcon. For the avoidance of doubt, the
Company will not acquire or fund Assets that
are at an earlier stage of development than
construcon ready.
The Company intends to invest in a
porolio of Assets that is diversied
by: (i) the principal technology ulised
Downing Renewables & Infrastructure Trust plc Annual Report | 27
to generate energy from renewable
sources, for example solar photovoltaic,
wind, hydropower-electric or geothermal
(“Technology”); (ii) geography; and (iii) the
stage of development of a project, being
one of operaonal, construcon-ready or
in-construcon (each a “Project Stage”).
Whilst the Company intends primarily to
take controlling interests, it may acquire
a mix of controlling and non-controlling
interests in Assets and the Company may
use a range of investment instruments in
the pursuit of its Investment Objecve,
including but not limited to equity and
debt investments.
In circumstances where the Company
does not hold a controlling interest in the
relevant investment, the Company will seek
to secure its shareholder rights through
contractual and other arrangements, inter
alia, to ensure that the Asset is operated
and managed in a manner that is consistent
with the Company’s Investment Policy.
Investment Restricons
The Company will observe the following
investment restricons when making
investments:
• the Company may invest no more than
60% of Gross Asset Value in Assets
located in the UK;
• the Company may invest no more
than 60% of Gross Asset Value in
Assets located in Ireland and Northern
Europe (combined);
• no more than 25% of Gross Asset
Value will be invested in Assets
in relaon to which the Company
does not have a controlling interest;
no investments will be made in
companies which generate electricity
through the combuson of fossil
fuels or derive a signicant poron of
their revenues from the use or sale
of fossil fuels unless the purpose of
the investment is to transion those
companies away from the use of fossil
fuels and toward sustainable sources;
and
• the Company will not invest in other
UK listed closed-ended investment
companies.
The Company will observe the following
investment restricons when making
investments, with the relevant limits being
calculated on the assumed basis that the
Company has gearing in place of 50% of
Gross Asset Value:
• the Company may invest no more
than 50% of Gross Asset Value in any
single Technology;
• the Company may invest no more
than 25% of Gross Asset Value in
Other Infrastructure;
• the Company may invest no more
than 35% of Gross Asset Value in
Assets that are in construcon or
construcon-ready;
Downing Renewables & Infrastructure Trust plc Annual Report | 28
• the Company may invest no more
than 30% of Gross Asset Value in any
one single Asset, and the Company’s
investment in any other single Asset
shall not exceed 25% of Gross Asset
Value; and
• at the me of an investment or entry
into an agreement with an Oaker,
the aggregate value of the Company’s
investments in Assets under contract
to any single Oaker will not exceed
40% of Gross Asset Value.
Following full investment of the Net
Proceeds and following the Company
becoming substanally geared (meaning
for this purpose by way of long-term debt
of 50% of Gross Asset Value being put
in place), the Company’s porolio will
comprise no fewer than six Assets.
Compliance with the above restricons will
be measured at the me of investment and
non-compliance resulng from changes
in the price or value of Assets following
investment will not be considered as a
breach of the investment restricons.
The Company will hold its investments
through one or more SPVs and the
investment restricons will be applied on a
look-through basis to the Asset owning SPV.
Borrowing Policy
Long-term limited recourse debt at the
SPV level may be used to facilitate the
acquision, renancing or construcon
of Assets. Where ulised, the Company
will seek to adopt a prudent approach to
nancial leverage with the aim that each
Asset will be nanced appropriately for
the nature of the underlying cashows and
their expected volality. Total long-term
structural debt will not exceed 50% of the
prevailing Gross Asset Value at the me of
drawing down (or acquiring) such debt.
In addion, the Company and/or its
subsidiaries may make use of short-term
debt, such as a revolving credit facility,
to assist with the acquision of suitable
opportunies as and when they become
available. Such short-term debt will be
subject to a separate gearing limit so as
not to exceed 10% of the prevailing Gross
Asset Value at the me of drawing down
(or acquiring) any such short-term debt.
The Company may employ gearing at the
level of an SPV, any intermediate subsidiary
of the Company or the Company itself,
and the limits on total long-term structural
debt and short-term debt shall apply on a
consolidated basis across the Company, the
SPVs and any such intermediate holding
enes (disregarding for this purpose any
intra-Group debt (i.e. borrowings and
debt instruments between members of
the Group)).
In circumstances where these
aforemenoned limits are exceeded as a
result of gearing of one or more Assets in
which the Company has a non-controlling
interest, the borrowing restricons will
not be deemed to be breached. However,
in such circumstances, the maer will be
brought to the aenon of the Board who
will determine the appropriate course of
acon.
Downing Renewables & Infrastructure Trust plc Annual Report | 29
Currency and Hedging Policy
The Company will adopt a structured risk
management approach in seeking to deliver
stable cash ows and dividend yield.
This may include entering into hedging
transacons for the purpose of ecient
porolio management. This could include:
• foreign currency hedging on a poron
of equity distribuons;
• foreign currency hedging on
construcon budgets;
• interest and/or inaon rate hedging
through swaps or other market
instruments and/or derivave
transacons; and
• power and commodity price hedging
through power purchase arrangements
or other market instruments and/or
derivave transacons.
Any such transacons will not be
undertaken for speculave purposes.
Cash management
The Company may hold cash on deposit
and may invest in cash equivalent
investments, which may include short-term
investments in money market type funds
(“Cash and Cash Equivalents”). There is no
restricon on the amount of Cash and Cash
Equivalents that the Company may hold and
there may be mes when it is appropriate
for the Company to have a signicant Cash
and Cash Equivalents posion.
Holding and Exit Strategy
It is intended that Assets will be held for the
long-term. However, if an aracve oer is
received or likely to be available, consideraon
will be given to the sale of the relevant Asset
and reinvestment of the proceeds.
Changes to and Compliance with the
Investment Policy
Any material changes to the Company’s
Investment Policy set out above will
require the approval of Shareholders by
way of an ordinary resoluon at a general
meeng and the approval of the FCA.
In the event of a breach of the investment
guidelines and the investment restricons
set out above, the AIFM shall inform the
Board upon becoming aware of the same
and if the Board considers the breach to
be material, nocaon will be made to a
Regulatory Informaon Service.
Business Model
The Company was incorporated on
8 October 2020 as a public company
limited by shares. The Company intends
to carry on business as an investment
trust within the meaning of secon 1158
of the Corporaon Tax Act 2010 and was
listed on the premium segment of the main
market of the London Stock Exchange on
10 December 2020.
The Company holds and manages its
investments through a parent holding
company, DORE Hold Co Limited, of which
it is the sole shareholder, DORE Hold Co
in turn holds investments via a number
of intermediate holding companies and
Downing Renewables & Infrastructure Trust plc Annual Report | 30
SPVs. The jurisdicons in which the SPVs
are incorporated is typically determined
by the locaon of the assets, and further
porolio-level holding companies may be
used to facilitate debt nancings.
As at 31 December 2021, the Company
owns a porolio of 3,234 Renewable
Energy Assets totalling 121 MW of
operaonal capacity. Medium term
structural debt is in place for the
United Kingdom solar porolio and, as
at 31 December 2021, this comprised
outstanding principal amounts of
£79.3 million lent by Aviva and BlackRock.
Downing Hydro AB, the intermediate
holding company which holds the
Swedish hydropower assets has access
to a seven-year EUR 43.5 million debt
facility with Skandinaviska Enskilda
Banken AB (“SEB”). Following the period
end, EUR 27.4 million was drawn against
this facility to fund the acquision of
two addional Swedish hydropower
schemes. The remainder of the undrawn
facility is predominately to fund future
capital expenditure requirements.
Short term debt nancing is available
through a £25 million RCF which may be
drawn on by DORE Hold Co Limited to
facilitate future growth plans.
The Company has a 31 December
nancial year end and announces half-
year results in or around September and
full-year results in or around March.
The Company intends to pay dividends
quarterly, targeng payments in or around
March, May, August and November each
year.
The Company has an independent board of
non-execuve directors and has appointed
Gallium Fund Soluons Limited as its AIFM
to provide porolio and risk management
services to the Company. The AIFM
has delegated the provision of porolio
management services to the Investment
Manager, Downing LLP. Further informaon
on the Investment Manager is provided in
the Investment Manager’s Report.
As an investment trust, the Company
does not have any employees and is reliant
on third party service providers for its
operaonal requirements. Likewise, the
SPVs do not have any employees and
services are also provided through third
party providers. Each service provider has
an established track record and has in place
suitable policies and procedures to ensure
they maintain high standards of business
conduct and corporate governance.
Downing Renewables & Infrastructure Trust plc Annual Report | 31
Downing Renewables
& Infrastructure Trust PLC
12938740
DORE HOLD CO LIMITED
13081088
Figure 1: Company Operang Model
Shareholders
Debt Providers
Santander UK Plc
Revolving credit facility
Shareholder Loan
Equity
Services
Key
Debt
Company Service Providers
Broker: Singer Capital Markets
Company Secretary: Link Company Maers
Administrator: Gallium Fund Soluons
Registrar: Link Company Maers
Auditors: BDO
PR Advisor: TB Cardew
Tax Adviser: EY
Legal: Gowling WLG
*for illustraon purposes, this is a simplified structure. Some investments in SPVs may be held indirectly through porolio level holding companies.
UK SPVs Non-UK SPV
Porolio Investments in SPVs*
AIFM
Gallium Fund Soluons
Investment Manager
Downing LLP
Debt Providers
Skandinaviska
Enskilda Banken AB
Aviva
BlackRock
Asset level debt facilies
Asset Manager
Downing LLP
Independent Board of Directors
Day to day management
subcontracted to Downing LLP
Objecves and Key Performance
Indicators
The Company sets out below its KPIs
which it uses to track the performance
of the Company over me against the
objecves, as described in the Strategic
Report on page 26. The Board is of the
opinion that the KPIs detailed in the table
below, alongside the environmental, social
and governance objecves set out on page
16 provide shareholders with sucient
informaon to assess how eecvely
the Company is meeng its objecves.
The Board will connue to monitor these
KPIs on an ongoing basis.
Downing Renewables & Infrastructure Trust plc Annual Report | 32
Financial Objecves
Objecve KPI and
Denion
Relevance to
Strategy
Performance Explanaon
Aracve
and
sustainable
level of
income
Dividends per
share (pence)
The dividend
reects the
Company’s ability
to deliver a low risk
but growing income
stream from the
porolio.
The Company
has paid
dividends
to date of
2.25 pence
per share.
The company
has declared
a further
1.25 pence per
share to be paid
in respect of
the period to
31 December
2021.
The Company
targeted an inial
yield of 3 pps in
respect of the
period from IPO to
31 December 2021.
The company will
have paid 3.5 pps in
respect of this period
exceeding the inial
target set at IPO.
Cash
dividend
cover
12
Reects the
Company’s
ability to cover its
dividends from the
income received
from its porolio.
1.21x –
excluding
dividends paid
immediately
following the
issuance of new
shares
1.14x. –
including
dividends paid
immediately
following the
issuance of new
shares
The Company,
through DORE
Hold Co received
distribuons of
£4.7m from the
underlying projects
enabling the
Company to pay full
covered dividends.
£2.5 million was paid
up via loan interest
from DORE Hold Co
in the period.
Downing Renewables & Infrastructure Trust plc Annual Report | 33
Objecve KPI and
Denion
Relevance to
Strategy
Performance Explanaon
Capital
preservaon
with an
element
of capital
growth
NAV per
share
(pence)
12
The NAV per share
reects our ability
to preserve capital
value and also
provide an element
of capital growth
throughout the life
cycle of our assets.
103.5 pence per
share
£141.8m /
103.5 pence per
share as at 31
December 2021.
NAV has increased
since IPO (from 98p),
aer taking into
account dividends
paid and further
equity issuance
during the year.
Total NAV
return (%)
12
The total NAV
return measure
highlights the
gross return to
investors including
dividends paid.
7.9% The Company’s NAV
has increased due to
the upward revaluaon
of the Company’s
Investment in Hold Co,
and its investments in a
porolio of renewable
energy assets.
Total
Shareholder
return since
IPO
12
The share price
appreciaon
plus reinvested
dividends over
a period, is a
measure of a
company’s capital
growth over the
long term.
5.8% The Company’s
closing share price as
at 31 December 2021
was 103.5 pence per
share. The Company’s
shares were issued at
100 pence per share.
Ongoing
charges
rao
12
Ongoing charges
shows the drag
on performance
caused by the
operaonal
expenses incurred
by the Company.
1.6% Company level
budgets are approved
annually by the Board
and actual spend is
reviewed quarterly.
Transacon budgets
are approved by the
Board and potenal
abort exposure is
carefully monitored.
12
These are alternave performance measures
Read more about the Company’s approach to sustainability and ESG on pages 10 to 25.
Downing Renewables & Infrastructure Trust plc Annual Report | 34
Downing Renewables & Infrastructure Trust plc Annual Report | 35
About Downing
The Company is managed by Downing LLP,
an established investment manager with
over 30 years’ experience and a considerable
track record in the core renewables space.
Downing is authorised and regulated by the
FCA and, as at 30 November 2021, had over
£1.5 billion of assets under management.
The Investment Manager has over 180 sta
and partners. The team of 39 investment
and asset management specialists who focus
exclusively on energy and infrastructure
transacons are supported by business
operaons, IT systems specialists, legal, HR
and regulatory and compliance professionals.
The Investment Manager is responsible
for the day-to-day management of the
Company’s investment porolio in
accordance with the Company’s Investment
Objecve and policy, subject to the overall
supervision of the Board.
The Investment Manager has managed
investments across various sectors in the
UK and internaonally and idened the
Energy & Infrastructure sector as a core
area of focus from as early as 2010. Since
then, to date it has made 141 investments
in renewable energy infrastructure
projects and currently oversees 474 MWp
of electricity generang capacity,
covering ve technologies across c.7,300
installaons.
The Investment Manager
Downing Renewables & Infrastructure Trust plc Annual Report | 36
Tom Williams
Partner, Head of Energy
and Infrastructure
Tom joined the Investment
Manager as Partner in the
Energy & Infrastructure
team in July 2018. Tom
heads up the team and has
23 years of experience as
principal and adviser across
the private equity and
private debt infrastructure
sectors. Tom has carried
out successful transacons
totalling in excess of
£13 billion in the energy,
ulies, transportaon,
accommodaon and defence
sectors.
Tom started his career
working as a project nance
lawyer in 1999 before
moving into private equity
with Macquarie Group in
London and the Middle East.
Tom holds a Postgraduate
Diploma in Legal Pracce
from the Royal College of
Law and a BA in law from
Cambridge University.
Henrik Dahlström
Investment Director
Henrik joined the
Investment Manager as
Investment Director in
June 2020 to expand its
European presence and lead
transacons in the Nordic
regions. Before joining
the Investment Manager,
Henrik spent 17 years with
Macquarie Infrastructure
and Real Assets (“MIRA”). At
MIRA, Henrik was a Director
responsible for covering
the Nordic region. This role
included the originaon and
execuon of transacons in
the renewable energy and
infrastructure sectors as well
as holding asset management
and board responsibilies.
Henrik has worked across
renewable energy and
infrastructure sectors as a
principal for investments in
the UK and in Europe. Henrik
holds a master’s degree in
nance from Gothenburg
School of Economics.
Tom Moore
Partner, Head of Fund
Reporng and Co-Head
of Asset Management
Tom joined the Investment
Manager in May 2019 to
build a full-service asset
management team to provide
investors with an ecient
and class leading asset
management service. Since
joining in May 2019, the team
has grown to 21 full me
employees with experse
split across nancial,
technical and commercial
sectors. The team manages
over 474 MWp of energy
generang assets across ve
separate technologies. Tom
is also responsible for the
reporng and investment
operaons across the
unquoted investment teams.
Prior to joining the Investment
Manager, Tom was a Director
at Foresight Group, where he
had oversight of a signicant
porolio of renewable energy
investments.
Tom is a chartered accountant
and holds a BSc in Economics
from the University of York.
Danielle Strothers
Co-Head of Asset
Management
Danielle joined the
Investment Manager in
September 2019. Alongside
Tom, she manages the
asset management
funcon, focussing on asset
performance, business
operaons and compliance.
Danielle is also responsible
for the coordinaon of the
valuaon process across the
energy porolio.
Prior to joining Downing,
Danielle was a Senior
Porolio Manager at
Foresight Group, where
she was responsible for
the operaons of their
renewable energy porolio.
Danielle is a chartered
accountant and holds a BSc
in Accounng & Finance from
the University of Birmingham.
The key individuals responsible for execung the Company’s investment strategy are:
Downing Renewables & Infrastructure Trust plc Annual Report | 37
Portfolio Summary
At the period end, through its main subsidiary, the Company owned 121 MWp
of hydropower and solar assets with an annual generation of around 200 GWh.
The portfolio is diversified across 3,255 individual installations and across four
different energy markets.
Following the period end the Group has added an additional 54 MW of wind and
hydropower assets with an additional annual generation of 156 GWh. The entire
portfolio now stands at 175 MWp with a combined annual generation of 355 GWh.
The Group currently has no exposure to any assets under construction.
Hydro
Solar
Cash
Porolio composion by valuaon, as at the balance sheet date
Technology
Geography/Power
Market Exposure
Sweden
Great Britain
Cash
Northern Ireland
Sweden
Great Britain
Cash
Northern Ireland
Porolio composion by valuaon, as at 31 January 2022
Hydro
Solar
Wind
Cash
Technology
Geography/Power
Market Exposure
262841 Tissue Regenix Cover
Spread Opon 3
Downing Renewables & Infrastructure Trust plc Annual Report | 38
Norway
Hydro
Solar
Wind
Hydro
2022 acquisitions2021 acquisitions
Portfolio
Downing Renewables & Infrastructure Trust plc Annual Report | 39
Investment Technology
Date
Acquired
Locaon
Power Market
/ Subsidy
Installed
capacity
(MW)
Expected annual
generaon
(GWh)
Ugsi Hydropower Feb-21 Älvadalen, Sweden SE3 / n/a 1.8 10
Båthusströmmen Hydropower Feb-21 Älvadalen, Sweden SE3 / n/a 3.5 14
Åsteby Hydropower Feb-21 Torsby, Sweden SE3 / n/a 0.7 3
Fensbol Hydropower Feb-21 Torsby, Sweden SE3 / n/a 3 14
Rödbjörke Hydropower Feb-21 Torsby, Sweden SE3 / n/a 3.3 15
Väls Hydropower Feb-21 Torsby, Sweden SE3 / n/a 0.8 3
Torsby Hydropower Feb-21 Torsby, Sweden SE3 / n/a 3.1 13
Tvärforsen Hydropower Feb-21 Torsby, Sweden SE2 / n/a 9.5 37
Suon Bridge Ground mount solar Mar-21 Somerset, England UK / ROC 6.7 7
Andover Aireld Ground mount solar Mar-21 Hampshire, England UK / ROC 4.3 4
Kingsland Barton Ground mount solar Mar-21 Devon, England UK / ROC 6 6
Bourne Park Ground mount solar Mar-21 Dorset, England UK / ROC 6 6
Laughton Levels Ground mount solar Mar-21 East Sussex, England UK / ROC 8.3 9
Deeside Ground mount solar Mar-21 Flintshire, Wales UK / FiT 3.8 3
Redbridge Farm Ground mount solar Mar-21 Dorset, England UK / ROC 4.3 4
Iwood Ground mount solar Mar-21 Somerset, England UK / ROC 9.6 9
New Rendy Ground mount solar Mar-21 Somerset, England UK / ROC 4.8 5
Redcourt Ground mount solar Mar-21 Carmarthenshire, Wales UK / ROC 3.2 3
Oakeld Ground mount solar Mar-21 Hampshire, England UK / ROC 5 5
Kerriers Ground mount solar Mar-21 Cornwall, England UK / ROC 10 10
RSPCA Llys Nini Ground mount solar Mar-21 Swansea, Wales UK / ROC 0.9 1
Commercial porolio Rooop Solar Mar-21 Various, England UK / FiT 0.3 0
Commercial porolio Rooop Solar Mar-21 Various, England & Wales UK / ROC 5.2 4
Commercial porolio Rooop Solar Mar-21 Various, N. Ireland SEM / NIROC 0.7 1
Bombardier Rooop Solar Mar-21 Belfast, N. Ireland SEM / ROC 3.6 3
Residenal porolio Residenal rooop solar Mar-21 Various, N. Ireland SEM / NIROC 13.1 10
TOTAL AS AT 31 DECEMBER 2021: 121.5 199
Addions following the Balance Sheet Date:
Lemmån Hydropower Jan-22 Älvdalen, Sweden SE3 / n/a 0.6 3
Ryssa Övre Hydropower Jan-22 Mora, Sweden SE3 / n/a 0.7 3
Ryssa Nedre Hydropower Jan-22 Mora, Sweden SE3 / n/a 0.6 2
Rots Övre Hydropower Jan-22 Älvdalen, Sweden SE3 / n/a 0.7 3
Rots Nedre Hydropower Jan-22 Älvdalen, Sweden SE3 / n/a 0.3 1
Gabrielsberget Syd
Vind
Wind Jan-22 Aspeå, Sweden SE2 / n/a 46.0 108
Vallhaga Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 2.1 12
Österforsens
Krastaon
Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 1.9 12
Bornforsen 1 Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 0.5 3
Bornforsen 2 Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 1.5 9
TOTAL AS AT THE DATE OF THIS REPORT: 175.4 355
Downing Renewables & Infrastructure Trust plc Annual Report | 40
Investment Manager’s Report
Introducon
We are delighted with the progress made
during the Company’s inaugural year.
During the reporng period, the Company
announced two acquisions deploying the
majority of proceeds from the IPO. In addion
to deploying capital quickly, the assets
acquired by the Company are of high quality
and oer the diversicaon of technology,
geography and power market exposure that is
central to the aims of the Company.
Acquisions
We have remained busy following the
period end and have invested a further
£39.9 million into three acquisions in
both wind and hydropower investments.
This includes a 46 MWp operaonal wind
farm in north eastern Sweden and two
addional Swedish hydropower porolios
to complement the Company’s exisng
porolio. All acquisions are owned
100% by the Group. The discussion below
presents further informaon on these
acquisions.
Downing Hydro AB
The Group completed its rst investment
in a porolio of eight operaonal
hydropower plants located in central and
southern Sweden on 1 February 2021 for
£59.9 million.
The eight hydropower plants are located
across three dierent rivers in Sweden
in two dierent price zones, with an
expected annual average producon of
108 GWh. The porolio has a robust
operang track record spanning more
than ve decades and enjoys storage
capacity, in the form of dammed rivers, of
105.6 million cubic meters. This capacity
regulates water ow to the turbines and
allows the assets to capture periods
of higher power prices through the
controlled dispatch of generaon.
In January 2022, the Group acquired
two operaonal porolios of hydropower
plants located in central Sweden for
£20.1 million. The acquision consisted
of a c. 12 GWh per annum porolio of
hydropower plants and a c. 36 GWh
per annum porolio. These acquisions
were largely funded through a drawdown
on the Downing Hydro AB (DHAB)
Swedish hydropower porolio debt facility
signed in November 2021.
The rst porolio comprises ve
hydropower plants located on three
dierent rivers in central Sweden. The sites
also benet from a long operaonal history
and are located in the county of Dalarna,
which is in the aracve SE3 price area.
Downing Renewables & Infrastructure Trust plc Annual Report | 41
The second of the two new porolios
includes four run-of-river hydropower
plants situated on a single river in central
Sweden. The sites benet from a long
operaonal history and were refurbished
between 2010 and 2013. The hydropower
plants are located in and around the
Swedish town Edsbyn in the SE2 zone.
A framework agreement is in place with
Axpo (a leading Swiss energy company)
which allows DHAB to lock in prices.
DHAB has hedged posions in line
with the requirements under the debt
facility. The hydro assets do not aract
government subsidy payments.
More informaon on the synergies
within the Swedish hydropower porolio
can be seen in the Porolio and Asset
Management secon on page 43.
Chalkhill Solar Porolio
On 19 March 2021 the Group completed
its rst UK investment, the acquision
of a porolio of solar PV assets located
across the UK. The porolio was acquired
for a consideraon of £42 million. The
acquision target, Chalkhill Life Holdings
Limited, benets from £67.9 million senior
debt from Aviva and £10.8 million debt
from BlackRock.
The porolio, described as the “Seed
Assets” in the IPO Prospectus, comprises:
• 13 ground-mounted sites located
across mainland Great Britain totalling
c. 73 MWp;
• 28 commercial rooop assets totalling
c. 10 MWp; and
• 7 residenal rooop porolios in
Northern Ireland totalling c. 13MWp.
Most ground mounted PV assets have a
long-term power oake agreement with
Statkra. The Solar companies have been
locking in prices due to the high-power
prices in the market.
Gabriel Wind Project
On 2 February 2022 the Group completed
its rst onshore wind investment. The
Company acquired an operaonal
46 MW onshore wind project located in
Nordmaling, north eastern Sweden for
approximately £19.8 million.
The project has been operaonal for
c. 10 years and consists of 20 turbines
with an expected annual producon of
108 GWh.
Gabriel has a short-term oake
agreement with Centrica.
Downing Renewables & Infrastructure Trust plc Annual Report | 42
Porolio Performance
The Company received the economic
benet of the porolios acquired from
1 February 2021. For the period of
operaons between 1 February 2021
and 31 December 2021, operang prot
for the combined porolios was 16.9%
above expectaons, driven primarily by
generaon being 4.7% above expectaons
and achieving higher than ancipated
power pricing.
0
20,000
40,000
60,000
80,000
100,000
120,000
Actual (MWh)
Expected (MWh)
SolarHydro
Actual (MWh)Expected (MWh)
0
2000
4000
6000
8000
10000
12000
SolarHydro
Actual (£’000)Expected (£’000)
Asset Generation vs Budget
Asset Operating Profit vs Budget
Downing Renewables & Infrastructure Trust plc Annual Report | 43
The Downing Hydro AB porolio had
a strong period with the hydropower
assets generang 108.1 GWh, 9.1% above
expectaons.
