Downing Renewables and Infrastructure Trust (DORE) has released its operational update and NAV for the three months ending 30 September 2023.
- DORE’s NAV was £217.1m, or 118.7p per share for 30 September 2023, a 0.6% increase over the three months. A dividend of 1.345p per share was paid for the third quarter.
- DORE NAV movements can be broken down as follows:
- Portfolio performance (+£4.7m, +2.5pps);
- Update to the long-term power price forecasts (-£6.4m, -3.5pps);
- Other movements including FX movement and dividend (+£1.8m, +1.2pps).
- Energy generation for the periods was higher than expected, due largely to outperformance of DORE’s hydroassets having experienced strong water inflows due to higher rainfall. Whereas wind and solar assets were below budgets due to lack of availability. Operating profit was lower than budgeted, due to lower generation in the solar and wind portfolios and lower-than-expected power prices in the Nordic region off the back of higher-than-expected rainfall.
- DORE made two acquisitions over the period: Project BlueSea, a Swedish Electricity Distribution System Operator worth £7m; and a grid services asset worth £11m in Mersey, with completion subject to receiving approval from OFGEM.
- DORE’s average discount rate fell marginally, from 7.8% to 7.7%, due to Project BlueSea’s 7.1% discount rate.
- The more important comment made in this update, in our view, is that the trust is now in the very early stages of considering potential co-investors for its existing Swedish hydropower assets. This was done in light of the value of DORE’s hydro assets, raising cash to reduce borrowings under the RCF; and create value through ongoing share buybacks.
QD comment: [It is good to see a renewable trust having a positive NAV growth when others have been hit by weaker power prices. The most important takeaway from this update will be the notion that they may sell off a portion of their hydro assets. It’s early days yet but it is a clear positive for shareholders, as it seems that the board wishes to use these proceeds to directly increase shareholder value, whether that comes in the form of further buybacks, reducing floating rate debt or funding NAV/earnings enhancing investments. While outside interest would provide evidence of the success of DORE’s approach, our only concern is whether this amounts to selling the trust’s crown jewels, given how successful their hydro assets have been and the work the team have done in adding value to them.]