REG - Gore Street Energy - Half-year Report
14/12/2023 07:00
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RNS Number : 7100W Gore Street Energy Storage Fund PLC 14 December 2023
14 December 2023
Gore Street Energy Storage Fund plc
(the "Company" or "GSF")
Half Year Results for the 6-months ending 30 September 2023
Strong performance and positive revenue trends continue
Operational highlights:
· The portfolio generated £19.3m of revenue during the period,
amounting to £12.2m in operational EBITDA.
· During the September-end quarter, the Company generated operational
EBITDA of £8.3m, resulting in an operational dividend cover of 1.15x.
· For the six month period, total portfolio revenue per MW per hour
was £15.10, with non-GB assets achieving 2.6x more revenue than the GB
portfolio, underscoring the benefits of the diversification strategy:
§ GB revenue: £7.54/MW/hr
§ Non-GB revenue: £19.66/MW/hr
· The 79.9 MW Stony asset was energised during the reporting
period.
· Energisation and commencement of commissioning for the 49.9 MW
Ferrymuir asset is awaiting completion of grid connection works.
· The Company's cash balance as of 30 September was £75.0m with a
further £13.9m held across its subsidiaries, sufficient to meet all
outstanding contractual commitments.
· As at 30 September, Fund level gearing remained at 0%.
· Additional project-level debt funding of $60m secured post-period
through a First Citizens loan to support the build-out of the Company's 200MW
/ 400MWh Big Rock asset in California. Between the Santander and First
Citizens facilities, GSF has available debt financing of c.£99.0m. If fully
drawn, total debt would represent c. 15% of GAV.
Net Asset Value (NAV):
The Company continued to demonstrate strong operational performance. However,
adjustments to short-term inflation and discount rates (+25bps) reflecting the
macroeconomic landscape drove a decrease in NAV:
· NAV as of 30 September 2023 was £543.3m or 112.9 pence per
share, bringing NAV total return since IPO to 48.8%.
· Despite the NAV per ordinary share decrease of 2.3% to 112.9p
(115.6p as at 31 March 2023), NAV total return for the period, including the
3.5p in dividend payments, remained positive at 0.7%.
· Portfolio valuation increased by 8%.
Movement in NAV since March 2023 Changes in NAV per share in pence
NAV March 2023 115.6
Fund + Subsidiary Holding Companies Operating Expense (0.8)
Dividends (3.5)
Cash Generation 2.9
Discount Rate Increases (2.8)
Inflation (1.2)
Opex Savings 1.6
De-risking of Assets 1.2
Revenue Curves (0.9)
Other DCF Changes and Rollover 0.8
NAV 30 September 2023 112.9
Dividend Declaration
The Company's Board of Directors has approved a dividend of 2.0 pence per
share for the September end quarter. The ex-dividend date will be 28 December
2023, and the record date of 29 December 2023. The dividend will be paid on or
around 12 January 2024.
Any such dividend payment to Shareholders may take the form of either dividend
income or "qualifying interest income", which may be designated as an interest
distribution for UK tax purposes and, therefore, subject to the interest
streaming regime applicable to investment trusts. Of this dividend declared of
2.0 pence per share, 1.15 pence is treated as qualifying interest income.
Alex O'Cinneide, CEO of Gore Street Capital, the Investment Manager of the
Company, commented:
"I am pleased to report that the Company's strategy, enabled by the active
role of the Investment Manager, despite difficult stock market conditions, has
allowed the business to continue to meet its objectives. Since inception, the
operational portfolio has generated an average of 20% per annum cash yield
over invested capital, and during the September-end quarter, the Company
delivered an operational dividend cover of 1.15x. This positive trajectory is
reflected in portfolio performance, which maintained the highest revenue on
both a per MW and absolute basis among our listed peers during the period
whilst being the cost leader on capital cost per MW/MWh fully installed. This
was achieved through diversification, with assets in Ireland, Texas and
Germany overachieving against base case. With a NAV Total Return of 48.8%
since IPO, an excellent balance sheet given our minimum level of debt, and a
strong cash position, the Company remains in a compelling and sustainable
position."
The interim report will shortly be available to download from the Company's
website www.gsfenergystoragefund.com (http://www.gsfenergystoragefund.com/) .
Please click on the following link to view the document:
http://www.rns-pdf.londonstockexchange.com/rns/7100W_1-2023-12-13.pdf (http://www.rns-pdf.londonstockexchange.com/rns/7100W_1-2023-12-13.pdf)
The Company has also submitted its interim report to the National Storage
Mechanism and it will shortly be available for inspection
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
For further information:
Gore Street Capital Limited
Alex O'Cinneide / Paula Travesso
Tel:
+44 (0) 20 3826 0290
Shore Capital (Joint Corporate Broker)
Anita Ghanekar / Rose Ramsden / Iain Sexton (Corporate Advisory)
Tel: +44 (0) 20 7408 4090
Fiona Conroy (Corporate Broking)
J.P. Morgan Cazenove (Joint Corporate Broker)
Tel:
+44 203 493 8000
William Simmonds / Jérémie Birnbaum (Corporate Finance)
Tel: +44 (0) 20 3493 8000
Buchanan (Media Enquiries)
Charles Ryland / Henry Wilson / George Beale
Tel: +44 (0) 20 7466
5000
Email: gorestreet@buchanan.uk.com (mailto:gorestreet@buchanan.uk.com)
Notes to Editors
About Gore Street Energy Storage Fund plc
Gore Street is London's first listed and internationally diversified energy
storage fund dedicated to the low-carbon transition. It seeks to provide
Shareholders with sustainable returns from their investment in a diversified
portfolio of utility-scale energy storage projects. In addition to growth
through increasing operational capacity and a considerable pipeline, the
Company aims to deliver consistent and robust dividend yield as income
distributions to its Shareholders.
https://www.gsenergystoragefund.com (https://www.gsenergystoragefund.com/)
Half Year Report Gore Street Energy Storage Fund Plc
For the six months ended 30 September 2023
Highlights and Key Metrics
Key Metrics
For the period ending 30 September 2023
NAV PER SHARE
112.9p
(March 2023: 115.6p)
OPERATIONAL CAPACITY
291.6 MW**
(March 2023: 291.6 MW)
DIVIDEND YIELD
8.9%
(March 2023: 6.9%)
NAV TOTAL RETURN
for the 6 month period
0.7%
(September 2022: 4.6%)
OPERATIONAL EBITDA
for the 6 month period
£12.2m
(September 2022: £14.8m)
DIVIDENDS PAID DURING THE PERIOD
3.5p
(September 2022: 3.0p)
Table 1: Key Metrics As at As at
30 September 2023
31 March 2023
Net Asset Value (NAV) £543.3m £556.3m
NAV per share 112.9p 115.6p
NAV Total Return since IPO * 48.8% 48.0%
Share price based on closing price at indicated date 78.8p 100.8p
Market capitalisation based on closing price £379.3m £485.3m
Share price total return since IPO * 13.3% 31.8%
(Discount)/Premium to NAV * -30.2% -12.8%
Portfolio's total capacity 1.17 GW 1.17 GW
Portfolio's operational capacity 291.6 MW** 291.6 MW
Operational dividend cover for the period * 0.72x 0.90x
Operational dividend cover for quarter ended 30 September * 1.15x 1.30x
Dividend Yield * 8.9% 6.9%
Ongoing charges Figure * 1.39% 1.37%
Fund level gearing 0.00% 0.00%
As at As at
30 September 2023
30 September 2022
Key Metrics for the period (1 April - 30 September)
NAV Total Return for the six month period * 0.7% 4.6%
Share Price Total return for the six month period * -18.4% 0.0%
Operational EBITDA for the six month period * £12.2m £14.8m
Total Fund EBITDA for the six month period * £8.5m £10.4m
Dividends per Ordinary Share paid during the period 3.5p 3.0p
* Some of the financial measures above are classified as
Alternative Performance Measures, as defined by the European Securities and
Markets Authority and are indicated with an asterisk (*). Definitions of these
performance measures, and other terms used in this report, are given on page
37 of the Interim Report for the period ending 30 September 2023 together with
supporting calculations where appropriate.
** The 79.9 MW Stony asset was energised during the reporting period.
Chair's Statement
On behalf of the Board, it is my pleasure to present the Company's Interim
report covering the six months ending 30 September 2023.
Overview and Performance
Following advice from the Company's independent valuers and reflecting the
financial conditions as at the end of the period, we have adjusted our
inflation assumptions and raised discount rates across the board by 0.25%,
leading to a new weighted average of 10.3%. The Net Asset Value (NAV) per
share, as of 30 September, was 112.9p, representing a reduction of 2.7p per
share over the period. These adjustments have been made in light of the
macroeconomic conditions experienced over the reporting period, while the
operational performance of the Company and its assets remains strong. Overall
growth is evidenced by NAV total returns of 48.8% since IPO in May 2018 and an
8.9% dividend yield to shareholders, based on the 30 September share price.
Despite challenging market conditions - especially in Great Britain - over the
six months to 30 September, the Company's internationally diversified
portfolio has performed well. Revenue for the reporting period was £19.3m,
representing an average of £15.10/MW/hr, with the Company's international
assets delivering 2.6x more revenue on a MW basis than those in Great Britain.
The strength of this revenue generation during the period was supported by
exceptional performance in August, which delivered the highest revenues
reached in a single month across the Company's five-year history. This
record-breaking achievement was led by the Company's Texas assets following
their pre-qualification to deliver a newly launched grid service, ERCOT
Contingency Reserve Service (ECRS), illustrating the success of the Company's
international diversification, which underpins the potential and sustained
profitability of our asset class.
We are, therefore, committed to building out our construction portfolio to
ensure greater access to revenue-generating activities across multiple markets
in future, some of which have progressed well in the reporting period. The 80
MW Stony asset - our largest operational asset to date - was energised in
September, a key milestone in achieving our stated target of an energised
portfolio of over 800 MW by the end of 2024.
By remaining focused on the key metrics of cost per MW fully installed and
revenue generation per MW, the Company anticipates that deployment across
multiple international markets will have a positive impact on the current
operational dividend cover of 0.72x while lowering exposure to the GB market
as a percentage of its total operational portfolio.
I look forward to updating shareholders as additional revenue-generating
capacity is added to the operational portfolio in the coming months.
The Company continuously evaluates how best to optimise the c. 1.2 GW
portfolio it holds across five energy grids. This includes the potential sale
of assets to enhance shareholder returns when it would prove accretive to
reinvest capital in other opportunities. This would also prove to be a
valuable exercise in NAV discovery, given the uncertainty over a wide range of
asset valuations seen elsewhere within the sector.
Share Price
The extreme volatility seen across the stock market over the last six months,
has been reflected in the share prices of the entire asset class, and is not
reflective of the Company's sustained performance in operations and revenue
generation. As market conditions improve, we expect our industry-leading
portfolio to continue delivering sustainable returns to investors.
The Company continues to demonstrate best-in-class operational performance,
notwithstanding challenging market dynamics, and offers healthy returns to
long-term stockholders who recognise energy storage's fundamental value within
the energy transition.
Dividends
We remain committed to the dividend target of 7% of NAV, which has been met
consistently. The Company paid a dividend of 2.0 pence for the June end
quarter in line with this target, with an additional dividend of 2.0 pence for
the September end quarter to be paid on or around 12 January 2024.
Outlook
Despite challenges, the Company remains resilient and focused on outperforming
revenue benchmarks, increasing EBITDA margin, and building its portfolio. It
has energised 80 MW during the period, with 50 MW expected to follow through
Ferrymuir in Q4 FY23/24 and 57 MW at Enderby in Q1 FY24/25. In total we are
targeting the energisation of 442 MW by the end of 2024, including expanding
assets in Ireland and the United States.
This will support the Company's uniquely diversified approach across
international markets, which has allowed us to tap into diverse revenue
streams and positions it well for continued success in the years to come.
Since the quarter end we have already seen inflation rates come down, a fall
in the yield on government bonds and markets have started to expect falls in
interest rates rather than further increases. This has led to a strong rally
in our share price and, though it remains well short of our NAV, we are
hopeful this is the start of a trend that may go significantly further in
2024.
