Annual Report
For the year to 31 December 2023
Downing Renewables &
Infrastructure Trust PLC
Downing Renewables & Infrastructure Trust PLC Annual Report for the year to 31 December 2023
Visit
doretrust.com
April 2024
Contents
COMPANY OVERVIEW
4 Highlights
5 Key Metrics
6 About us
STRATEGIC REPORT
8 Chairman’s Statement
12 Strategy and Business Model
19 The Investment Manager
21 Portfolio Summary
25 Investment Managers Report
44 Sustainability and responsible
Investment
71
Section 172(1) Statement
74 Risk & Risk Management
80 Going Concern and Viability
Statement
GOVERNANCE
83 Board of Directors
85 Directors’ Report
89 Corporate Governance Statement
100 Nomination Committee Report
104
Management Engagement
Committee Report
106 Audit and Risk Committee Report
110 Directors’ Remuneration Report
115
Statement of Directors’
Responsibilities
118 Independent Auditor’s Report
FINANCIAL STATEMENTS
127 Statement of Comprehensive
Income
128 Statement of Financial Position
129 Statement of Changes in Equity
130 Statement of Cash Flows
131 Notes to the Financial Statements
OTHER INFORMATION
160 Alternative Performance Measures
169 Glossary
171 Cautionary Statement
172 Company Information
173 Shareholder Information
Downing Renewables & Infrastructure Trust plc Annual Report | 3
Company Overview
Downing Renewables & Infrastructure Trust plc Annual Report | 4
> Deployed £47m into 11 investments, including:
> £18m into electricity grids and grid stability infrastructure projects in Sweden and the UK;
> Afurther£13mintoaportfolioof1600operationalrooftopsolarinstallationsintheUK;
and
> £16minto9hydropowerplants,includingtheCompany’sfirstinvestmentinIceland.
> ReducedtheproportionoftheCompany’srevenuesthatareexposedtovariablepowerprices
through strategic investments in grid and grid stability assets and the Icelandic hydropower
acquisitionwithitslongterm,fixedprice,inflationlinkedrevenues.
> Generated£24.7million(up26.6%from£19.5millionin2022)operatingprofitfortheunderlying
portfolioduringtheperiod.
> Continued to build out and optimise the hydropower portfolio, implementing hardware and
software upgrades necessary to enable access to new lucrative grid frequency markets in
Swedenin2024.
> Interimdividendsof5.38 pence per ordinary share declared in respect of the year, in line with
target.Cashdividendcoverofinterimdividendspaidduringtheyearof5.285penceof1.21x
1
(2022:1.17x), increasing to1.78xusing pre debt service cashflows.
> Thetargetdividendrelatingto2024hasbeenincreasedby7.85%to5.80penceperordinary
share.
> NAV total return
1
of3.5% for the year to 31 December 2023 and 33.0% since IPO in
December2020.
> Net asset value (“NAV”) as at 31 December 2023 was £212.1 million or 117.7 pence per
ordinary share.
> The Company’s renewable energy portfolio generated 395GWh in 2023, (up 21.1% from
326GWhin2022),avoided186,348tonnesofCO2e(up21.4%from153,457tonnesofCO2e
in 2022)and powered the equivalent of 146,183 UK homes (up29.9%from112,523UKhomes
in2022).
> Respondedtothesignificantdiscount at which the Company’s shares, and the sector as a whole,
traded by commencing a buyback programme in March 2023. The Company repurchased
4.38 million sharesincreasingshareholders’NAVreturnby0.6pencepershare.
Highlights
1
These are alternative performance measures
Downing Renewables & Infrastructure Trust plc Annual Report | 5
As at or for
period ending
31 December 2023
As at or for the
period ending
31 December 2022
Market capitalisation £162m £210m
Share price 90.0 pence 113.5 pence
Dividends paid in the year £9.7m £8.0m
Dividends paid in the year per ordinary share 5.285 pence 5.000 pence
GAV
2,3
£352m £310m
NAV £212m £219m
NAV per share 117.7 pence 118.6 pence
NAV total return with respect to the year
1,2,3
3.5% 19.5%
Total Shareholder Return with respect to the year
1,4
-16.3% 15.1%
NAV total return since inception
1,2,3
33.0% 28.5%
Total Shareholder Return since inception
1,4
1.1% 21.1%
Weighted average discount rate
5
7.7 % 7.7 %
Environmental Performance Assets avoided
186,348 tonnes of CO
2
and powered
the equivalent of
146,183 homes
Assets avoided
153,457 tonnes of CO
2
and powered
the equivalent of
112,523 homes
A glossary of terms can be found on page 169.
Key Metrics
1
These are alternative performance measures.
2
A measure of total asset value including debt held in unconsolidated subsidiaries.
3
Based on NAV at IPO of £0.98/share.
4
Total returns in sterling, including dividend reinvested.
5
This is the weighted average discount used in the valuation of underlying investments
Downing Renewables & Infrastructure Trust plc Annual Report | 6
DowningRenewables&InfrastructureTrustPLC(“DORE” orthe “Company”)isa closedended
investmentcompanyincorporatedinEnglandandWales.TheCompanyaimstoprovideinvestors
withanattractiveandsustainablelevelofincome,withanelementofcapitalgrowth,byinvesting
in a diversified portfolio of renewable energy and infrastructure assets in the UK, Ireland and
NorthernEurope.
TheCompany’sstrategy,whichfocusesondiversificationbygeography,technology,revenueand
projectstage,isdesignedtodeliverstabilityofrevenuesandconsistencyofincometoshareholders.
The Company isanArticle9fundpursuanttotheEUSustainableFinanceDisclosureRegulations
(“SFDR”).ThecoresustainableInvestmentObjectiveoftheCompanyistoacceleratethetransition
tonetzerothroughitsinvestments,compilingandoperatingadiversifiedportfolioofrenewable
energyandinfrastructureassetstohelpfacilitatethetransitiontoamoresustainablefuture.This
directlycontributestoclimatechangemitigation.
DORE is a Green Economy Mark (London Stock Exchange) accredited company with an
ESGframeworkthataims toprovideinvestorswithattractivereturnswhilecontributingtothe
successfultransitiontoanet-zerocarboneconomy,resultinginacleaner,greenerfuture.
Asat31December2023,theCompanyhad184,622,487ordinarysharesinissueissue(ofwhich
4,375,363wereheldintreasury)whicharelistedonthepremiumsegmentoftheFCA’sOfficialList
andtradedontheLondonStockExchange’sMainMarket.
DOREismanagedbyDowningLLP(the“InvestmentManager”or“Downing”).
About DORE
Strategic Report
Downing Renewables & Infrastructure Trust plc Annual Report | 7
Downing Renewables & Infrastructure Trust plc Annual Report | 8
Chairman’s Statement
The Board is pleased with the deployment of £47 million during the year, further increasing
geographical and revenue diversification. At the portfolio level, the Investment Manager’s
in-house asset management team remains committed to ensuring ongoing positive
operational performance. This performance, combined with the accretive acquisitions, has
enabled the Company to raise the dividend target by 7.85% to 5.80 pence per ordinary share
in respect of the year from 1 January 2024.
On behalf of the Board, I am pleased to present the Annual Report of Downing Renewables
& Infrastructure Trust PLC (“DORE”) covering the year to 31 December 2023 (the “Annual
Report”). As we navigate a transformative period in the global energy landscape, the
Company continues to make significant progress in achieving its strategic objectives of
delivering sustainable returns through diversification of geography, technology, revenue,
and project stage.
Acquisitions
In the Company’s Interim Report, I advised that the Investment Manager had continued to deploy
the Company’s funds during the first half of 2023, when DORE acquired two additional operational
hydropower plants in Sweden (with annual generation of 8.3 GWh), for £5.1 million, a portfolio of
operational solar PV assets located in the UK for £12.6 million and Mersey Reactive Power, a UK-
based, fully operational project providing grid stability services to the transmission system for £11.0
million.
The second half of the year saw further progress in increasing the stability of revenues and
consistency of income to shareholders.
In July, DORE made its second acquisition in the grid infrastructure sector, a Swedish Electricity
Distribution System Operator, Blåsjön Nät AB (“Blåsjön”), for £7.6 million. Blåsjön is a regulated
electricity distributor which delivers 16-18 GWh per annum of electricity through medium and
low voltage lines to its c.1,500 domestic and business customers in Strömsund, northern Sweden.
Its revenues are set by the Swedish regulator and are dependent on neither volume nor price of
electricity, increasing the Company’s diversification of revenues and reducing the proportion of the
Company’s revenues that are exposed to variable power prices.
Further geographic and electricity market diversification was achieved with the acquisition of a
8.3 GWh per annum hydropower plant, located in south-central Iceland, for £5.0 million. The plant
has been operational since 2018 and adds long-term, fixed price, inflation-linked revenues to the
Company’s portfolio, and also reduces the proportion of Company’s revenues that are exposed to
variable power prices. The Company now generates revenue from four different revenue sources
and has two new revenue streams that are not derived from energy sales.
The core Swedish hydropower portfolio was bolstered through the acquisition of a further five
hydropower plants for a total investment of £6.0 million. The acquisitions increase the total number
of hydropower plants owned by DORE to 34 with a total average annual production of 215 GWh per
annum, increasing the Swedish hydropower platform generation capacity by c.14% and the storage
capacity to 213 million cubic meters.
Further details on the acquisitions during the period can be found in the Investment Manager’s
Report on pages 25 to 27.
Downing Renewables & Infrastructure Trust plc Annual Report | 9
Chairman’s Statement continued
6
Based on figures from underlying spv unaudited management accounts which are not included within this report.
Debt Facilities
In the interests of capital efficiency and to enhance the potential for income returns and long-term
capital growth, the Company is permitted to maintain a conservative level of gearing. As at
31 December 2023, the total Portfolio’s gearing (expressed as a loan to value (LTV) ratio) was
40% (2022: 30%). The Company has access to a £40m Revolving Credit Facility (“RCF”), of which
£18.6m is drawn. There are two additional long term debt facilities at asset level, a £78.8 million
facility which is fully drawn and a €68.5 million facility of which €49.4 million was drawn as at
31 December 2023. In total, the sterling value of debt was £140 million at 31 December 2023. The
weighted average cost of debt across the borrowings is 2.5%.
Further information on these facilities can be found in the Investment Manager’s Report, and the
Company’s borrowing policy is laid out on page 14.
Portfolio Performance
The underlying portfolio generated £24.7 million (2022: £19.5 million) operating profit during the
period
6
, an 11.6% return (2022: 8.9%) on equity capital deployed. The 4,866 core renewable energy
assets produced approximately 396 GWh of renewable electricity, enough to power 146,183 houses,
with the two new grid infrastructure assets in particular performing well.
Financial Results
Despite the strong return on capital deployed, during the period the NAV per ordinary share
decreased 0.8% from 118.6 pence at 31 December 2022 to 117.7 pence at 31 December 2023.
Including dividends paid of 5.285 pence per ordinary share in the year, the NAV total return since
31 December 2022 was 3.5% resulting from the valuation across all four technologies and the
payment of the dividend. The reduction in NAV was largely driven by future power prices being
forecast to return to more normalised levels more rapidly than anticipated at the start of the year.
The NAV reflects the fair market valuation of the Company’s portfolio based on a discounted cash
flow analysis over the life of each of the Group’s assets plus the value of the Company’s other
assets and liabilities. The assumptions which underpin the valuation are provided by the Investment
Manager and the Board has satisfied itself with the calculation methodology and underlying
assumptions. Further details of the valuation changes are given on page 39.
The portfolio companies distributed £15.2 million to the Company by way of shareholder loan
repayments and interest during the period. Cash of £3.7 million was retained in the Company’s
subsidiary DORE Hold Co and forms part of the valuation.
The Company made a profit for the year to 31 December 2023 of £6.9 million, resulting in earnings
per ordinary share of 3.8 pence.
Downing Renewables & Infrastructure Trust plc Annual Report | 10
Chairman’s Statement continued
Dividends
The Company has paid interim dividends to shareholders of 1.345 pence per share for the first three
quarters of 2023, and a further dividend of 1.345 pence per share was announced on 20 February
2024 in respect of the quarter to 31 December 2023. Together, these amount to the 5.38 pence
per share target for the 2023 financial year, announced on 2 March 2023.
In cash terms, the Company and its subsidiary achieved a cash dividend cover of 1.21x against
the dividends of 5.285 pence per share paid during the year. When amortisation of debt is added
back, the dividend cover was 1.78x. Cash dividend cover has been calculated on the basis of cash
actually received by the Company and its immediate subsidiary, post the payment of any debt
service obligations.
The Company will target a dividend of 5.80 pence per share relating to the year to 31 December
2024, a 7.85% increase from 2023. The increased dividend is expected to be covered by cash in
excess of 1.35x by the current portfolio.
Capital Structure
Share prices across the broad infrastructure investment fund sector are depressed and the Company
is trading at a discount to NAV. The Board is closely monitoring the Company’s share price discount
and is committed to buying back its own shares when deemed appropriate. While share buy backs
will not necessarily prevent the discount from widening, particularly in times of market weakness
or volatility, the Board believes that buybacks enhance the NAV per share for existing shareholders,
provide some additional market liquidity and help to mitigate discount volatility which can damage
shareholder returns.
During the twelve months to 31 December 2023 the Company has bought back a total of
4,375,363 shares into treasury at a cost of £4.1 million. Since the year end, a further 2,544,899
shares have been bought back into treasury at a cost of £2.1m. As at 10 April 2024, the Company
had 184,622,487 shares in issue (including 6,920,262 in treasury, which are available to be resold
at a premium to NAV per ordinary share when the opportunity arises).
Alongside buybacks the Board has balanced accretive acquisitions and revenue optimisation
initiatives. The Company has benefitted in particular from its hydropower aggregation, modernisation
and revenue optimisation strategy and has further opportunities to expand its investment in
this strategy with the aim of increasing overall portfolio returns. The Company has also secured
opportunities to construct battery storage projects on land owned by the hydropower facilities at
projected returns in excess of other investments held by the Company and in excess of equivalent
projects in the UK.
In light of the potential value to the Company of: (1) these investment opportunities; (2) reducing
borrowings under the RCF; and (3) the value created through ongoing share buybacks, the Company
continues to make progress in considering potential co-investors for its existing Swedish hydropower
assets.
Downing Renewables & Infrastructure Trust plc Annual Report | 11
Chairman’s Statement continued
Outlook
The Board is pleased with the deployment of £47 million in high-quality investments made in the
year and is especially encouraged by the progress made into further diversifying the portfolio with
acquisitions in both a new geography (Iceland) and a new technology (grid infrastructure).
In 2024, the Investment Manager’s in-house asset management team will continue to focus on
delivering positive operational performance and increasing revenues from the portfolio through
optimisation initiatives and careful allocation of capital.
The area of greatest focus and where the potential return is greatest is in implementing the software
and hardware upgrades that enable the hydropower plants to participate in frequency containment
reserve (“FCR”) markets in Sweden. This increases the number of revenue streams and the overall
capital value of the plants and the Investment Manager believes that this could add as much as
5% to the value of the hydropower portfolio over time with little capital investment required. The
hardware has currently been installed at 20 plants.
The Company will continue to leverage the deep expertise of the Investment Manager to deliver
strong operational performance while placing its sustainability goals at the centre of its operational
objectives.
The Board looks forward to bringing shareholders further updates on future progress.
Hugh W M Little
Chair
10 April 2024
Downing Renewables & Infrastructure Trust PLC
Downing Renewables & Infrastructure Trust plc Annual Report | 12
The Board is responsible for the Company’s Investment Objective and Investment Policy and
has overall responsibility for ensuring the Company’s activities are in line with such overall
strategy. The Group’s Investment Objective and Investment Policy are published below.
Corporate Summary
The Company is a closed ended investment company incorporated in England and Wales with
registration number 12938740. The Company aims to provide investors with an attractive and
sustainable level of income, with an element of capital growth, by investing in a diversified portfolio
of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe.
As at 31 December 2023, the Company had 184,622,487 ordinary shares in issue (with 4,375,363
held in treasury) which are listed on the premium segment of the Official List and admitted to
trading on the London Stock Exchange’s Main Market.
Investment Objective
The Company’s Investment Objective is to provide investors with an attractive and sustainable
level of income returns, with an element of capital growth, by investing in a diversified portfolio of
renewable energy and infrastructure assets in the UK, Ireland and Northern Europe.
The core sustainable Investment Objective of the Company is to accelerate the transition to net
zero through its investments, compiling and operating a diversified portfolio of renewable energy
and infrastructure assets to help facilitate the transition to a more sustainable future. The Company
believes that this directly contributes to climate change mitigation.
The Company has made disclosures under the EU’s Sustainable Finance Disclosure Regulation
(“SFDR”) as part of its commitment to sustainability. The Company is an Article 9 fund under SFDR.
Investment Policy
The Company seeks to achieve its Investment Objective through investment in a diversified portfolio
of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe, comprising
(i) pre-dominantly 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 generation and sale of electricity on the wholesale electricity markets (“Other Infrastructure”)
(together “Assets” and each project being an “Asset”). Assets may be operational, in construction or
construction-ready, at the time of purchase. In-construction or construction-ready Assets are assets
which have in place the required grid access rights, land consents, planning, permitting and regulatory
consents in order to commence construction. For the avoidance of doubt, the Company does not
acquire or fund Assets that are at an earlier stage of development than construction-ready.
The Company can invest in a portfolio of Assets that is diversified by: (i) the principal technology
utilised to generate energy from renewable sources, for example solar photovoltaic, wind,
hydro-electric or geo-thermal (“Technology”); (ii) geography; and (iii) the stage of development of
a project, being one of operational, construction-ready or in-construction (each a “Project Stage”).
Although 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
Strategy and Business Model
Downing Renewables & Infrastructure Trust plc Annual Report | 13
instruments in the pursuit of its investment objective, 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 Restrictions
The Company will observe the following restrictions when making investments:
> the Company may invest no more than 60% of Gross Asset Value in Assets located in the UK,
save that until the Net Asset Value of the Company first exceeds £300 million, the Company may
invest no more than 75% 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), save that until the Net Asset Value of the Company first exceeds
£300 million, the Company may invest no more than 75% of Gross Asset Value in Assets located
in Ireland and Northern Europe (combined);
> the Company may invest no more than 50% of Gross Asset Value in any single Technology, save
that until the Net Asset Value of the Company first exceeds £300 million, the Company may
invest no more than 60% 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 construction
or construction ready;
> 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;
> at the time of an investment or entry into an agreement with an Offtaker, the aggregate value of
the Company’s investments in Assets under contract to any single Offtaker will not exceed 40%
of Gross Asset Value;
> no more than 25% of Gross Asset Value will be invested in Assets in relation to which the
Company does not have a controlling interest;
> no investments will be made in companies which generate electricity through the combustion
of fossil fuels or derive a significant portion of their revenues from the use or sale of fossil fuels
unless the purpose of the investment is to transition those companies away from the use of
fossil fuels and toward sustainable sources;
> the Company’s portfolio will comprise no fewer than six Assets; and
> the Company will not invest in other UK listed closed-ended investment companies.
Compliance with the above restrictions will be measured at the time of investment and
non-compliance resulting from changes in the price or value of the Assets following investment will
not be considered as a breach of the investment restrictions. The Company will hold its investments
through one or more SPVs and the investment restrictions will be applied on a look through basis
to the Asset owning SPV.
Strategy and Business Model continued
Downing Renewables & Infrastructure Trust plc Annual Report | 14
Borrowing Policy
Long-term limited recourse debt at the SPV level may be used to facilitate the acquisition, refinancing
or construction of Assets. Where utilised, the Company will seek to adopt a prudent approach to
financial leverage with the aim that each Asset will be financed appropriately for the nature of the
underlying cashflows and their expected volatility. Total long-term structural debt will not exceed
50% of the prevailing Gross Asset Value at the time of drawing down (or acquiring) such debt.
In addition, the Company and/or its subsidiaries may make use of short-term debt, such as a
revolving credit facility, to assist with the acquisition of suitable opportunities as and when they
become available. Such short-term debt will be subject to a separate gearing limit so as not to
exceed 20% of the prevailing Gross Asset Value at the time 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
entities (disregarding for this purpose any intra-Group debt (i.e. borrowings and debt instruments
between members of the Group)).
In circumstances where these limits are exceeded as a result of gearing of one or more Assets in
which the Company has a non-controlling interest, the borrowing restrictions will not be deemed
to be breached. However, in such circumstances, the matter will be brought to the attention of the
Board who will determine the appropriate course of action.
For general purposes the Company defines Gross Asset Value as the aggregate of: (i) the fair value
of the Group’s underlying investments (whether or not subsidiaries), valued on a discounted cash
flow basis as described in the International Private Equity and Venture Capital Valuation Guidelines
(latest edition December 2022); (ii) the Group’s proportionate share of the cash balances and cash
equivalents of Group companies and non-subsidiary companies in which the Group holds an interest;
and (iii) the Group’s proportionate share of other relevant assets or liabilities of the Group valued at fair
value (other than third party borrowings) to the extent not included in (i) or (ii) above. For the purposes
of the Investment Policy only, the definition of GAV is adjusted such that the Group’s proportionate
share of the cash balances and cash equivalents of Group companies and non-subsidiary companies
in which the Group holds an interest are multiplied by two to reflect the gearing that the Group could
obtain upon investment of such balances.
Currency and Hedging Policy
The Company adopts a structured risk management approach in seeking to deliver stable cash flows
and dividend yield. This may include entering into hedging transactions for the purpose of efficient
portfolio management. This could include:
> foreign currency hedging on a portion of equity distributions and net asset value(s);
> foreign currency hedging on construction budgets;
> interest and/or inflation rate hedging through swaps or other market instruments and/or
derivative transactions; and
Strategy and Business Model continued
Downing Renewables & Infrastructure Trust plc Annual Report | 15
> power and commodity price hedging through power purchase arrangements or other market
instruments and/or derivative transactions. Any such transactions are not undertaken for
speculative 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 restriction on the amount of Cash and Cash Equivalents that the Company may hold
and there may be times when it is appropriate for the Company to have a significant Cash and Cash
Equivalents position.
Holding and Exit Strategy
It is intended that Assets will be held for the long-term. However, if an attractive offer is received or
likely to be available, consideration 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 change to the Company’s Investment Policy set out above will require the approval of
shareholders by way of an ordinary resolution at a general meeting and the approval of the FCA.
In the event of a breach of the investment guidelines and the investment restrictions 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, notification will be made to a Regulatory Information Service.
Business Model
The Company was incorporated on 8 October 2020 as a public company limited by shares. The
Company carries on business as an investment trust within the meaning of section 1158 of the
Corporation 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 SPVs. The jurisdictions in which the SPVs are incorporated
is typically determined by the location of the assets, and further portfolio-level holding companies
may be used to facilitate debt financings.
As at 31 December 2023, the Company owns a portfolio of 4,866 Renewable Energy Assets totalling
203 MW of operational capacity, one grid asset delivering electricity to c.1,500 domestic and
business customers and one 200MVAr grid stability asset helping to managing voltage on the UK
Transmission System by absorbing 200MVAr reactive power per hour.
The Company is an Article 9 fund which reports under Climate Related Financial Disclosures (TCFD)
and Sustainable Finance Disclosures Regulation (SFDR).
Short term debt financing is available through a £40 million RCF which may be drawn on by DORE
Hold Co Limited to facilitate future growth plans.
Strategy and Business Model continued
Downing Renewables & Infrastructure Trust plc Annual Report | 16
The Company has a 31 December financial 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,
targeting payments in or around March, June, September and December each year.
The Company has an independent board of non-executive directors and during the year, the
Management Engagement Committee assessed and recommended the appointment of a new AIFM.
Effective 1 February 2024, JTC Global AIFM Solutions Limited was appointed as the Company’s
new AIFM and JTC (UK) Limited as the Company’s new fund administrator. The AIFM has delegated
the provision of portfolio management services to the Investment Manager, Downing LLP. Further
information 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 operational 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.
Financial Objectives
Objective KPI and Definition Relevance to
Strategy
Performance Explanation
Attractive and
sustainable level of
income
Dividends per share
(pence)
The dividend reflects
the Company’s ability
to deliver a low risk
but growing income
stream from the
portfolio.
The Company has
paid dividends of
4.035 pence per
share in respect
of the year ending
31 December 2023.
The company has
declared a further
1.345 pence per
share to be paid in
respect of the period
to 31 December
2023.
The Company
successfully met
the increased
dividend guidance
of 5.38 pence per
share for the year to
31 December 2023.
The Company’s
annual dividend
target will increase
by 7.85% for
the year ended
31 December 2024
to 5.80 pence per
share.
Cash dividend
cover
12
Reflects the
Company’s ability to
cover its dividends
from the income
received from its
portfolio.
1.21x The Company,
through DORE
Hold Co received
distributions of
£15.2m from the
underlying projects
enabling the
Company to pay fully
covered dividends.
£11.5 million was
paid up via loan
interest from DORE
Hold Co in the
period.
Strategy and Business Model continued
Downing Renewables & Infrastructure Trust plc Annual Report | 17
Objective KPI and Definition Relevance to
Strategy
Performance Explanation
Capital preservation
with an element of
capital growth
NAV per share
(pence)
12
The NAV per share
reflects our ability
to preserve capital
value and provide an
element of capital
growth throughout
the life cycle of our
assets.
117.7 pence per
share
117.7 pence per
share as at 31
December 2023. NAV
has decreased since
31 December 2022
from 118.6 pence per
share after taking into
account dividends
paid.
Total NAV return
(%)
12
The total NAV return
measure highlights
the gross return to
investors including
dividends paid.
3.5% The Company’s NAV
has decreased due
to the downward
revaluation of
the Company’s
Investment in Hold
Co, however the Total
NAV % increased due
to dividends paid
Total Shareholder
return since IPO
12
The share price
movement plus
reinvested dividends
over a period, is
a measure of a
company’s capital
growth over the long
term.
1.1% The Company’s
closing share price
as at 31 December
2023 was 90.0 pence
per share.
Ongoing charges
ratio
12
Ongoing charges
shows the drag on
performance caused
by the operational
expenses incurred by
the Company.
1.6% Company level
budgets are approved
annually by the Board
and actual spend is
reviewed quarterly.
Transaction budgets
are approved by the
Board and potential
abort exposure is
carefully monitored.
12
These are alternative performance measures
A glossary of terms can be found on page 169.
Strategy and Business Model continued
Downing Renewables & Infrastructure Trust plc Annual Report | 18
DORE Holdco Limited and all subsidiaries are held at Fair Value and not consolidated.
Objectives and Key Performance Indicators
The Company sets out above its KPIs which it uses to track the performance of the Company
over time against the objectives, as described in the Sustainability section on page 68. The Board
is of the opinion that the KPIs detailed in the table above, alongside the environmental, social
and governance objectives set out on page 56 provide shareholders with sufficient information to
assess how effectively the Company is meeting its objectives. The Board will continue to monitor
these KPIs on an ongoing basis.
Downing Renewables
& Infrastructure Trust PLc
12938740
DORE HOLD CO LIMITED
13081088
Shareholders
Ownership
Services
Key
Debt
UK Solar
Assets
UK Grid
Services Assets
UK Solar
Holding Company
UK Grid
Holding Company
Icelandic Hydro
Assets
Swedish
Hydro Assets
Swedish Grid
Services Assets
Swedish
Wind Assets
Swedish Holding
Company
Debt Provider
Aviva
Debt Provider
Skandinaviska Enskilda
Banken AB
Independent Board of Directors
Day to day management
subcontracted to Downing LLP
Debt Providers
Santander UK PlC
Revolving credit facility
AIFM
JTC Global AIFM Solutions
Investment Manager
Downing LLP
Company Service Providers
Broker: Singer Capital Markets, Winterflood
Company Secretary: Link Company Matters
Administrator: JTC (UK) Limited
Registrar: Link Market Services
Auditors: BDO
PR Advisor: TB Cardew
Tax Adviser: EY
Legal: Gowling WLG
Strategy and Business Model continued
Downing Renewables & Infrastructure Trust plc Annual Report | 19
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 31 December 2023, had over £2.0 billion of assets under
management.
The Investment Manager has over 210 staff and partners. The team of 44 investment and asset
management specialists who focus exclusively on energy and infrastructure transactions are
supported by business operations, 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 portfolio in accordance with the Company’s Investment Objective and Policy, subject
to the overall supervision of the Board.
The Investment Manager has managed investments across various sectors in the UK and
internationally and identified the Energy & Infrastructure sector as a core area of focus from
as early as 2010. Since then, to date it has made over 190 investments in renewable energy
infrastructure projects and currently oversees 537 MWp of electricity generating capacity, covering
six technologies across c.9,260 installations.
The key individuals responsible for executing the Company’s investment strategy are:
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 25 years of experience as
principal and adviser across the private equity and private debt infrastructure
sectors. Tom has carried out successful transactions totalling in excess of
£14 billion in the energy, utilities, transportation, accommodation and
defence sectors.
Tom started his career working as a project finance lawyer in 1999 before
moving into private equity with Macquarie Group in London and the Middle
East. Tom holds a Postgraduate Diploma in Legal Practice from the Royal
College of Law and a BA in law from Cambridge University.
The Investment Manager
Downing Renewables & Infrastructure Trust plc Annual Report | 20
Henrik Dahlström
Investment Director
Henrik joined the Investment Manager as Investment Director in June
2020 to expand its European presence and lead transactions 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 origination and execution of transactions in the renewable energy
and infrastructure sectors as well as holding asset management and board
responsibilities.
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 finance from Gothenburg School of Economics.
Tom Moore
Partner, Head of Private Market Operations
Tom joined the Investment Manager in May 2019 to build a full-service asset
management team to provide investors with an efficient and class leading
asset management service. Tom is now responsible for fund and portfolio
reporting and investment operations across private markets.
Prior to joining the Investment Manager, Tom was a Director at Foresight
Group, where he had oversight of a significant portfolio of renewable energy
investments.
Tom is a chartered accountant and holds a BSc in Economics from the
University of York.
Danielle Strothers
Head of Asset Management
Danielle joined the Investment Manager in September 2019. Danielle
manages the asset management function, focussing on asset performance,
business operations and compliance. Danielle is also responsible for the
coordination of the valuation process across the energy portfolio.
Prior to joining Downing, Danielle was a Senior Portfolio Manager at Foresight
Group, where she was responsible for the operations of their renewable
energy portfolio.
Danielle is a chartered accountant and holds a BSc in Accounting & Finance
from the University of Birmingham.
The Investment Manager continued
Downing Renewables & Infrastructure Trust plc Annual Report | 21
Portfolio Summary
At the year end, through its main subsidiary, DORE Holdco Limited, the Company owned a renewable
energy portfolio of hydropower, wind and solar assets, representing 203 MW of installed capacity
with expected annual generation of around 424 GWh.
The Company also owns a grid infrastructure portfolio including a shunt reactor that regulates
voltage on the UK Transmission System by absorbing 200MVAr reactive power per hour and a
Swedish Electricity Distribution System Operator which delivers electricity to c.1,500 domestic and
business customers.
The generating portfolio is diversified across 4,868 individual installations and across five different
energy markets. The grid infrastructure portfolio is diversified across two geographies and
technologies.
The Group currently has no exposure to any assets under construction.
Hydro
44%
42%
8%
5%
1%
Solar
Wind
Grid Services
Cash
Technology
by GAV
Sweden
52%
37%
8%
2%
1%
Great Britain
Northern Ireland
Iceland
Cash
Geography
by GAV
Sweden - SE2
34%
26%
21%
8%
4%
2%
Sweden - SE3
Great Britain
Northern Ireland
No exposure
Iceland
Sweden SE4
Power Market
Exposure
by GAV
5%
Portfolio composition by valuation, as at 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 22
Portfolio
Portfolio as at 31 December 2023
Source: Downing; Note: For illustrative purposes only; Data as December 2023.
