REG - Gore Street Energy - Half-year Results & Dividend Declaration
20/12/2021 07:01
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RNS Number : 1094W Gore Street Energy Storage Fund PLC 20 December 2021
20 December 2021
Gore Street Energy Storage Fund Plc
('Gore Street' or the 'Company')
Half Year Results
Gore Street Energy Storage Fund plc (ticker: GSF), London's first listed
energy storage fund investing in income producing assets in the UK and
internationally, today announces its Half-Year Unaudited results for the
six-month period to 30 September 2021.
Financial Highlights for the period of 30 September 2021
· NAV increased significantly from £145.1 million in March 2021 to
£285.3 million as at September 2021
· NAV per share increased 2.4% to 103.3 pence (31 March 2021: 100.9
pence)
· Total shareholder return of 26.5% since inception as of 30
September 2021
· Quarterly dividend for the period of 4.0 pence per share
· Following the issuance of further shares in April 2021, Issued Share
Capital (ISC) increased to 276.2 million shares (31 March 2021: 143.9 million
shares)
· Earnings per share (basic and diluted) of 4.20 pence (31 March
2021: 16.06 pence)
Operational Highlights for the period of 30 September 2021
· Total portfolio (inclusive of grid expansion grants) increased to
516.5 MW as of 30 September 2021 (31 March 2021: 440 MW).
o Acquired an 80MW construction ready energy storage project in Milton
Keynes, scheduled to become operational in Q1 2023, for c.£30 million.
o Acquired a 57MW in construction energy storage project in Leicester,
scheduled to become operational in 2023, for c.£22 million.
· A successful fundraise of £135 million was completed during the
period. £15.3m in equity from ISIF is available to the Company for the
expansion projects in Ireland. This equity drawdown facility is not reflected
in AuM of £285 million.
· 10 operational companies in Great Britain (GB) (holding 21 assets)
generate 210 MW of capacity of which 100.0 MW in Northern Ireland, 106.0 MW in
England and 4 MW in Wales, continue to perform within expectations.
· The Company's 306.8 MW of construction and pre-construction assets
include two projects totalling 137 MW acquired during the period in England
and 60 MW grid expansion rights for the 30 MW Porterstown project in the
Republic of Ireland (ROI).
Post Period-end Highlights
· The Company has raised gross proceeds of £73.6 million in an
oversubscribed capital raise post-Period End (Admission date of 4(th) October
2021) through the issue of 68,811,220 new Ordinary Shares, bringing the number
of ordinary shares in issue to a total of 345.0 million.
· Total market cap following the post-Period placing (as of 4th October
2021), represents a 145% increase when compared to 31st March 2021.
· As at 19 November 2021, Kilmannock, one of the Company's ROI assets,
has secured a 90MW increase in its allocated grid connection capacity,
bringing the Company's total grid capacity to over 600MW.
· In Ireland, the Company's grid allocation is now 310 MW, the largest
portfolio of Irish assets available to investors.
· The Company is actively reviewing opportunities in GB, Ireland,
Australia, Continental Europe and the US. The total pipeline stands at 1.2 GW.
Net Asset Value
As at 30 September 2021, the unaudited estimated NAV per Ordinary Share had
increased to 103.3 pence representing a total return, including dividends, of
3.37% from March 2021. NAV per share increased from 30 September 2020 by 6
pence, and total returns including dividends were 13.4%.
Dividend Payment
The 2.0 pence per share declared dividend will be paid on or around 14 January
2022 to shareholders on the register as of 31 December 2021. The ex-dividend
date will be 30 December 2021.
CEO of Gore Street Capital, the investment adviser to the Company, Alex
O'Cinneide commented:
"I am delighted to report that Gore Street has had another exceptional period
of successful growth as we continued to consistently deliver against our
strategy and targets, providing attractive returns to our investors in an
important sector, underpinned by significant environmentally-focused
tailwinds. We grew substantially during the period, with our portfolio of
assets totalling over 600 MW in aggregate post-period, of which 210 MW is
already operational, delivering strong cashflows for the Company.
During the period, we delivered target quarterly dividends to our
shareholders. We successfully raised a total of £135 million in April, and
post period-end raised a further £73.6 million in October 2021. This reflects
the ongoing momentum of attractive opportunities in our pipeline. In May 2021,
we acquired Stony Energy Storage Limited, an 80 MW project, followed by the
acquisition of Enderby Energy Storage Limited, a transmission connected asset.
Gore Street is well positioned to continue to grow not only in GB and Ireland
but also internationally, with approximately 1.2 GW of attractive
opportunities in our acquisition pipeline, of which over 100 MW in North
America and Europe is now under exclusivity. The global transition to clean
and renewable energy generation remains a leading priority for governments in
the UK and Ireland, as well as further afield, and our assets play a major
role in enabling that transition, whilst creating significant value for our
shareholders. I would like to thank our shareholders for their support and
look forward to updating investors on our continued good progress."
The Legal Entity Identifier of the Company is 213800GPUNVGG81G4O21.
The person responsible for releasing this announcement is Susan Fadil.
For further information:
Gore Street Capital Limited
Alex O'Cinneide / Maria Vaggione Tel: +44 (0) 20 3826 0290
Shore Capital (Joint Corporate Broker)
Anita Ghanekar / Rose Ramsden / Iain Sexton (Corporate Advisory) Tel: +44 (0) 207 408 4050
Fiona Conroy / Henry Willcocks (Corporate Broking)
J.P. Morgan Cazenove (Joint Corporate Broker)
William Simmonds / Jérémie Birnbaum (Corporate Finance) Tel: +44 (0) 20 7742 4000
Buchanan (Media Enquiries)
Charles Ryland / Henry Wilson / George Beale Tel: +44 (0) 20 7466 5000
Email: Gorestreet@buchanan.uk.com
JTC (UK) Limited, Company Secretary Tel: +44 (0) 20 7409 0181
Notes to Editors
About Gore Street Energy Storage Fund plc
Gore Street is London's first listed energy storage fund and seeks to provide
Shareholders with a significant opportunity to invest in a diversified
portfolio of utility scale energy storage projects. In addition to growth
through exploiting its considerable pipeline, the Company aims to deliver
consistent and robust dividend yield as income distributions to its
Shareholders.
The Company targets an annual dividend of 7.0% of NAV per Ordinary Share in
each financial year, subject to a minimum target of 7.0 pence per Ordinary
Share. Dividends are paid quarterly.
https://www.gsenergystoragefund.com (https://www.gsenergystoragefund.com)
Overview
As of 30 September 2021:(*)
Market Capitalisation Dividend for the period Total Returns since IPO
£299.7 million 4 pence 26.5%
NAV NAV per share NAV total returns since June 2018/IPO
£285.3 million 103.3 24.2%
(* Note on Market Capitalisation: Closing Share Price of 108.5 pence as of
September 30, 2021. The total number of shares of 276.2 million does not
include shares issued post-reporting period of September 30, 2021.)
