TIDMGSF
RNS Number : 8441G
Gore Street Energy Storage Fund PLC
09 November 2018
9 November 2018
Gore Street Energy Storage Fund Plc
('Gore Street' or the 'Company')
Maiden Interim Results, NAV and Dividend Declaration
Half Yearly Report and Financial Statements for the period from
19 January 2018 (incorporation date) to 30 September 2018
Operational Highlights
-- On 25 May 2018, Gore Street successfully listed on the
Premium segment of the London stock exchange, raising gross
proceeds of GBP30.6m
-- Approximately 50% of the IPO proceeds already invested or committed across four assets
-- Gore Street's portfolio comprises:
o Two assets fully operational and producing income with 8 MW of
installed capacity
o Two shovel-ready projects with 19 MW of installed capacity.
These are expected to be operational in Q2 2019. Engineering,
Procurement & Construction (EPC) contracts have been agreed on
both assets
Pipeline
-- A robust pipeline of significant investment opportunities with multiple partners:
Exclusive Assets or in advanced stage of negotiations
Project Location Type of project (FTM Total Project
/ BTM)[1] Size (MW)
---------------- ------------------------------ --------------
Project
1 United Kingdom FTM - Lithium-ion technology 30.0
---------------- ------------------------------ --------------
Project
2 Belgium FTM - Lithium-ion technology 25.0
---------------- ------------------------------ --------------
Project
3 Germany FTM - Flow technology 11.0
---------------- ------------------------------ --------------
Total 66.0 MW
Additional Pipeline
Project Location Type of project Total Project
Size (MW)
---------------- ------------------------------ --------------
Project
4 United Kingdom FTM - Lithium-ion technology 49.0
---------------- ------------------------------ --------------
Project
5 United Kingdom FTM - Lithium-ion technology 45.0
---------------- ------------------------------ --------------
Project
6 United States FTM - Lithium-ion technology 30.0
---------------- ------------------------------ --------------
Project
7 United Kingdom FTM - Lithium-ion technology 20.0
---------------- ------------------------------ --------------
Project
8 United Kingdom FTM - Lithium-ion technology 7.5
---------------- ------------------------------ --------------
Total 151.5 MW
Financial Highlights
-- NAV per ordinary share of 97.0 pence as at 30 September 2018
-- Share price as of 28 September 2018[2] of 99.75 pence
-- Portfolio[3] valuation of GBP8.0m as at 30 September 2018
-- The Board has declared an initial interim quarterly dividend
of 2.0 pence per ordinary share for the period to 30 September
2018, payable to shareholders on the register on 16 November 2018.
As announced on 8 November 2018, the ex-dividend date will be 15
November 2018 with a target payment date of 30 November 2018
-- This dividend is fully covered by cash to be distributed from
the operating SPVs. The future dividend schedule for the year
remains on track to deliver its announced 4.0 pence per share as
per the target yield at IPO
CEO of Gore Street Capital, the investment manager to the
Company, Alex O'Cinneide commented:
"This has been an exciting time for Gore Street in executing our
London listing and successfully raising proceeds to meet the demand
for our considerable pipeline. Deployment of proceeds has been
swift with over 50% of funds already invested in four attractive
assets. We are keen to continue this rapid progress, increasing the
scale and diversification of the committed proceeds of the Company
and its asset base. We continue to see highly favourable
developments within our asset class as demand for energy storage
projects continues to grow. We continue to negotiate with multiple
partners for a significant number of projects under exclusivity
that we look forward to funding in due course."
The Legal Entity Identifier of the Company is
213800GPUNVGG81G4O21.
For further information:
Gore Street Capital Limited
Alex O'Cinneide Tel: +44 (0) 20 3826 0290
Stockdale Securities Limited
Daniel Harris / Rose Ramsden (Corporate Tel: +44 (0) 20 7601 6000
Finance)
Henry Willcocks / Fiona Conroy (Corporate
Broking)
Media enquiries:
Buchanan
Charles Ryland / Steph Watson / Tel: +44 (0) 20 7466 5000
Henry Wilson
Email: Gorestreet@buchanan.uk.com
A copy of the Half Yearly Report and the Audited Financial
Statements has been submitted to the National Storage Mechanism and
will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM. The Half Yearly Report and Audited
Financial Statements will be available on the Company's website
where further information on the Company can also be found
http://www.gsenergystoragefund.com/content/news/corporate-news.aspx.
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.
Chairman's Statement
For the period from 19 January 2018 (incorporation date) to 30
September 2018
I am pleased to present Gore Street Energy Storage Fund PLC
first interim report (including initial accounts) since listing on
the Premium Segment of the London Stock Exchange in May 2018, for
the period ended 30 September 2018.
Performance and returns
GSF portfolio is performing in line with expectation. Our
operating assets continue to benefit from secured revenue contracts
and multiple revenue stacking strategy.
Dividends
The first quarterly dividend of 2 pence per share is to be paid
on 30 November 2018. We are targeting a dividend of 4 pence per
share with respect to period end 31 March 2019.
Acquisitions
The last six months have been strong on the acquisition front.
We completed the acquisition of interests in 4 new facilities
during the year, through 3 transactions. These acquisitions
demonstrated our ability to source and execute transactions across
the market but only when we consider the terms to be advantageous
to shareholders. As a result, we invested a total of GBP8 million,
with our net storage capacity increasing to 29 Megawatt ("MW").
Gearing
The Company and its subsidiaries (the "Group") will generally
avoid using non-recourse debt at the SPV level and aims to keep the
Group level borrowings at a prudent level (the maximum presently is
15 % of GAV) to reduce risk. We ended the half year with no
external borrowings.
Outlook
The energy storage systems market globally was valued at
approximately cUSD$194.3 billion. in 2017 and is expected to
generate revenue of around $296.0 billion by the end of 2024, an
annual increase of around 6.2% from 2018 till 2024. The industry
expects a possible 2,000 MW of additional energy storage by 2020 in
the UK. The Department of Energy and Climate Change had put forward
that there is potential growth in the industry of up to 20 GW by
2050, whilst various Government and European Commission documents
continue to identify the importance of energy storage for future
energy systems.
The Company therefore is working in a growing market and we
continue to see a significant number of interesting projects with
different business models attached to them. We note that several of
the key revenue services which our projects participate in,
Frequency Response and Capacity Market, have had lower clearing
prices and contracts becoming shorter in length in the recent
auctions than we saw at the start of the year; however, these
results have been matched by a continued dramatic fall in systems
costs. We therefore believe that the return range stated at IPO is
still achievable. With our strong cash flow, we continue to have
confidence in meeting our objectives.
Governance
The Board is working well in the discharge of its
responsibilities and during the year several Board committees were
established, with Directors being appointed to those
committees.
Conclusion
The Company first listed nearly 6 months ago in May 2018. Since
listing, we have executed our investment objectives. That is down
to the excellent work of the investment adviser and pushing forward
the Company's investment strategy. The market is maturing in line
with our expectations here in the UK and abroad and an increasing
range of services these assets can provide will yield a robust and
diversified revenue profile.
_________________________
Patrick Cox
Chairman
Date: 8 November 2018
Investment Advisors Report
For the period from 19 January 2018 (incorporation date) to 30
September 2018
About Gore Street Capital ("Investment Adviser")
The Investment Adviser was formed in 2013 as a platform to
acquire, develop and manage global renewable energy assets. It is
headquartered in the UK and comprises a strong team of investment
professionals with significant experience in sourcing, structuring
and managing large renewable energy projects globally. The
Investment Adviser was the first to deploy privately owned large
scale battery projects in Britain.
Structure
Gore Street Energy Storage Fund PLC (the "Company") holds and
manages its investments through UK limited companies which are
effectively 100% wholly-owned by the Company, GSES 1 Limited, NK
Energy Storage Solutions Ltd. and GSC LR POT Limited.
Investment Objective
The Company seeks to provide investors with a sustainable and
attractive dividend over the long term by investing in a
diversified portfolio of utility scale energy storage projects
primarily located in the UK, although the Company will also
consider projects in North America and Western Europe. In addition,
the Company seeks to provide investors with an element 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.
Strategic Partners
As the Company's cornerstone investors, NEC Energy Storage Inc.
("NEC ES") and Nippon Koei ("NK") have remained the Company's
strategic partners and major shareholders since the IPO of the
Company on 25 May 2018.
NEC ES is a wholly-owned subsidiary of NEC Corporation, a global
information and communications technology leader listed on the
Tokyo Stock Exchange. NEC ES is widely recognised as a pioneer and
leader in the market for utility scale energy storage.
NK is the longest-standing engineering consulting firm in Japan
listed on the Tokyo Stock Exchange.
The Company through the support from Investment Adviser would
benefit from exclusive right of first offer in relation to their
energy storage projects pipeline.
Investment Portfolio Summary
The Company's portfolio currently has 4 assets with a total
installed capacity of 29.0 MW or 27.06 MW (proportionately to the
Company's ownership). All of the assets within the GSF's portfolio
are situated in the UK. Operating assets represent 10.0 MW or 8.0
MW (proportionately to the Company's shareholding portion).