Norway
Iceland
Finland
Sweden
UK
Northern Ireland
Solar
Grid Assets
Hydropower
Wind
Downing Renewables & Infrastructure Trust plc Annual Report | 23
Investment Technology Date Acquired Location
Power Market /
Subsidy
Installed capacity
(MW)
Expected annual
generation (GWh)
Ugsi Hydro Feb-21 Älvadalen, Sweden SE3/n/a 1.8 10.0
Båthusströmmen Hydro Feb-21 Älvadalen, Sweden SE3/n/a 3.5 13.7
Åsteby Hydro Feb-21 Torsby, Sweden SE3/n/a 0.7 2.8
Fensbol Hydro Feb-21 Torsby, Sweden SE3/n/a 3.0 14.0
Röbjörke Hydro Feb-21 Torsby, Sweden SE3/n/a 3.3 14.9
Väls Hydro Feb-21 Torsby, Sweden SE3/n/a 0.8 3.2
Torsby Hydro Feb-21 Torsby, Sweden SE3/n/a 3.1 13.2
Tvärforsen Hydro Feb-21 Torsby, Sweden SE2/n/a 9.5 36.9
Sutton Bridge Solar Mar-21 Somerset, England UK/ROC 6.7 6.7
Andover Airfield Solar Mar-21 Hampshire, England UK/ROC 4.3 4.2
Kingsland Barton Solar Mar-21 Devon, England UK/ROC 6.0 5.9
Bourne Park Solar Mar-21 Dorset, England UK/ROC 6.0 6.0
Laughton Levels Solar Mar-21 East Sussex, England UK/ROC 8.3 8.8
Deeside Solar Mar-21 Flintshire, Wales UK/FiT 3.8 3.4
Redbridge Farm Solar Mar-21 Dorset, England UK/ROC 4.3 4.2
Iwood Solar Mar-21 Somerset, England UK/ROC 9.6 9.3
New Rendy Solar Mar-21 Somerset, England UK/ROC 4.8 4.7
Redcourt Solar Mar-21 Carmarthenshire, Wales UK/ROC 3.2 3.2
Oakfield Solar Mar-21 Hampshire, England UK/ROC 5.0 4.7
Kerriers Solar Mar-21 Cornwall, England UK/ROC 10.0 9.7
RSPCA Llys Nini Solar Mar-21 Swansea, Wales UK/ROC 0.9 0.8
Commercial portfolio Solar Mar-21 Various, England and Wales UK/FiT 5.5 4.3
Commercial portfolio Solar Mar-21 Various, Northern Ireland SEM/NIROC 0.7 0.5
Bombardier Solar Mar-21 Belfast, N. Ireland SEM/ROC 3.6 2.8
Residential portfolio Solar Mar-21 Various, N. Ireland SEM/NIROC 13.1 10.1
Lemmån Hydro Jan-22 Älvadalen, Sweden SE3/n/a 0.6 2.6
Ryssa Övre Hydro Jan-22 Mora, Sweden SE3/n/a 0.7 2.6
Ryssa Nedre Hydro Jan-22 Mora, Sweden SE3/n/a 0.6 2.4
Rots Övre Hydro Jan-22 Älvadalen, Sweden SE3/n/a 0.8 2.8
Rots Nedre Hydro Jan-22 Älvadalen, Sweden SE3/n/a 0.3 1.4
Gabrielsberget Syd Vind AB Wind Jan-22 Aspeå, Sweden SE2/n/a 46.0 107.9
Vallhaga Hydro Jan-22 Edsbyn, Sweden SE2/n/a 2.6 12.8
Österforsens Kraftstation Hydro Jan-22 Edsbyn, Sweden SE2/n/a 1.5 11.5
Bornforsen 1 Hydro Jan-22 Edsbyn, Sweden SE2/n/a 0.7 2.9
Bornforsen 2 Hydro Jan-22 Edsbyn, Sweden SE2/n/a 1.4 9.3
Fridafors Övre Hydro May-22 Fridafors, Sweden SE4/n/a 2.3 10.0
Fridafors Nedre Hydro May-22 Fridafors, Sweden SE4/n/a 2.9 7.7
Hedvigsfors Hydro Oct-22 Sweden SE2/n/a 0.3 1.2
Gysinge Hydro Oct-22 Sweden SE3/n/a 0.3 2.5
Brattfallet Hydro Oct-22 Sweden SE3/n/a 0.5 3.7
Mölnbacka Hydro Oct-22 Sweden SE3/n/a 1.8 3.8
Värån Övre Hydro Oct-22 Sweden SE3/n/a 0.2 1.2
Värån Nedre Hydro Oct-22 Sweden SE3/n/a 0.2 1.2
Kristinefors Hydro Oct-22 Sweden SE3/n/a 0.1 0.7
Högforsen Hydro Feb-23 Sweden SE2/n/a 0.35 2.5
Gottne Hydro Feb-23 Sweden SE2/n/a 0.7 5.8
AEE Renewables UK 13 Solar Apr-23 Devon, England UK/ROC/FiT 5.6 5.6
Gloucester Wind Solar Apr-23 Various, England and Wales UK/FiT 1.1 .1.2
Hewas Solar Solar Apr-23 Various, England and Wales UK/FiT 2.0 1 .9
Penhale Solar Solar Apr-23 Surrey, England UK/FiT 0.3 0.4
Priory Farm Solar Farm Solar Apr-23 Suffolk, England Great Britain UK/ROC 3.2 2.5
Portfolio continued
Downing Renewables & Infrastructure Trust plc Annual Report | 24
Investment Technology Date Acquired Location
Power Market /
Subsidy
Installed capacity
(MW)
Expected annual
generation (GWh)
St Colomb Solar Solar Apr-23 Various, England and Scotland UK/FiT 0.8 0.6
Blåsjön Nat Grid Jul-23 Sweden SE2 n/a n/a
Mersey Shunt reactor Nov-23 United Kingdom UK/n/a n/a n/a
Bruket Hydro Dec-23 Sweden SE2/n/a 0.9 3.9
Nylandsån Hydro Dec-23 Sweden SE2 /n/a 0.55 1.6
Källsjön Hydro Dec-23 Sweden SE2 /n/a 0.25 0.7
Tunsjön Hydro Dec-23 Sweden SE2/n/a 0.25 0.6
Lagmansholm Hydro Dec-23 Sweden SE3/n/a 0.5 2.4
Urðarfellvirkjun Hydro Dec-23 Iceland IS/n/a 1.1 8.3
TOTAL AS AT 31 DECEMBER 2023: 202.9 424.2
Portfolio continued
Downing Renewables & Infrastructure Trust plc Annual Report | 25
Introduction
We are delighted with the progress made investing in the portfolio during the year. The Company
announced eight acquisitions in the hydropower, solar and grid infrastructure sectors totaling
£47 million, which support and strengthen the Company’s aim of diversification by technology,
geography, power market exposure and revenue. During the year GAV increased by 13% from
£310 million to £352 million and the expected annual generation of the portfolio grew by 11% from
382 GWh to 424 GWh. In addition, two non-generation assets were acquired, providing revenue
streams that are not derived from energy sales.
Acquisitions and Capital Deployment
Although we have focused on growing the core renewables portfolio, we have also prioritised our
strategic aim of reducing the proportion of the Company’s portfolio that is exposed to merchant
power prices through investment in grids and grid infrastructure projects. This is an attractive sector
for the Company and one which we believe has huge potential to unlock value.
We delivered further geographical diversification through the acquisition of the Company’s first
hydropower plant in Iceland, which also benefits from long term, fixed price, inflation linked
revenues through its power sales agreement. We believe that Iceland is an attractive market for the
Company, particularly given the long term offtake contracts available for generating assets.
A great deal of resource has been dedicated to upgrading the capabilities of the Company’s
hydropower portfolio, concentrating efforts on the area of the portfolio where the return on
investment has the potential to be highest.
Hydropower – Downing Hydro AB (“DHAB”)
DHAB is the vehicle through which the Group acquires and owns its portfolio of hydropower plants.
In January 2023, the Group acquired a 2.5 GWh hydropower plant in Högforsen, on the Gillerån
river, a tributary to the Indalsälven river in Sweden’s SE2 region. The plant was commissioned in
1915 and in 2011, the plant underwent a major renovation, including replacement of generator,
turbine and control system.
In March 2023, the Group acquired a 6 GWh hydropower plant in the municipality of Gottne,
located on the Moälven river, also in SE2. The plant underwent a major refurbishment in 2015.
In December 2023, the Group acquired a 7 GWh portfolio of four hydropower plants and a
reservoir located in the Bruksån tributary in Sweden’s SE2. The plants were originally built between
1890 and 1930, three of which were refurbished between 2008 and 2012. All four plants benefit
from meaningful reservoir capacity that allows for better water storage and management to
optimise production.
Also in December 2023, the Group acquired a 2.4 GWh hydropower plant in the SE3 pricing region
located on the Säveån river in south-west Sweden. It includes an upstream weir, which regulates
waterflow from a lake, enabling better resource management to improve energy production. The
hydropower plant was originally built in the 1930s but underwent extensive refurbishment in 2013.
This asset expands the existing portfolio into a new geographical area and river system, further
diversifying the portfolio across different water catchment areas.
Investment Manager’s Report
Downing Renewables & Infrastructure Trust plc Annual Report | 26
The above acquisitions increased the total number of DORE’s Swedish hydropower plants to 34 with
a total annual average production of c. 215 GWh. The new hydropower plants will be integrated into
the existing portfolio and will continue to support DORE’s highly diversified investment strategy,
designed to increase the stability of revenues and consistency of income to shareholders.
The acquisitions were accretive to NAV, due to operational and capital efficiencies resulting from
the integration of the assets into the Company’s platform. During the period, a £0.3 million increase
in NAV was recognised as the new investments were brought into the platform.
Iceland
The Company acquired its first Icelandic asset, an 8 GWh (1.1 MW) hydropower plant, located in
south-central Iceland. The Urðafellsvirkjun plant has been operational since 2018 and comprises
a powerhouse, penstock and dam facilities. Unlike the Swedish assets, where the freehold land
is owned, this asset has a lease agreement that secures the land and water rights for the next
65 years, with strong rights to extend. The useful life of the asset is valued over 30 years, noting
that the Swedish assets are perpetual.
Iceland has a unique energy market shaped by its abundant renewable energy resources, primarily
geothermal and hydroelectric power, making it one of the cleanest and most sustainable energy
markets globally. Energy-intensive industrial consumers have been drawn to Iceland due to its
ability to provide consistent and relatively low-cost electricity; causing Iceland to have the highest
per capita generation/ consumption of renewable energy in Europe. Similar to other European
countries, Iceland is actively progressing towards electrification for vehicles and the maritime
sector, further increasing future demand for electricity.
The Icelandic hydropower market provides an attractive investment proposition for the Company,
with electricity producers benefitting from 100% inflation-linked take-or-pay offtake arrangements
with no exposure to merchant power pricing for the duration of the offtake agreement. In the past
few years, power prices have been increasing in Iceland but remain relatively low compared to its
European peers providing upside opportunities.
The hydropower plant benefits from a Euro denominated inflation linked, 100% pay-as-produce
offtake agreement with HS Orka, the third largest electricity producer in Iceland, running until 2032.
Solar – Domestic Rooftop Portfolio
In April 2023, the Group acquired a portfolio of operational solar PV assets located in the UK for
a cash consideration of £12.6 million. The 13.0 MWp portfolio of two ground-mounted sites and
approximately 1,600 commercial and residential installations benefits from high levels of feed-in
tariffs and renewable obligation certificate subsidies running to 2037. As a result of acquiring these
assets, the proportion of revenue derived from subsidies within the solar portfolio has risen from
51% to 54%.
The new portfolio will increase the total number of DORE’s solar assets to c.4,800, with a total
annual average production of 100 GWh. The new portfolio benefits from high subsidies, equating
to c. £122/MWh during the year. In addition, it has benefited from high fixed power purchase
agreements, meaning during 2023 the average power price achieved was £105/MWh.
DORE will remain unaffected by the UK’s Electricity Generator Levy (“EGL”) following this acquisition,
with the Company having significant headroom in the EGL’s annual allowance.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 27
Grid infrastructure – Blåsjön Nät AB
In July, DORE acquired a Swedish Electricity Distribution System Operator (“DSO”), Blåsjön Nät AB
(“Blåsjön”), for £8.5 million. Blåsjön is a regulated electricity distributor, which delivers 16-18 GWh
per annum of electricity through medium and low voltage lines to its c.1,500 domestic and business
customers in Strömsund, northern Sweden.
The DSO grid network is a monopoly with very long-life assets (comparable to the lifespan of the
Company’s hydropower portfolio). It is a critical entity within the electricity supply chain that plays
a vital role in the efficient and reliable distribution of electrical power to end-users. The electricity
distribution system is the part of the power grid responsible for delivering electricity from the
generating powerplants to consumers, businesses, and industries at lower voltage levels.
Blåsjön’s grid network is 436km in length and comprises overhead lines, three primary and 161
secondary substations. Blåsjön operates a licensed monopoly in a highly regulated environment and
generates consistent and predictable cashflows that are not exposed to energy price fluctuations.
Long term revenues under the regulatory regime are linked to inflation and interest rates. Blåsjön’s
revenues are set by Energimarknadsinspektionen, the Swedish electricity market regulator to meet
a predetermined return on capital.
Grid infrastructure – Reactive Power
In October, the Group acquired Mersey Reactive Power, a UK-based, fully operational 200 MVAr
shunt reactor for a cash consideration of c.£11.0 million. It is located in Frodsham, Merseyside.
This grid infrastructure asset became operational in May 2022 and was the first project to go live as
part of the National Grid’s Stability Pathfinder initiative. Mersey Reactive Power further increases
the Company’s long term, inflation linked, fixed revenues, by virtue of its availability-based contract
with National Grid ESO which runs until 2031.
The project, which has an expected asset life of 40 years, supports the UK’s electricity system in
voltage management, providing reactive power to increase network resilience, reducing costs to
consumers and lowering carbon emissions.
Mersey Reactive Power supports the balancing of real and reactive power through a shunt reactor,
a piece of electrical equipment used in high-voltage electricity transmission systems. It is a passive
device, meaning it does not generate electricity itself but rather helps to regulate the flow of
electricity on the power grid.
Traditionally, reactive power services have been provided by large fossil fuel plants, but to support
the transition to low and zero carbon energy, new sources and providers of reactive power are
needed. The Mersey region has been identified as a key problem area for reactive power, an issue
which is expected by National Grid ESO to become more acute as fossil fuel generation assets
continue to be decommissioned across the network, positioning the Mersey project well for
the future.
Blåsjön and Mersey account for 6.5% of the portfolio’s annualised revenues, providing a steady
stream throughout the year with low seasonal variations.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 28
Market Development and Opportunities in the Frequency Regulation Markets
The outlook for the Company is very encouraging, given the strong operational performance of the
existing assets and eight new acquisitions signed in 2023, including the Company’s first two grid
infrastructure assets, which further diversify the portfolio.
The Investment Manager is focussed on deploying capital into areas of the portfolio where the
potential return on capital is the greatest. Accordingly, the Investment Manager is pursuing
opportunities to gaining access to the attractive Swedish Frequency Containment Reserve
(“FCR”) market by building out the hydropower plants into power generation stations through the
installation of add-on equipment and software. The Investment Manager has also been identifying
sites for the installation of battery energy storage systems (“BESS”), often located on land owned
by the hydropower portfolio, which will enable DORE to gain access to the Fast Frequency Reserve
(“FFR”) markets, thus creating additional revenue streams and increasing productivity of the site.
The FFR market requires instantaneous reactions to address immediate frequency deviations, while
FCR provides a slightly more gradual response to maintain overall grid stability. Both reserves play
crucial roles in ensuring reliable electricity supply.
The combination of an increasingly centralised operation system across the hydropower portfolio
and software and hardware upgrades will enable the Company to regulate its power production to
such an extent that it can bid to participate in the FCR markets. The storage capability of hydropower
plants acts in a similar but slower manner to that of a battery, allowing hydropower production to
be adjusted relatively quickly (up or down) to assist in stabilising the grid.
Downing LLP, a professional Asset Manager (the “Asset Manager”) has now upgraded hardware
and software at 20 hydropower sites to enable the additional functionality required to participate
in these markets, and it is now anticipated that the first of the Swedish hydropower plants will be
able to participate in Q2 2024.
Most of DORE’s hydropower plants can participate in the Frequency Containment Reserve for
Normal Operation (“FCR-N”) market with some assets also deemed suitable for the Frequency
Containment Reserve for Disturbances (“FCR-D”) market. This opens up the portfolio to new
revenue streams with limited capital investment requirement.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 29
Investment Manager’s Report continued
FCR-N Markets
FCR-D Markets FCR-D Markets
Participants in FCR-N markets are paid per
MW per hour of participation with no
impact or limited impact on generation
FCR-N markets operate within
frequencies of 49.9 to 50.1 hertz
(production is gradually adjusted to
remain within this band)
FCR-D market
participants are paid
an availability
payment with minimal
impact on generation
When the frequency drops
below / above 49.9 and
50.1 hertz, the FCR-D
market participants are
activated for up to 20 mins
Limited supply in the FCR / FFR markets, combined with increased underlying demand resulting
from an increased share of intermittent generation in the electricity system, has created high FFR
and FCR prices, making the Swedish market particularly attractive.
The graph below shows the price achieved per MW per hour sold in the FCR markets.
0
10
20
30
40
50
60
70
80
90
1H 2021 2H 2021 1H 2022 2H 2022 1H 2023 2H 2023
FCR-D Up
FCR-N
FCR-D Down
Average
Source: mimer.svk.se
The Investment Manager has estimated the additional value of the revenues from the FCR-N and
FCR-D markets at 4-5% of the net asset value of the hydropower portfolio. Given the advanced
status of the programme, approximately 50% of this value is now reflected in the valuation of the
hydropower portfolio at 31 December 2023.
Downing Renewables & Infrastructure Trust plc Annual Report | 30
A project is also underway to register the Swedish windfarm Gabrielsberget Syd Vind AB for manual
Frequency Restoration Reserve (“mFRR”) in the Nordics. To enable this, the Asset Manager is
upgrading the current hardware onsite to allow for remote power down and this project is expected
to be complete in Q2 2024. No value has been included in the valuation of the Swedish windfarm
for potential future mFRR revenues.
Portfolio Performance
For the year to 31 December 2023, the 4,866 core renewable energy assets produced approximately
396 GWh of renewable electricity. Operating profit increased 27% and generation increased 21%
in the year.
From a financial perspective, the portfolio generated an operating profit of £24.7 million
8
, which was
below expectations. Operating profit variance was primarily caused by low electricity prices across
the Nordics resulting from high levels of hydropower generation in the region during a particularly
wet summer, combined with low demand from the European market where there has been high
levels of gas storage throughout the year. This had a direct impact on the revenues generated by
the wind and hydropower portfolios.
Contributions to operating profit from the underlying technologies varied. Operating profit across
the solar portfolio exceeded expectations at £16.9m, driven by strong Renewable Energy Guarantee
of Origin (“REGO”) pricing. Generation from the solar portfolio was 95 GWh across the year and was
moderately impacted by proactive interventions to replace and / or upgrade electrical equipment
across several ground mount sites. Examples of these projects include replacing PV connectors
and panels and a full inverter repowering project in Andover. These workstreams completed during
the period now position the portfolio well for improved technical performance going forwards. As
previously reported the dynamic spare parts strategy implemented in 2022 continues to support
the solar portfolio in mitigating the risk of downtime through prolonged equipment lead times.
Operating profit for the hydropower portfolio was £5.8m, which was lower than expected, despite
generation being broadly in line with expectations at 194 GWh. This was driven by power prices
in Sweden (which started the year at relatively high levels as a result of the invasion of Ukraine)
reducing to more normalised levels more quickly than expected. Operational performance was
broadly in line with expectations in the wind portfolio, with generation at 106 GWh. Operating
profit was £1.0m, also below budget for the same reasons as the hydropower portfolio.
Investments in new technologies during the period brought additional revenue streams to the
portfolio. The grid infrastructure assets had an operating profit of £1m, which was in line with
expectations. The UK grid stability asset, Mersey, performed very well during the period, driven
by strong availability, enabling the asset to benefit from its fixed revenue contract to provide a
reactive power stabilisation service to the National Grid. This was offset by the Swedish electricity
distribution grid, Blåsjön, incurring excess costs for storm damage repairs. Costs were also incurred
for grid and land works required to set up new customer connections, the benefit of which will be
reaped in future periods.
Investment Manager’s Report continued
8
Based on underlying spv management accounts
Downing Renewables & Infrastructure Trust plc Annual Report | 31
Operating Profit Expected vs Actual
0
5,000
10,000
15,000
20,000
WindSolarHydroElectrical Grid
Actual
Expected
(£’000)
Generation Expected vs Actual
0
50000
100000
150000
200000
WindSolarHydro
Actual
Expected
(MWh)
2023 2022
Hydro Wind Solar
Grid/Grid
Stability Total Hydro Wind Solar
Grid/Grid
Stability Total
GWh generated 194.2 105.8 94.7 N/A 394.7 128.3 108.0 89.9 N/A 326.3
Average price per MWh €55.98 €30.60 £216.0 N/A £49.0 €72.9 €29.9 £65.5 N/A £51.0
Revenues (£m) 9.5 3.3 21.5 2.0 36.3 8.2 3.1 15.4 N/A 26.7
Operating profit (£m) 5.8 1.0 16.9 1.0 24.7 6.0 1.0 12.5 N/A 19.5
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 32
Portfolio and Asset Management
The Investment Manager has continued to invest and strengthen its capabilities, with seven
additional hires during the period. The 31 strong team is located in offices in London, Stockholm
and Glasgow, where the skill set and expertise spans a broad range of specialisms such as power
markets, engineering, data analytics, finance, and commercial management.
The asset management team works in parallel to the investment team and ensures work is started
long before an asset is acquired. Prior to any acquisition being completed, the asset management
team carries out a comprehensive onboarding process to ensure that new assets are transitioned
smoothly into the wider energy portfolio resulting in an optimised performance from that asset
from day one of ownership.
The onboarding captures all key milestones that need to be completed as part of the transition,
including the collection of key documents such as project contracts and design documents, and the
assets are embedded into existing processes, such as contract management and compliance, incident
tracking, monitoring, and reporting. Assets are fully incorporated within the asset management
team’s portfolio reporting systems within 60 days of completion of an acquisition.
This dynamic onboarding process not only enables a smooth transition of new assets but is also
critical in supporting the team’s data led approach to asset management. By focussing on the
collection and quality of the portfolio data set and deploying the latest technologies and tools,
the team of data analysts have been able to deploy the latest technologies and tools to optimise
strategies such as preventative maintenance or water dispatch to increase power generation and
therefore returns to investors.
The effectiveness of having such a dynamic and efficient onboarding process was demonstrated
during the period as the asset management team onboarded two new grid technologies. As a
result of well-established systems and processes, the asset management team quickly completed
onboarding and have now fully incorporated these new technologies into normal operations and
existing systems.
Optimisation
During the period, the asset management team continued to develop and implement performance
and proprietary data optimisation strategies, the latter enhancing Downing’s data driven approach
to asset management.
Significant progress has been made on the previously reported hydropower digitalisation project.
Four pilot hydropower sites were successfully connected to a centralised control and data system
and performance of these sites can now be remotely monitored and controlled. Furthermore, the
sites are now being integrated into GPM software, which will allow extended analytics and insights
and mark the completion of the pilot project. This will also enable the Asset Manager to use real-
time data on reservoir levels and flow rates, alongside the Optimal Price Analysis tool to make
flexible decisions on optimal periods of generation. Given the success of the pilot projects, the
digitalisation programme is now being rolled out across the balance of the hydropower portfolio.
The asset management team has undertaken several optimisation projects to replace and improve
technical equipment within the UK ground-mounted solar portfolio. Having recognised a systematic
issue with inverters at one 4.3 MW site, the asset management team successfully replaced all
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 33
200 inverters during the period, with old inverters now kept in stock as spare parts. Inverters at
five additional sites were upgraded during the period to improve heat dissipation which will reduce
failure rates and downtime in the future. The asset management team has also been active in
pursuing a number of warranty claims against panel manufactures where systematic panel defects
exist. So far these claims have been successful at two sites where 100% of panel connectors have
been replaced by the manufacturer.
Ongoing active power price management ensures revenues are optimised in the UK and Nordic
markets. This included the forward sale of REGO and Guarantee of Origin (GOO) certificates which
will enable the portfolio to benefit from the current strong market pricing of these certificates and
fix strong and stable revenues for several years into the future.
Health and Safety
The health and safety of contractors and the public is a fundamental part of management processes.
Throughout the period, the Investment Manager maintained a range of workstreams in line with
the Company’s approach to Health and Safety management and continued to actively review the
approach to ensure continuous improvement.
Following the investment in Blåsjön, a Swedish Electricity Distribution System Operator delivering
electricity to c.1,500 domestic and business customers, the Investment Manager has undertaken
a thorough review of operational procedures which confirmed adherence to Swedish Standard
Electrical Safety Guidelines (ESAs) procedures for the asset. The asset runs at a significant distance
through rural mountainous areas of Sweden where access is often difficult and requires specialist
vehicles such as snowmobiles. To enhance contractor safety and optimise grid stability in the case
of cables impacted by adverse weather conditions, a phased programme is underway to upgrade
the isolation methods of overhead cables.
A rolling programme of Health and Safety audits continues across the portfolio. These audits are
based on a two-tier approach, where risks and procedures are audited at the site level and the
operator level. Downing has a process of continuous assessment and feedback of site and operator
practices, ensuring effective 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 effective communication,
escalation, and management of incidents.
Financing and Capital Structure
The Company, through its subsidiary DORE Holdco Limited adopts a prudent approach to leverage.
Its objective is that each asset will be financed appropriately for the nature of its underlying
cashflows. Long-term debt may be used where appropriate at the SPV level to facilitate acquisitions,
refinancing, capital expenditure or construction of assets.
Total long-term structural debt will not exceed 50% of the prevailing Gross Asset Value. At
31 December 2023, including project level financing, the Company and its subsidiaries’ leverage
stood at 40%.
In addition, the Company and/or its subsidiaries may also make use of short-term debt, such as a
revolving credit facility, to assist with the acquisition of suitable opportunities as and when they
become available.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 34
Revolving Credit Facility
As at 31 December 2023, the Group had entered into a loan agreement through its main subsidiary
DORE Hold Co Limited for a £25 million RCF with Santander UK plc. The RCF is available until
December 2025, with the possibility to be extended for a further year. On 26 January 2023, the
Company announced that the RCF had been increased to £40m further facilitating the execution
capabilities of the Company’s pipeline. As at 31 December 2023, the total drawn amount under the
RCF was £18.6 million.
The terms of the RCF now includes a ‘Green Projects’ initiative, operating under the Loan Market
Association’s (LMA) Green Loan Principles, a framework of market standards and guidelines that
provides a consistent methodology for use across the green loan market.
Under the ‘Green Projects’ criteria, the RCF can only be used in connection with assets that
present environmental benefits and appropriate green credentials. The RCF is available to be
drawn for the funding of investments and working capital requirements. Additional monitoring and
reporting obligations on the environmental benefits delivered by such assets will be required, which
comfortably aligns with DORE’s current investment strategy as an Article 9 fund.
The RCF has the additional benefit 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”) or Euro Interbank Offered Rate (“EURIBOR”) plus 2.25% per annum.
Refinancing of Hydropower Assets
The Group initially acquired DHAB, its Swedish hydropower portfolio, on an unlevered basis in
February 2021, shortly after the Company’s IPO. Given the strong transaction pipeline and
ongoing capital expenditure requirements, DHAB entered into a seven-year bullet repayment
EUR 43.5 million debt facility with SEB, a leading corporate bank in the Nordics.
In December 2023, the SEB facility was increased from EUR 43.5 million to EUR 68.5 million to
fund future capital expenditure requirements and further acquisitions. The total all-in cost of the
drawn debt for 2024 is c. 3.3%, benefitting from swaps until end of 2033.
As of 31 December 2023, DHAB has drawn down EUR 49.4 million under the facility, predominately
as source of funding for acquiring further hydropower plants in Sweden during 2023 but also to
fund some of the capital expenditure in DHAB.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 35
UK Solar Portfolio
Long term amortising debt (September 2034 maturity) is in place for the UK solar portfolio and, as
at 31 December 2023, comprised outstanding principal amounts of £68.3 million lent by Aviva and
£10.5 million lent by institutional investors managed by Vantage Infrastructure.
Approximately 12% of this debt is nominal with a fixed interest rate of 3.37%. The interest rate is
fixed in real terms on the remaining balance at 0.5%. The debt service of this larger debt tranche is
inflation-adjusted, with indexation tracking UK RPI.
A summary of the debt across the portfolio (excluding the RCF) can be found in the table below:
2023 2022
Hydro Wind Solar
Grid
infra-
structure
Working
capital Total Hydro Wind Solar
Grid
infra-
structure
Working
capital Total
Equity value (£’m) 111.5 27. 2 68.1 19.6 4.3 230.7 103.0 26.4 62.6 n/a 26.9 218.9
Debt (£’m) 42.8 0.0 78.7 0.0 0.0 121.5 23.0 0.0 68.5 n/a 0.0 91.5
GAV (£’m) 154.3 27.2 146.8 19.6 4.3 352.2 126.0 26.4 131.1 n/a 26.9 310.4
Foreign Exchange
The Group’s generating assets in Sweden earn revenues in EUR and incur some operational cost
in SEK. Blåsjön revenues and costs are in SEK. From 1 March 2024, Urðafellsvirkjun’s revenues
exposure is Euro. Assets in UK operate entirely in sterling.
The Group, together with its foreign exchange advisor, has developed and implemented its foreign
exchange risk management policy in line with the Prospectus. The policy targets hedging the short to
medium-term distributions (up to five years) from the portfolio of assets (that are not denominated
in GBP) on a “linear reducing basis”, whereby a high proportion of expected distributions in year
one are hedged and the proportion of expected distributions 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 profile.
In total, 46% of the Group’s EUR dividend receipts from SPVs out to March 2027 were hedged as
at the reporting date. In addition, 54% of the Group’s EUR denominated NAV is hedged.
Dividend hedges
0
10
20
30
40
50
60
70
80
90
2027202620252024
Percentage of EUR denominated
dividend receipts
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 36
Power markets and exposure
Through its portfolio companies, the Group adopts a medium to long-term power price hedging
policy for its generation assets, providing an extra degree of certainty over a portion of the Company’s
cash flows. The fixed price generation position for the portfolio as of 31 December 2023 is set out
in the chart below, showing the benefits of the combination of subsidy and fixed income from
power sales. The hedging positions are continuously reviewed to ensure an appropriate position is
maintained and new hedges are taken out as appropriate.
The war in Ukraine will continue to have a major impact on power prices in Europe and the UK where
gas supply is dominated by Russia. Consequently, the UK gas and UK power markets are likely to
stay volatile as long as the uncertainty about the Russian gas supply continues. The Company is
well-protected from this volatility, due to its high level of fixed pricing over the short to medium
term, which can be seen in the chart below.
Power Prices – Fixed vs Merchant
Nordic power market
The Nordic power market was dominated by the falling gas and power prices on the continent, a cold
spell resulting in demand increase and a delayed spring flood. Prolonged outages with Swedish and
Finnish nuclear facilities also contributed. Consequently, the market remained volatile, albeit less
volatile than for the last quarter of 2022. The variability in wind generation added to the volatility
on the spot market. The news about the cracks in some the French nuclear facilities also resulted
in some bullish news for the Nordic power markets at the end of March. The latter part of Q1 and
the beginning of Q2 saw a cold snap in the Nordic regions. The weather then became warmer than
is seasonally typical by the end of May, which resulted in the delayed spring flood and sudden hydro
inflows at approximately twice the seasonal average. The high hydro levels combined with high
wind and PV solar generation lead to very low (sometimes negative) spot prices across the Nordics
and Europe. In June, prices increased due to high continental temperatures and lower precipitation,
combined with reduced French nuclear availability and low renewable generation. However, prices
decreased again in Q3 due to high precipitation. The spot market occasionally traded at negative
prices because of low demand and high wind generation.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 37
€-
€
100
€200
€300
€400
€500
Nordic forward Cal 2026
Nordic forward Cal 2025
Nordic forward Cal 2024
Nordic Spot
€/MWh
Jan-21 Apr-21 Jul-21
Nordic forward Cal 2024 Nordic forward Cal 2025 Nordic forward Cal 2026Nordic Spot
Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23 Apr-23 Jul-23 Oct-23
UK power market
Weather and LNG supply dominated the evolution of forward power prices in the UK throughout the
year. Prices gradually came down from the previously reported extreme highs in September 2022.
Power prices are now trading below the levels of just before the Ukraine war but still higher than the
longer historical price range. The market witnessed a number of mini rallies due to industrial action
in France, news about potential new cracks in French nuclear power plants, extreme temperature
spikes on the continent in the Summer and news about potential supply issues in the gas markets.
As cold weather combined with signs of tightness in physical supply, National Grid ESO ordered
three coal-fired units to be readied for production. Potential gas supply issues included North Sea
gas outages, threats to global gas supply due to potential industrial actions from Australian LNG
workers and rising maintenance restrictions. These mini rallies were short lived, however, as overall
gas reserves have been high due to a relatively mild winter and relatively wet summer, pushing
prices down.
UK Win 24 UK Sum 25
UK Win 25 UK Sum 26 UK Sum 26
UK Spot
UK Sum 24
£-
£
100
£200
£300
£400
£500
£600
£700
UK Win 26
UK Sum 26
UK Win 25
UK Sum 25
UK Win 24
UK Sum 24
UK Spot
£/MWh
Jan-21 Jan-23 Apr-23 Jul-23 Oct-23Jan-22 Apr-22 Jul-22 Oct-22Apr-21 Jul-21 Oct-21
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 38
Dividends
The Company achieved a cash dividend cover of 1.21x post debt service and 1.78x before debt
service for dividends of 5.285 pence per share paid during the year. Cash dividend cover has been
calculated on a cash basis of income received by the Company and its immediate subsidiary.
The Board has resolved to pay the Company’s fourth interim dividend of the year of 1.345 pence
per share, equivalent to £2.4 million, in respect of the three months to 31 December 2023. This will
bring total dividends paid in respect of the financial year to 5.38 pence per share, which is in line
with the Company’s dividend guidance. The fourth interim dividend is not reflected in the accounts
to 31 December 2023.
The Company has chosen to designate part of each interim dividend as an interest distribution 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 distribution element of
this dividend. This will result in a reduction in the corporation tax payable by the Company.
Dividends in respect of the financial year to 31 December 2023 are as follows:
For the Period Ended
Dividend
Paid
No. of
Shares
Total
Dividend
(pence per
share)
Interest
Element
(pence per
share)
Dividend
Element
(pence per
share)
March 2023 June 2023 184,587,487 1.345 0.875 0.470
June 2023 September 2023 183,919,987 1.345 1.076 0.269
September 2023 December 2023 181,411,624 1.345 1.143 0.202
December 2023 March 2024 180,247,124 1.345 1.009 0.336
The Company intends to continue 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.
The target dividend for the year from 1 January 2024 has been increased by 7.85% to 5.80 pence
per ordinary share. On a 3 year average basis, future dividend cover is expected to exceed 1.35x.
Net asset value and Portfolio Valuation
The Company’s NAV decreased by 3.1% during the year from £218.9 million to £212.1 million.
The NAV movement comprised a positive contribution of £11.5 million from valuation gains, offset
by dividends and share buybacks of £13.8 million combined, and management and other costs of
£4.5 million.
At a per share level, the effect of the share buyback was to increase the NAV per share by 0.6p,
partially offsetting the overall NAV per share decrease of 0.8% from 118.6 pence per share to
117.7 pence per share as at 31 December 2023.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 39
The bridge below shows the movement in NAV during the period, with each step explained further
below.
NAV Movement Bridge
NAV (£'m)
Opening NAV
(1-Jan-23)
Closing NAV
(31-Dec-23)
Performance
Power Curve
Contractual improvements
FX and Other
Dividend
Share buybacks
Management Fee
Inflation
Discount
Rate
FV uplift relating
to new investments
Acccessing new
revenue streams
Other Costs
and Charges
118.6p
218.9m
8.7p
16.0m
-17.8m
-9.6p
-1.6m
-0.9p
-0.5m
-0.3p
-9.7m
-5.3p
-4.1m
0.6p
-2.0m
-1.1p
-2.5m
-1.4p
117.7p
212.1m
0.6p
1.1m
1.6p
3.0m
1.7p
3.1m
4.4p
8.2m
190
195
200
205
210
215
220
225
230
235
240
Opening
Represents the NAV at 31 December 2022.
Performance
1
Represents the difference between the expected performance, and actual performance of the
portfolio companies throughout the year.
Power Prices
1
The Group uses long-term, forward-looking power price forecasts from third party consultants for
the purposes of asset valuations. In the UK an equal blend is taken from the most recent central
case forecasts from two leading consultants, whilst in Sweden an equal blend is taken from the
most recent central case forecasts from three leading consultants. This is then blended with actual
pricing for forward market trades for the next four years in Sweden and the next three years in
the UK enabling a more holistic view of the power market to be included in the valuation. Where
fixed price arrangements are in place, the financial model will reflect this price for the relevant time
frame. The impact of our short-term power hedging strategy is also included in this step.
Investment Manager’s Report continued
1
This is a component of the Fair Value of Investment.
Downing Renewables & Infrastructure Trust plc Annual Report | 40
The power price forecasts that are used in the valuations are set out below, alongside a comparison
against the last reporting period.