Patrick Cox
Chair
13 December 2023
Investment Manager's Interim Report
Dr Alex O'Cinneide
CEO of Gore Street Capital, the Investment Manager
"I am pleased to report that the Company's strategy, enabled by the active
role of the Investment Manager, has ensured the business continued to
overachieve during a challenging period. Since inception, the operational
portfolio has generated an average 20% per annum cash yield over invested
capital, and during the September-end quarter, the Company delivered an
operational dividend cover of 1.15x. This positive trajectory is reflected in
portfolio performance, which maintained the highest revenue on both a per MW
and absolute basis among our listed peers during the period. This was achieved
through diversification, with assets in Ireland, Texas and Germany
overachieving against base case. The slight decrease in NAV is wholly due to
changes in discount rate and inflation assumptions, with high-interest rates
expected to continue, and does not reflect the exemplary performance of the
Company's commercial operations. With a NAV Total Return of 48.8% since IPO,
an excellent balance sheet given our minimum level of debt, and a strong cash
position, the Company remains in a compelling and sustainable position."
Operational Highlights:
• The portfolio generated £19.3m of revenue during the
period, amounting to £12.2m in operational EBITDA;
- Total portfolio revenue per MW per hour was £15.10, with
non-GB assets achieving 2.6x more revenue than the GB portfolio, showcasing
the benefits of the diversification strategy;
- GB revenue: £7.54/MW/hr
- Non-GB revenue: £19.66/MW/hr
- During the September-end quarter, the Company generated
operational EBITDA of £8.3m, resulting in an operational dividend cover of
1.15x.
- The Company achieved an operational dividend cover of 0.72x for the
reporting period and a fund-level dividend cover of 0.50x.
• The 79.9 MW Stony asset was energised during the
reporting period.
• Energisation and commencement of commissioning for 49.9
MW Ferrymuir asset are awaiting completion of grid connection works.
• The Company's cash balance as of 30 September was
£75.0m with a further £13.9m across its subsidiaries, sufficient to meet all
outstanding contractual commitments.
• As at 30 September, Fund level gearing remained at 0%.
• Additional project level debt funding of $60.0m secured
post-period through a First Citizens loan to support the build out of the
Company's 200.0MW/400.0MWh Big Rock asset in California. Between the Santander
and First Citizens facilities, the Company has available debt financing of
c.£99.0m. If fully drawn, total debt would represent c.15% of GAV.
Net Asset Value (NAV):
• NAV as of 30 September 2023 was £543.3m or 112.9 pence
per share, bringing NAV total return since IPO to 48.8%.
• NAV per ordinary share decreased by 2.3% to 112.9p
(115.6p as at 31 March 2023).
• Portfolio valuation increased by 8%.
While the Company continued to demonstrate strong operational performance,
adjustments to short-term inflation and discount rates (+ 25bps) were needed
in response to the macroeconomic landscape and were the primary drivers of the
decrease in Net Asset Value (NAV).
Table 2
Movement in NAV since March 2023 Changes in NAV per share in pence
NAV March 2023 115.6
Fund + Subsidiary Holding Companies Operating Expense (0.8)
Dividends (3.5)
Cash Generation 2.9
Discount Rate Increases (2.8)
Inflation (1.2)
Opex Savings 1.6
De-risking of Assets 1.2
Revenue Curves (0.9)
Other DCF Changes and Rollover 0.8
NAV 30 September 2023 112.9
Revenue Generation and Portfolio Performance
As energy grids around the world continue to move toward a cleaner, more
secure energy mix, the requirement for flexible technologies able to provide
stability to this transition is increasing. This system need is stemming from
not just from the deployment of renewable generators, like wind turbines and
solar panels, but also from the increased volatility caused by climate change
and global conflicts.
Extreme weather events in recent years have become more frequent and exposed
the vulnerabilities of traditional energy infrastructure, while shortages in
fossil fuels have caused energy prices to spike as demand outstripped supply.
The Company is one of the only energy storage providers to be delivering
crucial grid services across multiple jurisdictions, bringing the benefits of
the asset class to five different energy systems (Great Britain, Ireland,
Germany, Texas and California). The international spread of the Company's
portfolio allows it to access a wide range of revenue streams, requiring
active management to ensure optimal performance.
The Company's commercial performance across the period improved through
adjustments in strategy, driven by transfers to new route- to-market (RTM)
providers in various markets, enabling access to additional value from
ancillary services and wholesale trading markets.
The Company switched RTMs for its German (March '23) and Texan (June '23)
assets for the first time. The processes associated with the selection of
these new service partners differed significantly from equivalent actions
taken by the Company previously in GB and involved engagement with new
contractors, as well as enrolling into new services the Company had not yet
delivered.
The successful transition to new partners resulted in almost immediate upsides
as the Company's assets were able to capture revenue previously unavailable to
them. The US fleet provided additional ancillary services beyond Response
Reserve Service (RRS), with ERCOT's Contingency Reserve Service (ECRS) being a
particular highlight across periods of higher load experienced during, hotter
temperatures in summer. Early prequalification of the Company's Texan assets
in late July through a new RTM partner contributed to a +53% increase in
revenue for the remainder of the period, when benchmarked against a passive
strategy focused on pre-existing ancillary services.
The US, German and Irish assets also saw additional value in the wholesale
market as trading opportunities became more frequent, with new and existing
RTMs incorporating new opportunities into the assets' revenue stacks. Whilst
the Company maintains the view that, over the short-term, ancillary services
will continue to drive revenues across all grids with currently operational
assets, exposure to a variety of trading strategies is integral to sustaining
revenue. The Company's German asset has demonstrated this with the successful
transition to a new data driven RTM provider, which yielded a +38% increase
through increased wholesale trading activity against a passive strategy
focused on the market's Frequency Containment Reserve (FCR) service. The
Company also utilised its exposure to this kind of strategy in the Irish
market at times when opportunities from DS3 (Delivering a Secure, Sustainable
Electricity System) ancillary services, which provide the bulk of revenue,
were low, due to variations in renewable energy.
Wind generation volumes will continue to drive these variations as the single
Irish electricity market progresses towards net-zero targets. During the
period, information was released on the Future Arrangements market reform,
starting in 2025, which will ultimately transform the current DS3 market for
providers of flexibility whilst ensuring sustainability and security for
consumers. The Company is prepared to embrace these changes in network
operations as it has done in GB, which continues to present an ever-changing
volume of capacity procurement.
The Company's extensive experience with battery energy storage system
operations positions it well to maintain optionality between RTMs whilst
reducing the risk of unforeseen delays or issues when switching contractors.
This will facilitate the Company's ongoing ability to capture new revenue
opportunities and begin operations in new markets.
Great Britain (GB) market
Table 3
TSO National Grid
GB Portfolio (operational) 109.7 MW / 101.0 MWh
Share of the market 3.5%(1)
Revenue during the period (£) 3.6m
Revenue per MW (£) 33,100 (£7.54/MW/hr)
Revenue per MWh (£) 36,000 (£8.19/MWh/hr)
EBITDA GB grid % of Total EBITDA 8.8%
(1) Modo Energy Q3 battery build out report
While ancillary services continue to dominate the GB market, the current level
of saturation has resulted in a downward pressure on prices. During the summer
months, these reached their lowest levels to date in stark contrast to the
record highs observed during the same period in 2022, particularly in Dynamic
Containment (DC) markets.
Despite a notable increase in the procurement volume of all dynamic services,
battery supply outpaced demand and, towards the period-end, market
participants sought additional value outside ancillary markets. June saw a
brief respite as National Grid ESO reacted to increasing volatility in network
frequency by increasing levels of DC procurement. This event underscores
energy storage's ability to quickly and efficiently alleviate grid issues,
which are readily caused by increasing renewables penetration on the grid. As
this continues to rise the grid operator will require more flexibility to
manage system operators, creating higher demand for energy storage.
Summer months in GB markets have historically seen lower marginal prices in
wholesale markets due to lower demand and increased gas availability (with
2022 being an exception). High renewables penetration occasionally drove
prices negative during the reporting period, creating arbitrage opportunities,
though these were short-lived. Consequently, asset owners/operators primarily
reverted to single-sided trading stacked alongside ancillary services. Over
the period, the Company participated in pure arbitrage less than 1% of the
time due to the limited available margins.
The Company actively engaged in consultations related to the Balancing
Mechanism (BM), the near real-time market permitting National Grid ESO to take
final energy and system actions to balance supply and demand and manage
constraints. Despite dispatching an average of 3 GW of power continuously,
energy storage systems faced under-utilisation due to the ESO's selection of
out-of-merit assets, despite not offering the best available pricing.
It remains unclear why energy storage assets are skipped in favour of larger,
higher carbon assets, however, it is widely considered to be linked to human
error and technological limitations in the National Grid ESO control room on
the volume of dispatch decisions. Energy storage market participants continue
to face these barriers and are, therefore, unable to properly factor
opportunities within the BM into their commercial strategy. Anticipated
reforms to the BM, including the introduction of a Bulk Dispatch Operator in
December 2023, aim to materially improve the utilisation of energy storage
systems active in the BM.
The Company acknowledges the complexity of the ESO's decision-making process
when assessing value for the consumer, which is rightly a priority. Given the
uncertainty around the upside in value from forthcoming reforms, the Company
maintains a prudent approach, refraining from becoming reliant on potential
improvements to the BM for revenue growth.
Irish market
Table 4
TSO SONI (Northern Ireland), EirGrid (Republic of Ireland)
Irish portfolio (operational) 130.0 MW / 72.6 MWh
Share of the market 50% in NI, 6% in RoI(2)
Revenue during the period (£) 9.7m
Revenue per MW (£) 74,800 (£17.04/MW/hr)
Revenue per MWh (£) 134,000 (£30.51/MWh/hr)
EBITDA Irish grid % of Total EBITDA 59.5%
(2) Energy Storage Ireland
While DS3 has continued to represent the dominant revenue stream available to
assets connected to the Irish grid, this value has historically exhibited
seasonal variations caused by changes in wind volumes. These variations result
in lower revenue under DS3 uncapped contracts during summer months, as the
contractual tariffs are directly proportional to the volume of renewable
generation (mostly wind) on the grid at any given time.
The reporting period defied these expectations due to regular episodes of high
wind penetration from May to August. This significantly improved revenue,
surpassing projections and generating 57% of the FY2023 revenue within the
six-month reporting period, a notable increase compared to 36% in the same
period the previous FY. Towards the end of the reporting period, the Company's
Northern Irish fleet actively engaged in wholesale trading to enhance baseline
revenue from uncapped DS3 payments, which vary throughout the day. The Company
utilised advanced forecasting to estimate when these variations would occur
and diverted capacity towards more lucrative opportunities in the wholesale
market compared to a passive DS3 strategy. The combination of increased
trading activity and uncapped DS3 revenues, which exceeded forecasts for both
the Mullavilly and Drumkee assets during the period, presents a promising
opportunity for long-term increased revenue.
Mullavilly began trading at 5 MW to test the frequency of dispatches and
opportunities for higher revenues. September experienced almost a full month
under this strategy before an increase to 10 MW on 29 September. The initial
findings represent a potential 46% increase in revenue on a MW basis when
compared to the availability- adjusted DS3 only strategy utilising 5 MW in
isolation, equivalent to £1,100/MW upside in revenue from exploiting low DS3
events and aligning them with wholesale value. Post-period, the Company has
scaled up its volumes accessing wholesale markets as well as deploying the
strategy to other assets across the Irish portfolio.
Wind volumes will continue to play a key role as the single Irish electricity
market progresses towards net-zero targets. During the period, information was
released on the future arrangements market reform starting in 2025, which will
ultimately transform the current DS3 market whilst ensuring sustainability and
security for consumers. The Company remains well positioned to deal with
changes in procurement mechanisms due to its experience in GB, which has
offered varying levels of procurement since the Company's inception.
German market
Table 5
TSO 50 Hertz, Amperion, Tennet, Transnet BW
German portfolio (operational) 22.0 MW / 29.0 MWh
Share of the market (MaStR) (50 Hertz) <1% (Germany), <5% (50 Hertz(3))
Revenue during the period (£) 0.8m
Revenue per MW (£) 38,600 (£8.79/MW/hr)
Revenue per MWh (£) 29,300 (£6.67/MWh/hr)
EBITDA German grid % of Total EBITDA 3.5%
(3) MaStR database
Following spikes in FCR prices experienced over the previous FY caused by
shortages in gas supplies, the Company prepared for normalisation of the gas
market and a subsequent fall in FCR prices by opening its German strategy to
increased trading activity.