The signicant upli in generaon
during the period was aributable to a
combinaon of strong plant availability
as well as a favourable combinaon
of precipitaon and reservoir levels.
Operang prot was 92.8% over budget
for the period, driven by favourable
power prices and producon exceeding
expectaons.
The Solar porolio performed in line with
expectaons, with the solar installaons
generang 86.9 GWh. In terms of
operang prot, the porolio performed
above expectaons, generang an
operang prot of £10.25m, 5.2% above
budget.
Average irradiaon levels across the solar
porolio were 1.9% above budget during
the period. The small deviaon between
irradiaon and generaon was mainly due
to DNO outages at two of the ground
mounted installaons. In both instances,
the O&M were able to ulise these periods
of downme by conducng intrusive
preventave maintenance that would
otherwise have caused downme of their
own.
Porolio and Asset Management
Downing has invested signicantly in
an in-house asset management team
capable of providing a full scope service
to a wide range of generaon and storage
technologies. Established in 2019, the
team totals 21 and includes experse
across power markets, engineering,
data analycs, nance and commercial
management.
Solar Hydro
86,969
108,113
Generation by
Technology
(MWh)
Downing Renewables & Infrastructure Trust plc Annual Report | 44
The asset management team works in
parallel to the investment team and
ensures work is started long before an
asset is acquired. Prior to acquision,
Downing carries out a comprehensive
onboarding process to ensure that new
assets are transioned smoothly into
the wider energy porolio. The plan
captures all key milestones that need to
be completed as part of the transion,
including the collecon and storage of a
range of key documents including project
contracts and design documents, as well as
detailed historic performance data.
The onboarding process also involves a
detailed review to ensure that the assets
are embedded into exisng processes, such
as contract management and compliance,
incident tracking, monitoring, and reporng.
Assets are fully incorporated within the asset
management team’s porolio reporng
systems within 60 days of compleon. This
reporng environment allows real me, exible
reporng to internal stakeholders.
Health and Safety
The health and safety of contractors
and the public is a fundamental part of
management processes. Throughout the
period, a range of workstreams were
carried out by the Asset Manager in line
with the Company’s approach to Health
and Safety management.
A dam safety framework was established
to ensure eecve management of the
risks surrounding hydropower acvies
and classied dams in Sweden. The
framework, which is based on industry
best pracce, focusses on regular
inspecons, the experse of operators and
the frequency and content of reporng.
Downing signicantly increased its
operaonal experse with the appointment
of Ulf Wennilsjo in January 2022. Ulf
has over 25 years of experience in the
operaon and management of large
hydropower porolios in Sweden. As part
of his experience, Ulf brings a wealth of
knowledge in the management of dam
safety pracses and procedures.
A rolling programme of Health and Safety
audits connues across the porolio.
These audits are based on a two-er
approach, where risks and procedures
are audited at the site level and also the
operator level. Downing has a process of
connuous assessment and feedback of site
and operator pracces, ensuring eecve
management systems are in place and
adhered to.
Finally, IT systems are used to thoroughly
track all incidents. As well as these systems
enabling performance measurement and
trend analysis, they also ensure the eecve
communicaon, escalaon, and management
of incidents.
Downing Renewables & Infrastructure Trust plc Annual Report | 45
Opmisaon
The acquision of the Downing Hydro AB
porolio from Fortum Sweden AB required
a detailed transion plan to enable a
smooth shi of operaons away from
being deeply integrated into the vendor’s
processes and across to Downing.
Several new hydropower operaonal
contracts were placed during the period,
including producon planning, dispatch
opmisaon and 24/7 control centre
arrangements. Together, these contracts
focus on opmising the assets and
establishing a framework for the ecient
growth of the hydropower porolio in the
future.
The Asset Manager has also commenced
a digitalisaon project for the hydro
porolio, looking at opportunies to
ulise technologies to improve operaonal
eciencies and reduce downme. The
rst step of this involves a trial at one site,
which will be rolled out in March 2022.
The trial will focus on automated visual
monitoring, aiming to reduce workload of
the dispatch centre and on call dues, as
well as to reduce maintenance costs and
downme.
The Asset Manager is also exploring
opportunies for implemenng specialist
technical performance monitoring
equipment, potenally building on the
capabilies added to the porolio during
2021.
Integral to the acvity of the asset
management team are the data and
systems analysts. Downing take a data
driven approach to the porolio and
invest signicant me and experse in
enabling porolio improvements through
data opmisaon strategies. One of
these strategies has seen Downing
partner with a leading AI technology
company. The project aims to leverage
arcial intelligence technology from our
partner and renewable energy experse
of Downing to beer predict short term
maintenance and long-term capital costs,
enabling faster response mes through
predicve maintenance, opmised
maintenance strategies and dynamic capital
expenditure forecasng.
During the period, the Asset Manager
connued to develop monitoring
capabilies across the porolio. Using
specialised soware, automated string
analysis was implemented across the
ground mounted solar installaons,
allowing O&M providers to complete more
focussed site visits and thereby opmise
performance.
An automated daily feed of half hourly
satellite irradiaon data was also
implemented during the period, enabling
greater performance monitoring across the
rooop solar installaons.
Downing Renewables & Infrastructure Trust plc Annual Report | 46
Several new and opmised contracts
were placed during the period. New
O&M contracts were executed across
the residenal rooop and hydropower
porolios. New contracts brought an
improved scope of services as well as
reduced pricing, while encouraging
proacve monitoring of maintenance
requirements which is expected to deliver
cost eciencies in the future. New supply
and export contracts were also placed and
the Asset Manager was able to achieve
favourable pricing.
Spare parts strategies have been
implemented across the porolio to help
reduce potenal downme in the event
of faults, while taking advantage of the
size of the porolio to ensure spare
part procurement is ecient and avoids
duplicaon of expenditure.
A phased opmisaon project connues
across the ground mount solar porolio
to increase the eciency of modules
by reversing the impact of degradaon.
Phase 1 is complete and connued analysis
is taking place, with inial results suggesng
improvements to generang capacity.
The ground mount solar porolio has
also achieved compliance with the new
accelerated loss of mains requirements,
using the available funding from Naonal
Grid ESO. Works are underway to achieve
compliance for the commercial porolio.
Financing and Capital Structure
The Group adopts a prudent approach to
leverage, with the aim that each asset will
be nanced appropriately for the nature of
its underlying cashows and their expected
volality. Long-term debt may be used where
appropriate at the SPV level to facilitate
acquisions, renancing, capital expenditure
or construcon of assets.
Total long-term structural debt will not
exceed 50% of the prevailing Gross Asset
Value. At 31 December 2021, including
project level nancing the Group’s leverage
stood at 28.0%. Since the period end this
has increased to 39%.
In addion, the Company and/or its
subsidiaries may also make use of short-term
debt, such as a revolving credit facility, to assist
with the acquision of suitable opportunies as
and when they become available.
Revolving Credit Facility
The Group has entered into a loan
agreement through its main subsidiary
DORE Hold Co Limited for a £25 million
RCF with Santander UK plc. The RCF
has a four-year term, with the possibility
to be extended for a further year, and
also includes an uncommied accordion
allowing for an increase in its size to
further assist the expected increase of the
Company’s investment acvity.
Downing Renewables & Infrastructure Trust plc Annual Report | 47
The RCF has the addional benet of being
able to be drawn in both GBP and EUR
(with the ability to also able to make use
of funds in other currencies) and is priced
at the Sterling Overnight Index Average
(“SONIA”) plus 2.25% per annum. The
Group will make use of the RCF mainly to
fund the acquision of addional assets.
Renancing of Hydropower Assets
The Group inially acquired DHAB, its
Swedish hydropower porolio, on an
unlevered basis in February 2021, shortly
aer the Company’s IPO. In light of the
strong transacon pipeline and ongoing
capital expenditure requirements, DHAB has
entered into a seven-year EUR 43.5 million
debt facility with SEB, a leading corporate
bank in the Nordics. As of 31 January 2022,
DHAB had ulised EUR 27.4m of the
facilies, predominately as source of funding
for acquiring nine further hydropower plants
in Sweden from AB Edsbyn Elverk and
ÄSI Kra AB. The remainder of the undrawn
facility is predominately to fund future capital
expenditure requirements.
Foreign Exchange
The Group’s assets in Sweden earn
revenues in EUR and incur operaonal cost
in SEK. Assets in UK operate enrely in
sterling.
The Group, together with its foreign
exchange advisor, has developed and
implemented its foreign exchange risk
management policy in line with the IPO
Prospectus. The policy targets hedging the
short to medium-term distribuons (up to
ve years) from the porolio of assets, that
are not denominated in GBP on a “linear
reducing basis”, whereby a high proporon
of expected distribuons in year one are
hedged and the proporon of expected
distribuons that are hedged reduces in a
linear fashion over the following four years.
This is a rolling programme and each year
further hedges are expected to be put in
place to maintain the prole.
In total, 77% of the Group’s EUR dividend
receipts from SPVs out to March 2026
were hedged as at the reporng date,
meaning only a small poron of these
future distribuons are subject to the
volality of the spot prices.
Power markets and exposure
Through its porolio companies, the Group
adopts a medium to long-term hedging
policy for its generaon assets, providing
an extra degree of certainty over the cash
ows over the hedged periods. The xed
price generaon posion for the porolio
as of 31 December 2021 is set out in the
chart below, showing the impact of the
combinaon of subsidy and xed income
from power sales. The hedging posions
are connuously reviewed to ensure an
appropriate posion is maintained and new
hedges are taken out as appropriate.
The Russian Conict will have a major
impact on power prices in Europe and the
UK as gas supply is dominated by Russia.
Consequently, the UK gas and UK power
markets are likely to stay volale as long
as the uncertainty about the Russian gas
supply connues. The Company is well
protected from this volality, due its high
level of xed pricing over the short to
medium term, which can be seen on the
chart below.
Downing Renewables & Infrastructure Trust plc Annual Report | 48
United Kingdom
From IPO in December 2020 through
to the end of July 2021, forward power
prices increased gradually mostly on the
back of increasing carbon prices.
In Q3 2021, global issues with coal and
gas supply, combined with an increased
demand, resulted in rising global gas
(“LNG”) and coal prices. This combined
with low wind levels, outages of domesc
CCGTs and nuclear generaon, fears
of wider issues with the nuclear eet
in France and the unexpected long-
term outage of one of the cross-border
interconnectors between the UK and
France created a perfect storm. High spot
prices and high forward prices resulted.
By then gas, power and carbon were now
all in unprecedented levels relave to
the last 10 years, with a signicant upli
in September. Given the unprecedented
high prices at the me, we took acon to
increase the porolio’s hedges.
Power prices peaked in October 2021
before declining on the back of falling gas
prices. However, the bearish senment
was short lived and prices recovered
as carbon prices rose again. Escalang
Russian acon in Ukraine and associated
sancons, new carbon price records and
French power supply concerns (with
mulple French nuclear plants facing
extended 10-year maintenance outages
throughout 2022) pushed prices to
unprecedented levels.
54,000.00
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Merchant revenuesFixed revenues
0%
20%
40%
60%
80%
100%
Power Prices – Fixed vs Merchant
Downing Renewables & Infrastructure Trust plc Annual Report | 49
Nordics
Q4 of 2020 saw bearish senments in
the Nordic electricity markets mostly due
to reduced demand and a hydrological
surplus, pushing spot prices to €0/MWh
from me to me.
Market prices increased during January
2021 due to a cold spell in the Nordics as
well as connental Europe. Prices came
down a lile aer the cold spell ended
but stayed at healthier levels, compared
to 2020, throughout the spring and early
summer of 2021. Due to a dry summer,
the Nordic hydrological decit connued
to increase, which resulted in higher
power prices by the end of summer 2021.
High precipitaon combined with surging
wind started to push down the spot and
forward prices at the end of September
2021. By the beginning of November
2021, prices started to increase again
mostly on the back of the price surge in
the European connent due to increasing
gas prices. Similar to the UK, the surge
rst intensied and then ended in the
week leading up to Christmas. At the end
of December prices came o signicantly.
Forward £/MWh
Sport £/MWh
UK Summer 23 £/MWH UK Spot £/MWH
UK Summer 22
£/MWH UK Winter 22 £/MWH
0
50
100
150
200
250
300
0
50
100
150
200
250
300
350
400
450
1-Oct-20 1-Jan-221-Jan-21 1-Apr-21 1-Jul-21 1-Oct-21
Downing Renewables & Infrastructure Trust plc Annual Report | 50
Dividends
The Company achieved a cash dividend
cover of 1.21x for the dividends paid of
2.25 pence per share paid during the period.
Dividend cover is presented excluding
dividends paid to new shareholders
immediately following the issuance of new
shares. If these are included, the dividend
cover would be 1.14x.
The Board has resolved to pay the
Company’s third interim dividend of
1.25 pence per share, equivalent to
£1.7 million, in respect of the three
months to 31 December 2021. This will
bring total dividends paid in respect of the
rst nancial year to 3.5 pence per share,
which is in line with the Company’s
updated dividend guidance. The third
interim dividend is not reected in the
accounts to 31 December 2021.
The Company has chosen to designate
part of each interim dividend as an
interest distribuon for UK tax purposes.
Shareholders in receipt of such a dividend
will be treated for UK tax purposes as
though they have received a payment
of interest in respect of the interest
distribuon element of this dividend. This
will result in a reducon in the corporaon
tax payable by the Company.
0
10
20
30
40
50
60
70
80
90
0
50
100
150
200
250
300
350
Forward €/MWh
Sport €/MWh
1-Oct-20 1-Jan-21 1-Apr-21 1-Jul-21
Nordic forward 2023 Nordic SpotNordic forward 2022
1-Oct-21
Dividends in respect of the nancial year to 31 December 2021 are as follows:
Dividend Paid For the
Period
No. of Shares Total
Dividend
(pence per
share)
Interest
Element
(pence per
share)
Dividend
Element
(pence per
share)
September 2021 June 2021 122,500,000 1.00 0.50 0.50
December 2021
September
2021
137,0 0 8,487 1.25 0.81 0.44
March 2022
December
2021
137,0 0 8,487 1.25 0.83 0.42
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.
Downing Renewables & Infrastructure Trust plc Annual Report | 51
120.1
(2.9)
(1.3)
6.5
4.0
1.1
(0.7)
141.8
NAV (£'m)
£115
£120
£125
£130
£135
£140
Opening (IPO)
(10-Dec-2020)
Management
fee
Other costs
and charges
Performance
Future
power prices
Inflaon
FX
Other
Closing
31-Dec-2021
£145
Dividend
Fund Raising
(0.9)
1.4
14.7
NAV Movement Bridge
Valuaon of the porolio
Net asset value
The Company’s NAV increased by 18% during the period from £120.0 million to £141.8 million. On a pence per share basis it increased
by 5.5 pence from 98 pence per share to 103.5 pence per share as at 31 December 2021. The NAV increase was driven by addional
fundraising, strong operaonal performance and increases in long term power price forecasts.
The bridge below shows the movement in NAV during the period, with each step explained further below.
Downing Renewables & Infrastructure Trust plc Annual Report | 51
Opening
Represents the NAV at IPO net of launch costs.
Dividends
Distribuons paid by the Company in the period.
Management Fee
Fees charged to the Company by the Investment Manager.
Other costs and charges
Charges incurred by the Company, and its immediate subsidiary DORE
Hold Co, in its normal operaons. No transacon costs are included.
Performance
Represents the balance sheet variance at the porolio company
level represenng higher cashows than ancipated in the short
term.
Power Prices
The Group uses long-term, forward-looking power price forecasts
from third party consultants for the purposes of asset valuaons.
In both the UK and Sweden, an equal blend is taken from the most
recent central case forecasts from two leading consultants. Where
xed price arrangements are in place, the nancial model will reect
this price for the relevant me frame. The impact of our short-term
power hedging strategy is also included in this step.
Inaon
The Group uses a near-term inaon forecast of 2.75%,
rising to a medium-term inaon forecast of 3.0% for the
purposes of UK asset valuaons. From 2030 onwards,
this forecast reduces to 2.25% because of the RPI reform
recently announced by the UK Government. Models are
updated quarterly to reect inaon to date.
For the Swedish asset valuaons, a 2.0% inaon forecast
is used, reecve of the Swedish central bank’s target
inaon rate.
Foreign Exchange
The impact of foreign exchange movements on foreign
cash balances and on underlying investment valuaons.
Other
Reects changes to operaonal contracts (such as
insurance) and debt terms, and other minor changes.
Downing Renewables & Infrastructure Trust plc Annual Report | 52
Key Valuaon Assumpons
Asset life
Where land is leased from an external
landlord, the operaonal life assumed for the
purposes of the asset valuaons is valued at
the earlier of planning or lease expiry.
Where a project has an indenite life, the
land it is located on is owned and there are
no constraints regarding planning, asset
valuaons are based on a perpetual life.
This is the basis for the valuaon of the
hydropower assets.
The asset life assumed for each of the
ground mounted solar sites was set
taking into consideraon the length of
the respecve planning consent and term
of leasing agreement in place at the me
of acquision. On a capacity-weighted
basis this results in an average asset life
of close to 25 years. There is an ongoing
process underway to extend planning
and lease terms to allow the assets to
operate for longer than inially expected.
This project is expected to increase the
weighted useful life of the ground mount
porolio to 27.8 years. The extension to
asset life assumpons to this level would, if
implemented on 31 December 2021, result
in a valuaon gain of approximately £1.1m.
Discount Rates
Discount rates used for the purpose of the
valuaon process are representave of
the Investment Manager’s and the Board’s
assessment of the rate of return in the
market for assets with similar characteriscs
and risk prole.
Discount rates in use across the porolio
range from 5.5% to 7.5%, with the weighted
value at 7.3%.
Foreign Exchange
Cashows 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 impraccalies of
hedging currency further into the future.
Porolio Valuaon sensivies
The NAV of the Company is comprised of
the sum of the discounted value of future
cash ows of the underlying investments
in solar and hydropower assets (being the
porolio valuaon), the cash balances of the
Company and its holding Company and the
other assets and liabilies of the Group.
The porolio valuaon is the largest
component of the NAV and the key
sensivies to this valuaon are considered
to be discount rate and the principal
assumpons used in respect of future
revenues and costs.
Downing Renewables & Infrastructure Trust plc Annual Report | 53
A broad range of assumpons are used in
the Company’s valuaon models. These
assumpons are based on long-term
forecasts and are generally not aected by
short-term uctuaons in inputs, whether
economic or technical.
The Investment Manager exercises its
judgement and uses its experience in
assessing the expected future cash ows
from each investment.
The impact of changes in the key drivers of
the valuaon are set out below.
Discount Rate
The weighted average discount rate of the
porolio at 31 December 2021 was 7.3%.
The Investment Manager considers a
variance of plus or minus 0.5% is to be a
reasonable range of alternave assumpons
for discount rates.
Energy Yield
For the solar assets, our underlying
assumpon set assumes the so called P50
level of electricity output based on reports
by technical advisors. The P50 output is
the esmated annual amount of electricity
generaon that has a 50% probability of
being exceeded and a 50% probability of
being underachieved.
For hydropower assets, the expected annual
aver a g e p ro d u c on is a p p l ie d t o t he v a l u a o n ,
similar to the P50 assumpon applied to solar
and wind assets. Given the long operaonal
record of the hydropower assets, the annual
producon forecast is derived from historic
datasets and validated by technical advisors.
The Energy Yield sensivies uses a
variance of plus or minus 5% applied to the
generaon.
Power Prices
The power price sensivity assumes a 10%
increase or decrease in power prices relave
to the base case for each year of the asset life.
While power markets can experience
volality in excess of +/-10% on a short-term
basis, the sensivity is intended to provide
insight into the eect on the NAV of
persistently higher or lower power prices
54,000.00
(8.00) (6.00) (4.00) (2.00) 0.00 2.00 4.00 6.00 8.00
Discount rate (+/- 0.5%)
Inflation (+/- 0.5%)
Power Prices (+/- 10%)
Energy Yield (+/-5%) Solar
Energy Yield (+/- 5%) Hydro
FX (+/- 10%)
NAV Movement (PPS)
Positive directional change to assumption Negative directional change to assumption
Sensitivities
Downing Renewables & Infrastructure Trust plc Annual Report | 54
over the whole life of the porolio, which is a
more severe downside scenario.
Inaon
The Company’s inaon assumpons are set
out above. A long-term inaon sensivity
of plus and minus 0.5% is presented below.
Foreign Exchange
The Company’s foreign exchange policy
is set out above. A sensivity of plus and
minus 10% is applied to any non-hedged
cashows derived from non-sterling
assets. The Company will also try to ensure
sucient near-term distribuons from any
non-sterling investments are hedged.
Market development and
opportunies
Since the IPO of the Company, the demand
for electricity around the globe has
connued to grow, this has pushed energy
prices to unprecedented levels. According
to the IEA, global electricity demand grew
by more than 6% in 2021 and was the
largest in percentage terms since 2010
13
.
Although electricity produced from
renewable sources grew by 6%
in 2021, this
was not enough to keep up with the rising
demand. There is clearly sll work to be
done.
The Investment Manager is progressing a
signicant pipeline of opportunies across
technologies / sectors including wind, solar,
hydro and ulies. The geographical focus of
the opportunies in progress is the Nordic
region and the UK, with certain further
opportunies across Northern Europe.
A key message coming out of the pandemic
has been that governments connue to
look to “build back beer” following the
uncertainty of the previous years, caused
by the Covid-19 pandemic. This year the
UK played host to COP26, which has raised
the global ambion on climate acon.
The outlook connues to remain favourable
for companies involved in the renewable
energy and infrastructure space. In 2021,
the renewable energy industry remained
remarkably resilient. Decreasing costs of
renewable energy technologies, along with
the growth of baery storage, have made
renewables one of the most compeve
energy sources in many areas.
Following COP26 many countries have set
ambious clean energy goals, increasing
renewable porolio standards with many
also enacng energy storage mandates.
The rollout of renewable energy capacity is
poised to accelerate in 2022 and beyond,
as concern for climate change grow and
demand for cleaner energy sources from
most market segments accelerates.
The outlook for the Company is
encouraging; three new acquisions
already made in 2022 (including the
Company’s rst wind asset) and proven
operaonal and nancial performance from
the Company’s exisng assets provide a
strong foundaon for future growth.
13
Surging electricity demand is pung power systems under strain around the world -
News - IEA
Downing Renewables & Infrastructure Trust plc Annual Report | 55
Section 172(1) Statement
The following disclosure describes how the Directors have
had regard to the maers set out in secon 172(1)(a) to (f)
when performing their duty under s172 of the Companies
Act 2006 and forms the Directors’ statement required
under secon 414CZA of the Companies Act 2006.
Secon 172(1) Descripon
(a) the likely consequences of any decision
in the long term
In managing the Company, the aim of the Board and of the Investment Manager is to
ensure the long-term sustainable success of the Company and, therefore, the likely
long‑term consequences of any decision are a key consideraon.
In managing the Company during the period since IPO, the Board and Investment
Manager believe they have acted in the way which we considered, in good faith, with a
view to promong the Company’s long‑term sustainable success and to achieving its
wider objecves for the benet of our shareholders as a whole, having had regard to our
wider stakeholders and the other maers set out in Secon 172 of the Companies Act.
(b) the interests of the company’s
Employees
As a closed-ended investment company, the Company does not have any employees,
however the interests of any employees within project companies are considered when
making decisions.
(c) the need to foster the company’s
business relaonships with suppliers,
customers and others
The Board’s approach is described under ‘Stakeholder Engagement’ below.
(d) the impact of the company’s operaons
on the community and the environment
The Board places a high value on the monitoring of ESG issues and sets the overall
strategy for ESG maers related to the Company. The Board takes responsibility in
managing any climate-related risks for the group, including transparent disclosure of
these risks, and takes migang acons to reduce or eliminate them where possible.
A descripon of the Company’s sustainable and responsible Investment Policy is set
out on pages 10 to 16.
(e) the desirability of the company
maintaining a reputaon for high standards
of business conduct
The Board’s approach is described under ‘Culture and Values’ below.
(f) the need to act fairly as between
members of the company
The Board’s approach is described under ‘Stakeholder Engagement’ below.
Downing Renewables & Infrastructure Trust plc Annual Report | 56
Culture and Values
The Directors’ overarching duty is to promote the success
of the Company for the benet of investors, with due
consideraon of other stakeholders’ interests. The Company
seeks to maintain the highest standards of business conduct
and corporate governance and ensures via the Investment
Manager that appropriate oversight, control and suitable
policies are in place to ensure the Company treats its
stakeholders fairly.
The Board seeks to ensure the alignment of its purpose,
values and strategy with this culture of openness,
debate and integrity through connued dialogue and
engagement with its key stakeholders. The Board, made
up of two male and one female members, aims to achieve
a supporve business culture combined with construcve
challenge and to provide a regular ow of informaon to
shareholders and other stakeholders.
Although the Company has no employees, the Company
is commied to respecng human rights in its broader
relaonships. Both the Company and the Investment
Manager have an‑corrupon and bribery policies in place
in order to maintain standards of business integrity, a
commitment to truth and fair dealing and a commitment to
complying with all applicable laws and regulaons.
The Company has several policies and procedures in place
to assist with maintaining a culture of good governance
including those relang to diversity, anbribery (including
the acceptance of gis and hospitality), tax evasion,
conicts of interest, and Directors’ dealings in the
Company’s shares. Further informaon can be seen in the
Nominaon Commiee Report on page 82.
The Board assesses and monitors compliance with these
policies regularly through Board meengs and the annual
evaluaon process. The Board seeks to appoint the most
appropriate service providers for the Company’s needs
and evaluates their services on a regular basis. The Board
considers the culture of the Investment Manager and other
service providers through regular reporng and by receiving
regular informaon well as through ad hoc interacons.
Downing Renewables & Infrastructure Trust plc Annual Report | 57
Stakeholder Engagement
This secon describes how the Board engages with its key stakeholders, how it considers their interests and the outcome of
the engagement when making its decisions, the likely consequences of any decision in the long-term, and further ensures that it
maintains a reputaon for high standards of business conduct.
