TIDMGSF
RNS Number : 1513T
Gore Street Energy Storage Fund PLC
16 July 2020
16 July 2020
Gore Street Energy Storage Fund Plc
('Gore Street' or the 'Company')
Full Year Results
Gore Street Energy Storage Fund plc (ticker: GSF), London's
first listed energy storage fund investing in income producing
assets in the UK and internationally, today announces full year
results for the period from 1 April 2019 to 31 March 2020
("FY2020").
FY2020 Financial Highlights
-- Total shareholder return for the period of 15.2%
-- Earnings per share (basic and diluted) of 11.78p
-- Net income of GBP4,789,273
-- NAV per ordinary share of 94.6 pence (FY19: 91.9 pence)
-- Aggregate declared dividend of 7.0p per ordinary share for
the period, in-line with the Fund's stated dividend target.
Dividend cover of 1.5 times for the financial year
-- Continuous growth of the Company's capital base as part of
the Company's Placing Programme with GBP20.5m raised in FY2020 and
an additional GBP23.7m raised post the period end
-- Further significant strategic investment partner secured
during the year: National Treasury Management Agency in Ireland, a
major sovereign wealth investor
FY2020 Operational Highlights
-- Gore Street's portfolio increased to 189MW with an additional
50MW increase following the period end
-- Operational assets producing income rose from two to four assets in Great Britain (GB):
o 4 MW project in Cenin, Swansea
o 6 MW site in Boulby, North Yorkshire
o 9 MW project at London's Port of Tilbury - energised in the
period
o 10 MW project in Lower Road, Essex - energised in the
period
-- Broadened the geography of the asset base, following the
acquisition of four assets in Northern Ireland (NI) and the
Republic of Ireland (RoI)
o Successfully secured two 6-year fixed revenue contracts for
the RoI projects
-- During Covid-19 period, the Company is pleased that all
assets performed within expectations, delivering a steady source of
defensive revenue for the Company.
Post Period Highlights
-- GBP23.7m raised in July 2020; AUM increased to GBP73.3m
o An additional GBP15.5m in equity from ISIF remains available
to the Fund for projects in Ireland, and is not reflected in
AUM
-- Further significant strategic investment partner secured:
JXTG Nippon Oil & Energy Corporation, one of Japan's largest
energy companies, as part of its long-term strategy to diversify
from oil and broaden its range of power sources and reduce its
carbon footprint
-- Assets under construction all running to schedule:
o 160 MW across four assets in NI and RoI expected to be
commissioned in 2021
o 50 MW project in Scotland recently acquired and expected to be
commissioned in 2022
-- Pipeline of projects meeting the investment criteria and
returns profile at c.900MW, which 151MW is under exclusivity and
actively in due diligence - including an operational portfolio of
81MW located in GB
Net Asset Value
As at 31 March 2020, the audited estimated NAV per Ordinary
Share has increased to 94.6 pence compared with 91.9 pence per
Ordinary Share at the previous period end, representing a total
return including dividends over the period of 10.6%. On a quarterly
basis, NAV per share increased on an ex-div basis from 92.1 pence
at December 2019.
CEO of Gore Street Capital, the investment adviser to the
Company, Alex O'Cinneide commented:
"I am pleased to report an excellent set of full year results,
delivering on our growth and performance objectives for the year.
Our operational portfolio is performing well and continues to
generate sustainable income for our shareholders with little to no
disruption from Covid-19. In line with the growing scale of the
market opportunity, we have grown the size of the Company threefold
and welcomed two new strategic investment partners.
We continue to acquire new assets, both operational and
construction ready, and are progressing our significant portfolio
of projects on the island of Ireland.
We have made major progress in growing our portfolio from 189MW
at the period end and to 239MW more recently, this is the largest
portfolio available to a financial investor. Our operational
portfolio has more than doubled during the course of the year to
29MW, while our pipeline is robust and growing.
The global transition to clean and renewable energy generation
of course remains a leading priority of governments everywhere and
the Company will continue to deliver the assets required to make
the transition as smooth as possible by acquiring the best
opportunities for our shareholders".
The Legal Entity Identifier of the Company is
213800GPUNVGG81G4O21.
The person responsible for releasing this announcement is Susan
Fadil.
The Annual Report and Accounts will today be available on the
Company's website at https://www.gsenergystoragefund.com .
In accordance with Listing Rule 9.6.1, copies of these documents
will also be submitted today to the UK Listing Authority via the
National Storage Mechanism and will be available for viewing
shortly at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For further information:
Gore Street Capital Limited
Alex O'Cinneide Tel: +44 (0) 20 3826 0290
Shore Capital
Anita Ghanekar / Darren Vickers / Hugo Masefield (Corporate Advisory) Tel: +44 (0) 20 7601 6128
Henry Willcocks / Fiona Conroy (Corporate Broking)
Media enquiries
Buchanan
Charles Ryland / Henry Wilson / George Beale Tel: +44 (0) 20 7466 5000
Notes to Editors
About Gore Street Energy Storage Fund plc
Gore Street is London's first listed energy storage fund and
seeks to provide Shareholders with a significant opportunity to
invest in a diversified portfolio of utility scale energy storage
projects. In addition to growth through exploiting its considerable
pipeline, the Company aims to deliver consistent and robust
dividend yield as income distributions to its Shareholders.
The Company targets an annual dividend of 7.0% of NAV per
Ordinary Share in each financial year, subject to a minimum target
of 7.0 pence per Ordinary Share. Dividends are paid quarterly.
1 Highlights
As at 31 March 2020:
Market Capitalisation Share Price Annual Dividend
GBP51.1.million 97.3 pence 7.0 pence for this
period*
NAV NAV per share Total Returns since
GBP49.7 million 94.6 pence IPO**
(on a share price
basis)
8.3%
*A total of 6.0 pence in dividends was paid in the financial
year and the remaining 1.0 pence will be paid following the end of
year Board meeting in July 2020.
Corporate Purpose
Gore Street Energy Storage Fund plc ("Gore Street" or the
"Company") aims to deliver 7 percent income yield per annum and
long-term capital growth to its investors from its portfolio of
utility-scale energy storage assets located in the UK and the rest
of the OECD.