Over the period, the Cremzow asset was, therefore, optimised using a blend of
FCR and wholesale trading. This was particularly effective across June to
August, when FCR accounted for a lower percentage of the revenue stack
(c.25%), meaning wholesale markets offered more flexibility and higher
revenues.
Working with the newly-selected RTM provider in Germany has exposed the
Company to new methods of algorithmic wholesale trading, allowing for higher
frequency trading with the optionality for positions to be deployed
physically. This is demonstrated in just under 50 GWh of energy capacity being
traded during the period, with only a fraction of that being
charged/discharged from the grid.
The asset was also prequalified for the "secondary reserve service" aFRR
towards the end of the period. This product has two elements focused on energy
(akin to FCR) and power, procured in 15-minute blocks. The additional revenue
stream will be secured in conjunction with wholesale trading and FCR upon
delivery, which will begin this fiscal year.
ERCOT market (Texas, US)
Table 6
TSO ERCOT
ERCOT portfolio (operational) 29.85 MW / 59.7 MWh
Share of the market (ERCOT) <1%(4)
Revenue during the period (£) 5.1m
Revenue per MW (£) 171,600 (£39.08/MW/hr)
Revenue per MWh (£) 85,800 (£19.54/MWh/hr)
EBITDA ERCOT grid % of Total EBITDA 28.2%
(4) ERCOT September GIS report
The Texas assets also transitioned to a new RTM provider towards the end of
June 2023, a month that experienced the first heatwave of the summer period.
This resulted in RRS prices spiking to just under $2,500/MW across the peak
hours of multiple days in a row, contributing to $800k generated in revenue
over the full month of June.
The selection of a new RTM allowed assets to provide a wider suite of services
and trading activity in the wholesale market. This included the newly
introduced ECRS, which requires two hours of delivery and constituted a
pivotal factor in the overall performance of this period. Without
transitioning to the new RTM, it is unlikely the Company would have been
exposed to this service and would, therefore, have captured lower revenue.
As June heatwaves cooled into July, prices across ancillary services returned
to baseline levels as requirements were easily satisfied. In August, however,
temperatures increased to over 40°C (105°F) for sustained periods, with peak
demand of over 85 GW reached due to increased use of air-conditioning, in
particular. With thermal generation (gas and coal) typically used to meet high
demand on annual maintenance or unable to come online due to temperatures, the
TSO went to the market for reserves (RRS, ECRS) in the absence of
interconnections with surrounding regions. As the situation progressed
throughout the month, ECRS clearing prices moved from over $2,500/MW, given
the low volume of providers pre-qualified for the service, to reach a maximum
of over $4,000/MW.
The RTM adjusted the strategy to a blend of ECRS, RRS and wholesale trading as
calls for the new two-hour service grew, ensuring the maximum value for
delivering energy was achieved for a given day. This allowed the Company's
Texas assets to generate $3.5m in August from just ECRS.
One final temperature spike early in September saw prices achieve $2,000/MW
before dropping away towards the end of the period. The assets were able to
deliver £5.1m in the first six months of FY23/24 compared to £3.8m across
the entire previous the full financial year, equating to an 85% increase in
revenue compared to the same period in 2022.
The Company expects these market conditions to continue until 2025 on the
basis that the availability of flexible capacity (15 GW) will remain
consistent with the levels seen during the period (~14 GW in 2023)(5). The
Company has evaluated the expected load profile over the coming two years and
concluded that should the necessary generation not come online to meet the
increased demand on the system from consumers, as the latest forecasts
suggest, ERCOT will experience frequent scarcity events. As seen during the
period, these scarcity events enable high battery revenues through reserve
services and wholesale volatility.
(5) Calculated based on Aurora Energy Research October 2023 ERCOT
Flexible Energy Market Forecast Data
Table 7
1 April -
30 September 2023
% within grid % of portfolio
£(000s)
GB - 109.7 MW / 101.0 MWh
Ancillary Services 2,590 71%
Capacity Market 618 17%
Wholesale Trading 426 12%
GB Total(6) 3,634 19%
Ireland - 130.0 MW / 72.6 MWh
DS3 Capped/Uncapped 9,480 97%
Capacity Market 216 2.2%
Wholesale Trading 32 0.3%
Ireland total 9,728 50%
Germany - 22.0 MW / 29.0 MWh
Ancillary Services 303 36%
Wholesale Trading 547 64%
Germany Total(7) 849 4%
ERCOT - 29.9 MW/59.7 MWh
Ancillary Services 4,633 90%
Wholesale Trading 490 10%
ERCOT Total 5,123 27%
Portfolio Total - 291.6 MW / 262.3 MWh 19,334
Market Revenue £(000s) £/MW/hr £/MWh/hr
GB 3,634 7.54 8.19
Irish 9,728 17.04 30.51
German 849 8.79 6.67
ERCOT 5,123 39.08 19.54
Weight averages 15.10 16.78
Total Revenue £(000s) June - end quarter September -
end quarter
GB 1,859 1,775
NI 3,552 5,413
RoI 378 384
Germany 340 509
ERCOT 798 4,325
TOTAL 6,929 12,406
(6) The Company holds a 49% ownership interest in Cenin (4.0
MW) and retains 49% of the generated revenue
(7) The Company holds a 90% ownership interest in Cremzow
(22 MW) and retains 90% of the generated revenue, while Enertrag maintains a
minority stake in the asset
Asset Performance
The portfolio performed well with average availability incorporating all
commercial operations downtime, including planned preventive maintenance,
exceeding 95% across the reporting period.
Great Britain:
Cenin, Lower Road, and Port of Tilbury achieved availability above 99%, with
Breach, Hulley, Larport and Lascar following closely with over 97%
availability on average. Ancala faced challenges, with efforts underway to
resolve issues at Heywood Grange and Brook Hall. Boulby achieved lower
availability during the period, with ongoing initiatives for improvement.
Ireland (Northern Ireland and the Republic of Ireland):
In Ireland, all three operational assets-Mullavilly, Drumkee, and
Porterstown-consistently demonstrated high availability and reliable
performance during the reporting period. Mullavilly and Drumkee in Northern
Ireland achieved over 99% availability, with no major risks identified.
Porterstown maintained near-faultless performance, achieving 100%
availability.
Germany:
The Cremzow project, developed in two phases, encountered availability issues
primarily due to extended lead times for spare parts related to the 2.0 MW
pilot project. As necessary spares are being procured and issues addressed, an
increase in availability is anticipated in the next reporting period.
Texas:
The projects in Texas-Snyder, Sweetwater, and Westover-exhibited impressive
resilience, achieving 94% availability despite high temperatures. Inverter
failures in September affected Snyder, however, ongoing resolutions with
suppliers are expected to rectify the issue. Sweetwater maintained strong
performance, achieving over 95% availability during the period, while a failed
network switch affected Westover's availability for a short time before
additional spares were procured to minimise future impacts.
Project progress overview
Great Britain (GB):
Stony was energised in September 2023.
Energisation and commencement of commissioning for Ferrymuir are awaiting
completion of the last remaining non‑contestable work packages carried out
by Scottish Power Energy Networks, including telecommunication and SCADA
works. All other material non-contestable works, including the Point of
Connection circuit breaker modification, have been completed. The slight delay
to the grid connection works program has been driven by resourcing problems at
the distribution network operator and the insolvency of the main
sub-contractor undertaking contestable works on behalf of the Project.
Procurement, manufacturing, and delivery of key battery components for Enderby
are complete, with works progressing well on site. The project is on track to
meet its energisation target of May 2024.
California:
The Big Rock asset in California is progressing well and, as of the date of
publication, is in construction. Contractors have been mobilised, with the
construction of civil engineering works underway, and batteries have been
delivered, with the first enclosures shipped. Key high- voltage equipment for
the substation has been procured, manufactured and stored in project
controlled warehouses. The Investment Manager remains confident of the asset's
energisation date.
Texas:
Initial contracts have been signed, and design, as well as procurement, has
been kicked off for the advanced engineering and delivery of a high-voltage
grid connection customer substation for Dogfish. Contracting for the battery
system is nearing completion. The project is progressing in accordance with
the planned timeline, aligning with the energisation target.
Ireland:
Transformer and civil engineering works for Porterstown Phase II are complete,
with detailed engineering and procurement for the battery system underway.
Despite a minor delay, energisation is targeted for October 2024.
Kilmannock, designed to accommodate Phase I and II, has finalised layout and
earthworks designs. Consent updates are in progress, and both phases remain on
schedule.
Pre-Construction development (Middleton and Dallas & Surrounds portfolio)
Pre-construction efforts at Middleton and the broader Dallas & Surrounds
portfolio (Mineral Wells, Mesquite, Wichita Falls, and Cedar Hill) are
progressing in accordance with grid availability. The projects are on track to
meet their respective energisation targets.
There is an active exploration of site expansion across the Company's existing
portfolio, with an initial focus on capacity (MW) expansions as this
represents greater additional value in most markets. The Investment Manager is
also exploring and progressing with opportunities for augmentation of assets
with additional duration (MWh) in specific locations where market signals
support the investment case.
Table 8
Project Target Energisation Capacity
Stony Energised 79.9 MW
Ferrymuir Jan - end 2024 49.9 MW
Enderby May - end 2024 57.0 MW
Porterstown Ph II Oct - end 2024 60.0 MW
Big Rock Dec - end 2024 200.0 MW
Dogfish Dec - end 2024 75.0 MW
Mineral Wells Jun - end 2025 9.95 MW
Mesquite Jun - end 2025 9.95 MW
Cedar Hill Jun - end 2025 9.95 MW
Wichita Falls Jun - end 2025 9.95 MW
Kilmannock Ph I H2 2025 30.0 MW
Kilmannock Ph II H2 2026 90.0 MW
Middleton H2 2026 200.0 MW
Q&A with Sumi Arima
Sumi Arima
CIO and CFO of Gore Street Capital, the Investment Manager
Q: What new revenue streams has the Company pursued during the reporting
period?
We sought out new RTM partners during the period to secure additional
opportunities and ultimately increase revenue generation from the global
portfolio.
Following the selection of a new RTM in Texas, the Company was able to secure
prequalification for ECRS, a daily procured ancillary service introduced in
June 2023. The first of the Company's assets began providing ECRS on 29 July,
and in the months since, the Texas sites have been delivering portfolio-
leading revenue, including an average of £156/MW/hr in August alone -
totaling £3.5m for the month.
We have also entered day-ahead and real-time energy trading markets in Texas
as part of a more diverse strategy. The Company has always had some
capability in the real-time market, but this has now been more fully enabled
to create a more effective trading strategy.
We were also able to select a data-driven RTM provider in Germany and achieved
prequalification to start delivering aFRR post-period, in addition to
continuing to provide FCR. Germany also has the deepest wholesale market
opportunity from the grids we are active in by a significant margin and,
therefore, is providing the Company with unique insight into high-frequency
trading. We have been able to apply this knowledge to the strategies we are
enacting across the portfolio, which has been optimised across four energy
grids to maximise profitability while delivering a valuable contribution to
grid stability.
In Ireland, for example, there are periods where ancillary services revenue is
lower. We are, therefore, ensuring the Company's assets are able to take
advantage of wholesale trading as a higher-value alternative revenue stream
when appropriate.
Should the depth and additional liquidity come to the GB market, as is
expected in the coming years as more renewables are deployed, we will be well
placed to deploy this kind of strategy.
Q: How are the Company's operational assets in Texas delivering value from the
volatile market?
We've seen in recent years how volatility caused by weather events in Texas
has created massive demand for energy storage. The Company's near 30 MW/60 MWh
operational portfolio plays a significant role in responding to these periods,
which often experience spikes in pricing up to $4,000 in ancillary services
and over $5,000 in real-time markets. Scarcity has the potential to last for
longer periods, as we saw this summer when the fleet generated $1.7m across
24-27 August due to high temperatures creating the same conditions on each
day. Maintaining fleet availability during these spikes has been a crucial
means of success for the Company's Texas assets, allowing material revenues to
be captured in a short period. From the beginning of June through to the end
of August, the Manager's in-house asset performance team kept the three Texas
assets at an average availability rate of 94%, ensuring they could respond to
the increased volatility experienced on the ERCOT grid during heatwaves
experienced over this summer period.
