REG - Gore Street Energy - NAV uplift, dividend and operational progress

Gore Street Energy Storage FundAnnouncement

15/06/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230615:nRSO8278Ca&default-theme=true

RNS Number : 8278C  Gore Street Energy Storage Fund PLC  15 June 2023

15 June 2023

Gore Street Energy Storage Fund plc

(the "Company" or "GSF")

NAV uplift and operational progress with dividend in line with expectations

Gore Street Energy Storage Fund plc, the internationally diversified energy
storage fund, is pleased to announce its 5.9% increase in unaudited Net Asset
Value ("NAV") for the year ended 31 March 2023.

 

The Company's NAV continues to deliver strong and steady growth despite recent
pricing volatility in GB. Dividends announced for the period have increased,
and the Investment Manager secured record prices in the T-4 2023 Capacity
Market auction.

 

Net Asset Value

The unaudited NAV as at 31 March 2023, increased to 115.6 pence per Ordinary
Share from 109.1 pence per Ordinary Share at 31 March 2022, an increase of
5.9%. NAV Total Return, including dividends, was 12.3% during the
period. This is a particularly pleasing performance and illustrative of the
Company's differentiated approach to this asset class, highlighted by its
geographic diversification and the Company's valuation policy as appropriately
set to reflect the resilient nature of our asset class.

The final quarter of the fiscal year (January - March 2023) was also strong
for the Company, seeing NAV increase by 1.8% from 113.5p at December-end 2022
and providing a NAV Total Return of 3.6% inclusive of dividends paid during
the quarter, despite challenging market conditions in GB.

                                                                    £ millions   Pence per Ordinary Share
 NAV as at 31 March 2022                                            376.5        109.1
 Gross Offering Proceeds                                            150.0        0.3

 Offering, Fund and Subsidiary Holding Companies Operating Expense  (17.3)       (3.6)
 Interest Income                                                    3.6          0.8
 Dividends                                                          (31.0)       (6.4) 1  (#_ftn1)
 Increase in NAV of portfolio SPVs                                  258.0        53.5
 Distribution from SPV                                              39.9         8.3
 Capex and Acquisitions                                             (223.4)      (46.4)
 NAV as at 31 March 2023                                            556.3        115.6

 

Financial and Operational highlights for the year ended 31 March 2023

 

·      NAV increased by 47.8% to £556.3m (31 March 2022: £376.5m).

·    NAV per share increased 5.9% to 115.6 pence (31 March 2022: 109.1
pence per share), with a NAV Total Return of 12.3%.

·    The Company has continued to achieve its dividend target from IPO,
with a total dividend for the reporting period of 7.5p (2022: 7.0p).

·    Portfolio capacity increased through acquisitions by 86.7% or 544.6
MW during the financial year.

·    Operational capacity increased by 59.9 MW or 25.8% during the year.

·    Portfolio revenue of £39.3m or £134,790 per MW/yr 2  (#_ftn2) .
This was generated by 19 revenue streams across four different grids.

·    EBITDA of the operational portfolio increased by 19.1% to £27.8m (31
March 2022: £23.3m). This represents an EBITDA of 5.77 pence per share.

·    During the reporting period, 63.5% of the portfolio's EBITDA was
secured outside Great Britain.

·    The Company raised £150m in an oversubscribed issuance in April
2022.

 

Key NAV drivers over the twelve-month period:

·    Capacity Market Contracts - Capacity Market (CM) contracts were
secured for both Great Britain ("GB") and Irish assets in the February 2023
auctions. Six sites were awarded contracts worth £63/kW/year for delivery
from October 2026 under the T-4 auction and are anticipated to deliver a
combined value of c.£45m, representing record-level T-4 auction pricing. This
includes a 15-year contract awarded to the Middleton asset, expected to
generate £2.97m annually in CM revenues (subject to CPI adjustments). The
Company has 15-year CM contracts for its entire GB construction portfolio. The
two 50 MW assets in Northern Ireland ("NI"), meanwhile, secured CM contracts
from 2022 until 2027, while Porterstown in the Republic of Ireland ("ROI")
secured a CM contract for 2026-2027.