The Investment Adviser has selected assets that deliver
portfolio diversification by multiple revenue streams, geographical
location, EPC contractors, O&M counterparties and
developers.
Portfolio Assets
As of September 2018, the Company's portfolio consisted of four
assets as detailed below:
1. Boulby 2. Cenin
Location Cleveland, North Location Swansea, Wales,
Yorkshire, United United Kingdom
Kingdom Size 4 MW / 4.8 MWh
Size 6 MW / 6 MWh ---------------------
---------------------- SPV Entity KiWi Power ES
SPV Entity NK Boulby Energy B Ltd.
Storage Ltd. ---------------------
---------------------- % Effectively Owned
% Effectively Owned by GSF 49%
by GSF 100% ---------------------
---------------------- Contract Type Co-location
Contract Type Behind-the-meter ---------------------
---------------------- Source of Revenue 1) Firm Frequency
Source of Revenue 1) Frequency Response Contract
2) Capacity Market 4) Capacity Market
3) Service to the ---------------------
site Site Type Renewable Generation
---------------------- ---------------------
Site Type Industrial Mining Status Operational
---------------------- ---------------------
Status Operational Commissioning/Expected Operational since
---------------------- Commissioning February 2018
Commissioning/Expected Operational since ---------------------
Commissioning October 2017 Battery Provider Tesla
---------------------- ---------------------
Battery Provider NEC ES
----------------------
3. Lower Road 4. Port of Tilbury
Location Brentwood, United Location Tilbury, London,
Kingdom United Kingdom
Size 10 MW / 5 MWh Size 9 MW / 4.5 MWh
------------------- -------------------
SPV Entity OSSPV001 Limited SPV Entity OSSPV001 Limited
------------------- -------------------
% Effectively % Effectively
Owned by GSF 100% Owned by GSF 100%
------------------- -------------------
Contract Type Front-of-the-meter Contract Type Behind-the-meter
------------------- -------------------
Site Type 5) Greenfield Site Type 6) Port
------------------- -------------------
Status Pre-construction Status Pre-construction
------------------- -------------------
Commissioning/Expected Expected to become Commissioning/Expected Expected to become
Commissioning operational in Q2 Commissioning operational in
2019 Q2 2019
------------------- -------------------
Battery Provider NEC ES Battery Provider NEC ES
------------------- -------------------
Market Update
Increasing Intermittent Capacity
The installation of renewable capacity has been encouraged by
the GB Government through various renewable incentive schemes. This
has led to the rapid deployment of intermittent wind and solar
generation capacity. As their output can vary considerably from one
period to the next, this has increased the variability and
uncertainty in the output. Flexibility assets- including storage
assets - are critical to manage this variability.
Increasing wind penetration is a critical value driver for
flexible assets due to both increasing intermittent generation's
impact on wholesale electricity price volatility, as well as the
increasing volume of Balancing Services that the system operators
will need to procure to manage wind variability. In GB, wind output
is highly correlated across the country, so small errors in wind
forecasting will put considerable pressure on system stability,
which the system operators will need to manage through increasing
capacity provisions within Balancing Services markets. As wind
penetration increases, existing plants will be required to run more
aggressive operating patterns than originally planned to manage
volatile renewable output, potentially starting and ramping up
multiple times per day.
The impact of solar intermittency on system stability is not as
pronounced. Nonetheless, the National Grid would still need to
procure Balancing Services to manage solar forecasting error,
creating demand for flexible assets.
Decreasing Firm Thermal Capacity
In parallel with the deployment of renewables, there has been a
corresponding decrease in thermal capacity, in particular with the
decommissioning of coal plants, to meet emissions targets. Over the
past five years, close to 10 GW of coal plants have been
decommissioned. This trend is expected to continue over the next
decade with the remaining 11 GW of transmission connected coal
plants expected to close by 2025. In addition, several gas plants
were mothballed in recent years due to challenging economics and
commercial setbacks.
A key uncertainty in the electricity market in the coming years
is the pace of decommissioning of the remaining coal plants.
Indeed, this will put pressure on capacity margins and create
challenges for the National Grid in balancing the system. These
large thermal plants provide Mandatory Balancing Services to the
system operators. When these plants retire, this will increase
volatility on the wholesale electricity market and the system
operator's reserve requirements, thus creating opportunities for
Distributed Energy and Flexibility providers.
A Strong Case for Battery Storage
As the share of renewables - especially wind at night - in the
UK electricity mix increases, thus creating uncertainty, and
thermal power capacity is decommissioned, which reduces the
network's ability to self-stabilise and avoid black-outs, the need
for flexibility increases. A number of services are increasingly
needed, that batteries, and in some cases competing technologies,
will need to provide:
-- The need for frequency response has increased due to the
decommissioning of thermal plants. Unlike wind and solar power
plants, thermal plants could absorb any short-term mismatch between
supply and demand. In the event of a spike in demand or power
plants shut down unexpectedly, this capacity gives the National
Grid time to adjust power production and avoid a black-out. As wind
and solar capacity which are the intermittent generation capacity
increases and thermal capacity increases, the network's ability to
avoid black-outs is reduced dramatically. Batteries are now needed
to provide dynamic, sub-30 second, frequency response to immediate
absorb any difference between consumption and generation, while the
National Grid dispatches other power production assets to take over
to avoid black-outs. Another factor is the increased concentration
of baseload power, which will require the National Grid to ensure
that there is enough flexibility capacity to offset a drop in power
if the largest power generation system shuts down unexpectedly.
-- Wholesale arbitrage and balancing market: the reduced
capacity margin resulting from the decommissioning of thermal
capacity and the deployment of renewables increases price
volatility thus creating an opportunity for wholesale arbitrage.
The growing share of intermittent capacity makes power generation
forecasts more uncertain. This forces the National Grid to
increasingly resort to the Balancing Services market to balance the
network after gate closure, which drives Balancing Mechanism ("BM")
price spreads higher. This creates another opportunity for
arbitrage.
-- A series of complementary revenues can be generated, such as
Capacity Market payments and distribution and transmission charges
avoidance - when the asset is co-located with a large commercial or
industrial off-taker.
-- Driven by electric vehicle deployment and increasing
Lithium-Ion manufacturing capacity worldwide, the price of
Lithium-Ion cells has been decreasing steadily, enabling developers
and investors to absorb the impact of decreasing frequency response
prices, whilst still meeting their target returns.
Increasing Competition and Evolving Revenue Strategy
Competition in the UK storage market is intensifying: As more
storage capacity comes online, FFR prices have decreased steadily
and contract durations are being shortened by the National
Grid.
In this context, while the industry is aided by decreasing
battery prices, it must also turn in increasingly complex revenue
stacking strategies to maximise battery utilisation and revenue.
Such strategies need to be combined with equally complex EPC and
O&M contracts with highly tailored warranty constructs
precisely matching the applications of the battery.
Investment Performance
The NAV per share for the Company as at 30 September 2018 was
97.0 pence compared to 97.6 pence as at 30 June 2018.
The difference from IPO predominantly reflected the costs and
expenses of the IPO of 2 pence per shares. The seed assets acquired
on 22 June 2018 were valued in line with purchase price, thus, did
not affect NAV as of 30 June 2018, and the NAV was, therefore, 97.6
pence per share on 30 June 2018.
The decrease in NAV from 97.6 pence per share to 97.0 pence per
share in the period from 1 July 2018 to 30 September 2018 is
attributable to decline in frequency response price forecasts
provided by third party and fund operating expenses.
This decline in frequency price forecasts was partially offset
by operating cost reductions and was further mitigated by the
planned implementation of alternative revenue strategies, including
energy arbitrage. As a result, NAV of portfolio SPVs decreased to
GBP8.0 m from acquisition and capital expenditure value of GBP8.1
m.
To manage the Company's operating expense, the Investment
Adviser has agreed to reduce its management fee for this half year
period from its contracted rate of 1% of NAV.
A gradual decrease in the NAV is otherwise to be anticipated
until the IPO proceeds are largely invested.
The NAV changes are summarized in below table. Since the IPO,
the Company has invested GBP8.1 m in cash through acquisitions of
SPVs and related capital expenditures, and it has committed to
deploy c. 50% of its capital.
NAV Bridge (IPO 25 May 2018 to 30 September 2018)
NAV Bridge NAV NAV/Share
GBP Million pence
-------------------------------------- --- ------------ ----------
IPO Proceeds 30.6 100.0
IPO expense (0.6) (1.8)
Investment Manager Fee (0.0) (0.1)
Other operational expense (0.3) (0.8)
Interest earned 0.0 0.1
Acquisition and Capex (8.1) (26.4)
NAV of Portfolio SPVs (30 Sep 2018) 8.0 26.1
------------------------------------------- ------------ ----------
Total NAV (30 September) 29.7 97.0
Valuation of the Investment Portfolio
The Investment Adviser is responsible for providing a fair
market valuation of the Company's underlying assets. The results of
fair market value of the Company's investment portfolio are
presented to the Company's Board of Directors for their review and
approval. Investments are reported at the Directors' estimate of
fair value at the reporting date. Investment Valuations are
calculated by Management quarterly and reviewed by a third party in
the mid-year and end of year reports.