Stakeholder Why is it Important to
Engage?
How has the Company
communicated and
engaged?
What were the key
topics of engagement?
Key strategic decisions
impacng stakeholder
group during period
Shareholders Shareholders and their
connued support is
crical to the connuing
existence of the business
and delivery of our
long-term investment
strategy.
The Company makes
regular market
announcements
where appropriate.
The Company has
published quarterly fact
sheets available on the
Company’s website.
Views and feedback are
sought from instuonal
investors via the
Company’s corporate
broker.
A large number of
investor meengs
were held prior to IPO
in December 2020
and in respect of the
subsequent fundraising in
October 2021 to engage
shareholders with the
Company’s strategy.
The Company made two
acquisions during the
period which should be
accreve to the NAV
over the long-term. The
Company increased its
annual dividend guidance
to 5 pence per share,
connuing to posion the
Company as an aracve
proposion for income
seeking investors.
Investment
Manager
The Investment Manager
is responsible for
execung the Investment
Objecve within the
bounds of the Investment
Policy of the Company.
The Board maintains
regular and open dialogue
with the Investment
Manager at Board
meengs and has regular
contact on operaonal
and investment maers
outside of meengs.
In addion to all maers
related to the execuon
of the Company’s
Investment Objecve, the
Board engaged with the
Investment Manager on
the structure of the Group
and the interpretaon of
investment restricons.
Determinaon that the
Investment Manager
maintains a robust internal
control environment,
and that the connued
appointment of the
Investment Manager is
in the best interests of
shareholders.
Service
providers
As an externally managed
Company, we are reliant
on our service providers
to conduct our core
acvies. We believe that
fostering construcve and
collaborave relaonships
with our service providers
will assist in the promoon
of the success of the
Company.
The Board maintains
regular contact with
its service providers,
both through Board and
Commiee meengs,
as well as outside the
regular meeng cycle. The
Management Engagement
Commiee is responsible
for conducng periodic
reviews of service
providers. During the
period, the Management
Engagement Commiee
assessed that the
connued appointment
of all service providers
remained in the best
interests of the Company
and its shareholders.
Being the inaugural annual
report for the Company
the Audit and Risk
Commiee, in parcular
the Chair, have been
engaged with the external
auditors to ensure the
process was undertaken
eecvely.
The Board sought advice
from the Company’s
Broker and Legal Counsel
in respect of various
maers, including
the interpretaon of
investment restricons.
Key service providers
have been retained,
providing connuity of
service and familiarity
with the objecves of the
Company.
During period, there was a
non-material amendment
to the Investment
Policy. For the purpose
of acquiring the solar
assets, the Company’s
Investment Policy was
temporarily amended to
permit the Company to
invest no more than 61%
of Gross Asset Value in
assets located in the UK.
The previous limit was
60%.
Downing Renewables & Infrastructure Trust plc Annual Report | 58
Stakeholder Why is it Important to
Engage?
How has the Company
communicated and
engaged?
What were the key
topics of engagement?
Key strategic decisions
impacng stakeholder
group during period
Asset-level
counterpares
Asset‑level counterpares
are an essenal
stakeholder group and
engagement with them
is important to ensure
assets are operang
safely and eecvely and
performing as expected.
The Group made its rst
investment on 1 February
2021. As a result, during
the reporng period
communicaons with
asset‑level counterpares
have been limited. As part
of connual monitoring
of future investments, we
expect a regular dialogue
w i t h t h e s e c o u n t e r p a r e s .
The key engagement with
asset‑level counterpares
was during the due
diligence process prior
to compleng the
investment.
Acquired two new
assets during the period,
increasing ongoing
servicing requirements
from O&M counterpares.
Debt-providers Providers of long-term
debt are key to supporng
the Company’s long-
term objecves through
enabling the connued
nancing of investment
opportunies.
During the period,
the Company, via
its unconsolidated
subsidiaries, entered
into an RCF and
also renanced its
hydropower assets.
This included a
comprehensive
negoaon of terms.
The Company and
its unconsolidated
subsidiaries provide
regular updates on
covenant compliance and
current posioning.
Pricing and sizing of
the debt was a key
consideraon for the
Company.
Debt will be a key
component of the
Company’s funding
strategy looking forward
and the porolio will
ulise the RCF debt
facility in the coming
months.
Following the period
end, the hydropower
level debt was ulised
to acquire further
hydropower assets. More
informaon on these
acquisions can be found
on pages 40 and 41.
Downing Renewables & Infrastructure Trust plc Annual Report | 59
Risks and Risk Management
The Board recognises that eecve risk management is
key to the Group’s success and that a proacve approach is
crical to ensuring the sustainable growth and resilience of
the Group. Risk is described as the potenal for events to
occur that may result in damage, liability or loss. Should any
of these events occur, the Company may well be adversely
impacted, potenally leading to the disrupon of the
Company’s business model, as well as potenal damage to
the reputaon or nancial standing of the Company.
The benet of a risk management framework is that it
allows for potenal risks to be idened in advance and
may enable these risks to either be migated or possibly
even converted into opportunies. The Company’s
IPO Prospectus, issued in November 2020 detailed the
potenal risks that the Directors considered were material
that could occur during the process of implemenng the
Company’s Investment Policy.
Principal Risks and Uncertaines
Procedures to idenfy principal or emerging risks
It is not possible to eliminate all risks that may be faced by
the Company.
The objecve of the Company’s risk management framework
and policies adopted by the Company is to idenfy risks and
enable the Board to respond to risks with migang acons
to reduce the potenal impacts should any of the risks
materialise.
The Board, through the Audit and Risk Commiee, regularly
reviews the Company’s risk register, with a focus on ensuring
appropriate controls are in place to migate each risk. Taking
considered risk is the essence of all business and investment
acvity.
The Board considers the following to be the principal risks
faced by the Company along with the potenal impact of
these risks and the steps taken to migate them.
Downing Renewables & Infrastructure Trust plc Annual Report | 60
Risk Idened Risk Descripon Risk Impact Migaon
Exposure to
wholesale
electricity prices
and risk to
hedging power
prices
The Company makes investments
in Assets with revenue exposure
to wholesale electricity prices.
The market price of electricity is
volale and is aected by a variety
of factors, including market demand
for electricity, levels of electricity
generaon, the generaon mix of
power plants, government support
f or v a r i o u s fo r m s of p o we r g e n e r a o n
and uctuaons in the market prices
of commodies and foreign exchange.
Market demand for electricity
can be impacted by many factors,
including changes in consumer
demand paerns, increased usage
of smart grids, a rise in demand for
electric vehicle charging capacity and
residenal parcipaon in renewable
energy generaon. Such changing
dynamics could have a material
adverse eect on the Company’s
protability, the NAV and the price of
the Ordinary Shares.
To the extent that the Company or an
SP V enters contract s to x the price it
receives on the electricity generated
or enters into derivaves with a view
to hedging against uctuaons in
power prices, the Company or SPV,
may be exposed to risk related to
delivering an amount of electricity
over a specic period.
I f th e r e a r e pe r i o d s o f n o n ‑ p r o d u c o n
the Company or an SPV may need
to pay the dierence between the
price it has sold the power at and the
market price at that me.
The Investment Manager closely
monitors exposure to power price
movements. Sensivity to long term
forecasts will be disclosed to investors
and the Board on a regular basis.
Many assets are expected to have a
signicant proporon of revenue that
is not linked to power price forecasts
including subsidies such as feed-in-
taris.
In addion, assets are geographically
diverse, spreading exposure across
dierent power markets and price
drivers. Short‑ and medium‑term
exposure to power prices will be
managed by locking power prices on
a rolling basis. See chart on page 48
for an illustraon of the porolio’s
current xed vs merchant revenues.
Exposure to the
transaconal
eects of foreign
exchange rate
uctuaons
and risks of
foreign exchange
hedging
To the extent the Company invests
in non‑sterling jurisdicons, it may
be exposed to foreign exchange
risk caused by uctuaons in the
value of foreign currencies when
the net income and valuaons of
those operaons in non‑Sterling
jurisdicons are translated into
Sterling for the purposes of nancial
reporng.
While the Company and SPVs may
enter derivave transacons to
hedge such foreign exchange rate
exp osures , th ere c an be no guar antee
that the Company and/or SPVs will
be able to, or will elect to, hedge such
exposures, or that were entered into,
will be successful.
The Company and/or SPVs may
be required to sasfy 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 posi on. To the ex tent
that the Company and/or SPVs do
rely on derivave instruments to
hedge exposure to exchange rate
uctuaons, they will also be subject
to counterparty risk. Any failure by
a hedging counterparty to discharge
its obligaons could have a material
adverse eect on the Company’s
protability, the NAV and the price of
the Ordinary Shares.
Natural hedging of foreign exchange
exposure will occur due to an
element of costs and debt (for capital
structuring purposes) being linked to
the local currency.
The Company will hedge expected
income from foreign assets up to ve
years in advance.
Downing Renewables & Infrastructure Trust plc Annual Report | 61
Risk Idened Risk Descripon Risk Impact Migaon
Non-compliance
with the
investment
trust eligibility
condions under
secons S1158/
S1159 of the CTA
2010
As an approved investment trust,
the Company is exempt from UK
corporaon tax on its chargeable
gains and capital prots on loan
relaonships.
If the Company fails to maintain
its investment trust status from
HMRC, in such circumstances, the
Company would be subject to the
normal rates of corporaon tax on
chargeable gains and capital prots
arising on the transfer or disposal of
investments and other assets. Which
coul d ad ver sel y a ec t the Com pany ’s
nancial performance, its ability to
provide returns to its Shareholders or
the post‑tax returns received by its
Shareholders.
The Company has contracted out the
relevant monitoring to appropriately
qualied professionals. The Investment
Manager also monitors relevant
qualifying condions.
The Investment Manager and the
Company Secretary report on
regulatory maers to the Board on
a quarterly basis. The assessment
of regulatory risks forms part of the
Board’s risk management framework.
Construcon
risks for certain
renewable
energy projects
SPVs may undertake projects that
are in the Construcon Phase or
are construcon ready which may
be exposed to certain risks, such as
cost overruns, construcon delays
and construcon defects that may
be outside the Company’s control.
Should compleon of any project
overrun (both in terms of me and
budget), there is a risk that payments
may be required to be made to
(or withheld by) a counterparty in
rel a on to th e d el ay. If the c om p le o n
of a project overruns, it would also
result in a delayed start to receipt
of revenues, which could aect the
Company’s ability to achieve its target
returns, depending on the nature and
scale of such delay.
Addional costs and expenses,
delays in construcon or carrying
out repairs, failure to meet technical
requirements, lack of warranty
cover and/or consequenal
operaonal failures or malfuncons
may have a material adverse eect
on the Company’s protability, the
NAV and the price of the ordinary
shares.
The Investment Manager will monitor
construcon carefully and report
frequently to the Board and AIFM.
The Investment Manager has an
experienced asset management
team including technical experts to
oversee construcon projects. The
Investment Manager will undertake an
extensive due diligence process prior to
investment with input from the Board
(including technical experse).
Third party experts will be used as
required to enhance knowledge and
experience.
Reliance on third-
party service
providers
The Company, whose Board is
non‑execuve, and which has no
employees, is reliant upon the
performance of third-party service
providers for its execuve funcon.
The Company relies on the
Investment Manager and other
s er v ic e pr ov i d e r s a n d t h e ir r ep u t a on
in the energy and infrastructure
market.
The third-party provider may prove
to be insuciently skilled for the role
or perform the roles required to an
inadequate level, which may cause the
Company to underperform, to breach
regulaons, or in extremis to go into
administraon.
There are clear service level
agreements in place for all third-party
providers and provisions are in place
that any provider can be replaced,
subject to an inial term or a breach of
the agreement occurring.
They have all been chosen for being
skilled and experienced in their areas
of experse. The Board has regular
oversight over all the other providers.
Downing Renewables & Infrastructure Trust plc Annual Report | 62
Risk Idened Risk Descripon Risk Impact Migaon
Lack of
availability
of suitable
renewable
energy projects
Compeon for renewable energy
projects in the primary investment or
secondary investment markets, may
result in the Company being unable
to make investments or on terms
that enable the target returns to be
delivered.
If the Investment Manager is unable
to source sucient opportunies
within a reasonable meframe,
whether by reason of fundamental
change in market condions creang
lack of available opportunies, too
much compeon or otherwise. A
greater proporon of the Company’s
assets will be held in cash for longer
than ancipated and the Company’s
ability to achieve its Investment
Objecve may be adversely aected.
The Company has an Investment
Manager in place with a strong track
record, who strengthened their team
ahead of the fund launch.
Through extensive industry
relaonships the Investment Manager
provides access to a signicant pipeline
of investment opportunies.
Conicts of
interest
The Investment Manager and the
AIFM may manage from me‑to‑
me other managed Funds pursuing
similar investment strategies to that
of the Company and which may be in
compeon with the Company.
The appointment of the AIFM is on
a non‑exclusive basis and each of
the AIFM and Investment Manager
manages other accounts, vehicles and
funds pursuing similar investment
strategies to that of the Company.
This has the potenal to give rise to
conicts of interest. The Company
may also be in compeon with
other Downing Managed Funds for
Assets. In relaon to the allocaon of
investment opportunies.
The AIFM and the Investment Manager
have clear conicts of interest and
allocaon policies in place.
Transacons where it is perceived
that there may be potenal conicts
of interest are overseen by the
Investment Manager’s Conicts
Commiee, an independent fairness
opinion on valuaon may also be
commissioned where deemed
necessary.
The applicaon of allocaon policy is
reviewed by the Investment Managers
Compliance Department, and by the
Board on annual basis.
Further informaon on these
procedures can be found in the
Company’s Prospectus dated
12 November 2020.
Risks relang
to the technical
performance of
assets
The long-term performance of the
assets acquired does not match
the expectaons at the me of the
acquision.
Incorrect assumpons against
technical performance of assets, or
the availability of natural resources
may lead to addional costs and
expenses, carrying out repairs, or
reduced revenues.
Any delays or reducon in the
producon or supply of energy may
have a material adverse eect on the
performance of the Company, the
NAV, the Company’s earnings and
returns to shareholders.
The Company will appoint third
party technical advisors for every
transacon. The advisors will
undertake a review of the technology,
design, installaon (if applicable),
and natural resource availability and
provide an analysis of expected long
term generaon yields.
Where Assets are going through
construcon, appropriate contractual
guarantees will be provided. Operators
will oen provide guarantees as to the
availability or performance of Assets.
Downing Renewables & Infrastructure Trust plc Annual Report | 63
Risk Idened Risk Descripon Risk Impact Migaon
Counterpares’
ability to make
contractual
payments
The Company’s revenue derives from
the renewable energy projects in
the porolio, the Company and its
SPVs will be exposed to the nancial
strength of the counterpares to
such projects and their ability to meet
their ongoing contractual payment
obligaons.
The failure by a counterparty to pay
the contractual payments due, or
the early terminaon of a PPA by
an Oaker due to insolvency, may
materially aect the value of the
porolio and could have a material
adverse eect on the performance
of the Company, the NAV, the
Company’s earnings and returns to
shareholders.
The Investment Manager will look
to build in suitable mechanisms to
protect the income stream from the
relevant renewable energy projects,
which may include parent guarantees
and liquidated damages payments on
terminaon.
Exposure to defaults may be further
migated by contracng with
counterpares who are public sector
or quasi-public sector bodies or who
are able to draw upon government
subsidies to partly fund contractual
payments.
As part of the acquision process,
the Investment Manager conducts a
thorough due diligence process on all
projects.
Risks associated
with Cyber
Security
There exists an increasing threat of
cyber‑aack in which a hacker may
aempt to access the Company’s
website or its secure data, or the
computer systems that relate to one
of its Assets and aempt to either
destroy or use this data for malicious
purposes.
Increased regulaon, laws, rules
and standards related to cyber
security, could impact the Company’s
reputaon or result in nancial loss
through the imposion of nes.
Suering a cyber breach will also
generally incur costs associated with
repairing aected systems, networks
and devices.
If one or several Assets became the
subject of a successful cyber‑aack,
to the extent any loss or disrupon
following from such aack would
not be covered or migated by any
of the Company’s insurance policies,
such loss or disrupon could have an
adverse eec t on the per formance of
the aected Asset and consequently
on the Company’s protability, the
NAV and the price of the Ordinary
Shares.
Cyber security policies and procedures
implemented by key service providers
are reported to the Board regularly to
ensure conformity. Thorough third-
party due diligence is carried out on
all suppliers engaged to service the
Company. All providers have processes
in place to idenfy cyber security risks
and apply and monitor appropriate risk
plans.
Further nancial risks are detailed in Note 16 of the nancial statements.
Downing Renewables & Infrastructure Trust plc Annual Report | 64
Emerging Risks
Emerging risks are characterised by a
degree of uncertainty, therefore the
Investment Manager and the Board
consider new and emerging risks every six
months. The risk register is then updated
to include these consideraons. The Board
has a process in place to idenfy emerging
risks, such as climate related risks, and
to determine whether any acons are
required. The Board relies on regular reports
provided by the Investment Manager and
the Administrator regarding risks that the
Company faces. When required, experts
are employed to provide further advice,
including tax and legal advisers.
Climate Change
Environmental laws and regulaons
connue to evolve as the UK, Europe and
the rest of the world connue to focus
their eorts on the goals laid out by the
Paris Agreement. In jurisdicons where
the Company’s Assets are located, newly
implemented laws and/or regulaons may
have an impact on a given Asset’s acvies.
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
liabilies will not be incurred in the future. In
a d di o n , e n v i ro n m e n t a l r e g u l a to r s m a y s e e k
to impose injuncons or other sancons
on an Asset’s operaons that may have
a material adverse eect on its nancial
c o n d i o n a n d v a l u a o n . C l i m a t e c h a n g e m a y
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 paerns such
as periods of increased or reduced wind
speeds or rainfall as well as extreme events
which may aect the performance of the
Company’s investments.
Physical Eects of Climate Change
While eorts to migate climate change
connue to progress, the physical impacts
are already emerging in the form of changing
weather paerns. Such as the recent
heatwaves experienced in North America
and recent ash ooding seen throughout
the UK and Europe.
Extreme weather events can result in
ooding, drought, res and storm damage,
which may potenally impair the operaons
of e x isn g a nd fut u re po r o lio com p ani e s at
a certain locaon or impacng locaons of
companies within their supply chain.
Transion Risks
Much of the conversaon around climate
change focuses on environmental
impacts, such as rising temperatures and
extreme weather events. A big part of
climate risk, however, involves transion
risk – or the risk that results from changing
policies, pracces, and technologies that
arise as countries and sociees work to
decrease their reliance on carbon. In the
near and medium term, transion risks
to porolio investments may arise from
any unexpected changes to exisng
government policies. An increase in
renewables build‑out ambion without
sucient demand could reduce power
price forecasts. This could have a negave
impact on the valuaon of the Company’s
assets.
Downing Renewables & Infrastructure Trust plc Annual Report | 65
Going Concern and Viability
Statement
Going Concern
The Board, in its consideraon of the
going concern posion of the Company,
has reviewed comprehensive cash ow
forecasts prepared by the Company’s
Investment Manager which are based on
market data and believes, based on those
forecasts, the assessment of the Company’s
subsidiary’s banking facilies and the
assessment of the principal risks described
in this report, that it is appropriate to
prepare the nancial statements of the
Company on the going concern basis.
In arriving at their conclusion that the
Company has adequate nancial resources,
the Directors were mindful that the Group
had cash of £33 million as at 31 December
2021, though £39.9 million has been spent
on new acquisions since the reporng date.
The Group ulised EUR 27.4 million of its
facility with SEB to help fund the addional
hydropower acquisions. There is EUR 16.1
million remaining of this facility.
Through its main subsidiary, DORE Hold
Co Limited, the Company has access to an
undrawn RCF which is available for either,
new investments or investment in exisng
projects and working capital. The RCF is
currently undrawn.
The Company’s net assets at
31 December 2021 were £141.8 million
and total expenses for the period ended
31 December 2021 were £2.2 million,
which represented approximately 1.6% of
average net assets during the period.
In light of the ongoing COVID‑19 pandemic
the Directors have fully considered each
of the Company’s investments. Given the
nature of the Company’s porolio, the
Directors do not foresee any immediate
material risk to the Company’s investment
porolio and income from underlying SPVs.
The Directors are sased that the
Company has sucient resources to
connue to operate for the foreseeable
future, a period of not less than
12 months from the date of this report.
Accordingly, they connue to adopt the
going concern basis in preparing these
nancial statements.
Viability Statement
In accordance with Principle 21 of the
AIC Code, the Board has assessed the
prospects of the Group over a period
longer than 12 months required by the
relevant ’Going Concern’ provisions. In
reviewing the Company’s viability, the
Directors have assessed the viability of the
Company for the period to 31 December
2026 (the ‘Period’). The Board believes that
the Period, being approximately ve years,
is an appropriate me horizon over which
to assess the viability of the Company,
parcularly when taking into account
the long term nature of the Company’s
investment strategy, which is modelled
over ve years, and the principal risks
outlined above. Based on this assessment,
the Directors have a reasonable
expectaon that the Company will be able
to connue to operate and to meet its
Downing Renewables & Infrastructure Trust plc Annual Report | 66
liabilies as they fall due over the period to
31 December 2026.
In making this statement, the Directors
have considered and challenged the
reports of the Investment Manager in
relaon to the resilience of the Group,
taking account of its current posion,
the principal risks faced in severe but
reasonable scenarios, including a stressed
scenario, the eecveness of any
migang acons and the Group’s risk
appete.
Sensivity analysis has been undertaken to
consider the potenal impacts of such risks
on the business model, future performance,
solvency and liquidity over the period,
both on an individual and combined basis.
In parcular, this has considered the
achievement of budgeted energy yields,
the level of future electricity and gas
prices, connued government support for
renewable energy subsidy payments and
the impact of a downside scenario which
includes signicant reducon of projects’
yields under severe power price and
generaon volume assumpons.
The Directors have determined that a
ve‑year look forward to December 2026
is an appropriate period over which to
provide its viability statement. This is
consistent with the outlook period used in
medium-term forecasts regularly prepared
for the Board by the Investment Manager
and the discussion of any new strategies
undertaken by the Board in its normal
course of business.
These reviews consider both the market
opportunity and the associated risks,
principally the ability to raise third-party
funds and invest capital, or migang
acons taken, such as a reducon of
dividends paid to shareholders or ulisaon
of addional borrowings available under
the RCF.
Board approval of the Strategic Report
The Strategic Report has been approved
by the Board of Directors and signed on its
behalf by the Chair.
Hugh W M Lile
Chair
4 March 2022
Downing Renewables & Infrastructure Trust plc Annual Report | 67
Downing Renewables & Infrastructure Trust plc Annual Report | 68
Hugh W M Lile
Chair
Hugh qualied as a chartered
accountant in 1982. In 1987 he
joined Aberdeen Asset Management
(“AAM”) and from 1990 to 2006
oversaw the growth of the private
equity business before moving
into the corporate team as Head
of Acquisions. Hugh rered from
AAM in 2015. Since then, he has
become chair of Drum Income
Plus REIT PLC and CLAN Cancer
Support, a Director of Dark Maer
Disllers Limited, and a governor
of both Robert Gordon University
and Robert Gordon’s College. Hugh
won the ‘Non-Execuve Director of
the Year’ award at the Instute of
Directors, Scotland awards ceremony
held in 2019.
Hugh was appointed as a Director of
the Company on 28 October 2020.
Joanna de Montgros
Non-execuve Director
Joanna is a specialist in the technical
and commercial elements of energy
projects, with 20 years’ experience
in renewable energy and exibility
investments, building on her academic
engineering background. In 2015,
Joanna co-founded internaonal
consultancy company Everoze.
Everoze provides a broad range of
engineering and strategic consulng
services, plus incubaon and
development of other start-ups
in this space. Prior to co-founding
Everoze, Joanna led the global
Project Engineering group within
DNV Renewables and was a member
of the DNV Renewable Advisory
Board. Joanna’s early career included
management consultancy (PWC) and
project nance (Fors Bank).
Jo was appointed as a Director of the
Company on 28 October 2020.
Ashley Paxton
Non-execuve Director
Ashley has 25 years’ experience
serving the funds and nancial
services industry in London and
Guernsey. Throughout that period, he
has served a large number of London
listed fund boards on IPOs and other
capital market transacons, audit and
other corporate governance maers.
Ashley was a partner with KPMG
in the Channel Islands (“C.I.”) from
2002 and transioned from audit to
become its C.I. Head of Advisory in
2008, a posion he held through to
his rerement from the rm in 2019.
Ashley is a Fellow of the Instute of
Chartered Accountants in England
and Wales and a resident of Guernsey.
Amongst other appointments he
serves on the board of JZ Capital
Partners Limited, Twentyfour Select
Monthly Income Fund Limited and is
Chairman of the Youth Commission
for Guernsey & Alderney, a locally
based charity delivering high
quality targeted services to children
and young people to support the
development of their social, physical
and emoonal wellbeing.
Ashley was appointed as a Director of
the Company on 28 October 2020.
Board of Directors
Downing Renewables & Infrastructure Trust plc Annual Report | 69
The Directors of the Company are pleased to present their
report for the period ended 31 December 2021.
Directors
The Directors who held oce during the year and as at the
date of this report are detailed on page 68.
Details of the Directors’ terms of appointment can be found
in the corporate governance statement and the Directors’
remuneraon report.
Share Capital
At the general meeng held on 26 October 2020, the
Company was granted authority to allot up to 200 million
ordinary shares, such authority to expire immediately following
admission of the Company’s ordinary shares to trading on the
premium segment of the main market of the London Stock
Exchange at IPO (“Admission”). On 10 December 2020, the
Company issued 122,500,000 ordinary shares at a price
of 100 pence per share, with an aggregate nominal value of
£1,225,000, raising gross proceeds of £122,500,000. The
shares were issued to instuonal and retail investors and
admied to trading on the premium segment of the main
market of the London Stock Exchange on 10 December 2020.