!!!!!
!!!!!
!!!!!
!!!!!
!!!!!
!!!!!
!!!!!
!!!!!
Inflation
1
2023 inflation forecasts were revised during the period reflecting the increasing rate of inflation
and in line with government forecasts.
The Group is now using the near-term (calendar year 2024) inflation forecast of 3.46% for the
purposes of UK asset valuations, falling to a medium-term inflation forecast of 3.00% from 2025.
From 2030 onwards, this forecast reduces to 2.25% in line with the RPI reform announced by the
UK Government.
A near-term inflation (calendar year 2024) forecast of 4.60% is used for the Swedish asset valuations.
The forecast in the medium term (2025 onwards) to long term reduces to 2.00%, in line with the
long term Swedish central bank’s target inflation rate.
Models are also updated quarterly to reflect actual inflation to date.
Discount rate
1
Discount rates used for the purpose of the valuation process are representative of the Investment
Manager’s and the Board’s assessment of the rate of return in the market for assets with similar
characteristics and risk profile.
As a result of movements in the risk-free rate in the UK, the weighted average discount rate of the
levered and unlevered Solar portfolio increased by 0.2% to 8.0%. The increased discount rates took
effect as at 30 June 2023.
Discount rates in use across the portfolio range from 6.3% to 8.05%, with the weighted average
value at 7.7%.
Acquisitions
1
The difference between the original cost of an investment and the revaluation of that investment
throughout the year.
Accessing new revenue streams
1
Net present value of 50% of budgeted FCR revenues on the hydro portfolio after significant progress
has been made in the hardware and software upgrades to participate in the FCR markets.
Investment Manager’s Report continued
1
This is a component of the Fair Value of Investment.
Downing Renewables & Infrastructure Trust plc Annual Report | 41
Contractual Changes
1
Reflects changes to underlying valuations as a result of changes to operational contracts (such as
insurance).
FX and Other
1
The impact of foreign exchange movements on underlying investment valuations. The impact of the
foreign exchange hedging activity is included in this movement.
Cashflows from assets that are generated in a non-sterling currency are converted in each period
they are earned using the actual hedges in place, with the residual amounts converted at the
relevant exchange rate.
The relevant exchange rate is taken from a forward curve provided by the Company’s foreign
exchange advisors for ten years, at which point the exchange rate is held constant due to the
impracticalities of hedging currency further into the future.
Other reflects changes to the underlying valuations as a result of changes to long term capital
expenditure assumptions and long term debt pricing, along with other minor changes including
increases relating to improved spot rates and impact from increasing the size of the facility.
Dividends
Distributions paid by the Company in the period.
Share buybacks
This is the cost of repurchasing shares in the market.
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 Limited, in its
normal operations. No transaction costs are included.
Asset life
Where the land is owned by an external landlord, which is the case for the UK solar, Icelandic Hydro
and Swedish wind assets, asset operations have been modelled to the earlier of the expiry of the
planning or permit, and the lease agreement. As well as these factors, life assumptions are also
capped at the useful economic life of the specific equipment installed on site.
As such, a useful economic life of 30 years is assumed for the Swedish wind portfolio commencing
2010.
An average useful economic life of 25 years is used for the UK solar portfolio. It is noted that over the
last few years the market has started to assign economic value to years 25-40 for solar assets, where
lease and planning arrangements allow. Downing has and will continue to explore opportunities with
Investment Manager’s Report continued
1
This is a component of the Fair Value of Investment.
Downing Renewables & Infrastructure Trust plc Annual Report | 42
local councils and landlords to extend existing planning permissions and lease agreements. In several
cases this has been successful and extensions to planning permission have been granted.
Where the land is owned with the asset, which is the case for the Swedish hydro assets, there are
no constraints in terms of lease agreements that need to be considered in the valuation. Also, due
to the nature of hydro as an asset class, the assets have a very long life assuming an appropriate
level of capex to maintain the equipment and dams etc.
Portfolio Valuation sensitivities
The NAV reflects the fair market valuation of the Company’s portfolio based on a discounted cash
flow analysis over the life of each of the Group’s assets plus the cash balances of the Company and
its holding Company and other cash and working capital balances in the Group.
The portfolio valuation is the largest component of the NAV and the key sensitivities to this
valuation are considered to be the discount rate and the principal assumptions used in respect of
future revenues and costs.
A broad range of assumptions are used in the Company’s valuation models. These assumptions are
based on long-term forecasts and are generally not affected by short-term fluctuations in inputs,
whether economic or technical.
The Investment Manager exercises its judgement and uses its experience in assessing the expected
future cash flows from each investment.
The impact of changes in the key drivers of the valuation are set out below.
Discount Rate
The weighted average discount rate of the portfolio at 31 December 2023 was 7.7%.
The Investment Manager considers a variance of plus or minus 1.0% is to be a reasonable range of
alternative assumptions for discount rates.
Energy Yield / Availability
For the solar assets, our underlying assumption set assumes the so called P50 level of electricity
output based on reports by technical advisors. The P50 output is the estimated annual amount of
electricity generation that has a 50% probability of being exceeded and a 50% probability of being
underachieved.
For hydropower assets, the expected annual average production is applied to the valuation, similar
to the P50 assumption applied to solar and wind assets. Given the long operational record of the
hydropower assets, the annual production forecast is derived from historic datasets and validated
by technical advisors.
Grid infrastructure assets do not generate energy. For Mersey, a shunt reactor, availability is used
as a comparable sensitivity. Blåsjön is not dependent on availability, as the regulator sets the total
revenue cap and therefore its result does not vary in this sensitivity.
The Energy Yield sensitivities uses a variance of plus or minus 5% applied to the generation.
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 43
Price
The power price sensitivity assumes a 10% increase or decrease in power prices relative to the base
case for each year of the asset life.
While power markets can experience volatility in excess of +/-10% on a short-term basis, the
sensitivity is intended to provide insight into the effect on the NAV of persistently higher or lower
power prices over the whole life of the portfolio, which is a more severe downside scenario.
Grid infrastructure assets do not generate energy and are therefore not reliant on power prices.
Mersey is reliant on a contract with National Grid which is currently in place until 2032. After this
agreement expires the price is unknown; pricing after 2032 has been sensitised relative to the
base case. Blåsjön is reliant on the WACC assumption which is set by the regulator and drives the
regulatory cap. The WACC assumption can be used as a comparable sensitivity for pricing.
Inflation
The Company’s inflation assumptions are set out above. A long-term inflation sensitivity of plus
and minus 1.0% is presented below.
Foreign Exchange
The Company’s foreign exchange policy is set out above. A sensitivity of plus and minus 10% is
applied to any non-hedged cashflows derived from non-sterling assets. The Company will also try
to ensure sufficient near-term distributions from any non-sterling investments are hedged.
Negative directional change to assumption
(15.00) (10.00) (5.00) 0.00 5.00 10.00 15.00
Discount rate (+/- 1%)
Inflation (+/- 1%)
Generation (+/- 5%)
Power prices (+/- 10%)
FX (+/- 10%)
NAV Movement (PPS)
Positive directional change to assumption
Investment Manager’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 44
Sustainability and Responsible Investment
As an active owner of renewable energy assets, our investments naturally contribute to
climate change mitigation by reducing the greenhouse gas emissions from burning fossil
fuels to generate power.
There was some manoeuvring in reverse gear over 2023 on commitments to decarbonise
in the UK, Germany and elsewhere, such as over dates for full implementation of EVs and
air source heat pumps. Perhaps this is understandable as policymakers have a tight space to
move in: a century of fossil fuels (still 80% of power), the need for energy security in home
and industrial settings and the fact that netting to zero carbon will not be cheap. Nonetheless,
DORE’s portfolio companies help to facilitate the UK, Sweden and Iceland in achieving their
aims of net zero and furthers related green energy strategies.
The deployment of current renewable energy technologies has continued in DORE’s 2023
financial year. Positive signs are being seen in the wind sector, in which DORE is starting
to see increased capacity plans, and for battery storage which complements renewable
energy’s intermittency. Major power utilities are decarbonising, with emissions reduction
targets, green capex, lobbying, and ESG disclosure becoming more and more common.
Big oil companies continue either researching or constructing facilities for carbon capture,
utilisation and storage, not least because this offers a future revenue source in a greener
world. However, there exist counterweights to these developments. There are delays and
problems in permitting for renewable installations and grid connectivity, with appreciation of
this in 2023, but no real action yet taken to address them.
DORE delegates the day-to-day management of its portfolio to the Asset Manager. In April
2023, the Asset Manager signed up to the Net Zero Asset Managers initiative along with
301 other signatories with a combined assets under management of $59 trillion. The recent
progress update from the Climate Change Committee “CCC” to help the UK government
is prescient. It expects shifts towards actual implementation – including renewables, heat
pumps, hydrogen, and carbon capture – in order to meet stated targets and carbon budgets.
Returning to policy and elections, political and economic factors can clash with climate
science and recommendations for policymakers – not just for the CCC but as the UN’s
Intergovernmental Panel on Climate Change also encounters at each year’s COP (at Dubai
certainly and likely the same for Baku later this year). Whichever temperature target is agreed
upon, renewable power plays a central role.
The Asset Manager has a robust process for identifying and managing both ESG risk and
opportunity through our sustainable investment approach. This includes:
i. the identification of material factors given the type of infrastructure asset;
ii. detailed assessments for deals, referencing guidance from the Global Real Estate
Suitability Benchmark (GRESB), Taskforce for Climate Related Financial Disclosures
(TCFD), Sustainability Accounting Standards Board (SASB), and the Sustainable Finance
Disclosures Regulation (SFDR); A new section on the Asset Manager’s ESG scorecards
looks at the social impacts of infrastructure, and ‘green collar’ workers.
iii. discussion and governance at investment committee;
Downing Renewables & Infrastructure Trust plc Annual Report | 45
iv. a list of sustainability actions for asset management. These include reporting emissions
consumed, planning for biodiversity and engaging with suppliers and communities.
ESG scorecard assessments were carried out on DORE’s assets at inception (ii above), which
provided insights on performance and areas to improve (iv).
For carbon management, as with many other investors, DORE’s main focus for the first half
of this decade is data. Greenhouse gas emissions are already reported. With new data and
models, the Asset Manager has begun looking at the embodied lifecycle carbon of existing
wind, solar and hydro assets.
Following investment, DORE is an active owner. The Asset Manager monitors the portfolio’s
emissions – made and avoided – and other ESG credentials, such as jobs created and
biodiversity impacts.
Land management in Sweden
Biodiversity/Nordic land management
DORE has previously committed to identify, refine and optimize its contribution to target
15 of the UN Sustainable Development Goals (Life on Land). As reported in the Company’s
interim report, ecological surveys were conducted during the summer on its Swedish land
holdings. During the surveys it was established that the Company is currently managing some
high value habitats with important biodiversity. These habitats include old deciduous forest,
nature conservation area and grasslands. Within the owned land, 20 ancient monuments or
possible ancient monuments were also identified: from stone age ruins, border marks, bridges
and roads. The majority of the managed land is forested area, with coniferous production
forest accounting for 57% of all the habitats the Company own and manages.
As previously reported, optimization suggestions have been received on a site by site basis.
The suggestions can be categorized into three main areas:
> To diversify the age of the habitats through selective forestry in order to allow different
species to thrive
To let habitats freely develop
>
To limit the extent of invasive species and lower quality habitats
During 2024 the Asset Manager will refine an ecological optimisation plan which can be
rolled out in the coming years. When creating this plan, there are some key considerations
that need to be taken into account. For example, dam safety will always be the first priority in
the management of hydropower sites; free habitat development can be enabled as long as it
doesn't affect the functionality and safety of the hydropower activities. Other considerations
such as carbon footprint will also be taken into account, as detailed below.
Sustainability and Responsible Investment continued
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Carbon uptake – an informant for sustainable land management
When making land management choices, we strive to consider multiple perspectives and
understand the impact of those decisions on both local biodiversity and the climate. During
the period the Company commissioned and assessment of carbon storage on the c.630 acres
of land owned in Sweden, establishing a new angle of insight to inform responsible choices in
land management.
The Company’s Swedish land is assessed to be a net carbon sink, with a total net movement
value of c.-0.061 tCO2eq/ha/yr. This means more carbon is stored than released and therefore
having an overall positive impact on the climate. This characteristic is a function of the land
and the state in which DORE acquired it but understanding this data will help support future
decision making around the use of the land.
The map below shows the net carbon storage position across the land owned in Sweden. As
indicated by the map key, green circles represent the highest uptake, whilst red and orange
represent areas where the ground is releasing more carbon. The majority of our land areas are
yellow, indicating that in most areas the uptake is just slightly higher than the release. In these
yellow areas, we are content that a focus on maintaining thriving native and natural habitats is
an an important aspect of mitigating climate change and optimizing carbon absorption.
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Carbon uptake – an informant for sustainable land management continued
Figure 1 – a map showing all the Swedish properties owned by the Company. Coloured circles
are showing the net carbon storage for each property, with green circles representing the
biggest uptake and orange and red circles indicating a bigger release of carbon than uptake.
The total sums to the total net value of c.-0.061 tCO2eq/ha/yr, as noted above.
Sustainability and Responsible Investment continued
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Biodiversity and habitats by the Mölnbacka hydropower plant
During 2023, the Company acquired the 1.8 MWp hydropower plant, Mölnbacka, located in
western Sweden. The areas surrounding this power plant are included in an agreement between
the Company and the County Administrative Board to protect the cultural and ecological values
in the area. These include:
> An area with coniferous forest mostly consisting of oak and birch, with some of the oaks
estimated to be c. 700 years old. Ecologically important forest structures like hollowed trees
and diversity in age of the trees can be found. This provides good shelter for birds and other
animal species.
> The biggest and most developed terminal moraine area in the municipality covering a length
of 3.4 km. This forms an ecologically important record of the glacial debris and withdrawal.
>
Meadowed areas with older oaks and high biodiversity in the field, which enables insects,
butterflies and bird species in the area to find both nourishment shelter and living habitat.
In a part of Sweden where production forests take up a big part of the landscape, these areas
are incredibly valuable for both plants and animals and their further development. Plants that
can be found in the meadows around this power plant are cow parsley, bluebells and germander
speedwell. The species beach violet is also found, which is categorized as vulnerable in the
Swedish Redlist. These plant species serve as an important food source for pollinating insects.
The water running through this area is creating a moist landscape which is favorable to many
different lichen and moss species. A local biologist has also spotted traces of otters, wolverines
and lynx by the water line. The yellow-hammer has also been spotted in the area in the wintery
landscape. This species is categorized as nearly threatened in the Swedish Redlist.
Sustainability and Responsible Investment continued
Picture by Jan Bengtsson – a yellowhammer
Downing Renewables & Infrastructure Trust plc Annual Report | 49
Enhancing the land around our renewable energy sites: Båthusströmmen hydropower plant
As a conscientious community member and business that owns c.630 acres of rural land across
Sweden, we strive to be good stewards of the land and give back to the local community when
possible. The Company has recently enabled several enhancements on a beach adjacent to the
hydropower plant Båthusströmmen that provides access to the river powering our hydro plant.
The Company provided funds to develop this area into a recreational space for community
members to enjoy.
The developments include:
> Construction of a large wooden deck platform with an attached coffee table overlooking the
river. This provides an ideal spot for people to relax next to the river and enjoy the views
> Installation of a high-quality BBQ area with commercial grade stainless steel grills. This
enables people to hold barbecues and cookouts by the river
> Seeding of lush grass increasing the usable green space
>
Creation of designated parking spots for boats, along with a new wide gravel ramp directly
into the river, facilitating easy launching of small watercraft
The recreational area enhances community members’ quality of life, while also fostering
increased goodwill and positive relationships between Downing and neighborhoods near the
plant. This demonstrates a real-world example of our commitment environmental stewardship
and corporate social responsibility in the places we generate renewable energy.
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Historically significant hydropower sites
Our Swedish hydropower portfolio contains plants which were commissioned as early as 1916.
With some hydropower acquisitions, the Company also acquires land area and buildings of
historical and cultural significance.
Case study on the blacksmith at Torsby Hydropower plant
Within the Torsby hydropower plant’s land area in western Sweden, there is a culturally
significant and protected building, previously used as a blacksmith’s workshop. The building has
been officially protected by the county administrative board as a result of a previous attempt
to demolish it. This smithy can be traced back to the end of 1800s and has been a part of the
utility operations in this area which spanned from woodworking to agriculture. This property
later came to form the foundation of the city Torsby which now spans around the old works and
hydropower plant.
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Historically significant hydropower sites continued
The building previously used as a smithy has undergone restoration works over the last
few years. This has been possible through donations and volunteering from businesses and
individuals in the community. Through these efforts, the building can now be used for art shows
and other cultural community events. The company is happy to support and enable the usage
and continued efforts to maintain the old blacksmith’s building. This underlines DORE’s ethos
to support local communities as part of its focus on sustainable investing.
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Historically significant hydropower sites continued
Case study on the furnace at Gysinge Hydropower plant
Commissioned in 1917, Gysinge is a 0.3 MWp plant located in the middle of Sweden, and is
one of the oldest hydropower plants in Company’s portfolio. The historical building in which the
hydropower plant is located also contains the world's first electric induction furnace for steel
production, created by the chemist Fredrik Adolf Kjellin in 1904. He was the first in the world
to create steel using electromagnetic coils and the method has since then been patented. The
furnace is generally viewed as a piece of world history and even though the building is managed
and owned by the Company, the furnace is owned by the Swedish National Museum of Science
and Technology.
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School visits
The UK programme of school visits
The Company’s agreement with Earth Energy Education continues in the UK, with 6 school visits
to sites within the ground mounted solar portfolio and 6 renewable energy workshops carried
out during 2023 with c. 250 children attending. The site visits cover both renewable energy
and its natural contribution to climate change mitigation, as well as site specific biodiversity of
interest. Feedback from one of the teachers after one of the workshops the site visit was: “The
children loved that, thank you, it was a fantastic workshop. They really learnt a lot about solar,
they are a very lively group, but they really engaged with this and enjoyed making the circuits.”
UK biodiversity enhancements
The school visits and biodiversity interest on the Company’s ground mounted solar sites are
set to be even more exciting in the coming years. During the period, the Company more than
doubled the number of bird and bat boxes on the ground mounted solar sites across the portfolio.
Installing animal boxes leads to increased connectivity in the landscapes, which could enable
bats and birds to increase their geographic reach. It provides a safe shelter for animals to eat,
sleep and breed. Welcoming bats and birds onto our sites will ideally also allow for further
biodiversity to thrive. Bats and birds act as important pollinators and seed dispensers, leading to
plant species to further develop and thrive. Birds and bats also provide an important ecosystem
service through insect and rodent control. Which in turn keeps the ecosystems on a sustainable
path, enabling further biodiversity.
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UK biodiversity enhancements continued
School visit at Gottne Hydropower plant
The 0.78 MWp hydropower plant Gottne turned 100 years old in 2021 and is located in Mellansel,
Sweden. During the early summer 2023 the Company had a class of 20 school children visit the
plant. The children got the opportunity to learn about the use of the river throughout history,
for example for saw and flour mills, leading to the building of the hydropower plant in 1921. On
their visit, the children toured the facilities to understand how the dam, inlet canal, turbine and
other components work together to harness the power of water. They learned how this local
plant provides renewable electricity to their community using a natural resource.
Equipping younger generations to participate in environmental decisions as informed citizens
helps accelerate responsible growth. As Downing continues enabling renewable projects across
Europe, initiatives like this in Gottne serve as a model for industry peers. Ultimately, investing in
the younger generation is investing in everyone's collective future.
Number of bird boxes increased from 12 to 26
Number of bat boxes increased from 10 to 22
2022
2022
2023
2023
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UK biodiversity enhancements continued
The Company is keeping a close eye on the evolving regulations related to the UK Biodiversity
Net Gain (“BNG”) scheme anticipated to be released in full during early 2024. This will guide
further enhancements scheduled for the UK solar sites. The ecological reports will also be
updated to ensure compliance with the latest BNG trading Metric.
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Downing is an active participant in wider sustainably sector initiatives and policy advocacy. Downing
is a signatory to: the UN Principles for Responsible Investment, the Financial Reporting Council’s
UK Stewardship Code, and the UN Global Compact. We are also members of GRESB (including its
Technical Expert Group for Infrastructure), the Institutional Investors Group on Climate Change
(including the Climate Action 100+ investor collaboration and its UK Taxonomy working group,
advising HM Government on the new regulation). We publicly support TCFD and the Transitions
Pathway Initiative. These commitments share Downing’s integration of ESG factors in its investment
process, from pre-deal screening through to active asset management, and then active ownership
and transparency on outcomes.
Downing’s Approach to Sustainability
Downing Renewables & Infrastructure Trust plc Annual Report | 57
Given their nature, DORE’s investments
can play a role in enabling and making
a positive contribution to several UN
Sustainable Development Goals, and
their sub-targets:
Target 7.1:
By 2030, ensure universal access to affordable, reliable and modern energy services.
Target 7.2:
By 2030, increase substantially the share of renewable energy in the global energy mix.
Target 9.4:
By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with
increased resource-use efficiency and greater adoption of clean and environmentally
sound technologies and industrial processes, with all countries taking action in
accordance with their respective capabilities.
Target 13.3:
Improve education, awareness-raising and human and institutional capacity on
climate change mitigation, adaptation, impact reduction and early warning.
Target 13.2:
Integrate climate change measures into national policies, strategies and planning.
Target 15.5:
Take urgent and significant action to reduce the degradation of natural habitats, halt
the loss of biodiversity and, by 2020, protect and prevent the extinction of threatened
species.
Target 15.9:
By 2030, integrate ecosystem and biodiversity values into national and local planning,
development processes, poverty reduction strategies and accounts.
Target 15.a:
Mobilize and significantly increase financial resources from all sources to conserve
and sustainably use biodiversity and ecosystems.
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Climate Disclosure, based on the recommendations of the Task Force for Climate Related
Financial Disclosures
The Company is not required to disclose under TCFD. We are supporting the TCFD ethos and its
purpose of addressing the systemic financial market risk of climate change by integrating climate
as a factor to governance, strategy, risk and metrics activity. We are pleased to share our climate
disclosure below.
The TCFD Recommendations are structured around four content pillars: 1. Governance; 2. Strategy;
3. Risk Management; and 4. Metrics & Targets.
The Company strives to maintain the highest standards of corporate governance and effective risk
management at both a Company and a portfolio level. Although the Company is not required to
report under the recommendations of the TCFD, many of those recommendations are voluntarily
followed in order to enhance the Company’s disclosures. As reporting climate impacts under TCFD
becomes a mandatory requirement for more entities, these disclosures shall be enhanced to ensure
full compliance with all the recommendations of the framework and any sector specific additional
guidance.
1. Governance
Governance is the responsibility of the Board, with key functions delivered through delegated
committees with the oversight of the Board and the ongoing support of the Investment Manager.
The Board meets on at least a quarterly basis, with additional ad-hoc meetings arranged as
appropriate. Information relating to the Company’s activities in fulfilling its sustainable Investment
Objective are presented on at least a quarterly basis. This data enables the Board to satisfy itself
that it is fulfilling the climate mitigation obligations explicit in the Company’s sustainable Investment
Objective; “to accelerate the transition to net zero through its investments, compiling and operating
a diversified portfolio of renewable energy and infrastructure assets to help facilitate the transition
to a more sustainable future. This directly contributes to climate change mitigation.”
On at least an annual basis the Board reviews climatic data, specific to the geographies and asset
types in the portfolio, in order to review and develop the Company’s strategy in relation to the risks
and opportunities from climate change.
The remit of the Board and its committees are set out in more detail in the Corporate Governance
Statement on pages 89 to 99. However, specifically the role of the Audit and Risk Committee is
to monitor the effectiveness of the Company’s financial reporting, its auditor, systems of internal
control and risk management, and the integrity of the Company’s external audit processes. In fulfilling
this purpose, the Committee has oversight of financial disclosures, including TCFD reporting.
In addition to the Board’s oversight functions, the Directors have appointed an Investment Manager
and delegated the day-to-day management of the Company to the Investment Manager. Rather
than creating new structures to govern and oversee the management of climate change risks and
opportunities, the Investment Manager has integrated climate change into its existing structures,
processes and risk registers. On the instruction of the Board, the Investment Manager gathers
portfolio data on an ongoing basis, that enables the board to oversee the delivery of the Company’s
sustainable Investment Objective.
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The Investment Manager also provides dedicated subject matter expertise to support the Board’s
annual review and development of strategy in relation to climate change risks and opportunities.
The Investment Manager integrates Environmental, Social and Governance factors into its
investment processes, with climatic factors forming integral components of the investment thesis.
Finally, the Investment Manager operates an Investment Committee to oversee and approve the
acquisition and disposal of assets on behalf of the portfolio. Climatic factors are reviewed as critical
components of the investment thesis.
2. Strategy
Scenario Analysis for Strategy Development
In order to analyse the potential range of risks and opportunities associated with climate change,
the Board selected three scenarios from the potential six developed by The Central Banks and
Supervisors Network for Greening the Financial System (“NGFS”). Selecting one scenario from each
of the available boxes enabled the board to consider the possible combinations of physical and
transitional risks.
NGFS Scenarios
Low Physical RiskH kHigher Physical Risk
Disorderly
Orderly Hot house world
Divergent
Net Zero
Current
Policics
NDCs
Below 2° C
Net Zero
2050
Physical risks arise from the changes in weather and climate that impact infrastructure and economic
activity. They are typically sub-divided into acute risks such as extreme weather events or chronic
risks such as rising sea levels, differentiated by the time taken to have a given effect.
Transition risks are the societal changes arising from a transition to a low-carbon economy.
They could arise from changes in public sector policies, innovation or the affordability of certain
technologies, investor or consumer sentiment towards behaviours or products.
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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 until 2080 leading to about
3°C of warming and severe physical risks. This includes irreversible changes like higher sea
levels.
2. The Delayed Transition Scenario assumes global annual emissions do not decrease until
2030. Strong policies are then needed to limit warming to below 2°C. Negative emissions
are limited. This scenario assumes new climate policies are not introduced until 2030 and
the level of action differs across countries and regions based on currently implemented
policies.
3. The Net Zero 2050 Scenario is an ambitious scenario that limits global warming to 1.5°C
through stringent climate policies and innovation, reaching net zero CO₂ emissions around
2050. Some jurisdictions such as the US, UK, EU and Japan reach net zero for all greenhouse
gases by this point. This scenario assumes that ambitious climate policies are introduced
immediately. Physical risks are relatively low, but transition risks are high.
Scenario Probabilities
These scenarios are not predictions and instead are presented as hypothetical outcomes. However,
an analysis of their relative probability indicates how strategy may develop over time or indeed
where the Board focused their analysis.
At this point in time, the Net Zero 2050 Scenario is assessed to be the least probable of the three
scenarios recognizing the lack of sufficient international consensus, co-operation and investment.
The Net Zero 2050 Scenario is dependent upon near term variables and so without significant
change, its probability will drop sharply in the near term.
Whilst the Current Policies Scenario is regulary rerviewed, it remains the base case scenario with
the greatest probability. If policy progress remains limited, the probability attributed to this >3˚C
scenario will increase over time.
The probability of achieving a Delayed Transition Scenario is dependent upon future unknown
variables, therefore without any significant change over the medium term, its probability will likely
increase over time.
Recognising that the Current Policies Scenario is considered the most probable, the Board’s analysis
of Climate risks was focused on an assumption of higher physical risks and lower transitional risks.
The relative probability of these scenarios will be reviewed on at least an annual basis and will
inform future strategy development.
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Analysis Periods for Strategy Development
Recognising the international climate policy focus on the next 30 years and the projected lifespan of
a number of the assets within the Company’s portfolio, the Board’s scenario analysis was considered
over a 30-year period, sub divided into three time horizons: short-term 2023-2030; medium term
2031–2040; and long-term 2041-2050.
The illustrative table below shows how the relative combinations of physical and transitional risks
might be expected to develop over time and why the Board’s analysis focused on physical risks.
Illustrative Risk Composition over time
Risk Composition
Short Term
2023 - 2030
Medium Term
2031 - 2040
Long Term
2041 - 2050
Current Policies Physical High Higher Highest
Transitional Low Low Low
Delayed Transition Physical High Higher Low
Transitional Low Highest High
Net Zero 2050 Physical Low Lower Lowest
Transitional Low Lower Lowest
Physical Factors, Portfolio Impacts and Modelling
Whilst climate change is a complex phenomenon, physical risks and opportunities to the portfolio
were identified across four principal factors: air temperature change, wind speed change,
precipitation level change and change to incidence rate of extreme weather events.
In addition to the data above, portfolio efficiency, micro and macro-economic data is reported
to the Board on a quarterly basis. Data relating to generation and portfolio efficiency is utilised
to assess the effect of any physical risks to the portfolio and the Company’s delivery of its
sustainable Investment Objective. Micro and macro-economic data, for example energy commodity
prices, carbon emissions allowance prices and subsidy rates are utilised to assess the impact of
transitional risks.
For each risk factor, the portfolio technology and geographic exposure were considered to assess
the potential impact on the portfolio. An appropriate modelling input was then identified to enable
the Board to assess the potential impact of the factor.
For example, the table below describes how a projected change in precipitation may require changes
to ground maintenance activity associated with the solar portfolio and therefore how operational
costs could change over time to reflect this. Meanwhile changes to precipitation rates could affect
generation from hydropower assets.
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Physical Factors, impact and modelling table
Physical Factors
Solar Hydropower Wind Grid
Impact
on Portfolio
Assumption
to flex
Impact
on Portfolio
Assumption
to flex
Impact
on Portfolio
Assumption
to flex
Impact
on Portfolio
Assumption
to flex
Air Temperature Δ Change in tech efficiency
due to temperature
fluctuations.
Performance
ratio
Timing of
spring melt
Generation
profile
Non-
measurable
impact on
performance
N/A Non-
measurable
impact on
performance
N/A
Wind Δ Mounting structure
maintenance, potential
to reduce surface
temperature of modules
Operational
costs
Nil N/A Higher levels
of generation
Generation Non-
measurable
impact on
performance
N/A
Precipitation Δ Ground maintenance
activity, potential to
impact on surface dust
of modules
Operational
costs relating
to land
management
More water
flow and
generation
capability
Generation Non-
measurable
impact on
performance
N/A Non-
measurable
impact on
performance
N/A
Extreme Weather Δ Damage to equipment Operational
costs
(insurance
premiums) /
Capex on
drainage
Spill
(efficiency
during high
water flow) /
equipment
damage
Generation /
Capex
Reduced
availability
due to high
winds/
equipment
damage
Generation/
Opex
Damage to
equipment
Operational
costs
(insurance
premiums)/
Capex on
drainage
A worked example - precipitation change under the current policies scenario
The company’s solar assets are predominantly located in the United Kingdom. The left and middle
maps show the projected change in Precipitation (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 difference between the two.
Precipitation Change UK
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Short Term: Solar modules are typically hydrophobic, making it unlikely that increased precipitation
would result in mineral build-up on the modules, however prolonged periods of cloud cover may
marginally reduce generation over the short term. Increased precipitation could increase growth of
vegetation around module arrays and require more frequent maintenance as a result. To monitor
these short-term effects, the efficiency of modules and their generation profiles are monitored on
an ongoing basis with this data built into ongoing portfolio valuations. Valuation models already
allow for ad hoc maintenance costs within operational expenditure.
Medium Term: Consistently higher precipitation rates may require additional capital expenditure to
improve site drainage.
The Company’s hydropower assets are predominantly located in Sweden. The left and middle maps
show the projected change in Precipitation (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
difference between the two.
Precipitation Change Sweden & Iceland
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Short, Medium and Long Term: Increased precipitation rates are likely to have a positive effect on
generation from hydropower assets. Marginal increases to routine maintenance are likely to be
offset by increased generation.
These worked example focused solely on projected precipitation changes in isolation from other
factors, across two technology types and geographies. When considered alongside other factors
like changes in air temperature and wind speed, the potential future variation in water supply to
Nordic and Icelandic hydropower assets were assessed to have a more significant potential impact
on portfolio valuations than the marginal impact from UK based solar assets. For this reason,
significant work is undertaken before the acquisition of the hydropower portfolio and the forecast
impact of climate change on the specifics assets was included within financial pricing models.
Increased precipitation, both on an annual basis and on shorter timeframes can challenge the ability
to handle high water flow. Temperature drives the melting of snow reservoirs and milder winters
can result in earlier spring floods and increased flow during the winter months.
When the data is available, we consider using seasonal inflow a more accurate measure than
precipitation alone as it reflects the dimensioned flow that the power plant will get, both in terms
of production and excess water flow.
The projected changes to the climate bring several other considerations in terms of potential impact
to asset valuations. Increased inflow during winter months can be beneficial if, through dispatch
control, it correlates with higher electricity market prices, although changes can also impact the
level of wind generation and changing demands for heat.
The relative impact of Physical and Transitional risks
Changes to physical factors are projected from modelled greenhouse gas emissions, extrapolated
principally from population growth, economic activity, energy utilisation and the generation mix.
Many of these physical factors are omni-directional and the potential effects are assessed to
be gradual.
Transitional factors can have a much wider spread of potential outcomes as a result of concentrated
human decision-making. For example, population growth is influenced by billions of unconnected
human decisions and therefore the probability of directional changes to population growth over the
short term are extremely low. In contrast policy changes to government subsidies can be influenced
by a relatively small number of people over a short period of time.
Across each of the three scenarios there is an assumption that policies and consumer preferences
are likely to become more supportive of renewable energy generation over time. Whilst harder to
project than the portfolio effects of physical risks, transitional factors are likely to remain supportive
of portfolio valuations.
Portfolio Sensitivity Analysis
Building on the scenario modelling and assumptions set out above, and data provided by NGFS
for the most likely scenario we are able to quantify the impact on environmental factors over an
appropriate timeframe. The percentage change in each metric is compared to the base year of 2020.
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Metric 2030 2040 2050
United Kingdom
Air Temperature Δ
temperature of air masses two meters
above the Earth's surface
0.3% 0.5% 0.7%
Wind Δ
velocity of an air mass 10 metres above
ground
-0.8% -0.9% -1.8%
Precipitation Δ
mass of water (both rainfall and snowfall)
falling on the Earth's surface
0.5% 2.3% 3.2%
Extreme Weather Δ
Percentage change in the cost of damage
from such events
7.7% 13.0% 20.9%
Sweden
Air Temperature Δ
temperature of air masses two meters
above the Earth's surface
0.4% 0.7% 1.0%
Wind Δ
velocity of an air mass 10 metres above
ground
-0.8% -1.1% -1.5%
Precipitation Δ
mass of water (both rainfall and snowfall)
falling on the Earth's surface
0.9% 1.4% 1.9%
Extreme Weather Δ
level of damage from river floods that is
expected to occur every year, measured
in USD.