Founded in 2018, Gore Street was the first pure-play energy
storage fund listed on the London Stock Exchange. Energy storage
was identified at the time of IPO as a crucial component in our
transition to a low carbon economy as it not only supports the
stability of national grids but also supports the incorporation of
renewables into public power infrastructure.
In 2019, Gore Street's portfolio grew substantially from 29 MW
of storage generation in the UK to 189 MW across the UK and the
Republic of Ireland. Gore Street aims to continue its growth with a
concentration in the UK and Ireland, while broadening its presence
in other key markets. The Company continuously seeks efficiencies
in its operations and seeks to steadily enhance the net asset value
("NAV") per share for its investors.
Key Metrics
Table 1 : Key Metrics
31 March 2019 31 March 2020
Net Asset Value GBP28.1 m GBP49.7 m
(NAV)
NAV per share* 91.9 p 94.6 p
Number of issued
Ordinary shares 30.6 m 52.5 m
Share price 90.5 p 97.3 p
(Discount)/ Premium
to NAV** (1.5%) 2.9%
Market capitalisation GBP27.7m GBP51.1m
Dividends paid 4.0 p 7.0 p***
Ongoing charges**** 2.1% 2.2%
*NAV per share is calculated as Total NAV divided by total
number of shares outstanding within the respective period. This is
an alternative performance measure.
**Premium/(Discount) to NAV calculated as difference between
closing price on 31 March of 2019/2020 to NAV on 31 March of
2019/2020. This is an alternative performance measure.
***A total of 6.0 pence in dividends was paid in the financial
year and the remaining 1.0 pence will be paid following the end of
year Board meeting in July 2020.
**** Ongoing Charges: The expenses of managing the Company are
reviewed quarterly by the Board. Ongoing charges are those expenses
of a type which are likely to recur in the foreseeable future. The
ongoing charges figure of 2.2% is calculated as the annualised
ongoing charges incurred by the Company, (including costs charged
to capital but excluding interest) divided by the average undiluted
net asset value (with debt at market value) for the period and
expressed as a percentage. This is an alternative performance
measure.
Key Milestones:
Over the course of a transformational year, the Company has
achieved the following:
June-2019
-- Secured rights to 160MW in Ireland
-- Shareholders Agreement with ISIF for up to a GBP30m investment
-- Two pence dividend declared
July-2019
-- Annual report published for year ending March 2019
-- Prospectus issuance for ordinary shares
August-2019
-- AGM
-- GBP6.3 million fund raise completed
September-2019
-- Two pence dividend declared
October-2019
-- Secured 6-year revenue contract for Irish assets (60MW)
-- Port of Tilbury (9 MW) operational
-- GBP10.7 million fund raise completed
December-2019
-- NEC appointed EPC contractor for Northern Irish assets (100MW)
-- Two pence dividend declared
January-2020
-- Construction commences on Northern Irish assets (100MW)
February-2020
-- GBP3.4 million fund raise completed
March-2020
-- Lower Road (10MW) operational
Net Asset Value
In the fiscal year, there was a NAV increase of 2.7 pence per
share which, when added to the dividends, represents a net asset
total return of 10.6%. From IPO to 31 March 2020, the Company has
delivered a net asset total return of 4.6%. The Company has no
outstanding borrowings at 31 March 2020.
Table 2 : Net Asset Value of GSF: quarterly progress
Quarter End Pence per share
Jun-18 98.0
Sep-18 97.0
Dec-18 92.9
Mar-19 91.9
Jun-19 93.6
Sep-19 95.5
Dec-19 96.1
Mar-20 94.6
Dividend History
Since IPO, the Company has targeted an annual dividend of 7
percent of NAV per Ordinary Share in each financial year. As of the
date of publication, the Company has declared total dividends of
7.0 pence with respect to the period ending 31 March 2020, as
targeted. The Company is targeting a dividend of 7.0 pence for
2021.
Table 3 : Dividends in respect of Per Quarter Ends
Ordinary Shares
Quarter Dividends
30 September 2018 2.0p
31 December 2018 1.0p
31 March 2019 1.0p
30 June 2019 2.0p
30 September 2019 2.0p
31 December 2019 2.0p
31 March 2020 1.0 p
Investment Policy Summary
Gore Street invests predominantly in energy battery storage,
with potential to diversify revenue streams and contracts by
"stacking" different income streams in each asset and across the
Company's portfolio. Through its portfolio companies, the Company
not only participates in grid related service contracts but also
reduces energy usage and provides constraint management services to
industrial clients and has the option to engage in wholesale
arbitrage and hedging.
The Company may use short term leverage to acquire assets
although such leverage will not exceed 15 per cent. (at the time of
borrowing) of Gross Asset Value without shareholder approval. The
Company intends to grow its portfolio through the issue of new
equity and from cash flows. It may invest cash held for working
capital purposes or pending investment, or distribution of
dividends in cash or near-cash equivalents, including money market
funds.
Concentration and Diversification
Gore Street currently holds eight separate assets and continues
to evaluate actively opportunities within its investment pipeline.
Although the Company will generally hold assets until the end of
their useful lives, it has the flexibility to dispose of assets
where the Investment Manager determines that it is in the interests
of the Company to do so.
In the past year, the Company invested in projects outside of
the United Kingdom by acquiring two assets with a combined energy
capacity of 60 MW in the Republic of Ireland. Gore Street continues
to focus its investment pipeline in the UK and the Republic of
Ireland, but in the coming years aims to also invest in projects
that meet its return criteria in North America and Western Europe.
This is provided that no more than 40 per cent. of its Gross Asset
Value will be invested outside of the UK and the Republic of
Ireland.
The Company's intention is that no single project or interest in
any project will have an acquisition price greater than 20 per
cent. of Gross Asset Value. However, in order to retain flexibility
as the portfolio develops, the Company permits single projects to
have an acquisition price of up to 25 per cent. of Gross Asset
Value calculated at the time of acquisition.