As a consequence of the above and as at the date of this report,
the Company’s ability to allot shares under this authority has
been exhausted.
In addion to and separate from the above authority, at the
general meeng held on 26 October 2020, the Company
was granted authority to allot ordinary shares and/or
C shares of the Company equal in aggregate to 20% of the
number of ordinary shares in issue immediately following
Admission, amounng to 24,500,000 shares, such authority
to expire on conclusion of the Company’s rst AGM.
On 19 October 2021, the Company issued 14,508,487
ordinary shares at a price of 102.5 pence per share,
with an aggregate nominal value of £145,084.87, raising
gross proceeds of £14.87 million. The placing price of
102.50 pence represented a discount of 1.68% to the
Company’s closing share price of 104.25 pence per share
on 28 September 2021 and a premium of 3.33% to the
unaudited ex-dividend net asset value per share as at
30 June 2021. The shares were issued to instuonal and
retail investors and admied to trading on the premium
segment of the main market of the London Stock Exchange
on 10 December 2020.
As at 31 December 2021 and the date of this report, the
Company has the ability to issue a further 9,991,513 ordinary
and/or C shares under this authority. This authority will
expire at the conclusion of, and renewal will be sought at,
the AGM to be held in April 2022.
At the general meeng held on 26 October 2020, the Company
was granted authority to purchase up to 14.99% of the ordinary
shares in issue immediately following Admission, amounng to
18,362,750 ordinary shares. This authority will expire at the
conclusion of, and renewal will be sought at, the AGM to be held
in April 2022. Shares bought back by the Company may be held
in treasury, from where they could be reissued at or above the
prevailing NAV quickly and cost eecvely.
This provides the Company with addional exibility in the
management of its capital base. No shares were bought back
or held in treasury during the period under review or at the
period end.
At the period end and at the date of this report, the issued
share capital of the Company comprised 137,008,487
ordinary shares. At general meengs of the Company,
ordinary shareholders are entled to one vote on a show of
hands and, on a poll, to one vote for every ordinary share held.
At 31 December 2021 and at the date of this report, the
total vong rights of the Company were 137,008,487.
Downing Renewables & Infrastructure Trust plc Annual Report | 70
Directors’ Report
3
The dividend targets stated above are targets only and not prot forecasts. There can be no assurance that these targets will be met, or that the
Company will make any distribuons at all and they should not be taken as an indicaon of the Company’s expected future results.
Substanal Shareholdings
The Directors have been informed of the following noable interests in the Company’s vong rights as at the date of this
report:
Shareholder Number of
Ordinary
Shares
% of Total
Vong
Rights
Bagnall Energy Limited 23,902,437 17.45
T Choithram & Sons Ltd (UK) 10,000,000 7.3 0
South Yorkshire Pensions Authority 5,000,000 3.65
Schng Juridisch Eigendom Privium Sustainable Impact Fund 4,500,000 3.28
The Company has not been informed of any changes to the noable interests between 31 December 2021 and the date of
this report.
Informaon About Securies Carrying Vong Rights
The following informaon is disclosed in accordance with
The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulaons 2008 and DTR 7.2.6
of the Financial Conduct Authority’s Disclosure Guidance
and Transparency Rules:
• the Company’s capital structure and vong rights and
details of the substanal shareholders in the Company
are set out above;
• proposals to grant powers to the Board to issue and
buy back the Company’s shares will be set out in the
noce of AGM; and
• there are no restricons concerning the transfer
of securies in the Company or on vong rights,
no special rights with regard to control aached
to securies and no agreements between holders
of securies regarding their transfer known to the
Company.
Dividends and Dividend Policy
Dividends paid in respect of the period ended 31
December 2021 are set out on in note 20 to the nancial
statements.
The Company pays dividends on a quarterly basis. The
Company may, where the Directors consider it appropriate,
use the special distributable reserve created by the
cancellaon of its Share premium account to pay dividends.
Distribuons made by the Company may take either the
form of dividend income, or of “qualifying interest income”
which may be designated as interest distribuons for UK tax
purposes.
At IPO, the Company targeted an inial dividend yield
of 3% by reference to the Issue Price in respect of the
calendar year to 31 December 2021, rising to a target
dividend yield of 5% by reference to the Issue Price,
in respect of the calendar year to 31 December 2022.
On 2 September 2021, the Company announced that,
following the rapid deployment of the IPO proceeds, it
was increasing its dividend guidance. Following payment
of the rst 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
(represenng a dividend per share of 1.25 pence for the
quarter ending September 2021 and thereaer)
3
.
Signicant Agreements
During the period under review, the Company entered, via
wholly owned subsidiaries, into two separate loan facility
agreements: a £25 million Revolving Credit Facility (“RCF”)
with Santander UK plc and a seven-year EUR 43.5 million
debt facility with SEB for its Swedish hydropower assets.
DORE Hold Co Limited has entered into a loan agreement
for a £25 million RCF with Santander UK plc. The RCF
has a four-year term, with the possibility to be extended
for a further year, and includes an uncommied accordion
allowing for an increase in its size to further assist the
expected increase of the Group’s investment acvity.
The RCF can be drawn in GBP and EUR (and also able to
make use of funds in other currencies) and is priced at the
Sterling Overnight Index Average (“SONIA”) plus 2.25%.
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Downing Renewables & Infrastructure Trust plc Annual Report | 72
The Group inially acquired Downing Hydro AB (“DHAB”),
its Swedish hydropower porolio, on an unlevered basis
shortly aer the Company’s IPO in December 2020.
DHAB has a seven-year EUR 43.5 million debt facility
with SEB.
Both loan facility agreements could alter or terminate on
the change of control of the Company.
Further details regarding the principal agreements
between the Company and its service providers, including
the Investment Manager, are set out in note 4 to the
nancial statements.
Financial Risk Management
Informaon about the Company’s nancial risk
management objecves and policies is set out in note 16
to the nancial statements.
Greenhouse Gas Emissions and Taskforce on Climate-Related
Financial Disclosures
Informaon about the Group’s GHG emissions and the
Company’s reporng against the TCFD recommendaons
is set out in the strategic report on pages 17 to 25.
Requirements of the Lisng Rules
Lisng Rule 9.8.4 requires the Company to include
specied informaon in a single idenable secon of
the annual report or a cross reference table indicang
where the informaon is set out. The informaon required
under Lisng Rule 9.8.4(7) in relaon to allotments of
shares is set out on page 70. The Directors conrm that
no addional disclosures are required in relaon to Lisng
Rule 9.8.4.
Audit Informaon
The Directors holding oce at the date of this annual report
conrm that, so far as they are each aware, there is no relevant
audit informaon of which the Company’s Auditor is unaware.
Each Director has taken all the steps that they ought to have
taken as a Director to make themselves aware of any relevant
audit informaon and to establish that the Company’s Auditor
is aware of that informaon.
Streamlined Energy Carbon Reporng
As the Company has outsourced operaons to third
pares, there are no signicant greenhouse gas emissions
to report from the operaons of the Company. The
Company qualies as a low energy user and is therefore
exempt from disclosures on greenhouse gas emissions and
energy consumpon.
Further detail on the Company’s environmental reporng
can be seen in the Sustainability report on pages 10 to 25.
Future Developments
Further informaon regarding likely future developments
in the business of the Company is set out in the
Investment Manager’s Report on pages 40 to 54.
Post Balance Sheet Events
Dividends
On 24 February 2022, The Board declared an interim
dividend of 1.25 pence per share with respect to the
period ended 31 December 2021.
The Dividend is expected to be paid on or around
31 March 2022 to shareholders on the register on
4 March 2022. The ex-dividend date is 3 March 2022.
Acquisions
The Company, through its main subsidiary acquired two
operaonal porolios of hydropower plants, located in
central Sweden for £20.1 million and also completed the
acquision of an operaonal 46 MW onshore wind project
located in north eastern Sweden for £19.8 million.
This Directors’ report has been approved by the Board.
By order of the Board
Link Company Maers Limited
Company Secretary
4 March 2022
Corporate Governance
Statement
This corporate governance statement forms part of the
Directors’ report.
Introducon from the Chairman
I am pleased to introduce this period’s corporate governance
statement. In this statement, the Company reports on
its compliance with the AIC Code, sets out how the
Board and its commiees have operated during the past
year and describes how the Board exercises eecve
stewardship over the Company’s acvies in the interests of
shareholders. The Board is accountable to shareholders for
the governance of the Group’s aairs and is commied to
maintaining the highest standard of corporate governance
for the long-term success of the Company.
The Company reviews its standards of governance against
the principles and recommendaons of the AIC Code, as
published in 2019.
The Board considers that reporng against the principles
and recommendaons of the AIC Code provides beer
informaon to shareholders as it addresses all the principles
set out in the UK Code, as well as seng out addional
principles and recommendaons on issues that are of
specic relevance to investment companies and is endorsed
by the FRC. The terms of the FRC’s endorsement mean that
AIC members who report against the AIC Code and the AIC
Guide fully meet their obligaons under the UK Code and
the related disclosure requirements contained in the lisng
rules of the FCA.
A copy of the AIC Code can be found at www.theaic.co.uk. A
copy of the UK Code can be obtained at www.frc.org.uk.
Statement of Compliance with the AIC Code
Pursuant to the lisng rules of the FCA, the Company is
required to provide shareholders with a statement on how
the main and supporng principles set out in the AIC Code
have been applied and whether the Company has complied
with the provisions of the AIC Code. The Board recognises
the importance of a strong corporate governance culture
and has established a framework for corporate governance
which it considers to be appropriate to the business of the
Company as a whole.
It should be noted that, as an investment trust, all of the
Company’s Directors are non-execuve and most of the
Company’s day-to-day responsibilies are delegated to third
pares. Consequently, the Company has not reported on
those provisions of the UK Code relang to the role of the
chief execuve, execuve remuneraon or internal audit.
The Board has reviewed the principles and
recommendaons of the AIC Code and considers that it
has complied throughout the year, except that Directors
are not appointed for a specic term as all Directors are
non-execuve and the Company has adopted a policy of
all Directors, including the Chairman, standing for annual
re-elecon. The Board is mindful of and will have regard to
corporate governance best pracce recommendaons with
respect to the tenure of the Chair and in future succession
planning. The Company does not have a Senior Independent
Director. The Board believes that the appointment of a
Senior Independent Director is not necessary at present
given the size of the Company.
The Principles of the AIC Code
The AIC Code is comprised of 18 Principles and 42
Provisions over ve secons covering the following areas:
• Board Leadership and Purpose;
• Division of Responsibilies;
• Composion, Succession and Evaluaon;
• Audit, Risk and Internal Control; and
• Remuneraon
The Board’s Corporate Governance Statement sets out how
the Company has complied with each of the Principles of the
AIC Code.
Downing Renewables & Infrastructure Trust plc Annual Report | 73
Downing Renewables & Infrastructure Trust plc Annual Report | 74
AIC Code Principle How the Company Complies
A. A successful company is led by an
eecve board, whose role is to
promote the long-term sustainable
success of the Company, generang
value for shareholders and
contribung to wider society.
Members of the Board are fully engaged and bring diverse skills to the table fostering healthy
debate. The Investment Objecve is to provide investors with an aracve and sustainable level
of income returns, with an element of capital growth, by invesng in a diversied porolio of
renewable energy and infrastructure assets in the UK, Ireland and Northern Europe.
As part of this the opportunies and risks faced by the business are considered, monitored and
assessed on a regular basis, both in terms of potenal and emerging risks that the Company may
face. More detail regarding the principal risks and uncertaines and the sustainability of the
business model can be found in the Strategic Report on pages 6 to 67.
B. The Board should establish the
Company’s purpose, values and
strategy, and sasfy itself that
these and its culture are aligned. All
directors must act with integrity, lead
by example and promote the desired
culture.
The purpose of the Company is also the Investment Objecve which is to provide investors with an
aracve and sustainable level of income returns, with an element of capital growth, by invesng
in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and
Northern Europe.
The investment process followed by the Investment Manager is set out on pages 26 to 35.
The Board embraces a culture of inclusivity, fairness and responsibility, adopng a responsible
governance culture. Transparency and openness are important values both amongst Board
members and in the Board’s dealings with the Company’s stakeholders. The Board assesses and
monitors its own culture as part of the annual Board evaluaon process, including its policies,
pracces and behaviour to ensure that it is appropriately aligned to the Company’s acvies.
C. The Board should ensure that the
necessary resources are in place for
the Company to meet its objecves
and measure performance against
t he m . Th e Bo a rd s h ou l d als o es t ab l is h
a fr am ework of prudent an d eec ve
controls, which enable risk to be
assessed and managed.
The Board and the Management Engagement Commiee regularly review the performance of the
Company and the performance and resources of the Investment Manager and other key service
providers to ensure that the Company can connue to meet its objecves.
The Audit and Risk Commiee is responsible for assessing and managing risks and further
informaon about how this is done can be found in the Audit and Risk Commiee Report on
pages 84 to 86.
D. In order for the Company to meet
its responsibilies to shareholders
and stakeholders, the Board should
ensure eecve engagement with,
and encourage parcipaon from,
these pares.
The Board understands its responsibilies to Shareholders and stakeholders and stakeholder
consideraons form an important part of decision making. Further informaon on the Company’s
engagement with stakeholders is set out in the Secon 172 statement on pages 55 to 58.
The Board considers the impact any decision will have on all relevant stakeholders to ensure
that they are making a decision that promotes the long-term success of the Company, including
in relaon to dividends, new investment opportunies and capital requirements.
The Directors welcome the views of all shareholders and place considerable importance on
communicaons with them. All shareholders, while remaining cognisant of any government
regulaons on social gatherings, are encouraged to aend the AGM, where they will be given the
opportunity to queson the Chairman, the Board and representaves of the Investment Manager.
In addion, the Direc tors are available to meet shareholders . Shareholders wishing to communic ate
with the Chairman, or any other member of the Board, may do so by wring to the Company
Secretary at dorecosec@linkgroup.co.uk.
The Management Engagement Commiee reviews the performance and connuing appointment
of the Company ’s key ser vice provider s annually to ensure that per for m ance levels s as fac tor y an d
any service issues can be discussed, as appropriate.
Downing Renewables & Infrastructure Trust plc Annual Report | 75
AIC Code Principle How the Company Complies
F. The chair leads the Board and
is responsible for its overall
eecveness in direcng the
Company. They should demonstrate
objecve judgement throughout
their tenure and promote a culture
of openness and debate. In addion,
the Chair facilitates construcve
board relaons and the eecve
contribuon of all non-execuve
directors, and ensures that Directors
receive accurate, mely and clear
informaon.
The Chair is responsible for leading the Board and is responsible for its overall eecveness in
direcng the aairs of the Company. The Chair ensures that all Directors receive accurate, mely
and clear informaon and promotes a culture of op enne ss and debate in Board meengs and within
the Company by encouraging and facilitang the eecve contribuon of other Directors.
There is a clear division of responsibilies between the Chair, the Directors, the Investment
Manager and the Company’s other third-party service providers.
The Boa rd mee ts regular ly through out the ye ar an d repre s enta ves of the Inves t ment Manager are
in aendance, when appropriate, at each meeng and most Commiee meengs. The Board has
ag ree d a sc he du le of m a e r s s pe ci c al l y res er ved fo r d ec isi o n by t h e B o ard whi ch is av ail ab le on the
Company’s website.
Prior to each Board and Commiee meeng, Directors are provided with a comprehensive set of
papers giving detailed informaon on the Company’s investment performance, transacons and
nancial posion and all Directors have mely access to all relevant management, nancial and
regulatory informaon.
The review of the per form ance of the Chair was car ried out duri n g th e year by Joanna De Montg ros
as the Chair of the Nominaon Commiee as part of the Board evaluaon exercise. The document
seng out the role of the Chair is available on the Company’s website. This review concluded that
t h e Ch air c on n ue s to m ake a sig ni c a nt co n t ri bu o n to, an d d e v ote s su c ien t me to th e a air s of,
the Company and connues to display excellent leadership.
G. The Board should consist of an
appropriate combinaon of Directors
(and, in parcular, independent non-
execuve directors) such that no one
in d i v i d u al o r sm al l gr ou p of in d iv i d ua ls
dominates the Board’s decision
making.
All of the Directors are non-execuve and are independent of the Investment Manager and the
other service providers.
The Chair, Hugh Lile, was independent of the Investment Manager at the me of his appointment
in 2020 and remains so. No Director is a director of another investment company managed by the
Company’s Investment Manager.
H. Non-execuve directors should have
sucient me to meet their board
responsibilies. They should provide
construcve challenge, strategic
guidance, oer specialist advice and
hold third party service providers to
account.
As part of the Board evaluaon process, the contribuons of each Director, as well as the me
commitments made by each Board member are considered and reviewed. The Directors’ other
commitments are regularly reviewed and any new appointments are considered by the other
Directors to ensure there is no conict of interest or risk of over boarding.
Following the Board evaluaon, it was concluded that each Director provides appropriate levels
of challenge and provided the Company and the Investment Manager with strategic guidance and
specialist advice when required.
The Management Engagement Commiee reviews the performance and cost of the Company’s
third-party service providers on an annual basis. More informaon regarding the work of the
Management Engagement Commiee can be found on page 83.
I. The Board, supported by the
Company Secretary, should ensure
that it has the policies, processes,
informaon, me and resources it
needs in order to funcon eecvely
and eciently.
The Directors have access to the advice and services of the Company Secretary through its
app ointe d rep r ese n ta ves and th e Co mpany Se cret ar y is re spo n sible to the Boa rd for ensu ring th at
Board procedures are followed and that applicable rules and regulaons are complied with. The
Company Secretary is also responsible for ensuring good informaon ows between all pares.
Downing Renewables & Infrastructure Trust plc Annual Report | 76
AIC Code Principle How the Company Complies
Composion, succession and evaluaon
J. Appointments to the Board should
be subject to a formal, rigorous
and transparent procedure, and an
eecve succession plan should be
maintained. Both appointments and
succession plans should be based
on merit and objecve criteria and,
within this context, should promote
diversity of gender, social and ethnic
backgrounds, cognive and personal
strengths.
The Board has established a Nominaon Commiee, comprising all Directors. This Commiee
will lead the appointment process of new Directors as and when vacancies arise and as part
of the Directors’ ongoing succession planning. More informaon regarding the work of the
Nominaon Commiee can be found on page 82.
In accordance with the AIC Code, the Board is comprised of a mixture of individuals who have
an appropriate balance of skills and experience to meet the future opportunies and challenges
facing the Company. Appointments are made rst and foremost on the basis of merit and taking
into account the recognised benets of all types of diversity. The Board ensures that diversity is an
important consideraon and part of the selecon criteria used to assess candidates to achieve a
balanced Board.
The Board is mindful of the current FCA proposals to incorporate the diversity recommendaons
fr om th e P ar ker and H amp to n -A le xa nd er rev iew s in to th e L is ng Rule s on a ‘co mp ly or ex pla in’ basi s
which will apply to nancial years commencing 1 Januar y 2022. Once nalised, these proposals will
be taken into consideraon in respect of the recruitment of all new Directors of the Company. The
Company will report its compliance against this new requirement in the annual report for the year
ending 31 December 2022.
K. The Board and its commiees
should have a combinaon of
skills, experience and knowledge.
Consideraon should be given to
the length of service of the Board as
a whole and membership regularly
refreshed.
The Directors bring a wide range of skills, experience and knowledge to the Board. Further
details are set out in their biographies on page 68.
The Directors’ skills, experience and knowledge are reviewed as part of the annual Board
evaluaon process. When considering new appointments in future, the Board will review the
skills of the Directors and seek to add persons with complementary skills or who possess skills
and experience which ll any gaps in the Board’s knowledge or experience and who can devote
sucient me to the Company to carry out their dues eecvely.
L. Annual evaluaon of the Board
should consider its composion,
diversity and how eecvely
members work together to achieve
objecves. Individual evaluaon
should demonstrate whether each
director connues to contribute
eecvely.
The Board has agreed to evaluate its own performance and that of its Commiees, Chair and
Directors on an annual basis. For the period under review, this was carried out by way of a
quesonnaire prepared by the Company Secretar y. A report was circulated to the Directors which
set out the results of the evaluaon process and the Directors met subsequently to discuss the
ndings and take any acons. The Nominaon Commiee led the evaluaon, which covered the
f un c o n in g o f t h e B o a rd as a wh o l e, t h e e e c ve n e ss o f th e Bo a r d C o m mi e e s , th e pe r fo r m an c e of
the Chair and the independence and contribuon made by each Director.
The Nominaon Commiee considers the ndings of the evaluaon process when making a
recommendaon to the Board regarding the elecon and re-elecon of Directors.
Following this review, the Board is sased that the structure, mix of skills and operaon of the
Board is eecve and relevant for the Company and it is recommended that shareholders vote in
favour of the elecon of the Directors at the AGM to be held in April 2022.
Fur ther informaon regarding the proposed elec on of each Dire ctor c an be found in the Noce of
AGM.
Downing Renewables & Infrastructure Trust plc Annual Report | 77
AIC Code Principle How the Company Complies
Audit, risk and internal control
M. The Board should establish
formal and transparent policies
and procedures to ensure the
independence and eecveness of
external audit funcons and sasfy
itself on the integrity of nancial and
narrave statements.
The Audit and Risk Commiee ensures that any work outside the scope of the standard audit work
requires prior approval by the Audit and Risk Commiee. This enables the Commiee to ensure
that the Auditor remains fully independent.
The Audit and Risk Commiee carries out a review of the per formance of the Auditor on an annual
basis. Feedback from other third pares, including the Investment Manager, is included as part
of this assessment to ensure that the Audit and Risk Commiee takes into account the views of
dierent pares who have a close working relaonship with the Auditor.
Further informaon regarding the work of the Audit and Risk Commiee can be found on page 84.
N. The Board should present a fair,
balanced and understandable
assessment of the Company’s
posion and prospects.
The Board, through the Audit and Risk Commiee, has considered the Annual Report and nancial
statement as a whole and agreed that they believe that the document presents a fair, balanced and
understandable assessment of the Company’s posion and prospects.
O. The Board should establish
procedures to manage risk, oversee
the internal control framework, and
determine the nature and extent of
the principal risks the Company is
willing to take in order to achieve its
long-term strategic objecves.
The Audit and Risk Commiee reviews repor ts from the principal service providers on compliance and
the internal and nancial control systems in operaon and relevant independent audit reports thereon.
The Audit and Risk Commiee has carried out an annual review of the eecveness of the
Company’s systems of internal control. Given the nature of the business, and being an Investment
Trust, the Company is reliant on its service providers and their own internal controls. The Audit and
Ri sk Co mmi e e rev iew s th e c on tr o l sy st em s i n ope ra o n at t h e C om pa ny ’s key s er vi ce prov id er s on
an annual basis, insofar as they relate to the aairs of the Company.
As set out in more detail in the Audit and Risk Commiee on pages 84 to 86, the Company has
in place a detailed system for assessing the adequacy of those controls.
P. Remuneraon policies and pracces
should be designed to support
strategy and promote long-term
sustainable success.
As outlined in the Remuneraon Policy on page 91, the Company follows the recommendaon
of the AIC Code that non-execuve Directors’ remuneraon should reect the me
commitment and responsibilies of the role. The Company’s policy is that the remuneraon
of non-execuve Directors should reect the experience of the Board as a whole and be
determined with reference to comparable organisaons and appointments. Directors are not
eligible for bonuses, share opons, long-term incenve schemes or other performance- related
benets as the Board does not believe that this is appropriate for non-execuve Directors.
The Remuneraon Policy is therefore designed to aract and retain high quality Directors, whilst
ensuring that Directors remain focused and incenvised to promote the long-term sustainable
success of the Company.
All Directors hold shares in the Company, all of which were purchased in the open market and using
the Directors’ own resources.
More informaon regarding the work of the Remuneraon Commiee can be found in the
Remuneraon Report and Policy which are set out on pages 87 to 92.
Q. A formal and transparent
procedure for developing policy on
remuneraon should be established.
No Director should be involved in
deciding their own remuneraon
outcome.
T he Rem un er a on Pol ic y has be e n d ev elo p ed wi th r efe re n ce to th e pe er gro up a nd th e pr in cip le s of
the AIC Code. There are agreed Directors’ remuneraon levels which all non-execuve Directors
receive (irrespecve of experience or tenure) for Directors, for the Audit and Risk Commiee
Chair and for the Chair of the Company. Any changes to the Chairman’s fee are considered by the
Remuneraon Commiee as a whole, with the excepon of the Chair who excuses himself for this
part of the meeng.
R. Directors should exercise
independent judgement and discreon
when authorising remuneraon
outcomes, taking account of company
and indi vid ual per fo rma nce, and wid er
circumstances.
Any decision with regard to remuneraon is taken aer considering the performance of the
Company and wider market condions and circumstances.
Downing Renewables & Infrastructure Trust plc Annual Report | 78
Board of Directors
Under the leadership of the Chairman, the Board of
Directors is collecvely responsible for the long-term
sustainable success of the Company, generang value for
shareholders and contribung to wider society. It provides
overall leadership, sets the strategic aims of the Company
and ensures that the necessary resources are in place for
the Company to meet its objecves and full its obligaons
to shareholders, within a framework of high standards of
corporate governance and eecve internal controls. The
Directors are responsible for the determinaon of the
Company’s Investment Policy and investment strategy and
have overall responsibility for the Company’s acvies,
including the review of investment acvity and performance
and the control and supervision of the Investment Manager.
The Board consists of three non-execuve Directors. It
seeks to ensure that it has an appropriate balance of skills
and experience, and considers that, collecvely, it has
substanal recent and relevant experience of investment
trusts and nancial and public company management. The
Chairman of the Audit and Risk Commiee, Ashley Paxton,
has recent and relevant nancial experience as set out in his
biography on page 68.