32.3% 57.1% 35.7%
Iceland
Air Temperature Δ
temperature of air masses two meters
above the Earth's surface
0.1% 0.5% 0.8%
Wind Δ
velocity of an air mass 10 metres above
ground
-1.1% -1.3% -1.6%
Precipitation Δ
mass of water (both rainfall and snowfall)
falling on the Earth's surface
0.2% 1.3% 1.7%
Snow Δ
mass of water falling on the Earth’s
surface in the form of snow
-2.7% -4.6% -9.0%
Taking the changes into account and making appropriate adjustments to valuation assumptions,
through generation profiles and levels, operational expenditure (including insurance premiums)
and capital expenditure, provides us with an estimate of the potential financial impact of climate
change to the Company. The estimated impact on the NAV of the Company would be approximately
0.86 pence per share.
Strategic Implications and Resilience of DORE’s Climate Change strategy
The physical risks of climate change present manageable risks to the portfolio, as described
throughout the first section of this report, however society’s transition to a lower carbon economy
presents significant opportunities and upside potential for the Company. The Company’s Investment
Objective is to provide investors with an attractive and sustainable level of income returns, with
an element of capital growth, by investing in a diversified portfolio of renewable energy and
infrastructure assets in the UK, Ireland and Northern Europe.
Significant growth in renewable energy and its associated infrastructure is critical to meeting the
required emission reductions across an expanding electricity generation sector. This positions the
Company well to continue delivering value to investors through its robust climate change strategy.
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3. Risk Management
The ongoing performance of the Company’s portfolio and all material factors affecting valuation are
reviewed by the Board on a quarterly basis. Market, climatic factors and events affecting valuation
are constantly monitored by the Investment Manager, with any extraordinary events leading to
material changes to valuation communicated to investors.
4. Metrics and Targets
The following data is currently utilised to support modelling of risks and opportunities in relation to
the portfolio’s technical generation mix and geographic exposure. The three common factors across
analysis of the portfolio are air temperature, wind speed and precipitation. In addition to these
three common factors a fourth data source has been selected for each geography and portfolio
technology, as a proxy for potential changes to costs of extreme weather events. The common
source of the data is the NGFS Current Policies Scenario and the time period selected aligns to the
short, medium and long term horizons identified during scenario analysis for strategy development.
Projected Air Temperature Change (UK and Sweden)
Projected Wind Speed Change (UK and Sweden)
Projected Precipitation 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 floods (Sweden)
These data sources will be updated and reviewed on an at least an annual basis to continue to
support scenario analysis and strategy development. Over time, additional data sources may be
selected to reflect the portfolio’s diversification by technology and geography.
In addition to the data above, portfolio efficiency, micro and macro-economic data is reported to the
Board on a quarterly basis. Data relating to generation and portfolio efficiency is utilised to assess the
effect of any physical risks to the portfolio and the Company’s delivery of its sustainable Investment
Objective. Micro and macro-economic data, for example energy commodity prices, carbon emissions
allowance prices and subsidy rates are utilised to assess the impact of transitional risks.
Scope 1 Emissions: When considering the direct emissions of the Company, we assess these to be
negligible because DORE does not own or lease building or vehicles. In addition, the majority of the
Company’s business has been conducted virtually.
Scope 2 Emissions: The Scope 2 emissions of the portfolio during the period are estimated to be
8 tC02e. These emissions stem principally from electricity utilised by the hydropower assets within
the portfolio and are estimated on the basis of electricity usage and geographically specific residual
grid emissions factors.
Downing’s Approach to Sustainability continued
Downing Renewables & Infrastructure Trust plc Annual Report | 67
Downing’s Approach to Sustainability continued
Scope 3 Emissions: The Scope 3 emissions of the portfolio are estimated to be 340 tCO2e. During
the 2023 period, an assessment was carried out on the emerging Scope 3 reporting standards
expected from the Company as an infrastructure investor, using guidance from the Greenhouse Gas
Protocol. As a result, Scope 3 emissions reporting has been significantly enhanced to cover more
factors in the Company’s value chain. The emissions reported come from equipment purchased
for maintenance, operational waste, grass-cutting, solar panel cleaning and the accrued mileage of
contractors making routine site visits throughout the reporting period.
The Company does not yet set specific climate or GHG emission reduction targets.
Downing Renewables & Infrastructure Trust plc Annual Report | 68
Key Performance Indicators
Key Performance Indicators 1 Jan 2023 – 31 Dec 2023 1 Jan 2022 – 31 Dec 2022
Environmental performance
Number of renewable generation assets 4,868 3,260
MW of installed renewable generation capacity 202.9 184.5
GWh renewable energy generated 395 326
Share of non-renewable energy production 0% 0%
GHG emissions avoided (tCO2e) (Scope 4) 186,348 153,457
Equivalent UK homes powered 146,183 112,523
Equivalent trees planted 1,096,166 902,689
GHG emissions (Scope 1) (tCO2e) 0 0
GHG emissions (Scope 2) (tCO2e) 8 21
GHG emissions (Scope 3) (tCO2e) 340 390
Total GHG emissions (tCO2e) 348 411
Carbon footprint (tCO2e/€m) 1.1 1.2
GHG intensity of investee companies (tCO2e/€m) 9.7 23.4
Share of non-renewable energy consumption 65% 59%*
Energy consumption intensity per high impact climate
sector (gWh/€m)
0.04 0.05
Reservoir capacity managed (Mm
3
) 213.2 114.3
Acres of land managed 1070 945
Acres of habitat removed 0 Not reported
Acres of habitat enhanced or restored 0 Not reported
Acres of Habitat protected (on-site) 32.1 Not reported
Acres of Habitat protected (off-site) 61.7 Not reported
Acres of habitats maintained 414.5 Not reported
Acres of land grazed 313 272
Number of beehives 17 7
Number of bird boxes 26 12
Number of bat boxes 22 10
Environmental incidents (including non-compliance with
permits/regulations)
0 0
Activities negatively affecting biodiversity sensitive areas 0 0
Hazardous waste ratio (tonnes/€m) 0 0
Wildlife fatalities 5 0
Downing Renewables & Infrastructure Trust plc Annual Report | 69
Key Performance Indicators continued
Key Performance Indicators 1 Jan 2023 – 31 Dec 2023 1 Jan 2022 – 31 Dec 2022
Social performance
O&M FTE jobs supported 28 16
Number of health and safety audits 35 28
Number of serious accidents or injuries 0 0
Number of engagements with stakeholders including local
community complaints
No complaints No complaints
Number of sites able to host educational visits 3 2
Number of renewable energy education events sponsored 13 13
Community funding £114,908 £28,762
GWh free or discounted renewable energy to homes and
businesses
20 18
Value of free or discounted renewable energy to homes
and businesses
£5.2m £4.7m
Exposure to companies active in the fossil fuel sector 0% 0%
Lack of processes and compliance mechanisms to monitor
compliance with UN Global Compact principles and OECD
Guidelines for Multinational Enterprises
No No
Exposure to controversial weapons 0% 0%
Investee countries subject to social violations 0 0
Governance performance
Unadjusted gender pay gap N/A N/A
Portfolio board gender diversity (female %) 44% 33%
* DORE’s Swedish assets’ energy supply comes from the typical fuel mix of the grid in Sweden which, whilst containing significant
renewables, is assumed not to be 100% renewable
Downing Renewables & Infrastructure Trust plc Annual Report | 70
The overarching duty of the Board is to promote the Company’s success for the benefit of investors
while taking other stakeholders’ interests into consideration. The Company strives to maintain the
highest standards of business conduct and corporate governance, and the Investment Manager
ensures that appropriate oversight, control, and policies are in place to ensure that the Company
treats its stakeholders fairly.
Through ongoing dialogue and engagement with its key stakeholders, the Board seeks to ensure that
its purpose, values, and strategy are aligned with this culture of openness, debate, and integrity. The
Board, which consists of two male and one female members, aims to create a supportive business
culture while also providing constructive challenge, as well as to provide shareholders and other
stakeholders with regular information.
Although the Company has no employees, it is committed to respecting human rights in its broader
relationships. Both the Company and the Investment Manager have anti-bribery and corruption
policies in place to ensure business integrity, a commitment to truth and fair dealing, and compliance
with all applicable laws and regulations.
To assist in maintaining a culture of good governance, the Company has several policies and
procedures in place, including those relating to diversity, anti-bribery (including the acceptance
of gifts and hospitality), tax evasion, conflicts of interest, and Directors’ dealings in the Company’s
shares.
The Board assesses and monitors compliance with these policies on a regular basis through Board
and Committee meetings. 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 reporting, receiving
regular information, and ad hoc interactions.
Culture and Values
Downing Renewables & Infrastructure Trust plc Annual Report | 71
The Directors confirm that they have acted in a way that they consider, in good faith, to be most
likely to promote the success of the Company for the benefit of its members as a whole, and in
doing so have regard to the matters set out in Section 172(1) of the Companies Act 2006 (“s.172
matters”). To ensure that the Directors are aware of and understand their duties, they are provided
with regular and ongoing updates on the relevant matters, as well as having continued access to
the advice and services of the Company Secretary and, when necessary, the Directors can seek
independent professional advice. The following disclosures describe how the Directors have regard
for the s.172 matters.
Section 172(1) Description
(a) the likely consequences of any decision
in the long term
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 consideration.
The Board and Investment Manager believe they have acted in
good faith in managing the Company during the year, with a view to
promoting the Company’s long‑term sustainable success and achieving
its wider objectives for the benefit of our shareholders as a whole,
having regard to our wider stakeholders and the other matters set out
in Section 172 of the Companies Act.
(b) the interests of the company’s
Employees
As a closed‑ended investment company, the Company has no
employees; however, the interests of any employees within project
companies are considered when making decisions.
(c) the need to foster the company’s
business relationships with suppliers,
customers and others
The Board’s approach is described under ‘Stakeholder Engagement’
below.
(d) the impact of the company’s operations
on the community and the environment
The Board places a high value on monitoring ESG issues and establishes
the overall strategy for ESG matters pertaining to the Company.
The Board is responsible for managing any climate-related risks for
the group, including transparent disclosure of these risks, and taking
mitigating actions to reduce or eliminate them where possible.
During the year DORE donated £30,000 to Piddlehinton Gym to put
towards the challenging project of repairing the roof. Piddlehinton gym
is a community hub closely located to DORE’s Bourne Park Solar Farm,
which provides facilities to enhance the wellbeing of local residents and
the Solar Farm employees.
A description of the Company’s sustainable and responsible Investment
Policy is set out on pages 56 to 67.
(e) the desirability of the company
maintaining a reputation 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.
Section 172(1) Statement
Downing Renewables & Infrastructure Trust plc Annual Report | 72
Stakeholder Engagement
This section describes how the Board engages with its key stakeholders, how it considers their
interests and the outcome of the engagement when making decisions, the long-term consequences
of any decision, and how it maintains a reputation 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 impacting
stakeholder groups
during period
Shareholders Shareholders and
their ongoing support
are critical to the
business’s continued
existence and the
deployment of our
long-term investment
strategy.
The Board is
committed to
maintaining
open channels of
communication
and to engage with
shareholders in ways
that are meaningful
in order to gain an
understanding of their
views.
The Company makes
regular market
announcements
where appropriate and
publishes quarterly
fact sheets which
are available on the
Company’s website.
Shareholder
attendance and
participation is
welcomed at the
Company’s AGM
and where possible
shareholders will have
the opportunity to
meet the Directors and
Investment Manager
to address questions
to them directly.
Views and feedback
are sought from
institutional investors
via the Company’s
corporate broker.
A number of investor
meetings were held
during the year to
engage shareholders
with the Company’s
strategy, as well as an
investor presentation
which has held by
the Investment
Manager to discuss
recent acquisitions
in the portfolio and
to receive questions
from shareholders.
Prior to the AGM
in June 2023,
shareholders were
given the opportunity
to engage with
the Board and the
Investment Manager,
and are encouraged
to do so at other
times throughout the
year.
Key topics discussed
at the AGM included
the annual report and
financial statements
and the Company’s
decision to purchase
ordinary shares in the
market.
The Company has
made acquisitions
during the year which
should be accretive
to the NAV over the
long‑term.
The Company has
invested in new
technologies and a
new geography in the
year, further showing
commitment to
diversification of the
portfolio.
The Company
acquired 8 assets
in the year for
£47 million across grid
infrastructure, hydro
and solar.
Investment
Manager
The Investment
Manager is
responsible for
carrying out the
Investment Objective
within the parameters
of the Company’s
Investment Policy.
The Board maintains
regular and open
dialogue with
the Investment
Manager at Board
meetings and has
regular contact on
operational and
investment matters
outside of meetings.
In addition to all
matters concerning
the Company's
Investment Objective,
the Board met with
the Investment
Manager to discuss
the Group's structure
and the interpretation
of investment
restrictions.
Determination that
the Investment
Manager maintains a
strong internal control
environment and
that the Investment
Manager's continued
appointment is in
the best interests of
shareholders.
Section 172(1) Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 73
Stakeholder Why is it important
to engage?
How has the
Company
communicated and
engaged?
What were the
key topics of
engagement?
Key strategic
decisions impacting
stakeholder groups
during period
Service
providers
As an externally
managed Company,
we are reliant on our
service providers
to conduct our
core activities.
We believe that
fostering constructive
and collaborative
relationships with
our service providers
will assist in the
promotion of the
success of the
Company.
The Board maintains
regular contact with
its service providers,
both through Board
and Committee
meetings as well as
outside the regular
meeting cycle.
The Management
Engagement
Committee is
responsible for
conducting periodic
reviews of service
providers to ensure
service providers
continue to function
at an acceptable level
and are appropriately
remunerated to
deliver the expected
level of service.
Throughout the year,
the Board has worked
closely with its
professional service
providers, such as
its external auditors,
joint corporate
brokers, legal counsel,
and the company
secretary, to ensure
that the Company is
managed efficiently
and accurately in
accordance with
applicable laws,
regulations, and best
practices.
During the year,
the Management
Engagement
Committee assessed
and recommended
the appointment of a
new AIFM. Effective
1 February 2024, JTC
Global AIFM Solutions
Limited was appointed
as the Company’s
new AIFM and JTC
(UK) Limited as the
Company’s new fund
administrator.
The Company’s other
key service providers
have been retained,
providing continuity of
service and familiarity
with the objectives
of the Company.
It was considered
that this was in the
best interests of the
Company and its
shareholders.
Asset-level
counterparties
Asset‑level
counterparties are an
essential stakeholder
group and engagement
with them is important
to ensure assets
are operating safely
and effectively
and performing as
expected.
As part of continual
monitoring of
investments, we
have a regular
dialogue with these
counterparties.
The key engagement
with asset-level
counterparties was
during the due
diligence process
prior to completing
the investment
Acquired eight new
assets during the
period, increasing
ongoing servicing
requirements from
O&M counterparties.
Debt-providers Providers of long‑
term debt are key
to supporting the
Company’s long‑ term
objectives through
enabling the continued
financing of investment
opportunities.
The Company and
its unconsolidated
subsidiaries provide
regular updates on
covenant compliance
and current
positioning.
Pricing and sizing of
the debt was a key
consideration for the
Company.
Debt will be a key
component of the
Company’s funding
strategy looking
forward and the
portfolio will utilise
the RCF debt facility
when beneficial.
At the start of the
year the RCF was
increased from
£25m to £40m,
which was utilised
throughout the year
for acquisitions in the
portfolio.
Section 172(1) Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 74
The Board recognises that effective risk management is key to the Group’s success and that a
proactive approach is critical to ensuring the sustainable growth and resilience of the Group. Risk
is described as the potential 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, potentially leading to
the disruption of the Company’s business model, as well as potential damage to the reputation or
financial standing of the Company.
The benefit of a risk management framework is that it allows for potential risks to be identified
in advance and may enable these risks to either be mitigated or possibly even converted into
opportunities. The Company’s Prospectus, issued in June 2022 detailed the potential risks that
the Directors considered were material that could occur during the process of implementing the
Company’s Investment Policy.
The Directors have overall responsibility for risk management and internal control within the
Company, and have delegated responsibility for the assurance of the risk management process and
the review of mitigating controls to the Audit and Risk Committee. The Board, through delegation
to the Audit and Risk Committee, has undertaken a robust assessment and review of the principal
and emerging risks facing the Company, including those that would threaten its business model and
future performance.
Principal Risks and Uncertainties
Procedures to identify principal or emerging risks
It is not possible to eliminate all risks that may be faced by the Company.
The objective of the Company’s risk management framework and policies adopted by the Company
is to identify risks and enable the Board to respond to risks with mitigating actions to reduce the
potential impacts should any of the risks materialise.
The Board, through the Audit and Risk Committee, regularly reviews the Company’s risk register,
with a focus on ensuring appropriate controls are in place to mitigate each risk. Taking considered
risk is the essence of all business and investment activity.
The Board considers the following to be the principal risks faced by the Company along with the
potential impact of these risks and the steps taken to mitigate them.
Risks and Risk Management
Downing Renewables & Infrastructure Trust plc Annual Report | 75
Risk Identified Risk Description Risk Impact Mitigation
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 volatile
and is affected by a variety
of factors, including market
demand for electricity, levels
of electricity generation, the
generation mix of power plants,
government support for various
forms of power generation and
fluctuations in the market prices
of commodities and foreign
exchange.
Market demand for electricity
can be impacted by many
factors, including changes in
consumer demand patterns,
increased usage of smart grids,
a rise in demand for electric
vehicle charging capacity and
residential participation in
renewable energy generation.
Such changing dynamics could
have a material adverse effect
on the Company’s profitability,
the NAV and the price of the
Ordinary Shares.
To the extent that the Company
or an SPV enters contracts to
fix the price it receives on the
electricity generated or enters
into derivatives with a view to
hedging against fluctuations
in power prices, the Company
or SPV, may be exposed to risk
related to delivering an amount of
electricity over a specific period.
If there are periods of non-
production the Company or
an SPV may need to pay the
difference between the price it
has sold the power at and the
market price at that time.
The Investment Manager closely
monitors exposure to power
price movements. Sensitivity
to long term forecasts will be
disclosed to investors and the
Board on a regular basis.
Many assets are expected to
have a significant proportion
of revenue that is not linked to
power price forecasts including
subsidies such as feed‑in‑tariffs.
In addition, assets are
geographically diverse,
spreading exposure across
different 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 36 for an illustration of
the portfolio’s current fixed vs
merchant revenues.
Exposure to the
transactional
effects of
foreign
exchange rate
fluctuations and
risks of foreign
exchange
hedging
To the extent the Company
invests in non-sterling
jurisdictions, it may be exposed
to foreign exchange risk caused
by fluctuations in the value of
foreign currencies when the
net income and valuations of
those operations in non‑Sterling
jurisdictions are translated into
Sterling for the purposes of
financial reporting.
While the Company and
SPVs may enter derivative
transactions to hedge such
foreign exchange rate exposures,
there can be no guarantee 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 satisfy margin
calls in respect of hedges and
in certain circumstances may
not have such collateral readily
available. In these circumstances,
the Company could be forced to
sell an Asset or borrow further
funds to meet a margin call or
take a loss on a position. To the
extent that the Company and/
or SPVs do rely on derivative
instruments to hedge exposure
to exchange rate fluctuations,
they will also be subject to
counterparty risk. Any failure
by a hedging counterparty to
discharge its obligations could
have a material adverse effect
on the Company’s profitability,
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 five years in
advance.
Risks and Risk Management continued
Downing Renewables & Infrastructure Trust plc Annual Report | 76
Risk Identified Risk Description Risk Impact Mitigation
Non-compliance
with the
investment
trust eligibility
conditions under
sections S1158/
S1159 of the
CTA 2010
As an approved investment
trust, the Company is exempt
from UK corporation tax on its
chargeable gains and capital
profits on loan relationships.
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
corporation tax on chargeable
gains and capital profits arising
on the transfer or disposal
of investments and other
assets. Which could adversely
affect the Company’s financial
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 qualified
professionals. The Investment
Manager also monitors relevant
qualifying conditions.
The Investment Manager and
the Company Secretary report
on regulatory matters to the
Board on a quarterly basis. The
assessment of regulatory risks
forms part of the Board’s risk
management framework.
Construction
risks for certain
renewable
energy projects
SPVs may undertake projects
that are in the Construction
Phase or are construction
ready which may be exposed
to certain risks, such as cost
overruns, construction delays
and construction defects that
may be outside the Company’s
control.
Should completion of any
project overrun (both in terms of
time and budget), there is a risk
that payments may be required
to be made to (or withheld by)
a counterparty in relation to
the delay. If the completion of
a project overruns, it would
also result in a delayed start to
receipt of revenues, which could
affect the Company’s ability
to achieve its target returns,
depending on the nature and
scale of such delay.
Additional costs and expenses,
delays in construction or
carrying out repairs, failure to
meet technical requirements,
lack of warranty cover and/
or consequential operational
failures or malfunctions may
have a material adverse effect
on the Company’s profitability,
the NAV and the price of the
ordinary shares.
The Investment Manager will
monitor construction carefully
and report frequently to the
Board and AIFM.
The Investment Manager has an
experienced asset management
team including technical
experts to oversee construction
projects. The Investment
Manager will undertake an
extensive due diligence process
prior to investment with input
from the Board (including
technical expertise).
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‑executive, and which has
no employees, is reliant upon
the performance of third-
party service providers for its
executive function.
The Company relies on the
Investment Manager and other
service providers and their
reputation in the energy and
infrastructure market.
The third-party provider may
prove to be insufficiently skilled
for the role or perform the roles
required to an inadequate level,
which may cause the Company
to underperform, to breach
regulations, or in extremis to go
into administration.
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
initial term or a breach of the
agreement occurring.
They have all been chosen for
being skilled and experienced
in their areas of expertise. The
Board has regular oversight over
all the other providers.
Risks and Risk Management continued
Downing Renewables & Infrastructure Trust plc Annual Report | 77
Risk Identified Risk Description Risk Impact Mitigation
Lack of
availability
of suitable
renewable
energy projects
Competition 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 sufficient
opportunities within a
reasonable timeframe, whether
by reason of fundamental
change in market conditions
creating lack of available
opportunities, too much
competition or otherwise.
A greater proportion of the
Company’s assets will be
held in cash for longer than
anticipated and the Company’s
ability to achieve its Investment
Objective may be adversely
affected.
The Company has an
Investment Manager in place
with a strong track record, who
continues to strengthen their
team to meet investment needs.
Through extensive industry
relationships the Investment
Manager provides access
to a significant pipeline of
investment opportunities.
Conflicts of
interest
The Investment Manager and
the AIFM may manage from
time‑to‑time other managed
Funds pursuing similar
investment strategies to that
of the Company and which
may be in competition 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 potential to give
rise to conflicts of interest.
The Company may also be
in competition with other
Downing Managed Funds
for Assets. In relation to
the allocation of investment
opportunities.
The AIFM and the Investment
Manager have clear conflicts of
interest and allocation policies
in place.
Transactions where it is
perceived that there may be
potential conflicts of interest
are overseen by the Investment
Manager’s Conflicts Committee,
an independent fairness opinion
on valuation may also be
commissioned where deemed
necessary.
The application of allocation
policy is reviewed by the
Investment Managers
Compliance Department, and
by the Board on annual basis.
Further information on these
procedures can be found in the
Company’s Prospectus dated
12 November 2020.
Risks relating
to the technical
performance of
assets
The long-term performance of
the assets acquired does not
match the expectations at the
time of the acquisition.
Incorrect assumptions against
technical performance of
assets, or the availability of
natural resources may lead to
additional costs and expenses,
carrying out repairs, or reduced
revenues.
Any delays or reduction in the
production or supply of energy
may have a material adverse
effect 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 transaction. The advisors
will undertake a review of the
technology, design, installation
(if applicable), and natural
resource availability and provide
an analysis of expected long
term generation yields.
Where Assets are going through
construction, appropriate
contractual guarantees will be
provided. Operators will often
provide guarantees as to the
availability or performance of
Assets.
Risks and Risk Management continued
Downing Renewables & Infrastructure Trust plc Annual Report | 78
Risk Identified Risk Description Risk Impact Mitigation
Counterparties’
ability to make
contractual
payments
The Company’s revenue
derives from the renewable
energy projects in the
portfolio, the Company and
its SPVs will be exposed to
the financial strength of the
counterparties to such projects
and their ability to meet their
ongoing contractual payment
obligations.
The failure by a counterparty to
pay the contractual payments
due, or the early termination
of a PPA by an Offtaker due to
insolvency, may materially affect
the value of the portfolio and
could have a material adverse
effect 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 termination.
Exposure to defaults may be
further mitigated by contracting
with counterparties 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 acquisition
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‑attack in which
a hacker may attempt to access
the Company’s website or its
secure data, or the computer
systems that relate to one of
its Assets and attempt to either
destroy or use this data for
malicious purposes.
Increased regulation, laws,
rules and standards related to
cyber security, could impact the
Company’s reputation or result
in financial loss through the
imposition of fines. Suffering a
cyber breach will also generally
incur costs associated with
repairing affected systems,
networks and devices.
If one or several Assets became
the subject of a successful
cyber‑attack, to the extent any
loss or disruption following
from such attack would not be
covered or mitigated by any
of the Company’s insurance
policies, such loss or disruption
could have an adverse effect on
the performance of the affected
Asset and consequently on
the Company’s profitability,
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 identify
cyber security risks and apply
and monitor appropriate risk
plans.
Further financial risks are detailed in note 16 of the financial statements.
Risks and Risk Management continued
Downing Renewables & Infrastructure Trust plc Annual Report | 79
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 considerations. The Board has a process in place to identify emerging risks, such
as climate related risks, and to determine whether any actions are required. The Board relies on
regular reports provided by the Investment Manager and the Fund 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 regulations continue to evolve as the UK, Europe and the rest of the world
continue to focus their efforts on the goals laid out by the Paris Agreement. In jurisdictions where
the Company’s Assets are located, newly implemented laws and/or regulations may have an impact
on a given Asset’s activities.
These laws may impose liability whether or not the owner or operator of the Assets knew of or
was responsible. There can be no assurance that environmental costs and liabilities will not be
incurred in the future. In addition, environmental regulators may seek to impose injunctions or
other sanctions on an Asset’s operations that may have a material adverse effect on its financial
condition and valuation. Climate change may also have other wide-ranging impacts such as an
increased likelihood of market reform, insurance coverage availability and cost.
Climate change may also lead to increased variability in average weather patterns such as periods
of increased or reduced wind speeds or rainfall as well as extreme events which may affect the
performance of the Company’s investments.
Physical Effects of Climate Change
While efforts to mitigate climate change continue to progress, the physical impacts are already
emerging in the form of changing weather patterns. Such as the recent heatwaves experienced in
North America and recent flash flooding seen throughout the UK and Europe.
Extreme weather events can result in flooding, drought, fires and storm damage, which may
potentially impair the operations of existing and future portfolio companies at certain locations or
impacting locations of companies within their supply chain.
Transition Risks
Much of the conversation around climate change focuses on environmental impacts, such as rising
temperatures and extreme weather events. A big part of climate risk, however, involves transition
risk – or the risk that results from changing policies, practices and technologies that arise as countries
and societies work to decrease their reliance on carbon. In the near and medium term, transition risks
to portfolio investments may arise from any unexpected changes to existing government policies.
An increase in renewables build-out ambition without sufficient demand could reduce power price
forecasts. This consideration has been built into long term power price assumptions however could
have a larger negative impact on the valuation of the Company’s assets than forecast.
Risks and Risk Management continued
Downing Renewables & Infrastructure Trust plc Annual Report | 80
Going Concern
The Board, in its consideration of the going concern position of the Company, has reviewed
comprehensive cash flow 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 facilities and the assessment of the principal risks described in this report, that
it is appropriate to prepare the financial statements of the Company on the going concern basis.
In arriving at their conclusion that the Company has adequate financial resources, the Directors
were mindful that the Company and its subsidiary had cash of £6.3 million as at 31 December 2023.
The Group utilised EUR 49.4 million of its facility with SEB to help fund the additional hydropower
acquisitions. There is EUR 19.1 million remaining available to be drawn on this facility. The directors
are provided with base cash flow forecasts and potential downside scenarios.
Through its subsidiary, DORE Hold Co Limited, the Company has access to a £40 million RCF, of
which £18.6 million has been drawn, the remaining balance is available for either new investments
or investment in existing projects and working capital.
The Company’s net assets at 31 December 2023 were £212.5 million and total expenses for the
period ended 31 December 2022 were £3.2 million, which represented approximately 1.5% of
average net assets during the period.
The Directors are satisfied that the Company has sufficient resources to continue to operate for the
foreseeable future, a period of 5 years from the date of this report. Accordingly, they continue to
adopt the going concern basis in preparing these financial statements.
Viability Statement
In accordance with Principle 21 of the AIC Code, the Board has assessed the prospects of the
Company 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 2028 (the ‘Period’). The Board believes that the Period, being
approximately five years, is an appropriate time horizon over which to assess the viability of
the Company, particularly when considering the long-term nature of the Company’s investment
strategy, which is modelled over five years, and the principal risks outlined above. Based on this
assessment, the Directors have a reasonable expectation that the Company will be able to continue
to operate and to meet its liabilities as they fall due over the period to 31 December 2028.
In making this statement, the Directors have considered and challenged the reports of the
Investment Manager in relation to the resilience of the Company, taking account of its current
position, the principal risks faced in severe but reasonable scenarios, including a stressed scenario,
the effectiveness of any mitigating actions and the Company’s risk appetite.
Going Concern and Viability Statement
Downing Renewables & Infrastructure Trust plc Annual Report | 81
Sensitivity analysis has been undertaken to consider the potential impacts of such risks on the
business model, future performance, solvency and liquidity over the period, both on an individual
and combined basis. This has considered the achievement of budgeted energy yields, the level
of future electricity and gas prices, continued government support for renewable energy subsidy
payments and the impact of a downside scenario which includes significant reduction of projects’
yields under severe power price and generation volume assumptions.
The Directors have determined that a five-year look forward to December 2028 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 mitigating actions taken, such as a reduction of
dividends paid to shareholders or utilisation of additional 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 Little
Chair
10 April 2023
Going Concern and Viability Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 82Downing Renewables & Infrastructure Trust plc Annual Report | 82
Governance
Downing Renewables & Infrastructure Trust plc Annual Report | 83
Board of Directors
Hugh W M Little (Chair)
Hugh was appointed as Chair and Director of the Company on 28 October
2020, as well as serving as Chair of the Company’s Management Engagement
Committee (“MEC”).
Hugh qualified 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
Acquisitions. Hugh retired from AAM in 2015.
In addition to his directorships at Downing Renewables & Infrastructure Trust
plc, Hugh serves as a Director of Dark Matter Distillers Limited and as a governor
of Robert Gordon’s College. In recent years, Hugh has also been Chair of Drum
Income Plus REIT plc and CLAN Cancer Support, a local charity. Hugh won the
‘Non-Executive Director of the Year’ award at the Institute of Directors, Scotland
awards ceremony held in 2019.
Joanna Holt (Non-Executive Director)
Joanna was appointed as a Director of the Company on 28 October 2020 and
serves as Chair of the Company’s Nomination Committee.
Joanna is a specialist in the technical and commercial elements of energy projects,
with over 20 years’ experience in renewable energy and flexibility investments,
building on her academic engineering background. In 2015, Joanna co-founded
international consultancy company Everoze; a company that provides a broad
range of engineering and strategic consulting services, as well as the 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 finance (Fortis Bank). Joanna has previously used
the name Joanna De Montgros.
Ashley Paxton (Non-Executive Director)
Ashley was appointed as a Director of the Company on 28 October 2020 and serves
as Chair of the Company’s Audit & Risk and Remuneration Committees.
Ashley has over 30 years of experience serving the funds and financial services
industry in London and Guernsey, with deep sectoral experience supporting listed
funds. Ashley was a partner with KPMG in the Channel Islands (“C.I.”) from 2002 and
transitioned from audit to become its C.I. Head of Advisory in 2008; a position he
held through to his retirement from the firm in 2019.
Ashley is a Fellow of the Institute of Chartered Accountants in England and Wales
(ICAEW) and a resident of Guernsey. In addition to his directorships at Downing
Renewables & Infrastructure Trust plc, he serves as a Director of JZ Capital Partners
Limited and as chair of Twentyfour Select Monthly Income Fund Limited, and on a
number of other unlisted company boards. He plays an important role in the local
third sector as Chair 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 emotional wellbeing.
Downing Renewables & Infrastructure Trust plc Annual Report | 84Downing Renewables & Infrastructure Trust plc Annual Report | 84
Downing Renewables & Infrastructure Trust plc Annual Report | 85
The Directors of the Company are pleased to present their report for the year ended 31 December
2023.
Directors
The Directors who held office during the year and as at the date of this report are detailed on page 83.
Details of the Directors’ terms of appointment can be found in the corporate governance statement and
the Directors’ remuneration report.
Share Capital
The Company was granted authority at the 2023 Annual General Meeting (“AGM”) to issue up to
18,458,700 Ordinary Shares (equivalent to 10% of the Company’s issued share capital as at the
latest practicable date before publication of the Notice of the AGM) on a non-pre-emptive basis
until the conclusion of the Company’s next AGM in 2024. The Company was also granted additional
authority at the 2023 AGM to issue up to 18,458,700 Ordinary shares (equivalent to a further
10% of the Company’s issued share capital as at the latest practicable date before publication of the
Notice of the AGM) to be used only for the purposes of the financing (or refinancing, if the authority
is to be used within 12 months after the original transaction) of an acquisition or specified capital
investment which is announced contemporaneously with the allotment or which has taken place in
the preceding 12 month period and is disclosed in the announcement of the allotment, on a non-
pre-emptive basis until the conclusion of the Company’s next AGM in 2024.
No ordinary shares have been allotted under either authority during the year. As at the date of
this report, the Company may allot further ordinary shares up to an aggregate nominal amount of
£369,174 under its existing authority (equivalent to 20% of the Company’s issued Ordinary Share
capital as at the latest date before publication of the Notice of AGM), provided that any amount above
10% is used only in connection with an acquisition or specified capital investment as detailed above.
A special resolution was passed at the 2023 AGM granting the Directors authority to repurchase up
to 27,669,664 Ordinary Shares (representing 14.99% of the Company’s issued share capital as at the
date of the AGM) during the period, expiring on the earlier of the Company’s AGM to be held in 2024
or 31 December 2024. This authority will expire at the conclusion of, and renewal will be sought at,
the AGM to be on 6 June 2024. Ordinary Shares purchased by the Company may be held in treasury
or cancelled. During the year, the Company bought back a total of 4,375,363 Ordinary Shares of
1p each with a nominal value of £43,753.63 at a total cost of £4,065,545. This represented 2.37% of
the issued share capital at 31 December 2023. The shares bought back are held in treasury.