The Investment Adviser uses a Discounted Cash Flow ("DCF")
method for the projects that are commercially operational, while
projects in pre-construction or under construction are held at cost
or at the acquisition cost as this is an appropriate estimate of
fair value. The methodology adheres to IFRS 13 as well as the
International Valuation Standards Council ("IVSC").
The Investment Adviser applies multiple assumptions in the
valuation models as detailed below:
General
-- Discount rate: For the assets currently in operation, the
Investment Adviser applied a discount rate from 6.0% to 8.0%. The
6.0% discount rate is applied only for revenue contracted periods,
reflecting the lower risk associated with National Grid as a
counterparty.
-- Movement in working capital: Change in working capital
(period-on-period current assets less current liabilities) is
incorporated into project cash flows through an assessment of
relevant balance sheet operating line items (e.g.: changes in
receivables, payables and VAT balance).
-- Inflation: Cash flow models include long-term inflationary
uplift of income and expenses at 2.5%. In light of government
targets (in particular the UK government's long-term target), the
Investment Adviser considers this to be the most appropriate.
Revenue
-- Contracted revenues based on the actual contracted prices and estimated availability.
-- Uncontracted revenues based on the unit price forecast from third party research house(s).
-- Future optimum mix of various revenue contracts based on
advice from industry experts (third party consultants).
Valuation of the Investment Portfolio
Operating Expenses
-- Expenses based on (a) contracted prices under long term
agreement (e.g. machinery maintenance and lease contract) or (b)
most recent actuals/quotes with inflation adjustments.
-- Energy cost based on system efficiency from EPC's technical specifications, published transmission/distribution network tariff and third party electricity price forecast.
Portfolio Summary
1. Boulby (6 MW)
From July to September 2018, Boulby's average availability was
88.0%. During the period there was a one-off inverter incident
which negatively affected Boulby's performance (as detailed below),
therefore, after adjustment of this incident, availability for the
period would be 99.9%.
In August 2018, Boulby was operating with 33% of its capacity (2
MW) for 2 weeks due to capacitor issue and, consequently, an
inverter failure. Technical support was presented on site during
the period and the issue was rectified by replacing the
capacitor.
In September 2018, Boulby as secured a Capacity Market T-1
contract delivery from 1 October 2018 to 30 September 2019.
2. Cenin (4 MW[4])
From July to September 2018, Cenin's average availability was
96.1%. During the period there were two incidents which negatively
affected Cenin's performance (as detailed below), therefore, after
adjustment of these incidents, availability for the period is
97.7%
In August 2018, there were two incidents occurred which
negatively affected Cenin's performance. First, there was a loss in
connectivity and the system went offline for 28 hours. The EPC
reacted quickly to resolve the issue and it was fully rectified.
Second, there was a loss in connectivity and the system went
offline for 8 hours but the issue was rectified by the EPC within
the same day. This was a result the cellular connectivity issue
and, thus, a new site master controller was installed.
3. Lower Road (10 MW)
The Company finalised its investment in Lower Road in September
2018 by acquiring an SPV owning the rights to the project. The
Engineering, Procurement and Construction ("EPC") and Operating and
Maintenance ("O&M") contracts have been signed.
Under the EPC contract, the asset owner has the option to
upgrade and increase capacity from. 5 MWh to 10 MWh within the
first 6 years after the start of operations.
4. Port of Tilbury (9 MW)
The Company finalised its investment in Port of Tilbury in
September 2018 by acquiring an SPV owning the rights to the
project. The EPC and O&M contracts have now been signed.
Under the EPC contract, the asset owner has the option to
upgrade and increase capacity from 4.5 MWh to 9 MWh within the
first 3.5 years after the start of operations.
Governance
Investment Adviser regularly reviews all energy storage assets
to ensure they are compliance with planning consent and conditions
set by the relevant local councils.
Investment Pipeline
The Company and Investment Adviser have identified 8 investment
opportunities. Three out of eight projects have already secured
exclusivity with the partners or in advanced stage of
negotiations[5] as detailed below:
Exclusive Assets or in advanced stage of negotiations
Project Location Type of project Total Project
(Front-of-the-Meter / Behind-the-Meter) Size (MW)
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
1 United Kingdom technology 30.0
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
2 Belgium technology 25.0
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Flow
3 Germany technology 11.0
---------------- ------------------------------------------ --------------
Total 56.0 MW
Additional Pipeline
Project Location Type of project Total Project
(Front-of-the-Meter / Behind-the-Meter) Size (MW)
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
4 United Kingdom technology 49.0
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
5 United Kingdom technology 45.0
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
6 United States technology 30.0
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
7 United Kingdom technology 20.0
---------------- ------------------------------------------ --------------
Project Front-of-the-Meter - Lithium-ion
8 United Kingdom technology 7.5
---------------- ------------------------------------------ --------------
Total 151.5 MW
Gore Street Capital
Investment Adviser
Date: 8 November 2018
Principal risk and uncertainties
For the period from 19 January 2018 (incorporation date) to 30
September 2018
The Directors consider the following principal risks and
uncertainties to the Company for the remainder of the period to 31
March 2019:
A. Risk relating to the Company
1. The Company and its subsidiaries have no employees and is
reliant on the performance of third party service providers
2. The Company's targeted returns are based on estimates and
assumptions that are inherently subject to significant
uncertainties and contingencies
3. Changes in laws or regulations governing the Company's
operations may adversely affect the Company's business
4. UK's exit from the European Union
B. Risk relating to portfolio and investment strategy
1. Macro level risks:
1.1 Energy market regulations
1.2 New energy storage technologies
2. Acquisition of energy storage projects risks:
2.1 Competition for acquisitions
2.2 Due diligence may fail to uncover all material risks
3. Others risk:
3.1 Valuation process
C. Risks relating to operation of the Company's portfolio
1. Inability to control operating expenses and investments
2. Changes in method to procure balancing services, length of
contracts and pricing, including frequency response and failure to
secure new contracts
3. Volatility of the price of electricity
4. Counterparty risk which includes demand aggregator,
electricity supplier and other counterparties
5. Technological and operational risks may rise which may not be
covered by warranties or insurance
D. Risks relating to taxation
More detailed information on the risks and uncertainties
affecting the Company can be found on pages 19 - 35 of the
Company's most recent Prospectus issued on 9 March 2018.
Directors' report
For the period from 19 January 2018 (incorporation date) to 30
September 2018
The directors present their report together with the audited
financial statements for the period from 19 January 2018
(incorporation date) to 30 September 2018 in accordance with
section 839 (4) of the Companies Act 2006. This is also the first
set of financial information prepared by Gore Street Energy Storage
Fund Plc (the "Company") and therefore no comparatives are
provided.
Principal activity and status
The Company was incorporated in England and Wales on 19 January
2018 with company number 11160422 and registered as an investment
company limited by shares under Section 833 of the Companies Act
2006. On 25 May 2018, the Company's ordinary shares were admitted a
Premium Listing and commenced dealings on the Main Market of the
London Stock Exchange ("LSE"). The Company has subsequent to its
launch, entered the Investment Trust Company ("ITC") regime for the
purposes of UK taxation. The Company is a Member of the Association
of Investment Companies ("AIC").
Business review
During the period the Company invested GBP1 in GSES 1 Limited, a
newly incorporated company in the United Kingdom. Since the IPO in
25 May 2018, the Company, through GSES 1 Limited, has successfully
acquired 4 facilities of which 3 facilities are wholly owned by the
Company. The Chairman's statement and Investment advisors report
expands on the business activity and acquisitions in the
period.
Results and dividends
The financial statements of the Company for the period appear
pages on 18 to 21. Total Comprehensive loss for the period was
GBP377,812. The Directors recommend that an interim dividend of 2
pence per share be paid in respect of the period ended 30 September
2018.
Dividend policy
Subject to market conditions and performance, financial position
and financial outlook, it is the Directors' intention to pay an
attractive level of dividend income to shareholders on a quarterly
basis. The targeted annual dividend for 31 March 2019 is 4p per
Ordinary share and thereafter 7 pence per share as per the
supplemental prospectus. The Company intends to grow the dividend
progressively, through investment in upward-only,
inflation-protected, long-term lease agreements.
Share capital
As at 30 September 2018, 30,600,000 ordinary shares were in
issue and no other classes of shares were in issue at that
date.
Risk management and internal control
The Board is responsible for financial reporting and controls,
including the approval of the Annual Report and Accounts, the
dividend policy, any significant changes in accounting policies or
practices, and treasury policies including the use of derivative
financial instruments. During the period the Board has carried out
a robust assessment of the principal risks and uncertainties facing
the Company and how they are being mitigated, as described on pages
11.
In light of the Company's current position and principal risks
and uncertainties, the Board has assessed the prospects of the
Company for a period of 12 months from the date of this report,
reviewing the Company's liquidity position, compliance with any
loan covenants and the financial strength of its energy contracts,
together with forecasts of the Company's future performance under
various scenarios. The Board has concluded there is a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities over that period. The Board has also
assessed the prospects of the Company over a longer period than the
going concern review and has a reasonable expectation that the
Company will be able to continue in business over the five year
period examined in that assessment.