These assets began delivering the ECRS service, which responds to both losses
of load on the ERCOT grid and ramping of load or demand, often caused by
changes in renewable generation. In summer months, the change from daytime
solar generation to evening capacity is stark (often referred to as a duck
curve due to the shape of the evening net demand curve), and our assets are
adding resilience to the Texas grid by helping manage this transition.
While this ramping is not as prominent in winter due to reduced daylight
hours, we expect to see some revenue generation from the changes in output
from the state's fleet of wind turbines. These months, however, have different
requirements from the ERCOT energy system, as cold snaps can result in
failures across traditional infrastructure. This increases volatility as the
assets available on the grid can attract higher prices for their
deliverability, creating opportunities for energy storage.
Q: How are the varying system durations across the portfolio suited to the
markets in which they operate?
GSF is unique in being the only listed vehicle with four different durations
within its portfolio: sub-30 minutes in Northern Ireland, both 30 minutes and
one hour in both the Republic of Ireland and Great Britain, 90 minutes in
Germany and two hours in Texas, with a two-hour system to follow in
California. For those assets built on behalf of the Company, minimising capex
has always been a focus, and we have, therefore, sized their technical
capabilities to suit the revenues available in each market.
The Northern Ireland portfolio has illustrated the success of this approach
during the reporting period, earning industry‑leading revenues from the
uncapped DS3 suite of ancillary services from less than half an hour of energy
delivery achieving 5.8x of the GB revenue in the period on a MWh basis.
The capabilities of the Company's two-hour operational Texas assets have also
proved advantageous following the introduction of ECRS in June. This service
requires providers to have two hours of capacity reserved for delivery at all
times, and while this could be served by a one-hour system delivering half its
capacity across the period in which it is triggered, we have been able to
utilise the full pre-qualified capacity of 9 MW of the operational Texas
assets since they first entered the service on 29 July to secure high revenues
as an early pre-qualified asset.
The 200 MW/400 MWh size of the Big Rock asset in California is strategically
designed to enable the asset to qualify for the Resource Adequacy (RA)
mechanism, which requires four hours of delivery. The asset has 100 MW of RA
deliverability and will also operate within ancillary services and wholesale
trading markets within California with 200 MW capacity.
To date, the Company has deployed optimal duration for the markets in which it
operates to avoid overspending on energy storage systems with underutilised
excess duration. In certain markets, like GB, it is still not evident when the
commercial opportunity to utilise larger MWh capacity will materialise. Today
the opportunities aren't there to allow a trading strategy that would justify
the added expense of building longer duration systems. The only other market
to reward such systems in GB - Dynamic Regulation - is significantly
oversubscribed, reducing the value than can be accrued to justify higher capex
for larger capacity. The Manager has ensured the Company is prepared for any
changes to these realities and maintains the flexibility to upgrade assets if
and when the market signals provide an incentive to do so.
Q: You've spoken about diversification, but does it work?
For a largely merchant asset-class like energy storage, diversification is a
fundamental necessity to reduce revenue volatility. Within Great Britain,
opportunities to diversify are limited due to uniform revenue streams and
consistent wholesale electricity prices across all regions. This uniformity
results in significant fluctuations in revenue year on year. Seasonal
variation also creates large fluctuations in quarterly revenue, with Spring
and Summer historically yielding higher revenues compared to the Fall and
Winter seasons.
The Company has always factored these revenue variations into its decision
making, which is why international diversification has been a key strategic
objective. Today, it is unique in holding assets across five distinct and
uncorrelated energy systems. This enables the Company to navigate the
challenges posed by individual market fluctuations by accruing more stable and
reliable revenue generation throughout the year from multiple markets. This
can be seen in the Company's revenue over this reporting period, when revenue
from its GB fleet was £7.54 per MW/hr, compared with £15.10 per MW/hr on a
consolidated portfolio basis, representing c.2x vs a GB-only portfolio.
Figure 3 in the 2023 Interim Report shows the standard deviation in revenue
generated per quarter since IPO by GSF's GB fleet, which amounts to c.£ 4.95
per MW/h. When analysing the consolidated fleet, however, which also includes
assets in Ireland, Germany and Texas, this quarterly figure drops to £2.68
per MW/h. The reduction of approximately 50% (post-FX) showcases the tangible
impact of diversification on revenue stability and, thus, the Company's
ability to sustainably pay dividends to its investors. As the Company
continues to build out new capacity outside of GB, volatility in revenues is
expected to reduce further.
Q: How is the Company's acquisition strategy delivering better value for
shareholders than alternatives?
The Company made a choice early on to acquire ready-to- build projects - those
with land rights, planning permission and a grid connection all secured -
where possible in order to manage the buildout process leveraging the
Investment Manager's in- house technical teams. This ultimately leads to
higher returns compared to an operational asset purchase strategy due to the
successful management of the higher risk profile of construction projects,
which can be built at cost without a markup included in the purchase price. In
addition, the Company's strategy ensures the best quality operational assets
due to the tight controls in place from start to finish while continually
bolstering the knowledge and expertise kept in the Investment Manager to be
applied to future projects.
As the Company's presence continues to grow in scale, it is able to leverage
its experience as an international owner to select favourable markets and
projects whilst also evaluating any potentially advantageous capital recycling
programs. The composition of the international portfolio is, therefore,
continuously evaluated to ensure all capacity remains wedded to the Company's
goals.
Q: To what extent is the market saturation experienced in GB emerging in other
markets?
As a first mover, the Company factors in declining revenue streams in all the
markets it operates in as we understand new entrants will follow and place
downward pressure on prices. This has been seen in GB every two to three years
since 2017, generally driven by new project lead times, and leaves the
market's 3 GW operational fleet competing over reducing revenues. The
reductions seen in ancillary services prices over the reporting period are a
strong indication this saturation is tightening.
The Company has been deploying capacity in other markets to increase access to
a wider range of revenue streams. The early moves into these markets allowed
the Company to establish itself ahead of others, who are likely to face high
barriers of entry and lack the experience operating in such markets that the
Manager has built up over the past two years.
In the single integrated Irish grid, for example, which remains a nascent
market, connection delays and limitations on grid needs for new capacity means
for those already operating assets, saturation is not an immediate concern.
The potential for more frequent procurement of ancillary services following
the retirement of the DS3 program bodes well for the Company, which will be
able to leverage its experience in other markets with competitive auctions and
shorter-term contracts.
Concerns over the potential for market saturation in the ERCOT market in
Texas, given the rapid deployment of energy storage in recent years, fail to
consider the scale of renewables capacity planned for the coming years,
alongside the retirement of traditional thermal generation.
Wind and solar generation, which is already being curtailed in the state,
could more than double from 50 GW at the end of 2022 to 104 GW(8) by 2035,
ensuring an ongoing need for energy storage through services like ECRS. It is
not a correct comparison to judge energy storage growth in ERCOT against
today's ancillary service needs, which will only grow as the system continues
to decarbonise.
The continued cycle of extreme weather events witnessed in Texas in recent
years adds to this need. Price spikes continue to increase as each heatwave
causes increasing demand for supply resources to serve both the ancillary
services and energy markets.
As with ECRS, more opportunities will always emerge for energy storage,
including in GB, where the full suite of ancillary services has yet to be
deployed. Procurement levels for the 2024 introduction of quick and slow
reserve have yet to be revealed, but these new services could help reduce the
current market saturation. Additional reforms planned for the Balancing
Mechanism and a subsequent shift in merchant trading opportunities may also
help alleviate the revenue issues seen in GB. These upcoming market drivers
could reduce downward pressure on prices as more opportunities for market
participants emerge, increasing demand for energy storage.
We would expect to see this cycle of tightening market saturation restricting
new entrants, followed by more opportunities for existing market players, in
every market.
(8) Aurora EOS:
https://eos.auroraer.com/dragonfly/insights/region/erc/home/content/2102
Q: How is the Company managing its cash flow and future deployments?
The scale of the Company's international portfolio and assessment of potential
pipeline opportunities requires a prudent approach to capital deployment.
Despite the diversified assets generating cashflows, the Company must
strategically prioritise asset buildouts, taking into account capital
requirements, contract structures and expected returns to contribute to
dividend cover once operational.
As at period-end, the Company and its subsidiaries had £89m of cash and cash
equivalents and a £50m Revolving Credit Facility ("RCF") with Santander,
which are sufficient to cover its contractual obligations of c. £64m. The RCF
also features an accordion option to increase beyond £50m to up to 30% of
Gross Asset Value ("GAV").
Post-period, the Company secured a $60m loan facility from First Citizens
Bank. The Investment Manager intends to draw down from this loan to optimise
returns through the construction of the 200 MW Big Rock asset in CAISO, which
is expected to be backed by up to 40% of contracted revenues.
The Company is continuously monitoring the use of debt given its prevailing
costs and intends to make drawdowns only when it is advantageous to do so. As
at 30 September, gearing stood at 0% of GAV. The Investment Manager has been
incrementally making use of the competitively priced First Citizens loan since
the period end.
NAV Overview & Drivers
Cash generation during the reporting period was £14m.
Net Asset Value (NAV) movements during the period reflected the macroeconomic
context in which the Company is operating. Adjustments in inflation
assumptions and an increase to discount rates (+25bps across the portfolio),
required to ensure the Company's valuation assumptions remained aligned with
the prevailing macroeconomic environment, resulted in a £19m reduction in
NAV. Revenue forecasts were updated to reflect the current pricing trends in
GB, resulting in an additional £4m reduction in NAV.
Positive drivers of NAV during the period included the Company achieving key
milestones for portfolio assets under construction. As the assets are
de-risked through stages of construction, discount rates are naturally unwound
to reflect the updated risk profile. During the period this resulted in an NAV
uplift of £6m. Operational expenditure savings achieved during the period
also provided a material £8m uplift to NAV.
A further increase of £4m was due to other Discounted Cash Flow (DCF)
changes, including updated repowering assumptions and, due to the proportion
of construction assets, the rollover across the portfolio added to the net
positive effect on NAV.
Table 9
FV Breakdown by Grid (in £m) Construction and Operation
pre-construction
GB 151.9 43.6
Ireland 13.9 74.6
Germany n/a 14.0
ERCOT 12.5 20.7
CAISO 140.6 n/a
Revenue Forecasts
GB:
GB's updated third-party revenue forecasts have been reflected with a central
blend of forecasts and have seen a decrease in forecasted prices driven by the
current drop in market prices. The prior application of prudent valuation
assumptions has largely mitigated the effect of lower third-party curves.
IRE:
Updated third-party revenue forecasts reflecting a central blend of forecasts
were used. The net effect of the updated curves on the Irish portfolio was an
uplift compared to the previous financial year-end.
The Porterstown asset in the Republic of Ireland has secured a Capacity Market
contract for the period from September 2023 to October 2024, which was
reflected in the valuations.
GER:
Updated central case scenario third-party revenue forecasts were used in the
model, creating an uplift in the German asset's valuation. The application of
a hybrid business model curve (ancillary services & trading) supported
this uplift. The adoption of this hybrid curve followed the German asset's
material participation in the trading market during the reporting period.
ERCOT:
Updated third-party central case scenario forecasts have been applied to the
models and did not cause material changes in price levels.
CAISO:
Third-party base case scenario merchant revenue forecasts have been updated
and, similar to ERCOT, did not have material changes in price levels.
Table 10: MW Capacity by Grid in Respective Years
2023 2024 2025 2026
GB 190 297 297 497
ERCOT 30 105 145 145
CAISO 0 200 200 200
GER 22 22 22 22
NI 100 100 100 100
RoI 30 90 120 210
Inflation
The inflation assumptions have been updated to reflect a decrease in inflation
throughout 2023 and 2024 compared to the assumptions at the previous financial
year end. The long-term inflation assumption remains consistent with those
disclosed previously.
Table 11
CPI Assumptions 2023 2024 2025+
GB 4.63% 2.75% 2.50%
EUR 3.11% 2.75% 2.50%
US 3.31% 2.75% 2.50%
Discount rates
The weighted average discount rate across the portfolio was 10.3% (10.1% in
FY23 end) as at 30 September. A 25 bps increase was applied to discount rates
across the portfolio, reflecting the increased risk-free rate. For relevant
assets, construction premia have been reduced in line with major construction
milestones completed.