The terms and condions of the appointment of the
Directors are formalised in leers of appointment, copies
of which are available for inspecon from the Company’s
registered oce. None of the Directors has a contract of
service with the Company nor has there been any other
contract or arrangement between the Company and any
Director at any me during the year. Directors are not
entled to any compensaon for loss of oce.
Board Operaon
The Directors have adopted a formal schedule of maers
specically reserved for the approval of the Board. These
include the following:
• approval of the Company’s Investment Policy, long-term
objecves and investment strategy;
• approval of acquisions from, divestments to, or co-
investments by the Company with other funds which are
managed by the Investment Manager;
• approval of Annual and Interim Reports and nancial
statements and accounng policies, prospectuses, circulars
and other shareholder communicaons;
• approval of the raising of new capital and major nancing
facilies;
• approval of dividends and the Company’s dividend
policy;
• Board appointments and removals;
• appointment and removal of the Investment Manager,
AIFM, Auditor and the Company’s other service
providers; and
• approval of the Company’s operang budgets.
Board Meengs
The Company has four scheduled Board meengs a year,
with addional meengs arranged as necessary.
At each Board meeng, the Directors follow a formal
agenda which is circulated in advance by the Company
Secretary. The Investment Manager, Administrator, AIFM
and Company Secretary regularly provide the Board
with nancial informaon, including an annual expenses
budget, together with brieng notes and papers in relaon
to changes in the Company’s economic and nancial
environment, statutory and regulatory changes and
corporate governance best pracce.
At each Board meeng, representaves from the
Investment Manager are in aendance to present reports
to the Directors covering the Company’s current and future
acvies, porolio of assets and its investment performance
over the preceding period. The Board and the Investment
Manager operate in a fully supporve, co-operave and
open environment and ongoing communicaon with the
Board is maintained between formal meengs.
Commiees
The Board has established four commiees to assist its
operaons: the Audit and Risk Commiee, the Management
Engagement Commiee, the Remuneraon Commiee and
the Nominaon Commiee. Each commiee’s delegated
responsibilies are clearly dened in formal terms of
reference, which are available on the Company’s website.
Given the size and nature of the Board it is felt appropriate
that all Directors are members of all Commiees.
Downing Renewables & Infrastructure Trust plc Annual Report | 79
Audit and Risk Commiee
The Audit and Risk Commiee meets twice a year and is
chaired by Ashley Paxton.
The Commiee ensures that the Company’s nancial
performance is properly monitored, controlled and
reported. The Commiee has direct access to the
Company’s Auditor and provides a forum through which
the Auditor reports to the Board. Representaves of
the Auditor aend both scheduled meengs of the
Commiee.
Further details about the Audit and Risk Commiee and
its acvies during the year under review are set out on
pages 84 and 86.
Nominaon Commiee
The Nominaon Commiee meets once a year and is
chaired by Joanna De Montgros. The Commiee oversees
Board recruitment and succession planning and the annual
Board evaluaon process.
Further details about the Nominaon Commiee and
its acvies during the year under review are set out on
page 82.
Management Engagement Commiee
The Management Engagement Commiee meets once a
year and is chaired by Hugh Lile. The Commiee reviews
the performance and connuing appointment of the
Investment Manager and the Company’s other principal
service providers.
Further details about the Management Engagement
Commiee and its acvies during the year under review
are set out on page 83.
Remuneraon Commiee
The Remuneraon Commiee meets once a year and is
chaired by Ashley Paxton. The Commiee conducts an
annual review of the remuneraon of the Directors.
Further details about the Remuneraon Commiee and
its acvies during the year under review are set out on
page 79.
Meeng Aendance
The number of scheduled Board and Audit and Risk Commiee meengs held during the period ended 31 December
2021 and the aendance of the individual Directors is shown below:
Board Audit and Risk
Commiee
Nominaon
Commiee
Remuneraon
Commiee
Management
Engagement
Commiee
Number
entled to
aend
Number
aended
Number
entled to
aend
Number
aended
Number
entled to
aend
Number
aended
Number
entled to
aend
Number
aended
Number
entled to
aend
Number
aended
Hugh Lile 4 4 2 2 1 1 1 1 1 1
Ashley Paxton 4 4 2 2 1 1 1 1 1 1
Joanna De
Montgros
4 4 2 2 1 1 1 1 1 1
Downing Renewables & Infrastructure Trust plc Annual Report | 80
A number of addional Board and Audit and Risk
Commiee meengs were held by the Company during
the period ended 31 December 2021. These meengs
were held in respect of the IPO, acquisions and
fundraising.
Inducon of New Directors
A procedure for the inducon of new Directors has been
established, including the provision of an inducon pack
containing relevant informaon about the Company, its
processes and procedures. New appointees have the
opportunity of meeng with the Chair, relevant persons at
the Investment Manager and the Secretary.
Elecon/Re-elecon of Directors
Under the Company’s Arcles of Associaon and in
accordance with the AIC Code, Directors are required
to rere at the rst AGM following their appointment.
Thereaer, at each AGM all Directors will seek annual re-
elecon. In accordance with the above policy, all Directors
will be seeking elecon at the forthcoming AGM.
Following formal performance evaluaon as detailed below,
the Board strongly recommends the elecon of each of
the Directors based on their experience and experse in
investment maers, their independence and connuing
eecveness and commitment to the Company.
Conicts of Interest
It is the responsibility of each individual Director to avoid
an unauthorised conict of interest situaon arising. The
Director must request authorisaon from the Board as
soon as he/she becomes aware of the possibility of an
interest that conicts, or might possibly conict, with the
interests of the Company (“situaonal conicts”). The
Company’s Arcles of Associaon authorise the Board to
approve such situaons, where deemed appropriate.
A register of conicts is maintained by the Secretary and is
reviewed at Board meengs, to ensure that any authorised
conicts remain appropriate. The Directors are required
to conrm at these meengs whether there has been any
change to their posion.
The Board is responsible for considering Directors’
requests for authorisaon of situaonal conicts and for
deciding whether or not the situaonal conict should
be authorised. The factors to be considered will include:
whether the situaonal conict could prevent the Director
from properly performing their dues; whether it has, or
could have, any impact on the Company; and whether it
could be regarded as likely to aect the judgement and/
or acons of the Director in queson. When the Board
is deciding whether to authorise a conict or potenal
conict, only Directors who have no interest in the maer
being considered are able to take the relevant decision,
and in taking the decision the Directors must act in a way
they consider, in good faith, will be most likely to promote
the Company’s success. The Directors are able to impose
limits or condions when giving authorisaon if they think
this is appropriate in the circumstances.
Insurance and Indemnity Provisions
The Board has agreed arrangements whereby Directors
may take independent professional advice in the
furtherance of their dues. The Company has Directors’
and Ocers’ liability insurance and professional indemnity
insurance to cover legal defence costs. Under the
Company’s Arcles, the Directors are provided, subject
to the provisions of UK legislaon, with an indemnity in
respect of liabilies which they may sustain or incur in
connecon with their appointment. This indemnity was in
force during the year and remains in force as at the date
of this report. Apart from this, there are no third-party
indemnity provisions in place for the Directors.
Performance Evaluaon of the Board
The Directors are aware that they need to connually
monitor and improve performance and recognise this
can be achieved through regular Board evaluaon, which
provides a valuable feedback mechanism for improving
Board eecveness. The Directors have therefore opted
to undertake an internal performance evaluaon by
way of quesonnaires specically designed to assess
the strengths and independence of the Board and the
Chairman, individual Directors and the performance of
the Commiees. The evaluaon of the Chair is carried
out by the other Directors of the Company, led by the
Chair of the Nominaon Commiee. The quesonnaires
are also intended to analyse the focus of Board meengs
and assess whether they are appropriate, or if any
addional informaon may be required to facilitate Board
discussions. The Chair acts on the results of the evaluaon
by recognising the strengths and addressing any
weaknesses of the Board as appropriate. The results of
the Board evaluaon process are reviewed and discussed
by the Board as a whole. This evaluaon process is carried
out annually.
Downing Renewables & Infrastructure Trust plc Annual Report | 81
The composion of the Board and, in parcular,
succession planning are kept under review by the Board
and are considered on an annual basis in December each
year in conjuncon with the evaluaon process in order
to ensure an orderly refreshment of the Board and to
develop a diverse pipeline.
Following the evaluaon process conducted during the
year under review, the Board considers that all the current
Directors contribute eecvely and have the skills and
experience relevant to the leadership and direcon of the
Company. The Board has sased itself that the Directors
have enough me to devote to the Company’s aairs.
Internal Control Review
The Board is responsible for the systems of internal
controls relang to the Company, including the reliability
of the nancial reporng process and for reviewing the
systems’ eecveness. The Directors have reviewed
and considered the guidance supplied by the FRC on
risk management, internal control and related nance
and business reporng and an ongoing process has been
established for idenfying, evaluang and managing
the principal risks faced by the Company. This process,
together with key procedures established with a view to
providing eecve nancial control, was in place during
the year under review and at the date of this report.
The internal control systems are designed to ensure
that proper accounng records are maintained, that the
nancial informaon on which business decisions are
made and which is issued for publicaon is reliable, and
that the assets of the Company are safeguarded.
The risk management process and systems of internal
control are designed to manage rather than eliminate
the risk of failure to achieve the Company’s objecves. It
should be recognised that such systems can only provide
reasonable, not absolute, assurance against material
misstatement or loss.
The Directors have carried out a review of the
eecveness of the systems of internal control as they
have operated over the year and up to the date of
approval of the report and nancial statements. There
were no maers arising from this review that required
further invesgaon and no signicant failings or
weaknesses were idened.
Internal Control Assessment Process
Robust risk assessments and reviews of internal controls are
undertaken regularly in the context of the Company’s overall
Investment Objecve:
In arriving at its judgement of what risks the Company faces,
the Board has considered the Company’s operaons in light
of the following factors:
• the nature and extent of risks which it regards as
acceptable for the Company to bear within its overall
business objecve;
• the threat of such risks becoming reality;
• the Company’s ability to reduce the incidence and
impact of risk on its performance;
• the cost to the Company and benets related to the
review of risk and associated controls of the Company;
and
• the extent to which third pares operate the relevant
controls.
A risk matrix has been produced against which the risks
idened and the controls in place to migate those risks
can be monitored. The risks are assessed on the basis
of the likelihood of them happening, the impact on the
business if they were to occur and the eecveness of
the controls in place to migate them. This risk matrix is
reviewed twice a year by the Audit and Risk Commiee
and at other mes as necessary. The principal risks that
have been idened by the Board are set out on pages 59
to 64.
Downing Renewables & Infrastructure Trust plc Annual Report | 82
Nomination Committee Report
I am pleased to present the Nominaon Commiee
Report for the period ended 31 December 2021.
Meengs
The Commiee comprises all Directors of the Company and
met once during the period under review.
Responsibilies of the Commiee
The primary responsibilies of the Commiee are as follows:
• to review the structure, size and composion
(including the skills, knowledge, experience and
diversity) of the Board;
• to give full consideraon to succession planning for
Directors in the course of its work, taking into account
the challenges and opportunies facing the Company,
and the skills and experse needed on the Board in the
future;
• to idenfy and nominate for the approval of the Board,
candidates to ll Board vacancies as and when they
arise;
• to review the results of the Board performance
evaluaon process that relate to the composion of
the Board; and
• to review annually the me required from non-
execuve Directors.
Appointment of New Directors
The nominaon commiee regularly reviews the composion
and eecveness of the Board and its commiees with the
objecve of ensuring that these have the appropriate balance
of skills and experience required to meet the current and future
opportunies and challenges facing the Company.
When considering the appointment of new Directors, the
nominaon commiee will acvely consider a range of
factors including the experse and experience required in a
prospecve candidate and the diversity of the Board, as set
out in the Company’s Diversity Policy below.
Diversity Policy
In accordance with the AIC Code, the Board is comprised
of a mixture of individuals who have an appropriate balance
of skills and experience to meet the future opportunies
and challenges facing the Company. Appointments are
based on merit and objecve criteria that protect against
discriminaon and are intended to promote a diversity
of gender, social and ethnic backgrounds, cognive and
personal strengths.
The Board is mindful of the current FCA proposals to
incorporate the diversity recommendaons from the
Parker and Hampton-Alexander reviews into the Lisng
Rules on a ‘comply or explain’ basis which will apply
to nancial years commencing 1 January 2022. Once
nalised, these proposals will be taken into consideraon
in respect of the recruitment of all new Directors of the
Company. The Company will report its compliance against
this new requirement in the annual report for the year
ending 31 December 2022, to be published in 2023.
Tenure Policy
Directors are not appointed for a specic term as all Directors
are non-execuve. The Company has adopted a policy of
all Directors, including the Chairman, standing for annual
re-elecon. The Board is mindful of and will have regard
to corporate governance best pracce recommendaons
with respect to the tenure of the Chairman and in future
succession planning, as appropriate.
Performance Evaluaon of the Board
Informaon on the performance evaluaon of the Board can
be found in the Corporate Governance report on page 80.
Joanna de Montgros
Chair of the Nominaon Commiee
4 March 2022
Downing Renewables & Infrastructure Trust plc Annual Report | 83
Management Engagement
Committee Report
I am pleased to present the Management
Engagement Commiee Report for the period
ended 31 December 2021.
Meengs
The Commiee comprises all Directors of the Company and
met once during the period under review.
Responsibilies of the Commiee
The primary responsibilies of the Commiee are as follows:
• to monitor and evaluate the performance of the
Investment Manager and its compliance with the
terms of the investment management agreement;
• to monitor and evaluate the performance of
the Alternave Investment Fund Manager and
its compliance with the terms of the alternave
investment fund management agreement;
• to consider the appropriateness of the investment
management agreement, that it is fair, complies with all
regulatory requirements, conforms with market and
industry pracce and remains in the best interests of
shareholders;
• to consider the appropriateness of the alternave
investment fund management agreement, that it is fair,
complies with all regulatory requirements, conforms
with market and industry pracce and remains in the
best interests of shareholders;
• to consider and review the level and method of
remuneraon of the Investment Manager and the
Alternave Investment Fund Manager pursuant to
the terms of their respecve agreements with the
Company;
• to consider the connuing appointment of the
Investment Manager and Alternave Investment
Fund Manager and make recommendaons to the
Board; and
• to review the performance and services provided by
the Company’s other service providers and consider
whether the connuing appointment of such service
providers under the terms of their agreements are
in the interests of shareholders as a whole, and make
recommendaons to the Board.
Connuing Appointment of the Investment
Manager
The Board, through the Management Engagement
Commiee, keeps the performance and connuing
appointment of the Investment Manager under connual
review. The Commiee conducts an annual review of
the Investment Manager’s performance and makes
a recommendaon to the Board about its connuing
appointment.
The Directors consider that the Investment Manager has
executed the Company’s investment strategy according to
the Board’s expectaons. Accordingly, the Board believes
that the connuing appointment of Downing LLP as
the Investment Manager of the Company, on the terms
agreed, is in the best interests of the Company and its
shareholders as a whole.
Hugh W M Lile
Chair of the Management Engagement Commiee
4 March 2022
Downing Renewables & Infrastructure Trust plc Annual Report | 84
Audit and Risk
Committee Report
I am pleased to present the Audit and Risk
Commiee Report for the period ended
31 December 2021.
Meengs
The Commiee comprises all Directors of the Company and
met twice during the period under review and once post
period end.
Responsibilies of the Commiee
The primary responsibilies of the Commiee are as follows:
• to monitor the integrity of the nancial statements of
the Company including its annual and interim reports
and any other formal announcements relang to its
nancial performance,
• to review and report to the Board on any signicant
nancial reporng issues and judgements which
those statements contain having regard to maers
communicated to it by the Auditor;
• to review the content of the annual report and nancial
statements and advise the Board on whether, taken
as a whole, it is fair, balanced and understandable and
provides shareholders with sucient informaon to
assess the Company’s performance, business model
and strategy;
• to keep under review the Company’s internal nancial
controls and review the adequacy and eecveness of
the Company’s internal control and risk management
systems and monitor the proposed implementaon of
such controls;
• to assess the current posion of the Company’s
emerging and principal risks, including those
that would threaten its business model, future
performance, solvency or liquidity and reputaon,
and how they are managed and migated; and the
prospects of the Company over such period as
deemed appropriate;
• to manage the relaonship with the Company’s
external Auditor, including reviewing the Auditor’s
remuneraon, independence and performance and
make recommendaons to the Board as appropriate;
• to review the Auditor’s independence and objecvity
and the eecveness and quality of the audit process;
and
• to consider annually whether there is a need for the
Company to have its own internal audit funcon.
Acvies in the Year
• conducted a review of the internal controls and risk
management systems of the Company and its third-
party service providers;
• agreed the audit plan and fees with the Auditor in
respect of the audit of the inial accounts, interim
review of the Interim Report for the period ended
30 June 2021 and the statutory audit of the Annual
Report for the period ended 31 December 2021,
including the principal areas of focus;
• received and discussed with the Auditor its report
on the results of the audit of the inial accounts, the
review of the half-yearly nancial statements and the
year-end audit;
• reviewed the Company’s inial accounts, interim and
annual nancial statements and recommended these
to the Board for approval;
• reviewed the methodology and assumpons applied in
valuing the assets of the Company; and
• reviewed whether an internal audit funcon would be
of value and concluded that this would provide minimal
addional comfort at considerable extra cost to the
Company.
• reviewed the adopon of the investment enty
accounng standard.
Downing Renewables & Infrastructure Trust plc Annual Report | 85
Signicant issues
The Commiee considered the following key issues in
relaon to the Company’s nancial statements during the
year. A more detailed explanaon of the consideraon of
the issues set out below, and the steps taken to manage
them, is set out in the Principal Risks and Uncertaines on
pages 59 to 64.
Valuaon of Investments
The discount rates used to determine the valuaon are
selected and recommended by the Investment Manager.
The discount rate is applied to the expected future cash
ows from each investment’s nancial forecasts to arrive
at a valuaon (discounted cash ow valuaon).
The Audit and Risk Commiee has considered the
subjecvity and appropriateness of the discount rates and
other key assumpons used to determine the valuaon,
of the investments, held through DORE Hold Co, which
could aect the NAV and share price of the Company.
These were discussed with the Investment Manager and
external auditor.
Internal controls
The Commiee carefully considers the internal control
systems by connually monitoring the services and
controls of its third-party service providers. The
Commiee reviewed, and where appropriate, updated
the risk matrix during the year under review. This is done
on a biannual basis. The Commiee received a report
on internal control and compliance from the Investment
Manager, the Administrator and the Registrar and no
signicant maers of concern were idened.
Going concern and long-term viability of the Company
The Commiee considered the Company’s nancial
requirements for the next 12 months and concluded
that it has sucient resources to meet its commitments.
Consequently, the nancial statements have been
prepared on a going concern basis. The Commiee also
considered the longer-term viability statement within the
Annual Report for the period ended 31 December 2021,
covering a ve-year period, and the underlying factors and
assumpons which contributed to the Commiee deciding
that this was an appropriate length of me to consider the
Company’s long-term viability.
Adopon of Investment enty accounng standard
Under IFRS 10, investment enes are required to hold
subsidiaries at fair value through the Income Statement
rather than consolidate them on a line-by-line basis. There
are three key condions to be met by the Company for
it to meet the denion of an investment enty. Further
detail on this can be found in Note 2 to the Financial
Statements.
The Directors have reviewed the criteria and are sased
that the Company meets the criteria of an Investment
Enty under IFRS 10. As explained in Note 2 to the
nancial statements, the Directors are of the opinion that
the Company meets the requirements of an “Investment
Enty”. Assessing whether the Company and certain
subsidiaries met the criteria of Investment Enes, in
accordance with denion set out in IFRS 10 was seen
as a key judgement. The Audit and Risk Commiee
debated the appropriateness of adopng the standard
with the Investment Manager and independent auditor.
The Audit and Risk Commiee concluded that applying
the investment enty exempon to IFRS 10 will improve
stakeholders’ understanding of the nancial performance
and posion of the Group.
The Company’s viability statement can be found on
page 65.
Downing Renewables & Infrastructure Trust plc Annual Report | 86
Audit fees and non-audit services provided by the
Auditor
The Commiee reviewed the audit plan and fees
presented by the Auditor and considered its report on the
nancial statements. Total fees for the year payable to
the Auditor amounted to £312,500. This gure includes
non-audit fees of £88,500 in respect of the audit of the
inial accounts and interim review for the period ended
30 June 2021. Professional fees relang to the reporng
accountant services and tax-structuring advice pre-IPO
totalled £101,000. Other pre-IPO work included the
review of the Company’s nancial model and this was
charged at £27,000.
All non-audit services provided by the Auditor during the
year were approved in advance by the Audit and Risk
Commiee and Directors. Further informaon on the fees
paid to the Auditor is set out in Note 6 to the nancial
statements.
Eecveness of the external audit
The Commiee reviews the eecveness of the external
audit carried out by the Auditor on an annual basis. The
Chairman of the Commiee maintained regular contact
with the Company’s Audit Partner throughout the year and
also met with them prior to the nalisaon of the audit of
the Annual Report and nancial statements for the period
ended 31 December 2021, without the Investment Manager
present, to discuss how the external audit was carried out,
the ndings from such audit and whether any issues had
arisen from the Auditor’s interacon with the Company’s
various service providers.
Independence and objecvity of the Auditor
The Commiee has considered the independence and
objecvity of the Auditor and has conducted a review of
non-audit services which the Auditor has provided during
the year under review. The Commiee receives an annual
conrmaon from the Auditor that its independence is not
compromised by the provision of such non-audit services.
Peter Smith is the Audit Partner allocated to the Company
by BDO LLP. The audit of the nancial statements for the
period ended 31 December 2021 is his rst as Audit Partner.
The Commiee is sased that the Auditor’s objecvity
and independence is not impaired by the performance of
their non-audit services and that the Auditor has fullled its
obligaons to the Company and its shareholders.
Appointment of the Auditor
Following consideraon of the performance of the Auditor,
the services provided during the year and a review of
its independence and objecvity, the Commiee has
recommended to the Board the appointment of BDO LLP
as Auditor to the Company. Shareholder approval of the
appointment of BDO as Auditor will be sought at the Annual
Gener al Mee ng of the Co mp any to be held o n 6 Apr il 202 2.
Ashley Paxton
Chair of the Audit and Risk Commiee
4 March 2022
Downing Renewables & Infrastructure Trust plc Annual Report | 87
Directors’ Remuneration Report
Statement from the Chair
I am pleased to present the Directors’
Remuneraon Report for the period
ended 31 December 2021.
As set out in the Corporate Governance
statement on pages 73 to 81, the
Remuneraon Commiee comprises all
Directors and meets at least once a year
to discuss maers relang to Directors’
remuneraon.
The Commiee reviewed Directors’
remuneraon at its meeng in November
2021. During the period ended 31
December 2021, the annual fees were
set at the rate of £50,000 for the Chair,
£40,000 for the Chair of the Audit and
Risk Commiee and £35,000 for a
Director. These fees levels were set in
2020, prior to the Company’s IPO. No
changes to the fee levels are proposed for
the year ending 31 December 2022.
Vong at the AGM
The Directors’ Remuneraon Report is
put to a shareholder vote on an annual
basis. The Directors’ Remuneraon Policy
is put to a shareholder vote in the rst
year of a Company or in any year where
there is to be a change to the policy and, in
any event, at least once every three years.
As this is the Company’s rst reporng
period, ordinary resoluons will be put
to shareholders at the forthcoming AGM
to be held in April 2022 to receive and
approve the Directors’ Remuneraon
Report and to receive and approve the
Directors’ Remuneraon Policy.
Performance of the Company
The Company was incorporated on
8 October 2020. As such, 31 December
2021 is its rst nancial period end and
historical data is not yet available. The
graph below compares the total return
to shareholders compared to the FTSE
All-Share index.
The Company does not have a specic
benchmark but has deemed the F TSE All-
Share Index to be the most appropriate
comparator for its performance. This
graph has been chosen as a comparison
as it is a publicly available broad equity
index which focuses on smaller companies
and is therefore more relevant than most
other publicly available indices.
Downing Renewables & Infrastructure Trust plc Annual Report | 88
Directors’ Remuneraon for the Period Ended 31 December 2021 (audited)
The remuneraon paid to the Directors during the period ended 31 December 2021 is
set out in the table below:
Fees
Period ended
31 December
2021
£
Expenses
Period ended
31 December
2021
£
Total
Period ended
31 December
2021
£
Hugh W M Lile 58,333 Nil 58,333
Joanna de Montgros 40,833 Nil 40,833
Ashley Paxton 46,667 Nil 46,667
145,833 Nil 145,833
All Directors were appointed on 28 October 2020. There is no variable component to
the Directors’ pay, all pay is xed.
90
95
100
105
110
115
120
10 Dec
2020
10 Jan
2021
10 Feb
2021
10 Mar
2021
10 Apr
2021
10 May
2021
10 Jun
2021
10 Jul
2021
10 Aug
2021
10 Sep
2021
10 Oct
2021
10 Nov
2021
10 Dec
2021
DORE FTSE All-share
Downing Renewables & Infrastructure Trust plc Annual Report | 89
Relave Importance of Spend on Pay
The table below sets out in respect of the period ended 31 December 2021:
a) the remuneraon paid to the Directors;
b) the Investment management fee; and
c) the distribuons made to shareholders by way of dividend.
Period ended
31 December
2021
£’000
Directors’ remuneraon 146
Investment management fee 1,284
Dividends paid to shareholders 2,938
Directors’ Interests (audited)
There is no requirement under the Company’s Arcles of Associaon for Directors to
hold shares in the Company.
As set out in the Company’s Prospectus, Joanna de Montgros agreed that any fees
payable to her in respect of her rst year of service should, save where the Company
and the Directors agreed otherwise, be used to acquire shares in the Company.
As at 31 December 2021, the interests of the Directors and any connected persons in
the shares of the Company are set out below:
Downing Renewables & Infrastructure Trust plc Annual Report | 90
Period ended
31 December
2021
Number of
Shares
Hugh W M Lile 150,000
Joanna de Montgros 21,085
Ashley Paxton
4
80,000
There have been no changes to any of the above holdings between 31 December 2021
and the date of this report.