(Note on Interim Dividend: A total of 4.0 pence in dividends was paid in the
period between March and September 2021. Note on Total Returns since IPO: On a
share price basis. This is an alternative performance measure. )
(Note on NAV per Share: Calculated as Total NAV divided by the total number of
shares. )
(Note on NAV Total Returns since IPO: Calculated as the difference between the
closing NAV as at 30 September 2021 and opening NAV IPO, plus dividends paid
since IPO divided by opening NAV at IPO ((103.3-97.7+18)/97.7)*100. This is an
alternative performance measure.)
Corporate Purpose:
Gore Street aims to deliver long-term capital growth to its investors from
utility-scale energy storage assets located in the UK, Ireland, and other
attractive markets within the OECD. The Company has made discretionary
dividend payments to shareholders at a target annual rate of 7 per cent of NAV
(and a target minimum rate of 7p per Ordinary Share), which is supported by
10-12 per cent unlevered project target IRR(**).
(** Target IRR before fees and expenses. Past performance is not indicative
of future returns.)
Investment Highlights
deployment of capital
In the 6 months since 31(st) March 2021, the Company has successfully
completed the acquisition of 137 MW of energy storage assets within Great
Britain (GB).
The first acquisition was a 100 per cent interest in Stony, a combined 79.9 MW
site at pre-construction stage in Milton Keynes. The transaction was completed
in May 2021.
The second acquisition was a 100 per cent interest in Enderby, a 57.0 MW site
at pre-construction stage in Leicester, which was completed in September 2021.
These acquisitions, together with the Company's grid capacity expansion offer
for its asset in the Republic of Ireland (ROI), increased the Company's
portfolio capacity from 380 MW, as of March 2021, to 516.5 MW at period end.
fundraise
During the reporting period, the Company raised £135.0 million in April 2021,
following a £60.0 million raise in December 2020. A further £73.6 million
was raised post the reporting period in an oversubscribed capital raise in
October 2021(*). As a result, post-period end, the Company completed its
November 2020 Placing Programme of 250 million shares to full capacity,
underpinned by strong investor appetite.
(* The capital raise closed post period end with Admission effective on 4
October 2021.)
Key Metrics
Table 1: Key Metrics
As at 31 March 2021 As at 30 September 2021
Net Asset Value (NAV) £145.1m £285.3m
NAV per share(**) 100.9p 103.3p
NAV Total Return(***) 14.1% 13.4%
Number of issued Ordinary shares 143.9m 276.2m
Share price based on closing price of indicated date 108.0p 108.5p
Premium to NAV(****) 7.0% 5.0%
Market capitalisation based on closing price at indicated date £155.4m
£299.7m
Portfolio's total capacity 380.0 MW 516.5 MW(*****)
Dividends announced(******) 7.0p 4.0p
(** Note on NAV per Share: Calculated as Total NAV divided by the total
number of shares outstanding within the respective period. )
(*** Note on NAV Total Return: Calculated as the difference between the
closing NAV at 30 September 2021 and opening NAV at 30 September 2020, plus
dividends paid for the period divided by opening NAV at 30 September 2021
((103.3 - 97.3+7)/97.3)*100).)
(**** Note on Premium to NAV: Calculated as the difference between the
closing share price on 30 September 2021 to NAV on 31 March of 2021
(108.5-103.3/103.3)*100).)
(***** The 516.5 MW includes an additional 60 MW of grid capacity approved
for Porterstown (January 2021). A further 90 MW of capacity was approved for
the Kilmannock site in November 2021, bringing the portfolio grid capacity to
606.5 MW.)
(****** A total of 4.0 pence in dividends was paid in the period.)
( )
The Company's market capitalisation has increased 93 per cent since the end of
last fiscal year (31st March 2021) with capital raised in April 2021. (The
Company's market capitalisation has increased by 145 per cent, as of the date
of publication).
The Company has paid 7.0 pence per dividend per share for the fiscal year,
with a 4.0 pence dividend per share announced and paid for this reporting
period.
An overview of the increase in Total NAV during the reporting period is
illustrated in the bridge figure below. The key drivers of the increase in NAV
from £145.1 million (March 2021) to £285.3 million in September 2021 were:
(i) the £135m fundraise in April; (ii) commercial operation of 2 x 50MW
assets in Northern Ireland (NI) (operational since March 30, 2021); and (iii)
reduction in discount rates used for some of the portfolio's assets currently
under construction.
On a NAV per share basis, the Company experienced an increase of 2.4 pence for
the period. From IPO to the reporting period, the Company has delivered a Net
Asset Total return of 24.2 per cent inclusive of dividends paid thus far.
( )
Market Share
The Company is a leader in the energy storage market, with a significant
portfolio of 296.5 MW across GB and 220 MW in Ireland. As of the date of
publication, the Company has received authorisation to increase its grid
capacity in Ireland by up to an additional 150 MW.
About 95 per cent of the Company's GB-based portfolio is actively delivering
Dynamic Containment services (DC)(*) with the remainder of the portfolio
delivering revenues from Firm Frequency Response (FFR) services(**). For this
reporting period, the Company's services accounted for 13 per cent(***) of the
DC market in GB.
(*) (One of National Grid's frequency response services designed to operate
post-fault i.e., for deployment after a significant frequency deviation to
meet the immediate need for faster-acting frequency response.)
(**) (An ancillary service for providing a proportional power response based
on measured network frequency. In GB this is procured by National Grid and
known as Firm Frequency Response. In NI/ROI this is procured by EirGrid/SONI
as part of the DS3 services and known as Fast Frequency Response.)
(***) (Note this market share is based on GSF awarded MW out of the total
awarded MW for DC in Great Britain for the reporting period.)
The Company's Northern Irish assets represent an ongoing 100.0 MW commitment
to delivering fast-acting Delivering a Secure Sustainable Electricity System
(DS3)(*) services to the Irish network - managed by SONI(**) and EirGrid(***).
The Company's operational projects represent a 5 per cent market share of
these DS3 services for uncapped(****)agreements. The Company also holds
contracts for 60.0 MW of capped DS3 agreements for its two assets in the ROI,
representing a 55 per cent market share of the Irish storage projects under
development. Combined, the Company's four Irish projects are expected to
represent an 8 per cent market share of capped and uncapped DS3 services.
Company's DC and DS3 Market Share: [refer to page 9 of interim report]
(*) (Delivering a Secure Sustainable Electricity System (DS3) is a programme
designed by EirGrid/SONI to procure high availability reserve services to the
Irish system.)
(**) (System Operator for Northern Ireland.)
(***) (EirGrid plc, the state-owned electric power transmission operator in
Ireland.)
(****) (The DS3 system services are procured by EirGrid and SONI under two
separate procurement routes: (i) volume uncapped procurement, also known as
the regulated arrangements; and (ii) volume capped procurement, also known as
fixed contract procurement.)
The Company's growth and its delivery against projected revenue streams is
reflected in its half year Net Revenue and EBITDA performance, illustrated in
figure 4 of the interim report [page 9], which shows a Net EBITDA Growth of
circa 17x and Net Revenue Growth of 16x since Q3 2018(*).
(*) (Past performance is not a guarantee of future results.)
