Annual Report • Apr 14, 2022
Annual Report
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CL 262843_Perivan_Security_Cover ID22 CL 00_262843 Downing AR Cover Spread (9.5mm spine) ID22 CL 01_262843 Downing AR_Cpp01-pp12 ID22 CL 02_262843 Downing AR-pp13-pp25 ID22 CL 03_262843 Downing AR_pp26-pp36 ID22 CL 04_262843 Downing AR-pp37-pp54 ID22 CL 05_262843 Downing AR-pp55-pp67 ID22 CL 06_262843 Downing AR-pp68-pp81 ID22 CL 07_262843 Downing AR-pp82-pp103 ID22 CL 08_262843 Downing AR-pp104-pp107 ID22 CL 09_262843 Downing AR-pp108-pp138 ID22 CL 10_262843 Downing AR_pp139-end ID22 Downing Renewables & Infrastructure Trust PLC Annual report for the period from incorporaon on 8 October 2020 to 31 December 2021 Contents Company Overview 2 Highlights 4 Key Metrics 5 About Us Strategic Report 6 Chairman’s Statement 10 Sustainability and Responsible Investment 26 Strategy and Business Model 35 The Investment Manager 37 Porolio Summary 38 Porolio 40 Investment Manager’s Report 55 Secon 172(1) Statement 59 Risk & Risk Management 65 Going Concern and Viability Governance 68 Board of Directors 70 Directors’ Report 73 Corporate Governance Statement 82 Nominaon Commiee Report 83 Management Engagement Commiee Report 84 Audit and Risk Commiee Report 87 Directors’ Remuneraon Report 93 Statement of Directors’ Responsibilies 96 Independent Auditor’s Report Financial Statements 104 Statement of Comprehensive Income 105 Statement of Financial Posion 106 Statement of Changes in Equity 107 Statement of Cash Flows 108 Notes to the Financial Statements Other Information 139 Alternave Performance Measures 142 Glossary 144 Cauonary Statement 145 Company Informaon 146 Shareholder Informaon Downing Renewables & Infrastructure Trust plc Annual Report | 1 Downing Renewables & Infrastructure Trust plc Annual Report | 2 Highlights Successfully raised gross proceeds during the period of £137.4 million through aplacing,anoerforsubscriponandanintermediariesoeratanissue price of 100 pence per ordinary share at IPO in December 2020 (£122.5 million) and a placing at 102.5 pence per ordinary share in October 2021 (£14.9 million). SwideploymentofthemajorityofIPOproceedsthroughthecompleonof twoinvestments,invesng£102 million: – porolioofeightoperaonalhydropowerplantsincentralandsouthern Sweden for £60 million in February 2021; and – a96MWpporolioofUKSolarPVassetsfor£42 million in March 2021. Strong operaonalperformancemeantoperangprotofinvestmentswas 16.9%aboveexpectaons(beingthebudgetguresusedwhenacquiringthe assets).Poroliogeneraonof195 GWh, 4.7%aboveexpectaons. ReecngitsimpaculinvestmentsandspecicSustainableInvestment Objecves,theCompanybecameanArcle9fundpursuanttotheEU taxonomyandtheEUSustainableFinanceDisclosureRegulaons(“SFDR”). Netassetvalue(“NAV”)as at 31 December 2021 of 103.5 pence per ordinary share, up 5.5 pence per ordinary sharecomparedtotheNAVimmediatelypost IPO of 98 pence per ordinary share. Interim dividends per ordinary share of 2.25 pence paid during the period and a further 1.25 pence per ordinary share declared (but not accrued)relangtothe period to December 2021. Target dividend from 1 July 2021 onwards has been increased against guidance at IPO to 5 pence per ordinary share per annum. Cash dividend cover of 1.21x 1 1 Thesearealternaveperformancemeasures Downing Renewables & Infrastructure Trust plc Annual Report | 3 Entered,viawhollyownedsubsidiaries,intotwoseparateloanfacilityagreements: a £25 millionRevolvingCreditFacility(“RCF”)withSantanderUKplcandaseven-year EUR 43.5 milliondebtfacilitywithSkandinaviskaEnskildaBankenAB(“SEB”)foritsSwedish hydropower assets. Post Year End Highlights Acquiredtwooperaonalporoliosofhydropowerplants,locatedincentralSwedenfor £20.1 million. – Theporolioconsistsofc.12GWhpa ofhydropowerplantslocatedintheSE3electricity pricingzoneandac.36GWhpa poroliolocatedintheSE2zone. Completedtheacquisionofanoperaonal46MWonshorewindfarm located in north eastern Sweden for £19.8 million. – Theprojecthasbeenoperaonalsince2011andhasastrongoperaonaltrackrecord. Theassetisexpectedtogeneratec.108GWhofelectricityperannum. Downing Renewables & Infrastructure Trust plc Annual Report | 4 Key Metrics As at or for period ending 31 December 2021 Total Shareholder Return 1,2 5.8% NAV total return since IPO 1,2,3 7.9% Share price 103.5 pence Market capitalisaon £141.8m GAV 1,4 £220.9m Dividends per Ordinary share declared for FY21 3.5 pence NAV £141.8m NAV per share 103.5 pence Environmental Performance Assets avoided 90,523 tonnes of CO 2 and powered the equivalent of 41,973 homes 1 Thesearealternaveperformancemeasures. 2 Total returns in sterling, including dividend reinvested. 3 BasedonNAVatIPOof£0.98/share. 4 A measure of total asset value including debt held in unconsolidated subsidiaries. Downing Renewables & Infrastructure Trust plc Annual Report | 5 About Us Downing Renewables & Infrastructure TrustPLC(“DORE”orthe“Company”) is a closed ended investment company incorporatedinEnglandandWales.The Company aims to provide investors with anaracveandsustainablelevelof income, with an element of capital growth, byinvesnginadiversiedporolioof renewable energy and infrastructure assets intheUK,IrelandandNorthernEurope. The Company’s strategy, which focuses ondiversicaonbygeography, technology,revenueandprojectstage, is designed to deliver the stability of revenues and the consistency of income to shareholders. TheCompanyisanArcle9fundpursuant totheEUtaxonomyandtheEUSustainable FinanceDisclosureRegulaons(“SFDR”).The coresustainableInvestmentObjecveofthe Companyistoacceleratethetransiontonet zero through its investments, compiling and operangadiversiedporolioofrenewable energy and infrastructure assets to help facilitatethetransiontoamoresustainable future. This directly contributes to climate changemigaon. DOREisaGreenEconomyMark(London StockExchange)accredited company with anESGframeworkthataimstoprovide investorswitharacvereturnswhile contribungtothesuccessfultransionto anet-zerocarboneconomy-resulngina cleaner, greener future. As at 31 December 2021, the Company had 137,008,487 ordinary shares in issue which are listed on the premium segment of theOcialListandtradedontheLondon StockExchange’sMainMarket. DOREismanagedbyDowningLLP (the“InvestmentManager”or“Downing”). Downing Renewables & Infrastructure Trust plc Annual Report | 6 Chairman’s Statement On behalf of the Board, I am pleased to present the rst annual report of Downing Renewables & Infrastructure Trust PLC covering the period since incorporaon on 8 October 2020 to 31 December 2021 (the “Annual Report”). Inial Public Oering & Equity Issuance On 10 December 2020 the Company’s ordinaryshareswereadmiedtotrading on the premium segment of the main marketoftheLondonStockExchange following the Company’s IPO. The IPO raised gross proceeds of £122.5 million through which we were delighted to welcome a very broad range of shareholders to the register. Inordertoaidourconnuinggrowth plans and to enable us to pursue value creangopportunies, we issued a further 14.5 million new ordinary shares on 19 October 2021 at a price of 102.5 pence per share, raising gross proceeds of £14.9 million. Acquisions During the period, the Company and its wholly owned subsidiaries (the “Group”) have successfully invested £102 million in new porolioinvestments and a further £39.9millionaertheyearend,viaDORE Hold Co Limited, the main investment vehicle for the Group. The Company now hasaporoliothatisexpectedtogenerate 355GWhofrenewableelectricityper year.Theseacquisionshaveenabledusto deploy alltheproceedsofequity issuance since incorporaonintoa porolio diversiedbytechnologyandgeography. In my Interim report to Shareholders on the period to 30 June 2021, I commented on how our investment strategy is to invest in adiversiedporolioofhydropower,solar, wind, geothermal and other infrastructure assetsacrosstheUK,IrelandandNorthern Europe.Invesngindierenttechnologies reduces our reliance on any given renewable energy resource and provides exposuretoassetswithdierenteconomic lives, leading to more stable returns. I am very pleased to report that the InvestmentManagerhasconnuedto make great progress in deploying the The well-publicised increases in power prices and inflation create strong tailwinds for us and I am confident that the Company is well positioned to benefit from these factors as we move into a new phase of growth with intended capital raising and deployment. Downing Renewables & Infrastructure Trust plc Annual Report | 7 Company’sequityissuanceproceeds. Since the period end, the Company has completedtheacquisionofa46MWp operaonalwindfarminnortheastern Sweden for £19.8 million. The Company hasalsoaddedtoitsexisnghydropower poroliowiththeacquisionofa2.9MWp porolioofsmall-scalehydropowerassets and6MWpporolioofthreehydropower plants in southern and central Sweden. Theaddionalhydropowerassetswere acquiredfor£20.1million. Debt Facilies Intheinterestsofcapitaleciencyandto enhanceincomereturns,long-termcapital growthandcapitalexibility,theCompany ispermiedtomaintainaconservave levelofgearing.Toallowexibilitywith making new investments, the Company, via wholly owned subsidiaries, entered into twoseparateloanfacilityagreements:a £25millionRCFwithSantanderUKplcand aseven-yearEUR43.5milliondebtfacility withSEB.Furtherinformaononthese faciliescanbefoundintheInvestment Manager’s Review. TheRCFwillgivetheGrouptheaddional exibilitytoenabletheInvestment Manager to capitalise on its current investment pipeline, whilst also facilitang future growth. Financial Results DuringtheperiodtheNAVperordinary share increased from 98 pence at admission(aercosts)to103.5 pence at 31 December 2021, an increase of 5.5 pence. Including dividends paid to date of 2.25 pence per ordinary share, gives aNAVtotalreturnsince IPO of 7.9%.Thisincreasereectsthe netearningsandthevaluaonupli of both our hydropower and solar assetsfollowingstrongoperaonal performancesinceacquisionalongside a favourable economic environment. Theporoliocompanies distributed £4.7 million to the Company by way of shareholder loan repayments and interest during the period. An element of this cash, £2.6 million was retained in the Company’ssubsidiaryDOREHoldCoand formspartofthevaluaon. TheCompanymadeaprotfortheperiod fromincorporaonto31December2021 of £10.1million,resulnginearnings per ordinary share of 9.4 pence. As per theaccounngstandards,thisincludes therevaluaonoftheassets. Downing Renewables & Infrastructure Trust plc Annual Report | 8 Porolio Performance The3,234operangassetsproduced approximately 195 GWh of clean electricityduringthereporngperiod. TheBoardconnuestobepleasedby thestrongoperaonalperformanceof theporolio.Generaonhasexceeded expectaonsby4.7%and,inaddion tostronggeneraonperformance, theCompanyhasbenetedfrom strengthening power prices in both jurisdicons,parcularlySweden. Together, these factors have driven asignicantincreaseinrevenueand cashows. Dividends and Returns As I set out in the Company’s Interim Report, at IPO the Company set out a dividend target of three interim dividends totalling 3 pence per ordinary share in respectofthenancialperiodfromIPO to 31 December 2021, rising to a target annualised dividend yield of 5 pence per ordinary share against the IPO price of 100 pence per ordinary share, in respect ofthenancialyearto31December 2022.Thereaer,theCompanyintends to adopt a progressive dividend policy. As announced in September 2021, following the rapid deployment of theequityissuanceproceedsandthe connuedstrongtradingperformance sincethetwoporolioswereacquired, theBoardannounceditwasincreasingits dividend guidance to 5 pence per share per annum from30June2021(represenng a dividend per share of 1.25 pence for thequarterendingSeptember2021and thereaer). In line with the improved guidance, the Company has paid interim dividends to Shareholders of 1 penny per share for the period from IPO to 30 June 2021 and 1.25pencepershareforthequarterto 30 September 2021. I am pleased that a further dividend of 1.25 pence per share has been announced and will be paid for thequarterto31December2021. The Companyconnuestomeettheincreased dividend guidance target. The Company achieved a cash dividend cover of 1.21x for the dividends of 2.25 pence per share paid during the period. Dividend cover is presented excluding dividends paid immediately following the issuance of new shares. If these are included, the dividend cover would be 1.14x. TheNAVreectsthefairmarketvaluaon oftheCompany’sporoliobasedona discountedcashowanalysisoverthe lifeofeachoftheGroup’sassets plus the fair value of other assets and less the Company’sliabilies.Theassumpons whichunderpinthevaluaonareprovided bytheInvestmentManagerandtheBoard hassaseditselfwiththecalculaon methodologyandunderlyingassumpons. Outlook TheBoardisverysasedwith the £142.8milliondeployedintheve investments made todate.Ataporolio level,theInvestmentManager’sin-house assetmanagementteamwillconnueits focusondeliveringconnuedposive operaonalperformance, along with opmisaoniniaveswhereappropriate. Downing Renewables & Infrastructure Trust plc Annual Report | 9 TheCompanywillconnuetoleverage theexperseoftheInvestmentManager todeliverstrongoperaonalperformance whilst placing its sustainability goals at the centreofitsoperaonalobjecves. Thewell-publicisedincreasesinpower pricesandinaoncreatestrongtailwinds for the CompanyandIamcondent thattheCompanyiswellposioned tobenetfromthesefactorsaswe move into a new phase of growth with intended capital raising and deployment. OurInvestmentManagerconnuesto take a discerning approach to pursuing investmentopportuniesthatwilldeliver the greatest value to shareholders. The Companyisacvelyprogressingseveral hundreds of millions of pounds of pipeline opportunies.OpportuniesspanUK and Nordic hydropower, wind, solar and baeries,Nordiculiesandessenal infrastructure. NetZerohasconnuedtodominate the agenda during the period, with the long-awaitedCOP26climatesummit having takenplaceinGlasgow in November 2021. The size and complexity ofthechallengeisenormous,requiring intervenonsacrossallsectors. Despitesignicantheadwayonseveral fronts,naonalclimateandnancing commitmentssllfellshortofwhatis needed to come to grips with the climate challenge. It remains clear that more renewableenergygeneraonisnecessary. CountriessignalledtheirintenonatCOP26 tobeginthephasingoutoftradional energy systems, and this means renewable energies must take the place of fossil fuels. Thescale-upofrenewablesneededwillbe substanal.Aseconomiesaroundtheworld move towards this carbon neutral future, theCompanyiswellposionedtotake advantageofthistransion. In order to increase the Company’s diversicaon,driveecienciesofscale attheporoliolevel,spreadthexed costs over a wider asset base and increase liquidityforcurrentandfutureshareholders theBoardintendsoverme to increase the size of the Company through the issue of further shares. Any such issuance will be priced at a premium to the prevailing net asset value and will be dependent on demand from investors as well as the availability of pipeline investments. The Company and the Investment Managerconnuetomonitortheongoing conictbetweenRussiaandUkraineand itseectonEuropeanpowermarkets. I would like to thank my fellow Directors and our Investment Manager for their eortssincetheCompany’sIPOand I would like to thank shareholders for their support of the Company, whichIamcondentiswellplacedto connueitsgrowthanddeliveronits InvestmentObjecves. Hugh W M Lile Chair 4 March 2022 Downing Renewables & Infrastructure Trust plc Downing Renewables & Infrastructure Trust plc Annual Report | 10 TheOECDesmatesthat$630billionof newinvestmentisrequiredforeachyear ofthenextdecadeinordertodeliverjust a66%chanceoflimingtemperature increase on the earth’s surface to below 2 degrees. 5 It is easy to be dwarfed by the vast scale of eortneeded, however by raising capital, deploying it into the renewable energy sector and then managingourgeneraoncapacityinthe mostecientmanner,thecompanyis makingatangiblecontribuon. Meengtheworld’senergyneedswill requirelargescalelandareastobe converted for renewable energy use. This highlights the need for responsible stewardship of the land and strong engagementwithlocalcommunies 6 . These aspects are priority aspects of the Company and Downing’s approach to responsible development of energy projects,andarealsocloselymonitoredby theBoard. Power density is the metric used to describethequantyoftheearth’s surfacerequiredtogenerateaunitof energy.Typically,thepowerdensiesof renewabletechnologiesaresignicantly lower than fossil fuels 7 and therefore the amountoflandrequiredishigher. Sustainability and Responsible Investment Environmental performance Acquision – 31 December 2021 Key Performance Indicators 3,255 Numberofrenewablegeneraonassets 121.4 MW MWofinstalledrenewablegeneraoncapacity 195GWh GWhenergygenerated 90,523 GHGemissionsavoided(tCO2e) 41,973 Equivalenthomes powered 4 Number of beehives 12 Number of bird boxes 10 Number of bat boxes Social performance £19,646 Annual community funding Governance 14 Number of health and safety audits 0 Numberofaccidents,injuries,seriousinjuries 5 OECD(2017),InvesnginClimate,InvesnginGrowth,OECDPublishing,Paris, hps://doi.org/10.1787/9789264273528-en. 6 hps://www.carboncommentary.com/blog/2020/8/23/how-much-space-will-a-100-renewables-uk-require 7 hps://net-zero.blog/book-blog/land-use-by-energy-source#:~:text=Power%20density%20is%20a%20 measure,%2C%20industry%2C%20and%20convenience%20living. Downing Renewables & Infrastructure Trust plc Annual Report | 11 Beyondjustraisinganddeploying capital, we have an important part to play in raising awareness on climate change,educangaroundthesoluons andinvesnginthelandscapeand communiesthatwe areprotecng. Taken together, these aspects of how we behave all add up to our social licence to operate 8 .They are notjust‘nicetohaves’, theyarecricalenablers. Green Energy Educaon The Company and Downing are pleased to bepartneringwithEarthEnergyEducaon, acompanydedicatedtogengchildren outoftheclassroomandvisingthe Company’s renewable energy sites across theUKtohelpeducatethemaboutgreen energy and inspire them about this sector. Pursuingthedevelopmentandoperaonof these renewableenergyprojects has now becomeanintergeneraonalresponsibility. Duringthe2021/22schoolyear,Earth EnergyEducaonwillbefacilitang 10 schoolvisitstoseveralground- mountedsolarprojectsownedbythe Company. During these trips, the children will learn what makes solar energy renewableanditsenvironmentalbenets. Perhaps most importantly, the children willlearnandunderstandtherelaonship betweenclimateandenergyconsumpon -importantknowledgewhenaddressing climate change. Addionally,EarthEnergyEducaonwill bearrangingveclassroom“solartoy design and make days” leading to one biginter-schoolsolarcarraceday.By construcngsolartoysandsun-fuelled cars, children will get to grips with how solartechnologycanbeusedinahands- on session. Finally,thegroupwillbeholdingve “poweryourschool”workshops.Working withaUK-widenetworkofsciensts, children will have the opportunity to record energy data in their school. They will use this data to design the best locaontoinstallsolarpanelsorwind turbines. It will be a valuable exercise for the children who will learn about the ecienciesofinstallingrenewableenergy generators. In all, these vital sessions will reach and hopefully inspire around 1,300 children. Mul-purpose land use During the period, the Company alongside Downing has been working in collaboraonwithlocalbranchesofthe BrishBeekeepersAssociaontohouse beesonitsUKSolarsites.Important factors that had to be considered 8 hps://socialicense.com/denion.html Downing Renewables & Infrastructure Trust plc Annual Report | 12 includeexibleaccessarrangementsfor the beekeepers and apiary fencing so that grazing sheep don’t get too close. The ongoing goal is renewable energy assets that enhance an ecosystem that encompasses and encourages wildlife. The world is increasingly looking for sustainableandcyclicalbusinesspracces thatbenettheplanetandallthe creatures that live on it; sheep play an important part in the maintenance of land aroundtheCompany’sground-mounted solar panels and the performance of renewable energy assets. Long grass can cause shading on the panels and reducetheireciency.The underperformance of one panel willaecttheproducvityof all the other panels surrounding it as they are connected in a series.Itisessenaltokeepthe grass around the solar panels trimmed,butusingtradional diesel-poweredmowersisme consuming, expensive and not environmentally friendly. Sheep maintain the land in afullysustainableandeco- friendly way while enabling dual purpose land use. The sheep support the biodiversity of the area by avoiding the use ofpescides,thusallowing local wildlife and pollinators toourishandthrive.They alsooeralowcostyethighlyeecve method for stopping grass and weeds from overgrowing. It also minimises the risks of damaging the solar panel infrastructurethatatradionalmower can pose. Weareproudtobedemonstrang ourcommitmenttotheBRENaonal Solar Centre’s Agricultural Good Pracce Guidance for Solar Farms 9 and the 10 Commitmentsofgoodpracce establishedbytheUKSolarTrade associaon. 10 We currently operate 8 grazing licences and 4 beehives across 247acresofmul-useland. 9 NSC_-Guid_Agricultural-good-pracce-for-SFs_0914.pdf(bre.co.uk) 10 SolarFarms:10Commitments•SolarEnergyUKh Downing Renewables & Infrastructure Trust plc Annual Report | 13 “Stewardship is the responsible allocaon, management and oversight of capital to create long-term value for clients and beneciaries leading to sustainable benets for the economy, the environment and society.” UK Stewardship Code 2021 When we use the term ‘Responsible Invesng’ we are principally referring to avoiding, migang and managing risks on behalf of our investors and the environment and society that we share. The base line for this approach is the Downing exclusion policy. Downing LLP’s investment exclusions are expressions of principles that we share in common with our investors. They are the lines in the sand that collecvely we will not cross. Briey summarizing the policy; exclusions are not applied on the basis of sectors but are informed by two areas: products and behaviors. There are certain corporate behaviors which we believe that society in the form of customers, suppliers, competors and regulators will not tolerate and therefore avoiding these companies protects our investors from reputaonal risk and poor performance outcomes. These behaviors are typically ones which we would not condone in our own business operaons or our supplier’s and we are aligned with our investors in not wishing to associate ourselves with them. Our framework for acceptable Corporate Behavior is the United Naons Global Compact. Dened breaches of the Global Compact would constute an investment exclusion. The Investment Manager is a Responsible Investor. This responsibility is contextualized by two key commitments; Downing is a signatory of the Principles for Responsible Investment (supported by the United Naons) and the Financial Reporng Council’s UK Stewardship Code. Both commitments share in common the integraon of Environmental, Social and Governance factors in investment decision-making and the principle of acve ownership. ESG Integraon is the systemac and explicit inclusion by investment managers of Environmental, Social and Governance (ESG) factors into nancial analysis. Acve ownership is the use of the rights and posion of ownership to inuence the acvies or behaviour of investee companies. We believe that ESG factors are nancially material and present both risks and opportunies for investors. Acvely managing material risks and opportunies is how we protect and enhance value for our investors. The terms ‘Responsible’ and ‘Sustainable’ are frequently used interchangeably but we believe that they mean subtly dierent things. As Investment Manager we are responsible to our investors for the execuon of their investment mandate. We put our investor’s interests ahead of our own. However, our responsibility is not just owed to our investors, as responsible stewards of capital we have a broader responsibility to society too: Downing’s Approach to Sustainability Downing Renewables & Infrastructure Trust plc Annual Report | 14 There are some products which although we cannot uninvent them, we can refuse to fund their producon. These products are typically those where there is sucient internaonal consensus that refusing to invest is a meaningful act, that supports the containment of a product which we believe has no legimate purpose. Product level exclusions would apply to companies deriving revenue from dened controversial weapons, the manufacture of tobacco products and companies with specic types and levels of fossil fuel exposure. When we talk about Responsible Investment, we recognize the natural relaonship between exclusion, engagement and divestment. Whilst adherence to the principles of the UN Global Compact Is a key tenet of our exclusion policy, proacvely encouraging best pracce across the themac areas of the compact Is the foundaon for our rm-wide engagement policy. We are used to thinking about our responsibility to our investors, it is implicit in our duciary duty. It is also not unusual for us to be thinking about our investor’s beneciaries too because our investors are frequently invesng for their children’s future. The same principle applies to society; when we think about our responsibility to society, in the context of Sustainability we are also thinking about the society of the future. “Sustainable development is development that meets the needs of the present without compromising the ability of future generaons to meet their own needs.” The Brundtland Commission, Our Common Future Sustainability, on the face of it is just about the rate at which something can be maintained. Its most frequently used to describe resource eciency. However, within nancial regulaon, ‘Sustainable Investment’ is a dened term: ‘Sustainable investment’ means an investment in an economic acvity that contributes to an environmental objecve… or… a social objecve… provided that such investments do not signicantly harm any of those objecves and that the investee companies follow good governance pracces. EU Sustainable Finance Disclosure Regulaon The Company was proud to be awarded The Green Economy Mark by the London Stock Exchange at IPO in December 2020. The Green Economy Mark was introduced in 2019 and recognises listed companies and funds that derive 50% or more of their revenue from environmental soluons. The award is recognion that the Company meets the required industry standards of the Company’s commitment to a sustainable investment approach. It also provides transparency for investors, giving those seeking a sustainable and strong risk-adjusted returns the reassurance that they are invesng in a greener future and supporng the UK’s commitment to a net-zero economy. Porolio alignment to EU taxonomy Aligned Not Aligned 46% 31% 22% Electricity generaon from Hydropower Electricity generaon photovoltaic technology using Solar Cash In addion to a high degree of taxonomy alignment, the United Naons Sustainable Development Goals are frequently used to describe the posive contribuon that our investments make to help solve some of the most pressing needs facing our environment and society. Downing Renewables & Infrastructure Trust plc Annual Report | 15 maximised through the proacve monitoring and incident response within the asset management team. Long term generaon prospects are improved through ensuring long term maintenance strategies are appropriate to keep the assets working eecvely. In addion, the program underway to extend the generang life of the ground mount solar assets will substanally increase the ancipated generaon from exisng assets. Target 9.4: By 2030, upgrade infrastructure and retrot industries to make them sustainable, with increased resource-use eciency and greater adopon of clean and environmentally sound technologies and industrial processes, with all countries taking acon in accordance with their respecve capabilies Since acquiring the UK solar porolio the asset manager has undertook an upgrade to its infrastructure by parcipang in the Energy Network’s Associaon program to ensure compliance with its engineering recommendaons. These changes designed to help Naonal Grid ESO operate the electricity network more eciently, reduce balancing costs and therefore provide savings to electricity customers. Target 13.3: Improve educaon, awareness-raising and human and instuonal capacity on climate change migaon, adaptaon, impact reducon and early warning In December 2021 Downing is pleased to be partnering with Earth Energy Educaon, a company dedicated to geng children out of the classroom and vising renewable energy sites across the UK to educate them about green energy. During the 2021/22 school year, Earth Energy Educaon will be facilitang 10 school visits to several ground-mounted solar projects managed by Downing. During these trips, the children will learn what makes solar energy renewable and its environmental benets. Perhaps most importantly, the children will learn Target 7.1: By 2030, ensure universal access to aordable, reliable and modern energy services The UK solar porolio is highly diversied across individual assets and geographies. A signicant level of solar generaon from the commercial and residenal rooops assets is provided on a free or discounted basis to the property owner. During the period of ownership, 9,908 MWh was made available to residenal occupants at no cost. In addion, 7,263 MWh has been made available to commercial landlords on a discounted basis. Although not all energy generated is used by the property and any excess is exported to the grid, the retail value of the electricity generated is in excess of £2.8m. Our hydropower porolio also provides electricity to local residents. Target 7.2: By 2030, increase substanally the share of renewable energy in the global energy mix The renewable generaon porolio is proacvely managed to maximise nancial return from each asset, oen meaning that generaon is increased over the short and long term. Short term generaon is Downing Renewables & Infrastructure Trust plc Annual Report | 16 and understand the relaonship between climate and energy consumpon – important knowledge when addressing climate change. Target 15.5: Take urgent and signicant acon to reduce the degradaon of natural habitats, halt the loss of biodiversity and, by 2020, protect and prevent the exncon of threatened species Across our ground mount solar porolio, we are now stewards of 358 acres of land. Over preceding generaons, intensive farming pracces, the use of ferlisers, herbicides and pescides have had a detrimental impact on farmland birds, pollinators, and the ower-rich habitats themselves 11 . Our ongoing land management plans have seen the sewing of region-specic wildower seed mixes, the re-introducon of pollinators through partnership with local branches of the Brish Beekeepers Associaon and specic measures to encourage UK Internaonal Union for Conservaon of Nature Red list species back onto the land. Going forward, we are planning an ongoing program of ecological site surveys to idenfy rene and opmise our contribuon to SDG 15. Target 15.9: By 2020, integrate ecosystem and biodiversity values into naonal and local planning, development processes, poverty reducon strategies and accounts Target 15.a: Mobilize and signicantly increase nancial resources from all sources to conserve and sustainably use biodiversity and ecosystems Environmental, Social and Governance Objecves Over the period, we have agreed a set of ESG KPIs against which we intend to track the ESG performance of our investments over me. Environmental Social Governance Renewable energy capacity Jobs supported Board independence & experse Renewable electricity / heat generated Number of accidents, injuries and fatalies Rao male to female board members (where funds do not control investments) GHG emissions avoided Existence of a formal community engagement / complaints handling process ABC policies in place and regularly reviewed GHG emissions (scope 1 and 2) Number of engagements with stakeholders including local community complaints Material contractor due diligence Proporon of purchased energy from renewable sources Ability to host educaon visits Acon taken to avoid or minimise habitat degradaon Educaon/community visits Natural habitat creaon / restoraon Community fund contribuons Environmental incidents including non- compliance with permits / regulaons 11 State-of-Nature-2019-UK-full-report.pdf (nbn.org.uk) Downing Renewables & Infrastructure Trust plc Annual Report | 17 Task Force for Climate Related Financial Disclosures (“TCFD”) The TCFD Recommendaons are designed to encourage consistent and comparable reporng on climate- related risks and opportunies by companies to their stakeholders. The TCFD Recommendaons are structured around four content pillars: (i) Governance; (ii) Strategy; (iii) Risk Management; and (iv) Metrics & Targets. Throughout this report, the Company has reported in line with TCFD recommendaons. The Company strives to maintain the highest standards of corporate governance and eecve risk management at both a Company and a porolio level. Although the Company is not required to report under the recommendaons of the TCFD, many of those recommendaons are followed in order to enhance the Company’s disclosures. Governance Governance is the responsibility of the Board, with key funcons delivered through delegated commiees with the oversight of the Board and the ongoing support of the Investment Manager. The Board meets on at least a quarterly basis, with addional ad-hoc meengs arranged as appropriate. Informaon relang to the Company’s acvies in fullling its sustainable Investment Objecve are presented on at least a quarterly basis. This data enables the Board to sasfy itself that it is fullling the climate migaon obligaons explicit in the Company’s sustainable Investment Objecve; “to accelerate the transion to net zero through its investments, compiling and operang a diversied porolio of renewable energy and infrastructure assets to help facilitate the transion to a more sustainable future. This directly contributes to climate change migaon.” On at least an annual basis the Board reviews climac data, specic to the geographies and asset types in the porolio, in order to review and develop the Company’s strategy in relaon to the risks and opportunies from climate change. The remit of the Board and its Commiees are set out in more detail in the Corporate Governance Statement on pages 73 to 81. However, specically the role of the Audit and Risk Commiee is to monitor the eecveness of the Company’s nancial reporng, service providers, systems of internal control and risk management, and the integrity of the Company’s external audit processes. In fullling this purpose, the Commiee has oversight of nancial disclosures, including TCFD reporng. In addion to the Board’s oversight funcons, the Directors have appointed an Investment Manager and delegated the day-to-day management of the Company to the Investment Manager. Rather than creang new structures to govern and oversee the management of climate change risks and opportunies, the Investment Manager has integrated climate change into its exisng structures, processes and risk registers. On the instrucon of the Board, the Investment Manager gathers porolio data on an ongoing basis, that enables the board to oversee the delivery of the Company’s sustainable Investment Objecve. The Investment Manager also provides dedicated subject maer experse to support the Board’s annual review and development of strategy in relaon to climate change risks and opportunies. The Investment Manager integrates Environmental, Social and Governance factors into its investment processes, with climac factors forming integral components of the investment thesis. Finally, the Investment Manager operates an Investment Commiee to oversee and approve the acquision and disposal of assets on behalf of the porolio. Climac factors are reviewed as crical components of the investment thesis. Downing Renewables & Infrastructure Trust plc Annual Report | 18 Strategy Scenario Analysis for Strategy Development In order to analyse the potenal range of risks and opportunies associated with climate change, the Board selected three scenarios from the potenal six developed by The Central Banks and Supervisors Network for Greening the Financial System (“NGFS”). Selecng one scenario from each of the available boxes, enabled the board to consider the possible combinaons of physical and transional risks. NGFS Scenarios Physical risks arise from the changes in weather and climate that impact infrastructure and economic acvity. They are typically sub-divided into acute risks like extreme weather events or chronic risks like rising sea levels, dierenated by the me taken to have a given eect. Transion risks are the societal changes arising from a transion to a low-carbon economy. They could arise from changes in public sector policies, innovaon or the aordability of certain technologies, investor or consumer senment towards behaviours or products. The three selected scenarios are: 1. The Current Policies Scenario (Base Case) assumes that only currently implemented policies are preserved, leading to high physical risks. Emissions grow unl 2080 leading to about 3°C of warming and severe physical risks. This includes irreversible changes like higher sea levels. This scenario will be updated to reect progress made at COP26 but remains the base case scenario with the greatest probability. 