With the Irish investments, the Company now faces exposure to
costs and revenues denominated in Euros. Gore Street aims to
achieve further diversification within its portfolio by spreading
its exposure across different jurisdictions, customers,
manufacturers, and suppliers.
Investment Criteria
The Investment Manager tests all acquisitions against the
Investment Policy. Save for final delivery and installation of the
battery systems, all other key development components of a project
must be in place before investment or must be simultaneously
arranged at the time of investment. The application of the
investment criteria against the recent acquisitions in Ireland are
set out below.
Table 4 : Application of Investment Criteria
Investment Mullavilly Drumkee Kilmannock Kilteel
Criteria
Grid Connection Yes Yes Yes Yes
Offer Received
Land Consents Land acquired Lease option Purchase option Lease option
secured secured secured
Visibility DS3 Uncapped* DS3 Uncapped* DS3 Volume Capped* DS3 Volume Capped*
of Revenue
Contracts
Planning Approval Yes Yes Yes Yes
* "DS3" refers to the Delivery Secure Sustainable Electricity
System programme in Ireland, as discussed further below on page
11.
2 Strategic Report
2.1 Chairman's Statement
I am pleased to present Gore Street's annual report and accounts
for the year ended 31 March 2020 and to provide an update on
developments over the year.
Financial Performance
The Company's NAV as at 31 March 2020 was 94.6 pence per
share.
Gore Street aims to deliver an annual dividend of 7.0 pence to
its investors and has met that target for the financial year ending
31 March 2020. In relation to this period a total of GBP2.8m was
paid out in dividends and a further GBP0.77m will be paid on 23
July 2020.
With the Port of Tilbury and Lower Road assets now operational
and the Cenin and Boulby assets continuing to perform, the Company
aims to maintain its target delivery of an annual dividend of 7.0
pence in respective of the financial year ending 31 March 2021.
Despite the COVID-19 pandemic, the Company continues to grow and
has further increased the number of shares in issue to 77.1 million
shares as of the date of publication, following a recent placing of
GBP23.7m to institutional investors, a retail offer through
PrimaryBid and a subscription for shares by Nippon Oil, the largest
petroleum company in Japan, as part of its clean energy strategy
(31 March 2020: 52.5 million shares).
Gearing
The Group will generally avoid using non-recourse debt at the
SPV level and aims to keep Group level borrowings within a prudent
range to reduce risk; the maximum gearing allowable presently is 15
per cent. of Gross Asset Value. We ended the period with no
external borrowings.
Portfolio Update and Acquisitions
The acquisition of four new development projects in Ireland has
increased the geographic diversification of the Company, with
assets now located in England, Wales, Northern Ireland and the
Republic of Ireland.
In 2019, the Company invested GBP16.1m into six projects, two of
which, namely Port of Tilbury and Lower Road, are now operational
and generating revenues. I am particularly pleased to announce the
award of six-year revenue contracts for each of the 30MW projects,
Kilteel and Kilmanock, under development in the Republic of Ireland
as part of the DS3 All-Island system to enable target renewable
wind penetration of 40 percent of electricity consumed by 2020.
Gore Street is also engaged and plans to construct 100MW of energy
storage in Northern Ireland that will participate in the DS3
uncapped market. This is targeted to commence in April 2021.
Post year end, the Company acquired Ferrymuir Energy Storage
Limited for GBP1.3m, a project with rights to develop a 50MW energy
storage system in Fife, Scotland, bringing the total portfolio size
to 239MW, the largest of any UK based manager. This will be our
first investment in Scotland. As of the time of publication, we are
also in exclusivity on the acquisition of an additional 151MW of
assets, of which 81MW are operational.
NEC Energy Solutions Inc ("NEC"), our partner in the development
of several assets, intends to wind down operations by 2030. NEC
successfully completed construction of three of our operational
assets. It is currently engaged in the construction of two assets
in Northern Ireland under a contract secured by parental guarantees
from NEC Japan and underwritten by performance bonds. Since its
announcement, NEC continues to meet its outstanding obligations to
the Company.
AIFM
Gore Street Capital Limited replaced Mirabella Financial
Services LLP as AIFM effective 31 December 2019.
Corporate, Social and Environmental Responsibility
Gore Street's investment thesis is based on the belief that
energy storage is a key component in the transition of electricity
generation to renewables, a significant part of mitigating climate
change.
Over the course of the current financial year, two of Gore
Street's assets, Boulby and Cenin, exported a combined total of
around 3000 MWh of electricity to the grid and saved high-volume
consumers round 400 MWh of electricity during triads (the period of
highest system demand in the winter). Over the next fiscal year,
Gore Street will formalise its sustainability track record and
report the same to its shareholders.
As of the date of publication, I am also pleased that Gore
Street was awarded the London Stock Exchange's Green Economy Mark,
acknowledging companies that derive 50 percent or more of their
revenues from environmental solutions.
Directors Responsibilities Pursuant to Section 172
The Directors are responsible for acting in a way that they
consider to be in good faith and most likely promote the success of
the Company for the benefit of its members as a whole. In doing so,
Directors must have regard to the needs of stakeholders amongst
other matters set out in section 172 when performing their duties
as discussed in the corporate governance report on pages 44 to
59.
Viability and Going Concern
The Directors have assessed the prospects of the Company over a
period of three years and confirm our reasonable expectation of
viability and continuance over that term. The Board deemed
appropriate due to the early stage of development of both the
Company and its investment portfolio after 21 months of trading,
and the nature of the business in which the Company is
involved.
The Directors' assessment of Gore Street's viability and going
concern are discussed in the corporate governance report on pages
38 to 39.
Market Outlook
The Board remains optimistic about the market for energy
storage.
The falling cost of lithium-ion has reduced capital expenditure
for battery storage over the past ten years by 87 percent, which is
encouraging further use of battery storage. In the United Kingdom
alone, in excess of 900MW of lithium-ion storage has been deployed
to date.
The reinstatement of the GB capacity market following a ruling
of the European Commission, has meant the Company has
retrospectively received 12 months of capacity market revenues from
prior periods, a welcome development anticipated by the Investment
Manager. The UK markets await the impact of a potential transition
period away from European legislation in the event of a no-deal
Brexit.