( )
CHAIR'S STATEMENT
I am pleased to present the Company's Interim report for the twenty-six weeks
ending 30 September 2021. It affords me an opportunity to thank my fellow
directors and the management and staff of our Investment Manager and our
suppliers for their successful navigation of the challenges presented by the
Covid 19 pandemic, which to date have had no material or dilatory impact on
our commercial activities, operational integrity or ability to grow.
The energy storage market has evolved significantly since IPO, and now
constitutes 1.3GW of operational capacity in the GB electricity market, which
provides for 4 per cent of the GB average generation capacity share. At IPO,
the Company's first acquisition of NK Boulby, a 30-minute duration 6 MW
battery, represented one of the largest battery storage assets of its kind in
the UK. The Fund's average project acquisition size in the reporting period
was approximately 65 MW with an average one hour in duration.
The Company's market capitalisation increased by 93 per cent in the period,
with a capital raise of £135 million in April 2021, reflecting market
recognition of the importance of energy storage as a vital tool for grid
balancing, as renewables are increasingly integrated into our infrastructure.
The Company performed strongly over the period, contributing 13 per cent(*) of
the Dynamic Containment services in Great Britain (the National Grid's prime
frequency service) and its operational projects represent an 8% market share
of capped and uncapped DS3 services in the Irish grids.
NAV, as at 30 September 2021, was 103.3 per share increasing by 2.4 pence
since year end, improved over the past six months by generating revenues at
our two Northern Irish sites, delivering 100 MW of balancing capacity since
they began commercial operation in March 2021.
The Company increased its portfolio by 136.9 MW to 0.52 GW, representing a
twenty-six percent period growth. Our forward-looking Investment Management
team has developed a pipeline focused on further diversification of the
portfolio outside of the UK and Irish markets, and into regional markets in
North American and certain Western European states where we anticipate
substantial growth over the coming years. The Investment Manager's deal
pipeline stands at 1.2 GW with 581 MW actively under negotiation as of the
date of publication.
(* Note this market share is based on GSF awarded MW out of the total
awarded MW for DC in Great Britain for the reporting period.)
Financial Performance
The share price as at 30 September 2021 was 108.5 pence, representing a 5 per
cent premium to NAV.
The Company declared dividends of 4.0 pence per share during the reporting
period, of which 2.0 pence per share declared and approved at the post-period
board meeting will be paid in January 2022.
Fundraising
The Company was oversubscribed in its April 2021 fundraise, raising £135m
during the reporting period and completed its November 2020 Placing Programme
to full capacity after the period end, in October 2021. The post-period
fundraise was again, oversubscribed, as only £73.6 million remained available
for subscription on the 2020 Prospectus.
We are encouraged by the increasing investor focus and support of the efforts
of the Fund and other companies that support the effort towards net-zero in
the markets in which we operate.
The amounts raised during the reporting period are allocated for the payment
of construction activities at Ferrymuir, Enderbly and Stony and the 150MW
expansion of the Irish assets (all with 1-hour duration).
Operational Performance
I am pleased to note that there were zero major or minor health and safety
incidents on our sites in the period.
The Company's availability for trading and delivery of ancillary services
throughout the reporting period was strong, with an average availability
across regions of 94 per cent.
A high proportion of portfolio revenues were generated through the delivery of
high-value services, in the form of dynamic containment in GB and uncapped DS3
services in the Irish grids.
The Manager anticipates frequency services to remain attractive over the next
reporting period until the market is able to meet grid demand for such
services.
Environmental Sustainability
The Company's assets provide a critical service to national and regional
grids, balancing electricity supply and demand, in the face of the inherently
intermittent electric generation from renewable sources. Consequently, the
Company's investments facilitate the integration of renewable energy into
power grids, ultimately contributing to the decarbonisation goals.
The Company is committed to assessing and monitoring data on the impact and
effectiveness of its systems in supporting the net zero ambitions of the grid
systems that we support and is on track to begin external reporting of its
performance in accordance with SFDR frameworks in the 2022 fiscal year.
Although not a mandatory requirement for the Company, it intends to become
SFDR Article 8 Compliant in 2022. As part of this commitment, it will measure,
in addition to all 14 main metrics under Article 8 SFDR Regulation, six
additional environmental and social impact indicators which are relevant to
the Company's business processes. These include the monitoring of any
emissions of ozone depletion substances, water usage and non-recycled waste
ratios, and working with equipment manufacturers to identify and monitor the
labour conditions across their supply chain.
COVID 19 and Other Risks
The Investment Management team continues to predominantly work remotely, as we
strive to minimise the impact of COVID on the Company's day to day operations.
There is increased complexity in supply chain management across the globe and
in light of this, the Investment Manager is working closely with its
engineering and procurement partners to seek to ensure timely and efficient
delivery in line with construction schedules. The Investment Manager does not
expect any delays in the timelines of its pre-construction and construction
projects as of the date of publication.
The Company's other principal risks were set out in detail in the 31 March
2021 Annual Report, have been reassessed and continue to remain unchanged for
the reporting period.(**)
( )
(**) (Principal risks constitute Operational Risks, Market Risks, Technology
Manufacturer Risk, Valuation Risks, COVID-19 Disruption Risks, Brexit Risks,
Construction Risks, Currency Risks, and Cyber-Security Risks.)
Outlook
As of the date of publication, Kilmannock, one of the projects under
development in Ireland, secured authorisation to increase its grid capacity by
an additional 90MW, which will raise portfolio capacity to 0.62 GW. We
anticipate that the Investment Manager will complete its assessment of how
much of the available capacity to build out in Ireland in the coming months.
As of the reporting period end, the Company contributed 110MW per annum to the
British grid, 100MW in NI and has an additional 246.8MW under development in
the United Kingdom and Ireland. It currently contributes 210MW ancillary
services per annum to GB and Ireland and by the end of 2023, will contribute
as much as 597 MW per annum in GB and Ireland.
The Company's pipeline will be predominantly focused overseas over the next
reporting period, where pipeline projects range between 50MW and 250MW (and
average 110 MW) with longer battery duration of between 2 and 4 hours, as
appropriate for merchant market trading in the United States. The increase in
the volume of energy available per MW per site will not only result in lower
CapEx per unit of energy but will also allow the Company to capture trading
opportunities available in these markets.
We are encouraged by the aggressive growth of renewables in several regional
operating systems in the United States and the resulting market opportunities
for energy storage. Notably, the Company could reach 1GW capacity by year
end with the acquisition of as few as four new projects in the coming months.
Signature
Patrick Cox
Chair
Date: 17 December 2021
INVESTMENT MANAGER'S REPORT
Summary of Recent Portfolio Developments
The Company currently has an interest in 25 assets held within 15 portfolio
companies. During the reporting period, the Company increased its total
portfolio to 516.5 MW comprised of 210 MW of operational assets and 246.8 MW
of pre-construction and construction phase projects, and EirGrid authorisation
to increase grid capacity at its Porterstown site by a further 60 MW. This
represents a 60 per cent increase in portfolio development capacity since
March 2021. Post Period, the Company was one of a few to receive consent to
increase grid capacity at its sites, obtaining consent to increase the
Kilmannock site capacity from 30.0 MW to 120.0 MW. In the coming months, the
Investment Manager will complete its assessment of how much of the available
extended capacity to build out in Ireland.