2. The Delayed Transion Scenario assumes global annual emissions do not decrease unl 2030. Strong policies are then needed to limit warming to below 2°C. Negave emissions are limited. This scenario assumes new climate policies are not introduced unl 2030 and the level of acon diers across countries and regions based on currently implemented policies. Downing Renewables & Infrastructure Trust plc Annual Report | 19 3. The Net Zero 2050 Scenario is an ambious scenario that limits global warming to 1.5°C through stringent climate policies and innovaon, reaching net zero CO₂ emissions around 2050. Some jurisdicons such as the US, UK, EU and Japan reach net zero for all greenhouse gases by this point. This scenario assumes that ambious climate policies are introduced immediately. Physical risks are relavely low, but transion risks are high. Scenario Probabilies These scenarios are not predicons and instead are presented as hypothecal outcomes. However, an analysis of their relave probability indicates how strategy may develop over me or indeed where the Board focused their analysis. At this point in me, the Net Zero 2050 Scenario is assessed to be the least probable of the three scenarios recognizing the lack of sucient internaonal consensus, co-operaon and investment. The Net Zero 2050 Scenario is dependent upon near term variables and so without signicant change, its probability will drop sharply in the near term. Whilst the Current Policies Scenario will be updated to reect progress made at COP26, it remains the base case scenario with the greatest probability. If policy progress remains limited, the probability aributed to this >3˚C scenario will increase over me. The probability of achieving a Delayed Transion Scenario is dependent upon future unknown variables, therefore without any signicant change over the medium term, its probability will reduce over me. Recognising that the Current Policies Scenario is considered the most probable, the Board’s analysis of Climate risks was focused on an assumpon of higher physical risks and lower transional risks. The relave probability of these scenarios will be reviewed on at least an annual basis and will inform future strategy development. Downing Renewables & Infrastructure Trust plc Annual Report | 20 Analysis Periods for Strategy Development Recognising the internaonal climate policy focus on the next 30 years and the projected lifespan of a number of the assets within the Company’s porolio, the Board’s scenario analysis was considered over a 30-year period, sub divided into three me horizons: short-term 2022-2030; medium term 2031–2040; and long-term 2041-2050. The illustrave table below shows how the relave combinaons of physical and transional risks might be expected to develop over me and why the Board’s analysis focused on physical risks. Illustrave Risk Composion over me Risk Composion Short Term 2022 - 2030 Medium Term 2031 - 2040 Long Term 2041 - 2050 Current Policies Physical High Higher Highest Transional Low Low Low Delayed Transion Physical High Higher Low Transional Low Highest High Net Zero 2050 Physical Low Lower Lowest Transional Low Lower Lowest Physical Factors, Porolio Impacts and Modelling Whilst climate change is a complex phenomenon, physical risks and opportunies to the porolio were idened across four principal factors: air temperature change, wind speed change, precipitaon level change and change to incidence rate of extreme weather events. In addion to the data above, porolio eciency, micro and macro-economic data is reported to the Board on a quarterly basis. Data relang to generaon and porolio eciency is ulised to assess the eect of any physical risks to the porolio and the company’s delivery of its sustainable Investment Objecve. Micro and macro-economic data, for example energy commodity prices, carbon emissions allowance prices and subsidy rates are ulised to assess the impact of transional risks. For each risk factor, the porolio technology and geographic exposure were considered to assess the potenal impact on the porolio. An appropriate modelling input was then idened to enable the Board to assess the potenal impact of the factor. For example, the table below describes how a projected change in precipitaon may require changes to ground maintenance acvity associated with the solar porolio and therefor how operaonal costs could change over me to reect this. Meanwhile changes to precipitaon rates could aect generaon from hydropower assets. Downing Renewables & Infrastructure Trust plc Annual Report | 21 Physical Factors, impact and modelling table Physical Factors Solar Hydropower Impact on Porolio Assumpon to ex Impact on Porolio Assumpon to ex Air Temperature Δ Change in tech eciency due to temperature uctuaons Performance rao Timing of spring melt Generaon prole Wind Δ Mounng structure maintenance, potenal to reduce surface temperature of modules Operaonal costs Nil N/A Precipitaon Δ Ground maintenance acvity, potenal to impact on surface dust of modules Operaonal costs relang to land management More water ow and generaon capability Generaon Extreme Weather Δ Damage to equipment Operaonal costs (insurance premiums) / Capex on drainage Spill (eciency during high water ow) / equipment damage Generaon / Capex A worked example - precipitaon change under the current policies scenario The company’s solar assets are predominantly located in the United Kingdom. The le and middle maps show the projected change in Precipitaon (in %) in United Kingdom since the reference period 1986-2006, in the years 2030 and 2050 under a NGFS current policies scenario. The third map shows the dierence between the two. Precipitaon Change UK Downing Renewables & Infrastructure Trust plc Annual Report | 22 Short Term: Solar modules are typically hydrophobic, making it unlikely that increased precipitaon would result in mineral build-up on the modules, however prolonged periods of cloud cover may marginally reduce generaon over the short term. Increased precipitaon could increase growth of vegetaon around module arrays and require more frequent maintenance as a result. To monitor these short-term eects, the eciency of modules and their generaon proles are monitored on an ongoing basis with this data built into ongoing porolio valuaons. Valuaon models already allow for ad hoc maintenance costs within operaonal expenditure. Medium Term: Consistently higher precipitaon rates may require addional capital expenditure to improve site drainage. The Company’s hydropower assets are predominantly located in Sweden. The le and middle maps show the projected change in Precipitaon (in %) in Sweden since the reference period 1986-2006, in the years 2030 and 2050 under a NGFS current policies scenario. The third map shows the dierence between the two. Precipitaon Change Sweden Short, Medium and Long Term: Increased precipitaon rates are likely to have a posive eect on generaon from hydropower assets. Marginal increases to roune maintenance are likely to be oset by increased generaon. This worked example focused solely on projected precipitaon changes in isolaon from other factors, across two technology types and geographies. When considered alongside other factors like changes in air temperature and wind speed, the potenal future variaon in water supply to Nordic hydropower assets was assessed to have a more signicant potenal impact on porolio valuaons than the marginal impact from UK based solar assets. For this reason, signicant work is undertaken before the acquision of the hydropower porolio and the forecast impact of climate change on the specics assets was included within nancial pricing models. Downing Renewables & Infrastructure Trust plc Annual Report | 23 Increased precipitaon, both on an annual basis and on shorter meframes can challenge the ability to handle high water ow. Temperature drives the melng of snow reservoirs and milder winters can result in earlier spring oods and increased ow during the winter months. When the data is available, we consider using seasonal inow a more accurate measure than precipitaon alone as it reects the dimensioned ow that the power plant will get, both in terms of producon and excess water ow. The projected changes to the climate bring several other consideraons in terms of potenal impact to asset valuaons. Increased inow during winter months can be benecial if it connuous to correlate with higher electricity market prices, although changes can also impact the level of wind generaon and changing demands for heat. The relave impact of Physical and Transional risks Changes to physical factors are projected from modelled greenhouse gas emissions, extrapolated principally from populaon growth, economic acvity, energy ulisaon and the generaon mix. Many of these physical factors are omni- direconal and the potenal eects are assessed to be gradual. Transional factors can have a much wider spread of potenal outcomes as a result of concentrated human decision- making. For example, populaon growth is inuenced by billions of unconnected human decisions and therefore the probability of direconal changes to populaon growth over the short term are extremely low. In contrast policy changes to government subsidies can be inuenced by a relavely small number of people over a short period of me. Across each of the three scenarios there is an assumpon that policies and consumer preferences are likely to become more supporve of renewable energy generaon over me. Whilst harder to project than the porolio eects of physical risks, transional factors are likely to remain supporve of porolio valuaons. Porolio Sensivity Analysis Building on the scenario modelling and assumpons set out above, and data provided by NGFS for the most likely scenario we are able to quanfy the impact on environmental factors over an appropriate meframe. Metric 2022 - 2030 2031 - 2040 2041 - 2050 Solar - UK Air Temperature Δ temperature of air masses two meters above the Earth's surface 0.3% 0.6% 0.8% Wind Δ velocity of an air mass 10 metres above ground (0.3%) (0.8%) (1.7%) Precipitaon Δ mass of water (both rainfall and snowfall) falling on the Earth's surface (0.1%) 2.0% 2.9% Extreme Weather Δ percentage change in the cost of damage from such events 6.9% 15.3% 23.3% Downing Renewables & Infrastructure Trust plc Annual Report | 24 Metric 2022 - 2030 2031 - 2040 2041 - 2050 Hydropower - Sweden Air Temperature Δ temperature of air masses two meters above the Earth's surface 0.4% 0.9% 1.2% Wind Δ velocity of an air mass 10 metres above ground (0.1%) (0.8%) (1.2%) Precipitaon Δ mass of water (both rainfall and snowfall) falling on the Earth's surface 0.8% 1.5% 1.9% Extreme Weather Δ level of damage from river oods that is expected to occur every year, measured in USD 16.0% 56.0% 34.8% Taking the changes into account and making appropriate adjustments to valuaon assumpons, through generaon proles and levels, operaonal expenditure (including insurance premiums) and capital expenditure provides us with an esmate of the potenal nancial impact of climate change to the Company. As all climate related consideraons are already included within our investment case, the esmated impact on the NAV of the Company would be approximately 0.74 pence per share. Strategic Implicaons and Resilience of DORE’s Climate Change strategy The physical risks of climate change present manageable risks to the porolio, as described throughout the rst secon of this report, however society’s transion to a lower carbon economy presents signicant opportunies and upside potenal for the Company. The Company’s investment objecve is to provide investors with an aracve and sustainable level of income returns, with an element of capital growth, by invesng in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe. Signicant growth in renewable energy and its associated infrastructure is crical to meeng the required emission reducons across an expanding electricity generaon sector. This posions the Company well to connue delivering value to investors through its robust climate change strategy. Risk Management The ongoing performance of the company’s porolio and all material factors aecng valuaon are reviewed on a quarterly basis. Market, climac factors and events aecng valuaon are constantly monitored by the Investment Manager, with any extraordinary events leading to material changes to valuaon, communicated to investors. The Investment Manager ulises in-house subject maer experse to prepare reports for the board throughout the reporng period. These reports incorporate policy perspecves and data sourced from respected third-party policy experts. On the basis of these reports, the board undertake an annual review and development process in support of the company’s climate change strategy, idenfying and evaluang the principal climate risks and opportunies. The board’s standard reporng pack contains data that enables them to oversee the delivery of the company’s sustainable investment objecve, explicitly delivering output that supports Climate Change Migaon. Downing Renewables & Infrastructure Trust plc Annual Report | 25 Metrics and Targets The following data is currently ulised to support modelling of risks and opportunies in relaon to the porolio’s technical generaon mix and geographic exposure. The three common factors across analysis of the porolio are air temperature, wind speed and precipitaon. In addion to these three common factors a fourth data source has been selected for each geography and porolio technology, as a proxy for potenal changes to costs of extreme weather events. The common source of the data is the NGFS Current Policies Scenario and the me period selected aligns to the short, medium and long term horizons idened during scenario analysis for strategy development. Projected Air Temperature Change (UK and Sweden) Projected Wind Speed Change (UK and Sweden) Projected Precipitaon Rate Change (UK and Sweden) Projected annual % change in cost of expected damage from tropical cyclones (UK) Projected annual % change in cost of expected damage from river oods (Sweden) These data sources will be updated and reviewed on an at least an annual basis to connue to support scenario analysis and strategy development. Over me, addional data sources may be selected to reect the porolio’s diversicaon by technology and geography. In addion to the data above, porolio eciency, micro and macro-economic data is reported to the board on a quarterly basis. Data relang to generaon and porolio eciency is ulised to assess the eect of any physical risks to the porolio and the company’s delivery of its sustainable investment objecve. Micro and macro-economic data, for example energy commodity prices, carbon emissions allowance prices and subsidy rates are ulised to assess the impact of transional risks. Scope 1 Emissions: When considering the direct emissions of the company, we assess these to be negligible, recognising that over the reporng period, all company’s business has been conducted virtually. Scope 2 Emissions: The Scope 2 emissions of the porolio are esmated to be 4,325 kg C02e. These emissions stem principally from electricity ulised by the hydropower assets within the porolio and are esmated on the basis of electricity usage and geographically specic residual grid emissions factors. Scope 3 Emissions: The Scope 3 emissions of the porolio are esmated to be 13,033 kg CO2e. These emissions are esmated principally on the basis of grass-cung and panel cleaning across the Ground Mounted Solar poron of the porolio and the accrued mileage of contractors making roune site visits throughout the reporng year. Downing Renewables & Infrastructure Trust plc Annual Report | 26 Strategy and Business Model The Board is responsible for the Company’s Investment Objecve and Investment Policy and has overall responsibility for ensuring the Company’s acvies are in line with such overall strategy. The Group’s Investment Objecve and Investment Policy are published below. Corporate Summary The Company is a closed ended investment company incorporated in England and Wales with registraon number 12938740. The Company aims to provide investors with an aracve and sustainable level of income, with an element of capital growth, by invesng in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe. As at 31 December 2021, the Company had 137,008,487 ordinary shares in issue which are listed on the premium segment of the Ocial List and admied to trading on the London Stock Exchange’s Main Market. Investment Objecve The Company’s investment objecve is to provide investors with an aracve and sustainable level of income returns, with an element of capital growth, by invesng in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe. The core sustainable investment objecve of the Company is to accelerate the transion to net zero through its investments, compiling and operang a diversied porolio of renewable energy and infrastructure assets to help facilitate the transion to a more sustainable future. The Company believes that this directly contributes to climate change migaon. The Company has made disclosures under the EU’s Sustainable Finance Disclosure Regulaon (“SFDR”) as part of its commitment to sustainability. The Company is an Arcle 9 fund under SFDR. Investment Policy The Company will seek to achieve its Investment Objecve through investment in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe, comprising (i) predominantly assets which generate electricity from renewable energy sources; and (ii) other infrastructure assets and investments in businesses whose principal revenues are not derived from the generaon and sale of electricity on the wholesale electricity markets (“Other Infrastructure”) (together “Assets” and each project being an “Asset”). Assets may be operaonal, in construcon or construcon-ready, at the me of purchase. In-construcon or construcon-ready Assets are assets which have in place the required grid access rights, land consents, planning, perming and regulatory consents in order to commence construcon. For the avoidance of doubt, the Company will not acquire or fund Assets that are at an earlier stage of development than construcon ready. The Company intends to invest in a porolio of Assets that is diversied by: (i) the principal technology ulised Downing Renewables & Infrastructure Trust plc Annual Report | 27 to generate energy from renewable sources, for example solar photovoltaic, wind, hydropower-electric or geothermal (“Technology”); (ii) geography; and (iii) the stage of development of a project, being one of operaonal, construcon-ready or in-construcon (each a “Project Stage”). Whilst the Company intends primarily to take controlling interests, it may acquire a mix of controlling and non-controlling interests in Assets and the Company may use a range of investment instruments in the pursuit of its Investment Objecve, including but not limited to equity and debt investments. In circumstances where the Company does not hold a controlling interest in the relevant investment, the Company will seek to secure its shareholder rights through contractual and other arrangements, inter alia, to ensure that the Asset is operated and managed in a manner that is consistent with the Company’s Investment Policy. Investment Restricons The Company will observe the following investment restricons when making investments: • the Company may invest no more than 60% of Gross Asset Value in Assets located in the UK; • the Company may invest no more than 60% of Gross Asset Value in Assets located in Ireland and Northern Europe (combined); • no more than 25% of Gross Asset Value will be invested in Assets in relaon to which the Company does not have a controlling interest; no investments will be made in companies which generate electricity through the combuson of fossil fuels or derive a signicant poron of their revenues from the use or sale of fossil fuels unless the purpose of the investment is to transion those companies away from the use of fossil fuels and toward sustainable sources; and • the Company will not invest in other UK listed closed-ended investment companies. The Company will observe the following investment restricons when making investments, with the relevant limits being calculated on the assumed basis that the Company has gearing in place of 50% of Gross Asset Value: • the Company may invest no more than 50% of Gross Asset Value in any single Technology; • the Company may invest no more than 25% of Gross Asset Value in Other Infrastructure; • the Company may invest no more than 35% of Gross Asset Value in Assets that are in construcon or construcon-ready; Downing Renewables & Infrastructure Trust plc Annual Report | 28 • the Company may invest no more than 30% of Gross Asset Value in any one single Asset, and the Company’s investment in any other single Asset shall not exceed 25% of Gross Asset Value; and • at the me of an investment or entry into an agreement with an Oaker, the aggregate value of the Company’s investments in Assets under contract to any single Oaker will not exceed 40% of Gross Asset Value. Following full investment of the Net Proceeds and following the Company becoming substanally geared (meaning for this purpose by way of long-term debt of 50% of Gross Asset Value being put in place), the Company’s porolio will comprise no fewer than six Assets. Compliance with the above restricons will be measured at the me of investment and non-compliance resulng from changes in the price or value of Assets following investment will not be considered as a breach of the investment restricons. The Company will hold its investments through one or more SPVs and the investment restricons will be applied on a look-through basis to the Asset owning SPV. Borrowing Policy Long-term limited recourse debt at the SPV level may be used to facilitate the acquision, renancing or construcon of Assets. Where ulised, the Company will seek to adopt a prudent approach to nancial leverage with the aim that each Asset will be nanced appropriately for the nature of the underlying cashows and their expected volality. Total long-term structural debt will not exceed 50% of the prevailing Gross Asset Value at the me of drawing down (or acquiring) such debt. In addion, the Company and/or its subsidiaries may make use of short-term debt, such as a revolving credit facility, to assist with the acquision of suitable opportunies as and when they become available. Such short-term debt will be subject to a separate gearing limit so as not to exceed 10% of the prevailing Gross Asset Value at the me of drawing down (or acquiring) any such short-term debt. The Company may employ gearing at the level of an SPV, any intermediate subsidiary of the Company or the Company itself, and the limits on total long-term structural debt and short-term debt shall apply on a consolidated basis across the Company, the SPVs and any such intermediate holding enes (disregarding for this purpose any intra-Group debt (i.e. borrowings and debt instruments between members of the Group)). In circumstances where these aforemenoned limits are exceeded as a result of gearing of one or more Assets in which the Company has a non-controlling interest, the borrowing restricons will not be deemed to be breached. However, in such circumstances, the maer will be brought to the aenon of the Board who will determine the appropriate course of acon. Downing Renewables & Infrastructure Trust plc Annual Report | 29 Currency and Hedging Policy The Company will adopt a structured risk management approach in seeking to deliver stable cash ows and dividend yield. This may include entering into hedging transacons for the purpose of ecient porolio management. This could include: • foreign currency hedging on a poron of equity distribuons; • foreign currency hedging on construcon budgets; • interest and/or inaon rate hedging through swaps or other market instruments and/or derivave transacons; and • power and commodity price hedging through power purchase arrangements or other market instruments and/or derivave transacons. Any such transacons will not be undertaken for speculave purposes. Cash management The Company may hold cash on deposit and may invest in cash equivalent investments, which may include short-term investments in money market type funds (“Cash and Cash Equivalents”). There is no restricon on the amount of Cash and Cash Equivalents that the Company may hold and there may be mes when it is appropriate for the Company to have a signicant Cash and Cash Equivalents posion. Holding and Exit Strategy It is intended that Assets will be held for the long-term. However, if an aracve oer is received or likely to be available, consideraon will be given to the sale of the relevant Asset and reinvestment of the proceeds. Changes to and Compliance with the Investment Policy Any material changes to the Company’s Investment Policy set out above will require the approval of Shareholders by way of an ordinary resoluon at a general meeng and the approval of the FCA. In the event of a breach of the investment guidelines and the investment restricons set out above, the AIFM shall inform the Board upon becoming aware of the same and if the Board considers the breach to be material, nocaon will be made to a Regulatory Informaon Service. Business Model The Company was incorporated on 8 October 2020 as a public company limited by shares. The Company intends to carry on business as an investment trust within the meaning of secon 1158 of the Corporaon Tax Act 2010 and was listed on the premium segment of the main market of the London Stock Exchange on 10 December 2020. The Company holds and manages its investments through a parent holding company, DORE Hold Co Limited, of which it is the sole shareholder, DORE Hold Co in turn holds investments via a number of intermediate holding companies and Downing Renewables & Infrastructure Trust plc Annual Report | 30 SPVs. The jurisdicons in which the SPVs are incorporated is typically determined by the locaon of the assets, and further porolio-level holding companies may be used to facilitate debt nancings. As at 31 December 2021, the Company owns a porolio of 3,234 Renewable Energy Assets totalling 121 MW of operaonal capacity. Medium term structural debt is in place for the United Kingdom solar porolio and, as at 31 December 2021, this comprised outstanding principal amounts of £79.3 million lent by Aviva and BlackRock. Downing Hydro AB, the intermediate holding company which holds the Swedish hydropower assets has access to a seven-year EUR 43.5 million debt facility with Skandinaviska Enskilda Banken AB (“SEB”). Following the period end, EUR 27.4 million was drawn against this facility to fund the acquision of two addional Swedish hydropower schemes. The remainder of the undrawn facility is predominately to fund future capital expenditure requirements. Short term debt nancing is available through a £25 million RCF which may be drawn on by DORE Hold Co Limited to facilitate future growth plans. The Company has a 31 December nancial year end and announces half- year results in or around September and full-year results in or around March. The Company intends to pay dividends quarterly, targeng payments in or around March, May, August and November each year. The Company has an independent board of non-execuve directors and has appointed Gallium Fund Soluons Limited as its AIFM to provide porolio and risk management services to the Company. The AIFM has delegated the provision of porolio management services to the Investment Manager, Downing LLP. Further informaon on the Investment Manager is provided in the Investment Manager’s Report. As an investment trust, the Company does not have any employees and is reliant on third party service providers for its operaonal requirements. Likewise, the SPVs do not have any employees and services are also provided through third party providers. Each service provider has an established track record and has in place suitable policies and procedures to ensure they maintain high standards of business conduct and corporate governance. Downing Renewables & Infrastructure Trust plc Annual Report | 31 Downing Renewables & Infrastructure Trust PLC 12938740 DORE HOLD CO LIMITED 13081088 Figure 1: Company Operang Model Shareholders Debt Providers Santander UK Plc Revolving credit facility Shareholder Loan Equity Services Key Debt Company Service Providers Broker: Singer Capital Markets Company Secretary: Link Company Maers Administrator: Gallium Fund Soluons Registrar: Link Company Maers Auditors: BDO PR Advisor: TB Cardew Tax Adviser: EY Legal: Gowling WLG for illustraon purposes, this is a simplified structure. Some investments in SPVs may be held indirectly through porolio level holding companies. UK SPVs Non-UK SPV Porolio Investments in SPVs AIFM Gallium Fund Soluons Investment Manager Downing LLP Debt Providers Skandinaviska Enskilda Banken AB Aviva BlackRock Asset level debt facilies Asset Manager Downing LLP Independent Board of Directors Day to day management subcontracted to Downing LLP Objecves and Key Performance Indicators The Company sets out below its KPIs which it uses to track the performance of the Company over me against the objecves, as described in the Strategic Report on page 26. The Board is of the opinion that the KPIs detailed in the table below, alongside the environmental, social and governance objecves set out on page 16 provide shareholders with sucient informaon to assess how eecvely the Company is meeng its objecves. The Board will connue to monitor these KPIs on an ongoing basis. Downing Renewables & Infrastructure Trust plc Annual Report | 32 Financial Objecves Objecve KPI and Denion Relevance to Strategy Performance Explanaon Aracve and sustainable level of income Dividends per share (pence) The dividend reects the Company’s ability to deliver a low risk but growing income stream from the porolio. The Company has paid dividends to date of 2.25 pence per share. The company has declared a further 1.25 pence per share to be paid in respect of the period to 31 December 2021. The Company targeted an inial yield of 3 pps in respect of the period from IPO to 31 December 2021. The company will have paid 3.5 pps in respect of this period exceeding the inial target set at IPO. Cash dividend cover 12 Reects the Company’s ability to cover its dividends from the income received from its porolio. 1.21x – excluding dividends paid immediately following the issuance of new shares 1.14x. – including dividends paid immediately following the issuance of new shares The Company, through DORE Hold Co received distribuons of £4.7m from the underlying projects enabling the Company to pay full covered dividends. £2.5 million was paid up via loan interest from DORE Hold Co in the period. Downing Renewables & Infrastructure Trust plc Annual Report | 33 Objecve KPI and Denion Relevance to Strategy Performance Explanaon Capital preservaon with an element of capital growth NAV per share (pence) 12 The NAV per share reects our ability to preserve capital value and also provide an element of capital growth throughout the life cycle of our assets. 103.5 pence per share £141.8m / 103.5 pence per share as at 31 December 2021. NAV has increased since IPO (from 98p), aer taking into account dividends paid and further equity issuance during the year. Total NAV return (%) 12 The total NAV return measure highlights the gross return to investors including dividends paid. 7.9% The Company’s NAV has increased due to the upward revaluaon of the Company’s Investment in Hold Co, and its investments in a porolio of renewable energy assets. Total Shareholder return since IPO 12 The share price appreciaon plus reinvested dividends over a period, is a measure of a company’s capital growth over the long term. 5.8% The Company’s closing share price as at 31 December 2021 was 103.5 pence per share. The Company’s shares were issued at 100 pence per share. Ongoing charges rao 12 Ongoing charges shows the drag on performance caused by the operaonal expenses incurred by the Company. 1.6% Company level budgets are approved annually by the Board and actual spend is reviewed quarterly. Transacon budgets are approved by the Board and potenal abort exposure is carefully monitored. 12 These are alternave performance measures Read more about the Company’s approach to sustainability and ESG on pages 10 to 25. Downing Renewables & Infrastructure Trust plc Annual Report | 34 Downing Renewables & Infrastructure Trust plc Annual Report | 35 About Downing The Company is managed by Downing LLP, an established investment manager with over 30 years’ experience and a considerable track record in the core renewables space. Downing is authorised and regulated by the FCA and, as at 30 November 2021, had over £1.5 billion of assets under management. The Investment Manager has over 180 sta and partners. The team of 39 investment and asset management specialists who focus exclusively on energy and infrastructure transacons are supported by business operaons, IT systems specialists, legal, HR and regulatory and compliance professionals. The Investment Manager is responsible for the day-to-day management of the Company’s investment porolio in accordance with the Company’s Investment Objecve and policy, subject to the overall supervision of the Board. The Investment Manager has managed investments across various sectors in the UK and internaonally and idened the Energy & Infrastructure sector as a core area of focus from as early as 2010. Since then, to date it has made 141 investments in renewable energy infrastructure projects and currently oversees 474 MWp of electricity generang capacity, covering ve technologies across c.7,300 installaons. The Investment Manager Downing Renewables & Infrastructure Trust plc Annual Report | 36 Tom Williams Partner, Head of Energy and Infrastructure Tom joined the Investment Manager as Partner in the Energy & Infrastructure team in July 2018. Tom heads up the team and has 23 years of experience as principal and adviser across the private equity and private debt infrastructure sectors. Tom has carried out successful transacons totalling in excess of £13 billion in the energy, ulies, transportaon, accommodaon and defence sectors. Tom started his career working as a project nance lawyer in 1999 before moving into private equity with Macquarie Group in London and the Middle East. Tom holds a Postgraduate Diploma in Legal Pracce from the Royal College of Law and a BA in law from Cambridge University. Henrik Dahlström Investment Director Henrik joined the Investment Manager as Investment Director in June 2020 to expand its European presence and lead transacons in the Nordic regions. Before joining the Investment Manager, Henrik spent 17 years with Macquarie Infrastructure and Real Assets (“MIRA”). At MIRA, Henrik was a Director responsible for covering the Nordic region. This role included the originaon and execuon of transacons in the renewable energy and infrastructure sectors as well as holding asset management and board responsibilies. Henrik has worked across renewable energy and infrastructure sectors as a principal for investments in the UK and in Europe. Henrik holds a master’s degree in nance from Gothenburg School of Economics. Tom Moore Partner, Head of Fund Reporng and Co-Head of Asset Management Tom joined the Investment Manager in May 2019 to build a full-service asset management team to provide investors with an ecient and class leading asset management service. Since joining in May 2019, the team has grown to 21 full me employees with experse split across nancial, technical and commercial sectors. The team manages over 474 MWp of energy generang assets across ve separate technologies. Tom is also responsible for the reporng and investment operaons across the unquoted investment teams. Prior to joining the Investment Manager, Tom was a Director at Foresight Group, where he had oversight of a signicant porolio of renewable energy investments. Tom is a chartered accountant and holds a BSc in Economics from the University of York. Danielle Strothers Co-Head of Asset Management Danielle joined the Investment Manager in September 2019. Alongside Tom, she manages the asset management funcon, focussing on asset performance, business operaons and compliance. Danielle is also responsible for the coordinaon of the valuaon process across the energy porolio. Prior to joining Downing, Danielle was a Senior Porolio Manager at Foresight Group, where she was responsible for the operaons of their renewable energy porolio. Danielle is a chartered accountant and holds a BSc in Accounng & Finance from the University of Birmingham. The key individuals responsible for execung the Company’s investment strategy are: Downing Renewables & Infrastructure Trust plc Annual Report | 37 Portfolio Summary At the period end, through its main subsidiary, the Company owned 121 MWp of hydropower and solar assets with an annual generation of around 200 GWh. The portfolio is diversified across 3,255 individual installations and across four different energy markets. Following the period end the Group has added an additional 54 MW of wind and hydropower assets with an additional annual generation of 156 GWh. The entire portfolio now stands at 175 MWp with a combined annual generation of 355 GWh. The Group currently has no exposure to any assets under construction. Hydro Solar Cash Porolio composion by valuaon, as at the balance sheet date Technology Geography/Power Market Exposure Sweden Great Britain Cash Northern Ireland Sweden Great Britain Cash Northern Ireland Porolio composion by valuaon, as at 31 January 2022 Hydro Solar Wind Cash Technology Geography/Power Market Exposure 262841 Tissue Regenix Cover Spread Opon 3 Downing Renewables & Infrastructure Trust plc Annual Report | 38 Norway Hydro Solar Wind Hydro 2022 acquisitions2021 acquisitions Portfolio Downing Renewables & Infrastructure Trust plc Annual Report | 39 Investment Technology Date Acquired Locaon Power Market / Subsidy Installed capacity (MW) Expected annual generaon (GWh) Ugsi Hydropower Feb-21 Älvadalen, Sweden SE3 / n/a 1.8 10 Båthusströmmen Hydropower Feb-21 