The Board is pleased to contribute to the market arrangements
for the All-Island Single Electricity Market in Ireland, by
participating in its DS3 Programme implemented to enable greater
system flexibility as the use of renewables grows. The Company
considers its successful tender of 60MW of its portfolio in the
first DS3 volume capped auction an important first step. It will
also plan to contribute an additional 100MW over the short-term by
participating in DS3's uncapped grid balancing services auctions
over the coming years.
COVID- 19 And Other Risks
While the scale of the impact of the economic slowdown resulting
from the COVID-19 pandemic remains difficult to assess, an
examination of its short-term impacts on the Company is provided on
page 32. The Board has assessed a number of scenarios including the
potential impact of a drastic reduction in storage demand during an
economic slowdown as part of its going-concern analysis.
Given the storage industry's relatively nascent stage, the
Company does face other potential risks, including the possibility
of changes in the design of the energy market or market rules,
whether as a result of Brexit or as a consequence of other
legislation. As an Irishman, I am particularly proud that the
Company is a pioneering participant in the DS3 Programme designed
to ensure that Ireland's electricity systems are capable of
supporting its 2020 and 2025 renewable electricity targets. While
our participation in the Irish market and consequent exposure to
the Euro is part of our diversification strategy, it also
introduces foreign exchange risks to our investors. We discuss
these and other principal risks and our mitigation strategies on
pages 30 to 32.
Conclusion
Since IPO in 2018, the Company has grown its portfolio from 6MW
to 239MW and we expect this existing capacity to be significantly
increased by the deals currently under negotiation. The Company
continues to strive towards operational excellence as an early
mover in the energy storage marketplace. Since year-end and
notwithstanding the pandemic, the operational assets have continued
to generate revenues broadly in line with expectations. The Company
is working hard to bring the two Northern Irish projects under
construction on-stream on time and within budget. We will continue
to manage these assets, along with those under pre-design and
design phases of development, to ensure timely and efficient
onboarding of our operational pipeline and the delivery of
long-term capital growth to our investors.
Patrick Cox
Chairman
Date:15 July 2020
2.2 INVESTMENT MANAGER'S REPORT
Summary of Recent Portfolio Acquisitions
Recent Acquisitions
In the fiscal year, the Company's portfolio substantially
increased in scale with acquisition of a 51 percent interest in
four assets located in Ireland with a capacity of 160MW, bringing
the total capacity of the Company's portfolio to 189MW. Low Carbon,
the seller and developer of each of the four assets, maintains a 49
percent equity stake in each project. All four projects expect to
derive revenues from the "DS3" or "Delivery Secure Sustainable
Electricity System" programme in Ireland. The first two of the
projects, located in Northern Ireland, began construction in
January 2020 with NEC (UK) Limited engaged as engineering,
procurement, and construction ("EPC") contractor and operations and
maintenance ("O&M") contractor. The sites are expected to
commence operations by 1 April 2021. The NEC contracts provide
performance, availability and completion warranties that aid in
de-risking construction. The two assets in the Republic of Ireland
each won six-year fixed revenue contracts to provide available
capacity in the DS3 capped market.
Details of the Company's portfolio as of the year ending 31
March 2020 are provided below.
Table 5 : Portfolio by Stage - in MW
Design Construction Operational
Mar-19 19 10
Jun-19 19 10
Sep-19 100 19 10
Dec-19 60 110 19
Mar-20 60 100 29
Investment Portfolio
Portfolio Overview
The Company has an interest in eight assets: Cenin, Boulby,
Lower Road, Port of Tilbury, Drumkee, Mullavilly, Kilteel and
Killmannock.
Organisational Chart
Shareholders
Parent
GSF
Portfolio Holding Company
GSES1
Portfolio Holding Company Portfolio Holding Company
NK Energy Storage GSC LR POT
Solutions
Project SPVs
Cenin, Boulby, Lower Road and Port of Tilbury are operational
with Drumkee and Mullavilly under construction. As of March 31,
2020, Killmannock and Kilteel are undergoing pre-construction
activities.
Cenin Port of Tilbury
Voting rights 49% Voting rights 100%
Major Revenue Frequency Services Major Revenue Frequency Services
Stream Stream
Battery Duration 1.2 hours Battery Duration 30 Minutes
Site Type Colocational Site Type Behind the Meter
Boulby Lower Road
Voting rights 100% Voting rights 100%
Major Revenue Frequency Services Major Revenue Frequency Services
Stream Stream
Battery Duration 30 Minutes Battery Duration 30 Minutes
Site Type Behind the Meter Site Type Front of Meter
Kiteel Kilmannock, Republic of Ireland
Voting rights 51% Voting rights 51%
Major Revenue DS3 Capped Major Revenue DS3 Capped
Stream Stream
Battery Duration TBC Battery Duration TBC
Site Type Front of Meter Site Type Front of Meter
Mullavilly, Northern Ireland Drumkee, Northern Ireland
Voting rights 51% Voting rights 51%
Major Revenue DS3 Uncapped Major Revenue DS3 Uncapped
Stream Stream
Battery Duration 30 Minutes Battery Duration 30 Minutes
Site Type Front of Meter Site Type Front of Meter
PORTFOLIO COMPOSITION
Breakdown of total portfolio including (construction and
operational assets) by MW as of 31 March 2020:
Behind Meter/Front of Meter
MW
BTM 15
IOM 170
Colocational* 4
Geography
MW
Ireland 60
Northern
Ireland 100
England 25
Wales 4
Battery Manufacturer
MW
Tesla 4
NEC 125
Pending 60
PORTFOLIO BY LOCATION
1. Drumkee -NI 3. Kilteel -ROI 5. Port of Tilbury 7. Boulby -GB
-GB
2. Mullavilly 4.Kilmannock 6. Lower Road 8. Cenin -GB
- NI -ROI - GB
Unplanned Maintenance
The Boulby asset had two incidents of unplanned reduced
availability in the fiscal year in which it was unable to deliver
frequency response services, resulting in a loss of around GBP100K
in revenues. However, the asset was still able to generate Triad
revenues during the period. The incidents were caused by software
communication issues. The Investment Manager is assessing the
benefits and costs of system enhancements and upgrades to improve
network connectivity.