The Board is also responsible for the internal controls of the
Company, including operational and compliance controls and risk
management systems, which are documented in a Board memorandum. As
with any risk management system, the Company's internal control
framework is designed to manage risk but cannot give absolute
assurance that there will never be any material misstatement or
loss. The Board has reviewed the risk management and internal
control framework in the period and believes it to be working
effectively. The Board has considered the appropriateness of
establishing an internal audit function and, having regard to the
relatively simple nature of the Company's operations and the likely
cost of such a function, has concluded that it is not necessary at
this stage.
Risk management and internal control continued
The Board meets at least every quarter to review the Company's
performance against its strategic aims, objectives, business plans
and budgets and ensures that any corrective action considered
necessary is taken. Additional meetings are held as required to
deal with the business of the Company in a timely manner. Directors
are expected to attend all meetings of the Board and all meetings
of those committees on which they sit, as well as the Annual
General Meeting ("AGM"). Meetings called outside the scheduled
quarterly Board meetings may need to be convened at relatively
short notice and therefore at times when not every director is
available. Every meeting during the period has however been
correctly convened with an appropriate quorum and with the
directors independent of the Investment Adviser.
Directors
All directors are non-executive directors. In accordance with
the Articles of Association, all directors are required to retire
and seek re-election at the AGM following their initial appointment
to the Board. All four directors will therefore retire and seek
re-election at the next AGM having been appointed during 2018.
The Company maintains GBP10 million of directors' and Officers'
Liability Insurance cover for the benefit of the directors, which
was in place throughout the period and which continues in effect at
the date of this report.
Details of the fees paid to directors in the period are set out
below.
Director Annual fee Received in period ended 30 September 2018
(GBP) (GBP)
------------------ ----------- -------------------------------------------
Patrick Cox 33,000 11,635
Caroline Banzsky 21,000 7,404
Malcolm King 18,000 6,346
Thomas Murley 18,000 6,346
In accordance with FCA Listing Rules 9.8.6(R)(1), Directors'
interest in the shares of the Company (in respect of which
transactions are notifiable to the Company under FCA Disclosure and
Transparency Rule 3.1.2(R)) as at 30 September 2018 are shown
below:
Directors' interest and beneficial interest Number of ordinary shares Percentage of issued share capital
--------------------------------------------- -------------------------- -----------------------------------
Patrick Cox 49,996 0.02%
Caroline Banzsky 35,000 0.01%
Malcolm King 25,000 0.01%
Significant shareholdings
As at 30 September 2018 the directors have been notified that
the following shareholders have a disclosable interest of 3% or
more in the ordinary shares of the Company:
Shareholder Number of ordinary shares Percentage of issued share capital
-------------------------------- -------------------------- -----------------------------------
AJ Bell 877,692 3%
Nigel Lindsay-Fynn 800,000 3%
Interactive Investor 872,585 3%
Hargreaves Lansdown 902,118 3%
Stockdale Securities connected 937,681 3%
Premier Asset Management 1,100,000 4%
First Avenue LLC 1,850,000 6%
Herald IM 2,000,000 7%
Nippon Koei Co. Ltd 6,000,000 20%
NEC Energy Solutions Inc 8,000,000 26%
Political contributions
The Company made no political contributions during the
period.
Greenhouse gas emissions reporting
The Board has considered the requirement to disclose the
Company's measured carbon emissions sources under the Companies Act
2006 (Strategic report and Director's report) Regulations 2013.
During the period ended 30 September 2018:
-- any emissions from the Company's projects have been the
subsidiaries responsibility rather than the Company's, so the
principle of operational control has been applied;
-- any emissions that are either produced from the Company's
registered office or from offices used to provide administrative
support are deemed to fall under the Adviser and Manager's
responsibility; and
-- the Company has not leased or owned any vehicles which fall
under the requirements of Mandatory Emissions Reporting.
As such, the Board believes that the Company has no reportable
emissions for the period ended 30 September 2018.
Employees
The Company has no employees and therefore no employees share
scheme or policies for the employment of disabled persons or
employee engagement.
Other disclosures
Disclosures of financial risk management objectives and policies
and exposure to financial risks are included in note17 to the
financial statements.
Disclosures in relation to the Company's business model and
strategy have been included within the Investment Adviser's report
on page 3. Disclosures in relation to the main industry trends and
factors that are likely to affect the future performance and
position of the business have been included within the Investment
Advisers report. Disclosures in relation to environmental matters,
employees, social and human rights issues, employee diversity have
not been included as the directors' do not consider these to be
relevant to the Company.
Disclosure of information to auditors
All of the Directors have taken all the steps that they ought to
have taken to make themselves aware of any information needed by
the auditors for the purposes of their audit and to establish that
the auditors are aware of that information. The Directors are not
aware of any relevant audit information of which the auditors are
unaware.
Independent Auditors
Ernst & Young LLP were appointed as auditors by the
directors during the period and have expressed their willingness to
continue as auditor for Company.
Signed by order of the Board,
_________________________
Patrick Cox
Chairman
Date: 8 November 2018
Statement of directors' responsibilities
The directors are responsible for preparing the half yearly
report and financial statements in accordance with applicable law
and regulations.
As a company listed on the London Stock Exchange, Gore Street
Energy Storage Fund Plc is subject to the FCA's Listing Rules and
Disclosure and Transparency Rules, as well as to all applicable
laws and regulations in England and Wales where it is
registered.
The half yearly report and financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union. Under company
law, the directors must not approve the financial statements unless
they are satisfied they give a true and fair view of the state of
affairs of the Company and of the profit or loss for the period. In
preparing these financial statements, the directors should:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable;
-- specify which generally accepted accounting principles have
been adopted in their preparation; and
-- prepare the financial statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping proper accounting
records which are sufficient to show and explain the Company's
transactions and are to disclose with reasonable accuracy at any
time the financial position of the Company and enable them to
ensure that the financial statements comply with the requirements
of the Companies Act 2006. They are also responsible for
safeguarding the assets of the company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are also responsible for preparing the Half yearly
report and financial statements and the directors confirm that they
consider that, taken as a whole, the half yearly report and
financial statements is fair, balanced and understandable and
provides the information necessary for shareholders to assess the
Company's performance, business model and strategy. In accordance
with the FCA's Disclosure and Transparency Rules, the directors
confirm to the best of their knowledge that:
a) the financial statements, prepared in accordance with
applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company taken as a whole; and
b) The half year report and accounts include an indication of
important events that have occurred during the first period of the
financial period, and their impact on the set of financial
statements, and description of the principal risks and
uncertainties for the remaining six months of the financial
year.
c) The half year report and accounts include the related
parties' transactions that have taken place in the first period of
the financial period and that have materially affected the
financial position or the performance of the enterprise during that
period.
The directors have acknowledged their responsibilities in
relation to the financial statements for the period to 30 September
2018.
Going concern
The financial position of the Company, its cash flows, liquidity
position and borrowing facilities are described in the financial
statements and related notes. In addition, note17 to the financial
statements includes the policies and processes for managing its
capital, its financial risk management, details of its financial
instruments and its exposure to credit risk and liquidity risk. The
Company has sufficient financial resources and expectation of
growth in the medium-term to meet its financial obligations. As
such the directors believe that the Company will continue into the
foreseeable future and have adopted the going concern basis of
preparation in preparing these financial statements.
Signed by order of the Board,
_________________________
Patrick Cox
Chairman
Date: 8 November 2018
Independent Auditors report to the members of Gore Street Energy
Storage Fund Plc
We have examined the initial accounts of Gore Street Energy
Storage Fund Plc for the period from 19 January 2018 (incorporation
date) to 30 September 2018 which comprise the statement of
comprehensive income, statement of financial position, statement of
changes in equity, statement of cash flow and the related notes 1
to 23. The initial accounts have been prepared under the accounting
policies set out therein.
This report is made solely to the company's members, as a body,
in accordance with Section 839(5) of the Companies Act 2006 and for
no other purpose. Our audit work has been undertaken so that we
might state to the company's members those matters we are required
to state to them in an auditor's report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company's
members, as a body, for our audit work, for this report, or for the
opinions we have formed.
Respective responsibilities of directors and auditors
As described in the statement of directors' responsibilities the
directors are responsible for the preparation of the initial
accounts in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union.
Our responsibility is to report to you our opinion as to whether
the initial accounts have been properly prepared within the meaning
of section 839(4) of the Companies Act 2006.
Opinion
In our opinion the initial accounts for the period from 19
January 2018 (incorporation date) to 30 September 2018 have been
properly prepared within the meaning of section 839(4) of the
Companies Act 2006.
Caroline Mercer (Senior Statutory Auditor)
For and on behalf of Ernst & Young LLP, Statutory
Auditor
London
8 November 2018
Statement of comprehensive income
For the period from 19 January 2018 (incorporation date) to 30
September 2018
Notes 19 January 2018 to 30 September 2018
(GBP)
----------------------------------------------------------------- ---- ------ -------------------------------------
Net gain /(loss) on investments at fair value through the profit and
loss 6 (110,380)
Revenue 7 18,863
Administrative and other expenses 8 (286,295)
Loss before tax (377,812)
Taxation 9 -
----------------------------------------------------------------- ---- ------ -------------------------------------
Loss after tax and loss for the period (377,812)
----------------------------------------------------------------------- ------ -------------------------------------
Total comprehensive loss for the period (377,812)
----------------------------------------------------------------------- ------ -------------------------------------
Loss per share (basic and diluted) - pence per share 10 (1.23)
All items dealt with in arriving at the result for the period
relate to continuing operations.