Table 12
Discount Rate Matrix Pre-construction phase Construction phase Energised
phase
Contracted Income 10.40-11.00% 9.25-10.25% 7.25-9.25%
Uncontracted Income 10.40-11.00% 9.25-10.25% 8.75-9.25%
MW 694.8 106.9 371.5
Opex
The Investment Manager's experienced in-house asset management team enables
the portfolio assets to benefit from lower costs and increased technical
supervision.
Material operating expenditure savings were achieved during the period by
taking several third-party services in-house, including asset management and
certain O&M workstreams for operational Irish assets; asset management for
Cenin, Stony, Enderby, and Ferrymuir in GB; and RTM fee reductions for the
Texas operational portfolio.
Newly executed contracts with opex impacts have been reflected in the US
assets' models, such as insurance and substation facilities expenses.
Capex
Repowering curve assumptions have been updated, reflecting a slight increase
in the long-term forecast of battery prices. However, the Company's assets
have a significant portion of their useful life left before they are scheduled
to be repowered.
For relevant construction assets, the upfront capex schedules have been
revised based on developing discussions with contractors.
Sensitivities
NAV sensitivities were applied to analyse the impact of changes in
macroeconomic factors and key valuation assumptions on the NAV of the
portfolio. The following sensitivities were applied:
a. Inflation rate: +/- 1.0%
b. FX volatility: +/- 3.0%
c. Discount rate: +/- 1.0%
d. EPC costs +/- 10.0%
Outlook Message from Alex O' Cinneide
Dr Alex O'Cinneide
CEO of Gore Street Capital, the Investment Manager
CEO Statement
I am pleased to report that the Company's strategy, enabled by the active role
of the Investment Manager, despite difficult stock market conditions, has
allowed the business to continue to overachieve during a challenging period.
Since inception, it has generated a 20% per annum cash yield over invested
capital, and during the September end quarter, the Company delivered an
operational dividend cover of 1.15x. This positive trajectory is reflected in
portfolio performance, which maintained the highest revenue on both a per MW
and absolute basis among our listed peers during the period. This was achieved
through diversification, with assets in Ireland, Texas and Germany
overachieving against base case. The slight decrease in NAV is wholly due to
changes in the discount rate and inflation assumptions, with high-interest
rates expected to continue, and does not reflect the exemplary performance of
the Company's commercial operations. With a NAV Total Return of 48.8% since
IPO, an excellent balance sheet given our minimal level of debt, and a strong
cash position, the Company remains in a compelling and sustainable position.
While we expect energy storage to continue to play a crucial role in the
decarbonisation of GB, the growth of the market in just a short number of
years has resulted in new entrants exceeding demand for their services. The
expected market saturation we are currently experiencing caused reduced prices
during the reporting period, particularly in the summer months.
Due to the international spread of the Company's operational assets, these
market dynamics did little to impact the industry- leading revenues that were
achieved during the period, in part, by tackling volatility caused by the
climate crisis.
Heatwaves have become a predictable feature of summer months in Texas, as seen
by the record-breaking temperatures experienced across the latest reporting
period. As power demand achieved new heights across the state, the Company's
operational portfolio in the ERCOT market was able to capture value from price
spikes as high as $4,000/MW/hr while supporting the constrained grid system to
deliver capacity when needed most. Early prequalification for the new ECRS
service allowed the Company to reach average monthly revenues of £156/MW/h in
Texas in August, with its three operational assets generating £3.46m in
August alone.
This first mover mentality continues to pay off in the single integrated Irish
electricity market, where the Company was among the first to establish itself
with the DS3 program.
While DS3 services have proven effective in responding to the needs of an
increasingly decarbonised grid, the structure of future delivery of ancillary
services is uncertain after the Irish transmission system operators and
regulator set out proposals to reform the suite of ancillary services in the
reporting period. The Investment Manager is already engaging in the
development of this process to safeguard future revenue streams for the
Company's assets.
In addition to these ancillary service activities across the portfolio, the
assets have also derived additional value from the wholesale market as trading
opportunities became more frequent. While the Company has always taken a
realistic view of the emergence of trading as a dominant revenue stream for
energy storage, the reporting period has shown we are ready to act on any
opportunity as it arises. With the support of new and existing partners, we
have been able to optimise trading across the US, Germany and the Irish grid.
The expertise we are continuing to build will pay dividends in future
reporting periods when more of the Company's assets enter commercial activity.
The 80 MW Stony project was energised in September while the 50 MW Ferrymuir
project is ready and awaiting final works by the network operator. The
Company's biggest project to date - the 200 MW/400 MWh Big Rock asset in
California - has also been advancing at speed through the efforts of the
Investment Manager. A $60m loan agreement with First Citizens Bank was secured
post-period to introduce project-level debt into the portfolio for the first
time. It will be used to fund the remaining capital costs of the Big Rock
project, which, to date, has been funded with GSF equity.
While we have remained mindful of the changing macroeconomic challenges,
updating the Company's NAV accordingly, the exciting advancements made by the
Company during the reporting period along with continued industry- leading
revenues ensure we are well-positioned for sustainable growth.
Delivery against strategy
The Company has continued to deliver industry-leading revenue during the
reporting period thanks to the new RTM partnerships and refined strategies
introduced across its uniquely diversified revenue streams. Improvements in
revenues were delivered through new RTM partnerships and refined strategies,
including participation in trading markets in Germany, Texas and Ireland.
Optimisation of asset management functions has further complimented the
profitability of the Company during the period, resulting in material and
ongoing cost savings.
During the period, the Company's operational fleet grew further with the
energisation of the Stony asset. Significant progress has been made in the
buildout of Big Rock and Enderby in line with project schedules.
As indicated to investors, the Company has continued to put a suitably mature
capital structure in place. This began with the upsizing of the existing debt
facility from £15m to £50m through a revolving credit facility, with an
accordion facility option to increase beyond £50m to up to 30% of Gross Asset
Value ("GAV"), secured at the fund level from Santander and was followed by
project-level debt secured for its California asset, the 200 MW/400 MWh Big
Rock project. Post-period, the Company successfully secured a $60m First
Citizens loan for a period of three years at a competitive cost compared to
GBP debt. The progress made on Resource Adequacy contracting for the Big Rock
asset further supports the improved capital structure.
The increased debt availability adds to the funding sources providing
sufficient headroom for the Company to continue meeting its working capital,
capex, dividend and other financial commitments without the need for
additional equity raise in the short-term. These include: £75m in Company
cash reserve and a further £13.9m across its subsidiaries as at 30 September
2023. The Company maintains its prudent approach to leverage with drawdowns
made only when it is advantageous compared to the resulting costs, while the
facilities are kept available to support growth during improving market
conditions.
In response to increasing costs in the debt markets, the Investment Manager
continuously assesses various strategies to optimise the use of available
funds. One such strategy is the prioritisation of construction-ready projects
based on buildout schedules and sizes. As part of this strategy, the
Investment Manager has decided to prioritise the construction of Dogfish and
progressed with its procurement.
The Company continues to maintain a strong balance sheet with a total
available liquidity of £135m as at 30 September 2023.
With the additional CIT loan facility secured post-period and future cash
generation capability, the Company is well‑positioned to manage liquidity in
the coming years.
Outlook
Equity markets, particularly for renewables infrastructure, are navigating
challenging terrain amidst the ongoing pressure from central banks' persistent
"higher for longer" rate signals. Despite its leading global dividend yields,
the UK is trading at a historic discount compared to other regions. While the
market is likely to be close to or already at the peak of interest rates, the
Bank of England is expected to reduce the base rate gradually, given the
persistent nature of inflation in the UK, with some forecasts not predicting a
decline in the base rate until mid-2024.
The Company has demonstrated resilience during these challenging market
conditions and continues to execute against the strategy outlined to investors
in the investment policy. As highlighted in the previous Annual Report, the
Company is focused on the following areas: outperforming revenue benchmarks,
increased EBITDA margin, and the buildout of the Company's portfolio.
Buildout of the Portfolio
Following the successful energisation of 79.9 MW, the Company is now focused
on the construction of Ferrymuir and Enderby in GB, scheduled for energisation
in January and May 2024, as well as other prioritised assets. The Company has
targeted the energisation of an additional 442 MW before the end of 2024,
including the expansion of the Porterstown asset in Ireland and the Big Rock
and Dogfish assets in California and Texas.
As a real asset investor, the increased operational capacity directly impacts
cash generation and dividend cover. These assets not only provide yields but
also offer capital appreciation as they progress from the construction to the
operational stage.
RA and ITC Processes
The Investment Manager is in advanced stages of contracting under the Resource
Adequacy (RA) mechanism, a service available to energy storage operators in
the CAISO market (California). The RA market is currently observing favourable
prices for batteries with commercial operation dates (CODs) before the end of
2025, driven by a high demand for RA providers in the near term. Big Rock
benefits from this market trend through its Dec-24 target COD with the ability
to secure 10-15-year bilateral contracts, which it intends to confirm in early
2024 at the currently attractive pricing levels.
The Company is also looking to monetise the Investment Tax Credit (ITC)
available under the US Inflation Reduction Act for its US assets, which
qualify for at least 30% of ITC. The market will be updated in due course once
negotiations for the correct long- term partner for both streams have been
suitably progressed.
Positive Policy Developments
The US Inflation Reduction Act has significantly benefited the deployment of
energy storage assets and, provides the Company with substantial capital
expenditure reimbursements post- energisation. The strong incentives also
accelerate renewable penetration acting as the fundamental driver for
increased need for energy storage and subsequent revenues.
The $368bn policy package has also prompted action from the European
Commission, which released a series of recommendations for accelerating the
integration of renewable and low-carbon technologies, including energy
storage, that are now being discussed at the European Council level. This
marks a significant and direct intention to support energy storage in European
policy, aligning with the industry's long-held beliefs regarding the
technology's pivotal role in achieving a decarbonised and secure EU energy
system.
Additionally, the Net Zero Industry Act, which aims to ensure that at least
40% of the EU's annual deployment needs for strategic net-zero technologies
are met by 2030, now includes electricity storage technologies. Coupled with
recent changes to state aid rules, this inclusion is expected to accelerate
investments in the manufacturing and deployment of energy storage,
facilitating Europe's journey to supply chain independence.
As an asset owner with operational capacity in the EU and an active pipeline
across the continent, the Company is well‑positioned to capitalise on the
upcoming changes to the policy landscape.
Policymakers in GB are proving slow to share their response, and given recent
policy announcements delaying the country's climate targets and proximity to a
general election, the Investment Manager does not expect an improved policy
agenda until after the general election.
Next Steps
We approach 2024 with tempered optimism, recognising the inherent
opportunities of the Company's diversified approach. Given the current pricing
landscape in GB, continuing to build on the Company's international presence
will ensure it continues to tap into a diverse mix of revenue streams across
multiple uncorrelated markets. This international emphasis will become
increasingly evident in 2024 and beyond as the Company brings more
international capacity online.
Directors' Interim Report
Principal Risks and Uncertainties
The principal risks and uncertainties with the Company's business fall into
the following categories: Changes to Market Design; Inflation; Exposure to
Lithium-Ion Batteries, Battery Manufacturers, and technology changes; Service
Provider; Valuation of Unquoted Assets; Delays in Grid Energisation or
Commissioning; Currency Exposure; Cyber-Attack and Loss of Data; and Physical
and transitional climate-related risks. A detailed explanation of the risks
and uncertainties in each of these categories can be found on pages 43 to 45
of the Company's published annual report for the year ended 31 March 2023.
These risks and uncertainties have not materially changed during the six
months ended 30 September 2023. However, the Board has noted that geopolitical
factors continued to create uncertainties, including relating to energy
policy, supply chains and interest rates.
Going Concern
Having assessed the principal risks and uncertainties, and the other matters
discussed in connection with the viability statement as set out on page 46 of
the published annual report for the year ended 31 March 2023, the Directors
consider it appropriate to adopt the going concern basis in preparing the
accounts.
Related Party Transactions
There have been no transactions with related parties that have materially
affected the financial position or the performance of the Company during the
six months ended 30 September 2023.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge, this set of
condensed financial statements has been prepared in accordance with UK
adopted IAS 34 Interim Financial Reporting and with the Statement of
Recommended Practice, "Financial Statements of Investment Companies and
Venture Capital Trusts" issued in July 2022, and that this half year report
includes a fair review of the information required by 4.2.7R and 4.2.8R of the
FCA's Disclosure Guidance and Transparency Rules.