Health & Safety
All HSE policies, including daily task trackers and inspection
records are in place. There were no Health or Safety incidents in
the year.
Market Outlook
Market projections for the global energy storage market remain
optimistic across all regions, with over a six-fold increase
projected by 2030 to $19.4 billion. The falling cost of lithium-ion
has reduced capital expenditure for battery storage over the past
ten years by 87 percent, further encouraging growth. In the United
Kingdom alone, in excess of 900MW of lithium-ion storage has been
deployed to date.
In addition, the Company continues to evaluate the commercial
viability of flow battery technology and of long duration storage
technologies. Gore street anticipates that prices of vanadium redox
batteries will reduce from current level of $100/KWh within the
next few years.
In the meantime, the electricity industry continues to undergo
change. With the ongoing integration of more variable renewable
forms of generation onto power systems (including wind, solar,
electric vehicles stations and other technologies), there is
greater complexity in managing demand and supply and ensuring
stability in power systems. Energy storage remains a critical tool
of national power systems to support the successful transition to a
net-zero economy.
United Kingdom And the Irish Markets
Brexit and the impact on the Electricity Industry
On 23 January 2020, the European Union (Withdrawal Agreement)
Act 2020 ("the Act") was adopted enabling the UK government to
ratify the Withdrawal Agreement and implement its provisions into
the UK law. As a result of the Act, the UK remains legally bound by
the EU law during the transition period agreed in the Withdrawal
Agreement which runs from 11 pm on 31 January 2020 until 11 pm on
31 December 2020.
During the transition period, UK's energy markets will remain
integrated with those of the EU with common rules governing their
operation.
For the period post 1 January 2021, the UK Government, Office of
Gas and Electricity Markets ("Ofgem"), and Irish regulators have
published guidance to the markets to provide a steer on the
potential outcome of a "no deal" Brexit, which is considered to be
the most disruptive to electricity markets.
In the event of a "no deal" Brexit, the electricity
interconnectors between Great Britain ("GB") and the continent, and
GB and Ireland, may not be able to continue operating in the market
coupling mechanism that operates between wholesale markets at the
day-ahead stage. This may result in different wholesale market
prices in GB and its connected markets than would otherwise be the
case. Depending on the outturn of those prices, the arbitrage value
for storage assets could be affected positively or negatively.
Outside of interconnectors, the government has also identified
the need for contingency planning for code administrators and
market participants, depending on the outcome of the negotiations
with the EU. Ofgem has noted that some industry licenses and codes
may need to change during the implementation period (if a
withdrawal agreement is agreed), or sooner in a no deal scenario,
as these currently reflect EU legislation. Similarly, the
monitoring of energy market trades and protections against insider
trading will need to transition to UK legislation either at the end
of the implementation period, or from the date of no deal.
Significantly, the Investment Manager does not currently believe
that the changes to licenses and codes, nor the reporting of
trades, will have a material impact on the Company's business.
Reinstatement of the GB Capacity Markets
Both GB and Ireland provide for a capacity market, which is a
policy mechanism that provides a long-term revenue stream to the
Company's sites, based in a GBP/KW/year (or Euro equivalent)
payment which is de-rated according to the level of storage
installed at the site.
GB reinstated the capacity market in October 2019 following a
formal investigation by the European Commission which concluded
that the mechanism did not violate EU state aid rules. The National
Grid made deferred payments from the standstill period to market
participants for the suspension period and the Company received
payments for Cenin and Boulby retrospectively.
The Launch of the Irish DS3 Market
Eirgrid and SONI (the systems operators in Republic of Ireland
and Northern Ireland respectively) established new market
arrangements for the All-Island Single Electricity Market in
October 2018. Ireland's ambitions are for 40 percent of electricity
generated (and 16 percent of total energy consumed) to come from
renewable sources by 2020, and the stated aim of the DS3 Programme
is "to meet the challenges of operating the electricity system in a
secure manner while achieving these 2020 renewable electricity
targets."
DS3 is one of the initiatives implemented by Eirgrid to allow
for greater system flexibility as the use of renewables grows. In
the first fixed contract DS3 auction, the Company successfully won
60MW out of a total of 110MW flexible capacity procured by
Eirgrid.
Pipeline Update
The Investment Manager continues its assessment of opportunities
within the core markets of GB and Ireland, and is also assessing
opportunities in other OECD markets, particularly Western Europe
and North America. The Investment Manager is actively engaged with
developers on specific opportunities in line with the Company's
investment policy.
As of March 31, 2020, the Company has exclusivity to four assets
for a combined 145MW in Scotland and is actively reviewing
opportunities in the UK and Ireland with a total of 900MW under
consideration.
In line with the Company's investment policy, the pipeline focus
remains to acquire the project rights from developers with grid
connections and planning permits secured, land options in place,
and with visibility on revenue streams. The Investment Manager will
also consider the acquisition of fully operational portfolios if
these are aligned with its investment policy and meet the Company's
target returns.
Table 6 : Long term pipeline as of 31 March 2020
Assets Under Consideration
Project (*) Location Total project/portfolio Status
size - MW
Project 1 GB 50 Under Consideration
(**)
Project 2 GB 3 0 Under Consideration
(**)
Project 3 GB 30 Under Consideration
(**)
Project 4 GB 20 Under Consideration
(**)
Project 5 GB 5 Under Consideration
(**)
Project 6 Belgium 25 Under Consideration
(**)
Portfolio 1 I reland 2 00 Under legal Option
TOTAL 360
*The Company does not expect to acquire 100% of all projects.