 

·      Discount rate - The weighted average discount rate across the
portfolio increased to 10.1% (FY 2022: 8.3%), in response to the current
macroeconomic environment. The Investment Manager has updated discount rates
based on their respective grid and stage of development.

 

·      CPI assumptions - CPI has been revised per third-party forecasts,
with an updated long-term target of 2.5% from 2025 onwards. Changes to
inflation rates, have impacted forecasted revenues and operational expenses.

 

·      Asset stage - The Company's operational capacity grew by 26%
during the reporting period, reaching 291.6 MW, following the successful
commissioning of the Porterstown asset in January 2023 and the acquisition of
operational assets on the ERCOT grid (Texas).

 

·      Operating performance - £39.3m in revenue was generated during
the reporting period, averaging £134,790 per MW/yr. Over the 2022 calendar
year, the Company achieved a consistently high average revenue of £157,414
per MW/yr 3  (#_ftn3) .

 

·      Portfolio expansion - The Company made acquisitions totalling
544.6 MW during the period. This comprised of 144.65 MW of projects on the
ERCOT grid in Texas, 200 MW in GB, and 200 MW on the Californian grid (CAISO).
The Company's geographical split is now: 42% in GB, 27% in Ireland, 12% in
Texas, 17% in California and 2% in Germany.

 

·      Portfolio revenue curves - Portfolio revenue curves across
geographies have been revised based on updated third-party inputs.

 

Portfolio Update

Operational capacity increased by 59.85 MW, or 25.8%, reaching 291.6 MW during
the fiscal year. A significant proportion of assets
under-construction/pre-construction (521.8 MW) are scheduled to become
operational within the following 18 months.

 

An overview of the portfolio's assets and their status as at 31 March 2023 is
provided below:

 Project            MW / MWh     Grid Location         Revenue denomination  Status
 Boulby             6.0 / 6.0    GB (Yorkshire)        GBP                   Operational
 Cenin              4.0 / 4.8    GB (Wales)            GBP                   Operational
 POTL               9.0 / 4.5    GB (Essex)            GBP                   Operational
 Lower Road         10.0 / 5.0   GB (Essex)            GBP                   Operational
 Mullavilly         50.0 / 21.3  NI                    GBP                   Operational
 Drumkee            50.0 / 21.3  NI                    GBP                   Operational
 Hulley             20.0 / 20.0  GB (Cheshire)         GBP                   Operational
 Lascar             20.0 / 20.0  GB (Manchester)       GBP                   Operational
 Larport            19.5 / 19.5  GB (Herefordshire)    GBP                   Operational
 Ancala             11.2 / 11.2  GB (Various)          GBP                   Operational
 Breach             10.0 / 10.0  GB (Derbyshire)       GBP                   Operational
 Cremzow            22.0 / 29.0  Germany               EUR                   Operational
 PBSL               30.0 / 30.0  ROI                   EUR                   Operational
 Synder             9.95 / 19.0  US (ERCOT)            USD                   Operational
 Westover           9.95 / 19.0  US (ERCOT)            USD                   Operational
 Sweetwater         9.95 / 19.0  US (ERCOT)            USD                   Operational
 Stony              79.9 / 79.9  GB (Buckinghamshire)  GBP                   Energisation scheduled
 Ferrymuir          50.0 / 50.0  GB (Scotland)         GBP                   Under construction/ Pre-construction
 Enderby            57.0 / 57.0  GB (Leicestershire)   GBP                   Under construction/ Pre-construction
 Middleton          200          GB (Heysham)          GBP                   Under construction/ Pre-construction
 PBSL Expansion     60           ROI                   EUR                   Under construction/ Pre-construction
 Kilmannock (KBSL)  30           ROI                   EUR                   Under construction/ Pre-construction
 KBSL Expansion     90           ROI                   EUR                   Under construction/ Pre-construction
 Cedar Hill         9.95         US (ERCOT)            USD                   Under construction/ Pre-construction
 Mineral Wells      9.95         US (ERCOT)            USD                   Under construction/ Pre-construction
 Wichita Falls      9.95         US (ERCOT)            USD                   Under construction/ Pre-construction
 Mesquite           9.95         US (ERCOT)            USD                   Under construction/ Pre-construction
 Dog Fish           75           US (ERCOT)            USD                   Under construction/ Pre-construction
 Big Rock           200 / 400    US (CAISO)            USD                   Under construction/ Pre-construction
 Total:             1173.2