Älvadalen, Sweden SE3 / n/a 3.5 14 Åsteby Hydropower Feb-21 Torsby, Sweden SE3 / n/a 0.7 3 Fensbol Hydropower Feb-21 Torsby, Sweden SE3 / n/a 3 14 Rödbjörke Hydropower Feb-21 Torsby, Sweden SE3 / n/a 3.3 15 Väls Hydropower Feb-21 Torsby, Sweden SE3 / n/a 0.8 3 Torsby Hydropower Feb-21 Torsby, Sweden SE3 / n/a 3.1 13 Tvärforsen Hydropower Feb-21 Torsby, Sweden SE2 / n/a 9.5 37 Suon Bridge Ground mount solar Mar-21 Somerset, England UK / ROC 6.7 7 Andover Aireld Ground mount solar Mar-21 Hampshire, England UK / ROC 4.3 4 Kingsland Barton Ground mount solar Mar-21 Devon, England UK / ROC 6 6 Bourne Park Ground mount solar Mar-21 Dorset, England UK / ROC 6 6 Laughton Levels Ground mount solar Mar-21 East Sussex, England UK / ROC 8.3 9 Deeside Ground mount solar Mar-21 Flintshire, Wales UK / FiT 3.8 3 Redbridge Farm Ground mount solar Mar-21 Dorset, England UK / ROC 4.3 4 Iwood Ground mount solar Mar-21 Somerset, England UK / ROC 9.6 9 New Rendy Ground mount solar Mar-21 Somerset, England UK / ROC 4.8 5 Redcourt Ground mount solar Mar-21 Carmarthenshire, Wales UK / ROC 3.2 3 Oakeld Ground mount solar Mar-21 Hampshire, England UK / ROC 5 5 Kerriers Ground mount solar Mar-21 Cornwall, England UK / ROC 10 10 RSPCA Llys Nini Ground mount solar Mar-21 Swansea, Wales UK / ROC 0.9 1 Commercial porolio Rooop Solar Mar-21 Various, England UK / FiT 0.3 0 Commercial porolio Rooop Solar Mar-21 Various, England & Wales UK / ROC 5.2 4 Commercial porolio Rooop Solar Mar-21 Various, N. Ireland SEM / NIROC 0.7 1 Bombardier Rooop Solar Mar-21 Belfast, N. Ireland SEM / ROC 3.6 3 Residenal porolio Residenal rooop solar Mar-21 Various, N. Ireland SEM / NIROC 13.1 10 TOTAL AS AT 31 DECEMBER 2021: 121.5 199 Addions following the Balance Sheet Date: Lemmån Hydropower Jan-22 Älvdalen, Sweden SE3 / n/a 0.6 3 Ryssa Övre Hydropower Jan-22 Mora, Sweden SE3 / n/a 0.7 3 Ryssa Nedre Hydropower Jan-22 Mora, Sweden SE3 / n/a 0.6 2 Rots Övre Hydropower Jan-22 Älvdalen, Sweden SE3 / n/a 0.7 3 Rots Nedre Hydropower Jan-22 Älvdalen, Sweden SE3 / n/a 0.3 1 Gabrielsberget Syd Vind Wind Jan-22 Aspeå, Sweden SE2 / n/a 46.0 108 Vallhaga Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 2.1 12 Österforsens Krastaon Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 1.9 12 Bornforsen 1 Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 0.5 3 Bornforsen 2 Hydropower Jan-22 Edsbyn, Sweden SE2 / n/a 1.5 9 TOTAL AS AT THE DATE OF THIS REPORT: 175.4 355 Downing Renewables & Infrastructure Trust plc Annual Report | 40 Investment Manager’s Report Introducon We are delighted with the progress made during the Company’s inaugural year. During the reporng period, the Company announced two acquisions deploying the majority of proceeds from the IPO. In addion to deploying capital quickly, the assets acquired by the Company are of high quality and oer the diversicaon of technology, geography and power market exposure that is central to the aims of the Company. Acquisions We have remained busy following the period end and have invested a further £39.9 million into three acquisions in both wind and hydropower investments. This includes a 46 MWp operaonal wind farm in north eastern Sweden and two addional Swedish hydropower porolios to complement the Company’s exisng porolio. All acquisions are owned 100% by the Group. The discussion below presents further informaon on these acquisions. Downing Hydro AB The Group completed its rst investment in a porolio of eight operaonal hydropower plants located in central and southern Sweden on 1 February 2021 for £59.9 million. The eight hydropower plants are located across three dierent rivers in Sweden in two dierent price zones, with an expected annual average producon of 108 GWh. The porolio has a robust operang track record spanning more than ve decades and enjoys storage capacity, in the form of dammed rivers, of 105.6 million cubic meters. This capacity regulates water ow to the turbines and allows the assets to capture periods of higher power prices through the controlled dispatch of generaon. In January 2022, the Group acquired two operaonal porolios of hydropower plants located in central Sweden for £20.1 million. The acquision consisted of a c. 12 GWh per annum porolio of hydropower plants and a c. 36 GWh per annum porolio. These acquisions were largely funded through a drawdown on the Downing Hydro AB (DHAB) Swedish hydropower porolio debt facility signed in November 2021. The rst porolio comprises ve hydropower plants located on three dierent rivers in central Sweden. The sites also benet from a long operaonal history and are located in the county of Dalarna, which is in the aracve SE3 price area. Downing Renewables & Infrastructure Trust plc Annual Report | 41 The second of the two new porolios includes four run-of-river hydropower plants situated on a single river in central Sweden. The sites benet from a long operaonal history and were refurbished between 2010 and 2013. The hydropower plants are located in and around the Swedish town Edsbyn in the SE2 zone. A framework agreement is in place with Axpo (a leading Swiss energy company) which allows DHAB to lock in prices. DHAB has hedged posions in line with the requirements under the debt facility. The hydro assets do not aract government subsidy payments. More informaon on the synergies within the Swedish hydropower porolio can be seen in the Porolio and Asset Management secon on page 43. Chalkhill Solar Porolio On 19 March 2021 the Group completed its rst UK investment, the acquision of a porolio of solar PV assets located across the UK. The porolio was acquired for a consideraon of £42 million. The acquision target, Chalkhill Life Holdings Limited, benets from £67.9 million senior debt from Aviva and £10.8 million debt from BlackRock. The porolio, described as the “Seed Assets” in the IPO Prospectus, comprises: • 13 ground-mounted sites located across mainland Great Britain totalling c. 73 MWp; • 28 commercial rooop assets totalling c. 10 MWp; and • 7 residenal rooop porolios in Northern Ireland totalling c. 13MWp. Most ground mounted PV assets have a long-term power oake agreement with Statkra. The Solar companies have been locking in prices due to the high-power prices in the market. Gabriel Wind Project On 2 February 2022 the Group completed its rst onshore wind investment. The Company acquired an operaonal 46 MW onshore wind project located in Nordmaling, north eastern Sweden for approximately £19.8 million. The project has been operaonal for c. 10 years and consists of 20 turbines with an expected annual producon of 108 GWh. Gabriel has a short-term oake agreement with Centrica. Downing Renewables & Infrastructure Trust plc Annual Report | 42 Porolio Performance The Company received the economic benet of the porolios acquired from 1 February 2021. For the period of operaons between 1 February 2021 and 31 December 2021, operang prot for the combined porolios was 16.9% above expectaons, driven primarily by generaon being 4.7% above expectaons and achieving higher than ancipated power pricing. 0 20,000 40,000 60,000 80,000 100,000 120,000 Actual (MWh) Expected (MWh) SolarHydro Actual (MWh)Expected (MWh) 0 2000 4000 6000 8000 10000 12000 SolarHydro Actual (£’000)Expected (£’000) Asset Generation vs Budget Asset Operating Profit vs Budget Downing Renewables & Infrastructure Trust plc Annual Report | 43 The Downing Hydro AB porolio had a strong period with the hydropower assets generang 108.1 GWh, 9.1% above expectaons. The signicant upli in generaon during the period was aributable to a combinaon of strong plant availability as well as a favourable combinaon of precipitaon and reservoir levels. Operang prot was 92.8% over budget for the period, driven by favourable power prices and producon exceeding expectaons. The Solar porolio performed in line with expectaons, with the solar installaons generang 86.9 GWh. In terms of operang prot, the porolio performed above expectaons, generang an operang prot of £10.25m, 5.2% above budget. Average irradiaon levels across the solar porolio were 1.9% above budget during the period. The small deviaon between irradiaon and generaon was mainly due to DNO outages at two of the ground mounted installaons. In both instances, the O&M were able to ulise these periods of downme by conducng intrusive preventave maintenance that would otherwise have caused downme of their own. Porolio and Asset Management Downing has invested signicantly in an in-house asset management team capable of providing a full scope service to a wide range of generaon and storage technologies. Established in 2019, the team totals 21 and includes experse across power markets, engineering, data analycs, nance and commercial management. Solar Hydro 86,969 108,113 Generation by Technology (MWh) Downing Renewables & Infrastructure Trust plc Annual Report | 44 The asset management team works in parallel to the investment team and ensures work is started long before an asset is acquired. Prior to acquision, Downing carries out a comprehensive onboarding process to ensure that new assets are transioned smoothly into the wider energy porolio. The plan captures all key milestones that need to be completed as part of the transion, including the collecon and storage of a range of key documents including project contracts and design documents, as well as detailed historic performance data. The onboarding process also involves a detailed review to ensure that the assets are embedded into exisng processes, such as contract management and compliance, incident tracking, monitoring, and reporng. Assets are fully incorporated within the asset management team’s porolio reporng systems within 60 days of compleon. This reporng environment allows real me, exible reporng to internal stakeholders. Health and Safety The health and safety of contractors and the public is a fundamental part of management processes. Throughout the period, a range of workstreams were carried out by the Asset Manager in line with the Company’s approach to Health and Safety management. A dam safety framework was established to ensure eecve management of the risks surrounding hydropower acvies and classied dams in Sweden. The framework, which is based on industry best pracce, focusses on regular inspecons, the experse of operators and the frequency and content of reporng. Downing signicantly increased its operaonal experse with the appointment of Ulf Wennilsjo in January 2022. Ulf has over 25 years of experience in the operaon and management of large hydropower porolios in Sweden. As part of his experience, Ulf brings a wealth of knowledge in the management of dam safety pracses and procedures. A rolling programme of Health and Safety audits connues across the porolio. These audits are based on a two-er approach, where risks and procedures are audited at the site level and also the operator level. Downing has a process of connuous assessment and feedback of site and operator pracces, ensuring eecve management systems are in place and adhered to. Finally, IT systems are used to thoroughly track all incidents. As well as these systems enabling performance measurement and trend analysis, they also ensure the eecve communicaon, escalaon, and management of incidents. Downing Renewables & Infrastructure Trust plc Annual Report | 45 Opmisaon The acquision of the Downing Hydro AB porolio from Fortum Sweden AB required a detailed transion plan to enable a smooth shi of operaons away from being deeply integrated into the vendor’s processes and across to Downing. Several new hydropower operaonal contracts were placed during the period, including producon planning, dispatch opmisaon and 24/7 control centre arrangements. Together, these contracts focus on opmising the assets and establishing a framework for the ecient growth of the hydropower porolio in the future. The Asset Manager has also commenced a digitalisaon project for the hydro porolio, looking at opportunies to ulise technologies to improve operaonal eciencies and reduce downme. The rst step of this involves a trial at one site, which will be rolled out in March 2022. The trial will focus on automated visual monitoring, aiming to reduce workload of the dispatch centre and on call dues, as well as to reduce maintenance costs and downme. The Asset Manager is also exploring opportunies for implemenng specialist technical performance monitoring equipment, potenally building on the capabilies added to the porolio during 2021. Integral to the acvity of the asset management team are the data and systems analysts. Downing take a data driven approach to the porolio and invest signicant me and experse in enabling porolio improvements through data opmisaon strategies. One of these strategies has seen Downing partner with a leading AI technology company. The project aims to leverage arcial intelligence technology from our partner and renewable energy experse of Downing to beer predict short term maintenance and long-term capital costs, enabling faster response mes through predicve maintenance, opmised maintenance strategies and dynamic capital expenditure forecasng. During the period, the Asset Manager connued to develop monitoring capabilies across the porolio. Using specialised soware, automated string analysis was implemented across the ground mounted solar installaons, allowing O&M providers to complete more focussed site visits and thereby opmise performance. An automated daily feed of half hourly satellite irradiaon data was also implemented during the period, enabling greater performance monitoring across the rooop solar installaons. Downing Renewables & Infrastructure Trust plc Annual Report | 46 Several new and opmised contracts were placed during the period. New O&M contracts were executed across the residenal rooop and hydropower porolios. New contracts brought an improved scope of services as well as reduced pricing, while encouraging proacve monitoring of maintenance requirements which is expected to deliver cost eciencies in the future. New supply and export contracts were also placed and the Asset Manager was able to achieve favourable pricing. Spare parts strategies have been implemented across the porolio to help reduce potenal downme in the event of faults, while taking advantage of the size of the porolio to ensure spare part procurement is ecient and avoids duplicaon of expenditure. A phased opmisaon project connues across the ground mount solar porolio to increase the eciency of modules by reversing the impact of degradaon. Phase 1 is complete and connued analysis is taking place, with inial results suggesng improvements to generang capacity. The ground mount solar porolio has also achieved compliance with the new accelerated loss of mains requirements, using the available funding from Naonal Grid ESO. Works are underway to achieve compliance for the commercial porolio. Financing and Capital Structure The Group adopts a prudent approach to leverage, with the aim that each asset will be nanced appropriately for the nature of its underlying cashows and their expected volality. Long-term debt may be used where appropriate at the SPV level to facilitate acquisions, renancing, capital expenditure or construcon of assets. Total long-term structural debt will not exceed 50% of the prevailing Gross Asset Value. At 31 December 2021, including project level nancing the Group’s leverage stood at 28.0%. Since the period end this has increased to 39%. In addion, the Company and/or its subsidiaries may also make use of short-term debt, such as a revolving credit facility, to assist with the acquision of suitable opportunies as and when they become available. Revolving Credit Facility The Group has entered into a loan agreement through its main subsidiary DORE Hold Co Limited for a £25 million RCF with Santander UK plc. The RCF has a four-year term, with the possibility to be extended for a further year, and also includes an uncommied accordion allowing for an increase in its size to further assist the expected increase of the Company’s investment acvity. Downing Renewables & Infrastructure Trust plc Annual Report | 47 The RCF has the addional benet of being able to be drawn in both GBP and EUR (with the ability to also able to make use of funds in other currencies) and is priced at the Sterling Overnight Index Average (“SONIA”) plus 2.25% per annum. The Group will make use of the RCF mainly to fund the acquision of addional assets. Renancing of Hydropower Assets The Group inially acquired DHAB, its Swedish hydropower porolio, on an unlevered basis in February 2021, shortly aer the Company’s IPO. In light of the strong transacon pipeline and ongoing capital expenditure requirements, DHAB has entered into a seven-year EUR 43.5 million debt facility with SEB, a leading corporate bank in the Nordics. As of 31 January 2022, DHAB had ulised EUR 27.4m of the facilies, predominately as source of funding for acquiring nine further hydropower plants in Sweden from AB Edsbyn Elverk and ÄSI Kra AB. The remainder of the undrawn facility is predominately to fund future capital expenditure requirements. Foreign Exchange The Group’s assets in Sweden earn revenues in EUR and incur operaonal cost in SEK. Assets in UK operate enrely in sterling. The Group, together with its foreign exchange advisor, has developed and implemented its foreign exchange risk management policy in line with the IPO Prospectus. The policy targets hedging the short to medium-term distribuons (up to ve years) from the porolio of assets, that are not denominated in GBP on a “linear reducing basis”, whereby a high proporon of expected distribuons in year one are hedged and the proporon of expected distribuons that are hedged reduces in a linear fashion over the following four years. This is a rolling programme and each year further hedges are expected to be put in place to maintain the prole. In total, 77% of the Group’s EUR dividend receipts from SPVs out to March 2026 were hedged as at the reporng date, meaning only a small poron of these future distribuons are subject to the volality of the spot prices. Power markets and exposure Through its porolio companies, the Group adopts a medium to long-term hedging policy for its generaon assets, providing an extra degree of certainty over the cash ows over the hedged periods. The xed price generaon posion for the porolio as of 31 December 2021 is set out in the chart below, showing the impact of the combinaon of subsidy and xed income from power sales. The hedging posions are connuously reviewed to ensure an appropriate posion is maintained and new hedges are taken out as appropriate. The Russian Conict will have a major impact on power prices in Europe and the UK as gas supply is dominated by Russia. Consequently, the UK gas and UK power markets are likely to stay volale as long as the uncertainty about the Russian gas supply connues. The Company is well protected from this volality, due its high level of xed pricing over the short to medium term, which can be seen on the chart below. Downing Renewables & Infrastructure Trust plc Annual Report | 48 United Kingdom From IPO in December 2020 through to the end of July 2021, forward power prices increased gradually mostly on the back of increasing carbon prices. In Q3 2021, global issues with coal and gas supply, combined with an increased demand, resulted in rising global gas (“LNG”) and coal prices. This combined with low wind levels, outages of domesc CCGTs and nuclear generaon, fears of wider issues with the nuclear eet in France and the unexpected long- term outage of one of the cross-border interconnectors between the UK and France created a perfect storm. High spot prices and high forward prices resulted. By then gas, power and carbon were now all in unprecedented levels relave to the last 10 years, with a signicant upli in September. Given the unprecedented high prices at the me, we took acon to increase the porolio’s hedges. Power prices peaked in October 2021 before declining on the back of falling gas prices. However, the bearish senment was short lived and prices recovered as carbon prices rose again. Escalang Russian acon in Ukraine and associated sancons, new carbon price records and French power supply concerns (with mulple French nuclear plants facing extended 10-year maintenance outages throughout 2022) pushed prices to unprecedented levels. 54,000.00 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 Merchant revenuesFixed revenues 0% 20% 40% 60% 80% 100% Power Prices – Fixed vs Merchant Downing Renewables & Infrastructure Trust plc Annual Report | 49 Nordics Q4 of 2020 saw bearish senments in the Nordic electricity markets mostly due to reduced demand and a hydrological surplus, pushing spot prices to €0/MWh from me to me. Market prices increased during January 2021 due to a cold spell in the Nordics as well as connental Europe. Prices came down a lile aer the cold spell ended but stayed at healthier levels, compared to 2020, throughout the spring and early summer of 2021. Due to a dry summer, the Nordic hydrological decit connued to increase, which resulted in higher power prices by the end of summer 2021. High precipitaon combined with surging wind started to push down the spot and forward prices at the end of September 2021. By the beginning of November 2021, prices started to increase again mostly on the back of the price surge in the European connent due to increasing gas prices. Similar to the UK, the surge rst intensied and then ended in the week leading up to Christmas. At the end of December prices came o signicantly. Forward £/MWh Sport £/MWh UK Summer 23 £/MWH UK Spot £/MWH UK Summer 22 £/MWH UK Winter 22 £/MWH 0 50 100 150 200 250 300 0 50 100 150 200 250 300 350 400 450 1-Oct-20 1-Jan-221-Jan-21 1-Apr-21 1-Jul-21 1-Oct-21 Downing Renewables & Infrastructure Trust plc Annual Report | 50 Dividends The Company achieved a cash dividend cover of 1.21x for the dividends paid of 2.25 pence per share paid during the period. Dividend cover is presented excluding dividends paid to new shareholders immediately following the issuance of new shares. If these are included, the dividend cover would be 1.14x. The Board has resolved to pay the Company’s third interim dividend of 1.25 pence per share, equivalent to £1.7 million, in respect of the three months to 31 December 2021. This will bring total dividends paid in respect of the rst nancial year to 3.5 pence per share, which is in line with the Company’s updated dividend guidance. The third interim dividend is not reected in the accounts to 31 December 2021. The Company has chosen to designate part of each interim dividend as an interest distribuon for UK tax purposes. Shareholders in receipt of such a dividend will be treated for UK tax purposes as though they have received a payment of interest in respect of the interest distribuon element of this dividend. This will result in a reducon in the corporaon tax payable by the Company. 0 10 20 30 40 50 60 70 80 90 0 50 100 150 200 250 300 350 Forward €/MWh Sport €/MWh 1-Oct-20 1-Jan-21 1-Apr-21 1-Jul-21 Nordic forward 2023 Nordic SpotNordic forward 2022 1-Oct-21 Dividends in respect of the nancial year to 31 December 2021 are as follows: Dividend Paid For the Period No. of Shares Total Dividend (pence per share) Interest Element (pence per share) Dividend Element (pence per share) September 2021 June 2021 122,500,000 1.00 0.50 0.50 December 2021 September 2021 137,0 0 8,487 1.25 0.81 0.44 March 2022 December 2021 137,0 0 8,487 1.25 0.83 0.42 The Company intends to pay dividends on a quarterly basis, with dividends typically declared in respect of the quarterly periods ending March, June, September and December. Payment of the relevant dividend declared is expected be made within three months of the relevant quarter end. Downing Renewables & Infrastructure Trust plc Annual Report | 51 120.1 (2.9) (1.3) 6.5 4.0 1.1 (0.7) 141.8 NAV (£'m) £115 £120 £125 £130 £135 £140 Opening (IPO) (10-Dec-2020) Management fee Other costs and charges Performance Future power prices Inflaon FX Other Closing 31-Dec-2021 £145 Dividend Fund Raising (0.9) 1.4 14.7 NAV Movement Bridge Valuaon of the porolio Net asset value The Company’s NAV increased by 18% during the period from £120.0 million to £141.8 million. On a pence per share basis it increased by 5.5 pence from 98 pence per share to 103.5 pence per share as at 31 December 2021. The NAV increase was driven by addional fundraising, strong operaonal performance and increases in long term power price forecasts. The bridge below shows the movement in NAV during the period, with each step explained further below. Downing Renewables & Infrastructure Trust plc Annual Report | 51 Opening Represents the NAV at IPO net of launch costs. Dividends Distribuons paid by the Company in the period. Management Fee Fees charged to the Company by the Investment Manager. Other costs and charges Charges incurred by the Company, and its immediate subsidiary DORE Hold Co, in its normal operaons. No transacon costs are included. Performance Represents the balance sheet variance at the porolio company level represenng higher cashows than ancipated in the short term. Power Prices The Group uses long-term, forward-looking power price forecasts from third party consultants for the purposes of asset valuaons. In both the UK and Sweden, an equal blend is taken from the most recent central case forecasts from two leading consultants. Where xed price arrangements are in place, the nancial model will reect this price for the relevant me frame. The impact of our short-term power hedging strategy is also included in this step. Inaon The Group uses a near-term inaon forecast of 2.75%, rising to a medium-term inaon forecast of 3.0% for the purposes of UK asset valuaons. From 2030 onwards, this forecast reduces to 2.25% because of the RPI reform recently announced by the UK Government. Models are updated quarterly to reect inaon to date. For the Swedish asset valuaons, a 2.0% inaon forecast is used, reecve of the Swedish central bank’s target inaon rate. Foreign Exchange The impact of foreign exchange movements on foreign cash balances and on underlying investment valuaons. Other Reects changes to operaonal contracts (such as insurance) and debt terms, and other minor changes. Downing Renewables & Infrastructure Trust plc Annual Report | 52 Key Valuaon Assumpons Asset life Where land is leased from an external landlord, the operaonal life assumed for the purposes of the asset valuaons is valued at the earlier of planning or lease expiry. Where a project has an indenite life, the land it is located on is owned and there are no constraints regarding planning, asset valuaons are based on a perpetual life. This is the basis for the valuaon of the hydropower assets. The asset life assumed for each of the ground mounted solar sites was set taking into consideraon the length of the respecve planning consent and term of leasing agreement in place at the me of acquision. On a capacity-weighted basis this results in an average asset life of close to 25 years. There is an ongoing process underway to extend planning and lease terms to allow the assets to operate for longer than inially expected. This project is expected to increase the weighted useful life of the ground mount porolio to 27.8 years. The extension to asset life assumpons to this level would, if implemented on 31 December 2021, result in a valuaon gain of approximately £1.1m. Discount Rates Discount rates used for the purpose of the valuaon process are representave of the Investment Manager’s and the Board’s assessment of the rate of return in the market for assets with similar characteriscs and risk prole. Discount rates in use across the porolio range from 5.5% to 7.5%, with the weighted value at 7.3%. Foreign Exchange Cashows from assets that are generated in a non-sterling currency are converted in each period they are earned using the actual hedges in place, with the residual amounts converted at the relevant exchange rate. The relevant exchange rate is taken from a forward curve provided by the Company’s foreign exchange advisors for ten years, at which point the exchange rate is held constant due to the impraccalies of hedging currency further into the future. Porolio Valuaon sensivies The NAV of the Company is comprised of the sum of the discounted value of future cash ows of the underlying investments in solar and hydropower assets (being the porolio valuaon), the cash balances of the Company and its holding Company and the other assets and liabilies of the Group. The porolio valuaon is the largest component of the NAV and the key sensivies to this valuaon are considered to be discount rate and the principal assumpons used in respect of future revenues and costs. Downing Renewables & Infrastructure Trust plc Annual Report | 53 A broad range of assumpons are used in the Company’s valuaon models. These assumpons are based on long-term forecasts and are generally not aected by short-term uctuaons in inputs, whether economic or technical. The Investment Manager exercises its judgement and uses its experience in assessing the expected future cash ows from each investment. The impact of changes in the key drivers of the valuaon are set out below. Discount Rate The weighted average discount rate of the porolio at 31 December 2021 was 7.3%. The Investment Manager considers a variance of plus or minus 0.5% is to be a reasonable range of alternave assumpons for discount rates. Energy Yield For the solar assets, our underlying assumpon set assumes the so called P50 level of electricity output based on reports by technical advisors. The P50 output is the esmated annual amount of electricity generaon that has a 50% probability of being exceeded and a 50% probability of being underachieved. For hydropower assets, the expected annual aver a g e p ro d u c on is a p p l ie d t o t he v a l u a o n , similar to the P50 assumpon applied to solar and wind assets. Given the long operaonal record of the hydropower assets, the annual producon forecast is derived from historic datasets and validated by technical advisors. The Energy Yield sensivies uses a variance of plus or minus 5% applied to the generaon. Power Prices The power price sensivity assumes a 10% increase or decrease in power prices relave to the base case for each year of the asset life. While power markets can experience volality in excess of +/-10% on a short-term basis, the sensivity is intended to provide insight into the eect on the NAV of persistently higher or lower power prices 54,000.00 (8.00) (6.00) (4.00) (2.00) 0.00 2.00 4.00 6.00 8.00 Discount rate (+/- 0.5%) Inflation (+/- 0.5%) Power Prices (+/- 10%) Energy Yield (+/-5%) Solar Energy Yield (+/- 5%) Hydro FX (+/- 10%) NAV Movement (PPS) Positive directional change to assumption Negative directional change to assumption Sensitivities Downing Renewables & Infrastructure Trust plc Annual Report | 54 over the whole life of the porolio, which is a more severe downside scenario. Inaon The Company’s inaon assumpons are set out above. A long-term inaon sensivity of plus and minus 0.5% is presented below. Foreign Exchange The Company’s foreign exchange policy is set out above. A sensivity of plus and minus 10% is applied to any non-hedged cashows derived from non-sterling assets. The Company will also try to ensure sucient near-term distribuons from any non-sterling investments are hedged. Market development and opportunies Since the IPO of the Company, the demand for electricity around the globe has connued to grow, this has pushed energy prices to unprecedented levels. According to the IEA, global electricity demand grew by more than 6% in 2021 and was the largest in percentage terms since 2010 13 . Although electricity produced from renewable sources grew by 6% in 2021, this was not enough to keep up with the rising demand. There is clearly sll work to be done. The Investment Manager is progressing a signicant pipeline of opportunies across technologies / sectors including wind, solar, hydro and ulies. The geographical focus of the opportunies in progress is the Nordic region and the UK, with certain further opportunies across Northern Europe. A key message coming out of the pandemic has been that governments connue to look to “build back beer” following the uncertainty of the previous years, caused by the Covid-19 pandemic. This year the UK played host to COP26, which has raised the global ambion on climate acon. The outlook connues to remain favourable for companies involved in the renewable energy and infrastructure space. In 2021, the renewable energy industry remained remarkably resilient. Decreasing costs of renewable energy technologies, along with the growth of baery storage, have made renewables one of the most compeve energy sources in many areas. Following COP26 many countries have set ambious clean energy goals, increasing renewable porolio standards with many also enacng energy storage mandates. The rollout of renewable energy capacity is poised to accelerate in 2022 and beyond, as concern for climate change grow and demand for cleaner energy sources from most market segments accelerates. The outlook for the Company is encouraging; three new acquisions already made in 2022 (including the Company’s rst wind asset) and proven operaonal and nancial performance from the Company’s exisng assets provide a strong foundaon for future growth. 