None of the Directors or any persons connected with them had a material interest in the
Company’s transacons, arrangements or agreements during the year.
4
All of Ashley Paxton’s shares are held jointly with Alexandra Paxton, a person closely associated with Ashley Paxton.
Downing Renewables & Infrastructure Trust plc Annual Report | 91
Remuneration Policy
Introducon
The Directors’ Remuneraon Policy is
put to a shareholder vote in the rst year
of a Company or in any year where there
is to be a change to the policy and, in any
event, at least once every three years.
As this is the Company’s rst reporng
period, an ordinary resoluon will be put
to shareholders at the forthcoming AGM
to be held in April 2022 to receive and
approve the Directors’ Remuneraon
Policy.
Policy
The Company follows the
recommendaon of the AIC Code that
non-execuve Directors’ remuneraon
should reect the me commitment and
responsibilies of the role. The Board’s
policy is that the remuneraon of non-
execuve Directors should reect the
experience of the Board as a whole and be
determined with reference to comparable
organisaons and appointments. The
fees of the non-execuve Directors are
determined within the limits set out in
the Company’s arcles of associaon; the
Directors are not eligible for bonuses,
pension benets, share opons, long-
term incenve schemes or other benets.
There are no performance condions
aaching to the remuneraon of the
Directors as the Board does not consider
such arrangements or benets necessary
or appropriate for non-execuve
Directors. Under the Directors’ leers
of appointment, there is no noce period,
and no compensaon is payable to a
Director on leaving oce.
It is the Board’s policy that Directors
do not have service contracts, but
Directors are provided with a leer of
appointment as a non-execuve Director.
The terms of their appointment provide
that Directors shall rere and be subject
to elecon at the rst annual general
meeng aer their appointment. The
Directors are subject to rerement by
rotaon in accordance with the arcles of
associaon; however, the Company has
adopted the policy of annual re-elecon
of all Directors.
The Company is commied to ongoing
shareholder dialogue and any views
expressed by shareholders on the fees
being paid to Directors would be taken
into consideraon by the Board when
reviewing the Directors’ remuneraon
policy and in the annual review of
Directors’ fees.
Downing Renewables & Infrastructure Trust plc Annual Report | 92
Directors’ Fee Levels
Expected
fees for the
year ending
31 December
2022
Fees for the
period ended
31 December
2021
Chair £50,000 £58,333
Chair of the Audit and Risk Commiee £40,000 £46,667
Director £35,000 £40,833
The approval of shareholders would be required to increase the aggregate limit
for Directors’ fees of £300,000 per annum, as set out in the Company’s arcles of
associaon.
Approval
The Directors’ Remuneraon Report was approved by the Board and signed on its behalf
by:
Ashley Paxton
Chair of the Remuneraon Commiee
4 March 2022
Downing Renewables & Infrastructure Trust plc Annual Report | 93
Statement of Directors’
Responsibilities
In respect of the nancial statements
The Directors are responsible for preparing the Annual Report and the nancial
statements in accordance with applicable law and regulaon.
Company law requires the Directors to prepare nancial statements for each
nancial year. Under that law the directors are required to prepare nancial
statements in accordance with internaonal accounng standards in conformity with
the requirements of the Companies Act 2006. Under company law the Directors
must not approve the nancial statements unless they are sased that they give a
true and fair view of the state of aairs of the Company and of the prot or loss for
the Company for that period. The Directors are also required to prepare nancial
statements in accordance with internaonal nancial reporng standards adopted
pursuant to Regulaon (EC) No 1606/2002 as it applies in the European Union.
Under company law, Directors must not approve the nancial statements unless they
are sased that they give a true and fair view of the state of aairs of the Company
and of the prot or loss of the Company for that period. In preparing the nancial
statements, the Directors are required to:
• select suitable accounng policies and then apply them consistently;
• state whether applicable IFRS as issued by the IASB) have been followed, subject to
any material departures disclosed and explained in the nancial statements;
• make judgements and accounng esmates that are reasonable and prudent; and
• prepare the nancial statements on the going concern basis unless it is
inappropriate to presume that the Company will connue in business.
The Directors are responsible for keeping adequate accounng records that are
sucient to show and explain the Company’s transacons and disclose with
reasonable accuracy at any me the nancial posion of the Company and enable
them to ensure that the nancial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence
for taking reasonable steps for the prevenon and detecon of fraud and other
irregularies. The Directors are responsible for ensuring that the annual report and
accounts, taken as a whole, are fair, balanced, and understandable and provides the
informaon necessary for shareholders to assess the group’s performance, business
model and strategy.
Downing Renewables & Infrastructure Trust plc Annual Report | 94
Website publicaon
The Directors are responsible for ensuring the annual report and the nancial
statements are made available on a website. Financial statements are published
on the Company’s website in accordance with legislaon in the United Kingdom
governing the preparaon and disseminaon of nancial statements, which may
vary from legislaon in other jurisdicons. The maintenance and integrity of the
Company’s website is the responsibility of the directors. The Directors’ responsibility
also extends to the ongoing integrity of the nancial statements contained therein.
Directors’ responsibilies pursuant to DTR4
The directors conrm that, to the best of their knowledge:
• The nancial statements have been prepared in accordance with the applicable
set of accounng standards and Arcle 4 of the IAS regulaon and give a true
and fair view of the assets, liabilies, nancial posion and prot and loss of the
Company.
• The annual report includes a fair review of the development and performance
of the business and the nancial posion of the Company, together with a
descripon of the principal risks and uncertaines that they face.
On behalf of the Board.
Hugh W M Lile (Chair)
4 March 2022
Downing Renewables & Infrastructure Trust plc Annual Report | 95Downing Renewables & Infrastructure Trust plc Annual Report | 95
Downing Renewables & Infrastructure Trust plc Annual Report | 96
Independent Auditor’s Report
Opinion on the nancial statements
In our opinion the nancial statements:
• give a true and fair view of the state of the
Company’s aairs as at 31 December 2021 and of
its prot for the period from 8 October 2020 to
31 December 2021;
• have been properly prepared in accordance with
internaonal accounng standards in conformity
with the requirements of the Companies Act 2006;
and
• have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the nancial statements of Downing
Renewables & Infrastructure Trust Plc (the ‘Company’)
for the period ended 31 December 2021 which comprise
the Statement of comprehensive income, the Statement
of nancial posion, the Statement of changes in equity,
the Statement of cash ows and notes to the nancial
statements, including a summary of signicant accounng
policies. The nancial reporng framework that has
been applied in their preparaon is applicable law and
internaonal accounng standards in conformity with the
requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with Internaonal
Standards on Auding (UK) (ISAs (UK)) and applicable law.
Our responsibilies under those standards are further
described in the Auditor’s responsibilies for the audit of
the nancial statements secon of our report. We believe
that the audit evidence we have obtained is sucient and
appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the addional report to the
audit commiee.
Independence
Following the recommendaon of the Audit Commiee,
we were appointed by the Directors on 10 November
2020 to audit the nancial statements for the period
ended 31 December 2021 and subsequent nancial
periods. The period of total uninterrupted engagement is
one year covering the year ended 31 December 2021. We
remain independent of the Company in accordance with
the ethical requirements that are relevant to our audit of
the nancial statements in the UK, including the FRC’s
Ethical Standard as applied to listed public interest enes,
and we have fullled our other ethical responsibilies
in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to
the Company.
Conclusions relang to going concern
In auding the nancial statements, we have concluded
that the Directors’ use of the going concern basis of
accounng in the preparaon of the nancial statements is
appropriate. Our evaluaon of the Directors’ assessment
of the Company’s ability to connue to adopt the going
concern basis of accounng included:
• Assessing and challenging the inputs in the cashow
forecast prepared by the Directors against actual
results and contractual commitments, including
performing stress tesng considering downside
scenarios and assessing the impact on the
Company’s liquidity posion;
• Assessing assumpons used within the valuaon
models to supporng documentaon per the Key
Audit Maer noted below;
• Reviewing the future commitments of the Company
and checking they have been appropriately
incorporated into the forecast; and
• Reviewing the amount of headroom in the forecasts
of both base case and downside scenarios (e.g. loan
facility or viability of future placements).
Downing Renewables & Infrastructure Trust plc Annual Report | 97
Based on the work we have performed, we have not
idened any material uncertaines relang to events
or condions that, individually or collecvely, may cast
signicant doubt on the Company’s ability to connue as a
going concern for a period of at least twelve months from
when the nancial statements are authorised for issue.
In relaon to the Company’s reporng on how it has
applied the UK Corporate Governance Code, we have
nothing material to add or draw aenon to in relaon to
the Directors’ statement in the nancial statements about
whether the Directors considered it appropriate to adopt
the going concern basis of accounng.
Our responsibilies and the responsibilies of the Directors
with respect to going concern are described in the relevant
secons of this report.
Overview
Key audit maers Valuaon of investments
Materiality Company nancial statements as a whole
£2.125 million based on 1.5% of net assets
Lower tesng threshold
£217,000 based on 10% of gross expenditure for items impacng
on realised return.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the
Company and its environment, including the Company’s
system of internal control, and assessing the risks of
material misstatement in the nancial statements. We
also addressed the risk of management override of internal
controls, including assessing whether there was evidence of
bias by the Directors or Investment Manager that may have
represented a risk of material misstatement.
Key audit maers
Key audit maers are those maers that, in our
professional judgement, were of most signicance in our
audit of the nancial statements of the current period
and include the most signicant assessed risks of material
misstatement (whether or not due to fraud) that we
idened, including those which had the greatest eect
on: the overall audit strategy, the allocaon of resources
in the audit, and direcng the eorts of the engagement
team. This maer was addressed in the context of our audit
of the nancial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion
on this maer.
Downing Renewables & Infrastructure Trust plc Annual Report | 98
Key audit maers How the scope of our audit addressed the key audit maer
Valuaon of Investments
See note 9 and accounng
policy on page 114.
The valuaon of unquoted
investments is calculated using
discounted cash ow models. This
is a highly subjecve accounng
esmate where there is an
inherent risk of bias arising from
the investment valuaons being
prepared by the Investment
Manager, who is remunerated
based on the net asset value of the
company.
These esmates include judgements
including future power prices, power
generaon, discount rates, useful
economic life of assets, tax and
inaon.
100% of the underlying investment
porolio is represented by unquoted
equity and loan investments.
Investments at fair value through
prot or loss is the most signicant
balance in the nancial statements
and is the key driver of performance
therefore we determined this to be a
key audit maer.
In respect of the equity investments valued using discounted cash
ow models, we performed the following specic procedures:
• Obtained and reviewed purchase agreements and contracts
and considered whether inputs were accurately reected in
the valuaon model
• Used spreadsheet analysis tools to assess the integrity of the
valuaon models
• Agreed power generaon and power price forecasts to power
purchase agreements and independent reports prepared
by management’s experts . We assessed the competency,
independence and objecvity of the management’s expert
• Challenged the appropriateness of the selecon and
applicaon of key assumpons in the model including the
discount rate, inaon, asset life, energy yield and power
price applied by benchmarking to available industry data and
consulng with our internal valuaons experts
• Reviewed the corporaon tax workings within the valuaon
model and considered whether these had been modelled
accurately in the context of current corporaon tax legislaon
and rates
• Agreed a sample of cash and other net assets to bank
statements and investee company management accounts
• Considered the accuracy of forecasng by comparing forecasts
from acquision date to period end against actual results
For loan investments we vouched the balances recorded to loan
agreements and veried the terms of the loan.
For each of the key assumpons in the valuaon models,
we considered the appropriateness of the assumpon by
benchmarking to available industry data and consulng with our
internal valuaons experts and considering whether alternave
reasonable assumpons could have been applied. We considered
each assumpon in isolaon as well as in conjuncon with other
assumpons and the valuaon as a whole. Where appropriate,
we sensised the valuaons where other reasonable alternave
assumpons could have been applied. We also considered the
completeness and clarity of disclosures regarding the range of
reasonable alternave assumpons in the nancial statements.
Key observaons
Based on our procedures performed we found the valuaon of
the investment porolio to be acceptable.
Downing Renewables & Infrastructure Trust plc Annual Report | 99
Our applicaon of materiality
We apply the concept of materiality both in planning
and performing our audit, and in evaluang the eect
of misstatements. We consider materiality to be the
magnitude by which misstatements, including omissions,
could inuence the economic decisions of reasonable users
that are taken on the basis of the nancial statements.
In order to reduce to an appropriately low level the
probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality,
to determine the extent of tesng needed. Importantly,
misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the
nature of idened misstatements, and the parcular
circumstances of their occurrence, when evaluang their
eect on the nancial statements as a whole.
Based on our professional judgement, we determined
materiality for the nancial statements as a whole and
performance materiality as follows:
2021
Materiality £2.125 million
Basis for determining materiality 1.5% net assets
Raonale for the benchmark applied Net Asset Value is a key indicator of performance and as such
the most relevant benchmark on which to base materiality for the
users of the nancial statements.
Performance materiality 70% materiality (£1.487 million)
Basis for determining performance materiality Risk assessment of control environment and consideraon of
potenal errors due to this being a rst year audit and the rst
year in which nancial statements have been produced.
Lower tesng threshold
We also determined that for items impacng realised
return, a misstatement of less than materiality for the
nancial statements as a whole could inuence the
economic decisions of users. As a result, we determined a
lower tesng threshold for these items to be 10% of gross
expenditure being £217,000.
Reporng threshold
We agreed with the Audit Commiee that we would
report to them all individual audit dierences in excess
of £42,000. We also agreed to report dierences below
this threshold that, in our view, warranted reporng on
qualitave grounds.
Other informaon
The Directors are responsible for the other informaon.
The other informaon comprises the informaon included
in the annual report other than the nancial statements
and our auditor’s report thereon. Our opinion on the
nancial statements does not cover the other informaon
and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other
informaon and, in doing so, consider whether the other
informaon is materially inconsistent with the nancial
statements or our knowledge obtained in the course of
the audit, or otherwise appears to be materially misstated.
If we idenfy such material inconsistencies or apparent
Downing Renewables & Infrastructure Trust plc Annual Report | 100
material misstatements, we are required to determine
whether this gives rise to a material misstatement in the
nancial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other informaon, we are required to
report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Lisng Rules require us to review the Directors’
statement in relaon to going concern, longer-term viability
and that part of the Corporate Governance Statement
relang to the Company’s compliance with the provisions
of the UK Corporate Governance Code specied for our
review.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent
with the nancial statements or our knowledge obtained
during the audit.
Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopng the going
concern basis of accounng and any material uncertaines idened set out on page
65; and
• The Directors’ explanaon as to their assessment of the Company’s prospects, the
period this assessment covers and why the period is appropriate set out on page 66.
Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 93;
• Board’s conrmaon that it has carried out a robust assessment of the emerging and
principal risks set out on page 59;
• The secon of the annual report that describes the review of eecveness of risk
management and internal control systems set out on page 59; and
• The secon describing the work of the Audit Commiee set out on page 84.
Downing Renewables & Infrastructure Trust plc Annual Report | 101
Other Companies Act 2006 reporng
Based on the responsibilies described below and our work performed during the course of the audit, we are required by
the Companies Act 2006 and ISAs (UK) to report on certain opinions and maers as described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in the course of the audit:
• the informaon given in the Strategic report and the Directors’ report for the nancial period for which the
nancial statements are prepared is consistent with the nancial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we have not idened material misstatements in the strategic report or the Directors’ report.
Directors’
remuneraon
In our opinion, the part of the Directors’ remuneraon report to be audited has been properly prepared in
accordance with the Companies Act 2006.
Maers on which
we are required
to report by
excepon
We have nothing to report in respect of the following maers in relaon to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounng records have not been kept, or returns adequate for our audit have not been received
from branches not visited by us; or
• the nancial statements and the part of the Directors’ remuneraon report to be audited are not in
agreement with the accounng records and returns; or
• certain disclosures of Directors’ remuneraon specied by law are not made; or
• we have not received all the informaon and explanaons we require for our audit.
Responsibilies of Directors
As explained more fully in the statement of Directors’
responsibilies, the Directors are responsible for the
preparaon of the nancial statements and for being
sased that they give a true and fair view, and for such
internal control as the Directors determine is necessary to
enable the preparaon of nancial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the nancial statements, the Directors are
responsible for assessing the Company’s ability to connue
as a going concern, disclosing, as applicable, maers related
to going concern and using the going concern basis of
accounng unless the Directors either intend to liquidate
the Company or to cease operaons, or have no realisc
alternave but to do so.
Auditor’s responsibilies for the audit of the
nancial statements
Our objecves are to obtain reasonable assurance about
whether the nancial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to inuence
the economic decisions of users taken on the basis of these
nancial statements.
Downing Renewables & Infrastructure Trust plc Annual Report | 102
Extent to which the audit was capable of detecng
irregularies, including fraud
Irregularies, including fraud, are instances of non-
compliance with laws and regulaons. We design procedures
in line with our responsibilies, outlined above, to detect
material misstatements in respect of irregularies, including
fraud. The extent to which our procedures are capable of
detecng irregularies, including fraud is detailed below:
We gained an understanding of the legal and regulatory
framework applicable to the Company and the industry
in which it operates, and considered the risk of acts by
the company which were contrary to applicable laws and
regulaons, including fraud. We considered the signicant
laws and regulaons to be compliance with Companies Act
2006, the FCA lisng and DTR rules, the principles of the UK
Corporate Governance Code, requirements of s.1158 of the
Corporaon Tax Act, and applicable accounng standards.
Our procedures included:
• agreement of the nancial statement disclosures to
underlying supporng documentaon;
• enquiries of the board and relevant Service
Organisaons regarding known or suspected instances
of non-compliance with laws and regulaon and fraud.
We corroborated our enquiries through our review
of board meeng minutes for the year and other
evidence gathered during the course of the audit; and
• obtaining an understanding of the control environment
in monitoring compliance with laws and regulaons.
We assessed the suscepbility of the nancial statements
to material misstatement, including fraud and considered
the fraud risk areas to be the valuaon of investments and
management override of controls.
Our procedures included:
• the procedures set out in the Key Audit Maers
secon above; and
• tesng a sample of journal entries to supporng
documentaon and evaluang whether there was
evidence of bias by the Directors that represented a
risk of material misstatement due to fraud.
Our audit procedures were designed to respond to risks
of material misstatement in the nancial statements,
recognising that the risk of not detecng a material
misstatement due to fraud is higher than the risk of
not detecng one resulng from error, as fraud may
involve deliberate concealment by, for example, forgery,
misrepresentaons or through collusion. There are inherent
limitaons in the audit procedures performed and the
further removed non-compliance with laws and regulaons
is from the events and transacons reected in the nancial
statements, the less likely we are to become aware of it.
A further descripon of our responsibilies is available on
the Financial Reporng Council’s website at: www.frc.org.
uk/auditorsresponsibilies. This descripon forms part of
our auditor’s report.
Use of our report
This report is made solely to the Company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Company’s
members those maers we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permied by law, we do not accept or assume
responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed
Peter Smith (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
4 March 2022
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
Downing Renewables & Infrastructure Trust plc Annual Report | 103Downing Renewables & Infrastructure Trust plc Annual Report | 103
Downing Renewables & Infrastructure Trust plc Annual Report | 104
Statement of Comprehensive
Income
For the Period from 8 October 2020 to 31 December 2021
Notes
Revenue
31 December
2021
£’000s
Capital
31 December
2021
£’000s
Total
31 December
2021
£’000s
Income
Return on investment 5 4,978 7,327 12,305
Total income 4,978 7,327 12,305
Expenses
Investment management fees 4 (1,284) – (1,284)
Directors’ fees 18 & 22 (146) – (146)
Other expenses 6 (745) – (745)
Total expenses (2,175) – (2,175)
Prot before taxaon 2,803 7,327 10,130
Taxaon 7 – – –
Prot aer taxaon 2,803 7,327 10,130
Prot and total comprehensive income
aributable to:
Equity holders of the Company 2,803 7, 327 10,130
Earnings per share – Basic & diluted (pence) 8 2.6 6.8 9.4
The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance
withInternaonalFinancialReporngStandards(IFRS)asadopted.Thesupplementaryrevenuereturnandcapital
columnshavebeenpreparedinaccordancewiththeAssociaonofInvestmentCompaniesStatementofRecommended
Pracce(AICSORP).
Downing Renewables & Infrastructure Trust plc Annual Report | 105
Statement of Financial Position
As at 31 December 2021
Notes
31 December 2021
£’000s
Non-current assets
Investmentsatfairvaluethroughprotandloss 9 131,508
131,508
Current assets
Trade and other receivables 10 280
Cash and cash equivalents 15 11,254
11,534
Total assets 143,042
Current liabilies
Trade and other payables
11 (1,201)
(1,201)
Total liabilies (1,201)
Net assets 141,841
Capital and reserves
Called up share capital 12 1,370
Share Premium 13 14,506
Special distributable reserve 13 118,435
Revenue reserve 203
Capital reserve 7,327
Shareholders’ funds 141,841
Net asset value per ordinary share (pence) 14 103.5
TheauditednancialstatementsofDowning Renewables and Infrastructure Trust PLC were approved by the Board of
Directors and authorised for issue on 4 March 2022 and are signed on behalf of the Board by:
Hugh W M Lile
Chair
Companyregistraonnumber12938740
Downing Renewables & Infrastructure Trust plc Annual Report | 106
Statement of Changes in Equity
For the Period from 8 October 2020 to 31 December 2021
Notes
Share
Capital
£’000s
Share
Premium
£’000s
Capital
Reserve
£’000s
Revenue
Reserve
£’000s
Special
Distributable
Reserve
£’000s
Total
£’000s
Balance at the start
of the period
– – – – – –
Gross proceeds from
share issue
12 1,370 136,001 – – – 137,371
Bonus shares 12 – (52) – – – (52)
Share issue costs 12 – (220) – – (2,450) (2,670)
Dividends 20 – – – (2,600) (338) (2,938)
Transfer to special
distributable reserve
13 – (121,223) – – 121,223 –
Total comprehensive
income for the
period
– – 7,327 2,803 – 10,130
Net assets
aributable to
shareholders at
31 December 2021
1,370 14,506 7,327 203 118,435 141,841
TheCompany’sdistributablereservesconsistoftheSpecialdistributablereserve,Capitalreserveaributableto
unrealisedgainsandRevenuereserve.Therehavebeennorealisedgainsorlossesatthereporngdate.
Downing Renewables & Infrastructure Trust plc Annual Report | 107
Statement of Cash Flows
For the Period from 8 October 2020 to 31 December 2021
Notes
Incorporaon to
31 December 2021
£’000s
Cash ows from operang acvies
Protbeforetaxaon 10,130
Adjusted for:
Interest income 5 (4,978)
Unrealised gains on investments at fair value 5 (7, 327)
Increase in receivables (280)
Increase in payables 1,201
Net cash oulows from operang acvies (1,254)
Cash ows from invesng acvies
Purchase of investments 9 (121,749)
Loan Interest Received 9 2,546
Net cash oulows from invesng acvies (119,203)
Cash ows from nancing acvies
Gross proceeds of share issue 12 137,371
Bonus shares 12 (52)
Dividends 20 (2,938)
Share issue costs 12 (2,670)
Net cash ows from nancing acvies 131,711
Increase in cash and cash equivalents 11,254
Cash and cash equivalents at the start of the period –
Cash and cash equivalents at the end of the period 15 11,254
Downing Renewables & Infrastructure Trust plc Annual Report | 108
Notes to the
Financial Statements
1. General Informaon
The Company is registered in England and
Wales under number 12938740 pursuant
to the Companies Act 2006 and its
registered oce 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 ulmate controlling
party of the group. The Company’s
ordinary shares were rst admied to
the premium segment of the Financial
Conduct Authority’s Ocial List and to
trading on the Main Market of the London
Stock Exchange under the cker DORE on
10 December 2020.
The audited nancial statements of the
Company (the “nancial statements”) are for
the period from incorporaon on 8 October
2020 to 31 December 2021 and comprise
only the results of the Company, as all of its
subsidiaries are measured at fair value in line
with IFRS 10 as disclosed in Note 2.
The Company’s objecve is to generate
an aracve total return for investors
comprising stable dividend income and
capital preservaon, with the opportunity
for capital growth through the acquiring and
realising value from a diverse porolio 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.
2. Basis of preparaon
These nancial statements have been
prepared in accordance with internaonal
accounng standards in conformity with
the requirements of the Companies
Act 2006 and the applicable legal
requirements of the Companies Act 2006.
In addion to complying with internaonal
accounng standards in conformity with
the requirements of the Companies
Act 2006, the nancial statements
also comply with internaonal nancial
reporng standards adopted pursuant
to Regulaon (EC) No 1606/2002 as it
applies in the European Union.
The nancial statements have also
been prepared as far as is relevant and
applicable to the Company in accordance
with the Statement of Recommended
Pracce: Financial Statements of
Investment Trust Companies and Venture
Capital Trusts (“SORP”) issued in October
For the Period from 8 October 2020 to 31 December 2021
Downing Renewables & Infrastructure Trust plc Annual Report | 109
2019 by the Associaon of Investment
Companies (“AIC”).
The nancial statements are prepared on
the historical cost basis, except for the
revaluaon of certain nancial instruments
at fair value through prot or loss. The
principal accounng policies adopted
are set out below. These policies are
consistently applied.
The nancial statements are presented in
Sterling, which is the Company’s funconal
currency and are rounded to the nearest
thousand, unless otherwise stated.
Esmates and underlying assumpons
are reviewed regularly on an on-going
basis. Revisions to accounng esmates
are recognised in the period in which the
esmates are revised and in any future
period aected. The signicant esmates,
judgement or assumpons for the period
are set out on page 111.
There are no comparaves as this is the
Company’s rst accounng period.
Basis of Consolidaon
The sole objecve of the Company and
through its subsidiary DORE Hold Co
Limited is to own Renewable Energy
Infrastructure Projects, via individual
corporate enes. Hold Co typically
will issue equity and loans to nance its
investments.
