TIDMGSF
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 GBP145.1 million in March
2021 to GBP285.3 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.GBP30 million.
o Acquired a 57MW in construction energy storage project in
Leicester, scheduled to become operational in 2023, for c.GBP22
million.
-- A successful fundraise of GBP135 million was completed during
the period. GBP15.3m 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 GBP285 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 GBP73.6 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 GBP135 million
in April, and post period-end raised a further GBP73.6 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 Tel: +44 (0) 207 408 4050
Sexton (Corporate Advisory)
Fiona Conroy / Henry Willcocks (Corporate
Broking)
J.P. Morgan Cazenove (Joint Corporate
Broker)
William Simmonds / Jérémie Tel: +44 (0) 20 7742 4000
Birnbaum (Corporate Finance)
Buchanan (Media Enquiries)
Charles Ryland / Henry Wilson / George Tel: +44 (0) 20 7466 5000
Beale
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
Overview
As of 30 September 2021:(*)
Market Capitalisation Dividend for the period Total Returns since
GBP299.7 million 4 pence IPO
26.5%
NAV NAV per share NAV total returns since
GBP285.3 million 103.3 June 2018/IPO
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 GBP135.0 million
in April 2021, following a GBP60.0 million raise in December 2020.
A further GBP73.6 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) GBP145.1m GBP285.3m
-------------------- -------------------
NAV
per
sha
re(**) 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 GBP155.4m
capitalisation GBP299.7m
based
on
closing
price
at
indicated
date
-------------------- -------------------
Portfolio's 380.0 516.5
total MW MW
capacity (*****)
-------------------- -------------------
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 GBP145.1 million (March 2021) to
GBP285.3 million in September 2021 were: (i) the GBP135m 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, t he
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 GBP135 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 GBP135m 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 GBP73.6 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 GBP17/MWh, compared to averages of GBP10.6/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 GBP51 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
GBP285.30 million and had cash balances of GBP172.56 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 GBP15m
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 1 April 2020 to 30 September
2021 2020
------------------------- ------ --------------------------------------- ----------------------------------
Revenue Capital Total Revenue Capital Total
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------------- ------ ------------ ----------- ------------ ---------- ---------- ----------
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 31 March
2021
(GBP) 2021
(GBP)
----------------------------------- ------ --- ------------- --- ------------
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 Share premium Special Capital Capital Revenue Total
capital reserve reserve reduction reserve reserve shareholders
(GBP) reserve equity
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------ ---------- -------------- --------- ------------ ----------- ------------ ------------------
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
30 September
2021 2,762,246 238,515,497 186,656 14,684,101 32,323,166 (3,168,008) 285,303,658
------------------ ---------- -------------- --------- ------------ ----------- ------------ ------------------
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 Special Capital Capital Revenue Total
reserve reserve reduction reserve reserve shareholders
(GBP) (GBP) reserve equity
(GBP) (GBP) (GBP) (GBP) (GBP)
----------------- -------------- -------------- --------- ----------- ---------- ------------ -----------------
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 1 April 2020
to 30 September to 30 September
2021 2020
Notes (GBP) (GBP)
------------------------------------------ -------- ----------------- --- -----------------
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 GBP1,969,922
(2020: GBP634,192).