13 Surging electricity demand is pung power systems under strain around the world - News - IEA Downing Renewables & Infrastructure Trust plc Annual Report | 55 Section 172(1) Statement The following disclosure describes how the Directors have had regard to the maers set out in secon 172(1)(a) to (f) when performing their duty under s172 of the Companies Act 2006 and forms the Directors’ statement required under secon 414CZA of the Companies Act 2006. Secon 172(1) Descripon (a) the likely consequences of any decision in the long term In managing the Company, the aim of the Board and of the Investment Manager is to ensure the long-term sustainable success of the Company and, therefore, the likely long‑term consequences of any decision are a key consideraon. In managing the Company during the period since IPO, the Board and Investment Manager believe they have acted in the way which we considered, in good faith, with a view to promong the Company’s long‑term sustainable success and to achieving its wider objecves for the benet of our shareholders as a whole, having had regard to our wider stakeholders and the other maers set out in Secon 172 of the Companies Act. (b) the interests of the company’s Employees As a closed-ended investment company, the Company does not have any employees, however the interests of any employees within project companies are considered when making decisions. (c) the need to foster the company’s business relaonships with suppliers, customers and others The Board’s approach is described under ‘Stakeholder Engagement’ below. (d) the impact of the company’s operaons on the community and the environment The Board places a high value on the monitoring of ESG issues and sets the overall strategy for ESG maers related to the Company. The Board takes responsibility in managing any climate-related risks for the group, including transparent disclosure of these risks, and takes migang acons to reduce or eliminate them where possible. A descripon of the Company’s sustainable and responsible Investment Policy is set out on pages 10 to 16. (e) the desirability of the company maintaining a reputaon for high standards of business conduct The Board’s approach is described under ‘Culture and Values’ below. (f) the need to act fairly as between members of the company The Board’s approach is described under ‘Stakeholder Engagement’ below. Downing Renewables & Infrastructure Trust plc Annual Report | 56 Culture and Values The Directors’ overarching duty is to promote the success of the Company for the benet of investors, with due consideraon of other stakeholders’ interests. The Company seeks to maintain the highest standards of business conduct and corporate governance and ensures via the Investment Manager that appropriate oversight, control and suitable policies are in place to ensure the Company treats its stakeholders fairly. The Board seeks to ensure the alignment of its purpose, values and strategy with this culture of openness, debate and integrity through connued dialogue and engagement with its key stakeholders. The Board, made up of two male and one female members, aims to achieve a supporve business culture combined with construcve challenge and to provide a regular ow of informaon to shareholders and other stakeholders. Although the Company has no employees, the Company is commied to respecng human rights in its broader relaonships. Both the Company and the Investment Manager have an‑corrupon and bribery policies in place in order to maintain standards of business integrity, a commitment to truth and fair dealing and a commitment to complying with all applicable laws and regulaons. The Company has several policies and procedures in place to assist with maintaining a culture of good governance including those relang to diversity, anbribery (including the acceptance of gis and hospitality), tax evasion, conicts of interest, and Directors’ dealings in the Company’s shares. Further informaon can be seen in the Nominaon Commiee Report on page 82. The Board assesses and monitors compliance with these policies regularly through Board meengs and the annual evaluaon process. The Board seeks to appoint the most appropriate service providers for the Company’s needs and evaluates their services on a regular basis. The Board considers the culture of the Investment Manager and other service providers through regular reporng and by receiving regular informaon well as through ad hoc interacons. Downing Renewables & Infrastructure Trust plc Annual Report | 57 Stakeholder Engagement This secon describes how the Board engages with its key stakeholders, how it considers their interests and the outcome of the engagement when making its decisions, the likely consequences of any decision in the long-term, and further ensures that it maintains a reputaon for high standards of business conduct. Stakeholder Why is it Important to Engage? How has the Company communicated and engaged? What were the key topics of engagement? Key strategic decisions impacng stakeholder group during period Shareholders Shareholders and their connued support is crical to the connuing existence of the business and delivery of our long-term investment strategy. The Company makes regular market announcements where appropriate. The Company has published quarterly fact sheets available on the Company’s website. Views and feedback are sought from instuonal investors via the Company’s corporate broker. A large number of investor meengs were held prior to IPO in December 2020 and in respect of the subsequent fundraising in October 2021 to engage shareholders with the Company’s strategy. The Company made two acquisions during the period which should be accreve to the NAV over the long-term. The Company increased its annual dividend guidance to 5 pence per share, connuing to posion the Company as an aracve proposion for income seeking investors. Investment Manager The Investment Manager is responsible for execung the Investment Objecve within the bounds of the Investment Policy of the Company. The Board maintains regular and open dialogue with the Investment Manager at Board meengs and has regular contact on operaonal and investment maers outside of meengs. In addion to all maers related to the execuon of the Company’s Investment Objecve, the Board engaged with the Investment Manager on the structure of the Group and the interpretaon of investment restricons. Determinaon that the Investment Manager maintains a robust internal control environment, and that the connued appointment of the Investment Manager is in the best interests of shareholders. Service providers As an externally managed Company, we are reliant on our service providers to conduct our core acvies. We believe that fostering construcve and collaborave relaonships with our service providers will assist in the promoon of the success of the Company. The Board maintains regular contact with its service providers, both through Board and Commiee meengs, as well as outside the regular meeng cycle. The Management Engagement Commiee is responsible for conducng periodic reviews of service providers. During the period, the Management Engagement Commiee assessed that the connued appointment of all service providers remained in the best interests of the Company and its shareholders. Being the inaugural annual report for the Company the Audit and Risk Commiee, in parcular the Chair, have been engaged with the external auditors to ensure the process was undertaken eecvely. The Board sought advice from the Company’s Broker and Legal Counsel in respect of various maers, including the interpretaon of investment restricons. Key service providers have been retained, providing connuity of service and familiarity with the objecves of the Company. During period, there was a non-material amendment to the Investment Policy. For the purpose of acquiring the solar assets, the Company’s Investment Policy was temporarily amended to permit the Company to invest no more than 61% of Gross Asset Value in assets located in the UK. The previous limit was 60%. Downing Renewables & Infrastructure Trust plc Annual Report | 58 Stakeholder Why is it Important to Engage? How has the Company communicated and engaged? What were the key topics of engagement? Key strategic decisions impacng stakeholder group during period Asset-level counterpares Asset‑level counterpares are an essenal stakeholder group and engagement with them is important to ensure assets are operang safely and eecvely and performing as expected. The Group made its rst investment on 1 February 2021. As a result, during the reporng period communicaons with asset‑level counterpares have been limited. As part of connual monitoring of future investments, we expect a regular dialogue w i t h t h e s e c o u n t e r p a r e s . The key engagement with asset‑level counterpares was during the due diligence process prior to compleng the investment. Acquired two new assets during the period, increasing ongoing servicing requirements from O&M counterpares. Debt-providers Providers of long-term debt are key to supporng the Company’s long- term objecves through enabling the connued nancing of investment opportunies. During the period, the Company, via its unconsolidated subsidiaries, entered into an RCF and also renanced its hydropower assets. This included a comprehensive negoaon of terms. The Company and its unconsolidated subsidiaries provide regular updates on covenant compliance and current posioning. Pricing and sizing of the debt was a key consideraon for the Company. Debt will be a key component of the Company’s funding strategy looking forward and the porolio will ulise the RCF debt facility in the coming months. Following the period end, the hydropower level debt was ulised to acquire further hydropower assets. More informaon on these acquisions can be found on pages 40 and 41. Downing Renewables & Infrastructure Trust plc Annual Report | 59 Risks and Risk Management The Board recognises that eecve risk management is key to the Group’s success and that a proacve approach is crical to ensuring the sustainable growth and resilience of the Group. Risk is described as the potenal for events to occur that may result in damage, liability or loss. Should any of these events occur, the Company may well be adversely impacted, potenally leading to the disrupon of the Company’s business model, as well as potenal damage to the reputaon or nancial standing of the Company. The benet of a risk management framework is that it allows for potenal risks to be idened in advance and may enable these risks to either be migated or possibly even converted into opportunies. The Company’s IPO Prospectus, issued in November 2020 detailed the potenal risks that the Directors considered were material that could occur during the process of implemenng the Company’s Investment Policy. Principal Risks and Uncertaines Procedures to idenfy principal or emerging risks It is not possible to eliminate all risks that may be faced by the Company. The objecve of the Company’s risk management framework and policies adopted by the Company is to idenfy risks and enable the Board to respond to risks with migang acons to reduce the potenal impacts should any of the risks materialise. The Board, through the Audit and Risk Commiee, regularly reviews the Company’s risk register, with a focus on ensuring appropriate controls are in place to migate each risk. Taking considered risk is the essence of all business and investment acvity. The Board considers the following to be the principal risks faced by the Company along with the potenal impact of these risks and the steps taken to migate them. Downing Renewables & Infrastructure Trust plc Annual Report | 60 Risk Idened Risk Descripon Risk Impact Migaon Exposure to wholesale electricity prices and risk to hedging power prices The Company makes investments in Assets with revenue exposure to wholesale electricity prices. The market price of electricity is volale and is aected by a variety of factors, including market demand for electricity, levels of electricity generaon, the generaon mix of power plants, government support f or v a r i o u s fo r m s of p o we r g e n e r a o n and uctuaons in the market prices of commodies and foreign exchange. Market demand for electricity can be impacted by many factors, including changes in consumer demand paerns, increased usage of smart grids, a rise in demand for electric vehicle charging capacity and residenal parcipaon in renewable energy generaon. Such changing dynamics could have a material adverse eect on the Company’s protability, the NAV and the price of the Ordinary Shares. To the extent that the Company or an SP V enters contract s to x the price it receives on the electricity generated or enters into derivaves with a view to hedging against uctuaons in power prices, the Company or SPV, may be exposed to risk related to delivering an amount of electricity over a specic period. I f th e r e a r e pe r i o d s o f n o n ‑ p r o d u c o n the Company or an SPV may need to pay the dierence between the price it has sold the power at and the market price at that me. The Investment Manager closely monitors exposure to power price movements. Sensivity to long term forecasts will be disclosed to investors and the Board on a regular basis. Many assets are expected to have a signicant proporon of revenue that is not linked to power price forecasts including subsidies such as feed-in- taris. In addion, assets are geographically diverse, spreading exposure across dierent power markets and price drivers. Short‑ and medium‑term exposure to power prices will be managed by locking power prices on a rolling basis. See chart on page 48 for an illustraon of the porolio’s current xed vs merchant revenues. Exposure to the transaconal eects of foreign exchange rate uctuaons and risks of foreign exchange hedging To the extent the Company invests in non‑sterling jurisdicons, it may be exposed to foreign exchange risk caused by uctuaons in the value of foreign currencies when the net income and valuaons of those operaons in non‑Sterling jurisdicons are translated into Sterling for the purposes of nancial reporng. While the Company and SPVs may enter derivave transacons to hedge such foreign exchange rate exp osures , th ere c an be no guar antee that the Company and/or SPVs will be able to, or will elect to, hedge such exposures, or that were entered into, will be successful. The Company and/or SPVs may be required to sasfy margin calls in respect of hedges and in certain circumstances may not have such collateral readily available. In these circumstances, the Company could be forced to sell an Asset or borrow further funds to meet a margin call or take a loss on a posi on. To the ex tent that the Company and/or SPVs do rely on derivave instruments to hedge exposure to exchange rate uctuaons, they will also be subject to counterparty risk. Any failure by a hedging counterparty to discharge its obligaons could have a material adverse eect on the Company’s protability, the NAV and the price of the Ordinary Shares. Natural hedging of foreign exchange exposure will occur due to an element of costs and debt (for capital structuring purposes) being linked to the local currency. The Company will hedge expected income from foreign assets up to ve years in advance. Downing Renewables & Infrastructure Trust plc Annual Report | 61 Risk Idened Risk Descripon Risk Impact Migaon Non-compliance with the investment trust eligibility condions under secons S1158/ S1159 of the CTA 2010 As an approved investment trust, the Company is exempt from UK corporaon tax on its chargeable gains and capital prots on loan relaonships. If the Company fails to maintain its investment trust status from HMRC, in such circumstances, the Company would be subject to the normal rates of corporaon tax on chargeable gains and capital prots arising on the transfer or disposal of investments and other assets. Which coul d ad ver sel y a ec t the Com pany ’s nancial performance, its ability to provide returns to its Shareholders or the post‑tax returns received by its Shareholders. The Company has contracted out the relevant monitoring to appropriately qualied professionals. The Investment Manager also monitors relevant qualifying condions. The Investment Manager and the Company Secretary report on regulatory maers to the Board on a quarterly basis. The assessment of regulatory risks forms part of the Board’s risk management framework. Construcon risks for certain renewable energy projects SPVs may undertake projects that are in the Construcon Phase or are construcon ready which may be exposed to certain risks, such as cost overruns, construcon delays and construcon defects that may be outside the Company’s control. Should compleon of any project overrun (both in terms of me and budget), there is a risk that payments may be required to be made to (or withheld by) a counterparty in rel a on to th e d el ay. If the c om p le o n of a project overruns, it would also result in a delayed start to receipt of revenues, which could aect the Company’s ability to achieve its target returns, depending on the nature and scale of such delay. Addional costs and expenses, delays in construcon or carrying out repairs, failure to meet technical requirements, lack of warranty cover and/or consequenal operaonal failures or malfuncons may have a material adverse eect on the Company’s protability, the NAV and the price of the ordinary shares. The Investment Manager will monitor construcon carefully and report frequently to the Board and AIFM. The Investment Manager has an experienced asset management team including technical experts to oversee construcon projects. The Investment Manager will undertake an extensive due diligence process prior to investment with input from the Board (including technical experse). Third party experts will be used as required to enhance knowledge and experience. Reliance on third- party service providers The Company, whose Board is non‑execuve, and which has no employees, is reliant upon the performance of third-party service providers for its execuve funcon. The Company relies on the Investment Manager and other s er v ic e pr ov i d e r s a n d t h e ir r ep u t a on in the energy and infrastructure market. The third-party provider may prove to be insuciently skilled for the role or perform the roles required to an inadequate level, which may cause the Company to underperform, to breach regulaons, or in extremis to go into administraon. There are clear service level agreements in place for all third-party providers and provisions are in place that any provider can be replaced, subject to an inial term or a breach of the agreement occurring. They have all been chosen for being skilled and experienced in their areas of experse. The Board has regular oversight over all the other providers. Downing Renewables & Infrastructure Trust plc Annual Report | 62 Risk Idened Risk Descripon Risk Impact Migaon Lack of availability of suitable renewable energy projects Compeon for renewable energy projects in the primary investment or secondary investment markets, may result in the Company being unable to make investments or on terms that enable the target returns to be delivered. If the Investment Manager is unable to source sucient opportunies within a reasonable meframe, whether by reason of fundamental change in market condions creang lack of available opportunies, too much compeon or otherwise. A greater proporon of the Company’s assets will be held in cash for longer than ancipated and the Company’s ability to achieve its Investment Objecve may be adversely aected. The Company has an Investment Manager in place with a strong track record, who strengthened their team ahead of the fund launch. Through extensive industry relaonships the Investment Manager provides access to a signicant pipeline of investment opportunies. Conicts of interest The Investment Manager and the AIFM may manage from me‑to‑ me other managed Funds pursuing similar investment strategies to that of the Company and which may be in compeon with the Company. The appointment of the AIFM is on a non‑exclusive basis and each of the AIFM and Investment Manager manages other accounts, vehicles and funds pursuing similar investment strategies to that of the Company. This has the potenal to give rise to conicts of interest. The Company may also be in compeon with other Downing Managed Funds for Assets. In relaon to the allocaon of investment opportunies. The AIFM and the Investment Manager have clear conicts of interest and allocaon policies in place. Transacons where it is perceived that there may be potenal conicts of interest are overseen by the Investment Manager’s Conicts Commiee, an independent fairness opinion on valuaon may also be commissioned where deemed necessary. The applicaon of allocaon policy is reviewed by the Investment Managers Compliance Department, and by the Board on annual basis. Further informaon on these procedures can be found in the Company’s Prospectus dated 12 November 2020. Risks relang to the technical performance of assets The long-term performance of the assets acquired does not match the expectaons at the me of the acquision. Incorrect assumpons against technical performance of assets, or the availability of natural resources may lead to addional costs and expenses, carrying out repairs, or reduced revenues. Any delays or reducon in the producon or supply of energy may have a material adverse eect on the performance of the Company, the NAV, the Company’s earnings and returns to shareholders. The Company will appoint third party technical advisors for every transacon. The advisors will undertake a review of the technology, design, installaon (if applicable), and natural resource availability and provide an analysis of expected long term generaon yields. Where Assets are going through construcon, appropriate contractual guarantees will be provided. Operators will oen provide guarantees as to the availability or performance of Assets. Downing Renewables & Infrastructure Trust plc Annual Report | 63 Risk Idened Risk Descripon Risk Impact Migaon Counterpares’ ability to make contractual payments The Company’s revenue derives from the renewable energy projects in the porolio, the Company and its SPVs will be exposed to the nancial strength of the counterpares to such projects and their ability to meet their ongoing contractual payment obligaons. The failure by a counterparty to pay the contractual payments due, or the early terminaon of a PPA by an Oaker due to insolvency, may materially aect the value of the porolio and could have a material adverse eect on the performance of the Company, the NAV, the Company’s earnings and returns to shareholders. The Investment Manager will look to build in suitable mechanisms to protect the income stream from the relevant renewable energy projects, which may include parent guarantees and liquidated damages payments on terminaon. Exposure to defaults may be further migated by contracng with counterpares who are public sector or quasi-public sector bodies or who are able to draw upon government subsidies to partly fund contractual payments. As part of the acquision process, the Investment Manager conducts a thorough due diligence process on all projects. Risks associated with Cyber Security There exists an increasing threat of cyber‑aack in which a hacker may aempt to access the Company’s website or its secure data, or the computer systems that relate to one of its Assets and aempt to either destroy or use this data for malicious purposes. Increased regulaon, laws, rules and standards related to cyber security, could impact the Company’s reputaon or result in nancial loss through the imposion of nes. Suering a cyber breach will also generally incur costs associated with repairing aected systems, networks and devices. If one or several Assets became the subject of a successful cyber‑aack, to the extent any loss or disrupon following from such aack would not be covered or migated by any of the Company’s insurance policies, such loss or disrupon could have an adverse eec t on the per formance of the aected Asset and consequently on the Company’s protability, the NAV and the price of the Ordinary Shares. Cyber security policies and procedures implemented by key service providers are reported to the Board regularly to ensure conformity. Thorough third- party due diligence is carried out on all suppliers engaged to service the Company. All providers have processes in place to idenfy cyber security risks and apply and monitor appropriate risk plans. Further nancial risks are detailed in Note 16 of the nancial statements. Downing Renewables & Infrastructure Trust plc Annual Report | 64 Emerging Risks Emerging risks are characterised by a degree of uncertainty, therefore the Investment Manager and the Board consider new and emerging risks every six months. The risk register is then updated to include these consideraons. The Board has a process in place to idenfy emerging risks, such as climate related risks, and to determine whether any acons are required. The Board relies on regular reports provided by the Investment Manager and the Administrator regarding risks that the Company faces. When required, experts are employed to provide further advice, including tax and legal advisers. Climate Change Environmental laws and regulaons connue to evolve as the UK, Europe and the rest of the world connue to focus their eorts on the goals laid out by the Paris Agreement. In jurisdicons where the Company’s Assets are located, newly implemented laws and/or regulaons may have an impact on a given Asset’s acvies. These laws may impose liability whether or not the owner or operator of the Assets knew of or was responsible. There can be no assurance that environmental costs and liabilies will not be incurred in the future. In a d di o n , e n v i ro n m e n t a l r e g u l a to r s m a y s e e k to impose injuncons or other sancons on an Asset’s operaons that may have a material adverse eect on its nancial c o n d i o n a n d v a l u a o n . C l i m a t e c h a n g e m a y also have other wide-ranging impacts such as an increased likelihood of market reform, insurance coverage availability and cost. Climate change may also lead to increased variability in average weather paerns such as periods of increased or reduced wind speeds or rainfall as well as extreme events which may aect the performance of the Company’s investments. Physical Eects of Climate Change While eorts to migate climate change connue to progress, the physical impacts are already emerging in the form of changing weather paerns. Such as the recent heatwaves experienced in North America and recent ash ooding seen throughout the UK and Europe. Extreme weather events can result in ooding, drought, res and storm damage, which may potenally impair the operaons of e x isn g a nd fut u re po r o lio com p ani e s at a certain locaon or impacng locaons of companies within their supply chain. Transion Risks Much of the conversaon around climate change focuses on environmental impacts, such as rising temperatures and extreme weather events. A big part of climate risk, however, involves transion risk – or the risk that results from changing policies, pracces, and technologies that arise as countries and sociees work to decrease their reliance on carbon. In the near and medium term, transion risks to porolio investments may arise from any unexpected changes to exisng government policies. An increase in renewables build‑out ambion without sucient demand could reduce power price forecasts. This could have a negave impact on the valuaon of the Company’s assets. Downing Renewables & Infrastructure Trust plc Annual Report | 65 Going Concern and Viability Statement Going Concern The Board, in its consideraon of the going concern posion of the Company, has reviewed comprehensive cash ow forecasts prepared by the Company’s Investment Manager which are based on market data and believes, based on those forecasts, the assessment of the Company’s subsidiary’s banking facilies and the assessment of the principal risks described in this report, that it is appropriate to prepare the nancial statements of the Company on the going concern basis. In arriving at their conclusion that the Company has adequate nancial resources, the Directors were mindful that the Group had cash of £33 million as at 31 December 2021, though £39.9 million has been spent on new acquisions since the reporng date. The Group ulised EUR 27.4 million of its facility with SEB to help fund the addional hydropower acquisions. There is EUR 16.1 million remaining of this facility. Through its main subsidiary, DORE Hold Co Limited, the Company has access to an undrawn RCF which is available for either, new investments or investment in exisng projects and working capital. The RCF is currently undrawn. The Company’s net assets at 31 December 2021 were £141.8 million and total expenses for the period ended 31 December 2021 were £2.2 million, which represented approximately 1.6% of average net assets during the period. In light of the ongoing COVID‑19 pandemic the Directors have fully considered each of the Company’s investments. Given the nature of the Company’s porolio, the Directors do not foresee any immediate material risk to the Company’s investment porolio and income from underlying SPVs. The Directors are sased that the Company has sucient resources to connue to operate for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they connue to adopt the going concern basis in preparing these nancial statements. Viability Statement In accordance with Principle 21 of the AIC Code, the Board has assessed the prospects of the Group over a period longer than 12 months required by the relevant ’Going Concern’ provisions. In reviewing the Company’s viability, the Directors have assessed the viability of the Company for the period to 31 December 2026 (the ‘Period’). The Board believes that the Period, being approximately ve years, is an appropriate me horizon over which to assess the viability of the Company, parcularly when taking into account the long term nature of the Company’s investment strategy, which is modelled over ve years, and the principal risks outlined above. Based on this assessment, the Directors have a reasonable expectaon that the Company will be able to connue to operate and to meet its Downing Renewables & Infrastructure Trust plc Annual Report | 66 liabilies as they fall due over the period to 31 December 2026. In making this statement, the Directors have considered and challenged the reports of the Investment Manager in relaon to the resilience of the Group, taking account of its current posion, the principal risks faced in severe but reasonable scenarios, including a stressed scenario, the eecveness of any migang acons and the Group’s risk appete. Sensivity analysis has been undertaken to consider the potenal impacts of such risks on the business model, future performance, solvency and liquidity over the period, both on an individual and combined basis. In parcular, this has considered the achievement of budgeted energy yields, the level of future electricity and gas prices, connued government support for renewable energy subsidy payments and the impact of a downside scenario which includes signicant reducon of projects’ yields under severe power price and generaon volume assumpons. The Directors have determined that a ve‑year look forward to December 2026 is an appropriate period over which to provide its viability statement. This is consistent with the outlook period used in medium-term forecasts regularly prepared for the Board by the Investment Manager and the discussion of any new strategies undertaken by the Board in its normal course of business. These reviews consider both the market opportunity and the associated risks, principally the ability to raise third-party funds and invest capital, or migang acons taken, such as a reducon of dividends paid to shareholders or ulisaon of addional borrowings available under the RCF. Board approval of the Strategic Report The Strategic Report has been approved by the Board of Directors and signed on its behalf by the Chair. Hugh W M Lile Chair 4 March 2022 Downing Renewables & Infrastructure Trust plc Annual Report | 67 Downing Renewables & Infrastructure Trust plc Annual Report | 68 Hugh W M Lile Chair Hugh qualied as a chartered accountant in 1982. In 1987 he joined Aberdeen Asset Management (“AAM”) and from 1990 to 2006 oversaw the growth of the private equity business before moving into the corporate team as Head of Acquisions. Hugh rered from AAM in 2015. Since then, he has become chair of Drum Income Plus REIT PLC and CLAN Cancer Support, a Director of Dark Maer Disllers Limited, and a governor of both Robert Gordon University and Robert Gordon’s College. Hugh won the ‘Non-Execuve Director of the Year’ award at the Instute of Directors, Scotland awards ceremony held in 2019. Hugh was appointed as a Director of the Company on 28 October 2020. Joanna de Montgros Non-execuve Director Joanna is a specialist in the technical and commercial elements of energy projects, with 20 years’ experience in renewable energy and exibility investments, building on her academic engineering background. In 2015, Joanna co-founded internaonal consultancy company Everoze. Everoze provides a broad range of engineering and strategic consulng services, plus incubaon and development of other start-ups in this space. Prior to co-founding Everoze, Joanna led the global Project Engineering group within DNV Renewables and was a member of the DNV Renewable Advisory Board. Joanna’s early career included management consultancy (PWC) and project nance (Fors Bank). Jo was appointed as a Director of the Company on 28 October 2020. Ashley Paxton Non-execuve Director Ashley has 25 years’ experience serving the funds and nancial services industry in London and Guernsey. Throughout that period, he has served a large number of London listed fund boards on IPOs and other capital market transacons, audit and other corporate governance maers. Ashley was a partner with KPMG in the Channel Islands (“C.I.”) from 2002 and transioned from audit to become its C.I. Head of Advisory in 2008, a posion he held through to his rerement from the rm in 2019. Ashley is a Fellow of the Instute of Chartered Accountants in England and Wales and a resident of Guernsey. Amongst other appointments he serves on the board of JZ Capital Partners Limited, Twentyfour Select Monthly Income Fund Limited and is Chairman of the Youth Commission for Guernsey & Alderney, a locally based charity delivering high quality targeted services to children and young people to support the development of their social, physical and emoonal wellbeing. Ashley was appointed as a Director of the Company on 28 October 2020. Board of Directors Downing Renewables & Infrastructure Trust plc Annual Report | 69 The Directors of the Company are pleased to present their report for the period ended 31 December 2021. Directors The Directors who held oce during the year and as at the date of this report are detailed on page 68. Details of the Directors’ terms of appointment can be found in the corporate governance statement and the Directors’ remuneraon report. Share Capital At the general meeng held on 26 October 2020, the Company was granted authority to allot up to 200 million ordinary shares, such authority to expire immediately following admission of the Company’s ordinary shares to trading on the premium segment of the main market of the London Stock Exchange at IPO (“Admission”). On 10 December 2020, the Company issued 122,500,000 ordinary shares at a price of 100 pence per share, with an aggregate nominal value of £1,225,000, raising gross proceeds of £122,500,000. The shares were issued to instuonal and retail investors and admied to trading on the premium segment of the main market of the London Stock Exchange on 10 December 2020. As a consequence of the above and as at the date of this report, the Company’s ability to allot shares under this authority has been exhausted. In addion to and separate from the above authority, at the general meeng held on 26 October 2020, the Company was granted authority to allot ordinary shares and/or C shares of the Company equal in aggregate to 20% of the number of ordinary shares in issue immediately following Admission, amounng to 24,500,000 shares, such authority to expire on conclusion of the Company’s rst AGM. On 19 October 2021, the Company issued 14,508,487 ordinary shares at a price of 102.5 pence per share, with an aggregate nominal value of £145,084.87, raising gross proceeds of £14.87 million. The placing price of 102.50 pence represented a discount of 1.68% to the Company’s closing share price of 104.25 pence per share on 28 September 2021 and a premium of 3.33% to the unaudited ex-dividend net asset value per share as at 30 June 2021. The shares were issued to instuonal and retail investors and admied to trading on the premium segment of the main market of the London Stock Exchange on 10 December 2020. As at 31 December 2021 and the date of this report, the Company has the ability to issue a further 9,991,513 ordinary and/or C shares under this authority. This authority will expire at the conclusion of, and renewal will be sought at, the AGM to be held in April 2022. At the general meeng held on 26 October 2020, the Company was granted authority to purchase up to 14.99% of the ordinary shares in issue immediately following Admission, amounng to 18,362,750 ordinary shares. This authority will expire at the conclusion of, and renewal will be sought at, the AGM to be held in April 2022. Shares bought back by the Company may be held in treasury, from where they could be reissued at or above the prevailing NAV quickly and cost eecvely. This provides the Company with addional exibility in the management of its capital base. No shares were bought back or held in treasury during the period under review or at the period end. At the period end and at the date of this report, the issued share capital of the Company comprised 137,008,487 ordinary shares. At general meengs of the Company, ordinary shareholders are entled to one vote on a show of hands and, on a poll, to one vote for every ordinary share held. At 31 December 2021 and at the date of this report, the total vong rights of the Company were 137,008,487. Downing Renewables & Infrastructure Trust plc Annual Report | 70 Directors’ Report 3 The dividend targets stated above are targets only and not prot forecasts. There can be no assurance that these targets will be met, or that the Company will make any distribuons at all and they should not be taken as an indicaon of the Company’s expected future results. Substanal Shareholdings The Directors have been informed of the following noable interests in the Company’s vong rights as at the date of this report: Shareholder Number of Ordinary Shares % of Total Vong Rights Bagnall Energy Limited 23,902,437 17.45 T Choithram & Sons Ltd (UK) 10,000,000 7.3 0 South Yorkshire Pensions Authority 5,000,000 3.65 Schng Juridisch Eigendom Privium Sustainable Impact Fund 4,500,000 3.28 The Company has not been informed of any changes to the noable interests between 31 December 2021 and the date of this report. Informaon About Securies Carrying Vong Rights The following informaon is disclosed in accordance with The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulaons 2008 and DTR 7.2.6 of the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules: • the Company’s capital structure and vong rights and details of the substanal shareholders in the Company are set out above; • proposals to grant powers to the Board to issue and buy back the Company’s shares will be set out in the noce of AGM; and • there are no restricons concerning the transfer of securies in the Company or on vong rights, no special rights with regard to control aached to securies and no agreements between holders of securies regarding their transfer known to the Company. Dividends and Dividend Policy Dividends paid in respect of the period ended 31 December 2021 are set out on in note 20 to the nancial statements. The Company pays dividends on a quarterly basis. The Company may, where the Directors consider it appropriate, use the special distributable reserve created by the cancellaon of its Share premium account to pay dividends. Distribuons made by the Company may take either the form of dividend income, or of “qualifying interest income” which may be designated as interest distribuons for UK tax purposes. At IPO, the Company targeted an inial dividend yield of 3% by reference to the Issue Price in respect of the calendar year to 31 December 2021, rising to a target dividend yield of 5% by reference to the Issue Price, in respect of the calendar year to 31 December 2022. On 2 September 2021, the Company announced that, following the rapid deployment of the IPO proceeds, it was increasing its dividend guidance. Following payment of the rst interim dividend of 1 pence per share for the period to 30 June 2021, the Company intends to increase the dividend to 5 pence for the year to 30 June 2022 (represenng a dividend per share of 1.25 pence for the quarter ending September 2021 and thereaer) 3 . Signicant Agreements During the period under review, the Company entered, via wholly owned subsidiaries, into two separate loan facility agreements: a £25 million Revolving Credit Facility (“RCF”) with Santander UK plc and a seven-year EUR 43.5 million debt facility with SEB for its Swedish hydropower assets. DORE Hold Co Limited has entered into a loan agreement for a £25 million RCF with Santander UK plc. The RCF has a four-year term, with the possibility to be extended for a further year, and includes an uncommied accordion allowing for an increase in its size to further assist the expected increase of the Group’s investment acvity. The RCF can be drawn in GBP and EUR (and also able to make use of funds in other currencies) and is priced at the Sterling Overnight Index Average (“SONIA”) plus 2.25%. Downing Renewables & Infrastructure Trust plc Annual Report | 71 Downing Renewables & Infrastructure Trust plc Annual Report | 72 The Group inially acquired Downing Hydro AB (“DHAB”), its Swedish hydropower porolio, on an unlevered basis shortly aer the Company’s IPO in December 2020. DHAB