The notes on pages 21 to 35 form an integral part of these
financial statements
Statement of Financial Position
As at 30 September 2018
Company number 11160422
Notes 30 September 2018 (GBP)
Assets
Investments at fair value through the profit or loss:
Investment in subsidiary 11 7,981,451
-------------------------------------------------------- ------ ------------------------
7,981,451
Current assets
Cash and cash equivalents 12 17,171,647
Trade and other receivables 13 4,695,294
-------------------------------------------------------- ------ ------------------------
21,866,941
Total assets 29,848,392
-------------------------------------------------------- ------ ------------------------
Current liabilities
Trade and other payables 14 (177,663)
-------------------------------------------------------- ------ ------------------------
(177,663)
Total net assets 29,670,729
-------------------------------------------------------- ------ ------------------------
Shareholders equity
Share capital 19 306,000
Share premium 19 47,708
Special reserve 19 186,656
Capital reduction reserve 19 29,508,177
Retained earnings 20 (377,812)
-------------------------------------------------------- ------ ------------------------
29,670,729
Total shareholders equity 29,670,729
-------------------------------------------------------- ------ ------------------------
Net asset value per share 18 0.97
The half yearly financial statements were approved and
authorised for issue by the Board of directors and is signed on its
behalf by;
_________________________
Patrick Cox
Chairman
Date: 8 November 2018
The notes on pages 21 to 35 form an integral part of these
financial statements.
Statement of changes in equity
For the period from 19 January 2018 (incorporation date) to 30
September 2018
Share capital Share premium Special reserve Capital Retained Total
(GBP) reserve (GBP) reduction earnings shareholders
(GBP) reserve (GBP) equity
(GBP) (GBP)
---------------- -------------- --------------- ---------------- --------------- --------------- ---------------
As at 19
January 2018 - - - - - -
Comprehensive
loss for the
period - - - - - -
Loss for the
period - - - - (377,812) (377,812)
---------------- -------------- --------------- ---------------- --------------- --------------- ---------------
Total
comprehensive
loss for the
period - - - - (377,812) (377,812)
---------------- -------------- --------------- ---------------- --------------- --------------- ---------------
Transactions
with owners
---------------- -------------- --------------- ---------------- --------------- --------------- ---------------
Ordinary shares
issued at a
premium during
the period 306,000 30,294,000 - - - 30,600,000
Share issue
costs - (551,459) - - - (551,459)
Issue of
redeemable
preference
shares 12,500 - - - - 12,500
Redemption of
redeemable
preference
shares (12,500) - - - - (12,500)
Transfer to
special
reserve - (186,656) 186,656 - - -
Transfer to
capital
reduction
reserve - (29,508,177) - 29,508,177 - -
As at 30
September 2018 306,000 47,708 186,656 29,508,177 (377,812) 29,670,729
---------------- -------------- --------------- ---------------- --------------- --------------- ---------------
The notes on pages 21 to 35 form an integral part of these
financial statements.
Statement of cash flow
For the period from 19 January 2018 (incorporation date) to 30
September 2018
19 January 2018 to 30 September 2018 GBP
--------------------------------------------------------------------- -----------------------------------------
Cash flows used in operating activities
Loss for the period (377,812)
Net gain /(loss) on investments at fair value through the profit and
loss 110,380
(Increase) in trade and other receivables (4,695,294)
Increase in trade and other payables 177,663
----------------------------------------------------------------------- -----------------------------------------
Net cash generated/ (used )in operating activities (4,785,063)
Cash flows used in investing activities
Purchase of investments (8,091,831)
Net cash generated/ (used) in investing activities (8,091,831)
Cash flows used in financing activities
Proceeds from issue of ordinary shares at a premium 30,600,000
Share issue costs (551,459)
Issue of redeemable preference shares 12,500
Redemption of redeemable preference shares (12,500)
Net cash inflow from financing activities 30,048,541
Net increase in cash and cash equivalents for the period 17,171,647
----------------------------------------------------------------------- -----------------------------------------
Cash and cash equivalents at the beginning of the period -
--------------------------------------------------------------------- -----------------------------------------
Cash and cash equivalents at the end of the period 17,171,647
----------------------------------------------------------------------- -----------------------------------------
The notes on pages 21 to 35 form an integral part of these
financial statements.
Notes to the financial statements
For the period from 19 January 2018 (incorporation date) to 30
September 2018
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
7(th) Floor, 9 Berkeley Street, London, W1J 8DW. 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, although the Company will also
consider projects in North America and Western Europe.
2. Basis of preparation
Statement of compliance
The half yearly financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRSs") and interpretations adopted by the European Union. The
financial statements have been prepared on a historical cost basis
except for financial assets and liabilities at fair value through
the profit or loss.
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.
Going concern
In assessing the going concern basis of accounting the directors
have had regard to the guidance issued by the Financial Reporting
Council. After making enquiries, and bearing in mind the nature of
the Company's business and assets, the Directors consider the
Company to have adequate resources to continue in operational
existence for the foreseeable future. As such, they have adopted
the going concern basis in preparing the half yearly report and
financial statements.
2. 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:
Assessment as an investment entity
Entities that meet the definition of an investment entity within
IFRS 10 are required to measure their subsidiaries at fair value
through profit or loss rather than consolidate them unless they
provided investment related services to the Company. To determine
that the Company continues to meet the definition of an investment
entity, the Company is required to satisfy the following three
criteria:
a) the Company obtains funds from one or more investors for the
purpose of providing those investors with investment management
services;
b) the Company commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
c) the Company measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Company meets the criteria as follows:
-- the stated strategy of the Company is to deliver stable
returns to shareholders through a mix of energy storage
investments;
-- the Company provides investment management services and has
several investors who pool their funds to gain access to
infrastructure related investment opportunities that they might not
have had access to individually; and
-- the Company has elected to measure and evaluate the
performance of all of its investments on a fair value basis. The
fair value method is used to represent the Company's performance in
its communication to the market, including investor presentations.
In addition, the Company reports fair value information internally
to directors, who use fair value as the primary measurement
attribute to evaluate performance.
The directors are of the opinion that the Company has all the
typical characteristics of an investment entity and continues to
meet the definition in the standard. This conclusion will be
reassessed on an annual basis.
2. Significant accounting judgements, estimates and assumptions
continued
Valuation of Investments in subsidiaries
Significant estimates in the Company's financial statements
include the amounts recorded for the fair value of the instruments.
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.
3. New and revised standards and interpretations
New and revised IFRSs adopted by the Company
The accounting policies used in the preparation of the financial
statements have been consistently applied during the period ended
30 September 2018.
The following new standards and amendments to standards and
interpretations are effective for annual periods beginning on or
after 1 January 2018 and have been adopted by the Company.
-- IFRS 15, 'Revenue from Contracts with Customers'.
-- IFRS 9, 'Financial Instruments - Classification and Measurement'.
New and revised IFRSs in issue but not yet effective
There are no standards, amendments or interpretations in issue
at the reporting date which have been issued but are not yet
effective and that are deemed to be material to the Company.
4. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
there financial statements are set out below:
Segmental information
The board is of the opinion that the Group is engaged in a
single segment business, being the investment in the United Kingdom
in energy storage assets.
Income and expenses
Income and expenses are accounted for on an accruals basis. The
Company's income and expenses are charged to the Statement of
Comprehensive Income.
Net gain or loss on investments at fair value through profit and
loss
The Company recognises movements in the fair value of
investments in subsidiaries through profit and loss.
Taxation
The Company is approved as an Investment Trust Company ("ITC")
under sections 1158 and 1159 of the Corporation Taxes Act 2010 and
Part 2 Chapter 1 Statutory Instrument 2011/29999 for accounting
periods commencing on or after 25 May 2018. The approval is subject
to the Company continuing to meet the eligibility conditions of the
Corporations Tax Act 2010 and the Statutory Instrument 2011/29999.
The Company intends to ensure that it complies with the ITC
regulations on an ongoing basis and regularly monitors the
conditions required to maintain ITC status.
From 1 April 2015 there is a single corporation tax rate of 19%.
Tax is recognised in the statement of comprehensive income except
to the extent that it relates to the items recognised as direct
movements in equity, in which case it is similarly recognised as a
direct movement in equity. Current tax is the expected tax payable
on any taxable income for the period, using tax rates enacted or
substantively enacted at the end of the relevant period.
