REG - Gore Street Energy - Full-Year Unaudited Net Asset Value

Gore Street Energy Storage FundAnnouncement

20/06/2024 07:00

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RNS Number : 1134T  Gore Street Energy Storage Fund PLC  20 June 2024

   20 June 2024

Gore Street Energy Storage Fund plc

(the "Company" or "GSF")

Full-Year Unaudited Net Asset Value

Geographically diversified revenue generation, increasing operational capacity
and capital management have positioned the Company well for future growth

 

Gore Street Energy Storage Fund plc, the internationally diversified energy
storage fund, is pleased to announce its unaudited Net Asset Value ("NAV") for
the year ended 31 March 2024.

The Company's approach to valuation remains consistent and helped largely
mitigate volatility in the Company's NAV due to the Investment Manager's
appropriate use of valuation assumptions and capital allocation strategy. The
Company's construction schedule is expected to provide support over future
valuation periods, given the large amount of capacity currently in
construction which is due to come online by the end of the current fiscal
year. Consistent revenue generation, increasing operational capacity, and
prudent capital management have positioned the Company well for strong future
growth. Dividends announced with respect to the reported period are in line
with the Company's stated dividend policy.

 

Net Asset Value

As of 31 March 2024, the unaudited NAV was 107.0 pence per share, representing
a 3.6% decrease during the quarter (31 December 2023: 111.0 pence per share)
and brought NAV total return since IPO to 48.4%.

The Key drivers of NAV over FY23/24 were updated macro assumptions reflecting
the operating environment at the time, and active portfolio management. Key
updated assumptions that negatively impacted NAV included inflation, forecast
revenue curves, and discount rates, resulting in a decrease of 11.3 pence per
share. Positive NAV drivers during the period due to active portfolio
management included strong cash generation and a significant increase in
energised capacity to 421.4MW (FY23: 291.6MW), as the Investment Manager
continues to successfully execute against its diversified growth strategy.
These drivers resulted in an increase of 10.1 pence per share.

 

Movements in Net Asset Value between March 2023 and March 2024

                                                          £m    Pence per share
 NAV March 2023                                           556   115.6
 Offering Proceeds (Nidec and Low Carbon share issuance)  27    0.0
 Dividends                                                (36)  (7.4)
 Revenue Curves                                           (35)  (7.0)
 Inflation                                                (7)   (1.5)
 Discount Rates                                           (13)  (2.8)
 Net Portfolio Returns                                    49    10.1
 NAV March 2024                                           541   107.0

 

Operational and Financial Highlights for the 12 months ended 31 March 2024.

·    The portfolio generated £41.4 million in revenue during the fiscal
year (31 March 2023: £39.3m).

·    The portfolio generated an operational EBITDA of £28.4 million. (31
March 2023: £27.8 million).

·    Energised capacity increased by 45% to 421.4MW (31 March 2023:
291.6MW).

·    Average operational capacity increased by 7% to 311.5MW (31 March
2023: 291.6MW)

·    The Company's diversified fleet achieved an average revenue of
£133,000 per MW/yr (31 March 2023: £135,000 per MW/yr).

·    As at 31 March 2024, the Company had £60.7 million in cash or cash
equivalents, as well as £58.6 million in debt headroom on its existing
facilities, sufficient to cover all contractual obligations and continue to
build out the Company's portfolio to over 750MW.

·    The Company increased its asset base on the Irish Grid to 385MW, of
which 130MW is operational, following the acquisition of a 51% stake in a 75MW
pre-construction energy storage project (Project Mucklagh) located in the
Republic of Ireland.

·    The Company maintained a low level of gearing, equal to 6.5% 1  of
GAV as at 31 March 2024. During FY24/25, the Company expects to draw down on
its available debt lines and expects net debt to reach c.15 % of GAV once
fully drawn.

·    The Company issued shares at NAV to strategic partners Nidec and Low
Carbon, for a total consideration value of c.£27m.