The Stony (79.9 MW) and Enderby (57.0 MW) assets acquired in April and
September, respectively, are expected to become commercially operational in
2023.
By period-end, around 95 per cent of the Company's operational portfolio in GB
was delivering Dynamic Containment services, which provided the highest
frequency services pricing available to storage sites during the reporting
period.(*)
(* Past performance is not a guarantee of future results.)
[refer to figure 5 of interim report]
The Company's portfolio of energy storage assets is made up of operational
projects, projects undergoing design and contracting ("pre-construction"
assets) and projects under construction. The operational assets make up over
one-third of the overall portfolio of 516.5 MW(*).
The Company has increased the size of its energy storage portfolio since IPO
by circa 18x.(**)
(*) (The 516.5 MW includes EirGrid's approval of a further 60 MW capacity
expansion for Porterstown (January 2021). Post-period end, EirGrid approved a
capacity expansion of Kilmannock's grid connection by 90 MW in November 2021,
bringing the portfolio capacity to 606.5 MW. )
(** Calculated based on the figures of 29 MW at the end of 2018 and 516.5 MW
at the end of the reporting period. )
Asset Performance
[Refer to figure 6 in the Interim Report]
The Company's availability throughout the reporting period was strong, with an
average availability across regions of 94 per cent.
Asset availability in June reduced to 89 percent in NI as the newly commercial
projects were taken offline to improve inverter stability. In GB, the Lower
Road and Port of Tilbury sites were taken offline for cable replacements
during the month of June. All sites have returned to full operational
capacity.
Health & Safety
We are proud to report zero major or minor Health and Safety incidents at our
sites in the reporting period to September 2021.
Revenue Stacking During the Reporting Period
The Investment Manager is constantly assessing options for revenue
optimisation, and profitability maximisation remains a key aspect of Gore
Street's revenue stacking strategy.
All portfolio assets provide frequency services (FFR and DC, DS3) that reward
the Company for fast response services to the grid.
The Company continues to benefit from higher-than-anticipated frequency
revenues in GB, due to delivery of DC, a service introduced in October 2020.
This service has achieved prices capped at £17/MWh, compared to averages of
£10.6/MWh experienced for FFR, for the reporting period.(*)
The Investment Manager seeks to continuously exploit its early participation
in service delivery and capture competitive pricing whilst National Grid's
demand for services remains higher than supply.
(* Past performance is not a guarantee of future results.)
The GB storage market was further incentivised by changes to market
regulations in the form of reduced levies on stand-alone storage facilities
and a reduction in capacity charges of approximately 30 per cent
(location-dependent). Storage is also now also exempt from variable 'BSUoS'
charges.(**)
( )
(** System charges related to National Grid's balancing of the demand and
generation on the transmission system.)
[Refer to figure 7 in the Interim Report]
The Investment Manager looks to participate in wholesale trading when
appropriate to exploit spikes in market volatility, particularly when revenue
trading opportunities deliver payments higher than the available suite of
frequency response revenue, giving due consideration to the cost of
degradation of the assets.
After the reporting period, the National Grid changed the method of
procurement for DC from a 24-hour procurement period to four-hour EFA blocks.
This change could provide the assets with greater flexibility to participate
in grid balancing and trading services.
The Company's projects are well-positioned to mitigate the risks associated
with renewable energy penetration in the energy generation mix. Although low
wind penetration can negatively impact revenues from ancillary services, the
Company can take advantage of resulting price volatility by capitalising on
trading opportunities. In GB, periods of high wind generation may lead to
increased ancillary service revenue in DC (for as long as additional
procurement is required by the National Grid).
The Company's assets in NI and the ROI participate in the complex DS3 program
and the Integrated Single Energy Market ("I-SEM") providing revenue streams
which are substantively similar to the ones in GB. The Company's projected
revenues from the DS3 market are in excess of the 10 per cent IRR target(***).
In March 2021, the system operator announced a 12-month extension of the DS3
service to 30 April 2024.
The Capacity Market (CM) is a contract with a duration between one to fifteen
years, designed to deliver power to the grid, at times of peak demand. All the
assets of the GB portfolio have a capacity agreement. In Ireland, where CM is
procured on both SONI and EirGrid networks, the Company currently possesses CM
contracts for both of its assets in NI.
(*** Projections are not indicative of future results.)
Pipeline
The Investment Manager's current pipeline focuses heavily on North America and
Western Europe. These markets generally mirror the same essential grid
balancing, capacity market and trading opportunities that characterise the GB
and Irish markets. The Investment Manager will leverage on its experience to
secure new assets in accordance with the Company's investment policy, so that
the Company does not assume early state risks associated with obtaining land,
planning and grid connection rights.
As of date of publication, the Company is actively reviewing opportunities in
GB, Ireland, Continental Europe, and the US. The total pipeline stands at 1.2
GW with transactions actively under negotiation amounting to a total of 581 MW
as of the date of publication.
The U.S. energy market is highly stratified, with several independent system
operators (each an "ISO") independently operating regional transmission
networks. The Company's pipeline focuses on market opportunities underpinned
by the incorporation of considerable wind and solar capacity into regional
grids in California (CAISO)(*), Texas (ERCOT)(**) New York (NYISO)(***) and
New England (ISO New England).
The US markets differ from the UK and Ireland in that they tend to favour
longer duration batteries, ranging from 1 to 4-hour duration. The increase in
the volume of energy available per MW per site in the United States, will not
only result in lower CapEx per unit of energy, but will also allow the Company
to capture trading opportunities available in these markets.
(*) (California Independent System Operator (CAISO))
(**) (Electric Reliability Council of Texas (ERCOT))
(***) (New York Independent System Operator (NYISO))
Environmental, Social and Governance Performance
Our Commitment to Sustainability
The Investment Manager understands that sustainability-related factors
incorporated into the investment processes, can support better investment
decisions. Therefore, the Investment Manager believes that sustainability
risks should be addressed as a central part of its investment decision-making
processes.
The Company is committed to the continuous integration of ESG assessments into
its investment, construction, and operational decision-making processes, and
strives to transparently communicate its progress through participation in the
following initiatives: [Refer to page 20 of the interim report]
Furthermore, through its investments in energy storage, the Company supports
the UN's Sustainable Development Goals, helping to direct funds to the above
four critical themes: [Refer to page 20 of the interim report]
The Company's role in energy storage has been recognised by the Exchange Green
Economy Mark, awarded by the London Stock Exchange's Green Economy Mark. The
award recognises companies that derive 50 per cent or more of their revenues
from environmental solutions.
How ESG relates to us
The Environmental Impact of our Work
The Company's assets provide a critical service to national and regional
grids, balancing electricity supply and demand with energy storage solutions,
in the face of the inherently intermittent electric generation by renewables.
Consequently, the Company's investments facilitate the integration of
renewable energy into power grids, ultimately contributing to the
decarbonisation goals.
The Company is committed to assessing the impact and effectiveness of its
systems in supporting the net zero ambitions of the grid systems that the
Company's assets support. The Investment Manager will begin external reporting
of the Company's performance in accordance with the SFDR framework in the 2022
fiscal year.