Investment in subsidiaries
Subsidiaries are entities controlled by the Company. Control
exists when the Company is exposed, or has rights, to variable
returns from its involvement with the subsidiary entity and has the
ability to affect those returns through its power over the
subsidiary entity. In accordance with the exception under IFRS 10
Consolidated financial statements, the Company is an investment
entity and therefore only consolidates subsidiaries if they provide
investment management services and are not themselves investment
entities.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and call deposit
held with the bank on a 32 day notice which can be readily
converted to cash.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value and subsequently stated at amortised cost less loss allowance
which is calculated using the provision matrix of the expected
credit loss model.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently stated at amortised cost.
Dividends
Dividends are recognised when they become legally payable, as a
reduction in equity in the financial statements. Interim equity
dividends are recognised when paid. Final equity dividends will be
recognised when approved by the shareholders.
Equity
Equity instruments issued by the Company are recorded at the
amount of the proceeds received, net of directly attributable issue
costs. Costs not directly attributable to the issue are immediately
expensed in the statement of comprehensive income.
Financial Instruments
In accordance with IFRS 9, the Company classifies its financial
assets and financial liabilities at initial recognition into the
categories of amortised cost or fair value through profit or
loss.
Financial assets
The Company classifies its financial assets at amortised cost or
fair value through profit or loss on the basis of both:
-- the entity's business model for managing the financial assets
-- the contractual cash flow characteristics of the financial asset
Financial assets measured at amortised cost
A debt instrument is measured at amortised cost if it is held
within a business model whose objective is to hold financial assets
in order to collect contractual cash flows and its contractual
terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount
outstanding. The Company includes in this category short-term
non-financing receivables including cash and trade and other
receivables.
Financial asset measured at fair value through profit or loss
(FVPL)
A financial asset is measured at fair value through profit or
loss if:
a) its contractual terms do not give rise to cash flows on
specified dates that are solely payments of principal and interest
(SPPI) on the principal amount outstanding; or
b) it is not held within a business model whose objective is
either to collect contractual cash flows, or to both collect
contractual cash flows and sell; or
c) it is classified as held for trading (derivative contracts in an asset position).
The Company includes in this category equity instruments and
loans including investments in subsidiaries. There are no
consolidated subsidiaries.
Financial liabilities
Financial liabilities measured at fair value through profit or
loss (FVPL)
A financial liability is measured at FVPL if it meets the
definition of held for trading of which the Company had none. The
Company includes in this category, derivative contracts in a
liability position.
Financial liabilities measured at amortised cost
This category includes all financial liabilities, other than
those measured at fair value through profit or loss, including
short-term payables.
Recognition and derecognition
Financial assets are recognised on trade date, the date on which
the Company commits to purchase or sell an asset. A financial asset
is derecognised where the rights to receive cash flows from the
asset have expired, or the Company has transferred its rights to
receive cash flows from the asset. The Company derecognises a
financial liability when the obligation under the liability is
discharged, cancelled or expired.
Impairment of financial assets
The Company holds trade receivables with no financing component
and which have maturities of less than 12 months at amortised cost
and, as such, has chosen to apply an approach similar to the
simplified approach for expected credit losses (ECL) under IFRS 9
to all its trade receivables. Therefore the Company does not track
changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date.
The Company's approach to ECLs reflects a probability-weighted
outcome, the time value money and reasonable and supportable
information that is available without undue cost or effort at the
reporting date about past events, current conditions and forecasts
of future economic conditions.
The Company uses the provision matrix as a practical expedient
to measuring ECLs on trade receivables, based on days past due for
groupings of receivables with similar loss patterns. Receivables
are grouped based on their nature. The provision matrix based on
historical observed loss rates over the expected life of the
receivables and is adjusted for forward looking estimates.
Fair value measurement and hierarchy
Fair value is the price that would be received on the sale of an
asset, or paid to transfer a liability, in an orderly transaction
between market participants at the measurement date. The fair value
measurement is based on the presumption that the transaction takes
place either in the principal market for the asset or liability, or
in the absence of a principal market, in the most advantageous
market. It is based on the assumptions that market participants
would use when pricing the asset or liability, assuming they act in
their economic best interest. A fair value measurement of a
non-financial asset takes into account the best and highest value
use for that asset.
The fair value hierarchy to be applied under IFRS 13 is as
follows:
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are carried at fair value and
which will be recorded in the financial information on a recurring
basis, the Company will determine whether transfers have occurred
between levels in the hierarchy by reassessing categorisation at
the end of each reporting period.
5. Fees and expenses
Accounting, secretarial and directors
JTC (UK) Limited has been appointed to act as secretary and
administrator for the Company through the Administration and
Company Secretarial Agreement. JTC (UK) Limited is entitled to a
GBP35,000 annual fee for the provision of Company Secretarial
services and a GBP25,000 annual fee for the provision of accounting
and administration services, based on a Company Net Asset Value of
up to GBP30 million. An ad valorem fee based on total assets of the
Company which exceed GBP30 million will be applied as follows:
- 0.1% on assets from GBP30 million to GBP75 million, plus
- 0.05% on assets from GBP75 million to GBP150 million, plus
- 0.04% thereafter
During the period, expenses incurred with JTC (UK) Limited for
administrative and secretarial services amounted to GBP21,226 with
GBP15,000 being outstanding and payable at the period end.
AIFM
The AIFM, Mirabella Financial Services LLP (the "AIFM"), is
entitled to receive from the Company, in respect of its services
provided under the AIFM agreement, an initial fee of GBP10,000 plus
a monthly fee of GBP7,500 for the term of the AIFM agreement.
During the period, AIFM fees amounted to GBP26,539 with the full
amount being outstanding and payable at the period end. This
resulted in a reduction of 11.5% of the agreed fee.
Investment Advisory
The fees relating to the investment adviser are disclosed within
note 21 Transactions with related parties.
6. Net gain /(loss) on investments at fair value through the
profit and loss
30 September 2018
(GBP)
--------------------------------------------------------------------------- ---- ------------------
Net gain /(loss) on investments at fair value through the profit and loss (110,380)
(110,380)
-------------------------------------------------------------------------------- ------------------
7. Revenue
30 September 2018
(GBP)
---------------------- ---- ------------------
Bank interest income 18,863
18,863
--------------------------- ------------------
8. Administrative and other expenses
30 September 2018
(GBP)
-------------------------------- ---- ------------------
Administration fees 21,226
Statutory Audit fees 36,000
Directors remuneration 31,731
Directors & officers insurance 5,198
Investment advisory fees 40,499
Legal and professional fees 79,145
Management fees 26,539
Marketing fees 22,528
Sundry expenses 23,429
286,295
------------------------------------- ------------------
9. 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%. The Company is in a loss position
and made no taxable income in the period.
30 September 2018
(GBP)
----------------------------------------------------- ---- ------------------
(a) Tax charge in profit or loss
UK corporation tax -
(b) Reconciliation of the tax charge for the period
Loss before tax (377,812)
Tax at UK main rate of 19% -
Tax charge for the period -
----------------------------------------------------------- ------------------
10. 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 2018
----------------------------------------------------------- ------------------
Net loss attributable to ordinary shareholders GBP (377,812)
Weighted average number of ordinary shares for the period 30,600,000
Loss per share - Basic and diluted (pence) (1.23)
------------------------------------------------------------ ------------------
11. Investment in subsidiaries
Place of business Percentage ownership 30 September 2018
(GBP)
------------------------- ------------------- --------------------- ------------------
GSES1 Limited ("GSES1") England & Wales 100% 7,981,451
The Company meets the definition of an investment entity.
Therefore, it does not consolidate its subsidiaries 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 subsidiary and there are no restrictions
in place in passing monies up the structure.
GSES1 controls NKESS and GSC LRPOT as listed below which in turn
hold an interest in project companies as disclosed in the in table
below.
Immediate Parent Place of business Percentage ownership Ownership
-------------------------------------- ----------------- ------------------ --------------------- ----------------
NK Energy Storage Solutions Limited GSES1
("NKESS") England & Wales 100% Wholly owned
NK Boulby Energy Storage NKESS England & Wales 100% Wholly owned
Kiwi Power ES B NKESS England & Wales 49% Partially owned
GSC LRPOT Limited ("GSC LRPOT") GSES1 England & Wales 100% Wholly owned
OSSPV001 Limited GSC LRPOT England & Wales 100% Wholly owned
Notes to the financial statements continued
For the period from 19 January 2018 (incorporation date) to 30
September 2018
12. Cash and cash equivalents
30 September 2018
(GBP)
-------------------------------------- ---- ------------------
Cash at bank 171,647
Notice deposit held at Barclays bank 17,000,000
17,171,647
------------------------------------------- ------------------
13. Trade and other receivables
30 September 2018
(GBP)
---------------------------------- ---- ------------------
VAT recoverable 78,951
Prepaid D&O insurance 4,825
Prepaid Investment Advisers fees 83,716
Other Debtors 27,802
Advance to NEC ES 4,500,000
4,695,294
--------------------------------------- ------------------
The Company entered into a direct loan with NKESS prior to the
launch of GSES1. Following the launch of GSES1, the loan to NKESS
was transferred to GSES1 and the interest receivable on the loan
remained in the accounts of the Company.