 

Key NAV drivers

·    Offering Proceeds: The Company issued 23,700,000 new Ordinary Shares
to strategic partners Nidec and Low Carbon. The shares were issued at the
prevailing Net Asset Value on the date of issuance. In December 2023,
14,000,000 shares were issued to Nidec, followed by an additional issuance of
9,700,000 shares to Low Carbon in March 2024, both at the prevailing NAV.

·    Dividends (-7.4p): The Company paid 7.5 pence per share during the
Financial Year. Due to the issuance of additional shares during the reporting
period, the per-share dividend amounted to 7.4p.

·    Revenue Curves (-7.0p): Throughout the year, key markets, notably
Great Britain, experienced a decline in the revenue forecasts driven by recent
weakness in revenue being factored in by research houses. Additionally the
Investment Manager maintained its prudent approach of adjusting near-term GB
revenue assumptions downward, in line with current market conditions in GB.
Despite an improved outlook in some markets, the net effect compared with the
previous reporting period was a decrease of 7.0 pence in NAV.

·    Inflation (-1.5p): Inflation assumptions aligned with those published
as part of the Company's interim results, reflecting the inflationary macro
environment at the time.

·    Discount rates (-2.8p): The Investment Manager increased the discount
rate by 25 bps across all asset stages and geographies. The weighted average
discount rate applied to the Company's portfolio saw an increase to 10.2% as
at 31 March 2024 (FY23: 10.1%). The impact of de-risking assets as they
progressed through construction is included in Net Portfolio Returns and had a
2.8p per share positive impact on NAV (included in Net Portfolio Returns
below).

·    Net Portfolio Returns (+10.1p): This refers to cash generation, COD
changes, Opex savings, site upgrades, de-risking of sites and DCF changes and
rollover. The net effect of these factors resulted in a 10.1 pence per share
increase in NAV.

 

Dividend Declaration

The Board has approved a fourth dividend of 1.5 pence per share, bringing the
total dividend for the period ending 31 March 2024 to 7.5 pence per share as
per the dividend target of 7% of average NAV over the reported period. Based
on the 31 March 2024 share price, this dividend was equal to a 11.6% yield.

The ex-dividend date will be 27 June 2024, and the record date is 28 June
2024. The dividend will be paid on or around 15 July 2024.

Any such dividend payment to Shareholders may take the form of either dividend
income or "qualifying interest income", which may be designated as an interest
distribution for UK tax purposes and, therefore, subject to the interest
streaming regime applicable to investment trusts. Of this dividend declared,
1.5 pence is treated as qualifying interest income.

 

Notice of Results

The Company will release its audited results for the twelve months ended 31
March 2024 on 15 July 2024.

A virtual presentation for analysts will be held at 9:30 am BST on the day of
the results. To register for the event, please
contact gorestreet@buchanan.uk.com (mailto:gorestreet@buchanan.uk.com) .

Additionally, the Investment Manager will hold a live presentation for
investors relating to the Annual Results via the Investor Meet Company
platform on 15 July 2024 at 11:00 am BST.

The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via the Investor Meet Company dashboard up until
9:00 am the day before the meeting or at any time during the live
presentation.

Investors can sign up to Investor Meet Company for free and add to meet GORE
STREET ENERGY STORAGE FUND
PLC via:https://www.investormeetcompany.com/gore-street-energy-storage-fund-plc/register-investor
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fd31v2n04.eu1.hs-sales-engage.com%2FCtc%2FI8%2B23284%2Fd31V2n04%2FJlF2-6qcW8wLKSR6lZ3npN5KTdVN3Vx8kW6DqwHj57fzDGN5pQTGwVG0SmW8f8YH-1sGJhpW6s256m23kqlmW6hxWNw7Gnb66W5_dBcQ2zhcbQW73gSbn5-YDK5N2jdslpj32hGW3qmZz96Kf_7BW35t2r25nTW9jW7TVFMd3tYXX1W2ntp5X3m8QYLW3c7KV284Lnn6N6ZqdWBkMgPTW5vRc_b70SLT4W2QtwZD1qDCY6W7R4nTx76n59VW8Z24yY7Yr-Z3W8bbfFK7JfFHWW1RhFXk3lD7-YW2FWmsp898zRMW5vkY5_9d4ZmrV7CK9W3qxYBGW51ygm076qsGwW19GBqs4cP-w5W5mJTmP1XMdLMW8VBD6h3RVx7nf7sSKfl04&data=05%7C02%7Cbpaulden%40gorestreetcap.com%7C291ba5dd6ebb4737055108dc8c741e80%7Cc85193471b654f408695009c77d04147%7C0%7C0%7C638539677571905071%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=eYoCsO0Cf%2B4Y8T3k%2FMdCG3mtXN3PV881K4rW%2FGYheMg%3D&reserved=0)