Patrick Cox
Chair
Independent Auditor's Review Report
to Gore Street Energy Storage Fund Plc
Conclusion
We have been engaged by the Company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30
September 2023 which comprises the Interim Condensed Statement of
Comprehensive Income, the Interim Condensed Statement of Financial Position,
the Interim Condensed Statement of Changes in Equity, the Interim Condensed
Statement of Cash Flows and the related explanatory notes. We have read the
other information contained in the half yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with UK adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with UK adopted international accounting standards. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the Directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statements in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
13 December 2023
Interim Condensed Financial Statements
Interim Condensed Statement of Comprehensive Income
For the Period Ended 30 September 2023
1 April 2023 to 30 September 2023 1 April 2022 to 30 September 2022
Notes Revenue Capital Total Revenue Capital Total
(£)
(£)
(£)
(£)
(£)
(£)
Net (loss)/gain on investments at fair value through profit and loss - (4,742,507) (4,742,507) - 23,905,375 23,905,375
Investment income 12,442,482 - 12,442,482 2,575,055 - 2,575,055
Administrative and other expenses (3,834,334) - (3,834,334) (3,795,540) - (3,795,540)
Profit before tax 8,608,148 (4,742,507) 3,865,641 (1,220,485) 23,905,375 22,684,890
Taxation 4 - - - - - -
Profit after tax and profit for the period 8,608,148 (4,742,507) 3,865,641 (1,220,485) 23,905,375 22,684,890
Total comprehensive income for the period 8,608,148 (4,742,507) 3,865,641 (1,220,485) 23,905,375 22,684,890
Profit per share (basic and diluted) - pence per share 5 0.80 4.81
All Revenue and Capital items in the above statement are derived from
continuing operations.
The Total column of this statement represents Company's Income Statement
prepared in accordance with UK adopted International Accounting Standards. The
total profit after tax for the period is the total comprehensive income and
therefore no additional statement of other comprehensive income is presented.
The supplementary revenue and capital columns are presented for information
purposes in accordance with the Statement of Recommended Practice issue by the
Association of Investment Companies.
The notes on pages 29 to 36 of the Interim Report for the period ended 30
September 2023 form an integral part of these financial statements.
Interim Condensed Statement of Financial Position
As at 30 September 2023
Company Number 11160422
Notes 30 September 31 March
2023
2023
(£) (£)
Non - Current Assets
Investments at fair value through profit or loss 6 469,342,485 434,762,146
469,342,485 434,762,146
Current assets
Cash and cash equivalents 8 74,989,816 123,705,727
Trade and other receivables 789,383 843,825
75,779,199 124,549,552
Total assets 545,121,684 559,311,698
Current liabilities
Trade and other payables 1,840,180 3,046,853
1,840,180 3,046,853
Total net assets 543,281,504 556,264,845
Shareholders equity
Share capital 10 4,813,995 4,813,995
Share premium 10 315,686,634 315,686,634
Special reserve 10 31,680 349,856
Capital reduction reserve 10 94,594,194 111,125,000
Capital reserve 10 120,841,907 125,584,414
Revenue reserve 10 7,313,094 (1,295,054)
Total shareholders equity 543,281,504 556,264,845
Net asset value per share 9 1.13 1.16
The interim financial statements were approved and authorised for issue by the
Board of directors and are signed on its behalf by:
Patrick Cox
Chair
Date: 13 December 2023
The notes on pages 29 to 36 of the Interim Report for the period ended 30
September 2023 form an integral part of these financial statements.
Interim Condensed Statement of Changes in Equity
For the Period Ended 30 September 2023
Share Share Special reserve Capital reduction reserve Capital Revenue reserve Total shareholders
capital
premium reserve
reserve
(£) (£)
(£) equity
(£) (£) (£)
(£)
As at 1 April 2023 4,813,995 315,686,634 349,856 111,125,000 125,584,414 (1,295,054) 556,264,845
Profit/(loss) for the period - - - - (4,742,507) 8,608,148 3,865,641
Total comprehensive income for the period - - - - (4,742,507) 8,608,148 3,865,641
Transactions with owners
Movement in special reserve - - (318,176) 318,176 - - -
Dividends paid - - - (16,848,982) - - (16,848,982)
As at 30 September 2023 4,813,995 315,686,634 31,680 94,594,194 120,841,907 7,313,094 543,281,504
For the Period Ended 30 September 2022
Share Share premium reserve Special reserve Capital reduction reserve Capital reserve Revenue reserve Total shareholders
capital
(£) (£) (£) (£) (£) equity
(£)
(£)
As at 1 April 2022 3,450,358 269,708,123 186,656 42,258,892 64,757,592 (3,880,527) 376,481,094
Profit/(loss) for the period - - - - 23,905,375 (1,220,485) 22,684,890
Total comprehensive income/(loss) for the period
- - - - 23,905,375 (1,220,485) 22,684,890
Transactions with owners
Ordinary shares issued at a premium during the period
1,363,637 148,636,363 - - - - 150,000,000
Share issue costs - (2,657,854) - - - - (2,657,854)
Dividends paid - - - (11,714,711) - - (11,714,711)
As at 30 September 2022 4,813,995 415,686,632 186,656 30,544,181 88,662,967 (5,101,012) 534,793,419
Capital reduction reserve and revenue reserves are available to the Company
for distributions to Shareholders as determined by the Directors.
The notes on pages 29 to 36 of the Interim Report for the period ended 30
September 2023 form an integral part of these financial statements.
Interim Condensed Statement of Cash Flows
For the Period Ended 30 September 2023
Notes 1 April 2023 to 1 April 2022 to
30 September 30 September
2023 2022
(£) (£)
Cash flows used in operating activities provided by
Profit for the period 3,865,641 22,684,890
Net loss/(gain) on investments at fair value through profit and loss 4,742,507 (23,905,375)
Decrease/(increase) in trade and other receivables 54,442 (1,091,983)
Decrease in trade and other payables (1,206,673) (1,520,858)
Net cash generated from /(used in) operating activities provided by 7,455,917 (3,833,326)
Cash flows used in investing activities
Purchase of investments (39,322,846) (26,900,159)
Purchase of short term investments - (140,000,000)
Net cash used in investing activities (39,322,846) (166,900,159)
Cash flows used in financing activities provided by
Proceeds from issue of ordinary shares at a premium - 150,000,000
Share issue costs - (2,657,854)
Dividends paid (16,848,982) (11,714,711)
Net cash (outflow)/inflow from financing activities (16,848,982) 135,627,435
Net decrease in cash and cash equivalents for the period (48,715,911) (35,106,050)
Cash and cash equivalents at the beginning of the period 123,705,727 198,047,440
Cash and cash equivalents at the end of the period 74,989,816 162,941,390
During the period, interest received by the Company totalled £12,442,482
(2022: £2,575,055).
The notes on pages 29 to 36 of the Interim Report for the period ended 30
September 2023 form an integral part of these financial statements.
Notes to the Interim Condensed Financial Statements
For the Period Ended 30 September 2023
1. General information
Gore Street Energy Storage Fund plc (the "Company") was incorporated in
England and Wales on 19 January 2018 with registered number 11160422. The
registered office of the Company is First Floor, 16-17 Little Portland Street,
London, W1W 8BP.
Its share capital is denominated in Pound Sterling (GBP) and currently
consists of ordinary shares. The Company's principal activity is to invest in
a diversified portfolio of utility scale energy storage projects primarily
located in UK, the Republic of Ireland, North America and Germany.
2. Basis of preparation
STATEMENT OF COMPLIANCE
The half yearly condensed financial statements for the period 1 April 2023 to
30 September 2023 have been prepared in accordance with UK adopted IAS 34
Interim Financial Reporting, and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
The half yearly financial statements do not include all the information and
disclosures required in the annual financial statements, and should be read in
conjunction with the Company's annual financial statements as at 31 March
2023.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in the
preparation of the Company's annual financial statements for the year ended 31
March 2023. These accounting policies will be applied in the Company's
financial statements for the year ended 31 March 2024.
The financial statements have been prepared on a historical cost basis except
for the investments which are accounted for at fair value through profit or
loss. The Company is an investment entity in accordance with IFRS 10 which
holds all its subsidiaries at fair value and therefore prepares separate
accounts only and does not prepare consolidated financial statements for the
Company.
The financial information for the year ended 31 March 2023 has been extracted
from the latest published audited financial statements which have been filed
with the Registrar of Companies. The Independent Auditor's Report on those
accounts contained no qualification or statement under Section 498 (2), (3) or
(4) of the Companies Act 2006.
The financial information contained in this Half Year Report does not
constitute statutory accounts as defined in Sections 434-436 of the Companies
Act 2006. The financial information for the six months ended 30 September 2023
and 30 September 2022 has not been audited by the Company's external auditor.
The financial statements do not contain any operating segment information on
the basis that there is only one reportable segment.
FUNCTIONAL AND PRESENTATION CURRENCY
The currency of the primary economic environment in which the Company operates
(the functional currency) is Pound Sterling ("GBP or £") which is also the
presentation currency.
Going Concern
The going-concern analysis takes into account expected increases to Investment
Adviser's fee in line with the Company's NAV and expected increases in
operating costs, as well as continued discretionary dividend payments to
shareholders at the annual target rate of 7% of NAV, subject to a minimum
target of 7 pence per Ordinary Share in each financial period. Consideration
has been given to the current macro-economic environment and volatility in the
markets. Based on the analysis performed, the Company will continue to be
operational and will have excess cash after payment of its liabilities for at
least the next 12 months to 31 December 2024.
As at 30 September 2023, the Company had net current assets of £73.94
million, including cash balances of £74.99 million (excluding cash balances
within investee companies), which are sufficient to meet current obligations
as they fall due. The major cash outflows of the Company are the payment of
dividends, costs relating to the acquisition of new assets and further
investments in existing portfolio Companies, all of which are discretionary.
The Company had no outstanding debt as of 30 September 2023. The Company is a
guarantor to GSES 1 Limited's £50m revolving credit facility with Santander,
of which £nil was drawn at 30 September 2023.
The Directors acknowledge their responsibilities in relation to the financial
statements for the half year ended 30 September 2023 and the preparation of
the financial statement on a going concern basis remains appropriate and the
Company expects to meet its obligations as and when they fall due for at least
12 months until 31 December 2024.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amount of assets, liabilities, income and
expenses. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to the accounting estimates are recognised in the period in
which the estimates are revised and in any future periods affected.
During the period the Directors considered the following significant
judgements, estimates and assumptions:
ASSESSMENT AS AN INVESTMENT ENTITY
Entities that meet the definition of an investment entity within IFRS 10 are
required to measure their subsidiaries at fair value through profit or loss
rather than consolidate them unless they provided investment related services
to the Company. To determine that the Company continues to meet the definition
of an investment entity, the Company is required to satisfy the following
three criteria:
a) the Company obtains funds from one or more investors for the
purpose of providing those investors with investment management services;
b) the Company commits to its investors that its business purpose is
to invest funds solely for returns from capital appreciation, investment
income, or both; and
c) the Company measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Company meets the criteria as follows:
• the stated strategy of the Company is to deliver stable
returns to shareholders through a mix of energy storage investments;
• the Company provides investment management services and
has several investors who pool their funds to gain access to infrastructure
related investment opportunities that they might not have had access to
individually; and
• the Company has elected to measure and evaluate the
performance of all of its investments on a fair value basis. The fair value
method is used to represent the Company's performance in its communication to
the market, including investor presentations. In addition, the Company reports
fair value information internally to Directors, who use fair value as the
primary measurement attribute to evaluate performance.
Having assessed the criteria above and in their judgement, the Directors are
of the opinion that the Company has all the typical characteristics of an
investment entity and continues to meet the definition in the standard. This
conclusion will be reassessed on an annual basis.
VALUATION OF INVESTMENTS
Significant estimates in the Company's financial statements include the
amounts recorded for the fair value of the investments. By their nature, these
estimates and assumptions are subject to measurement uncertainty and the
effect on the Company's financial statements of changes in estimates in
future periods could be significant. These estimates are discussed in more
detail in note 7.
4. Taxation
The Company is recognised as an Investment Trust Company ("ITC") for
accounting periods beginning on or after 25 May 2018 and is taxed at the main
rate of 25%.