As at 31 December 2023, the Company had 184,622,487 Ordinary Shares in issue, 4,375,363 of which
were held in treasury. The total voting rights of the Company at 31 December 2023 were 180,247,124.
Subsequent to the year end and up to the date of this Annual Report, the Company bought back
2,544,899 Ordinary Shares of 1p each with a nominal value of £25,449 at a total cost of £2,111,382.
This represents 1.38% of the issued share capital as at 31 December 2023. The shares bought back
are held in treasury. As at the date of this Annual Report, the Company has 184,622,487 Ordinary
Shares in issue, 6,920,262 of which are held in treasury. The total voting rights of the Company at the
date of this Annual Report are 177,702,225. No shares have been disposed of from treasury during
the year ended 31 December 2023 and up to the date of this Annual Report.
Directors’ Report
Downing Renewables & Infrastructure Trust plc Annual Report | 86
Shareholders’ Rights
At general meetings of the Company, ordinary shareholders are entitled to one vote on a show of
hands and, on a poll, to one vote for every ordinary share held.
Substantial Shareholdings
The Directors have been informed of the following notifiable interests in the Company’s voting rights
as at 31 December 2023:
Shareholder
Number of
Ordinary
Shares
% of Total
Voting
Rights
Bagnall Energy Limited 27,501, 267 15.04
T Choithram & Sons Ltd (UK) 10,000,000 5.41
EFG Private Bank Limited 9,031,331 4.89
Information About Securities Carrying Voting Rights
The following information is disclosed in accordance with The Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 and DTR 7.2.6 of the Financial Conduct
Authority’s Disclosure Guidance and Transparency Rules:
> the Company’s capital structure and voting rights and details of the substantial 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 notice of AGM; and
>
there are no restrictions concerning the transfer of securities in the Company or on voting rights,
no special rights regarding control attached to securities and no agreements between holders of
securities regarding their transfer known to the Company.
Dividends and Dividend Policy
Dividends paid in respect of the year ended 31 December 2023 are set out on in note 20 to the
financial statements.
The Company will target a dividend of 5.80 pence in respect of the 12 months ending 31 December
2024, a 7.85% increase from 2023. The Company adopts a progressive dividend policy taking into
consideration the prevailing inflationary environment. Given the nature of the Company’s income
streams, the Board expects that this will result in increases to the dividend in the medium term.
Directors’ Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 87
The Company pays dividends on a quarterly basis with dividends typically declared in respect of
the quarterly periods ending March, June, September and December and paid in June, September,
December and March respectively. Dividends on Ordinary Shares shall be declared and paid in
Sterling. The Company may, where the Directors consider it appropriate, use the special distributable
reserve created by the cancellation of its share premium account to pay dividends. Distributions
made by the Company may take either the form of dividend income, or of “qualifying interest
income” which may be designated as interest distributions for UK tax purposes.
Significant Agreements
On 3 December 2021, the Company’s wholly owned subsidiary, Dore Holdco Limited, executed a
£25 million multi-currency revolving credit facility with Santander UK plc, as arranger, agent and
security trustee (“Santander”). The RCF was increased from £25 million to £40 million on 26 January
2023. The facility can be extended for a further year at Santander’s approval. The facility can be
drawn in GBP and EUR (with the Company also able to make use of funding in other currencies).
As at the 31 December 2023, drawings and commitments under the Company’s Revolving Credit
Facility are £18.6 million.
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 financial statements.
Financial Risk Management
Information about the Company’s financial risk management objectives and policies is set out in
note 16 to the financial statements.
Greenhouse Gas Emissions and Task force on Climate‑Related Financial Disclosures
Information about the Company’s GHG emissions and the Company’s reporting against the TCFD
recommendations is set out in the strategic report on pages 56 to 69.
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include specified information in a single identifiable
section of the annual report or a cross reference table indicating where the information is set out.
The information required under Listing Rule 9.8.4(7) in relation to allotments of shares is set out
on page 85. The Directors confirm that no additional disclosures are required in relation to Listing
Rule 9.8.4.
Disclosure of Information to the Auditor
The Directors holding office at the date of this Annual Report confirm that, so far as they are each aware,
there is no relevant audit information 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 information and to establish that the Company’s Auditor is aware of that information.
Directors’ Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 88
Streamlined Energy Carbon Reporting
As the Company has outsourced operations to third parties, there are no significant greenhouse
gas emissions to report from the operations of the Company. The Company qualifies as a low
energy user due to producing less than 40,000 kWh and is therefore exempt from disclosures on
greenhouse gas emissions and energy consumption.
Further detail on the Company’s environmental reporting can be seen in the Sustainability Report
on pages 44 to 69.
Future Developments
Further information regarding likely future developments in the business of the Company is set out
in the Investment Manager’s Report on page 28.
Charitable and Political Donations
During the year the Company made a charitable donation of £30,000 (2022: nil) in the UK, to
Piddlehinton Gym Limited (Charity number: 1119693) to put towards the repair of the gym’s roof.
Piddlehinton gym is a community hub closely located to the Company’s Bourne Park Solar Farm,
which provides facilities to enhance the wellbeing of local residents and the Solar Farm employees.
No political donations were made during the year (2022: nil).
Post Balance Sheet Events
Dividends
On 20 February 2024, The Board declared an interim dividend of 1.345 pence per share with
respect to the period ended 31 December 2023.
The Dividend was paid on 28 March 2024 to shareholders on the register on 1 March 2024. The
ex-dividend date is 29 February 2024.
Acquisitions
The Company made the following acquisitions throughout the year:
> through its main subsidiary, two operational hydropower plants located in Sweden for £5.1 million;
> a portfolio of operational solar PV assets located in the UK for £12.6 million;
> Mersey Reactive Power in the UK for £11 million; and
> a Swedish Electricity Distribution System Operator for £7 million.
> Operational 1.1 MW hydropower plant located in Iceland for £5 million.
> Five hydropower plants in Sweden for £6 million.
The Directors’ Report has been approved by the Board.
By order of the Board
Link Company Matters Limited
Company Secretary
10 April 2024
Directors’ Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 89
Corporate Governance Statement
This corporate governance statement forms part of the Directors’ report.
Introduction from the Chair
I am pleased to present the corporate governance statement for the year ended 31 December 2023.
The Company reports on its compliance with the AIC Code in this statement, as well as how the Board
and its committees have operated over the past year and how the Board exercises effective stewardship
over the Company’s activities in the interests of shareholders. The Board is accountable to shareholders
for the governance of the Company’s affairs and is committed to upholding the highest level of corporate
governance for the Company’s long-term success.
The Company assesses its governance standards against the principles and recommendatIons of the
AIC Code, as published in 2019, and endorsed by the FRC.
The Board believes that reporting against the principles and recommendations of the AIC Code provides
better information to shareholders because it addresses all of the principles set out in the UK Code
while also establishing additional principles and recommendations on issues of particular relevance to
investment companies. According to the terms of the FRC’s endorsement, AIC members who report
against the AIC Code and the AIC Guide fully meet their obligations under the UK Code and the related
disclosure requirements contained in the FCA’s listing rules.
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
According to the FCA’s listing rules, the Company is required to provide shareholders with a
statement on how the AIC Code’s main and supporting principles have been applied, as well as
whether the Company has complied with the AIC Code’s provisions. 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, because the Company is an externally managed investment trust, all of
its Directors are non-executive, the Company has no internal operations and the majority of the
Company’s day-to-day responsibilities are delegated to third parties. As a result, the Company
has not reported on the UK Code provisions relating to the role of the chief executive, executive
remuneration or internal audit, as for the reasons set out in the AIC Guide, the Board considers that
these provisions are not relevant to the position of the Company.
The Board has reviewed the principles and recommendations of the AIC Code and considers that
it has complied throughout the year, except that Directors are not appointed for a specific term
and the Company has adopted a policy of all Directors, including the Chair, standing for annual
re-election. The Board is mindful of and will have regard to corporate governance best practice
recommendations 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, however
this is kept under continual review.
Downing Renewables & Infrastructure Trust plc Annual Report | 90
The Principles of the AIC Code
The AIC Code is comprised of 18 Principles and 42 Provisions over five sections covering the
following areas:
1. Board Leadership and Purpose;
2. Division of Responsibilities;
3. Composition, Succession and Evaluation;
4. Audit, Risk and Internal Control; and
5. Remuneration
The Board’s Corporate Governance Statement sets out how the Company has complied with each
of the Principles of the AIC Code.
Corporate Governance Statement continued
AIC Code Principle How the Company Complies
A. A successful company is led
by an effective board, whose
role is to promote the long-
term sustainable success of the
Company, generating value for
shareholders and contributing to
wider society.
Members of the Board are fully engaged and bring diverse skills to the table
fostering healthy debate. The Investment Objective is to provide investors
with an attractive and sustainable level of income returns, with an element of
capital growth, by investing in a diversified portfolio of renewable energy and
infrastructure assets in the UK, Ireland and Northern Europe.
As part of this, the opportunities and risks faced by the business are considered,
monitored and assessed on a regular basis, both in terms of potential and emerging
risks that the Company may face. More detail regarding the principal risks and
uncertainties and the sustainability of the business model can be found in the
Strategic Report on pages 8 to 82.
B. The Board should establish the
Company’s purpose, values and
strategy, and satisfy 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 Objective which is to provide
investors with an attractive and sustainable level of income returns, with an
element of capital growth, by investing in a diversified portfolio of renewable
energy and infrastructure assets in the UK, Ireland and Northern Europe.
The investment processes followed by the Investment Manager is set out on pages
12 to 18.
The Board embraces a culture of inclusivity, fairness and responsibility, adopting 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 evaluation process, including its policies, practices and behaviour to ensure
that it is appropriately aligned to the Company’s activities.
C. The Board should ensure that
the necessary resources are in
place for the Company to meet
its objectives and measure
performance against them. The
Board should also establish
a framework of prudent and
effective controls, which
enable risk to be assessed and
managed.
The Board and the Management Engagement Committee 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 continue to meet its objectives.
The Audit and Risk Committee is responsible for assessing and managing risks.
Further information about how this is done can be found in the Audit and Risk
Committee Report on pages 106 to 109.
Downing Renewables & Infrastructure Trust plc Annual Report | 91
AIC Code Principle How the Company Complies
D. In order for the Company to
meet its responsibilities to
shareholders and stakeholders,
the Board should ensure
effective engagement with, and
encourage participation from,
these parties.
The Board understands its responsibilities to shareholders and stakeholders and
stakeholder considerations form an important part of decision making. Further
information on the Company’s engagement with stakeholders is set out in the
Section 172 statement on pages 71 to 73.
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 those in relation to dividends, new investment opportunities
and capital requirements.
The Directors welcome the views of all shareholders and place considerable
importance on communications with them. All shareholders are encouraged to
attend the AGM, where they will be given the opportunity to question the Chair,
the Board and representatives of the Investment Manager. In addition, the Directors
are available to meet shareholders. Shareholders wishing to communicate with the
Chair, or any other member of the Board, may do so by writing to the Company
Secretary at dorecosec@linkgroup.co.uk.
The Management Engagement Committee reviews the performance and continuing
appointment of the Company’s key service providers annually to ensure that
performance levels are satisfactory and any service issues can be discussed, as
appropriate.
F. The Chair leads the Board and
is responsible for its overall
effectiveness in directing
the Company. They should
demonstrate objective
judgement throughout their
tenure and promote a culture
of openness and debate. In
addition, the Chair facilitates
constructive Board relations and
the effective contribution of all
Non-Executive Directors, and
ensures that Directors receive
accurate, timely and clear
information.
The Chair is responsible for leading the Board and is responsible for its overall
effectiveness in directing the affairs of the Company. The Chair ensures that all
Directors receive accurate, timely and clear information and promotes a culture of
openness and debate in Board meetings and within the Company by encouraging
and facilitating the effective contribution of other Directors.
There is a clear division of responsibilities between the Chair, the Directors, the
Investment Manager and the Company’s other third-party service providers.
The Board meets regularly throughout the year and representatives of the
Investment Manager are in attendance, when appropriate, at each meeting and
most Committee meetings. The Board has agreed a schedule of matters specifically
reserved for decision by the Board which is available on the Company’s website.
Prior to each Board and Committee meeting, Directors are provided with a
comprehensive set of papers giving detailed information on the Company’s
investment performance, transactions and financial position. All Directors have
timely access to all relevant management, financial and regulatory information.
The review of the performance of the Chair was carried out during the year by
external evaluator Valerie Stogdale of Stogdale St James, the results of which were
then discussed with Joanna Holt as the Chair of the Nomination Committee as part
of the Board evaluation exercise. The document setting out the role of the Chair is
available on the Company’s website. This review concluded that the Chair conducts
meetings effectively, encourages individual contribution and ensures constructive,
rigorous debate. The Chair continues to make significant contributions to the
Company, devotes sufficient time to its affairs and displays excellent leadership.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 92
AIC Code Principle How the Company Complies
G. The Board should consist of
an appropriate combination
of Directors (and, in particular,
independent non-executive
Directors) such that no one
individual or small group of
individuals dominates the
Board’s decision making.
All of the Directors are non-executive and are independent of the Investment
Manager and the other service providers.
The Chair, Hugh Little, was independent of the Investment Manager at the time
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-executive Directors should
have sufficient time to meet
their board responsibilities. They
should provide constructive
challenge, strategic guidance,
offer specialist advice and hold
third party service providers to
account.
As part of the Board evaluation process, the contributions of each Director, as
well as their time commitments 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 conflict of interest or risk of over boarding.
Following the Board evaluation, 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 Committee reviews the performance and cost of
the Company’s third-party service providers on an annual basis. More information
regarding the work of the Management Engagement Committee can be found on
pages 104 to 105.
I. The Board, supported by the
Company Secretary, should
ensure that it has the policies,
processes, information, time
and resources it needs in order
to function effectively and
efficiently.
The Directors have access to the advice and services of the Company Secretary
through its appointed representatives and the Company Secretary is responsible
to the Board for ensuring that Board procedures are followed, and that
applicable rules and regulations are complied with. The Company Secretary is
also responsible for ensuring good information flows between all parties.
Composition, succession and
evaluation
J. Appointments to the Board
should be subject to a formal,
rigorous and transparent
procedure, and an effective
succession plan should be
maintained. Both appointments
and succession plans should be
based on merit and objective
criteria and, within this context,
should promote diversity
of gender, social and ethnic
backgrounds, cognitive and
personal strengths.
The Board has established a Nomination Committee, comprising all Directors.
This Committee will lead the appointment process of new Directors as and when
vacancies arise and as part of the Directors’ ongoing succession planning. More
information regarding the work of the Nomination Committee can be found on
pages 100 to 103.
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
opportunities and challenges facing the Company. Appointments are made first and
foremost on the basis of merit and taking into account the recognised benefits of
all types of diversity. The Board ensures that diversity is an important consideration
and part of the selection criteria used to assess candidates to achieve a balanced
Board.
The Company’s policy on diversity can be found on pages 100 to 103.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 93
AIC Code Principle How the Company Complies
K. The Board and its committees
should have a combination
of skills, experience and
knowledge.
Consideration 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 83.
The Directors’ skills, experience and knowledge are reviewed as part of the
annual Board evaluation 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 fill any gaps in
the Board’s knowledge or experience and who can devote sufficient time to the
Company to carry out their duties effectively.
L. Annual evaluation of the Board
should consider its composition,
diversity and how effectively
members work together to
achieve objectives. Individual
evaluation should demonstrate
whether each director continues
to contribute effectively.
The Board conducted an external Board evaluation for the period under review,
further information on which can be found in the Nomination Committee report
on page 102. The Nomination Committee considers the findings of the evaluation
process when making a recommendation to the Board regarding the election and
re-election of Directors.
Following this review, the Board is satisfied that the structure, mix of skills and
operation of the Board is effective and relevant and that each Director continues
to demonstrate the appropriate skills, experience and commitment to contribute
effectively to the Board. It is therefore recommended that shareholders vote in
favour of the election of all the Directors at the AGM to be held in June 2024.
Further information regarding the proposed election of each Director can be found
in the Notice of AGM.
Audit, risk and internal control
M. The Board should establish
formal and transparent policies
and procedures to ensure the
independence and effectiveness
of external audit functions and
satisfy itself on the integrity
of financial and narrative
statements.
The Audit and Risk Committee ensures that any work outside the scope
of the standard audit work requires prior approval by the Audit and Risk
Committee. This enables the Committee to ensure that the Auditor remains fully
independent.
The Audit and Risk Committee carries out a review of the performance of the
Auditor on an annual basis. Feedback from other third parties, including the
Investment Manager, is included as part of this assessment to ensure that the
Audit and Risk Committee takes into account the views of different parties who
have a close working relationship with the Auditor.
Further information regarding the work of the Audit and Risk Committee can be
found on page 106.
N. The Board should present a fair,
balanced and understandable
assessment of the Company’s
position and prospects.
The Board, through the Audit and Risk Committee, has considered the Annual
Report and financial statements as a whole and agreed that the document presents
a fair, balanced and understandable assessment of the Company’s position 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
objectives.
The Audit and Risk Committee reviews reports from the principal service
providers on compliance and the internal and financial control systems in
operation and relevant independent audit reports thereon.
The Audit and Risk Committee has carried out an annual review of the
effectiveness 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 Risk Committee
reviews the control systems in operation at the Company’s key service providers
on an annual basis, insofar as they relate to the affairs of the Company.
As set out in more detail in the Audit and Risk Committee on pages 106 to
109 the Company has in place a detailed system for assessing the adequacy of
those controls.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 94
AIC Code Principle How the Company Complies
P. Remuneration policies and
practices should be designed to
support strategy and promote
long-term sustainable success.
As outlined in the Remuneration Policy on page 114, the Company follows the
recommendation of the AIC Code that non-executive Directors’ remuneration
should reflect the time, commitment and responsibilities of the role. The
Company’s policy is that the remuneration of non-executive Directors should
reflect the experience of the Board as a whole and be determined with reference
to comparable organisations and appointments. Directors are not eligible for
bonuses, share options, long-term incentive schemes or other performance-
related benefits as the Board does not believe that this is appropriate for non-
executive Directors.
The Remuneration Policy is therefore designed to attract and retain high quality
Directors, whilst ensuring that Directors remain focused and incentivised 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 information regarding the work of the Remuneration Committee can be
found in the Remuneration Report and Policy which are set out on pages 110 to
114.
Q. A formal and transparent
procedure for developing policy
on remuneration should be
established. No Director should
be involved in deciding their
own remuneration outcome.
The Remuneration Policy has been developed with reference to the Company’s
peer group and the principles of the AIC Code. There are agreed Directors’
remuneration levels for the non-executive Directors (irrespective of experience or
tenure), for the Audit and Risk Committee Chair and for the Chair of the Company.
Any changes to the Chair’s fee is considered by the Remuneration Committee as
a whole, with the exception of the Chair who excuses himself for this part of the
meeting.
R. Directors should exercise
independent judgement and
discretion when authorising
remuneration outcomes,
taking account of company and
individual performance, and
wider circumstances.
Any decision regarding remuneration is taken after considering the performance of
the Company and wider market conditions and circumstances.
Board of Directors
Under the leadership of the Chair, the Board of Directors is collectively responsible for the long-term
sustainable success of the Company, generating value for shareholders and contributing 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 objectives and fulfil its obligations to
shareholders, within a framework of high standards of corporate governance and effective internal
controls. The Directors are responsible for the determination of the Company’s Investment Policy
and investment strategy and have overall responsibility for the Company’s activities, including the
review of investment activity and performance and the control and supervision of the Investment
Manager.
The Board consists of three non-executive Directors. It seeks to ensure that it has an appropriate
balance of skills and experience, and considers that, collectively, it has substantial recent and
relevant experience of investment trusts and financial and public company management. The Chair
of the Audit and Risk Committee, Ashley Paxton, has recent and relevant financial experience as set
out in his biography on page 83.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 95
The terms and conditions of the appointment of the Directors are formalised in letters of appointment,
copies of which are available for inspection from the Company’s registered office. 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 time during the year. Directors are not
entitled to any compensation for loss of office.
Board Operation
The Directors have adopted a formal schedule of matters specifically reserved for the approval of
the Board. These include the following:
> approval of the Company’s Investment Policy, long-term objectives and investment strategy;
> approval of acquisitions 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 financial statements and accounting policies,
prospectuses, circulars and other shareholder communications;
> approval of the raising of new capital and major financing facilities;
> 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 operating budgets.
Board Meetings
The Company has four scheduled Board meetings a year, with additional meetings arranged as
necessary.
At each Board meeting, the Directors follow a formal agenda which is circulated in advance by the
Company Secretary. The Investment Manager, Fund Administrator, AIFM and Company Secretary
regularly provide the Board with financial information, including an annual expenses budget,
together with briefing notes and papers in relation to changes in the Company’s economic and
financial environment, statutory and regulatory changes and corporate governance best practice.
At each Board meeting, representatives from the Investment Manager are in attendance to present
reports to the Directors covering the Company’s current and future activities, portfolio of assets
and its investment performance over the preceding period. The Board and the Investment Manager
operate in a fully supportive, co-operative and open environment and ongoing communication with
the Board is maintained between formal meetings.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 96
Committees
The Board has established four committees to assist its operations: the Audit and Risk Committee,
the Management Engagement Committee, the Remuneration Committee and the Nomination
Committee. The delegated responsibilities of each committee are clearly defined 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
committees.
Audit and Risk Committee
The Audit and Risk Committee meets at least twice a year and is chaired by Ashley Paxton.
The Committee ensures that the Company’s financial performance is properly monitored, controlled
and reported. The Committee has direct access to the Company’s Auditor and provides a forum
through which the Auditor reports to the Board. Representatives of the Auditor attend the scheduled
meetings of the Committee.
Further details about the Audit and Risk Committee and its activities during the year under review
are set out on pages 106 to 109.
Nomination Committee
The Nomination Committee meets once a year and is chaired by Joanna Holt. The Committee
oversees Board recruitment and succession planning and the annual Board evaluation process.
Given the limited size of the board, the entity feels it’s appropriate to have all members of the board
fulfil the role.
Further details about the Nomination Committee and its activities during the year under review are
set out on pages 100 to 103.
Management Engagement Committee
The Management Engagement Committee meets once a year and is chaired by Hugh Little. The
Committee reviews the performance and continuing appointment of the Investment Manager and
the Company’s other principal service providers.
Further details about the Management Engagement Committee and its activities during the year
under review are set out on page 104.
Remuneration Committee
The Remuneration Committee meets once a year and is chaired by Ashley Paxton. The Committee
conducts an annual review of the remuneration of the Directors. Given the limited size of the board,
the entity feels it’s appropriate to have all members of the board fulfil the role.
Further details about the Remuneration Committee and its activities during the year under review
are set out on pages 110 to 114.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 97
Meeting Attendance
The number of Board and Committee meetings held during the period ended 31 December 2023
and the attendance of the individual Directors is shown below:
Board Audit and Risk
Committee
Nomination
Committee
Remuneration
Committee
Management
Engagement
Committee
Number of
meetings
held
Number
attended
Number of
meetings
held
Number
attended
Number of
meetings
held
Number
attended
Number of
meetings
held
Number
attended
Number of
meetings
held
Number
attended
Hugh Little 4 4 4 4 1 1 1 1 4 4
Ashley Paxton 4 4 4 4 1 1 1 1 4 4
Joanna Holt 4 4 4 4 1 1 1 1 4 3
During the financial year ended 31 December 2023, the Company held additional ad hoc
Management Engagement Committee meetings to discuss the change of the Company’s AIFM.
Induction of New Directors
A procedure for the induction of new Directors has been established, including the provision of an
induction pack containing relevant information about the Company, its processes and procedures.
New appointees have the opportunity of meeting with the Chair, relevant persons at the Investment
Manager, the Company Secretary and the Company’s other service providers.
Election/Re‑election of Directors
Under the Company’s Articles of Association and in accordance with the AIC Code, Directors
are required to retire at the first AGM following their appointment. Thereafter, at each AGM all
Directors will seek annual re-election. Following the formal performance evaluation as detailed
later on in this report, the Board strongly recommends the re-election of each of the Directors
based on their experience and expertise in investment matters, their independence and continuing
effectiveness and commitment to the Company.
Conflicts of Interest
It is the responsibility of each individual Director to avoid an unauthorised conflict of interest
situation arising. The Director must request authorisation from the Board as soon as he/she
becomes aware of the possibility of an interest that conflicts, or might possibly conflict, with the
interests of the Company (“situational conflicts”). The Company’s Articles of Association authorise
the Board to approve such situations, where deemed appropriate.
A register of conflicts is maintained by the Company Secretary and is reviewed at Board meetings,
to ensure that any authorised conflicts remain appropriate. The Directors are required to confirm at
these meetings whether there has been any change to their position.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 98
The Board is responsible for considering Directors’ requests for authorisation of situational conflicts
and for deciding whether or not the situational conflict should be authorised. The factors to be
considered will include:
> whether the situational conflict could prevent the Director from properly performing their duties;
> whether it has, or could have, any impact on the Company; and
>
whether it could be regarded as likely to affect the judgement and/ or actions of the Director in
question.
When the Board is deciding whether to authorise a conflict or potential conflict, only Directors who
have no interest in the matter 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 conditions when giving
authorisation 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 duties. The Company has Directors’ and Officers’ liability insurance,
public offering of securities insurance and professional indemnity insurance to cover legal defence
costs. Under the Company’s Articles, the Directors are provided, subject to the provisions of UK
legislation, with an indemnity in respect of liabilities which they may sustain or incur in connection
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 Evaluation of the Board
The Directors are aware that they need to continually monitor and improve performance and
recognise that this can be achieved through regular Board evaluation, which provides a valuable
feedback mechanism for improving Board effectiveness. For the period under review, the Directors
opted to engage Valerie Stogdale of Stogdale St James to undertake an external performance
evaluation of the Board and of the Chair. The evaluation was specifically designed to assess the
strengths and independence of the Board and the Chair, individual Directors and the performance
of the Committees. The process is also intended to analyse the focus of Board meetings and assess
whether they are appropriate, or if any additional information may be required to facilitate Board
discussions. The evaluation of the Chair is carried out by the other Directors of the Company, led
by the Chair of the Nomination Committee. The Chair acts on the results of the evaluation by
recognising the strengths and addressing any weaknesses of the Board as appropriate. The results
of the Board evaluation process were presented to the Board by Valerie Stogdale and discussed in
detail by the Board as a whole. The evaluation process is carried out annually. Further information
on the Board evaluation can be found in the Nomination Committee report on page 102.
Following the evaluation process conducted during the year under review, the Board considers
that all current Directors contribute effectively and have the skills and experience relevant to the
leadership and direction of the Company. The Board has satisfied itself that the Directors have
enough time to devote to the Company’s affairs.
Corporate Governance Statement continued
Downing Renewables & Infrastructure Trust plc Annual Report | 99
Corporate Governance Statement continued
Internal Control Review
The Board is responsible for the systems of internal controls relating to the Company, including
the reliability of the financial reporting process and for reviewing the systems’ effectiveness. The
Directors have reviewed and considered the guidance supplied by the FRC on risk management,
internal control and related finance and business reporting and an ongoing process has been
established for identifying, evaluating and managing the principal risks faced by the Company.
This process, together with key procedures established with a view to providing effective financial
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 accounting records are maintained,
that the financial information on which business decisions are made and which is issued for
publication 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 objectives. 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 effectiveness of the systems of internal control
as they have operated over the year and up to the date of approval of the report and financial
statements. There were no matters arising from this review that required further investigation and
no significant failings or weaknesses were identified.
Internal Control Assessment Process
Robust risk assessments and reviews of internal controls are undertaken regularly in the context of
the Company’s overall Investment Objective.
In arriving at its judgement of what risks the Company faces, the Board has considered the
Company’s operations 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 objective;
> 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 benefits related to the review of risk and associated controls of the
Company; and
>
the extent to which third parties operate the relevant controls.
A risk matrix has been produced against which the risks identified and the controls in place to
mitigate those risks can be monitored. The risks are assessed based on the likelihood of them
happening, the impact on the business if they were to occur and the effectiveness of the controls
in place to mitigate them. This risk matrix is reviewed twice a year by the Audit and Risk Committee
and at other times as necessary. The principal risks that have been identified by the Board are set
out on pages 74 to 79.
Downing Renewables & Infrastructure Trust plc Annual Report | 100
Nomination Committee Report
I am pleased to present the Nomination Committee Report for the year ended
31 December 2023.
Meetings
The Nomination Committee (the “Committee”) comprises all Directors of the Company and met
once during the year. Given the limited size of the board, the entity feels it’s appropriate to have all
members of the board fulfil the role.
Responsibilities of the Committee
The primary responsibilities of the Committee are as follows:
> to review the structure, size and composition (including the skills, knowledge, experience and
diversity) of the Board;
> to give full consideration to succession planning for Directors in the course of its work, taking
into account the challenges and opportunities facing the Company, and the skills and expertise
needed on the Board in the future;
> to identify and nominate for the approval of the Board, candidates to fill Board vacancies as and
when they arise;
> to review the results of the Board performance evaluation process that relate to the composition
of the Board; and
> to review annually the time required from non-executive Directors.
The Committee’s terms of reference are available on the Company’s website. The Committee’s
meeting attendance is set out on page 97.
Appointment of New Directors
The Committee regularly reviews the composition and effectiveness of the Board and its committees
with the objective of ensuring that there is the appropriate balance of skills and experience required to
meet the current and future opportunities and challenges facing the Company.
During the year, the Committee led a formal process to appoint a fourth Director to the Board.
The Committee conducted interviews of a shortlist of candidates, provided by external recruitment
consultant, Nurole Ltd. Nurole Ltd is independent and has no connection with the Company or any
individual Director. As part of the recruitment process, the Committee actively considered a range of
factors, including the expertise and experience required in a prospective candidate and the diversity of
the Board, with particular reference to the LR 9.8.6R (9) targets on diversity and inclusion, as set out in the
Board Diversity Policy below. To date an appointment has not been made as the Board has not yet identified
a candidate that meets the required criteria. Recruitment will be further reviewed throughout 2024.
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 opportunities and challenges
facing the Company. Appointments are made on the basis of merit and objective criteria designed
to promote diversity of gender, social background, ethnicity, age, sexual orientation, disability, and
professional and industry specific knowledge, all of which are important considerations in ensuring
that the Board and its committees have the right balance of skills, experience, independence and
knowledge to carry out their responsibilities.
Downing Renewables & Infrastructure Trust plc Annual Report | 101
The Board supports the introduction of diversity and inclusion targets in the FCA Listing Rules:
a) at least 40% of individuals on the Board are to be women;
b) at least one senior Board position is to be held by a woman; and
c) at least one individual on the Board is to be from a minority ethnic background.
The Board continues to develop succession plans to increase diversity on the Board; however, it
also recognises that the size of the Board should be considered alongside the Company’s specific
needs. Diversity of thought, skills and experience was a key focus for Board selection at IPO
and subsequently, and Board composition is felt to be well-rounded and commensurate for the
Company’s present needs. As the Company continues to grow, any future Board and Committee
appointments will, to the extent possible, be made with due consideration to the recommendations
of the FTSE Women Leaders Review, the Parker Review and the Financial Conduct Authority’s
Listing Rule 9.8.6R (9), alongside the established needs of the Company.
The Board recognises that being a recently formed Board of a small size makes it more challenging
to achieve the diversity targets in the short term and as such, the Board is not currently compliant
with the targets under LR 9.8.6R (9). However, as detailed above, it has strongly considered diversity
as part of its recruitment process for an additional Director.
The following tables, show the gender and ethnic background of the Directors as of the date of this
report, in accordance with Listing Rule 9 Annex 2.1.
Gender identity or sex
Number of Board
members
Percentage on the
Board
Number of senior
positions on the
Board
Men 2 66.6%
Women 1 33.3% Not applicable*
Not specified/prefer not to say 0 0
Ethnic background
Number of Board
members
Percentage on the
Board
Number of senior
positions on the
Board
White British or other White
(including minority white groups)
3 100% 1
Mixed/Multiple Ethnic Groups 0 0 0
Asian/Asian British 0 0 0
Black/African/Caribbean/Black British 0 0 0
Other ethnic group, including Arab 0 0 0
Not specified/prefer not to say 0 0 0
The data in the above tables was collected through self-reporting by the Directors.
* This column is inapplicable as the Company is externally managed and does not have executive management functions, specifically it
does not have a CEO or CFO.
Nomination Committee Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 102
Succession Planning
The Board recognises that an effective and orderly succession plan for the Board, ensuring the right
mix of skills and experience of future Board members, is vital. All three Directors were appointed
at the same time at IPO and the Committee is mindful of the need for orderly succession planning
to avoid significant change to Board membership in a short timeframe. To ease the process of
succession, interim reviews of the succession process and earlier tenure end dates will be considered
in ongoing annual reviews. The Committee considered succession planning throughout the year.
Performance Evaluation of the Board
In respect of the review of performance of the Board for the year ended 31 December 2023, the
Board engaged Valerie Stogdale of Stogdale St James (“Stogdale”) to conduct the evaluation. Stogdale
is independent and has no connection with the Company or any individual Director.
Stogdale assessed the performance of the Board, the individual Directors and the Chair, as well as
the effectiveness of the Company’s Committees. In particular the evaluation focussed on board
composition, succession planning, investment strategy and performance, risk management, and
stakeholder and external relations.
All Directors and the Company Secretary completed a questionnaire and were interviewed via
videoconference. Additional interviews were also held with the Company’s Broker, Singer Capital
Markets, and the Company’s Investment Manager, Downing LLP. Stogdale attended the Board and
Committee meetings in November 2023 as an observer.
Stogdale issued a formal report to the Chair and the Chair of the Nomination Committee (in the
place of a Senior Independent Director) and then presented the results of the evaluation to the
full Board via videoconference. The results of the evaluation indicated that the DORE Board is
competent, operates effectively, and functions harmoniously and diligently. The Chair leads the
Board effectively with professional competence and encourages effective contributions amongst
Directors without constraint. Areas identified with scope for improvement, included the development
of a comprehensive induction process for any new appointments to the Board, as well as ongoing
refinement of succession planning.
Further information on the performance evaluation of the Board can be found in the Corporate
Governance Statement on page 98.
Nomination Committee Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 103
Tenure Policy and Re‑election of Directors
The Board is mindful of, and will have regard to, corporate governance best practice recommendations
with respect to the tenure of the Chair and in future succession planning, as appropriate. Directors
are not appointed for a specific term and the Company has adopted a policy of all Directors, including
the Chair, standing for annual re-election. The Committee has considered each Directors’ performance
and concluded that each Director continues to demonstrate the appropriate skills, experience and
commitment to contribute effectively to the Board, and has sufficient time to allocate to their role.
