TIDMGRID
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 GBP818mn and NAV per
share rose to 151.18p per ordinary share (30 June 2022:
145.11p).
Financial highlights
NAV has increased to GBP818mn, 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 .
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
Charles Gorman +44 (0) 20 3995 6699
Camilla Esmund
Alex Hogan
JTC (UK) Limited as Company GHEnergyStorageCoSec@jtcgroup.com
Secretary +44 207 409 0181
Christopher Gibbons
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
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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