has a seven-year EUR 43.5 million debt facility with SEB. Both loan facility agreements could alter or terminate on the change of control of the Company. Further details regarding the principal agreements between the Company and its service providers, including the Investment Manager, are set out in note 4 to the nancial statements. Financial Risk Management Informaon about the Company’s nancial risk management objecves and policies is set out in note 16 to the nancial statements. Greenhouse Gas Emissions and Taskforce on Climate-Related Financial Disclosures Informaon about the Group’s GHG emissions and the Company’s reporng against the TCFD recommendaons is set out in the strategic report on pages 17 to 25. Requirements of the Lisng Rules Lisng Rule 9.8.4 requires the Company to include specied informaon in a single idenable secon of the annual report or a cross reference table indicang where the informaon is set out. The informaon required under Lisng Rule 9.8.4(7) in relaon to allotments of shares is set out on page 70. The Directors conrm that no addional disclosures are required in relaon to Lisng Rule 9.8.4. Audit Informaon The Directors holding oce at the date of this annual report conrm that, so far as they are each aware, there is no relevant audit informaon of which the Company’s Auditor is unaware. Each Director has taken all the steps that they ought to have taken as a Director to make themselves aware of any relevant audit informaon and to establish that the Company’s Auditor is aware of that informaon. Streamlined Energy Carbon Reporng As the Company has outsourced operaons to third pares, there are no signicant greenhouse gas emissions to report from the operaons of the Company. The Company qualies as a low energy user and is therefore exempt from disclosures on greenhouse gas emissions and energy consumpon. Further detail on the Company’s environmental reporng can be seen in the Sustainability report on pages 10 to 25. Future Developments Further informaon regarding likely future developments in the business of the Company is set out in the Investment Manager’s Report on pages 40 to 54. Post Balance Sheet Events Dividends On 24 February 2022, The Board declared an interim dividend of 1.25 pence per share with respect to the period ended 31 December 2021. The Dividend is expected to be paid on or around 31 March 2022 to shareholders on the register on 4 March 2022. The ex-dividend date is 3 March 2022. Acquisions The Company, through its main subsidiary acquired two operaonal porolios of hydropower plants, located in central Sweden for £20.1 million and also completed the acquision of an operaonal 46 MW onshore wind project located in north eastern Sweden for £19.8 million. This Directors’ report has been approved by the Board. By order of the Board Link Company Maers Limited Company Secretary 4 March 2022 Corporate Governance Statement This corporate governance statement forms part of the Directors’ report. Introducon from the Chairman I am pleased to introduce this period’s corporate governance statement. In this statement, the Company reports on its compliance with the AIC Code, sets out how the Board and its commiees have operated during the past year and describes how the Board exercises eecve stewardship over the Company’s acvies in the interests of shareholders. The Board is accountable to shareholders for the governance of the Group’s aairs and is commied to maintaining the highest standard of corporate governance for the long-term success of the Company. The Company reviews its standards of governance against the principles and recommendaons of the AIC Code, as published in 2019. The Board considers that reporng against the principles and recommendaons of the AIC Code provides beer informaon to shareholders as it addresses all the principles set out in the UK Code, as well as seng out addional principles and recommendaons on issues that are of specic relevance to investment companies and is endorsed by the FRC. The terms of the FRC’s endorsement mean that AIC members who report against the AIC Code and the AIC Guide fully meet their obligaons under the UK Code and the related disclosure requirements contained in the lisng rules of the FCA. A copy of the AIC Code can be found at www.theaic.co.uk. A copy of the UK Code can be obtained at www.frc.org.uk. Statement of Compliance with the AIC Code Pursuant to the lisng rules of the FCA, the Company is required to provide shareholders with a statement on how the main and supporng principles set out in the AIC Code have been applied and whether the Company has complied with the provisions of the AIC Code. The Board recognises the importance of a strong corporate governance culture and has established a framework for corporate governance which it considers to be appropriate to the business of the Company as a whole. It should be noted that, as an investment trust, all of the Company’s Directors are non-execuve and most of the Company’s day-to-day responsibilies are delegated to third pares. Consequently, the Company has not reported on those provisions of the UK Code relang to the role of the chief execuve, execuve remuneraon or internal audit. The Board has reviewed the principles and recommendaons of the AIC Code and considers that it has complied throughout the year, except that Directors are not appointed for a specic term as all Directors are non-execuve and the Company has adopted a policy of all Directors, including the Chairman, standing for annual re-elecon. The Board is mindful of and will have regard to corporate governance best pracce recommendaons with respect to the tenure of the Chair and in future succession planning. The Company does not have a Senior Independent Director. The Board believes that the appointment of a Senior Independent Director is not necessary at present given the size of the Company. The Principles of the AIC Code The AIC Code is comprised of 18 Principles and 42 Provisions over ve secons covering the following areas: • Board Leadership and Purpose; • Division of Responsibilies; • Composion, Succession and Evaluaon; • Audit, Risk and Internal Control; and • Remuneraon The Board’s Corporate Governance Statement sets out how the Company has complied with each of the Principles of the AIC Code. Downing Renewables & Infrastructure Trust plc Annual Report | 73 Downing Renewables & Infrastructure Trust plc Annual Report | 74 AIC Code Principle How the Company Complies A. A successful company is led by an eecve board, whose role is to promote the long-term sustainable success of the Company, generang value for shareholders and contribung to wider society. Members of the Board are fully engaged and bring diverse skills to the table fostering healthy debate. The Investment Objecve is to provide investors with an aracve and sustainable level of income returns, with an element of capital growth, by invesng in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe. As part of this the opportunies and risks faced by the business are considered, monitored and assessed on a regular basis, both in terms of potenal and emerging risks that the Company may face. More detail regarding the principal risks and uncertaines and the sustainability of the business model can be found in the Strategic Report on pages 6 to 67. B. The Board should establish the Company’s purpose, values and strategy, and sasfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and promote the desired culture. The purpose of the Company is also the Investment Objecve which is to provide investors with an aracve and sustainable level of income returns, with an element of capital growth, by invesng in a diversied porolio of renewable energy and infrastructure assets in the UK, Ireland and Northern Europe. The investment process followed by the Investment Manager is set out on pages 26 to 35. The Board embraces a culture of inclusivity, fairness and responsibility, adopng a responsible governance culture. Transparency and openness are important values both amongst Board members and in the Board’s dealings with the Company’s stakeholders. The Board assesses and monitors its own culture as part of the annual Board evaluaon process, including its policies, pracces and behaviour to ensure that it is appropriately aligned to the Company’s acvies. C. The Board should ensure that the necessary resources are in place for the Company to meet its objecves and measure performance against t he m . Th e Bo a rd s h ou l d als o es t ab l is h a fr am ework of prudent an d eec ve controls, which enable risk to be assessed and managed. The Board and the Management Engagement Commiee regularly review the performance of the Company and the performance and resources of the Investment Manager and other key service providers to ensure that the Company can connue to meet its objecves. The Audit and Risk Commiee is responsible for assessing and managing risks and further informaon about how this is done can be found in the Audit and Risk Commiee Report on pages 84 to 86. D. In order for the Company to meet its responsibilies to shareholders and stakeholders, the Board should ensure eecve engagement with, and encourage parcipaon from, these pares. The Board understands its responsibilies to Shareholders and stakeholders and stakeholder consideraons form an important part of decision making. Further informaon on the Company’s engagement with stakeholders is set out in the Secon 172 statement on pages 55 to 58. The Board considers the impact any decision will have on all relevant stakeholders to ensure that they are making a decision that promotes the long-term success of the Company, including in relaon to dividends, new investment opportunies and capital requirements. The Directors welcome the views of all shareholders and place considerable importance on communicaons with them. All shareholders, while remaining cognisant of any government regulaons on social gatherings, are encouraged to aend the AGM, where they will be given the opportunity to queson the Chairman, the Board and representaves of the Investment Manager. In addion, the Direc tors are available to meet shareholders . Shareholders wishing to communic ate with the Chairman, or any other member of the Board, may do so by wring to the Company Secretary at [email protected]. The Management Engagement Commiee reviews the performance and connuing appointment of the Company ’s key ser vice provider s annually to ensure that per for m ance levels s as fac tor y an d any service issues can be discussed, as appropriate. Downing Renewables & Infrastructure Trust plc Annual Report | 75 AIC Code Principle How the Company Complies F. The chair leads the Board and is responsible for its overall eecveness in direcng the Company. They should demonstrate objecve judgement throughout their tenure and promote a culture of openness and debate. In addion, the Chair facilitates construcve board relaons and the eecve contribuon of all non-execuve directors, and ensures that Directors receive accurate, mely and clear informaon. The Chair is responsible for leading the Board and is responsible for its overall eecveness in direcng the aairs of the Company. The Chair ensures that all Directors receive accurate, mely and clear informaon and promotes a culture of op enne ss and debate in Board meengs and within the Company by encouraging and facilitang the eecve contribuon of other Directors. There is a clear division of responsibilies between the Chair, the Directors, the Investment Manager and the Company’s other third-party service providers. The Boa rd mee ts regular ly through out the ye ar an d repre s enta ves of the Inves t ment Manager are in aendance, when appropriate, at each meeng and most Commiee meengs. The Board has ag ree d a sc he du le of m a e r s s pe ci c al l y res er ved fo r d ec isi o n by t h e B o ard whi ch is av ail ab le on the Company’s website. Prior to each Board and Commiee meeng, Directors are provided with a comprehensive set of papers giving detailed informaon on the Company’s investment performance, transacons and nancial posion and all Directors have mely access to all relevant management, nancial and regulatory informaon. The review of the per form ance of the Chair was car ried out duri n g th e year by Joanna De Montg ros as the Chair of the Nominaon Commiee as part of the Board evaluaon exercise. The document seng out the role of the Chair is available on the Company’s website. This review concluded that t h e Ch air c on n ue s to m ake a sig ni c a nt co n t ri bu o n to, an d d e v ote s su c ien t me to th e a air s of, the Company and connues to display excellent leadership. G. The Board should consist of an appropriate combinaon of Directors (and, in parcular, independent non- execuve directors) such that no one in d i v i d u al o r sm al l gr ou p of in d iv i d ua ls dominates the Board’s decision making. All of the Directors are non-execuve and are independent of the Investment Manager and the other service providers. The Chair, Hugh Lile, was independent of the Investment Manager at the me of his appointment in 2020 and remains so. No Director is a director of another investment company managed by the Company’s Investment Manager. H. Non-execuve directors should have sucient me to meet their board responsibilies. They should provide construcve challenge, strategic guidance, oer specialist advice and hold third party service providers to account. As part of the Board evaluaon process, the contribuons of each Director, as well as the me commitments made by each Board member are considered and reviewed. The Directors’ other commitments are regularly reviewed and any new appointments are considered by the other Directors to ensure there is no conict of interest or risk of over boarding. Following the Board evaluaon, it was concluded that each Director provides appropriate levels of challenge and provided the Company and the Investment Manager with strategic guidance and specialist advice when required. The Management Engagement Commiee reviews the performance and cost of the Company’s third-party service providers on an annual basis. More informaon regarding the work of the Management Engagement Commiee can be found on page 83. I. The Board, supported by the Company Secretary, should ensure that it has the policies, processes, informaon, me and resources it needs in order to funcon eecvely and eciently. The Directors have access to the advice and services of the Company Secretary through its app ointe d rep r ese n ta ves and th e Co mpany Se cret ar y is re spo n sible to the Boa rd for ensu ring th at Board procedures are followed and that applicable rules and regulaons are complied with. The Company Secretary is also responsible for ensuring good informaon ows between all pares. Downing Renewables & Infrastructure Trust plc Annual Report | 76 AIC Code Principle How the Company Complies Composion, succession and evaluaon J. Appointments to the Board should be subject to a formal, rigorous and transparent procedure, and an eecve succession plan should be maintained. Both appointments and succession plans should be based on merit and objecve criteria and, within this context, should promote diversity of gender, social and ethnic backgrounds, cognive and personal strengths. The Board has established a Nominaon Commiee, comprising all Directors. This Commiee will lead the appointment process of new Directors as and when vacancies arise and as part of the Directors’ ongoing succession planning. More informaon regarding the work of the Nominaon Commiee can be found on page 82. In accordance with the AIC Code, the Board is comprised of a mixture of individuals who have an appropriate balance of skills and experience to meet the future opportunies and challenges facing the Company. Appointments are made rst and foremost on the basis of merit and taking into account the recognised benets of all types of diversity. The Board ensures that diversity is an important consideraon and part of the selecon criteria used to assess candidates to achieve a balanced Board. The Board is mindful of the current FCA proposals to incorporate the diversity recommendaons fr om th e P ar ker and H amp to n -A le xa nd er rev iew s in to th e L is ng Rule s on a ‘co mp ly or ex pla in’ basi s which will apply to nancial years commencing 1 Januar y 2022. Once nalised, these proposals will be taken into consideraon in respect of the recruitment of all new Directors of the Company. The Company will report its compliance against this new requirement in the annual report for the year ending 31 December 2022. K. The Board and its commiees should have a combinaon of skills, experience and knowledge. Consideraon should be given to the length of service of the Board as a whole and membership regularly refreshed. The Directors bring a wide range of skills, experience and knowledge to the Board. Further details are set out in their biographies on page 68. The Directors’ skills, experience and knowledge are reviewed as part of the annual Board evaluaon process. When considering new appointments in future, the Board will review the skills of the Directors and seek to add persons with complementary skills or who possess skills and experience which ll any gaps in the Board’s knowledge or experience and who can devote sucient me to the Company to carry out their dues eecvely. L. Annual evaluaon of the Board should consider its composion, diversity and how eecvely members work together to achieve objecves. Individual evaluaon should demonstrate whether each director connues to contribute eecvely. The Board has agreed to evaluate its own performance and that of its Commiees, Chair and Directors on an annual basis. For the period under review, this was carried out by way of a quesonnaire prepared by the Company Secretar y. A report was circulated to the Directors which set out the results of the evaluaon process and the Directors met subsequently to discuss the ndings and take any acons. The Nominaon Commiee led the evaluaon, which covered the f un c o n in g o f t h e B o a rd as a wh o l e, t h e e e c ve n e ss o f th e Bo a r d C o m mi e e s , th e pe r fo r m an c e of the Chair and the independence and contribuon made by each Director. The Nominaon Commiee considers the ndings of the evaluaon process when making a recommendaon to the Board regarding the elecon and re-elecon of Directors. Following this review, the Board is sased that the structure, mix of skills and operaon of the Board is eecve and relevant for the Company and it is recommended that shareholders vote in favour of the elecon of the Directors at the AGM to be held in April 2022. Fur ther informaon regarding the proposed elec on of each Dire ctor c an be found in the Noce of AGM. Downing Renewables & Infrastructure Trust plc Annual Report | 77 AIC Code Principle How the Company Complies Audit, risk and internal control M. The Board should establish formal and transparent policies and procedures to ensure the independence and eecveness of external audit funcons and sasfy itself on the integrity of nancial and narrave statements. The Audit and Risk Commiee ensures that any work outside the scope of the standard audit work requires prior approval by the Audit and Risk Commiee. This enables the Commiee to ensure that the Auditor remains fully independent. The Audit and Risk Commiee carries out a review of the per formance of the Auditor on an annual basis. Feedback from other third pares, including the Investment Manager, is included as part of this assessment to ensure that the Audit and Risk Commiee takes into account the views of dierent pares who have a close working relaonship with the Auditor. Further informaon regarding the work of the Audit and Risk Commiee can be found on page 84. N. The Board should present a fair, balanced and understandable assessment of the Company’s posion and prospects. The Board, through the Audit and Risk Commiee, has considered the Annual Report and nancial statement as a whole and agreed that they believe that the document presents a fair, balanced and understandable assessment of the Company’s posion and prospects. O. The Board should establish procedures to manage risk, oversee the internal control framework, and determine the nature and extent of the principal risks the Company is willing to take in order to achieve its long-term strategic objecves. The Audit and Risk Commiee reviews repor ts from the principal service providers on compliance and the internal and nancial control systems in operaon and relevant independent audit reports thereon. The Audit and Risk Commiee has carried out an annual review of the eecveness of the Company’s systems of internal control. Given the nature of the business, and being an Investment Trust, the Company is reliant on its service providers and their own internal controls. The Audit and Ri sk Co mmi e e rev iew s th e c on tr o l sy st em s i n ope ra o n at t h e C om pa ny ’s key s er vi ce prov id er s on an annual basis, insofar as they relate to the aairs of the Company. As set out in more detail in the Audit and Risk Commiee on pages 84 to 86, the Company has in place a detailed system for assessing the adequacy of those controls. P. Remuneraon policies and pracces should be designed to support strategy and promote long-term sustainable success. As outlined in the Remuneraon Policy on page 91, the Company follows the recommendaon of the AIC Code that non-execuve Directors’ remuneraon should reect the me commitment and responsibilies of the role. The Company’s policy is that the remuneraon of non-execuve Directors should reect the experience of the Board as a whole and be determined with reference to comparable organisaons and appointments. Directors are not eligible for bonuses, share opons, long-term incenve schemes or other performance- related benets as the Board does not believe that this is appropriate for non-execuve Directors. The Remuneraon Policy is therefore designed to aract and retain high quality Directors, whilst ensuring that Directors remain focused and incenvised to promote the long-term sustainable success of the Company. All Directors hold shares in the Company, all of which were purchased in the open market and using the Directors’ own resources. More informaon regarding the work of the Remuneraon Commiee can be found in the Remuneraon Report and Policy which are set out on pages 87 to 92. Q. A formal and transparent procedure for developing policy on remuneraon should be established. No Director should be involved in deciding their own remuneraon outcome. T he Rem un er a on Pol ic y has be e n d ev elo p ed wi th r efe re n ce to th e pe er gro up a nd th e pr in cip le s of the AIC Code. There are agreed Directors’ remuneraon levels which all non-execuve Directors receive (irrespecve of experience or tenure) for Directors, for the Audit and Risk Commiee Chair and for the Chair of the Company. Any changes to the Chairman’s fee are considered by the Remuneraon Commiee as a whole, with the excepon of the Chair who excuses himself for this part of the meeng. R. Directors should exercise independent judgement and discreon when authorising remuneraon outcomes, taking account of company and indi vid ual per fo rma nce, and wid er circumstances. Any decision with regard to remuneraon is taken aer considering the performance of the Company and wider market condions and circumstances. Downing Renewables & Infrastructure Trust plc Annual Report | 78 Board of Directors Under the leadership of the Chairman, the Board of Directors is collecvely responsible for the long-term sustainable success of the Company, generang value for shareholders and contribung to wider society. It provides overall leadership, sets the strategic aims of the Company and ensures that the necessary resources are in place for the Company to meet its objecves and full its obligaons to shareholders, within a framework of high standards of corporate governance and eecve internal controls. The Directors are responsible for the determinaon of the Company’s Investment Policy and investment strategy and have overall responsibility for the Company’s acvies, including the review of investment acvity and performance and the control and supervision of the Investment Manager. The Board consists of three non-execuve Directors. It seeks to ensure that it has an appropriate balance of skills and experience, and considers that, collecvely, it has substanal recent and relevant experience of investment trusts and nancial and public company management. The Chairman of the Audit and Risk Commiee, Ashley Paxton, has recent and relevant nancial experience as set out in his biography on page 68. The terms and condions of the appointment of the Directors are formalised in leers of appointment, copies of which are available for inspecon from the Company’s registered oce. None of the Directors has a contract of service with the Company nor has there been any other contract or arrangement between the Company and any Director at any me during the year. Directors are not entled to any compensaon for loss of oce. Board Operaon The Directors have adopted a formal schedule of maers specically reserved for the approval of the Board. These include the following: • approval of the Company’s Investment Policy, long-term objecves and investment strategy; • approval of acquisions from, divestments to, or co- investments by the Company with other funds which are managed by the Investment Manager; • approval of Annual and Interim Reports and nancial statements and accounng policies, prospectuses, circulars and other shareholder communicaons; • approval of the raising of new capital and major nancing facilies; • approval of dividends and the Company’s dividend policy; • Board appointments and removals; • appointment and removal of the Investment Manager, AIFM, Auditor and the Company’s other service providers; and • approval of the Company’s operang budgets. Board Meengs The Company has four scheduled Board meengs a year, with addional meengs arranged as necessary. At each Board meeng, the Directors follow a formal agenda which is circulated in advance by the Company Secretary. The Investment Manager, Administrator, AIFM and Company Secretary regularly provide the Board with nancial informaon, including an annual expenses budget, together with brieng notes and papers in relaon to changes in the Company’s economic and nancial environment, statutory and regulatory changes and corporate governance best pracce. At each Board meeng, representaves from the Investment Manager are in aendance to present reports to the Directors covering the Company’s current and future acvies, porolio of assets and its investment performance over the preceding period. The Board and the Investment Manager operate in a fully supporve, co-operave and open environment and ongoing communicaon with the Board is maintained between formal meengs. Commiees The Board has established four commiees to assist its operaons: the Audit and Risk Commiee, the Management Engagement Commiee, the Remuneraon Commiee and the Nominaon Commiee. Each commiee’s delegated responsibilies are clearly dened in formal terms of reference, which are available on the Company’s website. Given the size and nature of the Board it is felt appropriate that all Directors are members of all Commiees. Downing Renewables & Infrastructure Trust plc Annual Report | 79 Audit and Risk Commiee The Audit and Risk Commiee meets twice a year and is chaired by Ashley Paxton. The Commiee ensures that the Company’s nancial performance is properly monitored, controlled and reported. The Commiee has direct access to the Company’s Auditor and provides a forum through which the Auditor reports to the Board. Representaves of the Auditor aend both scheduled meengs of the Commiee. Further details about the Audit and Risk Commiee and its acvies during the year under review are set out on pages 84 and 86. Nominaon Commiee The Nominaon Commiee meets once a year and is chaired by Joanna De Montgros. The Commiee oversees Board recruitment and succession planning and the annual Board evaluaon process. Further details about the Nominaon Commiee and its acvies during the year under review are set out on page 82. Management Engagement Commiee The Management Engagement Commiee meets once a year and is chaired by Hugh Lile. The Commiee reviews the performance and connuing appointment of the Investment Manager and the Company’s other principal service providers. Further details about the Management Engagement Commiee and its acvies during the year under review are set out on page 83. Remuneraon Commiee The Remuneraon Commiee meets once a year and is chaired by Ashley Paxton. The Commiee conducts an annual review of the remuneraon of the Directors. Further details about the Remuneraon Commiee and its acvies during the year under review are set out on page 79. Meeng Aendance The number of scheduled Board and Audit and Risk Commiee meengs held during the period ended 31 December 2021 and the aendance of the individual Directors is shown below: Board Audit and Risk Commiee Nominaon Commiee Remuneraon Commiee Management Engagement Commiee Number entled to aend Number aended Number entled to aend Number aended Number entled to aend Number aended Number entled to aend Number aended Number entled to aend Number aended Hugh Lile 4 4 2 2 1 1 1 1 1 1 Ashley Paxton 4 4 2 2 1 1 1 1 1 1 Joanna De Montgros 4 4 2 2 1 1 1 1 1 1 Downing Renewables & Infrastructure Trust plc Annual Report | 80 A number of addional Board and Audit and Risk Commiee meengs were held by the Company during the period ended 31 December 2021. These meengs were held in respect of the IPO, acquisions and fundraising. Inducon of New Directors A procedure for the inducon of new Directors has been established, including the provision of an inducon pack containing relevant informaon about the Company, its processes and procedures. New appointees have the opportunity of meeng with the Chair, relevant persons at the Investment Manager and the Secretary. Elecon/Re-elecon of Directors Under the Company’s Arcles of Associaon and in accordance with the AIC Code, Directors are required to rere at the rst AGM following their appointment. Thereaer, at each AGM all Directors will seek annual re- elecon. In accordance with the above policy, all Directors will be seeking elecon at the forthcoming AGM. Following formal performance evaluaon as detailed below, the Board strongly recommends the elecon of each of the Directors based on their experience and experse in investment maers, their independence and connuing eecveness and commitment to the Company. Conicts of Interest It is the responsibility of each individual Director to avoid an unauthorised conict of interest situaon arising. The Director must request authorisaon from the Board as soon as he/she becomes aware of the possibility of an interest that conicts, or might possibly conict, with the interests of the Company (“situaonal conicts”). The Company’s Arcles of Associaon authorise the Board to approve such situaons, where deemed appropriate. A register of conicts is maintained by the Secretary and is reviewed at Board meengs, to ensure that any authorised conicts remain appropriate. The Directors are required to conrm at these meengs whether there has been any change to their posion. The Board is responsible for considering Directors’ requests for authorisaon of situaonal conicts and for deciding whether or not the situaonal conict should be authorised. The factors to be considered will include: whether the situaonal conict could prevent the Director from properly performing their dues; whether it has, or could have, any impact on the Company; and whether it could be regarded as likely to aect the judgement and/ or acons of the Director in queson. When the Board is deciding whether to authorise a conict or potenal conict, only Directors who have no interest in the maer being considered are able to take the relevant decision, and in taking the decision the Directors must act in a way they consider, in good faith, will be most likely to promote the Company’s success. The Directors are able to impose limits or condions when giving authorisaon if they think this is appropriate in the circumstances. Insurance and Indemnity Provisions The Board has agreed arrangements whereby Directors may take independent professional advice in the furtherance of their dues. The Company has Directors’ and Ocers’ liability insurance and professional indemnity insurance to cover legal defence costs. Under the Company’s Arcles, the Directors are provided, subject to the provisions of UK legislaon, with an indemnity in respect of liabilies which they may sustain or incur in connecon with their appointment. This indemnity was in force during the year and remains in force as at the date of this report. Apart from this, there are no third-party indemnity provisions in place for the Directors. Performance Evaluaon of the Board The Directors are aware that they need to connually monitor and improve performance and recognise this can be achieved through regular Board evaluaon, which provides a valuable feedback mechanism for improving Board eecveness. The Directors have therefore opted to undertake an internal performance evaluaon by way of quesonnaires specically designed to assess the strengths and independence of the Board and the Chairman, individual Directors and the performance of the Commiees. The evaluaon of the Chair is carried out by the other Directors of the Company, led by the Chair of the Nominaon Commiee. The quesonnaires are also intended to analyse the focus of Board meengs and assess whether they are appropriate, or if any addional informaon may be required to facilitate Board discussions. The Chair acts on the results of the evaluaon by recognising the strengths and addressing any weaknesses of the Board as appropriate. The results of the Board evaluaon process are reviewed and discussed by the Board as a whole. This evaluaon process is carried out annually. Downing Renewables & Infrastructure Trust plc Annual Report | 81 The composion of the Board and, in parcular, succession planning are kept under review by the Board and are considered on an annual basis in December each year in conjuncon with the evaluaon process in order to ensure an orderly refreshment of the Board and to develop a diverse pipeline. Following the evaluaon process conducted during the year under review, the Board considers that all the current Directors contribute eecvely and have the skills and experience relevant to the leadership and direcon of the Company. The Board has sased itself that the Directors have enough me to devote to the Company’s aairs. Internal Control Review The Board is responsible for the systems of internal controls relang to the Company, including the reliability of the nancial reporng process and for reviewing the systems’ eecveness. The Directors have reviewed and considered the guidance supplied by the FRC on risk management, internal control and related nance and business reporng and an ongoing process has been established for idenfying, evaluang and managing the principal risks faced by the Company. This process, together with key procedures established with a view to providing eecve nancial control, was in place during the year under review and at the date of this report. The internal control systems are designed to ensure that proper accounng records are maintained, that the nancial informaon on which business decisions are made and which is issued for publicaon is reliable, and that the assets of the Company are safeguarded. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company’s objecves. It should be recognised that such systems can only provide reasonable, not absolute, assurance against material misstatement or loss. The Directors have carried out a review of the eecveness of the systems of internal control as they have operated over the year and up to the date of approval of the report and nancial statements. There were no maers arising from this review that required further invesgaon and no signicant failings or weaknesses were idened. Internal Control Assessment Process Robust risk assessments and reviews of internal controls are undertaken regularly in the context of the Company’s overall Investment Objecve: In arriving at its judgement of what risks the Company faces, the Board has considered the Company’s operaons in light of the following factors: • the nature and extent of risks which it regards as acceptable for the Company to bear within its overall business objecve; • the threat of such risks becoming reality; • the Company’s ability to reduce the incidence and impact of risk on its performance; • the cost to the Company and benets related to the review of risk and associated controls of the Company; and • the extent to which third pares operate the relevant controls. A risk matrix has been produced against which the risks idened and the controls in place to migate those risks can be monitored. The risks are assessed on the basis of the likelihood of them happening, the impact on the business if they were to occur and the eecveness of the controls in place to migate them. This risk matrix is reviewed twice a year by the Audit and Risk Commiee and at other mes as necessary. The principal risks that have been idened by the Board are set out on pages 59 to 64. Downing Renewables & Infrastructure Trust plc Annual Report | 82 Nomination Committee Report I am pleased to present the Nominaon Commiee Report for the period ended 31 December 2021. Meengs The Commiee comprises all Directors of the Company and met once during the period under review. Responsibilies of the Commiee The primary responsibilies of the Commiee are as follows: • to review the structure, size and composion (including the skills, knowledge, experience and diversity) of the Board; • to give full consideraon to succession planning for Directors in the course of its work, taking into account the challenges and opportunies facing the Company, and the skills and experse needed on the Board in the future; • to idenfy and nominate for the approval of the Board, candidates to ll Board vacancies as and when they arise; • to review the results of the Board performance evaluaon process that relate to the composion of the Board; and • to review annually the me required from non- execuve Directors. Appointment of New Directors The nominaon commiee regularly reviews the composion and eecveness of the Board and its commiees with the objecve of ensuring that these have the appropriate balance of skills and experience required to meet the current and future opportunies and challenges facing the Company. When considering the appointment of new Directors, the nominaon commiee will acvely consider a range of factors including the experse and experience required in a prospecve candidate and the diversity of the Board, as set out in the Company’s Diversity Policy below. Diversity Policy In accordance with the AIC Code, the Board is comprised of a mixture of individuals who have an appropriate balance of skills and experience to meet the future opportunies and challenges facing the Company. Appointments are based on merit and objecve criteria that protect against discriminaon and are intended to promote a diversity of gender, social and ethnic backgrounds, cognive and personal strengths. The Board is mindful of the current FCA proposals to incorporate the diversity recommendaons from the Parker and Hampton-Alexander reviews into the Lisng Rules on a ‘comply or explain’ basis which will apply to nancial years commencing 1 January 2022. Once nalised, these proposals will be taken into consideraon in respect of the recruitment of all new Directors of the Company. The Company will report its compliance against this new requirement in the annual report for the year ending 31 December 2022, to be published in 2023. Tenure Policy Directors are not appointed for a specic term as all Directors are non-execuve. The Company has adopted a policy of all Directors, including the Chairman, standing for annual re-elecon. The Board is mindful of and will have regard to corporate governance best pracce recommendaons with respect to the tenure of the Chairman and in future succession planning, as appropriate. Performance Evaluaon of the Board Informaon on the performance evaluaon of the Board can be found in the Corporate Governance report on page 80. Joanna de Montgros Chair of the Nominaon Commiee 4 March 2022 Downing Renewables & Infrastructure Trust plc Annual Report | 83 Management Engagement Committee Report I am pleased to present the Management Engagement Commiee Report for the period ended 31 December 2021. Meengs The Commiee comprises all Directors of the Company and met once during the period under review. Responsibilies of the Commiee The primary responsibilies of the Commiee are as follows: • to monitor and evaluate the performance of the Investment Manager and its compliance with the terms of the investment management agreement; • to monitor and evaluate the performance of the Alternave Investment Fund Manager and its compliance with the terms of the alternave investment fund management agreement; • to consider the appropriateness of the investment management agreement, that it is fair, complies with all regulatory requirements, conforms with market and industry pracce and remains in the best interests of shareholders; • to consider the appropriateness of the alternave investment fund management agreement, that it is fair, complies with all regulatory requirements, conforms with market and industry pracce and remains in the best interests of shareholders; • to consider and review the level and method of remuneraon of the Investment Manager and the Alternave Investment Fund Manager pursuant to the terms of their respecve agreements with the Company; • to consider the connuing appointment of the Investment Manager and Alternave Investment Fund Manager and make recommendaons to the Board; and • to review the performance and services provided by the Company’s other service providers and consider whether the connuing appointment of such service providers under the terms of their agreements are in the interests of shareholders as a whole, and make recommendaons to the Board. Connuing Appointment of the Investment Manager The Board, through the Management Engagement Commiee, keeps the performance and connuing appointment of the Investment Manager under connual review. The Commiee conducts an annual review of the Investment Manager’s performance and makes a recommendaon to the Board about its connuing appointment. The Directors consider that the Investment Manager has executed the Company’s investment strategy according to the Board’s expectaons. Accordingly, the Board believes that the connuing appointment of Downing LLP as the Investment Manager of the Company, on the terms agreed, is in the best interests of the Company and its shareholders as a whole. Hugh W M Lile Chair of the Management Engagement Commiee 4 March 2022 Downing Renewables & Infrastructure Trust plc Annual Report | 84 Audit and Risk Committee Report I am pleased to present the Audit and Risk Commiee Report for the period ended 31 December 2021. Meengs The Commiee comprises all Directors of the Company and met twice during the period under review and once post period end. Responsibilies of the Commiee The primary responsibilies of the Commiee are as follows: • to monitor the integrity of the nancial statements of the Company including its annual and interim reports and any other formal announcements relang to its nancial performance, • to review and report to the Board on any signicant nancial reporng issues and judgements which those statements contain having regard to maers communicated to it by the Auditor; • to review the content of the annual report and nancial statements and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides shareholders with sucient informaon to assess the Company’s performance, business model and strategy; • to keep under review the Company’s internal nancial controls and review the adequacy and eecveness of the Company’s internal control and risk management systems and monitor the proposed implementaon of such controls; • to assess the current posion of the Company’s emerging and principal risks, including those that would threaten its business model, future performance, solvency or liquidity and reputaon, and how they are managed and migated; and the prospects of the Company over such period as deemed appropriate; • to manage the relaonship with the Company’s external Auditor, including reviewing the Auditor’s remuneraon, independence and performance and make recommendaons to the Board as appropriate; • to review the Auditor’s independence and objecvity and the eecveness and quality of the audit process; and • to consider annually whether there is a need for the Company to have its own internal audit funcon. Acvies in the Year • conducted a review of the internal controls and risk management systems of the Company and its third- party service providers; • agreed the audit plan and fees with the Auditor in respect of the audit of the inial accounts, interim review of the Interim Report for the period ended 30 June 2021 and the statutory audit of the Annual Report for the period ended 31 December 2021, including the principal areas of focus; • received and discussed with the Auditor its report on the results of the audit of the inial accounts, the review of the half-yearly nancial statements and the year-end audit; • reviewed the Company’s inial accounts, interim and annual nancial statements and recommended these to the Board for approval; • reviewed the methodology and assumpons applied in valuing the assets of the Company; and • reviewed whether an internal audit funcon would be of value and concluded that this would provide minimal addional comfort at considerable extra cost to the Company. • reviewed the adopon of the investment enty accounng standard. Downing Renewables & Infrastructure Trust plc Annual Report | 85 Signicant issues The Commiee considered the following key issues in relaon to the Company’s nancial statements during the year. A more detailed explanaon of the consideraon of the issues set out below, and the steps taken to manage them, is set out in the Principal Risks and Uncertaines on pages 59 to 64. Valuaon of Investments The discount rates used to determine the valuaon are selected and recommended by the Investment Manager. The discount rate is applied to the expected future cash ows from each investment’s nancial forecasts to arrive at a valuaon (discounted cash ow valuaon). The Audit and Risk Commiee has considered the subjecvity and appropriateness of the discount rates and other key assumpons used to determine the valuaon, of the investments, held through DORE Hold Co, which could aect the NAV and share price of the Company. These were discussed with the Investment Manager and external auditor. Internal controls The Commiee carefully considers the internal control systems by connually monitoring the services and controls of its third-party service providers. The Commiee reviewed, and where appropriate, updated the risk matrix during the year under review. This is done on a biannual basis. The Commiee received a report on internal control and compliance from the Investment Manager, the Administrator and the Registrar and no signicant maers of concern were idened. Going concern and long-term viability of the Company The Commiee considered the Company’s nancial requirements for the next 12 months and concluded that it has sucient resources to meet its commitments. Consequently, the nancial statements have been prepared on a going concern basis. The Commiee also considered the longer-term viability statement within the Annual Report for the period ended 31 December 2021, covering a ve-year period, and the underlying factors and assumpons which contributed to the Commiee deciding that this was an appropriate length of me to consider the Company’s long-term viability. Adopon of Investment enty accounng standard Under IFRS 10, investment enes are required to hold subsidiaries at fair value through the Income Statement rather than consolidate them on a line-by-line basis. There are three key condions to be met by the Company for it to meet the denion of an investment enty. Further detail on this can be found in Note 2 to the Financial Statements. The Directors have reviewed the criteria and are sased that the Company meets the criteria of an Investment Enty under IFRS 10. As explained in Note 2 to the nancial statements, the Directors are of the opinion that the Company meets the requirements of an “Investment Enty”. Assessing whether the Company and certain subsidiaries met the criteria of Investment Enes, in accordance with denion set out in IFRS 10 was seen as a key judgement. The Audit and Risk Commiee debated the appropriateness of adopng the standard with the Investment Manager and independent auditor. The Audit and Risk Commiee concluded that applying the investment enty exempon to IFRS 10 will improve stakeholders’ understanding of the nancial performance and posion of the Group. The Company’s viability statement can be found on page 65. Downing Renewables & Infrastructure Trust plc Annual Report | 86 Audit fees and non-audit services provided by the Auditor The Commiee reviewed the audit plan and fees presented by the Auditor and considered its report on the nancial statements. Total fees for the year payable to the Auditor amounted to £312,500. This gure includes non-audit fees of £88,500 in respect of the audit of the inial accounts and interim review for the period ended 30 June 2021. Professional fees relang to the reporng accountant services and tax-structuring advice pre-IPO totalled £101,000. Other pre-IPO work included the review of the Company’s nancial model and this was charged at £27,000. All non-audit services provided by the Auditor during the year were approved in advance by the Audit and Risk Commiee and Directors. Further informaon on the fees paid to the Auditor is set out in Note 6 to the nancial statements. Eecveness of the external audit The Commiee reviews the eecveness of the external audit carried out by the Auditor on an annual basis. The Chairman of the Commiee maintained regular contact with the Company’s Audit Partner throughout the year and also met with them prior to the nalisaon of the audit of the Annual Report and nancial statements for the period ended 31 December 2021, without the Investment Manager present, to discuss how the external audit was carried out, the ndings from such audit and whether any issues had arisen from the Auditor’s interacon with the Company’s various service providers. Independence and objecvity of the Auditor The Commiee has considered the independence and objecvity of the Auditor and has conducted a review of non-audit services which the Auditor has provided during the year under review. The Commiee receives an annual conrmaon from the Auditor that its independence is not compromised by the provision of such non-audit services. Peter Smith is the Audit Partner allocated to the Company by BDO LLP. The audit of the nancial statements for the period ended 31 December 2021 is his rst as Audit Partner. The Commiee is sased that the Auditor’s objecvity and independence is not impaired by the performance of their non-audit services and that the Auditor has fullled its obligaons to the Company and its shareholders. Appointment of the Auditor Following consideraon of the performance of the Auditor, the services provided during the year and a review of its independence and objecvity, the Commiee has recommended to the Board the appointment of BDO LLP as Auditor to the Company. Shareholder approval of the appointment of BDO as Auditor will be sought at the Annual Gener al Mee ng of the Co mp any to be held o n 6 Apr il 202 2. Ashley Paxton Chair of the Audit and Risk Commiee 4 March 2022 Downing Renewables & Infrastructure Trust plc Annual Report | 87 Directors’ Remuneration Report Statement from the Chair I am pleased to present the Directors’ Remuneraon Report for the period ended 31 December 2021. As set out in the Corporate Governance statement on pages 73 to 81, the Remuneraon Commiee comprises all Directors and meets at least once a year to discuss maers relang to Directors’ remuneraon. The Commiee reviewed Directors’ remuneraon at its meeng in November 2021. During the period ended 31 December 2021, the annual fees were set at the rate of £50,000 for the Chair, £40,000 for the Chair of the Audit and Risk Commiee and £35,000 for a Director. These fees levels were set in 2020, prior to the Company’s IPO. No changes to the fee levels are proposed for the year ending 31 December 2022. Vong at the AGM The Directors’ Remuneraon Report is put to a shareholder vote on an annual basis. The Directors’ Remuneraon Policy is put to a shareholder vote in the rst year of a Company or in any year where there is to be a change to the policy and, in any event, at least once every three years. As this is the Company’s rst reporng period, ordinary resoluons will be put to shareholders at the forthcoming AGM to be held in April 2022 to receive and approve the Directors’ Remuneraon Report and to receive and approve the Directors’ Remuneraon Policy. Performance of the Company The Company was incorporated on 8 October 2020. As such, 31 December 2021 is its rst nancial period end and historical data is not yet available. The graph below compares the total return to shareholders compared to the FTSE All-Share index. The Company does not have a specic benchmark but has deemed the F TSE All- Share Index to be the most appropriate comparator for its performance. This graph has been chosen as a comparison as it is a publicly available broad equity index which focuses on smaller companies and is therefore more relevant than most other publicly available indices. Downing Renewables & Infrastructure Trust plc Annual Report | 88 Directors’ Remuneraon for the Period Ended 31 December 2021 (audited) The remuneraon paid to the Directors during the period ended 31 December 2021 is set out in the table below: Fees Period ended 31 December 2021 £ Expenses Period ended 31 December 2021 £ Total Period ended 31 December 2021 £ Hugh W M Lile 58,333 Nil 58,333 Joanna de Montgros 40,833 Nil 40,833 Ashley Paxton 46,667 Nil 46,667 145,833 Nil 145,833 All Directors were appointed on 28 October 2020. There is no variable component to the Directors’ pay, all pay is xed. 90 95 100 105 110 115 120 10 Dec 2020 10 Jan 2021 10 Feb 2021 10 Mar 2021 10 Apr 2021 10 May 2021 10 Jun 2021 10 Jul 2021 10 Aug 2021 10 Sep 2021 10 Oct 2021 10 Nov 2021 10 Dec 2021 DORE FTSE All-share Downing Renewables & Infrastructure Trust plc Annual Report | 89 Relave Importance of Spend on Pay The table below sets out in respect of the period ended 31 December 2021: a) the remuneraon paid to the Directors; b) the Investment management fee; and c) the distribuons made to shareholders by way of dividend. Period ended 31 December 2021 £’000 Directors’ remuneraon 146 Investment management fee 1,284 Dividends paid to shareholders 2,938 Directors’ Interests (audited) There is no requirement under the Company’s Arcles of Associaon for Directors to hold shares in the Company. As set out in the Company’s Prospectus, Joanna de Montgros agreed that any fees payable to her in respect of her rst year of service should, save where the Company and the Directors agreed otherwise, be used to acquire shares in the Company. As at 31 December 2021, the interests of the Directors and any connected persons in the shares of the Company are set out below: Downing Renewables & Infrastructure Trust plc Annual Report | 90 Period ended 31 December 2021 Number of Shares Hugh W M Lile 150,000 Joanna de Montgros 21,085 Ashley Paxton 4 80,000 There have been no changes to any of the above holdings between 31 December 2021 and the date of this report. None of the Directors or any persons connected with them had a material interest in the Company’s transacons, arrangements or agreements during the year. 4 All of Ashley Paxton’s shares are held jointly with Alexandra Paxton, a person closely associated with Ashley Paxton. Downing Renewables & Infrastructure Trust plc Annual Report | 91 Remuneration Policy Introducon The Directors’ Remuneraon Policy is put to a shareholder vote in the rst year of a Company or in any year where there is to be a change to the policy and, in any event, at least once every three years. As this is the Company’s rst reporng period, an ordinary resoluon will be put to shareholders at the forthcoming AGM to be held in April 2022 to receive and approve the Directors’ Remuneraon Policy. Policy The Company follows the recommendaon of the AIC Code that non-execuve Directors’ remuneraon should reect the me commitment and responsibilies of the role. The Board’s policy is that the remuneraon of non- execuve Directors should reect the experience of the Board as a whole and be determined with reference to comparable organisaons and appointments. The fees of the non-execuve Directors are determined within the limits set out in the Company’s arcles of associaon; the Directors are not eligible for bonuses, pension benets, share opons, long- term incenve schemes or other benets. There are no performance condions aaching to the remuneraon of the Directors as the Board does not consider such arrangements or benets necessary or appropriate for non-execuve Directors. Under the Directors’ leers of appointment, there is no noce period, and no compensaon is payable to a Director on leaving oce. It is the Board’s policy that Directors do not have service contracts, but Directors are provided with a leer of appointment as a non-execuve Director. The terms of their appointment provide that Directors shall rere and be subject to elecon at the rst annual general meeng aer their appointment. The Directors are subject to rerement by rotaon in accordance with the arcles of associaon; however, the Company has adopted the policy of annual re-elecon of all Directors. The Company is commied to ongoing shareholder dialogue and any views expressed by shareholders on the fees being paid to Directors would be taken into consideraon by the Board when reviewing the Directors’ remuneraon policy and in the annual review of Directors’ fees. Downing Renewables & Infrastructure Trust plc Annual Report | 92 Directors’ Fee Levels Expected fees for the year ending 31 December 2022 Fees for the period ended 31 December 2021 Chair £50,000 £58,333 Chair of the Audit and Risk Commiee £40,000 £46,667 Director £35,000 £40,833 The approval of shareholders would be required to increase the aggregate limit for Directors’ fees of £300,000 per annum, as set out in the Company’s arcles of associaon. Approval The Directors’ Remuneraon Report was approved by the Board and signed on its behalf by: Ashley Paxton Chair of the Remuneraon Commiee 4 March 2022 Downing Renewables & Infrastructure Trust plc Annual Report | 93 Statement of Directors’ Responsibilities In respect of the nancial statements The Directors are responsible for preparing the Annual Report and the nancial statements in accordance with applicable law and regulaon. Company law requires the Directors to prepare nancial statements for each nancial year. Under that law the directors are required to prepare nancial statements in accordance with internaonal accounng standards in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not approve the nancial statements unless they are sased that they give a true and fair view of the state of aairs of the Company and of the prot or loss for the Company for that period. The Directors are also required to prepare nancial statements in accordance with internaonal nancial reporng standards adopted pursuant to Regulaon (EC) No 1606/2002 as it applies in the European Union. Under company law, Directors must not approve the nancial statements unless they are sased that they give a true and fair view of the state of aairs of the Company and of the prot or loss of the Company for that period. In preparing the nancial statements, the Directors are required to: • select suitable accounng policies and then apply them consistently; • state whether applicable IFRS as issued by the IASB) have been followed, subject to any material departures disclosed and explained in the nancial statements; • make judgements and accounng esmates that are reasonable and prudent; and • prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the Company will connue in business. The Directors are responsible for keeping adequate accounng records that are sucient to show and explain the Company’s transacons and disclose with reasonable accuracy at any me the nancial posion of the Company and enable them to ensure that the nancial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevenon and detecon of fraud and other irregularies. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the informaon necessary for shareholders to assess the group’s performance, business model and strategy. Downing Renewables & Infrastructure Trust plc Annual Report | 94 Website publicaon The Directors are responsible for ensuring the annual report and the nancial statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislaon in the United Kingdom governing the preparaon and disseminaon of nancial statements, which may vary from legislaon in other jurisdicons. The maintenance and integrity of the Company’s website is the responsibility of the directors. The Directors’ responsibility also extends to the ongoing integrity of the nancial statements contained therein. Directors’ responsibilies pursuant to DTR4 The directors conrm that, to the best of their knowledge: • The nancial statements have been prepared in accordance with the applicable set of accounng standards and Arcle 4 of the IAS regulaon and give a true and fair view of the assets, liabilies, nancial posion and prot and loss of the Company. • The annual report includes a fair review of the development and performance of the business and the nancial posion of the Company, together with a descripon of the principal risks and uncertaines that they face. On behalf of the Board. Hugh W M Lile (Chair) 4 March 2022 Downing Renewables & Infrastructure Trust plc Annual Report | 95Downing Renewables & Infrastructure Trust plc Annual Report | 95 Downing Renewables & Infrastructure Trust plc Annual Report | 96 Independent Auditor’s Report Opinion on the nancial statements In our opinion the nancial statements: • give a true and fair view of the state of the Company’s aairs as at 31 December 2021 and of its prot for the period from 8 October 2020 to 31 December 2021; • have been properly prepared in accordance with internaonal accounng standards in conformity with the requirements of the Companies Act 2006; and • have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the nancial statements of Downing Renewables & Infrastructure Trust Plc (the ‘Company’) for the period ended 31 December 2021 which comprise the Statement of comprehensive income, the Statement of nancial posion, the Statement of changes in equity, the Statement of cash ows and notes to the nancial statements, including a summary of signicant accounng policies. The nancial reporng framework that has been applied in their preparaon is applicable law and internaonal accounng standards in conformity with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with Internaonal Standards on Auding (UK) (ISAs (UK)) and applicable law. Our responsibilies under those standards are further described in the Auditor’s responsibilies for the audit of the nancial statements secon of our report. We believe that the audit evidence we have obtained is sucient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the addional report to the audit commiee. Independence Following the recommendaon of the Audit Commiee, we were appointed by the Directors on 10 November 2020 to audit the nancial statements for the period ended 31 December 2021 and subsequent nancial periods. The period of total uninterrupted engagement is one year covering the year ended 31 December 2021. We remain independent of the Company in accordance with the ethical requirements that are relevant to our audit of the nancial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest enes, and we have fullled our other ethical responsibilies in accordance with these requirements. The non-audit services prohibited by that standard were not provided to the Company. Conclusions relang to going concern In auding the nancial statements, we have concluded that the Directors’ use of the going concern basis of accounng in the preparaon of the nancial statements is appropriate. Our evaluaon of the Directors’ assessment of the Company’s ability to connue to adopt the going concern basis of accounng included: • Assessing and challenging the inputs in the cashow forecast prepared by the Directors against actual results and contractual commitments, including performing stress tesng considering downside scenarios and assessing the impact on the Company’s liquidity posion; • Assessing assumpons used within the valuaon models to supporng documentaon per the Key Audit Maer noted below; • Reviewing the future commitments of the Company and checking they have been appropriately incorporated into the forecast; and • Reviewing the amount of headroom in the forecasts of both base case and downside scenarios (e.g. loan facility or viability of future placements). Downing Renewables & Infrastructure Trust plc Annual Report | 97 Based on the work we have performed, we have not idened any material uncertaines relang to events or condions that, individually or collecvely, may cast signicant doubt on the Company’s ability to connue as a going concern for a period of at least twelve months from when the nancial statements are authorised for issue. In relaon to the Company’s reporng on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw aenon to in relaon to the Directors’ statement in the nancial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounng. Our responsibilies and the responsibilies of the Directors with respect to going concern are described in the relevant secons of this report. Overview Key audit maers Valuaon of investments Materiality Company nancial statements as a whole £2.125 million based on 1.5% of net assets Lower tesng threshold £217,000 based on 10% of gross expenditure for items impacng on realised return. An overview of the scope of our audit Our audit was scoped by obtaining an understanding of the Company and its environment, including the Company’s system of internal control, and assessing the risks of material misstatement in the nancial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors or Investment Manager that may have represented a risk of material misstatement. Key audit maers Key audit maers are those maers that, in our professional judgement, were of most signicance in our audit of the nancial statements of the current period and include the most signicant assessed risks of material misstatement (whether or not due to fraud) that we idened, including those which had the greatest eect on: the overall audit strategy, the allocaon of resources in the audit, and direcng the eorts of the engagement team. This maer was addressed in the context of our audit of the nancial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this maer. Downing Renewables & Infrastructure Trust plc Annual Report | 98 Key audit maers How the scope of our audit addressed the key audit maer Valuaon of Investments See note 9 and accounng policy on page 114. The valuaon of unquoted investments is calculated using discounted cash ow models. This is a highly subjecve accounng esmate where there is an inherent risk of bias arising from the investment valuaons being prepared by the Investment Manager, who is remunerated based on the net asset value of the company. These esmates include judgements including future power prices, power generaon, discount rates, useful economic life of assets, tax and inaon. 100% of the underlying investment porolio is represented by unquoted equity and loan investments. Investments at fair value through prot or loss is the most signicant balance in the nancial statements and is the key driver of performance therefore we determined this to be a key audit maer. In respect of the equity investments valued using discounted cash ow models, we performed the following specic procedures: • Obtained and reviewed purchase agreements and contracts and considered whether inputs were accurately reected in the valuaon model • Used spreadsheet analysis tools to assess the integrity of the valuaon models • Agreed power generaon and power price forecasts to power purchase agreements and independent reports prepared by management’s experts . We assessed the competency, independence and objecvity of the management’s expert • Challenged the appropriateness of the selecon and applicaon of key assumpons in the model including the discount rate, inaon, asset life, energy yield and power price applied by benchmarking to available industry data and consulng with our internal valuaons experts • Reviewed the corporaon tax workings within the valuaon model and considered whether these had been modelled accurately in the context of current corporaon tax legislaon and rates • Agreed a sample of cash and other net assets to bank statements and investee company management accounts • Considered the accuracy of forecasng by comparing forecasts from acquision date to period end against actual results For loan investments we vouched the balances recorded to loan agreements and veried the terms of the loan. For each of the key assumpons in the valuaon models, we considered the appropriateness of the assumpon by benchmarking to available industry data and consulng with our internal valuaons experts and considering whether alternave reasonable assumpons could have been applied. We considered each assumpon in isolaon as well as in conjuncon with other assumpons and the valuaon as a whole. Where appropriate, we sensised the valuaons where other reasonable alternave assumpons could have been applied. We also considered the completeness and clarity of disclosures regarding the range of reasonable alternave assumpons in the nancial statements. Key observaons Based on our procedures performed we found the valuaon of the investment porolio to be acceptable. Downing Renewables & Infrastructure Trust plc Annual Report | 99 Our applicaon of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluang the eect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could inuence the economic decisions of reasonable users that are taken on the basis of the nancial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of tesng needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of idened misstatements, and the parcular circumstances of their occurrence, when evaluang their eect on the nancial statements as a whole. Based on our professional judgement, we determined materiality for the nancial statements as a whole and performance materiality as follows: 2021 Materiality £2.125 million Basis for determining materiality 1.5% net assets Raonale for the benchmark applied Net Asset Value is a key indicator of performance and as such the most relevant benchmark on which to base materiality for the users of the nancial statements. Performance materiality 70% materiality (£1.487 million) Basis for determining performance materiality Risk assessment of control environment and consideraon of potenal errors due to this being a rst year audit and the rst year in which nancial statements have been produced. Lower tesng threshold We also determined that for items impacng realised return, a misstatement of less than materiality for the nancial statements as a whole could inuence the economic decisions of users. As a result, we determined a lower tesng threshold for these items to be 10% of gross expenditure being £217,000. Reporng threshold We agreed with the Audit Commiee that we would report to them all individual audit dierences in excess of £42,000. We also agreed to report dierences below this threshold that, in our view, warranted reporng on qualitave grounds. Other informaon The Directors are responsible for the other informaon. The other informaon comprises the informaon included in the annual report other than the nancial statements and our auditor’s report thereon. Our opinion on the nancial statements does not cover the other informaon and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other informaon and, in doing so, consider whether the other informaon is materially inconsistent with the nancial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we idenfy such material inconsistencies or apparent Downing Renewables & Infrastructure Trust plc Annual Report | 100 material misstatements, we are required to determine whether this gives rise to a material misstatement in the nancial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other informaon, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement The Lisng Rules require us to review the Directors’ statement in relaon to going concern, longer-term viability and that part of the Corporate Governance Statement relang to the Company’s compliance with the provisions of the UK Corporate Governance Code specied for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the nancial statements or our knowledge obtained during the audit. Going concern and longer-term viability • The Directors’ statement with regards to the appropriateness of adopng the going concern basis of accounng and any material uncertaines idened set out on page 65; and • The Directors’ explanaon as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate set out on page 66. Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 93; • Board’s conrmaon that it has carried out a robust assessment of the emerging and principal risks set out on page 59; • The secon of the annual report that describes the review of eecveness of risk management and internal control systems set out on page 59; and • The secon describing the work of the Audit Commiee set out on page 84. Downing Renewables & Infrastructure Trust plc Annual Report | 101 Other Companies Act 2006 reporng Based on the responsibilies described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and maers as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: • the informaon given in the Strategic report and the Directors’ report for the nancial period for which the nancial statements are prepared is consistent with the nancial statements; and • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not idened material misstatements in the strategic report or the Directors’ report. Directors’ remuneraon In our opinion, the part of the Directors’ remuneraon report to be audited has been properly prepared in accordance with the Companies Act 2006. Maers on which we are required to report by excepon We have nothing to report in respect of the following maers in relaon to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounng records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • the nancial statements and the part of the Directors’ remuneraon report to be audited are not in agreement with the accounng records and returns; or • certain disclosures of Directors’ remuneraon specied by law are not made; or • we have not received all the informaon and explanaons we require for our audit. Responsibilies of Directors As explained more fully in the statement of Directors’ responsibilies, the Directors are responsible for the preparaon of the nancial statements and for being sased that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparaon of nancial statements that are free from material misstatement, whether due to fraud or error. In preparing the nancial statements, the Directors are responsible for assessing the Company’s ability to connue as a going concern, disclosing, as applicable, maers related to going concern and using the going concern basis of accounng unless the Directors either intend to liquidate the Company or to cease operaons, or have no realisc alternave but to do so. Auditor’s responsibilies for the audit of the nancial statements Our objecves are to obtain reasonable assurance about whether the nancial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of these nancial statements. Downing Renewables & Infrastructure Trust plc Annual Report | 102 Extent to which the audit was capable of detecng irregularies, including fraud Irregularies, including fraud, are instances of non- compliance with laws and regulaons. We design procedures in line with our responsibilies, outlined above, to detect material misstatements in respect of irregularies, including fraud. The extent to which our procedures are capable of detecng irregularies, including fraud is detailed below: We gained an understanding of the legal and regulatory framework applicable to the Company and the industry in which it operates, and considered the risk of acts by the company which were contrary to applicable laws and regulaons, including fraud. We considered the signicant laws and regulaons to be compliance with Companies Act 2006, the FCA lisng and DTR rules, the principles of the UK Corporate Governance Code, requirements of s.1158 of the Corporaon Tax Act, and applicable accounng standards. Our procedures included: • agreement of the nancial statement disclosures to underlying supporng documentaon; • enquiries of the board and relevant Service Organisaons regarding known or suspected instances of non-compliance with laws and regulaon and fraud. We corroborated our enquiries through our review of board meeng minutes for the year and other evidence gathered during the course of the audit; and • obtaining an understanding of the control environment in monitoring compliance with laws and regulaons. We assessed the suscepbility of the nancial statements to material misstatement, including fraud and considered the fraud risk areas to be the valuaon of investments and management override of controls. Our procedures included: • the procedures set out in the Key Audit Maers secon above; and • tesng a sample of journal entries to supporng documentaon and evaluang whether there was evidence of bias by the Directors that represented a risk of material misstatement due to fraud. Our audit procedures were designed to respond to risks of material misstatement in the nancial statements, recognising that the risk of not detecng a material misstatement due to fraud is higher than the risk of not detecng one resulng from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentaons or through collusion. There are inherent limitaons in the audit procedures performed and the further removed non-compliance with laws and regulaons is from the events and transacons reected in the nancial statements, the less likely we are to become aware of it. A further descripon of our responsibilies is available on the Financial Reporng Council’s website at: www.frc.org. uk/auditorsresponsibilies. This descripon forms part of our auditor’s report. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those maers we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permied by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed Peter Smith (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, United Kingdom 4 March 2022 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). Downing Renewables & Infrastructure Trust plc Annual Report | 103Downing Renewables & Infrastructure Trust plc Annual Report | 103 Downing Renewables & Infrastructure Trust plc Annual Report | 104 Statement of Comprehensive Income For the Period from 8 October 2020 to 31 December 2021 Notes Revenue 31 December 2021 £’000s Capital 31 December 2021 £’000s Total 31 December 2021 £’000s Income Return on investment 5 4,978 7,327 12,305 Total income 4,978 7,327 12,305 Expenses Investment management fees 4 (1,284) – (1,284) Directors’ fees 18 & 22 (146) – (146) Other expenses 6 (745) – (745) Total expenses (2,175) – (2,175) Prot before taxaon 2,803 7,327 10,130 Taxaon 7 – – – Prot aer taxaon 2,803 7,327 10,130 Prot and total comprehensive income aributable to: Equity holders of the Company 2,803 7, 327 10,130 Earnings per share – Basic & diluted (pence) 8 2.6 6.8 9.4 The total column of this statement is the Statement of Comprehensive Income of the Company prepared in accordance withInternaonalFinancialReporngStandards(IFRS)asadopted.Thesupplementaryrevenuereturnandcapital columnshavebeenpreparedinaccordancewiththeAssociaonofInvestmentCompaniesStatementofRecommended Pracce(AICSORP). Downing Renewables & Infrastructure Trust plc Annual Report | 105 Statement of Financial Position As at 31 December 2021 Notes 31 December 2021 £’000s Non-current assets Investmentsatfairvaluethroughprotandloss 9 131,508 131,508 Current assets Trade and other receivables 10 280 Cash and cash equivalents 15 11,254 11,534 Total assets 143,042 Current liabilies Trade and other payables 11 (1,201) (1,201) Total liabilies (1,201) Net assets 141,841 Capital and reserves Called up share capital 12 1,370 Share Premium 13 14,506 Special distributable reserve 13 118,435 Revenue reserve 203 Capital reserve 7,327 Shareholders’ funds 141,841 Net asset value per ordinary share (pence) 14 103.5 TheauditednancialstatementsofDowning Renewables and Infrastructure Trust PLC were approved by the Board of Directors and authorised for issue on 4 March 2022 and are signed on behalf of the Board by: Hugh W M Lile Chair Companyregistraonnumber12938740 Downing Renewables & Infrastructure Trust plc Annual Report | 106 Statement of Changes in Equity For the Period from 8 October 2020 to 31 December 2021 Notes Share Capital £’000s Share Premium £’000s Capital Reserve £’000s Revenue Reserve £’000s Special Distributable Reserve £’000s Total £’000s Balance at the start of the period – – – – – – Gross proceeds from share issue 12 1,370 136,001 – – – 137,371 Bonus shares 12 – (52) – – – (52) Share issue costs 12 – (220) – – (2,450) (2,670) Dividends 20 – – – (2,600) (338) (2,938) Transfer to special distributable reserve 13 – (121,223) – – 121,223 – Total comprehensive income for the period – – 7,327 2,803 – 10,130 Net assets aributable to shareholders at 31 December 2021 1,370 14,506 7,327 203 118,435 141,841 TheCompany’sdistributablereservesconsistoftheSpecialdistributablereserve,Capitalreserveaributableto unrealisedgainsandRevenuereserve.Therehavebeennorealisedgainsorlossesatthereporngdate. Downing Renewables & Infrastructure Trust plc Annual Report | 107 Statement of Cash Flows For the Period from 8 October 2020 to 31 December 2021 Notes Incorporaon to 31 December 2021 £’000s Cash ows from operang acvies Protbeforetaxaon 10,130 Adjusted for: Interest income 5 (4,978) Unrealised gains on investments at fair value 5 (7, 327) Increase in receivables (280) Increase in payables 1,201 Net cash oulows from operang acvies (1,254) Cash ows from invesng acvies Purchase of investments 9 (121,749) Loan Interest Received 9 2,546 Net cash oulows from invesng acvies (119,203) Cash ows from nancing acvies Gross proceeds of share issue 12 137,371 Bonus shares 12 (52) Dividends 20 (2,938) Share issue costs 12 (2,670) Net cash ows from nancing acvies 131,711 Increase in cash and cash equivalents 11,254 Cash and cash equivalents at the start of the period – Cash and cash equivalents at the end of the period 15 11,254 Downing Renewables & Infrastructure Trust plc Annual Report | 108 Notes to the Financial Statements 1. General Informaon The Company is registered in England and Wales under number 12938740 pursuant to the Companies Act 2006 and its registered oce Beaufort House, 51 New North Road, Exeter, England, EX4 4EP. The Company was incorporated on 8 October 2020 and is a Public Limited Company and the ulmate controlling party of the group. The Company’s ordinary shares were rst admied to the premium segment of the Financial Conduct Authority’s Ocial List and to trading on the Main Market of the London Stock Exchange under the cker DORE on 10 December 2020. The audited nancial statements of the Company (the “nancial statements”) are for the period from incorporaon on 8 October 2020 to 31 December 2021 and comprise only the results of the Company, as all of its subsidiaries are measured at fair value in line with IFRS 10 as disclosed in Note 2. The Company’s objecve is to generate an aracve total return for investors comprising stable dividend income and capital preservaon, with the opportunity for capital growth through the acquiring and realising value from a diverse porolio of renewable energy infrastructure projects. The Company currently makes its investments through its principal holding company and single subsidiary, DORE Hold Co Limited (“Hold Co”), and intermediate holding companies which are directly owned by the Hold Co. The Company controls the Investment Policy of each of the Hold Co and its intermediate holding companies in order to ensure that each will act in a manner consistent with the Investment Policy of the Company. The Company has appointed Downing LLP as its Investment Manager (the “Investment Manager”) pursuant to the Investment Management Agreement dated 12 November 2020. The Investment Manager is registered in England and Wales under number OC341575 pursuant to the Companies Act 2006. The Investment Manager is regulated by the FCA, number 545025. 2. Basis of preparaon These nancial statements have been prepared in accordance with internaonal accounng standards in conformity with the requirements of the Companies Act 2006 and the applicable legal requirements of the Companies Act 2006. In addion to complying with internaonal accounng standards in conformity with the requirements of the Companies Act 2006, the nancial statements also comply with internaonal nancial reporng standards adopted pursuant to Regulaon (EC) No 1606/2002 as it applies in the European Union. The nancial statements have also been prepared as far as is relevant and applicable to the Company in accordance with the Statement of Recommended Pracce: Financial Statements of Investment Trust Companies and Venture Capital Trusts (“SORP”) issued in October For the Period from 8 October 2020 to 31 December 2021 Downing Renewables & Infrastructure Trust plc Annual Report | 109 2019 by the Associaon of Investment Companies (“AIC”). The nancial statements are prepared on the historical cost basis, except for the revaluaon of certain nancial instruments at fair value through prot or loss. The principal accounng policies adopted are set out below. These policies are consistently applied. The nancial statements are presented in Sterling, which is the Company’s funconal currency and are rounded to the nearest thousand, unless otherwise stated. Esmates and underlying assumpons are reviewed regularly on an on-going basis. Revisions to accounng esmates are recognised in the period in which the esmates are revised and in any future period aected. The signicant esmates, judgement or assumpons for the period are set out on page 111. There are no comparaves as this is the Company’s rst accounng period. Basis of Consolidaon The sole objecve of the Company and through its subsidiary DORE Hold Co Limited is to own Renewable Energy Infrastructure Projects, via individual corporate enes. Hold Co typically will issue equity and loans to nance its investments. The Directors have concluded that in accordance with IFRS 10, the Company meets the denion of an investment enty having evaluated the criteria that needs to be met (see below). Under IFRS 10, investment enes are required to hold subsidiaries at fair value through prot or loss rather than consolidate them on a line-by-line basis, meaning Hold Co’s cash, debt and working capital balances are included in the fair value of the investment rather than in the Company’s assets and liabilies. Hold Co has one investor which is the Company. However, in substance, Hold Co is invesng the funds of the investors of the Company on its behalf and is eecvely performing investment management services on behalf of many unrelated beneciary investors. Characteriscs of an investment enty There are three key condions to be met by the Company for it to meet the denion of an investment enty. For each reporng period, the Directors will connue to assess whether the Company connues to meet these condions: • It obtains funds from one or more investors for the purpose of providing these investors with professional investment management services; • It commits to its investors that its business purpose is to invest its funds solely for the returns (including having an exit strategy for investments) from capital appreciaon, investment income or both; and • It measures and evaluates the performance of substanally all its investments on a fair value basis. Downing Renewables & Infrastructure Trust plc Annual Report | 110 In sasfying the second criterion, the noon of an investment meframe is crical. An investment enty should not hold its investments indenitely but should have an exit strategy for their realisaon. The Company intends to hold its renewable energy infrastructure assets for the remainder of their useful life to preserve the capital value of the porolio. However, as the renewable energy infrastructure assets are expected to have no residual value aer their useful lives, the Directors consider that this demonstrates a clear exit strategy from these investments. Subsidiaries are therefore measured at fair value through prot or loss, in accordance with IFRS 13 “Fair Value Measurement”, IFRS 10 “Consolidated Financial Statements” and IFRS 9 “Financial Instruments”. The Directors believe the treatment outlined above provides the most relevant informaon to investors. Going concern The Directors have adopted the going concern basis in preparing the Annual Report. The following is a summary of the Director’s assessment of going concern status of the Company. In reaching this conclusion, the Directors have considered the liquidity of the Company’s porolio of investments as well as its cash posion, income and expense ows. As at 31 December 2021, the Company had net assets of £141.8 million including cash balances of £11 million which are sucient to meet current obligaons as they fall due. Since the period end £39.9 million has been spent on new acquisions. The Group, through one of its unconsolidated subsidiaries, ulised EUR 27.4 million of its facility with SEB to help fund the addional hydropower acquisions. Through its main subsidiary, DORE Hold Co Limited, the Company has access to an undrawn RCF of £25 million which is available for either, new investments or investment in exisng projects and working capital. The RCF is currently undrawn. In the period since incorporaon, COVID-19 has connued to have a negave impact on the global economy. As the United Kingdom and the developed world connue to roll out their vaccinaon programmes, the outlook for both the UK and global economy is beginning to look more posive, although it should be noted, with the potenal for addional variants of the virus to become more prevalent, COVID-19 connues to raise potenal uncertaines and addional risks for the Company. The Directors and the Investment Manager connue to acvely monitor this and its potenal eect on the Company and its investments. In parcular, they have considered the following specic key potenal impacts: • Unavailability of key personnel at the Investment Manager or Administrator; and • Increased volality in the fair value of investments. Downing Renewables & Infrastructure Trust plc Annual Report | 111 In considering the above key potenal impacts of COVID-19 on the Company’s operaons, the Directors have assessed these with reference to the migaon measures in place. The key personnel at the Investment Manager had successfully implemented business connuity plans prior to incorporaon to ensure business disrupon was minimised, including remote working, and all sta are connuing to assume their day-to-day responsibilies. SPV revenues are derived from the sale of electricity, although approximately 89 per cent of the porolio’s revenue in 2022 is not exposed to oang power prices. Revenue is received through power purchase agreements in place with large and reputable providers of electricity to the market and also through government subsidies. In the period since acquision and up to the date of this report, there has been no signicant impact on revenue and cash ows of the SPVs. The SPVs have contractual operang and maintenance agreements in place with large and reputable providers. Therefore, the Directors and the Investment Manager do not ancipate a threat to the Group’s revenue. Based on the assessment outlined above, including the various risk migaon measures in place, the Directors do not consider that the eects of COVID-19 have created a material uncertainty over the assessment of the Company as a going concern. The Directors have reviewed Group forecasts and projecons which cover a period of at least 12 months from the date of approval of this report, considering foreseeable changes in investment and trading performance, which show that the Group has sucient nancial resources to connue in operaon for at least the next 12 months from the date of approval of this report. On the basis of this review, and aer making due enquiries, the Directors have a reasonable expectaon that the Company has adequate resources to connue in operaon and accordingly, they connue to adopt the going concern basis in preparing the nancial statements. Segmental reporng The Chief Operang Decision Maker (the “CODM”) being the Board of Directors, is of the opinion that the Company is engaged in a single segment of business, being investment in renewable energy infrastructure. The Company has no single major customer. The internal nancial informaon to be used by the CODM on a quarterly basis to allocate resources, assess performance and manage the Company will present the business as a single segment comprising the porolio of investments in renewable energy infrastructure assets. Crical accounng judgements, esmates and assumpons In the applicaon of the Company’s accounng policies, which are described in Note 3, the Directors are required to make judgements, esmates and assumpons about the fair value of assets and liabilies that aect reported Downing Renewables & Infrastructure Trust plc Annual Report | 112 amounts. It is possible, that actual results may dier from these esmates. The preparaon of the nancial statements requires management to make judgements, esmates and assumpons that aect the applicaon of the accounng policies and the reported amount of assets, liabilies, income and expenses. Esmates, by their nature, are based on judgement and available informaon, hence actual results may dier from these judgements, esmates and assumpons. The key assumpons that have a signicant impact on the carrying value of investments that are valued by reference to the discounted value of future cashows are the useful life of the assets, the discount rates, the rate of inaon, the price at which the power and associated benets can be sold and the amount of electricity the assets are expected to produce. The sensivity analysis of these key assumpons is outlined in note 9 to the nancial statements, on page 120. Useful lives are based on the Investment Manager’s esmates of the period over which the assets will generate revenue which are periodically reviewed for connued appropriateness. Where land is leased from an external landlord, the operaonal life assumed for the purposes of the asset valuaons is valued at the earlier of planning or lease expiry. Where a project has an indenite life, the land it is located on is owned and there are no constraints regarding planning, asset valuaons are based on a perpetual life including long term capital expenditure assumpons. This is the basis for the valuaon of the hydropower assets. The actual useful life may be a shorter or longer period depending on the actual operang condions experienced by the asset. The discount rates are subjecve and therefore it is feasible that a reasonable alternave assumpon may be used resulng in a dierent value. The discount rates applied to the cashows are reviewed regularly by the Investment Manager to ensure they are at the appropriate level. The Investment Manager will take into consideraon market transacons, where of similar nature, when considering changes to the discount rates used. The revenues and expenditure of the investee companies are frequently partly or wholly subject to indexaon and an assumpon is made as to near term and long-term rates. The price at which the output from the generang assets is sold is a factor of both wholesale electricity prices and the revenue received from the Government support regimes. Future power prices are esmated using external third-party forecasts which take the form of specialist consultancy reports, which reect various factors including gas prices, carbon prices and renewables deployment, each of which reect the UK and global response to climate change. Downing Renewables & Infrastructure Trust plc Annual Report | 113 The Company’s investments in unquoted investments are valued by reference to valuaon techniques approved the Directors and in accordance with the Internaonal Private Equity and Venture Capital (“IPEV”) Guidelines. As noted above, the Board have concluded that the Company meets the denion of an investment enty as dened in IFRS 10. This conclusion involved a degree of judgement and assessment as to whether the Company meets the criteria outlined in the accounng standards. New, revised and amended standards applicable to future reporng periods There were no new standards or interpretaons eecve for the rst me for periods beginning on or aer incorporaon that had a signicant eect on the Company’s nancial statements. Furthermore, none of the amendments to standards that are eecve from that date had a signicant eect on the nancial statements. New and revised standards not applied At the date of authorisaon of these nancial statements, the following amendments had been published and will be mandatory for future accounng periods. Eecve for accounng periods beginning on or aer 1 January 2022: • a number of narrow-scope amendments to IFRS 3 “Business combinaons”, IAS 16 “Property, plant and equipment”, IAS 37 “Provisions, conngent liabilies and conngent assets” and annual improvements on IFRS 1 “First-me Adopon of IFRS”, IFRS 9 “Financial instruments”, IAS 41 “Agriculture” and the Illustrave Examples accompanying IFRS 16 “Leases”. Eecve for accounng periods beginning on aer 1 January 2023: • Narrow-scope amendments to IAS 1 “Presentaon of Financial Statements”, Pracce statement 2 and IAS 8 “Accounng Policies, Changes in Accounng Esmates and Errors”. • Amendments to IAS 12, ”Income Taxes” – deferred tax related to assets and liabilies arising from a single transacon. • Amendments to IFRS 17, “Insurance contracts” – this standard replaces IFRS 4, which currently permits a wide variety of pracces in accounng for insurance contracts. Eecve for accounng periods beginning on or aer 1 January 2024: • Amendments to IAS 1 on classicaon of liabilies clarify that liabilies are classied as either current or non- current, depending on the rights that exist at the end of the reporng period. The impact of these standards is not expected to be material to the reported results and nancial posion of the Company. Downing Renewables & Infrastructure Trust plc Annual Report | 114 3. Signicant Accounng Policies Financial Instruments Financial assets and nancial liabilies are recognised on the Company’s Statement of Financial Posion when the Company becomes a party to the contractual provisions of the instrument. Financial assets are to be de-recognised when the contractual rights to the cash ows from the instrument expire or the asset is transferred, and the transfer qualies for de-recognion in accordance with IFRS 9 Financial Instruments and IFRS 13 Fair Value Measurement. Financial assets The Company classies its nancial assets as either investments at fair value through prot or loss or nancial assets at amorsed cost. The classicaon depends on the purpose for which the nancial assets are acquired. Management determines the classicaon of its nancial assets at inial recognion. Investments at fair value through prot or loss (“FVTPL”) The fair value of investments in renewable energy infrastructure projects is calculated by discounng at an appropriate discount rate future cash ows expected to be received by the Company’s intermediate holdings, from investments in both equity (dividends and equity redempons), shareholder and inter-company loans (interest and repayments). Investments are designated upon inial recognion as held at fair value through prot or loss. Gains or losses resulng from the movement in fair value are recognised in the Statement of Comprehensive Income at each valuaon point. As shareholder loan investments form part of a managed porolio of assets whose performance is evaluated on a fair value basis, loan investments are designated at fair value in line with equity investments. The Company’s loan and equity investments in Hold Co are held at fair value through prot or loss. Gains or losses resulng from the movement in fair value are recognised in the Company’s Statement of Comprehensive Income at each valuaon point. Financial assets are recognised/ derecognised at the date of the purchase/ disposal. Investments are inially recognised at cost, being the fair value of consideraon given. Transacon costs are recognised in the Statement of Comprehensive Income as incurred. Fair value is dened as the amount for which an asset could be exchanged between knowledgeable willing pares in an arm’s length transacon. Fair value is calculated on an unlevered, discounted cashow basis in accordance with IFRS 13 and IFRS 9. Financial assets at amorsed cost Loans and other receivables are measured at amorsed cost using the eecve interest method, less any impairment. They are included in current assets, except where maturies are greater Downing Renewables & Infrastructure Trust plc Annual Report | 115 than 12 months aer the reporng date, in which case they are to be classied as non-current assets. The Company’s nancial assets held at amorsed cost comprise “other receivables” and “cash and cash equivalents” in the statement of nancial posion. Impairment Impairment provisions for loans and receivables are recognised based on a forward-looking expected credit loss model. All nancial assets assessed under this model are immaterial to the nancial statements. Financial liabilies Financial liabilies are classied as other nancial liabilies, comprising: • other non-derivave nancial instruments, including trade and other payables, which are to be measured at amorsed cost using the eecve interest method. Financial liabilies and equity Debt and equity instruments are classied as either nancial liabilies or as equity in accordance with the substance of the contractual arrangement. Equity instruments The Company’s Ordinary Shares are classied as equity and are not redeemable. Costs associated or directly aributable to the issue of new equity shares are recognised as a deducon in equity and are charged either from the share premium account or the special distributable reserve, created on court cancellaon of share premium account. Taxaon The Company is approved as an Investment Trust Company (“ITC”) under secons 1158 and 1159 of the Corporaon Taxes Act 2010 and part 2 Chapter 1 Statutory Instrument 2011/2999. The approval is subject to the Company connuing to meet the eligibility condions of the Corporaon Tax Act 2010. The Company intends to ensure that it complies with the ITC regulaons on an ongoing basis and regularly monitors the condions required to maintain ITC status. Under the current system of taxaon in the UK, the Company is liable to taxaon on its operaons in the UK. Current tax is the expected tax payable on the taxable income for the period, using tax rates that have been enacted or substanvely enacted at the date of the Statement of Financial Posion. Dividends Dividends to the Company’s shareholders are recognised when they become legally payable. In the case of interim dividends, this is when they are paid. In the case of nal dividends, this is when they are approved by the shareholders at the Annual General Meeng. Income Income includes investment income from nancial assets at FVTPL and nance income. Downing Renewables & Infrastructure Trust plc Annual Report | 116 Investment income from nancial assets at FVTPL is recognised in the Statement of Comprehensive Income within income when the Company’s right to receive payments is established. Finance income comprises interest earned on intercompany loans and is recognised on an accruals basis. Expenses Expenses are accounted for on an accruals basis. Share issue expenses directly aributable to the lisng of shares are charged through prot and loss with incremental costs associated with raising capital charged through the Special Distributable Reserve or Share Premium Account. The Company’s investment management fee, administraon fees and all other expenses are charged through the Statement of Comprehensive Income. In respect of the analysis between revenue and capital these items are presented and charged 100% as revenue items. Cash and cash equivalents Cash and cash equivalents comprise cash balances, deposits held on call with banks and other short-term highly liquid deposits with original maturies of three months or less. Deposits to be held with original maturies of greater than three months are included in other nancial assets. There are no expected credit losses as the bank instuons will have high credit rangs assigned by internaonal credit rang agencies. Seasonal and cyclical variaons The Company’s results do not vary signicantly during reporng periods. 4. Investment management fees Under the terms of the Investment Management Agreement, the Investment Manager is entled to a management fee from the Company, which is calculated quarterly in arrears at 0.95% of NAV per annum up to £500 million and 0.85% per annum of NAV in excess of £500 million. The Company paid £353,135 of management fees during the period, investment management fees of £933,414 were accrued at the period end. No performance fee is payable to the Investment Manager under the Investment Management Agreement and there are no provisions that would entle the Investment Manager to a performance fee in respect of future periods. Downing Renewables & Infrastructure Trust plc Annual Report | 117 5. Return on investment 31 December 2021 £’000s Unrealised movement in fair value of investments (Note 9) 7, 327 Interest due on loans to investment (Note 9) 4,978 12,305 6. Other expenses 31 December 2021 £’000s Alternave investment fund manager fee 110 Fees payable to the Company’s auditor for the audit of the Company’s annual accounts 96 Fees payable to the Company’s auditor for other services 89 Company secretarial fee 62 Legal fees 87 Depositary fee 48 Hedging advisory 39 Markeng fee 53 Broker fee 53 Retainer fee 34 Other fees 74 745 Downing Renewables & Infrastructure Trust plc Annual Report | 118 Total fees payable to BDO for non-audit services during the year were £88,500 for the audit of the Company’s inial accounts and interim review. These services were pre- approved by the Audit and Risk Commiee and are not subject to the fee cap. During the Company’s IPO professional fees paid to BDO relang to reporng accountant services and tax structuring advice of £101,000 were charged. Professional fees of £27,000 were also charged for the review of the Company’s nancial model. These IPO costs were allocated against the Company’s capital reserves. 7. Taxaon Taxable income during the period was oset by expenses and the tax charge for the period ended 31 December 2021 is £Nil. As described above, the Company is recognised as an ITC for accounng periods and is taxed at the current main rate of 19%. To the extent that there is insucient group tax relief available to eliminate taxable prots, the Company may make interest distribuons to reduce taxable prots to nil. (a) Analysis of charge in the period Revenue £’000 Capital £’000 Total £’000 Analysis of tax charge / (credit) in the period: Current tax UK corporaon tax on prots of the period – – – Adjustments in respect of previous periods – – – Deferred tax: Originaon & reversal of ming dierences – – – Adjustments in respect of previous periods – – – Tax charge / (credit) on prot on ordinary acvies – – – Downing Renewables & Infrastructure Trust plc Annual Report | 119 (b) Factors aecng total tax charge for the period The eecve UK corporaon tax rate applicable to the Company for the period is 19%. The tax charge diers from the charge resulng from applying the standard rate of UK corporaon tax for an investment trust company. The dierences are explained below. Revenue £’000 Capital £’000 Total £’000 Prot / (Loss) on ordinary acvies before tax 2,803 7, 327 10,130 Prot on ordinary acvies mulplied by standard rate of corporaon tax in the UK of 19% 533 1,392 1,925 Eect of: Capital prots not taxable – (1,392) (1,392) Non-taxable income – – – Expenses non deducble 10 – 10 Interest distribuons (543) – (543) Timing dierences – – – Group relief – – – Excess management expenses – – – Total charge / (credit) for the period – – – HM Revenue & Customs (“HMRC”) has granted approval to the Company’s status as an investment trust, and it is the Company’s intenon to connue meeng the condions required to obtain approval in the foreseeable future. Investment companies which have been approved by HMRC under secon 1158 of the Corporaon Tax Act 2010, as amended are exempt from tax on capital gains. The March 2021 Budget announced a further increase to the main rate of corporaon tax to 25% from 1 April 2023. This rate has been substanvely enacted at the balance sheet date. There is no unrecognised deferred tax asset or liability at 31 December 2021. Downing Renewables & Infrastructure Trust plc Annual Report | 120 8. Earnings per share Revenue £’000s Capital £’000s Total £’000s Revenue and capital prot aributable to equity holders of the Company 2,803 7,327 10,130 Weighted average number of ordinary shares in issue 107, 86 4 107,86 4 107, 86 4 Basic and diluted earnings per share (pence) 2.6 6.8 9.4 Basic and diluted earnings per share are the same as there are no arrangements which could have a diluve eect on the Company’s ordinary shares. 