There can be no guarantee the pipeline assets will be acquired by
GSF
** Projects under consideration are not yet sufficiently
developed to meet the Fund's investment criteria
Valuation of the Portfolio
Net Asset Value
The NAV per share for the Company as of 31 March 2020 was 94.6
pence compared to 91.9 pence as of 31 March 2019
Table 7 : Net Asset Value (In GBP million)
Series 1
Starting NAV 28.12
Offering Proceeds 20.45
Offering Expenses -0.58
Fund Operating Expenses -1.52
Interest and Management Fee Income 0.32
Dividends -3.09
Capex and Acquisitions -16.11
Distribution from SPV -0.06
Increase in NAV of Portfolio SPV's 22.16
Ending NAV 49.69
Table 8 : Historic Net Asset Value
Pence
NAV at 31 March 2019 91.9
Less June 2019 dividend 1.0
NAV at 31 March 2019 (ex-dividend) 90.9
NAV at 31 March 2020 94.6
Less July 2020 dividend 1.0
NAV at 31 March 2020 (ex-dividend) 93.6
Movement in NAV (ex-dividend) 2.7
Dividends with respect
to the year 7.0
NAV Increase% 2.9%
Dividends
The target dividend with respect to 2020 is 7.0 pence as of the
date of publication, the Company paid or declared a total of 7.0
pence for the period ending 31 March 2020. This represents an 11
percent dividend yield for the investor at the IPO price.
Share Price
The share price as at 31 March 2020 was 97.3 pence, representing
a 2.9 percent premium to NAV.
Valuation Methodology
The Investment Manager is responsible for providing a fair
market valuation of the Company's underlying assets. Its valuation
results are presented to the Company's Board of Directors
("Directors") for review and approval prior to reporting.
Valuations are calculated quarterly and reviewed by an independent
third party, prior to publication of the half year and year-end
reports.
The Investment Manager currently values all assets within its
portfolio using a Discounted Cash Flow ("DCF") methodology. This
methodology adheres to IFRS 13 as well as the International
Valuation Standards Council ("IVSC").
Asset Life Extension
During the period, the Investment Manager extended the life of
the assets to up to 30 years. The amendment is justified by the
indefinite term of the grid connection offers, the 30 year life
terms for transformers and switch gear, and the ability to replace
and augment batteries, inverters, and all other components with
capital injections. All such associated capital expenditure is
accounted for in the valuation process. Conservatively, no residual
value has been assumed at the end of the project life
(notwithstanding the value of grid connections remaining).
Movements in Valuation Discount Rates
The Investment Manager applied a discount rate between 6.0
percent and 10.0 percent to each asset in the Company's portfolio,
with the 6.0 percent discount rate applied during periods in which
an asset has contracted revenue, reflecting the lower risk
associated with national system operators as a counterparty.
Table [ 9 ]: Discount Rate Matrix
Discount rate Pre-Construction Construction Phase Operational Phase**
Matrix Phase *
Contracted income 10.0% 6.5%-9.5% 6.0%-7.0%
Uncontracted 10.0% 7.5%-9.5% 7.0%-8.0%
income
*Construction discount rates vary based on programme status and
lead time
** Uncontracted revenue rates vary in accordance with market
maturity. Contracted revenue rates vary by counterparty
Revenue
The Investment Manager estimates uncontracted revenue values
based on the unit price forecasts of independent third-party
research house(s) and anticipates potential revenue stacks for each
asset based on its own experience and the advice of independent
third party consultants.
Operating Expenses
Where not already contracted and priced, development expenditure
(i.e. equipment maintenance and lease costs) are based on most
recent contracted expenditure and price quotes, with inflation
adjustments. Energy costs are estimated based on each system's
efficiency (as determined under EPC technical specifications),
published transmission and distribution network tariffs, and third
party electricity price forecast.
Gearing
As at 31 March 2020, no portfolio companies had any debt
outstanding.
Key Sensitivities
Table 10 : NAV Sensitivity Chart
Region NAV in NAV Sensitivity Chart
Base Case
(With DCF)
Revenue Revenue FX FX Discount Discount
+10% -10% +3% ( -3% (EUR Rate Rate
EUR stronger) weaker) +1% -1%
Northern GBP16.1m GBP19.5m GBP12.6m GBP16.8m GBP15.5m GBP13.7m GBP18.9m
Ireland
Republic GBP5.7m GBP7.6m GBP2.3m GBP5.9m GBP5.6m GBP3.8m GBP8.0m
of Ireland
Great Britain GBP6.7m GBP8.3m GBP3.9m GBP6.7m GBP6.7m GBP5.6m GBP7.1m
Principal Risks and Uncertainties
The directors have carried out a robust assessment of the
principle risks facing the company, including those that would
threaten its business model, future performance, solvency or
liquidity. The principal risks to the Company's portfolio are
identified below. Given that Gore Street is still in its nascent
stage, the Board routinely incorporates a review of the Company's
risk assessment matrix into its quarterly meetings. The Board's aim
is to mitigate the impact of material threats to the Company's
business model. The Company aims to achieve its corporate purpose
and investment strategy by providing for predictable yields and
long-term capital growth through its geographically diversified
investments in energy storage assets, while taking on minimal
development and technology risks.
Operational Risks
The Company and its subsidiaries have no employees and is
reliant on the performance of the Investment Manager to achieve its
investment goals and engage appropriate staff and advisors to
implement its investment strategies.
Mitigant : The Company's AIFM Agreement contains a key man
provision allowing the Company to terminate the agreement if the
chief executive at the Investment Manager is unable to carry out
his duties and obligations to the Company in accordance with the
terms of his appointment. The investment, regulatory, asset
management and transaction components of the Investment Manager's
responsibilities are supervised by two other management
professionals in order to mitigate the key-man risks. The
Investment Manager's team in turn also self-regulates with the
support and counsel of qualified market experts. With respect to
asset valuation, the Investment Manager routinely engages reputable
third-party valuers to confirm and review its NAV calculations on a
bi-annual basis. The Investment Manager also engages a third party
to conduct an annual audit of its risk and compliance policies and
procedures and to mitigate against any cultural drivers that could
harm investors or the portfolio.
Market Risks
There may be changes in the design of the energy market, or in
the specification of services, network charges, access to networks
or market rules, whether as a result of Brexit or as a consequence
of other legislation, that could impact current and future revenue
projections for any of the portfolio assets.
Mitigant : The diversification of assets across the United
Kingdom and Europe mitigates the impact of changes in any single
market product. In addition, the Investment Manager aims to stack
revenue contracts and resulting income streams available to each
asset, potentially reducing the groups portfolio's level of
reliance on any single contract mechanism or market service and
providing for some protection to the group against regulatory
changes in a particular market.