The Directors have concluded that in
accordance with IFRS 10, the Company
meets the denion of an investment
enty having evaluated the criteria that
needs to be met (see below). Under
IFRS 10, investment enes are required
to hold subsidiaries at fair value through
prot 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
liabilies. Hold Co has one investor which
is the Company. However, in substance,
Hold Co is invesng the funds of the
investors of the Company on its behalf
and is eecvely performing investment
management services on behalf of many
unrelated beneciary investors.
Characteriscs of an investment enty
There are three key condions to be
met by the Company for it to meet the
denion of an investment enty. For
each reporng period, the Directors will
connue to assess whether the Company
connues to meet these condions:
• 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 appreciaon, investment income
or both; and
• It measures and evaluates the
performance of substanally all its
investments on a fair value basis.
Downing Renewables & Infrastructure Trust plc Annual Report | 110
In sasfying the second criterion, the
noon of an investment meframe is
crical. An investment enty should
not hold its investments indenitely but
should have an exit strategy for their
realisaon. The Company intends to
hold its renewable energy infrastructure
assets for the remainder of their useful
life to preserve the capital value of the
porolio. However, as the renewable
energy infrastructure assets are expected
to have no residual value aer their useful
lives, the Directors consider that this
demonstrates a clear exit strategy from
these investments.
Subsidiaries are therefore measured at fair
value through prot 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
informaon to investors.
Going concern
The Directors have adopted the going
concern basis in preparing the Annual
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 porolio
of investments as well as its cash
posion, income and expense ows. As
at 31 December 2021, the Company had
net assets of £141.8 million including cash
balances of £11 million which are sucient
to meet current obligaons as they fall
due. Since the period end £39.9 million
has been spent on new acquisions. The
Group, through one of its unconsolidated
subsidiaries, ulised EUR 27.4 million of its
facility with SEB to help fund the addional
hydropower acquisions. Through its main
subsidiary, DORE Hold Co Limited, the
Company has access to an undrawn RCF
of £25 million which is available for either,
new investments or investment in exisng
projects and working capital. The RCF is
currently undrawn.
In the period since incorporaon,
COVID-19 has connued to have a
negave impact on the global economy.
As the United Kingdom and the
developed world connue to roll out their
vaccinaon programmes, the outlook
for both the UK and global economy is
beginning to look more posive, although
it should be noted, with the potenal for
addional variants of the virus to become
more prevalent, COVID-19 connues to
raise potenal uncertaines and addional
risks for the Company.
The Directors and the Investment
Manager connue to acvely monitor this
and its potenal eect on the Company
and its investments.
In parcular, they have considered the
following specic key potenal impacts:
• Unavailability of key personnel at the
Investment Manager or Administrator;
and
• Increased volality in the fair value of
investments.
Downing Renewables & Infrastructure Trust plc Annual Report | 111
In considering the above key potenal
impacts of COVID-19 on the Company’s
operaons, the Directors have assessed
these with reference to the migaon
measures in place. The key personnel at
the Investment Manager had successfully
implemented business connuity plans
prior to incorporaon to ensure business
disrupon was minimised, including remote
working, and all sta are connuing to
assume their day-to-day responsibilies.
SPV revenues are derived from the sale
of electricity, although approximately
89 per cent of the porolio’s revenue in
2022 is not exposed to oang power
prices. Revenue is received through power
purchase agreements in place with large
and reputable providers of electricity to
the market and also through government
subsidies. In the period since acquision
and up to the date of this report, there
has been no signicant impact on
revenue and cash ows of the SPVs. The
SPVs have contractual operang and
maintenance agreements in place with
large and reputable providers. Therefore,
the Directors and the Investment
Manager do not ancipate a threat to the
Group’s revenue.
Based on the assessment outlined above,
including the various risk migaon
measures in place, the Directors do not
consider that the eects of COVID-19
have created a material uncertainty over
the assessment of the Company as a
going concern.
The Directors have reviewed Group
forecasts and projecons which cover a
period of at least 12 months from the date
of approval of this report, considering
foreseeable changes in investment and
trading performance, which show that the
Group has sucient nancial resources
to connue in operaon for at least the
next 12 months from the date of approval
of this report. On the basis of this review,
and aer making due enquiries, the
Directors have a reasonable expectaon
that the Company has adequate resources
to connue in operaon and accordingly,
they connue to adopt the going concern
basis in preparing the nancial statements.
Segmental reporng
The Chief Operang 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 nancial informaon 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 porolio of investments in renewable
energy infrastructure assets.
Crical accounng judgements, esmates
and assumpons
In the applicaon of the Company’s
accounng policies, which are described
in Note 3, the Directors are required
to make judgements, esmates and
assumpons about the fair value of
assets and liabilies that aect reported
Downing Renewables & Infrastructure Trust plc Annual Report | 112
amounts. It is possible, that actual results
may dier from these esmates.
The preparaon of the nancial
statements requires management
to make judgements, esmates and
assumpons that aect the applicaon of
the accounng policies and the reported
amount of assets, liabilies, income and
expenses. Esmates, by their nature,
are based on judgement and available
informaon, hence actual results may
dier from these judgements, esmates
and assumpons.
The key assumpons that have a signicant
impact on the carrying value of investments
that are valued by reference to the
discounted value of future cashows are
the useful life of the assets, the discount
rates, the rate of inaon, the price at which
the power and associated benets can be
sold and the amount of electricity the assets
are expected to produce. The sensivity
analysis of these key assumpons is outlined
in note 9 to the nancial statements, on
page 120.
Useful lives are based on the Investment
Manager’s esmates of the period over
which the assets will generate revenue
which are periodically reviewed for
connued appropriateness. Where land
is leased from an external landlord, the
operaonal life assumed for the purposes
of the asset valuaons is valued at the
earlier of planning or lease expiry. Where
a project has an indenite life, the land
it is located on is owned and there are
no constraints regarding planning, asset
valuaons are based on a perpetual life
including long term capital expenditure
assumpons. This is the basis for the
valuaon of the hydropower assets. The
actual useful life may be a shorter or longer
period depending on the actual operang
condions experienced by the asset.
The discount rates are subjecve
and therefore it is feasible that a
reasonable alternave assumpon
may be used resulng in a dierent
value. The discount rates applied to the
cashows are reviewed regularly by the
Investment Manager to ensure they are
at the appropriate level. The Investment
Manager will take into consideraon
market transacons, where of similar
nature, when considering changes to the
discount rates used.
The revenues and expenditure of the
investee companies are frequently partly
or wholly subject to indexaon and an
assumpon is made as to near term and
long-term rates.
The price at which the output from the
generang assets is sold is a factor of
both wholesale electricity prices and the
revenue received from the Government
support regimes. Future power prices
are esmated using external third-party
forecasts which take the form of specialist
consultancy reports, which reect various
factors including gas prices, carbon prices
and renewables deployment, each of
which reect the UK and global response
to climate change.
Downing Renewables & Infrastructure Trust plc Annual Report | 113
The Company’s investments in unquoted
investments are valued by reference
to valuaon techniques approved the
Directors and in accordance with the
Internaonal Private Equity and Venture
Capital (“IPEV”) Guidelines.
As noted above, the Board have concluded
that the Company meets the denion of
an investment enty as dened in IFRS 10.
This conclusion involved a degree of
judgement and assessment as to whether
the Company meets the criteria outlined in
the accounng standards.
New, revised and amended standards
applicable to future reporng periods
There were no new standards or
interpretaons eecve for the rst
me for periods beginning on or aer
incorporaon that had a signicant eect
on the Company’s nancial statements.
Furthermore, none of the amendments to
standards that are eecve from that date
had a signicant eect on the nancial
statements.
New and revised standards not applied
At the date of authorisaon of these
nancial statements, the following
amendments had been published and
will be mandatory for future accounng
periods. Eecve for accounng periods
beginning on or aer 1 January 2022:
• a number of narrow-scope
amendments to IFRS 3 “Business
combinaons”, IAS 16 “Property, plant
and equipment”, IAS 37 “Provisions,
conngent liabilies and conngent
assets” and annual improvements on
IFRS 1 “First-me Adopon of IFRS”,
IFRS 9 “Financial instruments”, IAS
41 “Agriculture” and the Illustrave
Examples accompanying IFRS 16
“Leases”.
Eecve for accounng periods beginning
on aer 1 January 2023:
• Narrow-scope amendments to IAS 1
“Presentaon of Financial Statements”,
Pracce statement 2 and IAS 8
“Accounng Policies, Changes in
Accounng Esmates and Errors”.
• Amendments to IAS 12, ”Income
Taxes” – deferred tax related to assets
and liabilies arising from a single
transacon.
• Amendments to IFRS 17, “Insurance
contracts” – this standard replaces
IFRS 4, which currently permits a wide
variety of pracces in accounng for
insurance contracts.
Eecve for accounng periods beginning
on or aer 1 January 2024:
• Amendments to IAS 1 on classicaon
of liabilies clarify that liabilies are
classied as either current or non-
current, depending on the rights
that exist at the end of the reporng
period.
The impact of these standards is not
expected to be material to the reported
results and nancial posion of the
Company.
Downing Renewables & Infrastructure Trust plc Annual Report | 114
3. Signicant Accounng Policies
Financial Instruments
Financial assets and nancial liabilies are
recognised on the Company’s Statement
of Financial Posion 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 ows
from the instrument expire or the asset
is transferred, and the transfer qualies
for de-recognion in accordance with
IFRS 9 Financial Instruments and IFRS 13
Fair Value Measurement.
Financial assets
The Company classies its nancial
assets as either investments at
fair value through prot or loss or
nancial assets at amorsed cost. The
classicaon depends on the purpose
for which the nancial assets are
acquired. Management determines the
classicaon of its nancial assets at
inial recognion.
Investments at fair value through prot or
loss (“FVTPL”)
The fair value of investments in renewable
energy infrastructure projects is calculated
by discounng at an appropriate discount
rate future cash ows expected to be
received by the Company’s intermediate
holdings, from investments in both equity
(dividends and equity redempons),
shareholder and inter-company loans
(interest and repayments).
Investments are designated upon
inial recognion as held at fair value
through prot or loss. Gains or losses
resulng from the movement in fair
value are recognised in the Statement of
Comprehensive Income at each valuaon
point. As shareholder loan investments
form part of a managed porolio 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 prot or loss. Gains
or losses resulng from the movement in
fair value are recognised in the Company’s
Statement of Comprehensive Income at
each valuaon point.
Financial assets are recognised/
derecognised at the date of the purchase/
disposal. Investments are inially
recognised at cost, being the fair value
of consideraon given. Transacon
costs are recognised in the Statement of
Comprehensive Income as incurred. Fair
value is dened as the amount for which
an asset could be exchanged between
knowledgeable willing pares in an arm’s
length transacon. Fair value is calculated
on an unlevered, discounted cashow
basis in accordance with IFRS 13 and
IFRS 9.
Financial assets at amorsed cost
Loans and other receivables are measured
at amorsed cost using the eecve
interest method, less any impairment.
They are included in current assets,
except where maturies are greater
Downing Renewables & Infrastructure Trust plc Annual Report | 115
than 12 months aer the reporng date,
in which case they are to be classied
as non-current assets. The Company’s
nancial assets held at amorsed cost
comprise “other receivables” and “cash
and cash equivalents” in the statement of
nancial posion.
Impairment
Impairment provisions for loans and
receivables are recognised based on a
forward-looking expected credit loss
model. All nancial assets assessed under
this model are immaterial to the nancial
statements.
Financial liabilies
Financial liabilies are classied as other
nancial liabilies, comprising:
• other non-derivave nancial
instruments, including trade and other
payables, which are to be measured
at amorsed cost using the eecve
interest method.
Financial liabilies and equity
Debt and equity instruments are classied
as either nancial liabilies or as equity
in accordance with the substance of the
contractual arrangement.
Equity instruments
The Company’s Ordinary Shares are
classied as equity and are not redeemable.
Costs associated or directly aributable
to the issue of new equity shares are
recognised as a deducon in equity and
are charged either from the share premium
account or the special distributable reserve,
created on court cancellaon of share
premium account.
Taxaon
The Company is approved as an Investment
Trust Company (“ITC”) under secons 1158
and 1159 of the Corporaon Taxes Act
2010 and part 2 Chapter 1 Statutory
Instrument 2011/2999. The approval
is subject to the Company connuing
to meet the eligibility condions of the
Corporaon Tax Act 2010. The Company
intends to ensure that it complies with the
ITC regulaons on an ongoing basis and
regularly monitors the condions required
to maintain ITC status.
Under the current system of taxaon in
the UK, the Company is liable to taxaon
on its operaons 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 substanvely
enacted at the date of the Statement of
Financial Posion.
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 nal dividends, this is when they are
approved by the shareholders at the
Annual General Meeng.
Income
Income includes investment income from
nancial assets at FVTPL and nance
income.
Downing Renewables & Infrastructure Trust plc Annual Report | 116
Investment income from nancial 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 and is recognised
on an accruals basis.
Expenses
Expenses are accounted for on an
accruals basis. Share issue expenses
directly aributable to the lisng of shares
are charged through prot and loss with
incremental costs associated with raising
capital charged through the Special
Distributable Reserve or Share Premium
Account. The Company’s investment
management fee, administraon 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.
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 maturies of three
months or less.
Deposits to be held with original
maturies of greater than three months
are included in other nancial assets.
There are no expected credit losses as
the bank instuons will have high credit
rangs assigned by internaonal credit
rang agencies.
Seasonal and cyclical variaons
The Company’s results do not vary
signicantly during reporng periods.
4. Investment management fees
Under the terms of the Investment
Management Agreement, the Investment
Manager is entled to a management fee
from the Company, which is calculated
quarterly in arrears at 0.95% of NAV
per annum up to £500 million and
0.85% per annum of NAV in excess of
£500 million.
The Company paid £353,135 of
management fees during the period,
investment management fees of £933,414
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 entle the Investment
Manager to a performance fee in respect of
future periods.
Downing Renewables & Infrastructure Trust plc Annual Report | 117
5. Return on investment
31 December
2021
£’000s
Unrealised movement in fair value of investments (Note 9) 7, 327
Interest due on loans to investment (Note 9) 4,978
12,305
6. Other expenses
31 December
2021
£’000s
Alternave investment fund manager fee 110
Fees payable to the Company’s auditor for the audit of the
Company’s annual accounts
96
Fees payable to the Company’s auditor for other services 89
Company secretarial fee 62
Legal fees 87
Depositary fee 48
Hedging advisory 39
Markeng fee 53
Broker fee 53
Retainer fee 34
Other fees 74
745
Downing Renewables & Infrastructure Trust plc Annual Report | 118
Total fees payable to BDO for non-audit services during the year were £88,500 for the
audit of the Company’s inial accounts and interim review. These services were pre-
approved by the Audit and Risk Commiee and are not subject to the fee cap.
During the Company’s IPO professional fees paid to BDO relang to reporng accountant
services and tax structuring advice of £101,000 were charged. Professional fees of
£27,000 were also charged for the review of the Company’s nancial model. These IPO
costs were allocated against the Company’s capital reserves.
7. Taxaon
Taxable income during the period was oset by expenses and the tax charge for the
period ended 31 December 2021 is £Nil.
As described above, the Company is recognised as an ITC for accounng periods and is
taxed at the current main rate of 19%. To the extent that there is insucient group tax
relief available to eliminate taxable prots, the Company may make interest distribuons
to reduce taxable prots to nil.
(a) Analysis of charge in the period
Revenue
£’000
Capital
£’000
Total
£’000
Analysis of tax charge / (credit) in the period:
Current tax
UK corporaon tax on prots of the period – – –
Adjustments in respect of previous periods – – –
Deferred tax:
Originaon & reversal of ming dierences – – –
Adjustments in respect of previous periods – – –
Tax charge / (credit) on prot on ordinary acvies – – –
Downing Renewables & Infrastructure Trust plc Annual Report | 119
(b) Factors aecng total tax charge for the period
The eecve UK corporaon tax rate applicable to the Company for the period is 19%.
The tax charge diers from the charge resulng from applying the standard rate of UK
corporaon tax for an investment trust company. The dierences are explained below.
Revenue
£’000
Capital
£’000
Total
£’000
Prot / (Loss) on ordinary acvies before tax 2,803 7, 327 10,130
Prot on ordinary acvies mulplied by standard
rate of corporaon tax in the UK of 19%
533 1,392 1,925
Eect of:
Capital prots not taxable – (1,392) (1,392)
Non-taxable income – – –
Expenses non deducble 10 – 10
Interest distribuons (543) – (543)
Timing dierences – – –
Group relief – – –
Excess management expenses – – –
Total charge / (credit) 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 intenon to connue meeng the condions
required to obtain approval in the foreseeable future. Investment companies which
have been approved by HMRC under secon 1158 of the Corporaon 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 corporaon tax to
25% from 1 April 2023. This rate has been substanvely enacted at the balance sheet date.
There is no unrecognised deferred tax asset or liability at 31 December 2021.
Downing Renewables & Infrastructure Trust plc Annual Report | 120
8. Earnings per share
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue and capital prot aributable to equity
holders of the Company
2,803 7,327 10,130
Weighted average number of ordinary shares in
issue
107, 86 4 107,86 4 107, 86 4
Basic and diluted earnings per share (pence) 2.6 6.8 9.4
Basic and diluted earnings per share are the same as there are no arrangements which
could have a diluve eect on the Company’s ordinary shares.
9. Investments at fair value through prot and loss
Total
£’000s
Fair value at start of the period –
Loan advanced to DORE Hold Co Limited 113,749
Shareholding in DORE Hold Co limited 8,000
Unrealised gain on investments at FVTPL 7,327
Loan Interest 2,432
Fair value at end of the period 131,508
There is a loan agreement between the Company and DORE Hold Co Limited for
£120,000,000. At the reporng date £113,748,641 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 reporng date amounted to £2,432,398. Interest is repayable at the repayment date
of 31 December 2030 unless otherwise agreed between the pares to repay earlier.
The company received interest payments of £2,546,000 during the period. Included in
the fair value are cash balances at DORE Hold Co of £21.8 million.
Downing Renewables & Infrastructure Trust plc Annual Report | 121
The Company owns nine shares in DORE Hold Co Limited that were alloed for a
consideraon of £8,000,000.
Fair value measurements
IFRS 13 “Fair Value Measurement” requires disclosure of fair value measurement by level.
The level of fair value hierarchy within the nancial assets or nancial liabilies ranges
from level 1 to level 3 and is determined on the basis of the lowest level input that is
signicant to the fair value measurement.
The fair value of the Company’s investments is ulmately determined by the underlying
net present values of the SPV (“Special Purpose Vehicle”) investments. Due to their
nature, they are always expected to be classied as level 3 as the investments are not
traded and contain unobservable inputs.
The fair value hierarchy consists of the following three levels:
• Level 1 – Quoted prices (unadjusted) in acve markets for idencal assets or liabilies.
• 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).
Downing Renewables & Infrastructure Trust plc Annual Report | 122
The following table analyses the Company’s assets at 31 December 2021:
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
Total
£’000s
Investment porolio summary
Unlisted investments at fair
value through prot and loss
– – 131,508 131,508
Total – – 131,508 131,508
The determinaon of what constutes ‘observable’ requires signicant judgement by
the Company. Observable data is considered to be market data that is readily available,
regularly distributed or updated, reliable and veriable, not proprietary, and provided by
independent sources that are acvely involved in the relevant market.
The only nancial instruments held at fair value are the instruments held by the Group
in the SPVs, which are fair valued at each reporng date. The investments have been
classied 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 ulmately
determined by the underlying fair values of the SPV investments, the Company’s
sensivity analysis of reasonably possible alternave input assumpons is the same as for
the Group.
There have been no transfers between levels during the period.
Valuaons are derived using a discounted cashow methodology in line with IPEV
Valuaon Guidelines and take into account, inter alia, the following:
i. due diligence ndings 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, taxaon or regulatory environment.
Downing Renewables & Infrastructure Trust plc Annual Report | 123
The DCF valuaon of the Group’s investments represents the largest component of GAV
and the key sensivies are considered to be the discount rate used in the DCF valuaon
and assumpons in relaon to inaon, energy yield, foreign exchange and power price.
The shareholder loan and equity investments are valued as a single class of nancial asset
at fair value in accordance with IFRS 13 Fair Value Measurement.
Sensivity
Sensivity analysis is produced to show the impact of changes in key assumpons
adopted to arrive at the valuaon. For each of the sensivies, it is assumed that
potenal changes occur independently of each other with no eect on any other base
case assumpon, and that the number of investments in the porolio remains stac
throughout the modelled life. Accordingly, the NAV per share impacts shown below
assume the issue of further shares to fund these commitments.
Informaon on climate related sensivies can be found on pages 23 and 24.
The analysis below shows the sensivity of the porolio value (and its impact on NAV) to
changes in key assumpons as follows:
Discount rate
The weighted average valuaon discount rate applied to calculate the porolio valuaon
is 7.3%.
An increase or decrease in this rate by 0.5% points has the following eect on valuaon.
Discount rate NAV per
share
impact
-0.5%
change
£’000s
Total
porolio
Value
£’000s
+0.5%
change
£’000s
NAV per
share
impact
Directors’ valuaon –
Dec 2021
4.05 5,547 131,508 (5,072) (3.70)
Downing Renewables & Infrastructure Trust plc Annual Report | 124
Energy yield
The table below shows the sensivity of the porolio valuaon to a sustained decrease
or increase of energy generaon by minus or plus 5% on the valuaon, with all other
variables held constant. The fair value of the solar investments is based on a “P50” level
of electricity generaon for the renewable energy assets, being the expected level of
generaon over the long term. For hydropower assets, the expected annual average
producon is applied to the valuaon, similar to the P50 assumpon applied to solar and
wind assets.
A change in the forecast energy yield assumpons by plus or minus 5% has the following
eect.
Energy Yield NAV per
share
impact
-5%
change
£’000s
Total
porolio
Value
£’000s
+5%
change
£’000s
NAV per
share
impact
Directors’ valuaon –
Dec 2021
(6.36) (8,718) 131,508 8,750 6.39
Power prices
The sensivity considers a at 10% movement in power prices for all years, i.e. the
eect of adjusng the forecast electricity price assumpons in each of the jurisdicons
applicable to the porolio down by 10% and up by 10% from the base case assumpons
for each year throughout the operang life of the porolio.
A change in the forecast electricity price assumpons by plus or minus 10% has the
following eect.
Power Prices NAV per
share
impact
-10%
change
£’000s
Total
porolio
Value
£’000s
+10%
change
£’000s
NAV per
share
impact
Directors’ valuaon –
Dec 2021
(5.89) (8,070) 131,508 8,079 5.90
Downing Renewables & Infrastructure Trust plc Annual Report | 125
Inaon
The projects’ income streams are principally a mix of subsidies, which are amended each
year with inaon, and power prices, which the sensivity assumes will move with inaon.
The projects’ operang expenses typically move with inaon, but debt payments are xed.
This results in the porolio returns and valuaon being posively correlated to inaon.
The weighted average long-term inaon assumpon across the porolio is 2.4%.
The sensivity illustrates the eect of a 0.5% decrease and a 0.5% increase from the
assumed annual inaon rates in the nancial model for each year throughout the
operang life of the porolio.
Inaon NAV per
share
impact
-0.5%
change
£’000s
Total
porolio
Value
£’000s
+0.5%
change
£’000s
NAV per
share
impact
Directors’ valuaon –
Dec 2021
(2.12) (2,899) 131,508 3,108 2.27
Foreign exchange
The Company, where appropriate, seeks to manage its exposure to foreign exchange
movements, the objecve being, ensuring that the Sterling value of known future
investment commitments is xed. The porolio valuaon assumes foreign exchange rates
based on the relevant foreign exchange rates against GBP at the reporng date. A change
in the foreign exchange rate by plus or minus 10% (Euro against Swedish Krona, has the
following eect on the NAV, with all other variables held constant. The eect is shown
aer the eect of current level of hedging which reduces the impact of foreign exchange
movements on the Company’s NAV.
Foreign Exchange NAV per
share
impact
-10%
change
£’000s
Total
porolio
Value
£’000s
+10%
change
£’000s
NAV per
share
impact
Directors’ valuaon –
Dec 2021
(1.55) (2,130) 131,508 1,728 1.26
Downing Renewables & Infrastructure Trust plc Annual Report | 126
10. Trade and other receivables
31 December
2021
£’000s
Prepayments 14
VAT 266
280
11. Trade and other Payables
31 December
2021
£’000s
Accounts Payable 51
Accruals 1,150
1,201
Included in the accruals amount at the period end, £933,042 relates to the management
fee charged by Downing LLP during the period.
Downing Renewables & Infrastructure Trust plc Annual Report | 127
12. Called up share capital
Alloed, issued and fully paid: Number of Shares
Opening Balance at 8 October 2020 –
Alloed upon Incorporaon
Ordinary Shares of 1p each 1.00
Management Shares 50,000
Alloed/redeemed following admission to LSE
Ordinary Shares issued – IPO 122,499,999
Management Shares redeemed (50,000)
Ordinary Shares issued – 19 October 2021 14,508,487
Closing Balance of Ordinary Shares at 31 December 2021 137,008,487
The inial placing of 122,500,000 ordinary shares took place on 10 December 2020, raising
gross proceeds of £122,500,000. Each ordinary share has equal rights to dividends and has
equal rights to parcipate in a distribuon arising from a winding up of the Company.
Following the Court approval on 20 April 2021, the share premium cancellaon was
eecve. Bonus shares with a consideraon of £52,123 were issued and allocated to the
Share Premium account.
The share premium account of £121,223,000 at 20 April 2021 was transferred to a
special distributable reserve account. The issue costs of £2,450,000 relang to the inial
lisngs were oset against the special distributable reserve account.
The Company issued 14,508,487 addional ordinary shares on 19 October 2021 raising
gross proceeds of £14,871,199.
At 31 December 2021 the special distributable reserve account was £118,435,271.