The Committee has recommended to the Board that all Directors be re-elected at the Company’s 2024
AGM.
Joanna Holt
Chair of the Nomination Committee
10 April 2024
Nomination Committee Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 104
I am pleased to present the Management Engagement Committee Report for the year
ended 31 December 2023.
Meetings
The Management Engagement Committee (the “Committee”) comprises all Directors of the
Company and met four times during the year. The usual cycle of business is for the Committee to
meet once per year, but additional meetings were held to discuss the appointment of the Company’s
Alternative Investment Fund Manager (“AIFM”).
Responsibilities of the Committee
The primary responsibilities of the Committee 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 AIFM and its compliance with the terms of the
AIFM agreement;
> to consider the appropriateness of the Investment Management Agreement, that it is fair,
complies with all regulatory requirements, conforms with market and industry practice and
remains in the best interests of shareholders;
> to consider the appropriateness of the AIFM agreement, that it is fair, complies with all regulatory
requirements, conforms with market and industry practice and remains in the best interests of
shareholders;
> to consider and review the level and method of remuneration of the Investment Manager and
the AIFM pursuant to the terms of their respective agreements with the Company;
> to consider the continuing appointment of the Investment Manager and AIFM and make
recommendations to the Board; and
> to review the performance and services provided by the Company’s other service providers and
consider whether the continuing appointment of such service providers under the terms of their
agreements are in the interests of shareholders as a whole, and make recommendations to the
Board.
The Committee’s terms of reference are available on the Company’s website. Committee meeting
attendance is set out on page 97.
Continuing Appointment of the Investment Manager
The Board, through the Committee, keeps the performance and continuing appointment of the
Investment Manager under continual review. The Committee conducts an annual review of the
Investment Manager’s performance and makes a recommendation to the Board about its continuing
appointment.
Management Engagement Committee Report
Downing Renewables & Infrastructure Trust plc Annual Report | 105
The Directors consider that the Investment Manager has executed the Company’s investment
strategy according to the Board’s expectations. Accordingly, the Board believes that the continuing
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.
Change of AIFM
As part of the ongoing review of the performance and continuing appointment of the Company’s
AIFM and other service providers, a decision was made during the year to change the Company’s
AIFM from Gallium Fund Solutions Limited to JTC Global AIFM Solutions. The Company’s Fund
Administrator was also changed from Gallium P E Depositary Limited to JTC (UK) Limited. Following
a period of transition covering an agreed notice period, the changes effect on 1 February 2024.
Further information can be found on page 16.
Hugh W M Little
Chair of the Management Engagement Committee
10 April 2024
Management Engagement Committee Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 106
I am pleased to present the Audit and Risk Committee Report for the year ended
31 December 2023.
Meetings
The Audit and Risk Committee (the “Committee”) comprises all Directors of the Company and met
four times during the year ended 31 December 2023 and twice post year end.
As Hugh Little was independent on appointment and provides significant contribution to the
Committee meetings, the Directors believe it is appropriate for him to be a member of the
Committee, despite his role as Chair of the Board.
Responsibilities of the Committee
The primary responsibilities of the Committee are as follows:
> to monitor the integrity of the financial statements of the Company including its annual and
interim reports and any other formal announcements relating to its financial performance;
> to review and report to the Board on any significant financial reporting issues and judgements
which those statements contain having regard to matters communicated to it by the Auditor;
> to review the content of the annual report and financial statements and advise the Board on
whether, taken as a whole, it is fair, balanced and understandable and provides shareholders
with sufficient information to assess the Company’s position and performance, business model
and strategy;
> to keep under review the Company’s internal financial controls and review the adequacy and
effectiveness of the Company’s internal control and risk management systems and monitor the
proposed implementation of such controls;
> to assess the current position of the Company’s emerging and principal risks, including those
that would threaten its business model, future performance, solvency or liquidity and reputation,
and how they are managed and mitigated, and the prospects of the Company over such period
as deemed appropriate;
> to manage the relationship with the Company’s external Auditor, including reviewing the
Auditor’s remuneration, independence and performance and make recommendations to the
Board as appropriate;
> to review the Auditor’s independence and objectivity and the effectiveness and quality of the
audit process; and
> to consider annually whether there is a need for the Company to have its own internal audit
function.
Activities in the Year
> conducted a review of the internal controls and risk management systems of the Company;
> agreed the plan and fees with the Auditor in respect of their private report on its limited review
of the half-year financial statements for the period ended 30 June 2023 and the statutory audit
of the Annual Report for the year ended 31 December 2023, including the principal areas of
focus;
Audit and Risk Committee Report
Downing Renewables & Infrastructure Trust plc Annual Report | 107
Audit and Risk Committee Report continued
> reviewed the Company’s interim and annual financial statements and recommended these to
the Board for approval;
> reviewed the methodology and assumptions applied in valuing the assets of the Company;
> reviewed whether an internal audit function would be of value and concluded that this would
provide minimal additional comfort at considerable extra cost to the Company;
> reviewed the continued application adoption of the investment entity accounting standard; and
> reviewed the viability statement.
Significant issues
The Committee considered the following key issues in relation to the Company’s financial statements
during the year. A more detailed explanation of the consideration of the issues set out below, and the
steps taken to manage them, is set out in the Principal Risks and Uncertainties on pages 74 to 79.
Valuation of Investments
The valuation of the Company’s investments, held through DORE Hold Co Limited, is the key
driver of the Company’s Gross Asset Value and discounted cash flow modelling is typically used
to determine their carrying values. Inherent in these models are the discount rates used, which
have been selected and recommended by the Investment Manager. On an ongoing basis the
Committee considers and challenges the subjectivity and appropriateness of the discount rates and
other assumptions used with the Investment Manager relating to all of the Company’s investment
holdings.
Given the importance of ensuring the Company’s investments have been correctly stated, the
Committee also discussed the valuation of the Company’s investments with its auditor both at the
planning stage and as part of the completion of their audit, and detailed consideration has been
given (amongst other aspects) to challenging the selection and application of key assumptions used
in the models including the discount rates, inflation, asset lives, energy yields and power prices
applied.
The Committee is satisfied that the valuation methodology used for the Company’s investments is
appropriate.
Internal controls
The Committee considers the process for managing the risk of the Company and its service
providers on an ongoing basis. The Company’s risk matrix continues to be the core element of the
Company’s risk management to help manage these risks and is formally reviewed by the Committee
each quarter. This consideration includes identification of any new risks as well as any changes to
the likelihood and impact of previously identified risks against the controls in place to mitigate their
impact.
The Committee has also considered the need for an internal audit function. The Committee has
decided that the systems and procedures employed by the Investment Manager and the Company’s
other service providers provide sufficient assurance, that the control environment to safeguard the
Company’s assets, is properly maintained. An internal audit function specific to the Company is
therefore not considered necessary.
Downing Renewables & Infrastructure Trust plc Annual Report | 108
Audit and Risk Committee Report continued
Going concern and longer term viability of the Company
The Committee has considered the Company’s financial requirements for the next 12 months,
as well as the longer term viability covering a five year period to 31 December 2028. Based on
this assessment the Committee have a reasonable expectation that the Company will be able to
continue to operate and to meet its liabilities as they fall due over the period to 31 December 2028.
Additional information can be found on pages 80 and 81.
Adoption of Investment entity accounting standard
Under IFRS 10, investment entities 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 conditions to be
met by the Company for it to meet the definition of an investment entity. Further detail on this can
be found in note 2 to the Financial Statements.
The Directors have reviewed the criteria and are satisfied that the Company meets the criteria
of an Investment Entity under IFRS 10. As explained in note 2 to the financial statements, the
Directors are of the opinion that the Company meets the requirements of an “Investment Entity”.
Assessing whether the Company and certain subsidiaries met the criteria of Investment Entities,
in accordance with the definition set out in IFRS 10 was seen as a key judgement. The Committee
debated the appropriateness of adopting the standard with the Investment Manager and external
Auditor. The Committee concluded that applying the investment entity exemption to IFRS 10
improves stakeholders’ understanding of the financial performance and position of the Group.
The Company’s viability statement can be found on page 80.
Audit fees and non-audit services provided by the Auditor
The Committee reviewed the audit plan and fees presented by the Auditor and considered its report
on the financial statements. Total fees for the year payable to the Auditor amounted to £188,088
(2022: £312,000). This figure includes non-audit fees of £10,000 (2022: £157,500).
All non-audit services provided by the Auditor during the year were approved in advance by the
Committee and Directors. Further information on the fees paid to the Auditor is set out in note 6
to the financial statements.
Effectiveness of the external audit
The Committee reviews the effectiveness of the external audit carried out by the Auditor on an
annual basis. The Chair of the Committee maintained regular contact with the Company’s Audit
Partner holding separate meetings with them regularly throughout the year including at the planning
stage, and prior to the finalisation of the audit of the Annual Report and financial statements for
the year ended 31 December 2023. These meetings were held without the Investment Manager
present, to discuss the planning of the audit, the key areas of focus, and the initial findings from
such audit and whether any issues had arisen from the Auditor’s interaction with the Company’s
various service providers.
Downing Renewables & Infrastructure Trust plc Annual Report | 109
Audit and Risk Committee Report continued
Independence and objectivity of the Auditor
The Committee has considered the independence and objectivity of the Auditor and has conducted
a review of the non-audit services the Auditor has provided during the year under review. The
Committee receives an annual confirmation 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 financial statements for the year ended 31 December
2023 is his third as Audit Partner. The Committee is satisfied that the Auditor’s objectivity and
independence is not impaired by the performance of their non-audit services and that the Auditor
has fulfilled its obligations to the Company and its shareholders.
Re-appointment of the Auditor
Following a review of the Auditor’s performance, services provided during the year, and independence
and objectivity, the Committee has recommended to the Board that BDO LLP be re-appointed as
the Company’s Auditor. The approval for the re-appointment of BDO as Auditor will be sought from
shareholders at the Company’s Annual General Meeting on 6 June 2024.
Ashley Paxton
Chair of the Audit and Risk Committee
10 April 2024
Downing Renewables & Infrastructure Trust plc Annual Report | 110
Statement from the Chair of the Remuneration Committee
I am pleased to present the Directors’ Remuneration Report for the year ended 31 December 2023.
As set out in the Corporate Governance statement on pages 89 to 99, the Remuneration Committee
(“the Committee”) comprises all Directors and met once during the year ended 31 December 2023.
Given the limited size of the board, the entity feels it’s appropriate to have all members of the board
fulfil the role.
During the year ended 31 December 2023, the annual fees were set at the rate of £55,000 for the
Chair, £45,000 for the Chair of the Audit and Risk Committee and £40,000 for a Director.
At its meeting in November 2023, the Committee compared Directors’ remuneration to that of the
Company’s peer group and the average for similar-sized investment trusts. The Committee also
reviewed the Trust Associates 2023 Newsletter on Investment Company Non-Executive Directors’
Fees. The Committee agreed that Directors’ fees remained appropriate and therefore there has
been no change to the Directors’ fees during the year.
The Remuneration Policy will be implemented in the same manner as it was in the previous financial
year. There are no planned changes to the Remuneration Policy in 2024.
Responsibilities of the Committee
The main functions of the Committee include:
> agreeing the policy for the remuneration of the Directors and reviewing and proposing changes
to the policy;
> reviewing and considering ad hoc payments to the Directors in relation to duties undertaken
over and above normal business; and
> appointing independent professional remuneration advisers.
Directors’ Fee Levels
Expected
fees for the
year ending
31 December
2024
Fees for the
year ended
31 December
2023
Chair £55,000 £55,000
Chair of the Audit and Risk Committee £45,000 £45,000
Director £40,000 £40,000
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 articles of association.
Directors’ Remuneration Report
Downing Renewables & Infrastructure Trust plc Annual Report | 111
Voting at the AGM
The Directors’ Remuneration Report is put to a shareholder vote on an annual basis. The Directors’
Remuneration Policy is put to a shareholder vote in the first 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.
The Company’s Remuneration Report was approved by shareholders at its AGM on 8 June 2023,
and the Remuneration Policy was approved by shareholders at its AGM on 6 April 2022. There will
be no changes to the policy this year. An ordinary resolution will be put to shareholders at the
upcoming AGM in June 2024 to receive and approve the Directors’ Remuneration Report for the
year ended 31 December 2023.
The votes cast were as follows:
Directors’
Remuneration Report
(AGM 2023)
Directors’
Remuneration Report
(AGM 2022)
Number of
votes
% of votes
cast
Number of
votes
% of votes
cast
For 86,051,648 99.82 52,151,106 99.82
Against 151,154 0.18 96,528 0.18
Total votes cast 86,202,802 100 52, 247, 6 34 100
Number of votes withheld 44,098 – 26,825 –
Performance of the Company
The Company does not have a specific benchmark but has deemed the FTSE 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.
10 Dec
2020
10 Mar
2021
10 Jun
2021
10 Mar
2022
10 Jun
2022
10 Sep
2021
10 Dec
2021
10 Sep
2022
10 Dec
2022
10 Mar
2023
10 Jun
2023
10 Sep
2023
10 Dec
2023
DORE (rebased) FTSE All-share
5,000
5,500
6,000
6,500
7,000
7,500
8,000
8,500
9,000
9,500
Total Shareholder Return
Directors’ Remuneration Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 112
Directors’ Remuneration for the Year Ended 31 December 2023 (audited)
The remuneration paid to the Directors during the year ended 31 December 2023 is set out in the
table below:
Year ended 31 December 2023 Year ended 31 December 2022
Fees
£
Expenses
£
Total
£
Fees
£
Expenses
£
Total
£
Hugh W M Little 55,000 529 55,529 51,250 3,744 54,994
Joanna Holt 40,000 1,314 41,314 36,250 2,294 38,544
Ashley Paxton 45,000 3,052 48,052 41,250 3,412 44,662
Total 140,000 4,895 144,895 128,750 9,450 138,200
All Directors were appointed on 28 October 2020. There is no variable component to the Directors’
pay, all pay is fixed.
Annual Percentage Change in Directors’ Remuneration
The below table sets out the annual percentage change in Directors’ fees for the years ended
31 December 2022, and 31 December 2023 and the year ending 31 December 2024.
Director
% from 2023-
2024
% from 2022–
2023
% from 2021-
2022
Hugh W M Little Nil 7. 3% 2.5%
Joanna Holt Nil 10.3% 3.6%
Ashley Paxton Nil 9.1% 3.1%
Relative Importance of Spend on Pay
The table below sets out in respect of the year ended 31 December 2023:
a) the remuneration paid to the Directors;
b) the Investment management fee; and
c) the distributions made to shareholders by way of dividend.
Directors’ Remuneration Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 113
Year ended
31 December
2023
£’000
Year ended
December
2022
£’000
Percentage
change
2022-2023
Directors’ remuneration 140 125 12%
Investment management fee 2,044 1,781 15%
Dividends paid to shareholders 9,696 8,039 21%
Directors’ Interests (audited)
There is no requirement under the Company’s Articles of Association for Directors to hold shares
in the Company.
As at 31 December 2023, the interests of the Directors and any connected persons in the shares of
the Company are set out below:
Year ended
31 December
2023
Number of
Shares
Year ended
31 December
2022
Number of
Shares
Hugh W M Little 204,045 150,000
Joanna Holt 21,085 21,085
Ashley Paxton* 100,000 80,000
* All of Ashley Paxton’s shares are held jointly with Alexandra Paxton, a person closely associated with Ashley Paxton.
There have been no changes to any of the above holdings between 31 December 2023 and the
date of this report.
None of the Directors or any persons connected with them had a material interest in the Company’s
transactions, arrangements or agreements during the year.
Remuneration Advisers
The Company has not sought advice or service from any person outside of the Company in respect
of consideration of Directors’ remuneration.
Directors’ Remuneration Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 114
Remuneration Policy
A resolution to approve this Remuneration Policy was proposed at the Company’s AGM on 6 April
2022. The resolution was passed, and the policy provisions outlined below will be in effect until
they are next put to shareholders for renewal of that approval, which must happen every three
years, or if the Remuneration Policy is changed, in which case shareholder approval for the new
Remuneration Policy will be sought.
The Company follows the recommendation of the AIC Code that non-executive Directors’
remuneration should reflect the time commitment and responsibilities of the role. The Board’s
policy is that the remuneration of non-executive Directors should reflect the experience of the
Board as a whole and be determined with reference to comparable organisations and appointments.
The fees of the non-executive Directors are determined within the limits set out in the Company’s
articles of association; the Directors are not eligible for bonuses, pension benefits, share options,
long-term incentive schemes or other benefits. There are no performance conditions attached to
the remuneration of the Directors as the Board does not consider such arrangements or benefits
necessary or appropriate for non-executive Directors. Under the Directors’ letters of appointment,
there is no notice period, and no compensation is payable to a Director on leaving office.
It is the Board’s policy that Directors do not have service contracts, but Directors are provided
with a letter of appointment as a non-executive Director. The terms of their appointment provide
that Directors shall retire and be subject to election at the first annual general meeting after their
appointment. The Directors are subject to retirement by rotation in accordance with the articles of
association; however, the Company has adopted the policy of annual re-election of all Directors.
The Company is committed to ongoing shareholder dialogue and any views expressed by shareholders
on the fees being paid to Directors would be taken into consideration by the Board when reviewing
the Directors’ remuneration policy and in the annual review of Directors’ fees.
Approval
The Directors’ Remuneration Report was approved by the Board and signed on its behalf by:
Ashley Paxton
Chair of the Remuneration Committee
10 April 2024
Downing Renewables & Infrastructure Trust plc Annual Report | 115
Statement of Directors’ Responsibilities
In respect of the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in
accordance with UK adopted international accounting standards and applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under
that law the Directors are required to prepare financial statements in accordance with UK adopted
international accounting standards. Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of the state of affairs of the
Company and of the profit or loss for the Company for that period.
In preparing the financial statements, the Directors are required to:
> select suitable accounting policies and then apply them consistently;
> state whether they have been prepared in accordance with UK adopted international accounting
standards, subject to any material departures disclosed and explained in the financial statements;
> make judgements and accounting estimates that are reasonable and prudent;
> prepare the financial statements on the going concern basis unless it is inappropriate to presume
that the Company will continue in business; and
> prepare a directors’ report, a strategic report and directors’ remuneration report which comply
with the requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that the financial 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 prevention and detection of fraud and other irregularities. The Directors
are responsible for ensuring that the annual report and accounts, taken as a whole, are fair,
balanced, and understandable and provides the information necessary for shareholders to assess
the Company’s position, performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made
available on a website. Financial statements are published on the Company’s website in accordance
with legislation in the United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. 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 financial statements contained therein.
Downing Renewables & Infrastructure Trust plc Annual Report | 116
Statement of Directors’ Responsibilities continued
Directors’ responsibilities pursuant to DTR4
The Directors confirm that, to the best of their knowledge:
> The financial statements have been prepared in accordance with the applicable set of accounting
standards and Article 4 of the IAS regulation and give a true and fair view of the assets, liabilities,
financial position and profit and loss of the Company.
> The annual report includes a fair review of the development and performance of the business
and the financial position of the Company, together with a description of the principal risks and
uncertainties that they face.
On behalf of the Board.
Hugh W M Little (Chair)
10 April 2024
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Downing Renewables & Infrastructure Trust plc Annual Report | 118
Independent Auditor’s Report
To the members of Downing Renewables and Infrastructure Trust PLC
Opinion on the financial statements of the Remuneration Committee
In our opinion the financial statements:
> give a true and fair view of the state of the Company’s affairs as at 31 December 2023 and of its
profit for the year then ended;
> have been properly prepared in accordance with UK adopted international accounting standards;
> have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Downing Renewables and Infrastructure PLC (the
‘Company’) for the year ended 31 December 2023 which comprise the Statement of Comprehensive
Income, the Statement of Financial Position, the Statement of Changes in Equity, the Statement of
Cash Flows and notes to the financial statements, including a summary of significant accounting
policies. The financial reporting framework that has been applied in their preparation is applicable
law and UK adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit opinion is consistent with the additional report to the audit committee.
Independence
Following the recommendation of the audit committee, we were appointed by the Board on
10 November 2020 to audit the financial statements for the period ended 31 December 2021 and
subsequent financial periods. The period of total uninterrupted engagement including retenders
and reappointments is 3 years, covering the years ended 31 December 2021 to 31 December
2023. We remain independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. The non-audit services prohibited by that standard were not
provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of
the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of
accounting included:
> Assessing and challenging the inputs in the cashflow forecast prepared by the Directors against
existing contractual commitments, including performing stress testing considering downside
scenarios and assessing the impact on the Company’s liquidity position;
Downing Renewables & Infrastructure Trust plc Annual Report | 119
Independent Auditor’s Report continued
> Assessing assumptions used within the valuation models to supporting documentation per the
Key audit matter noted below and considering how these impact on the ability of the portfolio
companies to make distributions to the Company and therefore on the Company’s ability to
meet its commitments as they fall due;
> 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 the base case and downside
scenarios.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial
statements are authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code,
we have nothing material to add or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it appropriate to adopt the going
concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
Overview
Key audit matters Valuation of investments
2023
Yes
2022
Yes
Materiality
Company financial statements as a whole
£3.212m (2022: £3.290m) based on 1.5% (2022: 1.5%) of Net assets
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
financial statements. We also addressed the risk of management override of internal controls,
including assessing whether there was evidence of bias by the Directors that may have represented
a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified, including those
which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit,
and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Downing Renewables & Infrastructure Trust plc Annual Report | 120
Key audit matter How the scope of our audit addressed the key audit matter
Valuation of
Investments
See note 9 and
accounting policy
on page 131.
100% of the underlying
investment portfolio is
represented by unquoted equity
and loan investments.
The valuation of investments
is calculated using discounted
cash flow models. This is a highly
subjective accounting estimate
where there is an inherent risk of
bias arising from the investment
valuations being prepared by the
Investment Manager (with the
assistance of externally appointed
experts), who is remunerated
based on the net asset value of
the company.
These estimates include
judgements including future
power prices, power generation,
discount rates, asset lives and
inflation.
Investments at fair value
through profit or loss is the most
significant balance in the financial
statements and is the key driver
of performance therefore we
determined this to be a key audit
matter.
In respect of all underlying equity investments valued using
discounted cash flow models, we performed the following
specific procedures:
> For new investments, obtained and reviewed purchase
agreements and contracts and considered whether
inputs were accurately reflected in the valuation model.
> For existing investments, we analysed changes in
significant assumptions and inputs compared with
assumptions audited in previous periods and vouched
these to supporting documentation and independent
evidence including industry data.
> Used spreadsheet analysis tools to assess the integrity of
the valuation models.
> Agreed power generation and power price forecasts to
power purchase agreements and independent reports
prepared by management’s experts. We assessed the
competency, independence and objectivity of the
management’s expert.
> Challenged the appropriateness of the selection and
application of key assumptions in the model including
the discount rate, inflation, asset life, energy yield
and power price applied by benchmarking to available
industry data and with the assistance of our internal
valuations experts.
> Reviewed the corporation tax workings within the
valuation model and considered whether these had
been modelled accurately in the context of current
corporation tax legislation and rates
> Agreed a sample of cash and other net assets
incorporated into the valuation to bank statements and
investee company management accounts.
> Considered the accuracy of forecasting by comparing
forecasts to actual results.
> Vouched loans to loan agreements, verified the terms of
the loans and recalculated interest income and compared
to that recorded.
For each of the key assumptions in the valuation models,
we considered the appropriateness of the assumption by
benchmarking to available industry data and consulting with
our internal valuations experts and considering whether
alternative reasonable assumptions could have been applied.
We considered each assumption in isolation as well as in
conjunction with other assumptions and the valuation as a
whole in order to derive a reasonable range of valuations and
assess whether the company’s valuation was within that range.
Key observations
Based on our procedures performed we found the valuation of
the investment portfolio and judgements applied therein to be
acceptable.
Independent Auditor’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 121
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating
the effect of misstatements. We consider materiality to be the magnitude by which misstatements,
including omissions, could influence the economic decisions of reasonable users that are taken on
the basis of the financial 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
testing needed. Importantly, misstatements below these levels will not necessarily be evaluated
as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a
whole.
Based on our professional judgement, we determined materiality for the financial statements as a
whole and performance materiality as follows:
Company financial statements
2023 2022
Materiality £3.212m £3.290m
Basis for determining materiality 1.5% of Net Assets
Rationale 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 financial statements.
Performance materiality £2.248m £2.303m
Basis for determining performance materiality 70% of Materiality
Rationale for the percentage applied for
performance materiality
The level of performance materiality applied was set after having
considered a number of factors including our assessment of the
Company’s overall control environment and the expected total value
of known and likely misstatements and the level of transactions in
the year.
Specific materiality
We also determined that for those items impacting realised return, a misstatement of less than
materiality for the financial statements as a whole, specific materiality, could influence the economic
decisions of users as it is a measure of the Company’s performance. As a result, we determined
materiality for these items to be £382k (2022: £267k, based on 5% of revenue return before tax
(2022: 5%). We further applied a performance materiality level of 70% (2022: 70%) of specific
materiality to ensure that the risk of errors exceeding specific materiality was appropriately mitigated.
We used a specific materiality in the current year rather than a lower testing threshold given the
presence of a dividend target and therefore an enhanced incentive to overstate revenue returns.
Independent Auditor’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 122
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences
in excess of £160k (2022: £65k) and for those items impacting realised return £19k (2022: £5k).
We also agreed to report differences below these thresholds that, in our view, warranted reporting
on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information
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 information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance Code specified 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 financial
statements or our knowledge obtained during the audit.
Going concern and
longer-term viability
> The Directors’ statement with regards to the appropriateness of adopting the going
concern basis of accounting and any material uncertainties identified; and
> The Directors’ explanation as to their assessment of the Company’s prospects, the period
this assessment covers and why the period is appropriate.
Other Code provisions
> Directors’ statement on fair, balanced and understandable;
> Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks;
> The section of the annual report that describes the review of effectiveness of risk
management and internal control systems; and
> The section describing the work of the Audit Committee.
Independent Auditor’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 123
Other Companies Act 2006 reporting
Based on the responsibilities 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
matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
> the information given in the Strategic report and the Directors’ report for the financial
year for which the financial statements are prepared is consistent with the financial
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 identified material misstatements in the
strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Matters on which we
are required to report by
exception
We have nothing to report in respect of the following matters in relation to which the
Companies Act 2006 requires us to report to you if, in our opinion:
> adequate accounting records have not been kept, or returns adequate for our audit
have not been received from branches not visited by us; or
> the financial statements and the part of the Directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
> certain disclosures of Directors’ remuneration specified by law are not made; or
> we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Statement of Directors’ Repsonsibilities, the Directors are responsible
for the preparation of the financial statements and for being satisfied that they give a true and fair
view, and for such internal control as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial 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
Independent Auditor’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 124
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 influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We
design procedures in line with our responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, 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 regulations, including fraud. We considered the significant laws
and regulations to be compliance with Companies Act 2006, the FCA listing and DTR rules, the
principles of the UK Corporate Governance Code, requirements of s.1158 of the Corporation Tax
Act, and applicable accounting standards.
Our procedures in response to the above included:
> Agreement of the financial statement disclosures to underlying supporting documentation;
> Enquiries of management, the board and relevant Service Organisations regarding known or
suspected instances of non-compliance with laws and regulation and fraud. We corroborated
our enquiries through our review of board meeting 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
regulations
> Re-performing an assessment of the company’s investment trust status as of year-end, in order
to ensure that all eligibility conditions outlined under section 1158 of Corporation tax act 2010
are met.
We assessed the susceptibility of the financial statements to material misstatement, including fraud
and considered the fraud risk areas to be the valuation of investments, revenue recognition and
management override of controls.
Our procedures in response to the above included:
> The procedures set out in the Key Audit Matters section above;
> Obtaining independent evidence to support the ownership of investments;
> Recalculating the service fees received from DORE Hold Co Limited;
> Recalculating interest income in total and agreeing receipts to bank;
> Testing a risk based sample of journal entries to supporting documentation;
> Evaluating whether there was evidence of bias by the Directors that represented a risk of material
misstatement due to fraud;
Independent Auditor’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 125
> Evaluating whether the judgments and estimates made in selecting the significant assumptions
indicate possible management bias; and
> Incorporating an element of unpredictability by testing a judgemental sample of smaller expense
items that would not otherwise be selected for testing.
We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members and remained alert to any indications of fraud or non-compliance with
laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in
the audit procedures performed and the further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial statements, the less likely we are to
become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website
at: www.frc.org.uk/auditorsresponsibilities. This description 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 matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted 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
10 April 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
Independent Auditor’s Report continued
Downing Renewables & Infrastructure Trust plc Annual Report | 126
Financial Statements
Downing Renewables & Infrastructure Trust plc Annual Report | 126
Downing Renewables & Infrastructure Trust plc Annual Report | 127
Notes
Revenue
31 December
2023
£’000s
Capital
31 December
2023
£’000s
Total
31 December
2023
£’000s
Revenue
31 December
2022
£’000s
Capital
31 December
2022
£’000s
Total
31 December
2022
£’000s
Income
Return on investment 5 10,872 (564) 10,308 8,044 28,058 36,102
Total income 10,872 (564) 10,308 8,044 28,058 36,102
Expenses
Investment
management fees 4 (2,043) – (2,043) (1,781) – (1,781)
Directors’ fees 18 & 22 (150) – (150) (125) – (125)
Other expenses 6 (1,191) – (1,191) (1,001) – (1,001)
Total expenses (3,384) – (3,384) (2,907) – (2,907)
Profit before taxation 7,488 (564) 6,924 5,137 28,058 33,195
Taxation 7 – – – – – –
Profit after taxation 7, 488 (564) 6,924 5,137 28,058 33,195
Profit and total
comprehensive
income
attributable to:
Equity holders of the
Company 7,488 (564) 6,924 5,137 28,058 33,195
Earnings per share –
Basic & diluted
(pence) 8 4.1 (0.3) 3.8 3.2 17.4 20.6
The total column of this statement is the Statement of Comprehensive Income of the Company
prepared in accordance with International Financial Reporting Standards (IFRS) as adopted. The
supplementary revenue return and capital columns have been prepared in accordance with the
Association of Investment Companies Statement of Recommended Practice (AIC SORP).
Statement of Comprehensive Income
For the year from 1 January 2023 to 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 128
Notes
31 December
2023
£’000s
31 December
2022
£’000s
Non-current assets
Investments at fair value through profit and loss 9 212,030 196,866
212,030 196,866
Current assets
Trade and other receivables 10 337 567
Cash and cash equivalents 15 1,778 23,328
2,115 23,895
Total assets 214,145 220,761
Current liabilities
Trade and other payables 11 (2,083) (1,862)
(2,083) (1,862)
Total liabilities (2,083) (1,862)
Net assets 212,062 218,899
Capital and reserves
Called up share capital 12 1,846 1,846
Share Premium 65,910 65,910
Special distributable reserve 13 107, 341 114,618
Treasury Account 12 (4,065) –
Revenue reserve 6,209 1,140
Capital reserve 34,821 35,385
Shareholders’ funds 212,062 218,899
Net asset value per ordinary share (pence) 14 117.65 118.57
The audited financial statements of Downing Renewables & Infrastructure Trust PLC were approved
by the Board of Directors and authorised for issue on 10 April 2024 and are signed on behalf of the
Board by:
Hugh W M Little
Chair
Company registration number 12938740
Statement of Financial Position
As at 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 129
Notes
Share
Capital
£’000s
Share
Premium
£’000s
Capital
Reserve
£’000s
Treasury
Account
£’000s
Revenue
Reserve
£’000s
Special
Distributable
Reserve
£’000s
Total
£’000s
Net cash
attributable to
shareholders at
31 December 2021 1,370 14,506 7,327 – 203 118,436 141,841
Gross proceeds from
share issue 476 52,375 – – – – 52,851
Share issue costs – (971) – – – 22 (949)
Dividends – – – – (4,201) (3,840) (8,0 41)
Total comprehensive
income for the year – – 28,058 – 5,137 – 33,195
Net assets
attributable to
shareholders at
31 December 2022 1,846 65,910 35,385 – 1,140 114,618 218,899
Share issue costs 12 – – – – – – –
Shares bought back 12 – – – (4,065) – – (4,065)
Dividends 20 – – – – (2,419) ( 7, 27 7) (9,696)
Total comprehensive
income for the year – – (564) – 7,488 – 6,924
Net assets
attributable to
shareholders at
31 December 2023 1,846 65,910 34,821 (4,065) 6,209 107, 3 41 212,062
The Company’s distributable reserves consist of the Special distributable reserve, Capital reserve
attributable to realised gains and Revenue reserve. There have been no realised gains or losses at
the reporting date. Total reserves available for distribution were £113,897k (2022: £115,756k).
Statement of Changes in Equity
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 130
Notes
Year to
31 December
2023
£000s
Year to
31 December
2022
£000s
Cash flows from operating activities
Profit before taxation 6,924 33,195
Adjusted for:
Interest income 5 (9,872) ( 7,792)
Unrealised loss / (gain) on investments at fair value 5 564 (28,058)
Decrease / (Increase) in receivables 230 (285)
Increase in payables 221 661
Net cash outflows from operating activities (1,933) (2,279)
Cash flows from investing activities
Loan advanced to DORE Holdco Limited 9 (17, 356) (38,008)
Loan Interest Received 9 11,500 8,500
Net cash outflows from investing activities (5,856) (29,508)
Cash flows from financing activities
Gross proceeds of share issue 12 – 52,852
Amounts paid in respect of share buybacks (4,065) –
Dividends paid 20 (9,696) (8,041)
Share issue costs – (949)
Net cash flows from financing activities (13,761) 43,862
Decrease in cash and cash equivalents (21,550) 12,074
Cash and cash equivalents at the start of the year 23,328 11,254
Cash and cash equivalents at the end of the year 15 1,778 23,328
Statement of Cash Flows
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 131
1. General Information
The Company is registered in England and Wales under number 12938740 pursuant to the
Companies Act 2006 and its registered office Link Company Matters Limited 6th Floor, 65 Gresham
Street, London, United Kingdom, EC2V 7NQ.
The Company was incorporated on 8 October 2020 and is a Public Limited Company and the
ultimate controlling party of the Group. The Company’s ordinary shares were first admitted to the
premium segment of the Financial Conduct Authority’s Official List and to trading on the Main
Market of the London Stock Exchange under the ticker DORE on 10 December 2020.
The audited financial statements of the Company (the “financial statements”) are for the period
from 1 January 2023 to 31 December 2023 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 objective is to generate an attractive total return for investors comprising stable
dividend income and capital preservation, with the opportunity for capital growth through the
acquiring and realising value from a diverse portfolio of renewable energy infrastructure projects.