Technology Manufacturer Risks
Gore Street's portfolio currently consists only of lithium-ion
batteries provided by two battery manufacturers, NEC (UK) Limited
and Tesla, with NEC contracted as manufacturer and/or maintenance
provider in 97 percent of the Company's existing portfolio (for 125
MW of battery capacity). Each site contains multiple battery stacks
connected in parallel, with each stack containing modules of
battery cells that are partially independent and can be replaced
and repaired separately, thereby partially limiting the impact of
failure of any module of cells. The performance of each asset is
nonetheless dependent on scheduled maintenance and timely repair by
service providers.
Mitigant : The Company remains technologically agnostic and
continues to evaluate economically viable opportunities utilising
other technologies for battery storage. The Company is not under an
exclusivity agreement with any individual manufacturer and has
encouraged multiple engineering, procurement and construction (EPC)
bids for the 60MW of projects scheduled to commence construction in
2020 in order to further diversify its portfolio of manufacturer
and maintenance providers. In addition, adequate contractual rights
apply to enable the Company to replace any maintenance service
provider unable to carry out its obligations to the satisfaction of
the Company.
Liquidity Risks
Gore Street continues to meet its daily liquidity needs through
its cash resources and as at 31 March 2020, had cash of GBP15.0
million to meet its current obligations as they fall due. The
Company has no credit or debt to date, with discretionary dividends
and further investments constituting its primary potential
expenditures.
The Company is not exposed to liquidity and financing risks and
to date, has no liabilities or parental guarantees outstanding with
respect to any subsidiary obligations.
The Company's investment pipeline far exceeds its cash balance
and the Company must increase its cash resources in order to meet
or exceed its acquisition targets for the next year.
Mitigant : The Company will seek to continue to grow its
investor base and cash resources. Such cash will be used primarily
to finance further investments.
Valuation Risks
The Company's investments will predominantly be in unquoted
assets whose fair value involves the exercise of judgement.
Mitigant : The Investment Manager routinely utilises market
experts to confirm key and necessary data points utilised in the
valuation process (such as energy price forecasts). In addition,
portfolio assets are valued by independent third-parties on a
bi-annual basis, providing further objectivity to the portfolio
valuation process.
The Impact of COVID- 19
The longer term economic impact of the COVID-19 pandemic and
resulting lock-down on the Company and its portfolio remains
difficult to assess.
In the short term, there has been limited interruption in the
Company's business activities. Following a dip in the Company's
share price in March 2020 alongside the global markets, shares
continue to trade between 95 pence and 101 pence during this time
of uncertainty. The Investment Manager continues to manage Gore
Street's business activities via its virtual offices, including
pipeline development and EPC engagements for the Company's recent
acquisitions in the Republic of Ireland.
The underlying portfolio continues to generate revenue from four
operational assets each of which have to date, been unaffected by
the pandemic. Two Northern Irish assets under construction were
designated as essential construction projects during the early
lock-down period. Nonetheless, there were delays in the early weeks
of the lock-down resulting in a four-week suspension of
construction activities in Northern Ireland. In addition, the EPC
contractor for the Northern Irish assets has indicated that there
may be short-term delays in delivery of some parts. However, the
Company does not currently anticipate that the delays will impact
the assets' ability to meet the market deadlines for commencement
of service.
Mitigant : The Company will continue to monitor the economic
impact, if any, of COVID 19, including by working with its
contractors and their suppliers to mitigate the impact of any
future supply chain delays and to ensure that contractors have
established health and safety policies and protocols in the context
of COVID-19 to allow for the continued and timely development of
its portfolio projects.
Emerging Risks
To ensure that the Company maintains a holistic view to risk
management, Gore Street will continue to monitor a broader scope of
subsidiary or emerging risks to assess their potential to adversely
impact the business's operations and reduce shareholder value.
Emerging risks include cyber security attacks (not considered
principal risks because trades currently only occur within closed
operating systems) and any potential regulatory changes to the tax,
envionmental or planning frameworks governing the energy storage
markets.
3 GOVERNANCE
3.1 Directors' Report
The Directors present their report together with the audited
financial statements for the period from 1 April 2019 to 31 March
2020. The Corporate Governance Statement on pages 44 to 59 forms
part of this report. The Directors' Report together with the
Strategic report comprise the "management report" for the purposes
of Disclosure Guidance and Transparency Rule 4.1.5R.
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
as 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, through GSES 1 Limited, has
successfully acquired four new facilities, of which all facilities
are majority owned by the Company. The registered address of GSES 1
Limited is The Scalpel, 18th Floor, 52 Lime Street, London, EC3M
7AF. The Chairman's statement and Investment Managers report
expands on the business activity and acquisitions in the
period.
Results and dividends
The financial statements of the Company for the period appear on
pages 85 to 90. Total Comprehensive income for the period was
GBP4,789,273. The Directors recommend a fourth interim dividend of
1 pence per share be paid, bringing the total dividend in respect
of the period ended 31 March 2020 to 7 pence per share.
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 2020 of 7.0 pence
per Ordinary share will have been met, the annual target thereafter
is an annual dividend of 7.0 percent of NAV per Ordinary Share in
each financial year, subject to a minimum target of 7.0 pence per
Ordinary Share.
Share capital
As at 31 March 2020, 52,548,815 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, going concern 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 30 to 32.
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 was convened with an
appropriate quorum and with the Directors independent of the
Investment Manager.
Insurance
The Company maintains GBP10million 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.
Directors
All Directors are Non-Executive Directors. All the directors
will seek re-election at the AGM in accordance with the
recommendation of the AIC Code. Full details of the processes by
which directors can be appointed or replaced are set out in the
Articles of Association.