EU Sustainable Finance Disclosure Regulation (SFDR) compliance is not
mandatory for UK domiciled funds. However, the Company has decided to adopt
the relevant SFDR Article 8 requirements because it is engaged in cross-border
EU business. The Investment Manager aims to commence ESG monitoring and
reporting by the EU's 2022 deadline for SFDR. There are 14 metrics required to
be compliant with Article 8 of the SFDR (Table 2 - page 22 of the interim
report). The Investment Manager intends to extend its monitoring to include
certain emissions, water waste, and social impact metrics (Table 3 - page 24
of the interim report) which may be relevant to the Company's business
processes, as further detailed below.
Furthermore, the Company is a signatory of the UN PRI and intends to
participate in the next submission period, which will be in 2023. Regarding
the TCFD Framework, the Company will comply with its financial reporting and
climate-related financial disclosures, in line with FCA regulatory
expectations.
Our approach to Health and Safety
Gore Street's objective is that its sites are safe for staff and contractors.
We are proud to report zero major or minor Health and Safety incidents at our
sites in the fiscal year to September 2021.
Gore Street takes adequate precautions for safe design in its layout for
batteries and is currently working with its partners and industry specialists,
including leading insurers, to establish a framework for fire safety and
accident planning protocols to better assess fire safety in the industry. The
Company demands strict compliance with all applicable health and safety
regulations from its partners.
Our work with Suppliers
The Company encourages its suppliers and partners to work in an
environmentally and socially responsible manner. The Investment Manger's
Supplier Code of Conduct states that all its suppliers must establish
policies, due diligence frameworks, and management systems, consistent with
the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas, in order to ensure that parts and
products supplied to projects and assets managed by the Investment Manager are
"conflict-free," meaning that such minerals are sourced according to
industrywide standards and do not fuel wars or benefit rebel movements.
As part of its data collection initiative, the Investment Manager will work
with the Company's suppliers in what is expected to be a multi-year effort to
start to evaluate its supply chain for key social and governance risks,
including risks associated with the potential integration of conflict minerals
into the supply chain.
The Sustainability of our Batteries
Whilst the portfolio is at an early stage of its lifecycle, with the oldest
project in the portfolio at less than one-sixth of its projected lifecycle,
the Company is aware of the need to reduce waste and is exploring
opportunities to integrate a circular economy approach(*) for when we
eventually decommission our batteries. The Investment Manager's valuations
assume the assets have a useful life of up to 30 years.
Furthermore, the Company critically assesses the revenue streams in which it
chooses to operate and the impact this decision may have on a battery's
lifecycle, seeking to maximise battery efficiency.
Our approach to the Community
The Company aims to always operate in a manner that safeguards public health,
property and the environment and is proud to report zero major or minor Health
and Safety incidents at our sites in the fiscal year to September 2021.
Its partners' protocols and system designs are developed to ensure minimal
disruption to communities (including noise pollution and power system
interruption) during construction and operations.
Local Communities
The Company supports FareShare, the UK's national network of charitable food
redistributors, whose purpose is to take good quality surplus food across the
food industry and redistribute it to frontline charities and community groups.
The Company has recently given a donation to FareShare Northern Ireland which
will cover the salary of one of its van drivers for 16 months, thus helping
deliver 213 tonnes of food, equivalent to over half a million meals.
FairShare's socio-economic impact confirms that by collecting food that would
otherwise go to waste and redistributing it to good causes, it saves the UK
economy approximately £51 million every year(**).
Global Communities
Post-period, the Company's Board has approved a donation to UNICEF, matching
personal contributions at the Investment Manager. The donation will cover
about half of the cost of constructing and installing a multi-use solar
powered water supply system in Nampula province in Mozambique, intended to
provide access to safe and reliable water to circa 1500 people (including 500
children).
Diversity and Inclusion
The Investment Manager does not tolerate harassment, discrimination or
offensive behaviour of any kind and is committed to promote and select
individuals without concern for factors such as gender, race, ethnicity,
sexual orientation, religion, age, or disability.
We are committed to reporting our workforce diversity data bi-annually. At the
30 September 2021, two-thirds of the Investment Manager's executive team are
from non-white (majority) ethnicities and nearly half of the Investment
Manager's team are women.
At GSF's Board level, the proportion of women in executive leadership roles is
25 per cent.
(*) (The circular economy is based on the concept that products are designed to last longer and to be reused, repurposed or recycled.)
(**) (Impact Report carried out by NEF Consulting. Further details available at: 'Our impact fighting hunger and food waste 2019/20 | FareShare)
DIRECTORS' RESPONSIBILITIES
Going Concern
We have prepared this half year report on a going concern basis and the
Company's business activities, together with the factors likely to affect its
future development performance and position, are set out in the Investment
Manager's Review.
The Directors have assessed the ability of the Company to continue as a going
concern, below is the summary of the analysis.
Since 31(st) March 2021, there have been reduced restrictions on travel and
lockdown, but the full human and economic impact of the COVID-19 pandemic
remains difficult to assess.
The Company's ability to generate revenue from its operational assets
continues and remains largely unaffected by the pandemic. A potential key risk
facing the Company is that Covid-19 may affect the ability of operators to
adequately ensure operational integrity of the projects, particularly in terms
of operations and maintenance. The Company and the Investment Manager have
worked closely and liaised with the operators to ensure that commercial
activities remain operational, and, in their view, power generation will
remain essential to the UK's infrastructure.
The going-concern analysis assumes continued annual expenditure at the rate of
current expenditure and continued discretionary dividend payments to
shareholders at a target annual rate of 7 per cent of NAV (and a target
minimum rate of 7 pence per Ordinary Share). With expenditure and
discretionary dividends assumed unchanged, the Company will continue to be
operational and will have excess cash after payment of its liabilities for at
least 12 months until 31 December 2022.
As at 30 September 2021, the Company had net current assets of £285.30
million and had cash balances of £172.56 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 and costs relating to the acquisition of new assets, both of which
are discretionary. The Company is a guarantor to GSES1 Limited's £15m
revolving credit facility with Santander. There are no other outstanding debts
as at 30 September 2021.
The Directors considered the following scenario:
The Company and the portfolio assets for at least 12 months until 31 December
2022. We have assumed the Company's rate of expenditure over the year will
remain unchanged, that there are no contractual capital commitments at Company
level, that there is an intercompany loan from the Company to its subsidiaries
to finance EPC capex of portfolio assets, and that there are no loan
repayments received from operational companies over the time frame and any
loans from the Company to the subsidiaries are not repayable on short notice.
The Directors acknowledge their responsibilities in relation to the financial
statements for the half year ended 30 September 2021 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 2022.
Directors' Responsibilities
The Directors confirm that to the best of their knowledge:
The unaudited interim condensed financial statements have been prepared in
accordance with IAS 34 Interim Financial Reporting and give a true and fair
view of the assets, liabilities and financial position and the profit of the
Company as required by DTR 4.2.4R; and
The Chair's Statement, Investment Manager's Report and the notes to the
condensed financial statements include a fair review of the information
required by:
i. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during the period
and their impact on the unaudited interim condensed financial statements; and
a description of the principal risks and uncertainties for the remaining six
months of the year; and
ii. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the period and that
have materially affected the financial position and performance of the Company
during that period.
