REG - Gresham House Energy - Net Asset Value(s)

Gresham House Energy Storage FundAnnouncement

09/11/2022 07:00

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RNS Number : 7512F  Gresham House Energy Storage Fund  09 November 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

9 November 2022

GRESHAM HOUSE ENERGY STORAGE FUND PLC

("GRID", "the Fund" or the "Company")

Net Asset Value

Gresham House Energy Storage Fund plc (LSE: GRID) (the "Fund") announces its NAV as at 30 September 2022 was £818mn and NAV per share rose to 151.18p per ordinary share (30 June 2022: 145.11p).
 
Financial highlights

NAV has increased to £818mn, or 151.18p per share, up 6.07p per share. No
dividends were paid in the quarter as the dividend in respect of the quarter
ended 30 June 2022 was paid in October 2022. After deducting the Q2 dividend,
the adjusted ex-dividend NAV is 149.43p per share representing a like-for-like
increase of 2.98% compared to the Q2 2022 NAV.

§ From the IPO in November 2018 to the end of September 2022, GRID has
delivered a share price total return of 100.54% compared with 11.83% for the
FTSE All Share and an NAV total return of 84.12%

§ Exceptional first half performance continued through Q3 2022 with revenue
and EBITDA significantly ahead of budget. The backdrop for BESS remains
positive, underpinned by structural shifts as more renewables come online and
challenges in the French nuclear fleet turned Great Britain into a net
exporter of power to France for the first time in at least a decade.

§ Dividends were more than 1.3x covered 1  in Q3 2022 and expected to be
fully covered in 2022

§ 550MW of operational assets as at 30 September 2022

§ During the quarter, the most significant changes to NAV per share included:

-     +4.63p from higher third-party revenue forecasts

-     +2.56p from cash flow generation of underlying assets

-     +1.99p from increasing the RPI inflation assumption for 2022 to 9.0%

-     -0.89p from roll forward of NPV from operational projects

-     -1.78p due to a combination of cost increases primarily caused by a
weaker sterling and slightly later projections for COD 2  on a couple of new
projects and operational projects whose batteries are being augmented

§ In Q3 2022, there have been no changes to NAV from:

-     new projects being valued on a Discounted Cash Flow (DCF) basis
(having been previously valued at cost). Arbroath will be revalued at year end
and other projects are expected to follow in Q1 2023

-     changes to inflation assumptions beyond 2022 which remain at 4.5%,
3.5% and 2.5% for 2023, 2024 and 2025 & thereafter, respectively.
Assumptions remain lower than implied by UK gilt yield curves

-     changes in underlying discount rate assumptions. As such the blended
weighted average discount rate was 10.8% based on the mix of operational and
construction-stage projects

§ The Manager and Board are actively reviewing inflation and discount rate
assumptions and any changes will be incorporated in the end-of-year valuations

 

Portfolio activity and market outlook

Portfolio activity has been positive in Q3 2022. Arbroath and Stairfoot are
now operational, while Enderby and Coupar Angus are in the process of becoming
fully operational and several other projects will follow, as previously
announced.

As we mentioned in our Interim Results, the timing of connections remains
challenging. Other issues have been largely resolved, such as Covid-era
supply-chain bottlenecks and shipping costs, which have declined sharply,
while the time to connect new projects to local and national grid networks has
increased.

The Manager remains positive about the potential for growth. GRID's publicly
announced pipeline remains unchanged this quarter: however, new opportunities
are being progressed that are expected to increase pipeline in the future.

There is currently much discussion of possible regulatory or tax changes for
the renewables sector. We note that BEIS expressly stated in their recent REMA
consultation that it is essential for 'low-carbon flexibility' to be
prioritised and we are convinced, on both technical and financial grounds,
that batteries are the most credible storage technology compared with less
proven, more costly, and less efficient alternatives such as hydrogen or
"CO(2)-abated" gas-fired generation.

 

The factsheet for the period ended 30 September 2022 is available here
(https://protect.mimecast-offshore.com/s/WjUBCQ0GWmsNov90Ix2hza?domain=greshamhouse.com/)
.

 

For further information, please contact:

 Gresham House New Energy

 Ben Guest                              +44 (0) 20 3837 6270
 Jefferies International Limited

 Stuart Klein                           +44 (0) 20 7029 8000

 Gaudi Le Roux                          +44 (0) 20 7029 8000
 KL Communications                      gh@kl-communications.com (mailto:gh@kl-communications.com)

 Charles Gorman                         +44 (0) 20 3995 6699

 Camilla Esmund

 Alex Hogan
 JTC (UK) Limited as Company Secretary  GHEnergyStorageCoSec@jtcgroup.com (mailto:GHEnergyStorageCoSec@jtcgroup.com)

 Christopher Gibbons

                                        +44 207 409 0181

About the Company and the Manager:

Gresham House Energy Storage Fund plc seeks to provide investors with an
attractive and sustainable dividend over the long term by investing in a
diversified portfolio of utility-scale battery energy storage systems (known
as BESS) located in Great Britain, Northern Ireland, and the Republic of
Ireland. In addition, the Company seeks to provide investors with the prospect
of capital growth through the re-investment of net cash generated in excess of
the target dividend in accordance with the Company's investment policy.

The Company targets (i) an unlevered Net Asset Value total return of 8 per
cent. per annum; and (ii) a levered Net Asset Value total return of 15 per
cent. per annum Gresham House Asset Management Limited is the FCA authorised
operating business of Gresham House plc, a London Stock Exchange quoted
specialist alternative asset manager. Gresham House is committed to operating
responsibly and sustainably, taking the long view in delivering sustainable
investment solutions. www.greshamhouse.com (http://www.greshamhouse.com/)

Definition of utility-scale battery energy storage systems (BESS)

Utility-scale battery energy storage systems (BESS) are the enabling
infrastructure that will support the continued growth of renewable energy
sources such as wind and solar, essential to the UK's stated target to reduce
carbon emissions. They store excess energy generated by renewable energy
sources and then release that stored energy back into the grid during peak
hours when there is increased demand. BESS also provide Frequency Response
services to National Grid whereby batteries import and export power with the
aim to keep real-time supply and demand in near-perfect balance while also
protecting against unexpected outages of major power plants.

 1  Operational Dividend Cover as defined in the 2022 Interim Report and
Accounts

 2  Commencement of Operations Date

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