The Company currently makes its investments through its principal holding company and single
subsidiary, DORE Hold Co Limited (“Hold Co”), and intermediate holding companies which are
directly owned by the Hold Co. The Company controls the Investment Policy of each of the Hold Co
and its intermediate holding companies in order to ensure that each will act in a manner consistent
with the Investment Policy of the Company.
The Company has appointed Downing LLP as its Investment Manager (the “Investment Manager”)
pursuant to the Investment Management Agreement dated 12 November 2020. The Investment
Manager is registered in England and Wales under number OC341575 pursuant to the Companies
Act 2006. The Investment Manager is regulated by the FCA, number 545025.
2. Basis of preparation
The financial statements have been prepared in accordance with UK-adopted international
accounting standards and with the requirements of the Companies Act 2006 as applicable to
companies reporting under those standards.
The financial statements have also been prepared as far as is relevant and applicable to the Company
to the extent that this does not conflict with the requirements of IFRS and in accordance with
the Statement of Recommended Practice: Financial Statements of Investment Trust Companies
and Venture Capital Trusts (“SORP”) issued in October 2019 by the Association of Investment
Companies (“AIC”).
The financial statements are prepared on the historical cost basis, except for the revaluation of
certain financial instruments at fair value through profit or loss. The principal accounting policies
adopted are set out below. These policies are consistently applied.
The financial statements are presented in Sterling, which is the Company’s functional currency and
are rounded to the nearest thousand, unless otherwise stated.
Notes to the Financial Statements
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 132
2. Basis of preparation (Continued)
Estimates and underlying assumptions are reviewed regularly on an on-going basis. Revisions to
accounting estimates are recognised in the year in which the estimates are revised and in any future
year affected. The key assumptions are detailed below:
Power Prices
The Company uses long-term, forward-looking power price forecasts from third party consultants for
the purposes of asset valuations. In the UK an equal blend is taken from the most recent central case
forecasts from two leading consultants, whilst in Sweden an equal blend is taken from the most recent
central case forecasts from three leading consultants. This is then blended with actual pricing for forward
market trades for the next 4 years in Sweden and the next 3 years in the UK enabling a more holistic
view of the power market to be included in the valuation. Where fixed price arrangements are in place,
the financial model will reflect this price for the relevant time frame.
Inflation
The Company uses near-term (calendar year 2024) inflation forecast of 3.46% for the purposes of UK
asset valuations, falling to a medium-term inflation forecast of 3.00% from 2025. From 2030 onwards,
this forecast reduces to 2.25% in line with the RPI reform announced by the UK Government.
A near-term inflation (calendar year 2024) forecast of 4.60% is used for the Swedish asset valuations.
The forecast in the medium term (2025 onwards) to long term reduces to 2.00%, in line with the long
term Swedish central bank’s target inflation rate.
Foreign Exchange
Cashflows from assets that are generated in a non-sterling currency are converted in each period
they are earned using the actual hedges in place, with the residual amounts converted at the relevant
exchange rate.
The relevant exchange rate is taken from a forward curve provided by the Company’s foreign exchange
advisors for ten years, at which point the exchange rate is held constant due to the impracticalities of
hedging currency further into the future.
Discount rate
Discount rates used for the purpose of the valuation process are representative of the Investment
Manager’s and the Board’s assessment of the rate of return in the market for assets with similar
characteristics and risk profile.
As a result of movements in the risk-free rate in the UK, the weighted average discount rate of the Solar
portfolio increased by 0.2% to 8.0%. The increased discount rates took effect as at 30 June 2023.
Discount rates in use across the portfolio range from 6.3% to 8.05%, with the weighted average value
at 7.7%.
The significant estimates, judgement or assumptions for the year are set out in further detail on page 135.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 133
2. Basis of preparation (Continued)
Basis of Consolidation
The sole objective of the Company through its subsidiary DORE Hold Co Limited is to own
Renewable Energy Infrastructure Projects, via individual corporate entities. Hold Co typically will
issue equity and loans to finance its investments.
The Directors have concluded that in accordance with IFRS 10, the Company meets the definition
of an investment entity having evaluated the criteria that needs to be met (see below). Under IFRS
10, investment entities are required to hold subsidiaries at fair value through profit or loss rather
than consolidate them on a line-by-line basis, meaning Hold Co’s cash, debt and working capital
balances are included in the fair value of the investment rather than in the Company’s assets and
liabilities. Hold Co has one investor which is the Company. However, in substance, Hold Co is
investing the funds of the investors of the Company on its behalf and is effectively performing
investment management services on behalf of many unrelated beneficiary investors.
Characteristics of an investment entity
There are three key conditions to be met by the Company for it to meet the definition of an
investment entity. For each reporting year, the Directors will continue to assess whether the
Company continues to meet these conditions:
> It obtains funds from one or more investors for the purpose of providing these investors with
professional investment management services;
> It commits to its investors that its business purpose is to invest its funds solely for the returns
(including having an exit strategy for investments) from capital appreciation, investment
income or both; and
> It measures and evaluates the performance of substantially all its investments on a fair value basis.
In satisfying the second criterion, the notion of an investment timeframe is critical. An investment
entity should not hold its investments indefinitely but should have an exit strategy for their realisation.
The Company intends to hold its renewable energy infrastructure assets for the remainder of
their useful life to preserve the capital value of the portfolio. However, as the renewable energy
infrastructure assets are expected to have no residual value after their useful lives, the Directors
consider that this demonstrates a clear exit strategy from these investments.
Due to the nature of hydro as an asset class and where the land is owned with the asset, which is
the case for the Swedish hydro assets the assets are deemed to have an infinite life assuming an
appropriate level of capex to maintain the equipment and dams. As a result, valuations are based on
a perpetual life where the model assumes the portfolio is sold in 2050.
Subsidiaries are therefore measured at fair value through profit or loss, in accordance with IFRS 13 “Fair
Value Measurement”, IFRS 10 “Consolidated Financial Statements” and IFRS 9 “Financial Instruments”.
The Directors believe the treatment outlined above provides the most relevant information to investors.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 134
2. Basis of preparation (Continued)
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 portfolio of investments
as well as its cash position, income and expense flows. As at 31 December 2023, the Company
had net assets of £212.1 (2022: £218.9) million including cash balances of £1.8 (2022: £23.3)
million. The Group, through its' unconsolidated subsidiaries, utilised EUR 49.4 million of its facility
with SEB to help fund the additional hydropower acquisitions. Through its main subsidiary, DORE
Hold Co Limited, the Company has access to a RCF of £40 million which is available for either new
investments or investment in existing projects and working capital. At the reporting date £18.6m
had been drawn down from the RCF.
The Directors and the Investment Manager continue to actively monitor this and its potential effect
on the Company and its investments.
In particular, they have considered the following specific key potential impacts:
> Unavailability of key personnel at the Investment Manager or Fund Administrator; and
> Increased volatility in the fair value of investments.
The directors have considered the impact of the Ukraine war on SPV revenues, which are derived from
the sale of electricity, and note that 65% of revenues are not exposed to floating power prices. Revenue
is received through power purchase agreements in place with providers of electricity to the market
and also through government subsidies. In the year since acquisition and up to the date of this report,
there has been no significant impact on revenue and cash flows of the SPVs. The SPVs have contractual
operating and maintenance agreements in place with large and reputable providers. Therefore, the
Directors and the Investment Manager do not anticipate a threat to the Group’s revenue.
The Directors have reviewed Company forecasts and projections which cover a period of 5 years
from the date of approval of this report, considering foreseeable changes in investment and trading
performance, which show that the Company has sufficient financial resources to continue in
operation for 5 years from the date of approval of this report. The directors have considered the
impact of the current economic environment in their review, assessing three scenarios with different
levels of investment and cash flows. On the basis of this review, and after making due enquiries,
the Directors have a reasonable expectation that the Company has adequate resources to continue
in operation and accordingly. They continue to adopt the going concern basis in preparing the
financial statements.
Segmental reporting
The Chief Operating Decision Maker (the “CODM”) being the Board of Directors, is of the opinion
that the Company is engaged in a single segment of business, being investment in renewable energy
infrastructure.
The Company has no single major customer. The internal financial information to be used by the
CODM on a quarterly basis to allocate resources, assess performance and manage the Company
will present the business as a single segment comprising the portfolio of investments in renewable
energy infrastructure assets.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 135
2. Basis of preparation (Continued)
Critical accounting judgements, estimates and assumptions
In the application of the Company’s accounting policies, which are described in note 3, the
Directors are required to make judgements, estimates and assumptions about the fair value of
assets and liabilities that affect reported amounts. It is possible, that actual results may differ from
these estimates.
The preparation of the financial statements requires management to make judgements, estimates
and assumptions that affect the application of the accounting policies and the reported amount
of assets, liabilities, income and expenses. Estimates, by their nature, are based on judgement
and available information, hence actual results may differ from these judgements, estimates and
assumptions.
The key assumptions that have a significant impact on the carrying value of investments that are
valued by reference to the discounted value of future cashflows are the useful life of the assets,
the discount rates, the rate of inflation, the price at which the power and associated benefits can
be sold and the amount of electricity the assets are expected to produce. The sensitivity analysis of
these key assumptions is outlined in note 9 to the financial statements, on page 143.
Useful lives are based on the Investment Manager’s estimates of the period over which the assets
will generate revenue which are periodically reviewed for continued appropriateness. Where land
is leased from an external landlord, the operational life assumed for the purposes of the asset
valuations is valued at the earlier of planning or lease expiry. Where a project has a life in excess of
75 years, the land it is located on is owned and there are no constraints regarding planning, asset
valuations are based on a perpetual life including long term capital expenditure assumptions. This
is the basis for the valuation of the hydropower assets. The actual useful life may be a shorter or
longer period depending on the actual operating conditions experienced by the asset.
The discount rates are subjective and therefore it is feasible that a reasonable alternative assumption
may be used resulting in a different value. The discount rates applied to the cashflows are reviewed
regularly by the Investment Manager to ensure they are at the appropriate level. The Investment
Manager will take into consideration market transactions, 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 indexation and an assumption is made as to near term and long-term rates.
The price at which the output from the generating assets is sold is a factor of both wholesale electricity
prices and the revenue received from the Government support regimes. Future power prices are
estimated using external third-party forecasts which take the form of specialist consultancy reports,
which reflect various factors including gas prices, carbon prices and renewables deployment, each
of which reflect the UK and global response to climate change.
The Company’s investments in unquoted investments are valued by reference to valuation
techniques approved by the Directors and in accordance with the International Private Equity and
Venture Capital (“IPEV”) Guidelines.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 136
2. Basis of preparation (Continued)
Critical accounting judgements, estimates and assumptions (Continued)
As noted above, the Board have concluded that the Company meets the definition of an investment
entity as defined in IFRS 10. This conclusion involved a degree of judgement and assessment as to
whether the Company meets the criteria outlined in the accounting standards.
New standards issued
New and revised standards issued with effect from 1 January 2023:
> Narrow-scope amendments to IAS 1 “Presentation of Financial Statements”, Practice
statement 2 and IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
> Amendments to IAS 12, “Income Taxes” – deferred tax related to assets and liabilities arising
from a single transaction.
> Amendments to IFRS 17, “Insurance contracts” – this standard replaces IFRS 4, which currently
permits a wide variety of practices in accounting for insurance contracts.
The impact of these standards is not expected to be material to the reported results and financial
position of the Company.
New and revised standards issued with effect from 1 January 2024:
> Amendments to IAS 1 on classification of liabilities clarify that liabilities are classified as either
current or non-current, depending on the rights that exist at the end of the reporting year.
The impact of these standards is not expected to be material to the reported results and financial
position of the Company.
3. Material Accounting Policies
Financial Instruments
Financial assets and financial liabilities are recognised on the Company’s Statement of Financial
Position when the Company becomes a party to the contractual provisions of the instrument.
Financial assets and liabilities are to be de-recognised when the contractual rights to the cash flows
from the instrument expire or the asset is transferred, and the transfer qualifies for de-recognition
in accordance with IFRS 9 Financial Instruments.
Financial assets
The Company classifies its financial assets as either investments at fair value through profit or
loss or financial assets at amortised cost. The classification depends on the purpose for which the
financial assets are acquired. Management determines the classification of its financial assets at
initial recognition.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 137
3. Material Accounting Policies (Continued)
Investments at fair value through profit or loss (“FVTPL”)
The fair value of investments in renewable energy infrastructure projects is calculated by discounting
at an appropriate discount rate future cash flows expected to be received by the Company’s
intermediate holdings, from investments in both equity (dividends and equity redemptions),
shareholder and inter-company loans (interest and repayments).
Investments are designated upon initial recognition as held at fair value through profit or loss. Gains
or losses resulting from the movement in fair value are recognised in the Statement of Comprehensive
Income at each valuation point. As shareholder loan investments form part of a managed portfolio
of assets whose performance is evaluated on a fair value basis, loan investments are designated at
fair value in line with equity investments. The Company’s loan and equity investments in Hold Co
are held at fair value through profit or loss. Gains or losses resulting from the movement in fair value
are recognised in the Company’s Statement of Comprehensive Income at each valuation point.
Financial assets at Fair Value through profit and loss are recognised/ derecognised at the date of the
purchase/ disposal. Investments are initially recognised at cost, being the fair value of consideration
given. Transaction costs are recognised in the Statement of Comprehensive Income as incurred.
Fair value is defined as the amount for which an asset could be exchanged between knowledgeable
willing parties in an arm’s length transaction. Fair value is calculated on a levered, discounted
cashflow basis in accordance with IFRS 13.
Financial assets at amortised cost
Loans and other receivables are measured at amortised cost using the effective interest method,
less any impairment.
They are included in current assets, except where maturities are greater than 12 months after
the reporting date, in which case they are to be classified as non-current assets. The Company’s
financial assets held at amortised cost comprise “other receivables” and “cash and cash equivalents”
in the statement of financial position.
Impairment
Impairment provisions for loans and receivables are recognised based on a forward-looking
expected credit loss model. All financial assets assessed under this model are immaterial to the
financial statements.
Financial liabilities at amortised cost
Financial liabilities are classified as other financial liabilities, comprising other non-derivative
financial instruments, including trade and other payables, which are to be measured at amortised
cost using the effective interest method.
Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance
with the substance of the contractual arrangement.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 138
3. Material Accounting Policies (Continued)
Equity instruments
The Company’s Ordinary Shares are classified as equity and are not redeemable. Costs associated
or directly attributable to the issue of new equity shares are recognised as a deduction in equity and
are charged either from the share premium account or the special distributable reserve, created on
court cancellation of share premium account.
Taxation
The Company is approved as an Investment Trust Company (“ITC”) under sections 1158 and
1159 of the Corporation Taxes Act 2010 and part 2 Chapter 1 Statutory Instrument 2011/2999.
The approval is subject to the Company continuing to meet the eligibility conditions of the
Corporation Tax Act 2010. The Company intends to ensure that it complies with the ITC regulations
on an ongoing basis and regularly monitors the conditions required to maintain ITC status.
Under the current system of taxation in the UK, the Company is not liable to taxation on its
operations in the UK. Current tax is the expected tax payable on the taxable income for the year,
using tax rates that have been enacted or substantively enacted at the date of the Statement of
Financial Position.
Dividends
Dividends to the Company’s shareholders are recognised when they become legally payable. In the
case of interim dividends, this is when they are paid. In the case of final dividends, this is when they
are approved by the shareholders at the Annual General Meeting.
Income
Income includes investment income from financial assets at FVTPL and finance income.
Investment income from financial assets at FVTPL is recognised in the Statement of Comprehensive
Income within income when the Company’s right to receive payments is established.
Finance income comprises interest earned on intercompany loans and is recognised on an accruals
basis.
Expenses
Expenses are accounted for on an accruals basis. Share issue expenses directly attributable to the
listing of shares are charged through the Special Distributable Reserve or Share Premium Account
with incremental costs associated with raising capital charged through profit and loss. The Company’s
investment management fee, administration fees and all other expenses are charged through the
Statement of Comprehensive Income. In respect of the analysis between revenue and capital these
items are presented and charged 100% as revenue items.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 139
3. Material Accounting Policies (Continued)
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with banks and other
short-term highly liquid deposits with original maturities of three months or less.
Deposits to be held with original maturities of greater than three months are included in other
financial assets. There are no expected credit losses as the bank institutions will have high credit
ratings assigned by international credit rating agencies.
4. Investment management fees
Under the terms of the Investment Management Agreement, the Investment Manager is entitled
to a management fee from the Company, which is calculated quarterly in arrears at 0.95% of NAV
per annum up to £500 million and 0.85% per annum of NAV in excess of £500 million.
The Company incurred £2,042,579 (2022: £1,780,561) of management fees during the year,
investment management fees of £ 1,530,183 (2022: £1,426,289) were unpaid at the year end.
No performance fee is payable to the Investment Manager under the Investment Management
Agreement and there are no provisions that would entitle the Investment Manager to a performance
fee in respect of future years.
5. Return on investment
31 December
2023
£’000s
31 December
2022
£’000s
Unrealised movement in fair value of investments (Note 9) (564) 28,058
Interest arising on shareholder loans (note 9) 9,872 7,792
Provision of Corporate Services to DORE Holdco Limited 1,000 252
10,308 36,102
During the year, the Company supplied DORE Holdco Limited with the services laid out in the
Corporate Services Agreement dated 1 October 2022, these include but are not limited to consulting
and planning; product management; financial and other services.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 140
6. Other expenses
31 December
2023
£’000s
31 December
2022
£’000s
Alternative investment fund manager fee 182 152
Fees payable to the Company’s auditor for the audit of the Company’s
annual accounts
188 167
Fees payable to the Company’s auditor for other services 10 –
Company secretarial fee 67 58
Legal fees 61 69
Depositary fee 55 49
Hedging advisory 25 25
Marketing fee 76 64
Broker fee 53 88
Retainer fee 52 –
Professional fees 346 199
Other fees 76 130
1,191 1,001
Total fees payable to BDO LLP for non-audit services during the year were £10,000 (2022:
£157,500). This relates to the review of certain procedures of the interim financial statements under
the International Standard of Related Services (ISRS) 4400 (Revised) ‘Agreed-Upon Procedures
Engagements’. In the prior year, fees paid were for professional fees paid to BDO relating to
reporting accountant services received during the Company’s most recent share issuance program.
These share issue costs were allocated against the Company’s capital reserves.
7. Taxation
Taxable income during the year was offset by expenses and the tax charge for the year ended
31 December 2023 is £Nil.
As described above, the Company is recognised as an ITC for accounting years and to the extent
that there is insufficient group tax relief available to eliminate taxable profits, the Company may
make interest distributions to reduce taxable profits to nil.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 141
Notes to the Financial Statements continued
For the year ending 31 December 2023
7. Taxation (Continued)
(a) Analysis of charge in the year
Revenue
£’000
Capital
£’000
Total
£’000
Analysis of tax charge / (credit) in the year:
Current tax:
UK corporation tax on profits of the year – – –
Adjustments in respect of previous year – – –
Deferred tax:
Origination & reversal of timing differences – – –
Adjustments in respect of previous years – – –
Tax charge / (credit) on profit on ordinary activities – – –
(b) Factors affecting total tax charge for the year
The UK corporation tax rate was increased from 19% to 25% on 1 April 2023. The effective UK
corporation tax rate applicable to the Company for the year is 23.5%. The tax charge differs from
the charge resulting from applying the standard rate of UK corporation tax for an investment trust
company. The differences are explained below.
Revenue
£’000
Capital
£’000
Total
£’000
Profit on ordinary activities before tax 7,488 (564) 6,924
Profit on ordinary activities multiplied by effective rate of
corporation tax in the UK of 23.5%
1,760 (133) 1,627
Effect of:
Capital profits not taxable – 133 133
Excess expenses utilised (51) – (51)
Non-taxable income – – –
Expenses non deductible 40 – 40
Interest distributions (1,749) – (1,749)
Timing differences – – –
Group relief – – –
Excess management expenses – – –
Total charge / (credit) for the year – – –
Downing Renewables & Infrastructure Trust plc Annual Report | 142
7. Taxation (Continued)
(b) Factors affecting total tax charge for the year (Continued)
HM Revenue & Customs (“HMRC”) has granted approval to the Company’s status as an investment
trust, and it is the Company’s intention to continue meeting the conditions required to obtain approval
in the foreseeable future. Investment companies which have been approved by HMRC under section
1158 of the Corporation Tax Act 2010, as amended are exempt from tax on capital gains.
The March 2021 Budget announced a further increase to the main rate of corporation tax to 25%
from 1 April 2023. This rate has been substantively enacted at the balance sheet date.
There is no unrecognised deferred tax asset or liability at 31 December 2023.
8. Earnings per share
For the year to 31 December 2023
Revenue
£’000
Capital
£’000
Total
£’000s
Revenue and capital profit attributable to equity holders
of the Company
7,488 (564) 6,924
Weighted average number of ordinary shares in issue 183,494,773 183,494,773 183,494,773
Basic and diluted earnings per share (pence) 4.1 (0.3) 3.8
For the period to December 2022
Revenue
£’000
Capital
£’000
Total
£’000s
Revenue and capital profit attributable to equity holders
of the Company
5,137 28,058 33,196
Weighted average number of ordinary shares in issue 161,532,958 161,532,958 161,532,958
Basic and diluted earnings per share (pence) 3.2 17.4 20.6
Basic and diluted earnings per share are the same as there are no arrangements which could have
a dilutive effect on the Company’s ordinary shares.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 143
9. Investments at fair value through profit and loss
Total
2023
£’000s
Total
2022
£’000s
Fair value at start of the year 196,866 131,508
Loan advanced to DORE Hold Co Limited 17, 356 38,008
Unrealised (loss) / gain on investments at FVTPL (564) 28,058
Loan Interest (movement) (1,628) (708)
Fair value at end of the year 212,030 196,866
There is a loan agreement between the Company and DORE Hold Co Limited for £200,000,000
(2022: £200,000,000). At the reporting date £169,113,413 (2022: £151,756,990) 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 year end and outstanding at
the reporting date amounted to £96,110 (2022: £1,724,341). Interest is repayable at the repayment
date of 31 December 2030 unless otherwise agreed between the parties to repay earlier. The Fair
Value movements are largely attributable to market risk.
The NAV decrease was driven by updated power price forecasts showing a return to more normalised
long term power pricing more quickly than previously expected.
The Company received interest payments of £11,500,000 (2022: £8,500,000) during the year.
Included in the fair value are cash balances at DORE Hold Co of £5.3 million (2022: £4.8 million).
The Company owns 100% of the nine shares in DORE Hold Co Limited. These shares were allotted
for a consideration 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 financial assets or financial liabilities ranges from level 1 to level 3 and
is determined on the basis of the lowest level input that is significant to the fair value measurement.
The fair value of the Company’s investments is ultimately determined by the underlying net present
values of the SPV (“Special Purpose Vehicle”) investments. Due to their nature, they are always
expected to be classified as level 3 as the investments are not traded and contain unobservable inputs.
The fair value hierarchy consists of the following three levels:
>
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
>
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
>
Level 3 - Inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 144
9. Investments at fair value through profit and loss (Continued)
Fair value measurements (Continued)
The following table analyses the Company's assets at 31 December 2023:
Level 1
£’000s
Level 2
£’000s
Level 3
£’000s
Total
£’000s
Investment portfolio summary
Unquoted investments at fair value
through profit and loss
– – 212,030 212,030
Total – – 212,030 212,030
The determination of what constitutes ‘observable’ requires significant judgement by the Company.
Observable data is considered to be market data that is readily available, regularly distributed or
updated, reliable and verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market.
The only investment held at fair value is the investment in DORE Holdco Limited, which is fair
valued at each reporting date. The investment has been classified within level 3 as the investment
is not traded and contains unobservable inputs.
The fair value of the Company’s equity and loan investments in Hold Co is ultimately determined by
the underlying fair values of the SPV investments, the Company’s sensitivity analysis of reasonably
possible alternative input assumptions is the same as the subsidiary.
There have been no transfers between levels during the year.
Valuations are derived using a discounted cashflow methodology in line with IPEV Valuation
Guidelines and take into account, inter alia, the following:
i. due diligence findings where relevant;
ii. the terms of any material contracts including PPAs;
iii. asset performance;
iv. power price forecasts from leading market consultants; and
v. the economic, taxation or regulatory environment.
The DCF valuations of the Company’s investments represent the largest component of GAV and the
key sensitivities are considered to be the discount rate used in the DCF valuations and assumptions
in relation to inflation, energy yield, foreign exchange and power price.
The shareholder loan and equity investments are valued as a single class of financial asset at fair
value in accordance with IFRS 13 Fair Value Measurement.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 145
9. Investments at fair value through profit and loss (Continued)
Sensitivity
Sensitivity analysis is produced to show the impact of changes in key assumptions adopted to arrive at
the valuation. For each of the sensitivities, it is assumed that potential changes occur independently
of each other with no effect on any other base case assumption, and that the number of investments
in the portfolio remains static throughout the modelled life. Accordingly, the NAV per share impacts
shown below assume the issue of further shares to fund these commitments.
Information on climate related sensitivities can be found on pages 58 and 67.
The analysis below shows the sensitivity of the portfolio value (and its impact on NAV) to changes
in key assumptions as follows:
Discount rate
The weighted average valuation discount rate applied to calculate the levered and unlevered
portfolio valuation is 7.7%.
An increase or decrease in this rate by 1.0% points has the following effect on valuation.
Discount rate
NAV per
share
impact
-1.0%
change
Total
portfolio
Value
+1.0%
change
NAV per
share
impact
£’000 £’000 £’000
Directors’ valuation –
Dec 2023 13.73 24,750 212,030 20,467 -11.35
Energy yield
The table below shows the sensitivity of the portfolio valuation to a sustained decrease or increase
of energy generation by minus or plus 5% on the valuation, with all other variables held constant.
The fair value of the solar investments is based on a “P50” level of electricity generation for the
renewable energy assets, being the expected level of generation over the long term. The P50 figure
is the annual average level of generation, where the output is forecasted to be exceeded 50% over
a year. For hydropower assets, the expected annual average production is applied to the valuation,
similar to the P50 assumption applied to solar and wind assets.
A change in the forecast energy yield assumptions by plus or minus 5% has the following effect.
Energy Yield
NAV per
share
impact
-5%
change
Total
portfolio
Value
+5%
change
NAV per
share
impact
£’000 £’000 £’000
Directors’ valuation –
Dec 2023 (10.45) (18,830) 212,030 18,559 10.30
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 146
9. Investments at fair value through profit and loss (Continued)
Power prices
The sensitivity considers a flat 10% movement in power prices for all years, i.e. the effect of
adjusting the third party provided forecast electricity price assumptions in each of the jurisdictions
applicable to the portfolio down by 10% and up by 10% from the base case assumptions for each
year throughout the operating life of the portfolio.
A change in the forecast electricity price assumptions by plus or minus 10% has the following effect.
Power Prices
NAV per
share
impact
-10%
change
Total
portfolio
Value
+10%
change
NAV per
share
impact
£’000 £’000 £’000
Directors’ valuation –
Dec 2023 (11.78) (21,240) 212,030 21,168 11.74
Inflation
The projects’ income streams are principally a mix of subsidies, which are amended each year with
inflation, and power prices, which the sensitivity assumes will move with inflation. The projects’
operating expenses typically move with inflation, but debt payments are fixed. This results in
the portfolio returns and valuation being positively correlated to inflation. The weighted average
long-term inflation assumption across the portfolio is 2.15%.
The sensitivity illustrates the effect of a 1.0% decrease and a 1.0% increase from the assumed
annual inflation rates in the financial model for each year throughout the operating life of the
portfolio.
Inflation
NAV per
share
impact
-1.0%
change
Total
portfolio
Value
+1.0%
change
NAV per
share
impact
£’000 £’000 £’000
Directors’ valuation –
Dec 2023 (8.64) (15,571) 212,030 18,035 10.01
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 147
9. Investments at fair value through profit and loss (Continued)
Foreign exchange
The Company, where appropriate, seeks to manage its exposure to foreign exchange movements,
to ensure that the Sterling value of known future investment commitments is fixed. The portfolio
valuation assumes foreign exchange rates based on the relevant foreign exchange rates against
GBP at the reporting date. A change in the foreign exchange rate by plus or minus 10% (Euro
against GBP), has the following effect on the NAV, with all other variables held constant. The effect
is shown after the effect of current level of hedging which reduces the impact of foreign exchange
movements on the Company’s NAV.
Foreign Exchange
NAV per
share
impact
-10%
change
Total
portfolio
Value
+10%
change
NAV per
share
impact
£’000 £’000 £’000
Directors’ valuation –
Dec 2023 (4.99) (9,0 02) 212,030 13,798 7. 6 6
10. Trade and other receivables
31 December
2023
£’000s
31 December
2022
£’000s
Prepayments 85 271
VAT – 44
Debtors 252 252
337 567
11. Trade and other Payables
31 December
2023
£’000s
31 December
2022
£’000s
Accounts Payable 584 1,098
Accruals 1,349 76 4
VAT 150 –
2,083 1,862
Included in accruals and accounts payable at the year-end, £1,530,183 relates to the management
fee charged by Downing LLP during the year.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 148
12. Called up share capital
Allotted, issued and fully paid:
Number of
Shares
Opening Balance at 1 January 2023 184,622,487
Ordinary Shares issued –
Closing Balance of Ordinary Shares at 31 December 2023 184,622,487
Each ordinary share has equal rights to dividends and has equal rights to participate in a distribution
arising from a winding up of the Company.
During the year, the Company repurchased 4,375,363 shares for a cost of £4,065,545, these shares
are held in the Company’s equity account under treasury shares. Since the 31 December 2023 the
company has repurchased a further 2,544,899 shares for a cost of £.2.1m now held in treasury.
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 to cancel the amount standing to the credit of the share premium
account of the Company.
As stated by the Institute of Chartered Accountants in England and Wales (“ICAEW”) and the Institute
of Chartered Accountants in Scotland (“ICAS”) in the technical release TECH 02/17BL, The Companies
(Reduction of Share Capital) Order 2008 SI 2008/1915 (“the Order”) specifies the cases in which a
reserve arising from a reduction in a company’s capital (i.e., share capital, share premium account,
capital redemption reserve or redenomination reserve) is to be treated as a realised profit as a matter
of law. The Order also disapplies the general prohibition in section 654 on the distribution of a reserve
arising from a reduction of capital. The Order provides that if a limited company having a share capital
reduces its capital and the reduction is confirmed by order of court, the reserve arising from the
reduction is treated as a realised profit unless the court orders otherwise.
At 31 December 2023 the special distributable reserve account was £107,340,301.
(2022: £114,617,564).
14. Net asset value per ordinary share
The basic total net assets per ordinary share is based on the net assets attributable to equity
shareholders as at 31 December 2023 of £212,061,828 (2022: £218,899,172) and ordinary shares
of 180,247,124 (2022: 184,622,487) in circulation at 31 December 2023.
There is no dilution effect and therefore no difference between the diluted total net assets per
ordinary share and the basic total net assets per ordinary share.
15. Cash and Cash equivalents
At the year end, the Company had cash of £1.8 (2022: £23.3) million. This balance was held by the
Royal Bank of Scotland.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 149
16. Financial Risk Management
The Company’s investment activities expose it to a variety of financial risks, including interest rate
risk, foreign exchange risk, power price risk, credit risk and liquidity risk. The Board of Directors
have overall responsibility for overseeing the management of financial risks, however the review
and management of financial risks are delegated to the AIFM and Investment Manager.
Each risk and its management are summarised below.
Foreign exchange risk
Foreign exchange risk is defined as the risk that the fair value of future cash flows will fluctuate
because of changes in foreign exchange rates. The Company monitors its foreign exchange exposures
using its near-term and long-term cash flow forecasts. Its policy is to use foreign exchange hedging
to provide protection to the level of sterling distributions that the Company aims to receive from
portfolio companies over the medium-term, where considered appropriate. This may involve the
use of forward exchange. The Company's sensitivity to foreign exchange risk can be seen in note 9.
Interest rate risk
The Company may be exposed to changes in variable market rates of interest as this could impact
the discount rate and therefore the valuation of the projects as well as the fair value of the loan
receivables. The Company has fixed the interest rates for all of its asset level debt, the RCF which
has a floating rate makes up less than 6% of GAV, the Company is not considered to be materially
exposed to interest rate risk.
The Company’s interest and non-interest bearing assets and liabilities as at 31 December 2023 are
summarised below:
Assets
Interest
Bearing
£’000
Non-Interest
bearing
£’000
Total
£’000
Cash and cash equivalents – 1,778 1,778
Trade and other receivables – 337 337
Investments at fair value through profit and loss 169,113 42,917 212,030
Total assets at 31 December 2023 169,113 45,032 214,145
Total assets at 31 December 2022 151,757 69,004 220,761
Liabilities
Accrued expenses – (2,083) (2,083)
Total liabilities at 31 December 2023 – (2,083) (2,083)
Total liabilities at 31 December 2022 – (1,862) (1,862)
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 150
16. Financial Risk Management (Continued)
Liquidity risk
Liquidity risk is the risk that the Company may not be able to meet its financial obligations as they
fall due. The Investment Manager, AIFM and the Board continuously monitor forecast and actual
cash flows from operating, financing, and investing activities to consider payment of dividends,
repayment of trade and other payables or funding further investing activities.
The Company ensures it maintains adequate reserves, will put in place banking facilities and will
continuously monitor forecast and actual cash flows to seek to match the maturity profiles of
financial assets and liabilities.
At the year end, the Company’s investments were in secured loan and equity investments in private
companies, in which there is no listed market and therefore such investments would take time to
realise, and there is no assurance that the valuations placed on the investments would be achieved
from any such sale process. The Company’s Hold Co is the entity through which the Company
holds its investments, the liquidity of Hold Co is reflective of the investments in which it holds.
The Company’s main subsidiary holds an RCF with a facility of £40m, of which £18.6m has currently
been drawn.
Assets
Less than
1 year
£’000
1-5
years
£’000
More than
5 years
£’000
Total
£’000
Investments at fair value
through profit and loss (note 9) – – 212,030 212,030
Trade and other receivables 337 – – 337
Cash and cash equivalents 1,778 – – 1,778
Liabilities
Trade and other payables (2,083) – – (2,083)
Total at 31 December 2023 32 – 212,030 212,062
Total at 31 December 2022 21,718 – 196,866 218,584
Credit risk
Credit risk is the risk that a counterparty of the Company will be unable or unwilling to meet a
commitment that it has entered into with the Company. It is a key part of the pre-investment due
diligence. The credit standing of the companies which the Company intends to lend or invest is
reviewed, and the risk of default estimated for each significant counterparty position. Monitoring is
on-going, and year end positions are reported to the Board on a quarterly basis.
Credit risk may also arise from cash and cash equivalents and deposits with banks and financial
institutions. The Company and its subsidiaries may mitigate their risk on cash investments by
only transacting with major international financial institutions with high credit ratings assigned by
international credit rating agencies.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 151
16. Financial Risk Management (Continued)
Credit risk (Continued)
The fair value of the investments and cash represent the Company’s maximum exposure to
credit risk.
The Company’s credit risk exposure as at 31 December 2023 is summarised below:
As at
31 December
2023
£’000
As at
31 December
2022
£’000
Trade and other receivables 337 252
Loan Investment 169,113 151,757
Cash and cash equivalents 1,778 23,328
Total 171,228 175,337
There is a loan agreement between the Company and DORE Hold Co Limited for £200,000,000
(2022: £120,000,000). DORE Hold Co Limited is wholly owned subsidiary of the Company. The total
undrawn facility is £30,886,587.
Price risk
Price risk is defined as the risk that the fair value of a financial instrument held by the Company will
fluctuate. Investments are measured at FVTPL. As at 31 December 2023, the Company held three
investments through its intermediate holding company. The value of the underlying renewable
energy investments held by Hold Co will vary according to a number of factors including discount
rate used, asset performance and forecast power prices.
Capital risk management
The capital structure of the Company at the year-end consists of equity attributable to equity
holders of the Company, comprising issued capital and reserves. The Board continues to monitor
the balance of the overall capital structure so as to maintain investor and market confidence.
The Company is not subject to any external capital requirements.
Market risk
Returns from the Company’s investments are affected by the price at which the investments are
acquired. The value of these investments will be a function of the discounted value of their expected
future cash flows, and as such will vary with, inter alia, movements in interest rates, market prices
and the competition for such assets. The Investment Manager carries out a full valuation quarterly
and this valuation exercise takes into account changes described above.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 152
17. Unconsolidated subsidiaries, associates and joint ventures
The following table shows subsidiaries of the Group. As the Company is regarded as an Investment
Entity as referred to in note 2, these subsidiaries have not been consolidated in the preparation of
the financial statements:
Investment Place of Business
Ownership Interest
as at 31 December
2023
DORE Hold Co Limited
1
England
2
100%
DORE Sweden Hold Co Limited
2
England
2
100%
Downing Transmission Pathfinder Holdco Limited
10
England
12
100%
Downing Hydro AB
12
Sweden
13
100%
Downing Grid AB
10
Sweden
11
100%
Downing Wind Sweden Holdco AB
9
Sweden
11
100%
Abercomyn Solar Ltd
21
England
12
100%
Andover Airfield Solar Developments Ltd
20
England
12
100%
Appleton Renewable Energy Ltd
14
England
12
100%
Appleton Renewables Ltd
21
England
12
100%
Beeston Solar Energy Ltd
15
England
12
100%
Beeston Solar Ltd
21
England
12
100%
Bourne Park Solar Ltd
16
England
12
100%
Brookside Solar Ltd
21
England
12
100%
Brown Argus Trading Ltd
23
England
12
100%
Chalkhill Commercial PV Ltd
23
England
12
100%
Chalkhill Life Holdings Ltd
18
England
12
100%
Deeside Solar Farm Ltd
17
England
12
100%
Downing Summit AB
28
Sweden
11
100%
Emerald Isle Solar Energy Ltd
18
Northern Ireland
12
100%
Emerald Isle Solar Ltd
21
Northern Ireland
12
100%
Ferðaþjónustan Húsafelli ehf.
28
Iceland
11
100%
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 153
Investment Place of Business
Ownership Interest
as at 31 December
2023
Föreningen Lagmansholms Kraftverk u.p.a
28
Sweden
11
100%
Gabrielsberget Syd Vind AB
29
Sweden
11
100%
Gottne Energi AB
28
Sweden
11
100%
Greenacre Redbridge Ltd
25
England
12
100%
Greenacre Solar Energy Ltd
19
England
12
100%
Greenacre Solar Ltd
21
England
12
100%
Heulwen Solar Ltd
21
England
12
100%
Högforsen Kraftverk AB
28
Sweden
11
100%
Hulse Energy Ltd
21
Northern Ireland
12
100%
Hulse Renewable Energy Ltd
20
Northern Ireland
12
100%
KPP132 Ltd
27
England
12
100%
KPP141 Ltd
33
Northern Ireland
12
100%
Mersey Reactive Power Limited
21
England
12
100%
Moray Energy Ltd
22
Northern Ireland
12
100%
Moray Power (UK) Ltd
27
Northern Ireland
12
100%
Moray Power Ltd
21
Northern Ireland
12
100%
Newton Solar Energy Ltd
23
England
12
100%
Newton Solar Ltd
21
England
12
100%
Occasum Holdings Limited
15
England
12
100%
Penarth Energy Ltd
21
England
12
100%
Ridgeway Solar Energy Ltd
24
England
12
100%
Ridgeway Solar Ltd
21
England
12
100%
Ringlet Trading Ltd
23
England
12
100%
ROC Solar (UK) Ltd
25
Northern Ireland
12
100%
17. Unconsolidated subsidiaries, associates and joint ventures (Continued)
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 154
Investment Place of Business
Ownership Interest
as at 31 December
2023
ROC Solar Ltd
21
Northern Ireland
12
100%
Solar Finco 1 Limited
26
England
12
100%
Solar Finco 2 Limited
27
England
12
100%
Solar Finco 3 Limited
23
England
12
100%
TGC Solar Oakfield Ltd
29
England
12
100%
Triumph Renewable Energy Ltd
33
Northern Ireland
12
100%
Triumph Solar Energy Ltd
28
Northern Ireland
12
100%
Triumph Solar Ltd
21
Northern Ireland
12
100%
Voltaise (UK) Ltd
29
England
12
100%
Voltaise Ltd
21
England
12
100%
Wakehurst Renewable Energy Ltd
30
Northern Ireland
12
100%
Wakehurst Renewables Ltd
21
Northern Ireland
12
100%
York NIHE Ltd
36
Northern Ireland
12
100%
York Renewable Energy Ltd
31
England
12
100%
York Renewables Ltd
21
Northern Ireland
12
100%
1 DORE Hold Co is the intermediate holding company of the Group, this is 100% owned by DORE PLC
2 The Registered office is St Magnus House, 3 Lower Thames Street, London EC3R 6HD
3 These Companies are 100% owned by DORE Hold Co Limited
4 The registered office is c/o Cirio Advokatbyra Box 3294, 103 65 Stockholm
5 Appleton Renewable Energy Ltd is 100% owned by Appleton Renewables, Appleton Renewable Energy Ltd, in turn owns 100% of
Andover Airfield Solar Developments Ltd
6 These companies are 100% owned by Solar Finco 1 Ltd
7 Bourne Park Solar is 100% owned by Penarth Energy Ltd
8 These companies are 100% owned by Chalkhill Life Holdings Ltd
9 Emerald Isle Solar Energy Limited is 100% owned by Emerald Isle Solar Ltd
10 Both companies are 100% owned by Greenacre Solar Ltd
11 Hulse Renewable Energy Ltd is 100% owned by Hulse Energy Ltd
Notes to the Financial Statements continued
For the year ending 31 December 2023
17. Unconsolidated subsidiaries, associates and joint ventures (Continued)
Downing Renewables & Infrastructure Trust plc Annual Report | 155
12 Mersey Reactive Power is 100% owned by Downing Transmission Pathfinder Holdco Limited
13 Moray Energy Ltd and Moray Power (UK) are 100% owned by Moray Power Ltd, Moray Power (UK) Ltd owns 100% of KPP 132 Ltd
14 Newton Solar Energy is 100% owned by Newton Solar Ltd
15 Both companies are 100% owned by Ridgeway Solar Ltd
16 ROC Solar (UK) ltd is 100% owned by ROC Solar Ltd
17 Solar Finco 1 Ltd is 100% owned by Solar Finco 2 Ltd
18 Solar Finco 2 Ltd is 100% owed by Solar Finco 3 Ltd
19 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.
20 Voltaise (UK) Limited is 100% owned by Voltaise Ltd.
21 Wakehurst Renewable Energy Ltd is 100% owned by Wakehurst Renewables Ltd
22 These Companies are 100% owned by York Renewables Ltd
23 These Companies are 100% owned by Downing Hydro AB
24 These Companies are 100% owned by Downing Wind Sweden AB
18. Employees and Directors
The Company is governed by a Board of Directors, all of whom are independent and non-executive.
During the year, they received fees for their services of £140,000 (2022: £125,000). The Company
has 3 non-executive Directors.
Other than the Directors, the Company had no employees during the year.
19. Contingencies and commitments
The Company has no commitments or contingencies. (2022: no commitments or contingencies).
The total undrawn facility on the loan between the Company and DORE Hold Co Limited is
£30,886,587.
Notes to the Financial Statements continued
For the year ending 31 December 2023
17. Unconsolidated subsidiaries, associates and joint ventures (Continued)
Downing Renewables & Infrastructure Trust plc Annual Report | 156
20. Dividends declared
As outlined on page 10 of the Chairman’s statement, in the IPO Prospectus on 12 November 2020,
the Company was targeting an initial annualised dividend yield of 3% by reference to the IPO price
of £1.00, in respect of the financial year from IPO on 10 December 2020 to 31 December 2021
(equating 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 financial year to 31 December 2023.
Interim dividends paid during the year ended 31 December 2023
Dividend
per share
pence
Total dividend
£’000
With respect to the quarter ended 31 December 2022 1.25 2,308
With respect to the quarter ended 31 March 2023 1.345 2,478
With respect to the quarter ended 30 June 2023 1.345 2,471
With respect to the quarter ended 30 September 2023 1.345 2,439
5.285 9,696
Interim dividends declared after 31 December 2023 and not accrued in the year
Dividend
per share
pence
Total dividend
£’000
With respect to the quarter ended 31 December 2023 1.345 2,411
1.345 1.345
On 20 February 2024, The Board declared an interim dividend of 1.345 pence per share with
respect to the year ended 31 December 2023.
The dividend was paid on 28 March 2024 to shareholders on the register on 1 March 2024. The
ex-dividend date is 29 February 2024.
The target dividend for the year from 1 January 2024 has been increased by 7.85% to 5.80 pence per
ordinary share.
During the year, the Board declared interim dividends in respect of the quarterly periods ending
31 March 2023, 30 June 2023, 30 September 2023 for 1.345 pence per share and 1.25 pence per
share for the quarter ending 31 December 2022. As outlined in the Company’s Prospectus, the
Company has chosen to designate part of these interim dividends as an interest distribution.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 157
20. Dividends declared (Continued)
The dividend for the period to 31 December 2023, was paid as 1.005 pence per share as an interest
payment and 0.340 as an ordinary dividend. The dividend paid for the period to 31 March 2023
was paid as 0.875 pence per share as an interest payment and 0.470 as an ordinary dividend.
The dividend paid for the period to 30 June 2023 was paid as 1.076 pence per share as an interest
payment and 0.269 as an ordinary dividend. The dividend paid for the period to 30 September 2023
was paid as 1.143 pence per share as an interest payment and 0.202 as an ordinary dividend. All
dividend payments paid as interest are paid from the Special Distributable reserve and all dividend
payments paid as ordinary dividends are paid from the Revenue reserve.
Shareholders in receipt of such a dividend will be treated for UK tax purposes as though they
have received a payment of interest in respect of the interest distribution element of this dividend.
This will result in a reduction in the corporation tax payable by the Company.
21. Events after the balance sheet date
Dividends
On 20 February 2024, The Board declared an interim dividend of 1.345 pence per share with
respect to the period ended 31 December 2023.
The dividend was paid on 28 March 2024 to shareholders on the register on 1 March 2024. The
ex-dividend date is 29 February 2024.
The target dividend for the year from 1 January 2024 has been increased by 7.85% to 5.80 pence
per ordinary share.
Share Buybacks
Post year end, the Company had announced cumulative buybacks of 2,544,899 shares between
1 January 2024 and 10 April 2024.
22. Related party transactions
The amounts incurred in respect of the Investment Management fees during the year to 31 December
2023 was £2,043,529. Of this amount, £1,530,183 were unpaid at 31 December 2023.
The amounts incurred in respect of the Corporate Services agreement for the year to 31 December
2023 was £1,000,000. Of this amount, £252,055 were unpaid at 31 December 2023.
The Investment Manager is owed £113,830 commission in respect of funds raised during the
placing, open offer, offer for subscription and intermediaries offer. This amount remained unpaid at
the year end.
Notes to the Financial Statements continued
For the year ending 31 December 2023
Downing Renewables & Infrastructure Trust plc Annual Report | 158
Notes to the Financial Statements continued
For the year ending 31 December 2023
22. Related party transactions (Continued)
The amounts paid in respect of Directors fees during the year to 31 December 2023 was £140,000.
The amounts paid to individual directors during the year were as follows:
Hugh W M Little (Chair) £55,000
Jo Holt £40,000
Ashley Paxton £45,000
Due to the Company being an externally managed investment company, there are no other fees
due to key management personnel.
Intercompany Loans
During the year interest totalling £9.87 (2022: £7.79) million was charged on the Company’s
long-term interest-bearing loan between the Company and its subsidiary. At the year end,
£0.96 (2022: £1.7) million remained unpaid.
The loan to DORE Hold Co Limited is unsecured at interest rate of 6%. As at the balance sheet date,
the loan balance stood at £169.1 (2022: £151.7) million.
Transactions with the Investment Manager
During the year, £1,359,160 (2022: £1,029,535) of fees were earned by INFRAM LLP, a subsidiary
of Downing Group LLP for the management services relating to DORE’s underlying spv portfolio.
Downing Renewables & Infrastructure Trust plc Annual Report | 159
Other Information
Downing Renewables & Infrastructure Trust plc Annual Report | 159
Downing Renewables & Infrastructure Trust plc Annual Report | 160
In reporting financial information, the Company presents alternative performance measures,
(“APMs”), which are not defined or specified under the requirements of IFRS. The Company believes
that these APMs, which are not considered to be a substitute for or superior to IFRS measures,
provide stakeholders with additional helpful information 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 2023 Page
As at
31 December
2023
£'000
As at
31 December
2022
£'000
NAV a 128 212,062 218,899
Debt held in unconsolidated subsidiaries b n/a 140,148 91,495
Gross Asset Value a + b 352,210 310,394
NAV Total Return
A measure of NAV performance over the reporting year (including dividends paid). NAV total return
is shown as a percentage change from the start of the year. It assumes that dividends paid to
shareholders are reinvested at NAV at the time the shares are quoted ex-dividend.
Year Ended 31 December 2023 Page
As at
31 December
2023
£'000
As at
31 December
2022
£'000
NAV at 1 January 2023 pence a n/a 118.6 103.5
NAV at 31 December 2023 pence b 128 117.7 118.6
Reinvestment assumption pence c n/a 0.0 0.1
Dividends paid pence d 5 5.285 5
Total NAV Return ((b + c + d)/a) - 1 3.5% 19.5%
Alternative Performance Measures
Downing Renewables & Infrastructure Trust plc Annual Report | 161
Total Shareholder Return
A measure of share price performance over the reporting year (including dividends reinvested).
Share price total return is shown as a percentage change from the start of the year. It assumes
that dividends paid to shareholders are reinvested in the shares at the time the shares are quoted
ex-dividend.
Year Ended 31 December 2023 Page
As at
31 December
2023
£'000
As at
31 December
2022
£'000
Opening price at 1 January 2023 pence a n/a 113.50 103.50
Closing price at 31 December
2023
pence b 5 90.0 113.50
Benefits of reinvesting dividends pence c n/a -0.27 0.06
Dividends paid pence d 5 5.285 5
Total Return ((b + c + d)/a) - 1 -16.3% 15.1%
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.
Year Ended 31 December 2023 Page
Year Ended
31 December
2023
£'000
Year Ended
31 December
2022
£'000
Average NAV a n/a 214,967 200,318
Annualised Expenses b n/a 3,384 2,907
Ongoing charges ratio b / a 1.6% 1.5%
Alternative Performance Measures (Unaudited) continued
Downing Renewables & Infrastructure Trust plc Annual Report | 162
Dividend yield
This is the annualised measure of the amount of cash dividends paid out to shareholders relative to
the IPO price of £1.00 per share and the issue price.
Year Ended 31 December 2023 Page
Year Ended
31 December
2023
£'000
Year Ended
31 December
2022
£'000
Dividend from IPO to
31 December 2023
pence a n/a 12.535 7. 25
Ordinary Share price as at
31 December 2023
pence b 5 90.0 113.50
Issue price at IPO pence c n/a 100.00 100.00
Annualisation factor d n/a 0.4 0.67
Dividend yield by reference to
share price
(a/b * d) 5.6% 4.26%
Dividend yield by reference to
Issue Price
(a/c * d) 5.0% 4.83%
Dividend Cover
Dividend cover illustrates the number of times the Company’s cash flow can cover it dividend
payments to Shareholders.
Dividend Cover Year Ended 31 December 2023 Page
Year Ended
31 December
2023
£'000
Year Ended
31 December
2022
£'000
Cash flows (from portfolio companies) a n/a 15,283 12,135
Cash expenses (Company and Hold Co) b n/a (3,591) (2,767)
Debt amortisation C n/a 5,592 5,485
Dividends paid in 2023 d n/a 9,696 8,040
Dividend Cover (a + b) / d 1.21 1.17
Dividend Cover pre debt amortisation (a + b + c) / d 1.78 1.85
Alternative Performance Measures (Unaudited) continued
Downing Renewables & Infrastructure Trust plc Annual Report | 163
Alternative Performance Measures (Unaudited) continued
Weighted Average Cost of Debt
As at 31 December 2023 Debt Type Principal Interest Rate
Weighted
Interest Rate
Aviva Solar – amortising £68,284,827 0.81% 0.4%
Vantage Infrastructure Solar – amortising £10,471,065 1.54% 0.1%
SEB Hydro – bullet €49,410,900 3.34% 1.0%
Santander RCF £18,600,000 7.4 4% 1.0%
Weighted Average Cost of Debt 2.5%
Downing Renewables & Infrastructure Trust plc Annual Report | 164
SFDR Periodic Disclosure Template (Unaudited)
As a Financial Market Participant with products labelled as Article 9 under the EU’s Sustainable
Finance Disclosure Regulation, the Company is required to make a statement on principal adverse
sustainability impacts. These are included alongside other indicators in the table on pages 68 and 69.
SFDR indicators not included in the table on pages 68 and 69 as not relevant to infrastructure
investment (i.e. more applicable to listed investments) are:
> Exposure to companies active in the fossil fuel sector
> Exposure to energy-inefficient real estate assets
> Violations of UN Global Compact principles and Organisation for Economic Cooperation and
Development (OECD) Guidelines for Multinational Enterprises
> Emissions to water
> Exposure to controversial weapons
Under Annex V, a template periodic report for financial products referred to in Article 9(1), (2) and (3)
of Regulation (EU) 2019/2088 is required. This follows for DORE.
To what extent was the sustainable investment objective of this financial product met?
Did this financial product have a sustainable investment objective?
[tick and fill in as relevant, the percentage figure represents the sustainable investments]
6
Yes
No
It made sustainable investments with an environmental
objective: %
in economic activities that qualify as environmentally
sustainable under the EU Taxonomy
in economic activities that do not qualify as
environmentally sustainable under the EU Taxonomy
It promoted Environmental/Social (E/S) characteristics
and while it did not have as its objective a sustainable
investment, it had a proportion of % of sustainable
investments
with an environmental objective in economic
activities that qualify as environmentally sustainable
under the EU Taxonomy
with an environmental objective in economic
activities that do not qualify as environmentally
sustainable under the EU Taxonomy
with a social objective
It made sustainable investments with
a social objective: %
It promoted E/S characteristics, but did not make any
sustainable investments
100
x
Downing Renewables & Infrastructure Trust plc Annual Report | 165
SFDR Periodic Disclosure Template (Unaudited) continued
The Company is an impact fund, falling under Article 9 of the European Union’s Sustainable Finance
Disclosure Regulation, with a core sustainable investment objective to contribute to the transition
to net zero through its investments. This includes compiling and operating a diversified portfolio of
renewable energy and infrastructure assets to help facilitate the transition to a more sustainable
future. This directly contributes to climate change mitigation.
This objective above has been met by investments in renewable energy.
How did the sustainability indicators perform?
The performance of sustainability indicators can be found on page 68 in the section on sustainability
indictors.
...and compared to previous periods?
For this second reporting period, the number of renewable power assets, capacity and renewable
energy generated were all higher for 2023 than 2022 at 4,866 assets, 202.9 MWh and 395 GWh
respectively. This means over 30,000 more tonnes of CO2 equivalent have been avoided in this
period as a contribution to the sustainable investment objective. The acreage of land managed
has increased to 1070, which as we discuss above, means more carbon sequestration capability
through its tress and soil. Reporting on habitats has also evolved with metrics commencing in this
period. Social indicators show improvement as well, with increases in operations and maintenance
jobs (from 16 to 28) and health and safety audits (from 28 to 35), and an almost 300% increase in
community donations.
How did the sustainable investments not cause significant harm to any sustainable investment objective?
The pre-investment scorecard and process (see next section) captures risk of significant harm
through either a low overall score, or through a low score to individual questions. The RI team
independently review and provide an opinion, up to recording any risk and plans to mitigate. In
the period, no deals were rejected based on causing harm to a sustainability objective. Instead,
investments in renewable energy contributed to the objective of reducing or avoiding greenhouse
emissions, and therefore to climate change mitigation.
How did this financial product consider principal adverse impacts on sustainability factors?
Pre-investment research uses a proprietary scorecard based on multiple sustainability factors and
assesses risks or other potential indicators for adverse sustainability impacts. The EU Taxonomy
and the Do No Significant Harm criteria are also referenced within the scorecard and process. The
objective is to identify any risks and provide a foundation for future monitoring and engagement.
As investors in infrastructure, data availability and likelihood of occurrence for breaches of the
OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and
Human Rights is different to other asset classes like listed equity. Our approach is to monitor
via quarterly declarations in the Operations & Maintenance providers' KPI forms and to assume
providers have correctly reported with no violations unless notified. For human rights in solar
(supply chains) specifically, we have developed an ESG screen that assesses and scores the risk at
counterparties with whom we contract for procurement (eg, panels, inverters etc.). This looks at
country risk, analysis by the Downing Responsible Investment team and results from data providers
on controversies or commitments made. Any adverse impacts – defined as a low score – will inform
procurement decisions and possible engagement with the counterparty.
Downing Renewables & Infrastructure Trust plc Annual Report | 166
2. What were the top investments of this financial product?
During the reference period, which is full year 2023, the top three largest investments by installed
capacity were the Gabrielsberget Syd Vind AB wind farm in Sweden (46 MW), the Summit hydro
plant also in Sweden (14 MW) and a residential solar portfolio in N. Ireland (13.1 MW).
The Portfolio Summary section has full investments of this financial product, including infrastructure
sub-sector and location.
3. What was the proportion of sustainability-related investments?
What was the asset allocation?
100% to renewable power, based on this flow described in the guidance for Annex V:
Investment → #1 Sustainable (environmental objectives) → Environmental → Taxonomy-aligned
Note we have legacy assets transferred in from other entities that have not been assessed through
the research and scorecard process described in part 1 above. However given the sector of these
assets, they are assumed to meet the technical screening criteria for sustainability under the
Taxonomy: wind, solar and hydro (using the run of river qualification).
In which economic sectors were the investments made?
Following the EU Taxonomy Compass: Sector is Energy, Activity is Electricity generation from
hydropower, Electricity generation from wind power, Electricity generation using solar photovoltaic
technology and Transmission and distribution of electricity.
What was the share of sustainable investments with an environmental objective that were not aligned
with the EU Taxonomy?
0%
What was the share of socially sustainable investments?
0%
What investments were included under “not sustainable”, what was their purpose and were there any
minimum environmental or social safeguards?
None.
SFDR Periodic Disclosure Template (Unaudited) continued
Downing Renewables & Infrastructure Trust plc Annual Report | 167
SFDR Periodic Disclosure Template (Unaudited) continued
4. What actions were taken to attain the sustainable investment objective during the
reference period?
The objective, in line with DORE’s prospectus, was attained by the generation of renewable power
as a natural contributor to climate change mitigation by reducing the emissions from burning fossil
fuels to generate power. Three actions in particular were taken.
Robust integration of material sustainability factors, risks and potentially adverse impacts to
investment committee discussions and decisions.
Active ownership and monitoring these sustainability impacts post-investment.
A dynamic, internal ESG dashboard for KPIs – including Scopes 1-3, plus avoided, greenhouse gas
emissions – is used to report performance of sustainability indicators during the reference period.
During the period, DORE’s Nordic hydropower assets participated for the first time in the GRESB
Infrastructure Asset Assessment. This provided independent insights into how the sustainable
investment objective is being met, including capacity, generation and reporting of clean energy as
part of a net zero transition.
Downing Renewables & Infrastructure Trust plc Annual Report | 168
GRI Standards
We recognise the Global Reporting Initiative as the global best practice for sustainability reporting.
Relevant indicators are mapped below.
Statement of use
The Company has reported the information cited in this GRI content index for the period 1 January
to 31 December 2023 with reference to the GRI Standards.
GRI 1 used, GRI 1: Foundation 2021
GRI STANDARD DISCLOSURE LOCATION
GRI 2: General
Disclosures 2021
2-1 Organizational details Legal name & Ownership: Downing
Renewables & Infrastructure Trust PLC
(“DORE” or the “Company”) Location
of headquarters: London Counties of
operation: UK, Sweden
2-3 Reporting period, frequency and
contact point
1 Jan to 31 Dec 2023. Annual
reporting. Contact: Roger Lewis, Head
of Sustainability and Responsible
Investment
2-4 Restatements of information None
2-5 External assurance None
2-23 Policy commitments This report: Chairman’s Statement
2-28 Membership associations This report: Downing’s approach to
sustainability
GRI 302: Energy 2016 302-1 Energy consumption within the
organization
This report: Key Performance Indicators
302-3 Energy intensity This report: Key Performance Indicators
GRI 304: Biodiversity 2016 304-1 Operational sites owned, leased,
managed in, or adjacent to, protected areas
and areas of high biodiversity value outside
protected areas
This report: Key Performance Indicators
304-2 Significant impacts of activities,
products and services on biodiversity
This report: Key Performance Indicators
304-3 Habitats protected or restored This report: Key Performance Indicators
GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions This report: Key Performance Indicators
305-2 Energy indirect (Scope 2) GHG
emissions
This report: Key Performance Indicators
305-3 Other indirect (Scope 3) GHG emissions This report: Key Performance Indicators
305-4 GHG emissions intensity This report: Key Performance Indicators
305-5 Reduction of GHG emissions This report: Key Performance Indicators
GRI 407: Freedom of
Association and Collective
Bargaining 2016
407-1 Operations and suppliers in which the
right to freedom of association and collective
bargaining may be at risk
This report: Key Performance Indicators
GRI 408: Child Labor 2016 408-1 Operations and suppliers at significant
risk for incidents of child labor
This report: Key Performance Indicators
GRI 409: Forced or
Compulsory Labor 2016
409-1 Operations and suppliers at significant
risk for incidents of forced or compulsory labor
This report: Key Performance Indicators
Downing Renewables & Infrastructure Trust plc Annual Report | 169
2015 Paris
Agreement
an agreement within the United Nations Framework Convention on Climate
Change, dealing with greenhouse-gas-emissions mitigation, adaption, and
finance, signed in 2016
AIC Association 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
utility
CO2 Carbon dioxide
CO2e Carbon dioxide equivalent
COP26 The 2021 United Nations Climate Change Conference
DHAB Downing Hydro AB
distribution network low voltage electricity network that carries electricity locally from the
substation to the end-user
ESG environmental, social and governance
FiT feed-in tariff
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 Gigawatt
GWh Gigawatt hours
Investment Manager Downing LLP (Company No: OC341575)
IPO Initial Public Offering
KPI key performance indicator
MW Megawatt
MWh Megawatt hour
MWp Megawatt peak
NAV Net asset value
NAV Total Return A measure of NAV performance over the reporting year (including dividends
paid).
NIROC/s Northern Ireland ROC/s
O&M operations and maintenance
Ofgem the Office of Gas and Electricity Markets
Offtaker a purchaser of electricity and/or ROCs under a PPA
Other Infrastructure Means other infrastructure assets and investments in businesses whose
principal revenues are not derived from the generation and sale of electricity
on the wholesale electricity markets
PPA a power purchase agreement
PPS Pence per share
Glossary
Downing Renewables & Infrastructure Trust plc Annual Report | 170
RCF Revolving credit facility
Renewable Energy
Directive
EU Renewable Energy Directive (2009/28/EC)
RO Renewables Obligation
ROC/s renewables obligation certificate/s
SE2 South Sweden
SE3 North Sweden
SEB Skandinaviska Enskilda Banken AB
SEK Swedish Kroner
SEM Single Electricity Market
SFDR Sustainable Finance Disclosure Regulation
Solar PV photovoltaic solar
SORP Statement of recommended practise
SPV Special purpose vehicle
Sustainable
Development Goals
Set out in the 2030 Agenda for Sustainable Development, adopted by all
United Nations Member States in 2015
Total Shareholder
Return
A measure of share price performance over the reporting year (including
dividends reinvested).
transmission
network
high voltage power lines that transport electricity across large distances
at volume, from large power stations to the substations upon which the
distribution networks connect
Glossary continued
Downing Renewables & Infrastructure Trust plc Annual Report | 171
The Review Section of this report has been prepared solely to provide additional information to
shareholders to assess the Company’s strategies and the potential for those strategies to succeed.
These should not be relied on by any other party or for any other purpose.
The Review Section may include statements that are, or may be deemed to be, “forward-looking
statements”. These forward-looking statements can be identified using forward-looking terminology,
including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will” or “should”
or, in each case, their negative or other variations or comparable terminology.
These forward-looking statements include all matters that are not historical facts. They appear in
a number of places throughout this document and include statements regarding the intentions,
beliefs or current expectations of the Directors and the Investment Manager concerning, amongst
other things, the Investment Objectives and Investment Policy, financing strategies, investment
performance, results of operations, financial condition, liquidity, prospects, and distribution policy
of the Company and the markets in which it invests.
By their nature, forward-looking statements involve risks and uncertainties because they relate
to events and depend on circumstances that may or may not occur in the future. Forward-looking
statements are not guarantees of future performance. The Company’s actual investment
performance, results of operations, financial condition, liquidity, distribution policy and the
development of its financing strategies may differ materially from the impression created by the
forward-looking statements contained in this document.
Subject to their legal and regulatory obligations, the Directors and the Investment Manager
expressly disclaim any obligations to update or revise any forward-looking statement contained
herein to reflect any change in expectations with regard thereto or any change in events, conditions
or circumstances on which any statement is based. In addition, the Review Section may include
target figures for future financial year. Any such figures 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 matters which are significant in respect of Downing Renewables & Infrastructure
Trust PLC and its subsidiary undertakings when viewed as a whole.
Cautionary Statement
Downing Renewables & Infrastructure Trust plc Annual Report | 172
Company Information
Directors
(all non-executive)
Hugh W M Little (Chair)
Joanna Holt
Ashley Paxton
Registered Office Link Company Matters
Limited
6
th
Floor
65 Gresham Street
London
EC2V 7NQ
AIFM
JTC Global AIFM Solutions
Limited
Ground Floor
Dorey Court
Admiral Park
St Peter Port
Guernsey
GY1 2HT
Fund Administrator JTC (UK) Limited
The Scapel
18th Floor
52 Lime Street
London
EC3M 7AF
Investment
Manager
Downing LLP
6
th
Floor
Saint Magnus House
3 Lower Thames Street
London
EC3R 6HD
Joint Brokers Singer Capital Markets LLP
1 Bartholomew Lane
London
EC2N 2AX
Winterflood Securities
Limited
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London
EC4R 2GA
Sponsor Singer Capital Markets
Advisory
1 Bartholomew Lane
London
EC2N 2AX
Company Secretary Link Company Matters
Limited
6
th
Floor
65 Gresham Street
London
EC2V 7NQ
Solicitors to the
Company
Gowling WLG (UK) LLP
4 More London Riverside
London
SE1 2AU
Registrar Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Auditor BDO LLP
55 Baker Street
London
W1U 7EU
Downing Renewables & Infrastructure Trust plc Annual Report | 173
Shareholder Information
Key Dates
March 2024 Annual results announced
Payment of fourth interim dividend
June 2024 Annual General Meeting
June 2024 Company’s half-year end
Payment of first interim dividend
September 2024 Interim result announced
Payment of second interim dividend
December 2024 Company’s year end
Payment of third interim dividend
* These dates are provisional and subject to change.
Frequency of NAV Publication
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
relation 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 international 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 letter to Link Group,
Central Square, 29 Wellington Street, Leeds LS1 4DL.
Sources of Further Information
Copies of the Company’s Annual and Interim Reports, stock exchange announcements and further
information on the Company can be obtained from the Company’s website www.doretrust.com.
Contacting 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 matters with the
Company may do so by emailing the Company Secretary at dorecosec@linkgroup.co.uk.
This report has been printed on Revive 100 Silk.
Made from FSC® Recycled certified post-
consumer waste pulp. Manufactured in
accordance with ISO certified Carbon Balanced
standards for environmental, quality and energy
management.
CBP023984
Contents
COMPANY OVERVIEW
4 Highlights
5 Key Metrics
6 About us
STRATEGIC REPORT
8 Chairman’s Statement
12 Strategy and Business Model
19 The Investment Manager
21 Portfolio Summary
25 Investment Managers Report
44 Sustainability and responsible
Investment
71
Section 172(1) Statement
74 Risk & Risk Management
80 Going Concern and Viability
Statement
GOVERNANCE
83 Board of Directors
85 Directors’ Report
89 Corporate Governance Statement
100 Nomination Committee Report
104
Management Engagement
Committee Report
106 Audit and Risk Committee Report
110 Directors’ Remuneration Report
115
Statement of Directors’
Responsibilities
118 Independent Auditor’s Report
FINANCIAL STATEMENTS
127 Statement of Comprehensive
Income
128 Statement of Financial Position
129 Statement of Changes in Equity
130 Statement of Cash Flows
131 Notes to the Financial Statements
OTHER INFORMATION
160 Alternative Performance Measures
169 Glossary
171 Cautionary Statement
172 Company Information
173 Shareholder Information
Annual Report
For the year to 31 December 2023
Downing Renewables &
Infrastructure Trust PLC
Downing Renewables & Infrastructure Trust PLC Annual Report for the year to 31 December 2023
Visit
doretrust.com
April 2024