Signed on behalf of the Board of Directors
Patrick Cox
Committee Chair
Date: 17 December 2021
2 INTERIM CONDENSED FINANCIAL STATEMENTS
2.1 1.1 Interim Condensed Statement of Comprehensive Income
2.2 For the Interim period ended 30 September 2021
Notes 1 April 2021 to 30 September 2021 1 April 2020 to 30 September 2020
Revenue Capital Total Revenue Capital Total
(£) (£) (£) (£) (£) (£)
Net gain on investments at fair value through profit and loss - 11,096,979 11,096,979 - 3,692,663 3,692,663
Investment income 1,969,922 - 1,969,922 67,685 - 67,685
Administrative and other expenses (2,261,238) - (2,261,238) (904,273) - (904,273)
Profit before tax (291,316) 11,096,979 10,805,663 (836,588) 3,692,663 2,856,075
Taxation 4 - - - - - -
Profit after tax and profit for the period (291,316) 11,096,979 10,805,663 (836,588) 3,692,663 2,856,075
Total comprehensive income for the period (291,316) 11,096,979 10,805,663 (836,588) 3,692,663 2,856,075
Profit per share (basic and diluted) - pence per share 5 4.20 4.45
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 IFRS. The return on ordinary activities after
taxation 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.
1.2 Interim Condensed Statement of Financial Position
As at 30 September 2021
Company Number 11160422
Notes 30 September 2021 31 March
(£) 2021
(£)
Non - Current Assets
Investments at fair value through profit or loss 6 112,070,270 80,694,275
112,070,270 80,684,275
Current assets
Cash and cash equivalents 172,561,678 60,152,317
Trade and other receivables 7 1,015,695 5,364,168
173,577,373 65,516,485
Total assets 285,647,643 146,210,760
Current liabilities
Trade and other payables 343,985 1,075,819
343,985 1,075,819
Total net assets 285,303,658 145,134,941
Shareholders equity
Share capital 10 2,762,246 1,438,717
Share premium 10 238,515,497 107,713,725
Special reserve 10 186,656 186,656
Capital reduction reserve 10 14,684,101 17,446,348
Capital reserve 10 32,323,166 21,226,187
Revenue reserve 10 (3,168,008) (2,876,692)
Total shareholders equity 285,303,658 145,134,941
Net asset value per share 9 103.28 100.88
Interim Condensed Statement of Financial Position (continued)
As at 30 September 2021
Company Number 11160422
The annual financial statements were approved and authorised for issue by the
Board of directors and are signed on its behalf by;
Patrick Cox
Chair
Date: 17 December 2021
The notes on pages 37 to 55 form an integral part of these financial
statements.
1.3
For the Period Ended 30 September 2021
Share capital Share premium reserve Special reserve Capital reduction reserve Capital Revenue Total shareholders equity
(£) (£) reserve reserve (£)
(£) (£)
(£) (£)
As at 1 April 2021 1,438,717 107,713,725 186,656 17,446,348 21,226,187 (2,876,692) 145,134,941
Profit for the period - - - - 11,096,979 (291,316) 10,805,663
Total comprehensive income for the period - - - - 11,096,979 (291,316) 10,805,663
Transactions with owners
Ordinary shares issued at a premium during the period 1,323,529 133,676,471 - - - - 135,000,000
Share issue costs - (2,874,699) - - - - (2,874,699)
Dividends paid - - - (2,762,247) - - (2,762,247)
As at 2,762,246 238,515,497 186,656 14,684,101 32,323,166 (3,168,008) 285,303,658
30 September 2021
Capital reduction reserve and revenue reserves are available to the Company
for distributions to Shareholders as determined by the Directors.
The notes on pages 37 to 55 form an integral part of these financial
statements.
Interim Condensed Statement of Changes in Equity
For the Period Ended 30 September 2020
Share capital Share premium reserve Special reserve Capital reduction reserve Capital Revenue reserve Total shareholders equity
(£) (£) reserve (£)
(£) (£) (£)
(£)
As at 1 April 2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
Profit/(loss) for the period - - - - 3,692,663 (836,588) 2,856,075
Total comprehensive income/(loss) for the period - - - - 3,692,663 (836,588) 2,856,075
Transactions with owners
Ordinary shares issued at a premium during the period 246,274 23,420,624 - - - 23,666,898
Share issue costs - (367,902) - - - (367,902)
Dividends paid - - - (771,762) - (771,762)
As at 30 September 2020 771,762 42,759,780 186,656 24,744,738 8,713,121 (2,102,245) 75,073,812
1.
2. The notes on pages 37 to 55 form an integral part of
these financial statements.
1.4 Interim Condensed Statement of Cash Flows
For the Period Ended 30 September 2021
1 April 2021 to 30 September 1 April 2020 to 30 September
2021 2020
Notes (£) (£)
Cash flows used in operating activities provided by
Profit for the period 10,805,663 2,856,075
Net gain on investments at fair value through profit and loss (11,096,979) (3,692,663)
Decrease / (Increase) in trade and other receivables 4,348,473 (161,380)
(Decrease) / Increase in trade and other payables (731,834) 80,988
Net cash used in operating activities provided by 3,325,323 (916,980)
Cash flows used in investing activities
Purchase of investments (20,279,016) (2,345,651)
Net cash used in investing activities (20,279,016) (2,345,651)
Cash flows used in financing activities provided by
Proceeds from issue of ordinary shares at a premium 135,000,000 23,666,898
Share issue costs (2,874,699) (367,902)
Dividends paid (2,762,247) (771,762)
Net cash inflow from financing activities 129,363,054 22,527,234
Net increase / (decrease) in cash and cash equivalents for the period 112,409,361 (19,264,603)
Cash and cash equivalents at the beginning of the period 60,152,317 15,028,142
Cash and cash equivalents at the end of the period 172,561,678 34,292,745
During the period, interest received by the Company totaled £1,969,922 (2020:
£634,192).
4.
5. The notes on pages 37 to 55 form an integral part of
these financial statements.
Notes to the Interim Condensed Financial Statements
For the Period Ended 30 September 2021
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 18th Floor, The Scalpel, 52 Lime Street,
London, EC3M 7AF.
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 the UK and the Republic of Ireland, although the Company will also
consider projects in North America and Western Europe.
2. Basis of preparation
Statement of compliance
The half yearly condensed financial statements for the period 1 April 2021 to
30 September 2021 have been prepared in accordance with 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
2021.
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 2021. These accounting policies will be applied in the Company's
financial statements for the year ended 31 March 2022.
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 2021 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 2021
and 30 September 2020 have not been audited by the Company's external auditor.
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.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
2. Basis of preparation (continued)
Going Concern
Since the year end, there have been reduced restrictions on travel and
lockdown, but the full human and economic impact of the COVID-19 pandemic
still remains difficult to assess.
The Company's ability to generate revenue from its operational assets
continues and remains largely unaffected by the pandemic. A potential key risk
facing the Company is that Covid-19 may affect the ability of operators to
adequately ensure operational integrity of the projects, particularly in terms
of operations and maintenance. The Company and the Investment Manager have
worked closely and liaised with the operators to ensure that commercial
activities remain operational, and, in their view, power generation will
remain essential to the UK's infrastructure.