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 is to be used in conjunction with the
Company's purchase of products, equipment and/ or services from NEC
ES for the projects in which the Company is to be invested. The
Company's purchase of such products and equipment from NEC ES is
conditional upon NEC ES' ability to meet the requirements of the
Company's projects and subject to the terms and pricing of the
products, equipment and/ or services being provided on market
standard terms (as defined by the Company). The advance will be
forgiven up to the amount of investments the Company takes
possession / ownership of. If for example the value of the
investment is GBP4.5 million, the fund will not pay anymore. If NEC
ES is unable to supply to the Company products, equipment and/ or
services on terms agreeable to the Company to the value of the
Company's advance within 12 months from the date of the Company's
admission on the London Stock Exchange, NEC ES will within 14 days
of the end of such period pay to the Company (a) the balance of the
advance payment less the amount of value that has been supplied to
the Company in that period and (b) interest on the balance accrued
from the date of admission at a rate of 3 per cent, per annum. As
at 30 September 2018, no investments were purchased in connection
with the advance agreement with NEC ES.
Notes to the financial statements continued
For the period from 19 January 2018 (incorporation date) to 30
September 2018
14. Trade and other payables
30 September 2018
(GBP)
------------------------ ---- ------------------
Administration fees 15,000
AIFM fees 26,539
Audit fees 36,000
Directors remuneration 3,749
Accrued IPO costs 51,702
Professional fees 34,202
Other creditors 10,471
177,663
----------------------------- ------------------
15. Categories of financial instruments
30 September 2018
(GBP)
------------------------------------------ ---- ------------------
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents 17,171,647
Trade and other receivables 4,695,294
Fair value through profit or loss:
Investment in subsidiary 7,981,451
Total financial assets 29,848,392
------------------------------------------------ ------------------
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables 177,663
Total financial liabilities 177,663
------------------------------------------------ ------------------
At the balance sheet date, all financial assets and liabilities
were measured at amortised cost except for the investment in and
loans subsidiaries which are measured at fair value.
16. Fair Value measurement
Valuation process
The Company held a portfolio of lithium-ion energy storage
investments with a capacity of 8.0 Megawatt ("MW") operational and
19.0 MW of shovel ready projects (the "Investments") through its
subsidiary companies. The Investments comprise four projects:
Boulby, Cenin (49%), Lower Road and Port of Tilbury. All of these
investments are based in the UK. 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 the fair value of
the Company's investments or are produced by the office of the
Investment Adviser. As at 30 September 2018, the fair value of the
investment in NK Boulby Energy Storage Limited, which owns Boulby
Project has been determined (presented by the Manager and reviewed)
by BDO LLP.
Valuation approach and methodology
The Company utilises 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 income approach 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.
Another method (also known as the Market Method or
Capitalisation of Earnings method) involves applying appropriate
multiples/ratios to the historical, current and/or forecast
earnings of a company. The multiples/ratios are derived from the
financial indices available for comparable companies, adjusted to
reflect such factors as size, wider range of activities. Where the
comparable company is a listed company, the market capitalisation
is the sum of the price of small parcels of shares.
Some sectors tend to use non-financial industry-specific
multiples to determine the value of businesses. Within the
renewable energy infrastructure sector, the most common ratio is
GBPEnterprise value ("EV")/Megawatts ("MW") which captures the
installed capacity of a renewable energy project and is the method
used to value the investment assets of the Company.
The cost approach is typically used when a company's business is
asset based. It is also widely used for the valuation of
pre-construction, under-construction or newly operational projects
with limited operational history. The total asset valuation under
this approach will be the total commitment / Enterprise Value. A
cost-based valuation will be deemed as the actual issued capital
drawn and deployed to date, for the individual assets (including
both share premium and capital expenditure but excluding
transaction costs), referred to 'cost-to-date'. For financial
reporting purposes, cost is often accepted as a proxy for fair
value in instances where projects are preconstruction or under
construction as is the case with for assets held within GSC LRPOT
given the proximity to period end.
Valuation Input
Valuation Input Range Weighted average
------------------- --------------- -----------------
WACC 6 % - 8% 7.8%
CPI 2.5% NA
Acquisition price GBP0.7 million NA
Valuation of financial instruments
The investment at fair value through profit or loss is a 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 2018
(GBP)
------------------------------------------------------ ---- ------------------
Opening balance -
Add: purchases during the year 8,091,831
Total fair value movement through the profit or loss (110,380)
Closing balance 7,981,451
------------------------------------------------------------ ------------------
A miority shareholder of NK Boulby has a right to receive a
certain share of NK Boulby distribution once NK Energy Solutions
realizes excess return over an agreed hurdle return from it's
investment into NK Boulby. Based on free cash flow forecast used to
compute the net asset value of NK 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 might be
distributed to the minority shareholder.
17. Financial risk management
The Company is exposed to certain risk through the ordinary
course of business and the Company's financial risk management
objective is to minimise the effect of these risks. The management
of risks is performed by the directors of the Company and the
exposure to each financial risk considered potentially material to
the Company, how it arises and the policy for managing it is
summarised below:
-- Counterparty risk
The Company is exposed to third party credit risk in several
instances and the possibility that counterparties with which the
Company and its subsidiaries, together the Group, contracts may
default or fail to perform their obligations in the manner
anticipated by the Group. Such counterparties may include (but are
not limited to) manufacturers who have provided warranties in
relation to the supply of any equipment or plant, EPC contractors
who have constructed the Company's plants, who may then be engaged
to operate assets held by the Company, property owners or tenants
who are leasing ground space and/or grid connection to the Company
for the locating of the assets, contractual counterparties who
acquire services from the Company underpinning revenue generated by
each project or the energy suppliers, or demand aggregators,
insurance companies who may provide coverage against various risks
applicable to the Company's assets (including the risk of terrorism
or natural disasters affecting the assets) and other third parties
who may owe sums to the Company. In the event that such credit risk
crystallises, in one or more instances, and the Company is, for
example, unable to recover sums owed to it, make claims in relation
to any contractual agreements or performance of obligations (e.g.
warranty claims) or require the Company to seek alternative
counterparties, this may materially adversely impact the investment
returns. Further the projects in which the Company may invest will
not always benefit from a turnkey contract with a single contractor
and so will be reliant on the performance of several suppliers.
Therefore, the key risks during battery installation in connection
with such projects are the counterparty risk of the suppliers and
successful project integration.
The Company regularly assesses the creditworthiness of its
counterparties and enters into counterparty arrangements which are
financially sound and ensures, where necessary, the sourcing of
alternative arrangements in the event of changes in the
creditworthiness of its present counterparties.
-- Concentration risk
The Company's investment policy is limited to investment in
energy storage infrastructure, which will principally operate in
the UK. This means that the Company has a significant concentration
risk relating to the UK energy storage infrastructure sector.
Significant concentration of investments in any one sector may
result in greater volatility in the value of the Group's
investments and consequently the Net Asset Value and may materially
and adversely affect the performance of the Group and returns to
Shareholders.
The Company intends to manage its exposure to concentration risk
through considering projects in North America and Western
Europe.
-- Credit risk
Cash and other assets that are required to be held in custody
will be held at bank. Cash and other assets may not be treated as
segregated assets and will therefore not be segregated from the
banks own assets in the event of the insolvency of a custodian.
Cash held with the bank will not be treated as client money subject
to the rules of the FCA and may be used by the bank in the ordinary
course of its own business. The Company will therefore be subject
to the creditworthiness of the bank. In the event of the insolvency
of the bank, the Company will rank as a general creditor in
relation thereto and may not be able to recover such cash in full,
or at all.
The Company regularly assesses its credit exposure and considers
the creditworthiness of its customers and counterparties. Cash and
bank deposits are held with Barclays Plc, a reputable financial
institution with a Moody's credit rating A2.
-- Liquidity risk
The objective of liquidity management is to ensure that all
commitments which are required to be funded can be met out of
readily available and secure sources of funding. Although there is
no present intention to utilise borrowings, the Company may, where
the Board deems it appropriate, use short term leverage to acquire
assets but with the intention that such leverage be repaid with
funds raised through a new issue of equity or cash flow from the
Company's portfolio. Such leverage will not exceed 15 per cent. (at
the time of borrowing) of Gross Asset Value without Shareholder
approval. The Company's only financial liabilities are trade and
other payables. The Company has sufficient cash reserves to cover
these in the short-medium term. The Company's cash flow forecasts
are monitored regularly to ensure the Company is able to meet its
obligations when they fall due.
The following table reflects the maturity analysis of financial
assets and liabilities.
As at 30 September 2018 < 1 1 to 2 years 2 to 5 years > 5 years Total
year (GBP) (GBP) (GBP) (GBP)
(GBP)
----------------------------------------- ----------- ------------- ------------- ---------- -----------
Financial assets
Cash and cash equivalents 17,171,647 17,171,647
Trade and other receivables 4,695,294 - - - 4,695,294
Fair value through profit or loss:
Investment in subsidiary - - - 7,981,451 7,981,451
Total financial assets 21,866,941 - - 7,981,451 29,848,392
----------------------------------------- ----------- ------------- ------------- ---------- -----------
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables 177,663 - - - 177,663
Total financial liabilities 177,663 - - - 177,663
----------------------------------------- ----------- ------------- ------------- ---------- -----------
-- Market risk
Market risk is the risk that the fair value or cash flows of a
financial instrument will fluctuate due to changes in market
prices. Market risk reflects interest rate risk, currency risk and
other price risks. The objective is to minimise market risk through
managing and controlling these risks to acceptable parameters,
while optimising returns. The Company uses financial instruments in
the ordinary course of business, and also incurs financial
liabilities, in order to manage market risks.