30 September 30 September
2023 2022
(£) (£)
(a) Tax charge in profit and loss account
UK Corporation tax - -
(b) Reconciliation of the tax charge for the period
Profit before tax 3,865,641 22,684,890
Tax at UK standard rate of 25% (2022: 19%) 966,410 4,310,129
Effects of:
Unrealised loss/(gain) on fair value investments not taxable 1,185,627 (4,542,021)
Expenses not deductible for tax purposes 621 6,026
Utilisation of brought forward tax losses not previously recognised as 957,964 225,866
deferred tax
Interest distribution (3,110,621) -
Tax charge for the period - -
Estimated losses not recognised due to insufficient evidence of future profits 11,166,219 3,338,021
Estimated deferred tax thereon 25% (2022: 25%) 2,791,555 834,505
There is no corporate tax charge for the period (2022: £nil). The Company may
utilise available tax losses from within the UK tax group to relieve future
taxable profits in the Company and may also claim deductions on future
distributions or parts thereof designated as interest distributions.
Therefore a deferred tax asset, measured at the prospective corporate rate of
25% (2022: 25%) of £2,791,555 (2022: £834,505) has not been recognised in
respect of the carried forward losses.
5. Earnings per share
Earnings per share (EPS) amounts are calculated by dividing the profit or loss
for the period attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares in issue during the period. As
there are no dilutive instruments outstanding, basic and diluted earnings per
share are identical.
30 September 30 September
2023 2022
Net gain attributable to ordinary shareholders £3,865,641 £22,684,890
Weighted average number of ordinary shares for the period 481,399,478 471,712,444
Profit per share - Basic and diluted (pence) 0.80 4.81
6. Investments
Place of business Percentage ownership 30 September 31 March
2023
2023
GSES1 Limited ("GSES1") England & Wales 100% 469,342,485 434,762,146
The Company meets the definition of an investment entity. Therefore, it does
not consolidate its subsidiaries or equity method account for associates but,
rather, recognises them as investments at fair value through profit or loss.
The Company is not contractually obligated to provide financial support to the
subsidiaries and associate, except as guarantor to the revolving credit
facility entered into by GSES 1 Limited, and there are no restrictions in
place in passing monies up the structure.
The investment in GSES1 is financed through equity and a loan facility
available to GSES1. The facility may be drawn upon, to any amount agreed by
the Company as lender, and is available for a period of 20 years from 28 June
2018. The rest is funded through equity. The amount drawn on the facility at
30 September 2023 was £352,104,170 (31 March 2023: £309,182,178). The loan
is interest bearing and attracts interest at 8.5% per annum effective from 1
April 2023. Up until that date, the interest charge was 5% per annum.
Investments in the indirect subsidiaries are also structured through loan and
equity investments and the ultimate investments are in energy storage
facilities.
The increase in interest rate is viewed as a substantial modification to the
terms of the loan facility and as a result is derecognised and re-recognised
from the effective date. As the loan principal and accrued interest form part
of the Company's investments at fair value through profit or loss, the effect
of this change of interest rate is captured within the revaluation and
remeasurement of the total investment at period end. As a result there is no
accounting impact of the modification on the Statement of Financial Position
or Statement of Comprehensive Income.
Realisation of increases in fair value in the indirect subsidiaries will be
passed up the structure as repayments of loan interest and principal. The
Company holds a direct investment in GSES 1, which in turn holds investments
in various holding companies and operating assets as detailed in Note 6 below.
Immediate Parent Place of business Percentage Ownership Investment
GSF Albion Limited ("GSF Albion") GSES1 England & Wales 100%
NK Boulby Energy Storage Limited GSF Albion England & Wales 99.998% Boulby
Kiwi Power ES B GSF Albion England & Wales 49% Cenin
Ferrymuir Energy Storage Limited GSF Albion England & Wales 100% Ferrymuir
GSF England Limited ("GSF England") GSES1 England & Wales 100%
OSSPV001 Limited GSF England England & Wales 100% Lower Road and Port of Tilbury
Ancala Energy Storage Limited GSF England England & Wales 100% Beeches, Blue House Farm, Brookhall, Fell View, Grimsargh, Hermitage, Heywood
Grange, High Meadow, Hungerford, Low Burntoft
Breach Farm Energy Storage Limited GSF England England & Wales 100% Breach Farm
Hulley Road Energy Storage Limited GSF England England & Wales 100% Hulley Road
Larport Energy Storage Limited GSF England England & Wales 100% Larport
Lascar Battery Storage Limited GSF England England & Wales 100% Lascar
Stony Energy Storage Limited GSF England England & Wales 100% Stony
Enderby Battery Storage Limited GSF England England & Wales 100% Enderby
Middleton Energy Storage Limited GSF England England & Wales 100% Middleton
GSF IRE Limited ("GSF IRE") GSES1 England & Wales 100%
Mullavilly Energy Limited GSF IRE Northern Ireland 51% Mullavilly
Drumkee Energy Limited GSF IRE Northern Ireland 51% Drumkee
Porterstown Battery Storage Limited GSF IRE Republic of Ireland 51% Porterstown
Kilmannock Battery Storage Limited GSF IRE Republic of Ireland 51% Kilmannock
GSF Atlantic Limited ("GSF Atlantic") GSES1 England & Wales 100%
GSF Americas Inc. ("GSF Americas") GSF Atlantic North America 100%
GSF Green Power Cremzow Gmbh & Co KG GSF Atlantic Germany 90% Cremzow
GSF Green Power Cremzow Verwaltungs GmbH GSF Atlantic Germany 90% Cremzow
Snyder ESS Assets, LLC GSF Americas North America 100% Snyder
Sweetwater ESS Assets, LLC GSF Americas North America 100% Sweetwater
Westover ESS Assets, LLC GSF Americas North America 100% Westover
Mineral Wells ESS Assets, LLC GSF Americas North America 100% Mineral Wells
Cedar Hill ESS Assets, LLC GSF Americas North America 100% Cedar Hill
Wichita Falls ESS Assets, LLC GSF Americas North America 100% Wichita Falls
Mesquite ESS Assets, LLC GSF Americas North America 100% Mesquite
Dogfish ESS Assets, LLC GSF Americas North America 100% Dogfish
Big Rock ESS Assets, LLC GSF Americas North America 100% Big Rock
GSES 1 is registered at First Floor, 16-17 Little Portland, London, England,
W1W 8BP.
GSF Albion, GSF England, GSF IRE and GSF Atlantic were registered at 8th
Floor, 100 Bishopsgate, London, EC2N 4AG up until 20 October 2023 when they
all moved to First Floor, 16-17 Little Portland Street, London, United
Kingdom, W1W 8BP.
All other subsidiaries that have a place of business in England & Wales
and Northern Ireland are registered at 8th Floor, 100 Bishopsgate, London,
EC2N 4AG.
All subsidiaries that have a place of business in Republic of Ireland were
registered at 4th Floor, 76 Lower Baggot Street, Dublin 2 up until 6 June 2023
when they moved to Block 5, Irish Life Centre, Abbey Street Lower, Dublin 1.
GSF Cremzow GmbH & Co KG and GSF Cremzow Verwaltungs GmbH are registered
at Schenkenberg, Gut Dauerthal 3, 17291.
All subsidiaries with a place of business in North America are registered at
1209 Orange Street, Wilmington, Delaware 19801.
7. Fair Value measurement
VALUATION APPROACH AND METHODOLOGY
There are three traditional valuation approaches that are generally accepted
and typically used to establish the value of a business; the income approach,
the market approach and the net assets (or cost based) approach. Within these
three approaches, several methods are generally accepted and typically used to
estimate the value of a business.
The Company has chosen to utilise the income approach, which indicates value
based on the sum of the economic income that an asset, or group of assets, is
anticipated to produce in the future. Therefore, the income approach is
typically applied to an asset that is expected to generate future economic
income, such as a business that is considered a going concern. Free cash flow
to total invested capital is typically the appropriate measure of economic
income. The income approach is the DCF approach and the method discounts free
cash flows using an estimated discount rate (WACC).
VALUATION PROCESS
The Company's portfolio of lithium-ion energy storage investments has a total
capacity of 1.17 GW (September 2022: 698.2 MW). As at 30 September 2023, 291.6
MW of the Company's total portfolio was operational and 878.4 MW
pre‑operational (the "Investments").
The Investments comprise thirty-six projects, based in the UK, the Republic of
Ireland, mainland Europe or North America. The Directors review and approve
these valuations following appropriate challenge and examination. The current
portfolio consists of non-market traded investments and valuations are
analysed using forecasted cash flows of the assets and used the discounted
cash flow approach as the primary approach for the purpose of the valuation.
The Company engages external, independent and qualified valuers to determine
the fair value of the Company's investments or valuations are produced by the
Investment Advisor.
As at 30 September 2023, the fair value of all other investments has been
determined by the Investment Advisor and reviewed by BDO UK LLP.
The below table summarises the significant unobservable inputs to the
valuation of investments.
Significant Inputs Fair Value
Investment Portfolio Valuation technique Description (Range) 30 September 31 March
2023 2023
(£) (£)
Great Britain (excluding Northern Ireland) DCF Discount Rate Revenue/MW/hour 7.25% - 11.00% 195,446,658 180,714,570
£7 - £15
Northern Ireland DCF Discount Rate Revenue/MW/hour 8.00% - 9.25% 53,436,187 55,049,170
€9 - €29
Republic of Ireland DCF Discount Rate Revenue/MW/hour 8.00% - 10.75% 35,009,444 28,515,507
€8 - €19
Other OECD DCF Discount Rate Revenue/MW/hour 9.25% - 10.75% 187,890,064 171,008,958
€9 - €11
Holding Companies NAV $7 - $33 (2,439,868) (526,059)
Total Investments 469,342,485 434,762,146
The fair value of the holding companies represents the net current assets
including cash, held within those companies in order to settle any operational
costs.
SENSITIVITY ANALYSIS
The below table reflects the range of sensitivities in respect of the fair
value movements of the Company's investments.
Significant Inputs Estimated effect on Fair Value
Investment Portfolio Valuation technique Description Sensitivity 30 September 31 March
2023 2023
(£) (£)
Great Britain (excluding Northern Ireland) DCF Revenue + 10% 36,972,390 39,163,849
- 10% (37,624,009) (39,402,771)
Discount rate +1% (27,269,825) (25,103,594)
-1% 32,175,943 29,658,404
Northern Ireland DCF Revenue + 10% 5,429,474 5,360,179
- 10% (5,426,971) (5,357,401)
Discount rate +1% (3,056,981) (3,239,801)
-1% 3,517,592 3,741,944
Exchange rate +3% (1,397,842) (896,254)
-3% 1,483,991 952,017
Republic of Ireland DCF Revenue + 10% 5,270,918 5,631,626
- 10% (6,581,253) (6,434,752)
Discount rate +1% (5,917,836) (5,936,555)
-1% 6,865,968 6,914,698
Exchange rate +3% (1,037,385) (101,466)
-3% 1,101,553 107,516
Other OECD DCF Revenue + 10% 30,167,956 24,849,092
- 10% (30,614,718) (25,153,598)
Discount rate +1% (17,441,537) (14,401,398)
-1% 19,951,768 16,472,024
Exchange rate +3% (5,592,745) (4,689,659)
-3% 5,616,080 4,981,974
High case (+10%) and low case (-10%) revenue information used to determine
sensitivities are provided by third party pricing sources.
VALUATION OF FINANCIAL INSTRUMENTS
The investments at fair value through profit or loss are Level 3 in the fair
value hierarchy and the reconciliation in the movement of this Level 3
investment is presented below. No transfers between levels took place during
the period.
Reconciliation 30 September 31 March
2023 2023
(£) (£)
Opening balance 434,762,146 180,762,419
Loan drawdowns during the period/year 39,322,846 225,765,788
Loan repayments during the period/year - (32,592,883)
Loan interest received (10,655,622) (8,835,389)
Loan interest receivable from GSES 1 Limited 14,254,272 8,714,157
Total fair value movement on equity investment (8,341,157) 60,948,054
469,342,485 434,762,146
8. Cash and cash equivalents
30 September 31 March
2023 2023
(£) (£)
Cash at bank 60,144,670 99,199,093
Restricted cash 14,845,146 24,506,634
74,989,816 123,705,727
Restricted cash comprises cash held as collateral for future contractual
payment obligations and deferred payments payable from indirect subsidiaries
to third parties of the Company in relation to the Big Rock project.