The going-concern analysis assumes continued annual expenditure at the rate of
current expenditure and continued discretionary dividend payments to
shareholders at the target annual rate of 7 per cent of NAV (and a target
minimum rate of 7 pence per ordinary share). With expenditure and
discretionary dividends assumed unchanged, the Company will continue to be
operational and will have excess cash after payment of its liabilities for at
least 12 months until 31 December 2022
As at 30 September 2021, the Company had net current assets of £285.30
million and had cash balances of £172.56 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 and costs relating to the acquisition of new assets, both of which
are discretionary. The Company is a guarantor to GSES1 Limited's £15m
revolving credit facility with Santander. The Company had no outstanding debt
as of 30 September 2021.
The Directors acknowledge their responsibilities in relation to the financial
statements for the half year ended 30 September 2021 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 2022.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
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:
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 8.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
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 19%.
30 September 30 September
2021 2020
(£) (£)
(a) Tax charge in profit and loss account
UK Corporation tax - -
(b) Reconciliation of the tax charge for the period
Profit before tax 10,805,663 2,856,075
Tax at UK standard rate of 19% 2,053,076 542,654
Effects of:
Unrealised gain / (loss) on fair value investments (2,108,426) (701,605)
Expenses not deductible for tax purposes 861 4,217
Other differences 5,700 -
Deferred tax not recognised 48,789 154,734
Tax charge for the period - -
Estimated losses not to be recognised due to insufficient evidence of future 903,422 1,454,531
profits
Estimated deferred tax thereon 25% (2020: 19%) 225,855 276,361
As at 30 September 2021, the Company has excess management expenses that are
available to offset future tax revenues. A deferred tax asset, measured at the
prospective corporate rate of 25% (2020: 19%) of £225,855 (2020: £276,361)
has not been recognised in respect of these expenses since they are
recoverable only to the extent that the Company has sufficient future taxable
revenue.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
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
2021 2020
Net gain attributable to ordinary shareholders £ 10,805,663 £ 2,856,075
Weighted average number of ordinary shares for the period 257,420,379 64,151,689
Profit per share - Basic and diluted (pence) 4.20 4.45
6. Investments
Place of business Percentage ownership 30 September 30 September
2021 2020
GSES1 Limited ("GSES1") England & Wales 100% 112,070,270 36,450,807
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 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 2021 was £79,751,550 (31 March 2021: £59,472,534). The loan is
interest bearing and attracts interest at 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.
Realisation of increases in fair value in the indirect subsidiaries will be
passed up the structure as distributions on the equity investment. 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.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
6. Investments (continued)
Immediate Parent Place of business Percentage Ownership Investment
GSF Albion Limited GSES1 England & Wales 100%
("GSF Albion")
NK Boulby Energy Storage Limited GSF Albion England & Wales 99.998% Boulby
Kiwi Power ES B GSF Albion England & Wales 49% Cenin
GSF England Limited GSES1 England & Wales 100%
("GSF England")
OSSPV001 Limited GSF England England & Wales 100% Lower Road
Port of Tilbury
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% Kilteel
Kilmannock Battery Storage Limited GSF IRE Republic of Ireland 51% Kilmannock
Ferrymuir Energy Storage Limited GSF Albion England & Wales 100% Ferrymuir
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
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
6. Investments (continued)
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
(*) The acquisition of Stony Energy Storage Limited was completed on the 12
May 2021.
( )
(** )The acquisition of Enderby Battery Storage Limited completed on the 17
September 2021.
( )
( )
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
7. Trade and other receivables
The Company advanced to NEC ES an advance of £4,500,000 on the date at which
it was admitted to the Premium segment of the London Stock Exchange. The
advance letter provided that interest would accrue from the date of admission
at a rate of 3 per cent, per annum.
As at 30 September 2021, NEC ES has paid £0.30 million of the outstanding
interest with the balance of £0.08 million interest written off.
As at the date of publication the Company has set off all of the £4.5 million
advance against amounts due to NEC (UK) Limited under two EPC contracts.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
8. 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).
The International Valuation Standards Council ("IVSC") issued guidance in
March 2020 in response to the COVID-19 pandemic.
It notes that one of the main issues when dealing with valuation is
uncertainty and that valuation is not a fact, but an estimate of the most
probable of a range of possible outcomes based on the assumptions made in the
valuation process.
Valuation uncertainty can be caused by various factors, including market
disruption, input availability and the choice of method or model of valuation.
The guidance issued by the IVSC was considered by the Investment Advisor in
the determination of the valuations disclosed at 30 September 2021.
Valuation process
In the period, the Company acquired Stony Energy Storage Limited and Enderby
Battery Storage Limited, with capacities of 79.9MW and 57MW respectively. This
brings the Company's portfolio of lithium-ion energy storage investments to a
total capacity of 516.8 MW (March 2021: 380.0 MW). As at 30 September 2021,
210.0 MW of the Company's total portfolio was operational and 306.8 MW
pre-operational (the "Investments").
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
8. Fair Value measurement (continued)
Valuation process (continued)
The Investments comprise twenty five projects, all of these are based in the
UK and the Republic of Ireland. 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
or review the fair value of certain of the Company's investments.
As at 30 September 2021, the fair value of any investment held with a value
greater than 2% of the total net asset value of the portfolio, have been
determined, (presented by the Investment Advisor and reviewed) by BDO LLP and
further presented and reviewed by the Company's board of directors.
The fair value of all other investments have been determined by the Investment
Advisor and presented directly to and reviewed by the Company's board of
directors.
The below table summarises the significant unobservable inputs to the
valuation of investments.
Investment Portfolio Valuation technique Significant Inputs Fair Value
Description (Range) 30 September 31 March
2021 2021
(£) (£)
Great Britain DCF Discount Rate 6% - 9.5% 59,500,930 49,216,281
(excluding Northern Ireland) Revenue/MW/hour £7 - £26
Northern Ireland DCF Discount Rate 7% - 8.5% 34,957,823 23,968,276
Revenue/MW/hour £3.5 - £20.5
Republic of Ireland DCF Discount Rate 8.5% - 9.5% 11,311,979 6,015,352
Revenue/MW/hour €7 - €19.5
Holding Companies NAV 6,299,538 1,494,366
Total Investments 112,070,270 80,694,275
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.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
8. Fair value measurement (continued)
Sensitivity Analysis
The below table reflects the range of sensitivities in respect of the fair
value movements of the Company's investments.