Downing Renewables & Infrastructure Trust plc Annual Report | 128
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 Instute of Chartered Accountants in England and Wales (“ICAEW”) and
the Instute of Chartered Accountants in Scotland (“ICAS”) in the technical release TECH
02/17BL, The Companies (Reducon of Share Capital) Order 2008 SI 2008/1915 (“the
Order”) species the cases in which a reserve arising from a reducon in a company’s capital
(i.e., share capital, share premium account, capital redempon reserve or redenominaon
reserve) is to be treated as a realised prot as a maer of law.
The Order also disapplies the general prohibion in secon 654 on the distribuon of a
reserve arising from a reducon of capital. The Order provides that if a limited company
having a share capital reduces its capital and the reducon is conrmed by order of court,
the reserve arising from the reducon is treated as a realised prot unless the court
orders otherwise.
The amount of the share premium account cancelled and credited to the Company’s
special reserve is £121.2 million which can be ulised to fund distribuons by way of
dividends to the Company’s shareholders.
The share premium created on the issue of addional ordinary shares on 19 October
2021 has yet to be cancelled. At the reporng date, the amount standing to the credit of
the share premium account was £14,506,291.
At 31 December 2021 the special distributable reserve account was £118,435,271.
14. Net asset value per ordinary share
The basic total net assets per ordinary share is based on the net assets aributable to equity
shareholders as at 31 December 2021 of £141,841,774 and ordinary shares of 137,008,487
in issue at 31 December 2021.
There is no diluon eect and therefore no dierence between the diluted total net assets
per ordinary share and the basic total net assets per ordinary share.
Downing Renewables & Infrastructure Trust plc Annual Report | 129
15. Cash and Cash equivalents
At the period end, the Company had cash of £11.3 million. This balance was held by the Royal
Bank of Scotland.
16. Financial Risk Management
The Company’s investment acvies expose it to a variety of nancial 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 nancial risks, however
the review and management of nancial risks are delegated to the AIFM.
Each risk and its management are summarised below.
Foreign exchange risk
Foreign exchange risk is dened as the risk that the fair value of future cash ows will
uctuate because of changes in foreign exchange rates. The Company monitors its foreign
exchange exposures using its near-term and long-term cash ow forecasts. Its policy is to use
foreign exchange hedging to provide protecon to the level of sterling distribuons that the
Company aims to receive from porolio companies over the medium-term, where considered
appropriate. This may involve the use of forward exchange. The Company’s sensivity 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 aect future
cash ows or the fair values of nancial instruments. The Company is exposed to interest rate
risk on its cash balances held with counterpares, bank deposits, advances to counterpares
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 valuaon 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.
Downing Renewables & Infrastructure Trust plc Annual Report | 130
The Company’s interest and non-interest bearing assets and liabilies as at 31 December
2021 are summarised below:
Assets Interest
Bearing
£’000s
Non-
Interest
bearing
£’000s
Total
£’000s
Cash and cash equivalents – 11,254 11,254
Trade and other receivables – 280 280
Investments at fair value through prot and loss 113,749 17,759 131,508
Total assets 113,749 29,293 143,042
Liabilies
Accrued expenses – (1,201) (1,201)
Total liabilies – (1,201) (1,201)
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its nancial obligaons as
they fall due. The Investment Manager, AIFM and the Board connuously monitor forecast
and actual cash ows from operang, nancing, and invesng acvies to consider payment
of dividends, repayment of trade and other payables or funding further invesng acvies.
The Company ensures it maintains adequate reserves and will put in place banking facilies
and it will connuously monitor forecast and actual cash ows to seek to match the maturity
proles of nancial assets and liabilies.
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 me to realise, and there is no assurance that the valuaons placed on the investments
would be achieved from any such sale process. The Company’s Hold Co is the enty
through which the Company holds its investments, the liquidity of Hold Co is reecve of
the investments in which it holds. The Company’s main subsidiary holds an RCF, which has
currently been undrawn.
Downing Renewables & Infrastructure Trust plc Annual Report | 131
Less than
1 year
1-5
years
More than
5 years
Total
£’000 £’000 £’000 £’000
Assets
Investments at fair value
through prot and loss
(note 9)
– – 131,508 131,508
Trade and other receivables 280 – – 280
Cash and cash equivalents 11,254 – – 11,254
Liabilies
Trade and other payables (1,201) – – (1,201)
10,333 – 131,508 141,841
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 esmated for each signicant
counterparty posion. Monitoring is on-going, and period end posions are reported to the
Board on a quarterly basis.
Credit risk may also arise from cash and cash equivalents and deposits with banks and
nancial instuons. The Company and its subsidiaries may migate their risk on cash
investments by only transacng with major internaonal nancial instuons with high credit
rangs assigned by internaonal credit rang agencies.
The carrying value of the investments and cash represent the Company’s maximum exposure
to credit risk.
Downing Renewables & Infrastructure Trust plc Annual Report | 132
The Company’s credit risk exposure as at 31 December 2021 is summarised below:
As at
31 December
2021
£’000s
Loan Investment 113,749
Cash and cash equivalents 11,254
Total 125,003
Price risk
Price risk is dened as the risk that the fair value of a nancial instrument held by the
Company will uctuate. Investments are measured at FVTPL. As at 31 December 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 aributable
to equity holders of the Company, comprising issued capital and reserves. The Board
connues to monitor the balance of the overall capital structure so as to maintain investor
and market condence. The Company is not subject to any external capital requirements.
Market risk
Returns from the Company’s investments are aected by the price at which the
investments are acquired. The value of these investments will be a funcon of the
discounted value of their expected future cash ows, and as such will vary with, inter
alia, movements in interest rates, market prices and the compeon for such assets. The
Investment Manager carries out a full valuaon quarterly and this valuaon exercise takes
into account changes described above.
Downing Renewables & Infrastructure Trust plc Annual Report | 133
17. Unconsolidated subsidiaries, associates and joint ventures
The following table shows subsidiaries of the Group. As the Company is regarded as an
Investment Enty as referred to in note 2, these subsidiaries have not been consolidated in
the preparaon of the nancial statements:
Investment Place of Business Ownership Interest
as at 31 December
2021
DORE Hold Co Limited
16
England
17
100%
DORE Sweden Hold Co Limited
18
England
17
100%
Downing Hydro AB
18
Sweden
12
100%
Abercomyn Solar Ltd
21
England
17
100%
Andover Aireld Solar Developments Ltd
20
England
17
100%
Appleton Renewable Energy
20
England
17
100%
Appleton Renewables
21
England
17
100%
Beeston Solar Energy Ltd
21
England
17
100%
Beeston Solar Ltd
21
England
17
100%
Bourne Park Solar Ltd
22
England
17
100%
Brookside Solar Ltd
21
England
17
100%
Brown Argus Trading Ltd
23
England
17
100%
Chalkhill Commercial PV Ltd
23
England
17
100%
Chalkhill Life Holdings Ltd
18
England
17
100%
Deeside Solar Farm Ltd
23
England
17
100%
Emerald Isle Solar Energy Ltd
24
Northern Ireland
17
100%
Emerald Isle Solar Ltd
21
Northern Ireland
17
100%
Greenacre Redbridge Ltd
25
England
17
100%
Greenacre Solar Energy Ltd
25
England
17
100%
Greenacre Solar Ltd
21
England
17
100%
Heulwen Solar Ltd
21
England
17
100%
Hulse Energy Ltd
21
Northern Ireland
17
100%
Hulse Renewable Energy Ltd
26
Northern Ireland
17
100%
KPP132 Ltd
27
England
17
100%
KPP141 Ltd
33
Northern Ireland
17
100%
Moray Energy Ltd
27
Northern Ireland
17
100%
Moray Power (UK) Ltd
27
Northern Ireland
17
100%
Moray Power Ltd
21
Northern Ireland
17
100%
Newton Solar Energy Ltd
21
England
17
100%
Newton Solar ltd
21
England
17
100%
Penarth Energy Ltd
21
England
17
100%
Ridgeway Solar Energy Ltd
29
England
17
100%
Ridgeway Solar ltd
21
England
17
100%
Ringlet Trading Ltd
23
England
17
100%
ROC Solar (UK) Ltd
30
Northern Ireland
17
100%
ROC Solar ltd
21
Northern Ireland
17
100%
Solar Finco 1 Limited
31
England
17
100%
Solar Finco 2 Limited
32
England
17
100%
Solar Finco 3 Limited
23
England
17
100%
Downing Renewables & Infrastructure Trust plc Annual Report | 134
Investment Place of Business Ownership Interest
as at 31 December
2021
TGC Solar Oakeld Ltd
29
England
17
100%
Triumph Renewable Energy Ltd
33
Northern Ireland
17
100%
Triumph Solar Energy ltd
33
Northern Ireland
17
100%
Triumph Solar ltd
21
Northern Ireland
17
100%
Voltaise (UK) Ltd
34
England
17
100%
Voltaise ltd
21
England
17
100%
Wakehurst Renewable Energy Ltd
35
Northern Ireland
17
100%
Wakehurst Renewables Ltd
21
Northern Ireland
17
100%
York NIHE Ltd
36
Northern Ireland
17
100%
York Renewable Energy Ltd
36
England
17
100%
York Renewables Ltd
21
Northern Ireland
17
100%
16 DORE Hold Co is the intermediate holding company of the Group, this is 100% owned by
DORE PLC
17 The Registered oce is St Magnus House, 3 Lower Thames Street, London EC3R 6HD
18 These Companies are 100% owned by DORE Hold Co Limited
19 The registered oce is c/o Cirio Advokatbyra Box 3294, 103 65 Stockholm
20 Appleton Renewable Energy Ltd is 100% owned by Appleton Renewables, Appleton
Renewable Energy Ltd, in turn owns 100% of Andover Aireld Solar Developments Ltd
21 These companies are 100% owned by Solar Finco 1 Ltd
22 Bourne Park Solar is 100% owned by Penarth Energy Ltd
23 These companies are 100% owned by Chalkhill Life Holdings Ltd
24 Emerald Isle Solar Energy Limited is 100% owned by Emerald Isle Solar Ltd
25 Both companies are 100% owned by Greenacre Solar Ltd
26 Hulse Renewable Energy Ltd is 100% owned by Hulse Energy Ltd
27 Moray Energy Ltd and Moray Power (UK) are 100% owned by Moray Power Ltd, Moray
Power (UK) Ltd owns 100% of KPP 132 Ltd
28 Newton Solar Energy is 100% owned by Newton Solar Ltd
29 Both companies are 100% owned by Ridgeway Solar Ltd
30 ROC Solar (UK) Ltd is 100% owned by ROC Solar Ltd
31 Solar Finco 1 Ltd is 100% owned by Solar Finco 2 Ltd
32 Solar Finco 2 Ltd is 100% owed by Solar Finco 3 Ltd
33 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
34 Voltaise (UK) Limited is 100% owned by Voltaise Ltd
Downing Renewables & Infrastructure Trust plc Annual Report | 135
35 Wakehurst Renewable Energy Ltd is 100% owned by Wakehurst Renewables Ltd
36 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-execuve. During the period, they received fees for their services of £145,833.
The Company has 3 non-execuve Directors.
Other than the Directors, the Company had no employees during the period.
19. Conngencies and commitments
The Company has no commitments or conngencies.
20. Dividends declared
As outlined on page 8 of the Chairman’s statement, in the IPO Prospectus on
12 November 2020, the Company was targeng an inial annualised dividend yield of
3% by reference to the IPO price of £1.00, in respect of the nancial period from IPO
on 10 December 2020 to 31 December 2021 (equang to 3.0 pence per share), rising to
a target annualised dividend yield of 5% by reference to the IPO price in respect of the
nancial year to 31 December 2022.
Interim dividends paid during the period
ended 31 December 2021
Dividend per share
pence
Total dividend
£’000s
With respect to the quarter ended
30 June 2021
1.00 1,225
With respect to the quarter ended
30 September 2021
1.25 1,713
2.25 2,938
Interim dividends declared aer
31 December 2021 and not accrued in the
year
Dividend per share
pence
Total dividend
£’000s
With respect to the quarter ended
31 December 2021
1.25 1,713
1.25 1,713
Downing Renewables & Infrastructure Trust plc Annual Report | 136
On 24 February 2022, The Board declared an interim dividend of 1.25 pence per share
with respect to the period ended 31 December 2021.
The Dividend is expected to be paid on or around 31 March 2022 to shareholders on the
register on 4 March 2022. The ex-dividend date is 3 March 2022.
As announced in September 21, following the rapid deployment equity issuance proceeds
and the connued strong trading performance since the two porolios were acquired, the
Board announced it is increasing its dividend guidance. The Company intends to increase
the dividend to 5 pence for the year to 30 June 2022 (represenng a dividend per share
of 1.25 pence for the quarter ending September 2021 and thereaer).
During the period, The Board declared two interim dividends of 1 pence per share on
1 September 2021 and 1.25 pence per share on 25 November 2021, with respect to the
periods ending 30 June 2021 and 31 December 2021. As outlined in the Company’s
Prospectus, the Company has chosen to designate part of these interim dividends as an
interest distribuon.
The dividend for the period to 30 June 2021, was paid as 0.50 pence per share as an
interest payment and 0.50 as an ordinary dividend. The dividend paid for the period
to 31 December 2021 was paid as 0.8125 pence per share as an interest payment and
0.4375 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 distribuon element
of this dividend. This will result in a reducon in the corporaon tax payable by the
Company.
21. Events aer the balance sheet date
Dividends
On 24 February 2022, The Board declared an interim dividend of 1.25 pence per share
with respect to the period ended 31 December 2021.
The dividend is expected to be paid on or around 31 March 2022 to shareholders on the
register on 4 March 2022. The ex-dividend date is 3 March 2022.
Downing Renewables & Infrastructure Trust plc Annual Report | 137
Acquisions
The Company, through its main subsidiary acquired two operaonal porolios of
hydropower plants, located in central Sweden for £20.1 million and also completed the
acquision of an operaonal 46 MW onshore wind project located in north eastern
Sweden for £19.8 million. EUR 27.4 million was drawn against the facility with SEB to help
fund the hydropower acquisions.
22. Related party transacons
The amounts incurred in respect of the Investment Management fees during the period
to 31 December 2021 was £1,284,177. Of this amount, £933,042 were unpaid at
31 December 2021.
The placing agreement entered into on 12 November 2020 between the Company, the
Directors, the AIFM, the Investment Manager, Singer Capital Markets Advisory LLP
and Singer Capital Markets Securies Limited provided, amongst other things, that the
Investment Manager (i) would contribute to the costs of the IPO such that the Net Asset
Value per Ordinary Share at Admission would not be less than 98 pence and (ii) would
be paid commission in respect of investors introduced by it to the IPO. The net eect of
this receipt from, and payment to, the Investment Manager was a payment made by the
Company of £648,290. These terms of the placing agreement were disclosed in the IPO
Prospectus.
Each of the underling investments of the Group entered into an asset management
agreement with the Asset Manager. The total value of recurring services Invoiced to
the companies during the period was £370,635 with a further £222,801 accrued. The
£222,801 which has been accrued remained unpaid at the period end.
The amounts incurred in respect of Directors fees during the period to 31 December
2021 was £145,833. These amounts had been fully paid at 31 December 2021. The
amounts paid to individual directors during the period were as follows:
Hugh W M Lile (Chair) £58,333
Jo De Montgros £40,833
Ashley Paxton £46,667
Downing Renewables & Infrastructure Trust plc Annual Report | 138
Tony McGing and Tom Williams were Directors of the Company from 8 October 2020 to
28 October 2020, they received no remuneraon during the period.
Due to the Company being an externally managed investment company, there are no
other fees due to key management personnel.
Transacons with a Shareholder – Acquision of the Seed Assets
Bagnall Energy Limited is a shareholder in the Company. Its shareholding can be seen on
page 71.
As idened in the Company’s Prospectus dated 12 November 2020, the Company
beneted from an opon to acquire a porolio of c.96 MWp of operaonal 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
discreonary basis. This acquision of the Seed Assets represented a conict of interest
as the Investment Manager provided investment management services to both the
Company and Bagnall Energy Limited.
To migate this conict, the Investment Manager put in place several procedures,
including disclosure of the relevant conicts 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.
Intercompany Loans
During the period interest totalling £4.98 million was charged on the Company’s long-term
interest-bearing loan between the Company and its subsidiary. At the period end,
£2.4 million remained unpaid.
The loan to DORE Hold Co Limited is unsecured. As at the balance sheet date, the loan
balance stood at £113.7 million.
Downing Renewables & Infrastructure Trust plc Annual Report | 139
In reporng nancial informaon, the Company presents alternave performance measures,
(“APMs”), which are not dened or specied under the requirements of IFRS. The Company
believes that these APMs, which are not considered to be a substute for or superior to IFRS
measures, provide stakeholders with addional helpful informaon on the performance of
the Company. The APMs presented in this report are shown below:
Gross Asset Value or GAV
A measure of total asset value including debt held in unconsolidated subsidiaries.
As at 31 December 2021
Page £’000s
NAV a 105 141,841
Debt held in unconsolidated subsidiaries b n/a 79,250
Gross Asset Value a + b 221,091
NAV Total Return
A measure of NAV performance over the reporng period (including dividends paid). NAV
total return is shown as a percentage change from the start of the period. It assumes that
dividends paid to shareholders are reinvested at NAV at the me the shares are quoted
ex-dividend.
Period Ended
31 December 2021
Page NAV
NAV at IPO pence a n/a 98.00
NAV at 31 December 2021 pence b 105 103.5
Reinvestment assumpon pence c n/a 0.02
Dividends paid pence d 8 2.25
Total NAV Return ((b + c + d)/a) - 1 7.9%
Alternative Performance
Measures
Downing Renewables & Infrastructure Trust plc Annual Report | 140
Total Shareholder Return
A measure of share price performance over the reporng period (including dividends
reinvested). Share price total return is shown as a percentage change from the start of the
period. It assumes that dividends paid to shareholders are reinvested in the shares at the
me the shares are quoted ex- dividend.
Period Ended
31 December 2021
Page Share
Price
Issue price at IPO
(10 December 2020)
pence a n/a 100.00
Closing price at 31 December
2021
pence b 4 103.50
Benets of reinvesng
dividends
pence c n/a 0.03
Dividends paid pence d 8 2.25
Total Return ((b + c + d)/a) - 1 5.8%
Ongoing Charges
A measure, expressed as a percentage of average net assets, of the regular, recurring annual
costs of running the Company per Ordinary Share. This has been calculated and disclosed in
accordance with the AIC methodology.
Period Ended
31 December 2021
Page £’000s
Average NAV a n/a 126,443
Annualised Expenses b n/a 2,056
Ongoing charges rao b / a 1.6%
Downing Renewables & Infrastructure Trust plc Annual Report | 141
Dividend yield
This is the annualised measure of the amount of cash dividends paid out to shareholders
relave to the IPO price of £1.00 per share and the issue price.
Period Ended
31 December 2021
Page £’000s
Dividend from IPO to
31 December 2021
pence a n/a 3.50
Ordinary Share price as at
31 December 2021
pence b 4 103.50
Issue price at IPO pence c n/a 100.00
Annualisaon factor d n/a 0.95
Dividend yield by reference
to share price
(a/b * d) 3.20%
Dividend yield by reference
to Issue Price
(a/c * d) 3.31%
Dividend Cover
Dividend cover illustrates the number of mes the Company’s cash ow can cover it
dividend payments to Shareholders.
Dividend Cover
Period Ended
31 December 2021
Page
£’000
Cash ows (from porolio companies) a n/a 4,678
Cash expenses (Company and Hold Co) b n/a (1,339)
Dividends for FY 2021 (excluding new
equity)
c n/a 2,756
Dividends for FY 2021 (including new
equity)
d n/a 2,938
Dividend Cover excluding new equity (a + b) / c 1.21
Dividend Cover including new issuance (a + b) / d 1.14
Downing Renewables & Infrastructure Trust plc Annual Report | 142
Glossary
2016 Paris Agreement
an agreement within the United Naons Framework Convenon on Climate Change, dealing with
greenhouse-gas-emissions migaon, adapon, and nance, signed in 2016
AIC Associaon of Investment Companies
Asset Manager INFRAM LLP a company operated by Downing LLP. Downing LLP is the controlling member.
CCGT Combined Cycle Gas Turbines
Corporate PPA a PPA with a corporate end-user of electricity rather than with an electricity ulity
CO2 Carbon dioxide
CO2e Carbon dioxide equivalent
COP26 The 2021 United Naons Climate Change Conference
DHAB Downing Hydro AB
distribuon network low voltage electricity network that carries electricity locally from the substaon to the end-user
ESG environmental, social and governance
FiT feed-in tari
GAV
Gross asset value – the aggregate value of the Group’s underlying investments, cash and cash equivalents,
and third-party borrowings.
GBP Pounds Sterling
GHG Greenhouse Gas
Group the Company and its subsidiaries
GW Gigawa
GWh Gigawa hours
Investment Manager Downing LLP (Company No: OC341575)
IPO Inial Public Oering
KPI key performance indicator
MW Megawa
MWh Megawa hour
MWp Megawa peak
NAV Net asset value
NIROC/s Northern Ireland ROC/s
Downing Renewables & Infrastructure Trust plc Annual Report | 143
O&M operaons and maintenance
Ofgem the Oce of Gas and Electricity Markets
Oaker a purchaser of electricity and/or ROCs under a PPA
PPA a power purchase agreement
PPS Pence per share
RCF revolving credit facility
Renewable Energy Direcve EU Renewable Energy Direcve (2009/28/EC)
RO Renewables Obligaon
ROC/s renewables obligaon cercate/s
SE2 South Sweden
SE3 North Sweden
SEB Skandinaviska Enskilda Banken AB
SEK Swedish Kroner
SEM Single Electricity Market
SFDR Sustainable Finance Disclosure Regulaon
Solar PV photovoltaic solar
SORP Statement of recommended pracse
SPV Special purpose vehicle
Sustainable Development Goals
Set out in the 2030 Agenda for Sustainable Development, adopted by all United Naons Member States in
2015
transmission network
high voltage power lines that transport electricity across large distances at volume, from large power
staons to the substaons upon which the distribuon networks connect
Downing Renewables & Infrastructure Trust plc Annual Report | 144
Cautionary Statement
The Review Secon of this report has
been prepared solely to provide addional
informaon to shareholders to assess the
Company’s strategies and the potenal for
those strategies to succeed. These should
not be relied on by any other party or for
any other purpose.
The Review Secon may include statements
that are, or may be deemed to be, “forward-
looking statements”. These forward-looking
statements can be idened by the use of
forward-looking terminology, including the
terms “believes”, “esmates”, “ancipates”,
“expects”, “intends”, “may”, “will” or “should”
or, in each case, their negave or other
variaons or comparable terminology.
These forward-looking statements
include all maers that are not historical
facts. They appear in a number of places
throughout this document and include
statements regarding the intenons, beliefs
or current expectaons of the Directors
and the Investment Manager concerning,
amongst other things, the Investment
Objecves and Investment Policy, nancing
strategies, investment performance, results
of operaons, nancial condion, liquidity,
prospects, and distribuon policy of the
Company and the markets in which it
invests.
By their nature, forward-looking
statements involve risks and uncertaines
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 operaons, nancial
condion, liquidity, distribuon policy and
the development of its nancing strategies
may dier materially from the impression
created by the forward-looking statements
contained in this document.
Subject to their legal and regulatory
obligaons, the Directors and the
Investment Manager expressly disclaim any
obligaons to update or revise any forward-
looking statement contained herein to
reect any change in expectaons with
regard thereto or any change in events,
condions or circumstances on which any
statement is based. In addion, the Review
Secon may include target gures for
future nancial periods. Any such gures
are targets only and are not forecasts.
This Annual Report has been prepared for
the Company as a whole and therefore
gives greater emphasis to those maers
which are signicant in respect of Downing
Renewables & Infrastructure Trust PLC and
its subsidiary undertakings when viewed as
a whole.
Downing Renewables & Infrastructure Trust plc Annual Report | 145
Company Information
Directors
(all non-execuve)
Hugh W M Lile (Chair)
Joanna de Montgros
Ashley Paxton
Registered Oce Beaufort House
51 New North Road
Exeter
EX4 4EP
AIFM and Administrator Gallium Fund Soluons Limited
Gallium House
Unit 2
Staon 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 Maers 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
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
email: enquiries@linkgroup.co.uk
Depositary Gallium P E Depositary Limited
Gallium House
Unit 2
Staon Court
Borough Green
Sevenoaks
Kent
TN15 8AD
Auditor BDO LLP
55 Baker Street
London
W1U 7EU
Downing Renewables & Infrastructure Trust plc Annual Report | 146
Shareholder Information
Key Dates
March 2022 Annual results announced
Payment of fourth interim dividend
April 2022 Annual General Meeng
June 2022 Company’s half-year end
Payment of rst interim dividend
September 2022 Interim result announced
Payment of second interim dividend
December 2022 Company’s year end
Payment of third interim dividend
*
These dates are provisional and subject to change.
Frequency of NAV Publicaon
The Company’s NAV is released to the London Stock Exchange on a quarterly basis and is published on the Company’s website.
Share Register Enquiries
The register for the Company’s shares is maintained by Link Group. If you have any queries in relaon to your shareholding,
please contact the Registrar on 0371 664 0300 or on +44 (0)371 664 0300, UK Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable internaonal rate. Lines
are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. You can also contact the
Registrar by email at enquiries@ linkgroup.co.uk or by sending a leer to Link Group, 10
th
Floor, Central Square, 29 Wellington
Street, Leeds LS1 4DL.
Sources of Further Informaon
Copies of the Company’s Annual and Interim Reports, stock exchange announcements and further informaon on the
Company can be obtained from the Company’s website www.doretrust.com.
Contacng the Company
Shareholder queries are welcomed by the Company. While any queries regarding your shareholding should be raised with the
Registrar, shareholders who wish to raise any other maers with the Company may do so by emailing the Company Secretary
at dorecosec@linkgroup.co.uk.
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