Collateral will be released to the Company upon settlement of the contractual
and deferred payments, to be made in accordance with the applicable contracts.
The remaining £14,845,146 is expected to be released in H1 2024.
9. Net asset value per share
Basic NAV per share is calculated by dividing the Company's net assets as
shown in the Statement of Financial Position that are attributable to the
ordinary equity holders of the Company by the number of ordinary shares
outstanding at the end of the period. As there are no dilutive instruments
outstanding, basic and diluted NAV per share are identical.
30 September 31 March
2023 2023
Net assets per Statement of Financial Position £ 543,281,504 £ 556,264,845
Ordinary shares in issue as at 30 September/31 March 481,399,478 481,399,478
NAV per share - Basic and diluted (pence) 112.85 115.55
10. Share capital and reserves
Share capital Share Special Capital reduction reserve Capital Revenue reserve Total
premium reserve
reserve
reserve
(£)
(£)
(£)
(£)
(£) (£) (£)
At 1 April 2023 4,813,995 315,686,634 349,856 111,125,000 125,584,414 (1,295,054) 556,264,845
Dividends paid - - - 16,848,982 - - 16,848,982
Movement in special reserve - - (318,176) 318,176 - - -
Profit/(loss) for the period - - - - (4,742,507) 8,608,148 3,865,641
At 30 September 2023 4,813,995 315,686,634 31,680 94,594,194 120,841,907 7,313,094 543,281,504
Share Share Special Capital reduction reserve Capital Revenue reserve Total
capital
premium
reserve
reserve
(£)
reserve
(£)
(£)
(£)
(£) (£)
(£)
At 1 April 2022 3,450,358 269,708,123 186,656 42,258,892 64,757,592 (3,880,527) 376,481,094
Issue of ordinary £0.01 shares: 14 April 2022 1,363,637 148,636,363 - - - - 150,000,000
Transfer to capital reduction reserve - (100,000,000) - 100,000,000 - - -
Share issue costs - (2,657,852) - - - - (2,657,852)
Movement in special reserve - - 163,200 (163,200) - - -
Dividends paid - - - (30,970,692) - - (30,970,692)
Profit for the year - - - - 60,826,822 2,585,473 63,412,295
At 31 March 2023 4,813,995 315,686,634 349,856 111,125,000 125,584,414 (1,295,054) 556,264,845
In the prior year, following the approval at the Company's AGM on the 20
September 2022, the Company made an application to the High Court, together
with a lodgement of the Company's statement of capital with the Registrar of
Companies, the Company was permitted to reduce the capital of the Company by
an amount of £100,000,000. This was affected on the 29 November 2022 by a
transfer of that amount from the share premium account to distributable
reserves.
11. Dividends
Dividend 30 September 30 September
per share
2023 2022
(£) (£)
Dividends paid during the period
For the 3 month period ended 31 December 2021 2 pence - 6,900,716
For the 3 month period ended 31 March 2022 1 pence - 4,813,995
For the 3 month period ended 31 December 2022 2 pence 9,627,990 -
For the 3 month period ended 31 March 2023 1.5 pence 7,220,992 -
16,848,982 11,714,711
An interim dividend of 2 pence for the period 1 October 2022 to 31 December
2022 was proposed by the Directors, and subsequently paid on the 11 April
2023.
An interim dividend of 1.5 pence for the period 1 January 2023 to 31 March
2023 was proposed by the Directors and subsequently paid on 17 July 2023.
12. Transactions with related parties
Since the listing of the ordinary shares in 2018, the Company and the
Directors are not aware of any person who, directly or indirectly, jointly or
severally, exercises or could exercise control over the Company. The Company
does not have an ultimate controlling party.
Details of related parties are set out below:
DIRECTORS
On 1 May 2023, Lisa Scenna was appointed as a director. Patrick Cox, Chair of
the Board of Directors of the Company, is paid a director's remuneration of
£77,000 per annum, (2022: £75,000), Caroline Banszky is paid a director's
remuneration of £57,000 per annum, (2022: £55,000) with the remaining
directors being paid directors' remuneration of £47,000 per annum, (2022:
£45,000).
Total director's remuneration and associated employment costs of £146,248
were incurred in respect of the period with £nil being outstanding and
payable at the period end.
INVESTMENT ADVISOR
The Investment Advisor, Gore Street Capital Limited (the "Investment
Advisor"), is entitled to advisory fees under the terms of the Investment
Advisory Agreement amounting to 1% of Adjusted Net Asset Value. The advisory
fee will be calculated as at each NAV calculation date and payable quarterly
in arrears.
For the avoidance of doubt, where there are C Shares in issue, the advisory
fee will be charged on the Net Asset Value attributable to the Ordinary Shares
and C Shares respectively.
For the purposes of the quarterly advisory fee, Adjusted Net Asset Value
means:
a. for the four quarters from First Admission, Adjusted Net Asset
Value shall be equal to Net Asset Value;
b. for the next two quarters, Adjusted Net Asset Value shall be
equal to Net Asset Value minus Cash on the Company's Statement of Financial
Position, plus any committed Cash on the Company's Statement of Financial
Position;
c. thereafter, Adjusted Net Asset Value shall be equal to Net Asset
Value minus Cash on the Company's Statement of Financial Position.
During the prior year, the management agreement was amended to change the term
of adjusted NAV to mean net asset value minus uncommitted cash. Uncommitted
cash means all cash on the Company's balance sheet other than committed cash.
Committed cash means cash that has been allocated for repayment of a liability
on the balance sheet of any member of the group. Investment advisory fees of
£1,411,253.62 (30 September 2022: £2,160,498) were paid during the period,
there were £1,412,656 (30 September 2022: £nil) outstanding fees as at 30
September 2023 (31 March 2023: £nil outstanding).
In addition to the advisory fee, the Advisor is entitled to a performance fee
by reference to the movement in the Net Asset Value of Company (before
subtracting any accrued performance fee) over the Benchmark from the date of
admission on the London Stock Exchange.
The Benchmark is equal to (a) the gross proceeds of the Issue at the date of
admission increased by 7 per cent. per annum (annually compounding), adjusted
for: (i) any increases or decreases in the Net Asset Value arising from issues
or repurchases of Ordinary Shares during the relevant calculation period; (ii)
the amount of any dividends or distributions (for which no adjustment has
already been made under (i)) made by the Company in respect of the Ordinary
Shares at any time from date of admission; and (b) where a performance fee is
subsequently paid, the Net Asset Value (after subtracting performance fees
arising from the calculation period) at the end of the calculation period from
which the latest performance fee becomes payable increased by 7 per cent. per
annum (annually compounded).
The calculation period will be the 12 month period starting 1 April and ending
31 March in each calendar year with the first year commencing on the date of
admission on the London Stock Exchange.
The performance fee payable to the Investment Advisor by the Company will be a
sum equal to 10 per cent. of such amount (if positive) by which Net Asset
Value (before subtracting any accrued performance fee) at the end of a
calculation period exceeds the Benchmark provided always that in respect of
any financial period of the Company (being 1 April to 31 March each year) the
performance fee payable to the Investment Advisor shall never exceed an amount
equal to 50 per cent of the Advisory Fee paid to the Investment Advisor in
respect of that period. Performance fees are payable within 30 days from the
end of the relevant calculation period. Performance fees of £nil were accrued
for the period ended 30 September 2023, (31 March 2023: £2,457,164).
During the period the Investment Advisor provided operations management
services to SPV companies resulting in charges to the amount of £271,647 (31
March 2023: £855,692) being payable by the SPV companies to the
Investment Advisor.
13. Capital commitments
The Company together with its direct subsidiary, GSES1 Limited entered into
Facility and Security Agreements with Santander UK PLC in May 2021 for £15
million. The Facility was increased to £50 million in June 2023. Under these
agreements, the Company acts as chargor and guarantor to the amounts borrowed
under the Agreements by GSES1 Limited. As at 30 September 2023, no amounts had
been drawn on this facility.
The Company had no contingencies and significant capital commitments as at the
30 September 2023.
14. Post balance sheet events
The Directors have evaluated the need for disclosures and/or adjustments
resulting from post balance sheet events through to 13 December 2023, the date
the financial statements were available to be issued.
On 5 September 2023, the Board approved a dividend of 2 pence per share for
the period from 1 April 2023 to 30 June 2023. This dividend totalling
£9,627,990 was paid to investors on the 20 October 2023.
There were no adjusting post balance sheet events and as such no adjustments
have been made to the valuation of assets and liabilities as at 30 September
2023.
Alternative Performance Measures
For the Period Ended 30 September 2023
1. NAV Total return since IPO
A measure of NAV performance since IPO, considering both capital returns and
dividends paid to shareholders. This does not factor in return on reinvestment
of dividends.
30 September 31 March
2023 2023
NAV per Ordinary Share at year end 112.85p 115.55p
Dividends per ordinary share paid since IPO 32.50p 29.00p
NAV per Ordinary Share at IPO 97.67p 97.67p
NAV Total return 47.68p 46.88p
NAV Total Return since IPO 48.8% 48.0%
2. Share price total return since IPO
A measure of return to a shareholder holding a share since IPO. Dividends per
share reflect dividends declared during the period with Ex - dividend date
prior to year end. This does not factor in return on assumed reinvestment of
dividends.
30 September 31 March
2023 2023
Share price at period end 78.80p 100.80p
Dividends per share since IPO 34.50p 31.00p
Share price at IPO 100.00p 100.00p
Share price return since IPO 13.30p 31.80p
% Share price return since IPO 13.3% 31.8%
3. Share premium/discount
30 September 31 March
2023 2023
Share price at year end 78.80p 100.80p
NAV per Ordinary Share at year end 112.85p 115.55p
Discount to NAV -34.05p -14.75p
Discount to NAV % -30.2% -12.8%
4. Operational dividend cover
A measure to demonstrate the Company's ability to pay dividends to
shareholders from the earnings generated by underlying operational
investments.
30 September 31 March
2023 2023
Operational EBITDA £12.20m £27.77m
Dividend paid during the year (£) £16.85m £30.97m
Operational dividend cover 0.72x 0.90x
5. Operational dividend cover for quarter ended 30 September
A measure to demonstrate the Company's ability to pay dividends to
shareholders from the earnings generated by underlying operational
investments.
September September
quarter 2023
quarter 2022
Operational EBITDA £8.34m £6.24m
Dividend paid during the quarter (£) £7.22m £4.81m
Operational dividend cover 1.15x 1.30x
6. Dividend yield
30 September 31 March
2023 2023
Dividends per Ordinary Share paid during the year - Annualised 7.00p 7.00p
Share price at year end 78.80p 100.80p
Dividend yield 8.9% 6.9%
7. Ongoing charges figure
A measure, expressed as a percentage of average net assets, of the regular,
recurring annual costs of running the Company. This has been calculated and
disclosed in accordance with the AIC methodology.
30 September 31 March
2023 2023
Total administrative and other expenses 3,834,334 9,881,402
Performance fee and non-recurring expenses - 2,501,163
Total ongoing expenses 3,834,334 7,380,240
Total ongoing expenses - Annualised 7,668,670 7,380,240
Average NAV for the year 550,785,491 540,090,679
Ongoing charges figure 1.39% 1.37%
8. NAV Total return for the 6 month period
A measure of NAV performance for the financial year, considering both capital
returns and dividends paid to shareholders within the period. This does not
factor in return on reinvestment of dividends.
30 September 30 September
2023 2022
NAV per Ordinary Share at period end 112.85p 111.09p
Dividends per ordinary share paid during the period 3.50p 3.00p
NAV per Ordinary Share at the beginning of the period 115.55p 109.11p
NAV Total return 0.80p 4.98p
NAV Total Return for the period 0.7% 4.6%
9. Share price total return for the 6 month period
A measure of return to a shareholder holding a share for the financial year.
Dividends per share reflect dividends declared during the period with Ex -
dividend date prior to year end. This does not factor in return on assumed
reinvestment of dividends.
30 September 30 September
2023 2022
Share price at period end 78.80p 110.00p
Dividends per share during the period 3.50p 3.00p
Share price at the beginning of the period 100.80p 113.00p
Share price return for the period -18.50p 0.00p
% Share price return for the period -18.4% 0.0%
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