Investment Portfolio Valuation technique Estimated effect on
Significant Inputs Fair Value
Description Sensitivity 30 September 31 March
2021 2021
(£) (£)
Great Britain DCF Revenue + 10% 10,877,000 9,626,000
(excluding Northern Ireland) - 10% (11,032,000) (9,846,000)
Discount rate +1% (4,768,000) (4,278,000)
-1% 5,505,000 4,919,000
Northern Ireland DCF Revenue + 10% 4,290,000 4,210,000
- 10% (4,159,000) (4,095,000)
Discount rate +1% (2,627,000) (2,407,000)
-1% 3,016,000 2,787,000
Republic of Ireland DCF Revenue + 10% 2,131,000 715,000
- 10% (4,685,000) (1,392,000)
Discount rate +1% (3,373,000) (2,999,000)
-1% 4,011,000 2,787,000
High case (+10%) and low case (-10%) revenue information used to determine
sensitivities are provided by third party pricing sources.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
8. Fair value measurement (continued)
Valuation of financial instruments
The investment 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
2021 2021
(£) (£)
Opening balance 80,694,275 30,412,493
Purchases of underlying assets 20,279,016 34,076,053
Total fair value movement through profit and loss 11,096,979 16,205,729
112,070,270 80,694,275
A minority shareholder of Boulby has a right to receive a certain share of
Boulby distributions once NK Energy Solutions realises excess return over an
agreed hurdle return from its investment into Boulby.
Based on free cash flow forecast used to compute the net asset value of Boulby
for this period, it is not expected to reach the threshold return and thus no
payment to the minority shareholder is taken into account. However, if the
actual cash flow significantly exceeds the forecast cash flow used for current
net asset value, a part of the excess cash flow may be distributed to the
minority shareholder, impacting the ultimate fair value.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
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
2021 2021
Net assets per Statement of Financial Position £ 285,303,658 £ 145,134,941
Ordinary shares in issue as at 30 September / 31 March 276,224,622 143,871,681
NAV per share - Basic and diluted (pence) 103.28 100.88
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
10. Share capital and reserves
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve
reserve reserve
(£) (£) (£) (£) (£) (£) (£)
At 1 April 2021 1,438,717 107,713,725 186,656 17,446,348 21,226,187 (2,876,692) 145,134,941
Issue of ordinary £0.01 shares: 27 April 2021 1,323,529 133,676,471 - - - - 135,000,000
Share issue costs - (2,874,699) - - - - (2,874,699)
Dividends paid - - - (2,762,247) - - (2,762,247)
Profit for the period - - - - 11,096,979 (291,316) 10,805,663
At 30 September 2021 2,762,246 238,515,497 186,656 14,684,101 32,323,166 (3,168,008) 285,303,658
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
10. Share capital and reserves (continued)
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve
reserve reserve
(£) (£) (£) (£) (£) (£) (£)
At 1 April 2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
Issue of ordinary £0.01 shares: 30 June 2020 30,000 2,853,000 - - - - 2,883,000
Issue of ordinary £0.01 shares: 8 July 2020 216,274 20,567,624 - - - - 20,783,898
Issue of ordinary £0.01 shares: 30 October 2020 66,955 7,030,276 - - - - 7,097,231
Issue of ordinary £0.01 shares: 16 December 2020 600,000 59,400,000 - - - - 60,000,000
Share issue costs - (1,844,233) - - - - (1,844,233)
Dividends paid - - - (8,070,152) - - (8,070,152)
Profit for the year - - - - 16,205,729 (1,611,035) 14,594,694
At 31 March 2021 1,438,717 107,713,725 186,656 17,446,348 21,226,187 (2,876,692) 145,134,941
Share Issues
On 27 April 2021, the Company issued 132,352,941 ordinary shares at a price of
102 pence per share, raising net proceeds from the Placing of £135,000,000.
Admission subsequently took place on 27 April 2021.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
11. Dividends
Dividend per share 30 September 30 September
2021 2020
(£) (£)
Dividends paid during the period
For the 3 month period ended 31 March 2020 1 pence - 771,761
For the 3 month period ended 31 March 2021 1 pence 2,762,247 -
2,762,247 771,761
An interim dividend of 2 pence for the period 1 April 2021 to 30 June 2021 was
proposed by the Directors, and subsequently paid on the 8 October 2021.
An interim dividend of 2 pence for the period 1 July 2021 to 30 September 2021
is proposed by the Directors and due to be paid in January 2022.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
12. Transactions with related parties
Following admission of the ordinary shares (refer to note 20), 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
Patrick Cox, Chair of the Board of Directors of the Company, is paid a
director's remuneration of £57,500 per annum, (2020: £37,000), Caroline
Banszky is paid a director's remuneration of £45,000 per annum, (2020:
£25,000) with the remaining directors being paid directors' remuneration of
£40,000 per annum, (2020: £21,000).
Total director's remuneration and associated employment costs of £97,504 were
incurred in respect of the period with £4,085 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 1/4(th) of 1% of Adjusted Net Asset Value on a
quarterly basis. 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:
(i) for the four quarters from First Admission, Adjusted Net Asset Value shall be
equal to Net Asset Value;
(ii) 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;
(iii) thereafter, Adjusted Net Asset Value shall be equal to Net Asset Value minus
Cash on the Company's Statement of Financial Position.
Investment advisory fees of £1,353,252 (30 September 2020: £376,416) were
paid during the period, there were no outstanding fees as at 30 September
2021, (31 March 2021: £nil outstanding).
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
12. Transactions with related parties (continued)
Investment Advisor
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. No performance fees of were accrued
for the period ended 30 September 2021, (31 March 2021: £496,461).
During the period the Investment Advisor provided operations management
services to SPV companies resulting in charges to the amount of £247,363 (31
March 2021: £686,025) being payable by the SPV companies to the Investment
Advisor.
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
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. Under these agreements, the Company acts as chargor and guarantor to
the amounts borrowed under the Agreements by GSES1 Limited. As at 30 September
2021, no amounts had been drawn on this facility.
The Company had no contingencies and significant capital commitments as at the
30 September 2021.
14. Post balance sheet events
The Directors have evaluated the need for disclosures and / or adjustments
resulting from post balance sheet events through to 17 December 2021, the date
the financial statements were available to be issued.
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
2021.
Disclaimer
This announcement has been issued by, and is the sole responsibility of, Gore
Street Energy Storage Fund plc (the "Company").
This announcement is for information purposes only and is not intended to and
does not constitute or form part of any offer or invitation to purchase or
subscribe for, or any solicitation to purchase or subscribe for shares in any
jurisdiction in which such an offer or solicitation is unlawful.
The information and opinions contained in this announcement are provided as at
the date of the announcement and are subject to change without notice and no
representation or warranty, express or implied, is or will be made in relation
to the accuracy or completeness of the information contained herein.
The information in this announcement may include forward-looking statements,
which are based on the current expectations, intentions and projections about
future events and trends or other matters that are not historical facts and in
certain cases can be identified by the use of terms such as "may", "will",
"should", "could", "expect", "anticipate", "project", "estimate", "intend",
"continue", "target", "believe" (or the negatives thereof) or other variations
thereof or comparable terminology. These forward-looking statements, as well
as those included in any related materials, are not guarantees of future
performance and are subject to known and unknown risks, uncertainties,
assumptions about the Company and other factors, including, among other
things, the development of its business, trends in its industry, and future
capital expenditures and acquisitions. In light of these risks, uncertainties
and assumptions, the events in the forward-looking statements may not occur
and actual results may differ materially from those expressed or implied by
such forward looking statements. Given these risks and uncertainties,
prospective investors are cautioned not to place undue reliance on
forward-looking statements.
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