Following the presentation, materials will be posted on the Company's website:
www.gsenergystoragefund.com (http://www.gsenergystoragefund.com)

 

Factsheets

The Company produces a monthly factsheet, in addition to quarterly updates, to
communicate developments from across the portfolio and markets in which it
operates. The publications are available on the Company's website here
(https://www.gsenergystoragefund.com/content/investors/factsheet) .

 

 

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

"During the financial year, the Company has achieved significant success,
demonstrating the effectiveness of our diversification strategy in a
challenging environment. The spread of the Company's portfolio across
geographies, revenue streams, and regulatory environments has proven
invaluable, allowing us to deliver best-in-class operational performance and
consistent revenues averaging £133,000 per MW/yr.  These results demonstrate
the soundness of our capital allocation decisions in providing consistent and
sustainable returns to our investors. As a part of our active management
approach, we continuously review alternative revenue approaches, including
tolling agreements, to optimise the performance of the portfolio. With our
substantially unlevered portfolio, we are in a position to drive our revenue
hedging strategy by what is in GSF's long-term interest rather than the
short-term demands of lenders. In the future, it may be appropriate to
consider longer-term contracts. However, at the moment, we do not believe it
is the right time to enter into these contracts, as we are currently
experiencing a low point in the cycle in GB. Entering into a multi-year
contract at this stage would mean securing low revenues with little downside
protection while forfeiting any potential upside.

"The investments made to enter the Irish market in 2019, and Texas in 2022
have been proven out, as record revenues were captured in those markets at
various points throughout the year, and we see strong performance over the
summer months from Texas.

"I am proud of the Investment Manager's ability to raise funds and add to the
total portfolio, which now stands at 1.248GW. As we look ahead to the rest of
2024 and beyond, these achievements have served to maintain the Company's
strong position, which we will build on with the energisation of new capacity
- led by the 200MW / 400MWh Big Rock asset in California - in the coming
months.

"The fundamental drivers of energy storage remain strong, driven by climate
action, energy security and legislation worldwide. The Company has a strong
position, with a solid diversification strategy and unique exposure across
multiple revenue streams in uncorrelated markets - and will continue to play
an important role in the decarbonisation of energy systems globally."

 

For further information: 

 

Gore Street Capital Limited          

Alex O'Cinneide / Paula Travesso / Ben Paulden 

Email: ir@gorestreetcap.com
(https://gorestreetcap01-my.sharepoint.com/personal/bpaulden_gorestreetcap_com/Documents/ir@gorestreetcap.com)
 
 
Tel: +44 (0) 20 3826 0290 

 

Shore Capital (Joint Corporate Broker)   

Anita Ghanekar / Fiona Conroy / Sophie Collins
 
                Tel: +44 (0) 20 7408 4090 

(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 (mailto:gorestreet@buchanan.uk.com)  

 

Notes to Editors 

 

About Gore Street Energy Storage Fund plc 

Gore Street is London's first listed and internationally diversified energy
storage fund dedicated to the low-carbon transition. It seeks to provide
Shareholders with sustainable returns from their investment in a diversified
portfolio of utility-scale energy storage projects. In addition to growth
through increasing operational capacity and a considerable pipeline, the
Company aims to deliver consistent and robust dividend yield as income
distributions to its Shareholders. 

 

https://www.gsenergystoragefund.com (https://www.gsenergystoragefund.com/)  

 

 

 1  Includes project level and fund level debt.

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