 

Dividend Declaration

The Board has approved a fourth interim dividend of 1.5 pence per share,
bringing the total dividend for the period ending 31 March 2023 to 7.5 pence
per share (compared to 7 pence per share for the full year ended 31 March
2022), in line with the Company's progressive Dividend Policy. The ex-dividend
date will be 29 June 2023 and the record date 30 June 2023. The dividend will
be paid on or around 17 July 2023.

 

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
1.5 pence per share, 1.5 pence is treated as qualifying interest income.

 

Notice of Results

The Company will announce its results for the twelve months ended 31 March
2023 on Monday 17 July 2023.

 

 

Alex O'Cinneide, CEO of Gore Street Capital, the investment manager to the
Company, commented:

 

"I am pleased to report the continued growth of the Company, driven by our
successful diversification strategy. Our commitment to expanding the portfolio
across international markets has proven out, resulting in strong financial
performance and further positioning us as the global leader in the energy
storage sector.

 

Our unique diversification strategy has allowed us to navigate market
challenges and capture new revenue opportunities across different grid
networks in uncorrelated markets. This approach has not only mitigated the
impact of lower revenue in the GB market in 2023 but also provided stability
and consistent growth.

 

The Company's Irish assets have been particularly impressive, generating
outstanding revenues and bolstering our overall portfolio performance, a trend
that continued to the end of the reporting period. Our entire operational
portfolio has been well-placed to capitalise on the seasonal variations in
revenues seen across all the markets in which we operate, showcasing the
resilience and effectiveness of our diversification strategy.

 

Over the period, we have strategically acquired assets in key markets, further
enhancing our operational capacity and expanding our geographic presence. We
are now operating assets in four non-correlated energy systems, with
construction taking place in five grids. These acquisitions have delivered
cash-generating assets and positioned the Company for long-term growth as we
tap into the increasing demand for energy storage solutions worldwide.

 

Appropriate valuation of the Company's assets has also enabled continued
growth, minimised fees for shareholders, and insulated the Company from any
potential revaluing of assets due to short-term volatility in one grid. Our
assets have been sized for the market opportunity available in each grid and
not built on unfounded assumptions of new revenue streams suddenly
materialising.

 

Our strong performance is a testament to the expertise and dedication of my
colleagues in the Investment Manager, a committed board of directors, as well
as the continued support of shareholders. Over the next twelve months, we are
focused on our portfolio along the following areas 1) bringing projects to
operation at the lowest cost per MW/MWh fully installed 2) generating the
highest revenue per MW/MWh in each of the markets we are competing in 3)
utilise our economics of scale to materially increase EBITDA margin 4)
creating increased capacity in our existing projects over the original project
size.  We remain fully committed to delivering value and maintaining our
position at the forefront of the energy storage sector."

 

 

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)
 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

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 an 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.

 

 

 1  (#_ftnref1) 136.36m shares issued in April were eligible for only 5p of
dividends during the period since the fundraise in April.

(( 2  (#_ftnref2) )) Figure includes liquidated damages on late commissioning
of the PBSL project and based on operational MW as of 31(st) March 2023.

 3  (#_ftnref3) Figure excludes liquidated damages on late commissioning of
the PBSL project since project was operational in January 2023.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDSFLSIIEDSEIM