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Downing Renewables NAV still climbing

Downing Renewables and Infrastructure has announced an NAV as at 31 December 2022 and an update on operational performance. The NAV was 118.6p, up 0.8% on the NAV as at 30 September 2022 and after the payment of the dividend of 1.25p. 

The movement in NAV during the quarter was attributable to several factors:

  • Portfolio performance (+£4.3m, +2.3pps);
  • Update to reflect actual inflation in 2022 and increased inflation forecast for 2023 (+£4.4m, +2.4pps).
  • Update to the long-term power price forecasts (-£1.4m, -0.8pps);
  • Foreign currency exchange movement (-£3.4m, -1.8pps); and
  • Other movements including dividend (-£2.2m, -1.3pps).

The NAV total return for the year ending 31 December 2022, including dividends paid of 5.0p, was 19.5%.

Inflation forecasts for 2023 have been increased to 6.42% (from 2.75%) in the UK and 3.78% (from 2%) in Sweden. There has been no change to long term inflation assumptions (2024 onwards) of 3% in the UK and 2% in Sweden.

The company’s power price forecasts in the UK were largely consistent with the prior quarter with prices forecast to return towards more normalised levels a little sooner in the medium term. In Sweden, the power price forecasts have reduced in the period 2023-2026 with the longer-term assumptions (2027 onwards) consistent with those of the prior quarter.

The discount rates used to calculate the NAV were unchanged in the quarter and remain at 8.0% for the operational levered UK solar and Swedish hydropower portfolios and 6.3% for the unlevered Swedish wind farm, resulting in a portfolio discount rate of 7.7%.

Operational performance

Revenue for the quarter to 31 December 2022 was 63% over budget. Generation across the hydro portfolio was 21% below budget [for the year], mainly driven by low levels of precipitation as well the strategic decision to hold back water in the reservoirs for the winter months. The company believes that this decision contributed to hydropower revenues being about 80% above expectations for the quarter.

Wind and solar revenues were also significantly higher than budget (about 80% and 38% respectively), with the UK solar portfolio benefiting from higher than expected subsidies.

Operating profit for the portfolio was 78% above expectations for the quarter.

DORE : Downing Renewables NAV still climbing

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