9. Investments at fair value through prot and loss Total £’000s Fair value at start of the period – Loan advanced to DORE Hold Co Limited 113,749 Shareholding in DORE Hold Co limited 8,000 Unrealised gain on investments at FVTPL 7,327 Loan Interest 2,432 Fair value at end of the period 131,508 There is a loan agreement between the Company and DORE Hold Co Limited for £120,000,000. At the reporng date £113,748,641 had been advanced. The rate of interest on the loan is a rate agreed between DORE Hold Co Limited and the Company and has been set at 6% per annum. Interest accrued at the period end and outstanding at the reporng date amounted to £2,432,398. Interest is repayable at the repayment date of 31 December 2030 unless otherwise agreed between the pares to repay earlier. The company received interest payments of £2,546,000 during the period. Included in the fair value are cash balances at DORE Hold Co of £21.8 million. Downing Renewables & Infrastructure Trust plc Annual Report | 121 The Company owns nine shares in DORE Hold Co Limited that were alloed for a consideraon of £8,000,000. Fair value measurements IFRS 13 “Fair Value Measurement” requires disclosure of fair value measurement by level. The level of fair value hierarchy within the nancial assets or nancial liabilies ranges from level 1 to level 3 and is determined on the basis of the lowest level input that is signicant to the fair value measurement. The fair value of the Company’s investments is ulmately determined by the underlying net present values of the SPV (“Special Purpose Vehicle”) investments. Due to their nature, they are always expected to be classied as level 3 as the investments are not traded and contain unobservable inputs. The fair value hierarchy consists of the following three levels: • Level 1 – Quoted prices (unadjusted) in acve markets for idencal assets or liabilies. • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). • Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). Downing Renewables & Infrastructure Trust plc Annual Report | 122 The following table analyses the Company’s assets at 31 December 2021: Level 1 £’000s Level 2 £’000s Level 3 £’000s Total £’000s Investment porolio summary Unlisted investments at fair value through prot and loss – – 131,508 131,508 Total – – 131,508 131,508 The determinaon of what constutes ‘observable’ requires signicant judgement by the Company. Observable data is considered to be market data that is readily available, regularly distributed or updated, reliable and veriable, not proprietary, and provided by independent sources that are acvely involved in the relevant market. The only nancial instruments held at fair value are the instruments held by the Group in the SPVs, which are fair valued at each reporng date. The investments have been classied within level 3 as the investments are not traded and contain unobservable inputs. The Company’s investments are all considered to be level 3 assets. As the fair value of the Company’s equity and loan investments in Hold Co is ulmately determined by the underlying fair values of the SPV investments, the Company’s sensivity analysis of reasonably possible alternave input assumpons is the same as for the Group. There have been no transfers between levels during the period. Valuaons are derived using a discounted cashow methodology in line with IPEV Valuaon Guidelines and take into account, inter alia, the following: i. due diligence ndings where relevant; ii. the terms of any material contracts including PPAs; iii. asset performance; iv. power price forecasts from leading market consultants; and v. the economic, taxaon or regulatory environment. Downing Renewables & Infrastructure Trust plc Annual Report | 123 The DCF valuaon of the Group’s investments represents the largest component of GAV and the key sensivies are considered to be the discount rate used in the DCF valuaon and assumpons in relaon to inaon, energy yield, foreign exchange and power price. The shareholder loan and equity investments are valued as a single class of nancial asset at fair value in accordance with IFRS 13 Fair Value Measurement. Sensivity Sensivity analysis is produced to show the impact of changes in key assumpons adopted to arrive at the valuaon. For each of the sensivies, it is assumed that potenal changes occur independently of each other with no eect on any other base case assumpon, and that the number of investments in the porolio remains stac throughout the modelled life. Accordingly, the NAV per share impacts shown below assume the issue of further shares to fund these commitments. Informaon on climate related sensivies can be found on pages 23 and 24. The analysis below shows the sensivity of the porolio value (and its impact on NAV) to changes in key assumpons as follows: Discount rate The weighted average valuaon discount rate applied to calculate the porolio valuaon is 7.3%. An increase or decrease in this rate by 0.5% points has the following eect on valuaon. Discount rate NAV per share impact -0.5% change £’000s Total porolio Value £’000s +0.5% change £’000s NAV per share impact Directors’ valuaon – Dec 2021 4.05 5,547 131,508 (5,072) (3.70) Downing Renewables & Infrastructure Trust plc Annual Report | 124 Energy yield The table below shows the sensivity of the porolio valuaon to a sustained decrease or increase of energy generaon by minus or plus 5% on the valuaon, with all other variables held constant. The fair value of the solar investments is based on a “P50” level of electricity generaon for the renewable energy assets, being the expected level of generaon over the long term. For hydropower assets, the expected annual average producon is applied to the valuaon, similar to the P50 assumpon applied to solar and wind assets. A change in the forecast energy yield assumpons by plus or minus 5% has the following eect. Energy Yield NAV per share impact -5% change £’000s Total porolio Value £’000s +5% change £’000s NAV per share impact Directors’ valuaon – Dec 2021 (6.36) (8,718) 131,508 8,750 6.39 Power prices The sensivity considers a at 10% movement in power prices for all years, i.e. the eect of adjusng the forecast electricity price assumpons in each of the jurisdicons applicable to the porolio down by 10% and up by 10% from the base case assumpons for each year throughout the operang life of the porolio. A change in the forecast electricity price assumpons by plus or minus 10% has the following eect. Power Prices NAV per share impact -10% change £’000s Total porolio Value £’000s +10% change £’000s NAV per share impact Directors’ valuaon – Dec 2021 (5.89) (8,070) 131,508 8,079 5.90 Downing Renewables & Infrastructure Trust plc Annual Report | 125 Inaon The projects’ income streams are principally a mix of subsidies, which are amended each year with inaon, and power prices, which the sensivity assumes will move with inaon. The projects’ operang expenses typically move with inaon, but debt payments are xed. This results in the porolio returns and valuaon being posively correlated to inaon. The weighted average long-term inaon assumpon across the porolio is 2.4%. The sensivity illustrates the eect of a 0.5% decrease and a 0.5% increase from the assumed annual inaon rates in the nancial model for each year throughout the operang life of the porolio. Inaon NAV per share impact -0.5% change £’000s Total porolio Value £’000s +0.5% change £’000s NAV per share impact Directors’ valuaon – Dec 2021 (2.12) (2,899) 131,508 3,108 2.27 Foreign exchange The Company, where appropriate, seeks to manage its exposure to foreign exchange movements, the objecve being, ensuring that the Sterling value of known future investment commitments is xed. The porolio valuaon assumes foreign exchange rates based on the relevant foreign exchange rates against GBP at the reporng date. A change in the foreign exchange rate by plus or minus 10% (Euro against Swedish Krona, has the following eect on the NAV, with all other variables held constant. The eect is shown aer the eect of current level of hedging which reduces the impact of foreign exchange movements on the Company’s NAV. Foreign Exchange NAV per share impact -10% change £’000s Total porolio Value £’000s +10% change £’000s NAV per share impact Directors’ valuaon – Dec 2021 (1.55) (2,130) 131,508 1,728 1.26 Downing Renewables & Infrastructure Trust plc Annual Report | 126 10. Trade and other receivables 31 December 2021 £’000s Prepayments 14 VAT 266 280 11. Trade and other Payables 31 December 2021 £’000s Accounts Payable 51 Accruals 1,150 1,201 Included in the accruals amount at the period end, £933,042 relates to the management fee charged by Downing LLP during the period. Downing Renewables & Infrastructure Trust plc Annual Report | 127 12. Called up share capital Alloed, issued and fully paid: Number of Shares Opening Balance at 8 October 2020 – Alloed upon Incorporaon Ordinary Shares of 1p each 1.00 Management Shares 50,000 Alloed/redeemed following admission to LSE Ordinary Shares issued – IPO 122,499,999 Management Shares redeemed (50,000) Ordinary Shares issued – 19 October 2021 14,508,487 Closing Balance of Ordinary Shares at 31 December 2021 137,008,487 The inial placing of 122,500,000 ordinary shares took place on 10 December 2020, raising gross proceeds of £122,500,000. Each ordinary share has equal rights to dividends and has equal rights to parcipate in a distribuon arising from a winding up of the Company. Following the Court approval on 20 April 2021, the share premium cancellaon was eecve. Bonus shares with a consideraon of £52,123 were issued and allocated to the Share Premium account. The share premium account of £121,223,000 at 20 April 2021 was transferred to a special distributable reserve account. The issue costs of £2,450,000 relang to the inial lisngs were oset against the special distributable reserve account. The Company issued 14,508,487 addional ordinary shares on 19 October 2021 raising gross proceeds of £14,871,199. At 31 December 2021 the special distributable reserve account was £118,435,271. Downing Renewables & Infrastructure Trust plc Annual Report | 128 13. Special distributable reserve As indicated in the Company’s Prospectus dated 12 November 2020, following admission of the Company’s Ordinary Shares to trading on the London Stock Exchange, the Directors applied to the Court and obtained a judgement on 20 April 2021 to cancel the amount standing to the credit of the share premium account of the Company. As stated by the Instute of Chartered Accountants in England and Wales (“ICAEW”) and the Instute of Chartered Accountants in Scotland (“ICAS”) in the technical release TECH 02/17BL, The Companies (Reducon of Share Capital) Order 2008 SI 2008/1915 (“the Order”) species the cases in which a reserve arising from a reducon in a company’s capital (i.e., share capital, share premium account, capital redempon reserve or redenominaon reserve) is to be treated as a realised prot as a maer of law. The Order also disapplies the general prohibion in secon 654 on the distribuon of a reserve arising from a reducon of capital. The Order provides that if a limited company having a share capital reduces its capital and the reducon is conrmed by order of court, the reserve arising from the reducon is treated as a realised prot unless the court orders otherwise. The amount of the share premium account cancelled and credited to the Company’s special reserve is £121.2 million which can be ulised to fund distribuons by way of dividends to the Company’s shareholders. The share premium created on the issue of addional ordinary shares on 19 October 2021 has yet to be cancelled. At the reporng date, the amount standing to the credit of the share premium account was £14,506,291. At 31 December 2021 the special distributable reserve account was £118,435,271. 14. Net asset value per ordinary share The basic total net assets per ordinary share is based on the net assets aributable to equity shareholders as at 31 December 2021 of £141,841,774 and ordinary shares of 137,008,487 in issue at 31 December 2021. There is no diluon eect and therefore no dierence between the diluted total net assets per ordinary share and the basic total net assets per ordinary share. Downing Renewables & Infrastructure Trust plc Annual Report | 129 15. Cash and Cash equivalents At the period end, the Company had cash of £11.3 million. This balance was held by the Royal Bank of Scotland. 16. Financial Risk Management The Company’s investment acvies expose it to a variety of nancial risks, including, interest rate risk, foreign exchange risk, power price risk, credit risk and liquidity risk. The Board of Directors has overall responsibility for overseeing the management of nancial risks, however the review and management of nancial risks are delegated to the AIFM. Each risk and its management are summarised below. Foreign exchange risk Foreign exchange risk is dened as the risk that the fair value of future cash ows will uctuate because of changes in foreign exchange rates. The Company monitors its foreign exchange exposures using its near-term and long-term cash ow forecasts. Its policy is to use foreign exchange hedging to provide protecon to the level of sterling distribuons that the Company aims to receive from porolio companies over the medium-term, where considered appropriate. This may involve the use of forward exchange. The Company’s sensivity to foreign exchange risk can be seen in Note 9. Interest rate risk Interest rate risk arises from the possibility that changes in interest rates will aect future cash ows or the fair values of nancial instruments. The Company is exposed to interest rate risk on its cash balances held with counterpares, bank deposits, advances to counterpares through loans to its subsidiaries. The Company may be exposed to changes in variable market rates of interest as this could impact the discount rate and therefore the valuaon of the projects as well as the fair value of the loan receivables. The Company is not considered to be materially exposed to interest rate risk. Downing Renewables & Infrastructure Trust plc Annual Report | 130 The Company’s interest and non-interest bearing assets and liabilies as at 31 December 2021 are summarised below: Assets Interest Bearing £’000s Non- Interest bearing £’000s Total £’000s Cash and cash equivalents – 11,254 11,254 Trade and other receivables – 280 280 Investments at fair value through prot and loss 113,749 17,759 131,508 Total assets 113,749 29,293 143,042 Liabilies Accrued expenses – (1,201) (1,201) Total liabilies – (1,201) (1,201) Liquidity risk Liquidity risk is the risk that the Company may not be able to meet its nancial obligaons as they fall due. The Investment Manager, AIFM and the Board connuously monitor forecast and actual cash ows from operang, nancing, and invesng acvies to consider payment of dividends, repayment of trade and other payables or funding further invesng acvies. The Company ensures it maintains adequate reserves and will put in place banking facilies and it will connuously monitor forecast and actual cash ows to seek to match the maturity proles of nancial assets and liabilies. At the period end, the Company’s investments were in secured loan and equity investments in private companies, in which there is no listed market and therefore such investments would take me to realise, and there is no assurance that the valuaons placed on the investments would be achieved from any such sale process. The Company’s Hold Co is the enty through which the Company holds its investments, the liquidity of Hold Co is reecve of the investments in which it holds. The Company’s main subsidiary holds an RCF, which has currently been undrawn. Downing Renewables & Infrastructure Trust plc Annual Report | 131 Less than 1 year 1-5 years More than 5 years Total £’000 £’000 £’000 £’000 Assets Investments at fair value through prot and loss (note 9) – – 131,508 131,508 Trade and other receivables 280 – – 280 Cash and cash equivalents 11,254 – – 11,254 Liabilies Trade and other payables (1,201) – – (1,201) 10,333 – 131,508 141,841 Credit risk Credit risk is the risk that a counterparty of the Company will be unable or unwilling to meet a commitment that it has entered into with the Company. It is a key part of the pre-investment due diligence. The credit standing of the companies which the Company intends to lend or invest is reviewed, and the risk of default esmated for each signicant counterparty posion. Monitoring is on-going, and period end posions are reported to the Board on a quarterly basis. Credit risk may also arise from cash and cash equivalents and deposits with banks and nancial instuons. The Company and its subsidiaries may migate their risk on cash investments by only transacng with major internaonal nancial instuons with high credit rangs assigned by internaonal credit rang agencies. The carrying value of the investments and cash represent the Company’s maximum exposure to credit risk. Downing Renewables & Infrastructure Trust plc Annual Report | 132 The Company’s credit risk exposure as at 31 December 2021 is summarised below: As at 31 December 2021 £’000s Loan Investment 113,749 Cash and cash equivalents 11,254 Total 125,003 Price risk Price risk is dened as the risk that the fair value of a nancial instrument held by the Company will uctuate. Investments are measured at FVTPL. As at 31 December 2021, the Company held two investments through its intermediate holding company. The value of the underlying renewable energy investments held by Hold Co will vary according to a number of factors including: discount rate used, asset performance and forecast power prices. Capital risk management The capital structure of the Company at the year-end consists of equity aributable to equity holders of the Company, comprising issued capital and reserves. The Board connues to monitor the balance of the overall capital structure so as to maintain investor and market condence. The Company is not subject to any external capital requirements. Market risk Returns from the Company’s investments are aected by the price at which the investments are acquired. The value of these investments will be a funcon of the discounted value of their expected future cash ows, and as such will vary with, inter alia, movements in interest rates, market prices and the compeon for such assets. The Investment Manager carries out a full valuaon quarterly and this valuaon exercise takes into account changes described above. Downing Renewables & Infrastructure Trust plc Annual Report | 133 17. Unconsolidated subsidiaries, associates and joint ventures The following table shows subsidiaries of the Group. As the Company is regarded as an Investment Enty as referred to in note 2, these subsidiaries have not been consolidated in the preparaon of the nancial statements: Investment Place of Business Ownership Interest as at 31 December 2021 DORE Hold Co Limited 16 England 17 100% DORE Sweden Hold Co Limited 18 England 17 100% Downing Hydro AB 18 Sweden 12 100% Abercomyn Solar Ltd 21 England 17 100% Andover Aireld Solar Developments Ltd 20 England 17 100% Appleton Renewable Energy 20 England 17 100% Appleton Renewables 21 England 17 100% Beeston Solar Energy Ltd 21 England 17 100% Beeston Solar Ltd 21 England 17 100% Bourne Park Solar Ltd 22 England 17 100% Brookside Solar Ltd 21 England 17 100% Brown Argus Trading Ltd 23 England 17 100% Chalkhill Commercial PV Ltd 23 England 17 100% Chalkhill Life Holdings Ltd 18 England 17 100% Deeside Solar Farm Ltd 23 England 17 100% Emerald Isle Solar Energy Ltd 24 Northern Ireland 17 100% Emerald Isle Solar Ltd 21 Northern Ireland 17 100% Greenacre Redbridge Ltd 25 England 17 100% Greenacre Solar Energy Ltd 25 England 17 100% Greenacre Solar Ltd 21 England 17 100% Heulwen Solar Ltd 21 England 17 100% Hulse Energy Ltd 21 Northern Ireland 17 100% Hulse Renewable Energy Ltd 26 Northern Ireland 17 100% KPP132 Ltd 27 England 17 100% KPP141 Ltd 33 Northern Ireland 17 100% Moray Energy Ltd 27 Northern Ireland 17 100% Moray Power (UK) Ltd 27 Northern Ireland 17 100% Moray Power Ltd 21 Northern Ireland 17 100% Newton Solar Energy Ltd 21 England 17 100% Newton Solar ltd 21 England 17 100% Penarth Energy Ltd 21 England 17 100% Ridgeway Solar Energy Ltd 29 England 17 100% Ridgeway Solar ltd 21 England 17 100% Ringlet Trading Ltd 23 England 17 100% ROC Solar (UK) Ltd 30 Northern Ireland 17 100% ROC Solar ltd 21 Northern Ireland 17 100% Solar Finco 1 Limited 31 England 17 100% Solar Finco 2 Limited 32 England 17 100% Solar Finco 3 Limited 23 England 17 100% Downing Renewables & Infrastructure Trust plc Annual Report | 134 Investment Place of Business Ownership Interest as at 31 December 2021 TGC Solar Oakeld Ltd 29 England 17 100% Triumph Renewable Energy Ltd 33 Northern Ireland 17 100% Triumph Solar Energy ltd 33 Northern Ireland 17 100% Triumph Solar ltd 21 Northern Ireland 17 100% Voltaise (UK) Ltd 34 England 17 100% Voltaise ltd 21 England 17 100% Wakehurst Renewable Energy Ltd 35 Northern Ireland 17 100% Wakehurst Renewables Ltd 21 Northern Ireland 17 100% York NIHE Ltd 36 Northern Ireland 17 100% York Renewable Energy Ltd 36 England 17 100% York Renewables Ltd 21 Northern Ireland 17 100% 16 DORE Hold Co is the intermediate holding company of the Group, this is 100% owned by DORE PLC 17 The Registered oce is St Magnus House, 3 Lower Thames Street, London EC3R 6HD 18 These Companies are 100% owned by DORE Hold Co Limited 19 The registered oce is c/o Cirio Advokatbyra Box 3294, 103 65 Stockholm 20 Appleton Renewable Energy Ltd is 100% owned by Appleton Renewables, Appleton Renewable Energy Ltd, in turn owns 100% of Andover Aireld Solar Developments Ltd 21 These companies are 100% owned by Solar Finco 1 Ltd 22 Bourne Park Solar is 100% owned by Penarth Energy Ltd 23 These companies are 100% owned by Chalkhill Life Holdings Ltd 24 Emerald Isle Solar Energy Limited is 100% owned by Emerald Isle Solar Ltd 25 Both companies are 100% owned by Greenacre Solar Ltd 26 Hulse Renewable Energy Ltd is 100% owned by Hulse Energy Ltd 27 Moray Energy Ltd and Moray Power (UK) are 100% owned by Moray Power Ltd, Moray Power (UK) Ltd owns 100% of KPP 132 Ltd 28 Newton Solar Energy is 100% owned by Newton Solar Ltd 29 Both companies are 100% owned by Ridgeway Solar Ltd 30 ROC Solar (UK) Ltd is 100% owned by ROC Solar Ltd 31 Solar Finco 1 Ltd is 100% owned by Solar Finco 2 Ltd 32 Solar Finco 2 Ltd is 100% owed by Solar Finco 3 Ltd 33 Triumph Solar Energy is 100% owned by Triumph Solar Ltd, Triumph Solar Energy Ltd in turn owns 100% of Triumph Renewable Energy Ltd and KPP 141 Ltd 34 Voltaise (UK) Limited is 100% owned by Voltaise Ltd Downing Renewables & Infrastructure Trust plc Annual Report | 135 35 Wakehurst Renewable Energy Ltd is 100% owned by Wakehurst Renewables Ltd 36 These Companies are 100% owned by York Renewables Ltd 18. Employees and Directors The Company is governed by a Board of Directors, all of whom are independent and non-execuve. During the period, they received fees for their services of £145,833. The Company has 3 non-execuve Directors. Other than the Directors, the Company had no employees during the period. 19. Conngencies and commitments The Company has no commitments or conngencies. 20. Dividends declared As outlined on page 8 of the Chairman’s statement, in the IPO Prospectus on 12 November 2020, the Company was targeng an inial annualised dividend yield of 3% by reference to the IPO price of £1.00, in respect of the nancial period from IPO on 10 December 2020 to 31 December 2021 (equang to 3.0 pence per share), rising to a target annualised dividend yield of 5% by reference to the IPO price in respect of the nancial year to 31 December 2022. Interim dividends paid during the period ended 31 December 2021 Dividend per share pence Total dividend £’000s With respect to the quarter ended 30 June 2021 1.00 1,225 With respect to the quarter ended 30 September 2021 1.25 1,713 2.25 2,938 Interim dividends declared aer 31 December 2021 and not accrued in the year Dividend per share pence Total dividend £’000s With respect to the quarter ended 31 December 2021 1.25 1,713 1.25 1,713 Downing Renewables & Infrastructure Trust plc Annual Report | 136 On 24 February 2022, The Board declared an interim dividend of 1.25 pence per share with respect to the period ended 31 December 2021. The Dividend is expected to be paid on or around 31 March 2022 to shareholders on the register on 4 March 2022. The ex-dividend date is 3 March 2022. As announced in September 21, following the rapid deployment equity issuance proceeds and the connued strong trading performance since the two porolios were acquired, the Board announced it is increasing its dividend guidance. The Company intends to increase the dividend to 5 pence for the year to 30 June 2022 (represenng a dividend per share of 1.25 pence for the quarter ending September 2021 and thereaer). During the period, The Board declared two interim dividends of 1 pence per share on 1 September 2021 and 1.25 pence per share on 25 November 2021, with respect to the periods ending 30 June 2021 and 31 December 2021. As outlined in the Company’s Prospectus, the Company has chosen to designate part of these interim dividends as an interest distribuon. The dividend for the period to 30 June 2021, was paid as 0.50 pence per share as an interest payment and 0.50 as an ordinary dividend. The dividend paid for the period to 31 December 2021 was paid as 0.8125 pence per share as an interest payment and 0.4375 as an ordinary dividend. Shareholders in receipt of such a dividend will be treated for UK tax purposes as though they have received a payment of interest in respect of the interest distribuon element of this dividend. This will result in a reducon in the corporaon tax payable by the Company. 21. Events aer the balance sheet date Dividends On 24 February 2022, The Board declared an interim dividend of 1.25 pence per share with respect to the period ended 31 December 2021. The dividend is expected to be paid on or around 31 March 2022 to shareholders on the register on 4 March 2022. The ex-dividend date is 3 March 2022. Downing Renewables & Infrastructure Trust plc Annual Report | 137 Acquisions The Company, through its main subsidiary acquired two operaonal porolios of hydropower plants, located in central Sweden for £20.1 million and also completed the acquision of an operaonal 46 MW onshore wind project located in north eastern Sweden for £19.8 million. EUR 27.4 million was drawn against the facility with SEB to help fund the hydropower acquisions. 22. Related party transacons The amounts incurred in respect of the Investment Management fees during the period to 31 December 2021 was £1,284,177. Of this amount, £933,042 were unpaid at 31 December 2021. The placing agreement entered into on 12 November 2020 between the Company, the Directors, the AIFM, the Investment Manager, Singer Capital Markets Advisory LLP and Singer Capital Markets Securies Limited provided, amongst other things, that the Investment Manager (i) would contribute to the costs of the IPO such that the Net Asset Value per Ordinary Share at Admission would not be less than 98 pence and (ii) would be paid commission in respect of investors introduced by it to the IPO. The net eect of this receipt from, and payment to, the Investment Manager was a payment made by the Company of £648,290. These terms of the placing agreement were disclosed in the IPO Prospectus. Each of the underling investments of the Group entered into an asset management agreement with the Asset Manager. The total value of recurring services Invoiced to the companies during the period was £370,635 with a further £222,801 accrued. The £222,801 which has been accrued remained unpaid at the period end. The amounts incurred in respect of Directors fees during the period to 31 December 2021 was £145,833. These amounts had been fully paid at 31 December 2021. The amounts paid to individual directors during the period were as follows: Hugh W M Lile (Chair) £58,333 Jo De Montgros £40,833 Ashley Paxton £46,667 Downing Renewables & Infrastructure Trust plc Annual Report | 138 Tony McGing and Tom Williams were Directors of the Company from 8 October 2020 to 28 October 2020, they received no remuneraon during the period. Due to the Company being an externally managed investment company, there are no other fees due to key management personnel. Transacons with a Shareholder – Acquision of the Seed Assets Bagnall Energy Limited is a shareholder in the Company. Its shareholding can be seen on page 71. As idened in the Company’s Prospectus dated 12 November 2020, the Company beneted from an opon to acquire a porolio of c.96 MWp of operaonal solar PV projects located in the UK. The Seed assets were previously owned by Bagnall Energy Limited, a Downing Managed Fund, managed by the Investment Manager on a discreonary basis. This acquision of the Seed Assets represented a conict of interest as the Investment Manager provided investment management services to both the Company and Bagnall Energy Limited. To migate this conict, the Investment Manager put in place several procedures, including disclosure of the relevant conicts to the independent boards of both the Company and Bagnall Energy Limited, separate buy and sell side external legal advisers and a fairness opinion, addressed to the Company, on the value of the Asset to be acquired was sought from an independent expert. Intercompany Loans During the period interest totalling £4.98 million was charged on the Company’s long-term interest-bearing loan between the Company and its subsidiary. At the period end, £2.4 million remained unpaid. The loan to DORE Hold Co Limited is unsecured. As at the balance sheet date, the loan balance stood at £113.7 million. Downing Renewables & Infrastructure Trust plc Annual Report | 139 In reporng nancial informaon, the Company presents alternave performance measures, (“APMs”), which are not dened or specied under the requirements of IFRS. The Company believes that these APMs, which are not considered to be a substute for or superior to IFRS measures, provide stakeholders with addional helpful informaon on the performance of the Company. The APMs presented in this report are shown below: Gross Asset Value or GAV A measure of total asset value including debt held in unconsolidated subsidiaries. As at 31 December 2021 Page £’000s NAV a 105 141,841 Debt held in unconsolidated subsidiaries b n/a 79,250 Gross Asset Value a + b 221,091 NAV Total Return A measure of NAV performance over the reporng period (including dividends paid). NAV total return is shown as a percentage change from the start of the period. It assumes that dividends paid to shareholders are reinvested at NAV at the me the shares are quoted ex-dividend. Period Ended 31 December 2021 Page NAV NAV at IPO pence a n/a 98.00 NAV at 31 December 2021 pence b 105 103.5 Reinvestment assumpon pence c n/a 0.02 Dividends paid pence d 8 2.25 Total NAV Return ((b + c + d)/a) - 1 7.9% Alternative Performance Measures Downing Renewables & Infrastructure Trust plc Annual Report | 140 Total Shareholder Return A measure of share price performance over the reporng period (including dividends reinvested). Share price total return is shown as a percentage change from the start of the period. It assumes that dividends paid to shareholders are reinvested in the shares at the me the shares are quoted ex- dividend. Period Ended 31 December 2021 Page Share Price Issue price at IPO (10 December 2020) pence a n/a 100.00 Closing price at 31 December 2021 pence b 4 103.50 Benets of reinvesng dividends pence c n/a 0.03 Dividends paid pence d 8 2.25 Total Return ((b + c + d)/a) - 1 5.8% Ongoing Charges A measure, expressed as a percentage of average net assets, of the regular, recurring annual costs of running the Company per Ordinary Share. This has been calculated and disclosed in accordance with the AIC methodology. Period Ended 31 December 2021 Page £’000s Average NAV a n/a 126,443 Annualised Expenses b n/a 2,056 Ongoing charges rao b / a 1.6% Downing Renewables & Infrastructure Trust plc Annual Report | 141 Dividend yield This is the annualised measure of the amount of cash dividends paid out to shareholders relave to the IPO price of £1.00 per share and the issue price. Period Ended 31 December 2021 Page £’000s Dividend from IPO to 31 December 2021 pence a n/a 3.50 Ordinary Share price as at 31 December 2021 pence b 4 103.50 Issue price at IPO pence c n/a 100.00 Annualisaon factor d n/a 0.95 Dividend yield by reference to share price (a/b * d) 3.20% Dividend yield by reference to Issue Price (a/c * d) 3.31% Dividend Cover Dividend cover illustrates the number of mes the Company’s cash ow can cover it dividend payments to Shareholders. Dividend Cover Period Ended 31 December 2021 Page £’000 Cash ows (from porolio companies) a n/a 4,678 Cash expenses (Company and Hold Co) b n/a (1,339) Dividends for FY 2021 (excluding new equity) c n/a 2,756 Dividends for FY 2021 (including new equity) d n/a 2,938 Dividend Cover excluding new equity (a + b) / c 1.21 Dividend Cover including new issuance (a + b) / d 1.14 Downing Renewables & Infrastructure Trust plc Annual Report | 142 Glossary 2016 Paris Agreement an agreement within the United Naons Framework Convenon on Climate Change, dealing with greenhouse-gas-emissions migaon, adapon, and nance, signed in 2016 AIC Associaon of Investment Companies Asset Manager INFRAM LLP a company operated by Downing LLP. Downing LLP is the controlling member. CCGT Combined Cycle Gas Turbines Corporate PPA a PPA with a corporate end-user of electricity rather than with an electricity ulity CO2 Carbon dioxide CO2e Carbon dioxide equivalent COP26 The 2021 United Naons Climate Change Conference DHAB Downing Hydro AB distribuon network low voltage electricity network that carries electricity locally from the substaon to the end-user ESG environmental, social and governance FiT feed-in tari GAV Gross asset value – the aggregate value of the Group’s underlying investments, cash and cash equivalents, and third-party borrowings. GBP Pounds Sterling GHG Greenhouse Gas Group the Company and its subsidiaries GW Gigawa GWh Gigawa hours Investment Manager Downing LLP (Company No: OC341575) IPO Inial Public Oering KPI key performance indicator MW Megawa MWh Megawa hour MWp Megawa peak NAV Net asset value NIROC/s Northern Ireland ROC/s Downing Renewables & Infrastructure Trust plc Annual Report | 143 O&M operaons and maintenance Ofgem the Oce of Gas and Electricity Markets Oaker a purchaser of electricity and/or ROCs under a PPA PPA a power purchase agreement PPS Pence per share RCF revolving credit facility Renewable Energy Direcve EU Renewable Energy Direcve (2009/28/EC) RO Renewables Obligaon ROC/s renewables obligaon cercate/s SE2 South Sweden SE3 North Sweden SEB Skandinaviska Enskilda Banken AB SEK Swedish Kroner SEM Single Electricity Market SFDR Sustainable Finance Disclosure Regulaon Solar PV photovoltaic solar SORP Statement of recommended pracse SPV Special purpose vehicle Sustainable Development Goals Set out in the 2030 Agenda for Sustainable Development, adopted by all United Naons Member States in 2015 transmission network high voltage power lines that transport electricity across large distances at volume, from large power staons to the substaons upon which the distribuon networks connect Downing Renewables & Infrastructure Trust plc Annual Report | 144 Cautionary Statement The Review Secon of this report has been prepared solely to provide addional informaon to shareholders to assess the Company’s strategies and the potenal for those strategies to succeed. These should not be relied on by any other party or for any other purpose. The Review Secon may include statements that are, or may be deemed to be, “forward- looking statements”. These forward-looking statements can be idened by the use of forward-looking terminology, including the terms “believes”, “esmates”, “ancipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negave or other variaons or comparable terminology. These forward-looking statements include all maers that are not historical facts. They appear in a number of places throughout this document and include statements regarding the intenons, beliefs or current expectaons of the Directors and the Investment Manager concerning, amongst other things, the Investment Objecves and Investment Policy, nancing strategies, investment performance, results of operaons, nancial condion, liquidity, prospects, and distribuon policy of the Company and the markets in which it invests. By their nature, forward-looking statements involve risks and uncertaines because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The Company’s actual investment performance, results of operaons, nancial condion, liquidity, distribuon policy and the development of its nancing strategies may dier materially from the impression created by the forward-looking statements contained in this document. Subject to their legal and regulatory obligaons, the Directors and the Investment Manager expressly disclaim any obligaons to update or revise any forward- looking statement contained herein to reect any change in expectaons with regard thereto or any change in events, condions or circumstances on which any statement is based. In addion, the Review Secon may include target gures for future nancial periods. Any such gures are targets only and are not forecasts. This Annual Report has been prepared for the Company as a whole and therefore gives greater emphasis to those maers which are signicant in respect of Downing Renewables & Infrastructure Trust PLC and its subsidiary undertakings when viewed as a whole. Downing Renewables & Infrastructure Trust plc Annual Report | 145 Company Information Directors (all non-execuve) Hugh W M Lile (Chair) Joanna de Montgros Ashley Paxton Registered Oce Beaufort House 51 New North Road Exeter EX4 4EP AIFM and Administrator Gallium Fund Soluons Limited Gallium House Unit 2 Staon Court Borough Green Sevenoaks Kent TN15 8AD Investment Manager Downing LLP 6 th Floor St Magnus House 3 Lower Thames Street London EC3R 6HD Sponsor and Financial Adviser Singer Capital Markets LLP One Bartholomew Lane London EC2N 2AX Company Secretary Link Company Maers Limited Beaufort House 51 New North Road Exeter EX4 4EP Solicitors to the Company Gowling WLG (UK) LLP 4 More London Riverside London SE1 2AU Registrar Link Group 10th Floor Central Square 29 Wellington Street Leeds LS1 4DL email: [email protected] Depositary Gallium P E Depositary Limited Gallium House Unit 2 Staon Court Borough Green Sevenoaks Kent TN15 8AD Auditor BDO LLP 55 Baker Street London W1U 7EU Downing Renewables & Infrastructure Trust plc Annual Report | 146 Shareholder Information Key Dates March 2022 Annual results announced Payment of fourth interim dividend April 2022 Annual General Meeng June 2022 Company’s half-year end Payment of rst interim dividend September 2022 Interim result announced Payment of second interim dividend December 2022 Company’s year end Payment of third interim dividend * These dates are provisional and subject to change. Frequency of NAV Publicaon The Company’s NAV is released to the London Stock Exchange on a quarterly basis and is published on the Company’s website. Share Register Enquiries The register for the Company’s shares is maintained by Link Group. If you have any queries in relaon to your shareholding, please contact the Registrar on 0371 664 0300 or on +44 (0)371 664 0300, UK Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable internaonal rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales. You can also contact the Registrar by email at enquiries@ linkgroup.co.uk or by sending a leer to Link Group, 10 th Floor, Central Square, 29 Wellington Street, Leeds LS1 4DL. Sources of Further Informaon Copies of the Company’s Annual and Interim Reports, stock exchange announcements and further informaon on the Company can be obtained from the Company’s website www.doretrust.com. Contacng the Company Shareholder queries are welcomed by the Company. While any queries regarding your shareholding should be raised with the Registrar, shareholders who wish to raise any other maers with the Company may do so by emailing the Company Secretary at [email protected]. This report has been printed on Revive 100 Silk. Made from FSC® Recycled cered post-consumer waste pulp. Manufactured in accordance with ISO cered Carbon Balanced standards for environmental, quality and energy management. CBP011443 Downing Renewables & Infrastructure Trust plc Interim Report | A Visit doretrust.com Made using 100% recycled paper. St Magnus House 3 Lower Thames Street London EC3R 6HD 020 7416 7780 Designed and printed by Perivan
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