Price risk is the risk that the fair value or cash flows of a
financial instrument will fluctuate due to changes in market
prices. At 30 September 2018, the valuation basis of the Company's
investments were valued at market value. This investment is driven
by market factors and therefore sensitive to movements in the
market. With all other factors remaining constant, if this value of
the investment were to increase by 10%, there will be a resulting
increase in net assets attributable to ordinary shareholders for
the period of GBP728,624. Similarly, a decrease in the value of the
investment would result in an equal but opposite movement in the
net assets attributable to ordinary shareholders.
-- Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair values of
financial instruments. The Company is exposed to interest rate risk
on its cash balances held with counterparties, bank deposits,
advances to counterparties and through loans to related party. Bank
deposits and NEC ES advance carry a fixed rate of interest for a
definite period and loans to related parties carry a fixed rate of
interest for an initial period of 20 years. The Company is not
exposed to changes in variable market rates of interest and has
therefore not considered any sensitivity to interest rates.
-- Currency risk
All transactions and investments during the current period were
denominated in Pounds Sterling, thus no foreign exchange
differences arose. The Company does not hold any financial
instruments at period end which are not denominated in Pounds
Sterling and is therefore not exposed to any significant currency
risk.
-- Capital risk management
The capital structure of the Company at year end consists of
equity attributable to equity holders of the Company, comprising
issued capital, reserves and accumulated loss. The Company has no
return on capital benchmark, but the Board continues to monitor the
balance of the overall capital structure so as to maintain investor
and market confidence. The Company is not subject to any external
capital requirements.
18. 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 2018
-------------------------------------------------- ------------------
Net assets per statement of financial position GBP 29,670,729
Ordinary shares in issue as at 30 September 2018 30,600,000
NAV per share - Basic and diluted (pence) 96.96
--------------------------------------------------- ------------------
19. Share capital
Ordinary Share capital Share premium Special reserve Capital Total
shares Number (GBP) reserve (GBP) reduction shareholders
(GBP) reserve equity
(GBP) ( GBP)
---------------- --------------- -------------- --------------- ---------------- --------------- ---------------
As at 19
January 2018 - - - - -
Issue of 50,000
redeemable
preference
shares - one
quarter paid
up 12,500 12,500
Redemption and
cancellation
of 50,000
redeemable
preference
shares (12,500) - - - (12,500)
Issue of
ordinary
shares of
GBP0.01 and
fully paid at
GBP1 - 25 May
2018 30,600,000 306,000 30,294,000 - - 30,600,000
Share issue
costs 30,600,000 - (551,459) - - (551,459)
---------------- --------------- -------------- --------------- ---------------- --------------- ---------------
Transfer to
capital
reduction
reserve and
special
reserve - - (29,694,833) 186,656 29,508,177 -
As at 30
September 2018 30,600,000 306,000 47,708 186,656 29,508,177 30,048,541
---------------- --------------- -------------- --------------- ---------------- --------------- ---------------
Share capital and share premium account and capital reduction
reserve
On incorporation the Company issued 1 ordinary share of GBP1
which was fully paid up and 50,000 redeemable preference shares of
GBP1 each which were paid up to one quarter of their nominal value.
On 17 July 2018 the directors resolved to redeem the 50,000
redeemable preference shares.
On 21 May 2018, the Board approved the proposed placing and
offer for subscription (together the "Placing") of up to 100
million ordinary shares of GBP0.01 each in the capital of the
Company at a price of GBP1 per ordinary share. It was intended that
the ordinary shares of the Company would be admitted to trading on
the Premium Segment of the Main Market of the London Stock Exchange
("Admission"). On 25 May 2018, the Company issued 30,600,000
ordinary shares at a price of 100 pence per share, raising gross
proceeds from the Placing of GBP30,600,000. Admission subsequently
took place on 25 May 2018.
The consideration received in excess of the par value of the
ordinary shares issued of GBP30,294,000 was credited to the share
premium account.
Following a successful application to the High Court and
lodgement of the Company's statement of capital with the Registrar
of Companies, the Company was permitted to reduce the capital of
the Company by an amount of GBP29,694,833. This was affected on 16
August 2018 by a transfer of that amount from the share premium
account to distributable reserves. A special reserve is created out
of the distributable reserve for creditors outstanding as at the
date of reduction being 16 August 2018 and the balance transferred
to capital reduction reserve. The outstanding creditors as at 16
August 2018 were GBP186,656 and GBP29,508,177 was transferred to
capital reduction reserve. The capital reduction reserve is classed
as a distributable reserve and dividends paid by the Company are
currently being offset against this reserve.
Ordinary shareholders are entitled to all dividends declared by
the Company and to all of the Company's assets after repayment of
its borrowings and ordinary creditors. Ordinary shareholders have
the right to vote at meetings of the Company. All ordinary shares
carry equal voting rights.
20. Reserves
The nature and purpose of each of the reserves included within
equity at 30 September 2018 are as follows:
-- Share premium reserve: represents the surplus of the gross
proceeds of share issues over the nominal value of the shares, net
of the direct costs of equity issues and net of conversion
amount.
-- Capital reduction reserve: represents a distributable reserve
created following a Court approved reduction in capital
-- Retained earnings represent cumulative net gains and losses
recognized in the statement of comprehensive income.
The only movements in these reserves during the period are
disclosed in the statement of changes in equity.
21. Transactions with related parties
Following admission of the ordinary shares (refer to note 19),
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, Chairman of the Board of directors of the Company,
is paid director's remuneration of GBP33,000 per annum, Caroline
Banzsky is paid directors's remuneration of GBP21,000 per annum,
with the remaining directors being paid directors' remuneration of
GBP18,000 per annum. Total director's remuneration of GBP22,663 was
incurred in respect of the period with GBP1,249 being outstanding
and payable at the period end together with directors travel
expenses of GBP2,500.
Investment adviser
The investment adviser, Gore Street Capital Limited (the
"Investment Adviser"), 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 : 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 fee of GBP103,767 was paid during the period
of which GBP83,716 was paid in advance. The Investment Adviser
waived a portion of its fees which resulted in a reduction of
61.24% on the actual fees incurred by the Company.
In addition to the advisory fee, the Adviser 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 Adviser 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 Adviser shall never exceed an amount equal to 50 per
cent of the Advisory Fee paid to the Adviser in respect of that
period.
Performance fees are payable within 30 days from the end of the
relevant calculation period. No performance fees were accrued as at
30 September 2018.
Loans to related parties
Amounts receivable from the subsidiary represent amounts due to
the Company from its direct subsidiary undertaking, GSES 1 Limited,
which amounted to GBP7,920,846 at the period end, being an
outstanding loan amount of GBP7,920,846 as well as accrued interest
receivable of GBP57,951.
The Company also has a receivable balance of GBP2,654 due from a
related party entity, NKESS, relating to accrued interest on a loan
settled prior to the period end through GSES1.
22 Capital commitments
The Company is committed to invest into projects, as described
in note 13, that involve NEC ES providing, directly or indirectly,
a supply of products, equipment and/ or services required for those
projects within 18 months from the date of admission, provided NEC
ES has the ability to meet the requirements of such projects and
the terms of pricing of the products, equipment or services to be
provided are on standard market terms. The Company's obligations in
respect of the NEC ES commitment shall be discharged once NEC ES
and/ or any of its affiliates received contractual commitments in
respect of relevant project(s) in an amount equal to or greater
that the amount of the NEC ES investment.
The Company has committed to invest an amount equal to GBP6
million into projects that involve NK providing a supply of
products, equipment or services within 18 months from the date of
admission of its ordinary shares on the London Stock Exchange. This
does not include the Boulby and Cenin projects and is subject to
NK's ability to meet the requirements of such projects and the
terms and pricing of the products, equipment or services to be
provided are on market standard terms as determined by the Company.
The Company is not required to invest in any project that does not
fall within the parameters of the Company's investment policy. The
Company's commitment to acquire products, equipment and/ or
services from NK is capped at GBP6 million and no projects invested
in as at 30 September 2018 were in connection with this
commitment.
The Company had no contingencies and no other significant
capital commitments at the reporting date.
23. Post balance sheet events
The directors recommend a dividend of 2 pence per share to be
paid on 30 November 2018.
There were no further events after reporting date which requires
disclosure.
[1] Front-of-meter (FTM): directly connected to power grid;
Behind-the-meter (BTM): Connected to a C&I electricity user
site.
[2] 28 September 2018 was the last day of trading prior to the
end of quarter on 30 September 2018
[3] Aggregated value of SPVs
[4] Total of 4.0 MW or 2.0 MW proportionately to the Company's
share shareholding portion
[5] The Company does not necessarily expect to acquire 100% of
these projects
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FSDFAAFASELF
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November 09, 2018 02:00 ET (07:00 GMT)
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