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 GBP") 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
GBP285.30 million and had cash balances of GBP172.56 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 GBP15m 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
(GBP) (GBP)
(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
profits 903,422 1,454,531
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 GBP225,855 (2020: GBP276,361) 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 GBP 10,805,663 GBP 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 Percentage 30 September 30 September
business ownership 2021 2020
---------------------------- ----------- ----------- --------------- --------------
England &
GSES1 Limited ("GSES1") 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 GBP79,751,550 (31 March 2021: GBP59,472,534). 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 Place of business Percentage Investment
Parent Ownership
GSF Albion Limited
("GSF Albion") GSES1 England & Wales 100%
NK Boulby Energy GSF Albion England & Wales 99.998% Boulby
Storage Limited
Kiwi Power ES B GSF Albion England & Wales 49% Cenin
GSF England Limited
("GSF England") GSES1 England & Wales 100%
OSSPV001 Limited GSF England England & Wales 100% Lower Road
Port of Tilbury
GSF IRE Limited ("GSF
IRE") GSES1 England & Wales 100%
Mullavilly Energy GSF IRE Northern Ireland 51% Mullavilly
Limited
Drumkee Energy Limited GSF IRE Northern Ireland 51% Drumkee
Porterstown Battery GSF IRE Republic of 51% Kilteel
Storage Limited Ireland
Kilmannock Battery GSF IRE Republic of 51% Kilmannock
Storage Limited Ireland
Ferrymuir Energy GSF Albion England & Wales 100% Ferrymuir
Storage Limited
Ancala Energy Storage GSF England England & Wales 100% Beeches, Blue
Limited House Farm,
Brookhall,
Fell View,
Grimsargh,
Hermitage,
Heywood Grange,
High Meadow,
Hungerford,
Low Burntoft
Breach Farm Energy GSF England England & Wales 100% Breach Farm
Storage Limited
Notes to the Interim Condensed Financial Statements (continued)
For the Period Ended 30 September 2021
6. Investments (continued)
Hulley Road Energy GSF England England & Wales 100% Hulley Road
Storage Limited
Larport Energy Storage GSF England England & Wales 100% Larport
Limited
Lascar Battery Storage GSF England England & Wales 100% Lascar
Limited
Stony Energy Storage GSF England England & Wales 100% Stony
Limited(*)
Enderby Battery Storage GSF England England & Wales 100% Enderby
Limited (**)
(*) 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 GBP4,500,000 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 GBP0.30 million of the
outstanding interest with the balance of GBP0.08 million interest
written off.
As at the date of publication the Company has set off all of the
GBP4.5 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 Significant Inputs Fair Value
technique
Description (Range) 30 September 31 March
2021 2021
(GBP) (GBP)
----------------- ----------- ------------- -----------
Great Britain DCF Discount Rate 6% - 9.5% 59,500,930 49,216,281
(excluding Northern Ireland) Revenue/MW/hour GBP7 -
GBP26
Northern Ireland DCF Discount Rate 7% - 8.5% 34,957,823 23,968,276
Revenue/MW/hour GBP3.5
- GBP20.5
Republic of 8.5% -
Ireland DCF Discount Rate 9.5% 11,311,979 6,015,352
EUR7 -
Revenue/MW/hour EUR19.5
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 Estimated effect on
technique Significant Inputs Fair Value
----------------------------- --------------
Description Sensitivity 30 September 31 March
2021 2021
(GBP) (GBP)
---------------- ----------- -------------- -------------- ------------- ------------- -------------
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
(GBP) (GBP)
------------------------------------------ ------------------- --- -------------
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 GBP 285,303,658 GBP 145,134,941
Position
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
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------- ---------- ------------ --------- ------------ ----------- ------------ ------------
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
GBP0.01 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
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------- ---------- ------------ --------- ------------ ----------- ------------ ------------
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
GBP0.01 shares:
30 June 2020 30,000 2,853,000 - - - - 2,883,000
Issue of ordinary
GBP0.01 shares:
8 July 2020 216,274 20,567,624 - - - - 20,783,898
Issue of ordinary
GBP0.01 shares:
30 October 2020 66,955 7,030,276 - - - - 7,097,231
Issue of ordinary
GBP0.01 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 GBP135,000,000. 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 30 September 30 September
per share 2021 2020
(GBP) (GBP)
------------------------------- ------------ ------------- -------------
Dividends paid during the period
For the 3 month period ended
31 March 2020 1 pence - 771,761
For the 3 month period ended 1 pence 2,762,247 -
31 March 2021
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 GBP57,500 per annum, (2020: GBP37,000),
Caroline Banszky is paid a director's remuneration of GBP45,000
per annum, (2020: GBP25,000) with the remaining directors being
paid directors' remuneration of GBP40,000 per annum, (2020: GBP21,000).
Total director's remuneration and associated employment costs of
GBP97,504 were incurred in respect of the period with GBP4,085
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 GBP 1,353,252 (30 September 2020: GBP
376,416 ) were paid during the period, there were no outstanding
fees as at 30 September 2021, (31 March 2021: GBPnil 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: GBP496,461) .
During the period the Investment Advisor provided operations management
services to SPV companies resulting in charges to the amount of
GBP247,363 (31 March 2021: GBP686,025) 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 GBP15 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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IR GPGGPPUPGGBM
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