Significant shareholdings
As at 31 March 2020 the following shareholders have a
disclosable interest of 3 percent or more in the ordinary shares of
the Company:
Shareholder Number of Percentage of issued
ordinary shares share capital
The Bank of New York
(Nominees) Limited 11,730,910 22.3%
NEC Energy Solutions
Inc 9,098,901 17.3%
BBHISL Nominees Limited 6,000,000 11.4%
BNY (OCS) Nominees
Ltd 2,608,247 4.9%
Nortrust Nominees
Limited 2,100,000 3.9%
Merrill Lynch Pierce
Fenner & Smith 1,850,000 3.5%
HSBC Global Custody
Nominee (UK) Limited 1,675,000 3.2%
Goldman Sachs Securities
(Nominees) Limited 1,610,000 3.1%
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. The
Company is a closed-ended investment company which has no employees
and so its own direct environmental impact is minimal.
Employees
The Company has no employees and therefore no employees share
scheme or policies for the employment of disabled persons or
employee engagement.
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in the
Company, except as a result of:
-- The FCA's Listing Rules, require certain individuals to have
approval to deal in the Company's shares: and,
-- The Company's Articles of Association, allow the Board to
decline to register a transfer of shares, or otherwise impose
restriction on shares, to prevent the Company, the Investment
Advisor or the AIFM from breaching any law or regulation.
The Company is not aware of any agreements between holders of
securities that may result in restrictions on transferring
securities in the Company.
Securities carrying special rights
No person holds securities in the Company carrying special
rights with regards to control of the Company.
Change of control
The Company is not aware of any person who, directly or
indirectly, owns or controls the Company. The Company is not aware
of any arrangements the operations of which may give rise to a
change in control of the Company.
Director's share dealings
The Directors have adopted a code of Director's dealing in
ordinary shares, which is in accordance with the Market Abuse
Regulation. The Board is responsible for taking all proper and
reasonable steps to ensure any dealings by Director's, or persons
closely associated with them, are in compliance with the Market
Abuse Regulation.
Articles of Association
These are available on our website at
https://www.gsenergystoragefund.com/ or by application to the
Company Secretary. Any amendment to the Company's Articles of
Association may only be made by passing special resolution of the
shareholders of the Company.
Branches outside the UK
The Company does not have any branches outside the UK.
Powers of the Directors
The Board are responsible for managing the business affairs of
the Company in accordance with the Articles, the Companies Act and
the investment policy and have overall responsibility for the
company's activities including its strategy, investment activities
and reviewing the performance of the portfolio.
Powers in relation to the Company issuing its shares
Subject to company law and the Articles of Association, the
Directors are authorised to issue shares of such number of tranches
and on such terms as they determine, provided that such terms are
consistent with the provision of the Articles.
Statutory information contained elsewhere in the annual
report
Information required to be part of this Directors' report can be
found elsewhere in the annual report and is incorporated into this
report by reference, as indicated below:
-- Future developments, pages 23 to 24
-- Engagement with suppliers, customers and others with business
relationships with the Company, pages 40 to 42
-- Corporate Governance statement, pages 44 to 59
-- Manager and service providers, pages 49 to 50
-- Directors' names and biographies, pages 52 to 53
-- Directors' interest in shares, page 68
-- Financial instruments, note 16, page 107
-- Share capital reserves, note 20, pages 117 to 120
-- Transactions with related parties, note 22, pages 121 to
122
-- Post balance sheet events, note 24, page 123
Other disclosures
Disclosures of financial risk management objectives and policies
and exposure to financial risks are included in note 18 to the
financial statements.
Disclosures in relation to the Company's business model and
strategy have been included within the Investment Manager's report
on pages 11 to 29. Disclosures in relation to the main industry
trends and factors that are likely to affect the future performance
and position of the business have also been included within the
Investment Manager's report.
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 the financial year ending 31 March 2021. A
resolution to re-appoint Ernst & Young LLP as auditors to the
Company will be proposed at the AGM.
Going Concern and Viability
The Company's business activities, together with the factors
likely to affect its future development performance and position,
are set out in the Investment Manager's Report. The Company faces a
number of principal risks and uncertainties, as set out above,
including with respect to the economic impact of COVID-19 and
financial risks such as counterparty risk, credit risk,
concentration risk as discussed in note 18 to the financial
statements.
Going Concern
The Company's ability to generate revenue from its four
operational assets continues and is unaffected by the pandemic.
There was limited interruption in its construction activities for
the two new assets in Northern Ireland. In addition, the EPC for
the Northern Irish assets has reported that it anticipates short
term supply chain delays as a result of COVID-19. However, the
Company does not currently anticipate that the delays will impact
the assets' ability to meet the market deadlines for commencement
of service.
There has also been no interruption in contracting and design
work for the two new assets (Kilmannock and Kiteel) in the Republic
of Ireland. Nonetheless, as part of its going concern assessment,
the Company has assumed that the pandemic will impact investment
activity and has assumed no capital growth beyond the date of issue
of this financial statement.
The going-concern analysis further assumes continued annual
expenditure at the rate of current expenditure and continued
discretionary dividend payments to shareholders at the target
annual rate of 7 pence per ordinary share. With expenditure and
discretionary dividends assumed unchanged over the next 12 months,
the Company will continue to be operational and will have excess
cash after payment of its liabilities over the next 12 months.
The next general meeting and vote on the continuation of the
Company is scheduled for May 2023. The Company holds no debts or
other contractual financial commitments.
The Directors have acknowledged their responsibilities in
relation to the financial statements for the year ended 31 March
2020 and the preparation of the financial statement on a going
concern basis remains appropriate and the Company expects to meet
its obligations as and when they fall due for the foreseeable
future.
Long Term Viability
The Directors have assessed the prospects of the Company over a
period of three years.
As at 31 March 2020, the Company had net current assets of
GBP49.7 million and had cash balances of GBP15.028 million
(excluding cash balances within investee companies), which are
sufficient to meet current obligations as they fall due. The major
cash outflows of the Company are the payment of dividends and costs
relating to the acquisition of new assets, both of which are
discretionary. The Company had no outstanding debt as at 31 March
2020.
A potential key risk facing the Company is that Covid-19 may
affect the ability of operators to adequately ensure operational
integrity of the projects, particularly in terms of operations and
maintenance. The Company and the Investment Manager have worked
closely and liaised with the operators to ensure that commercial
activities remain operational and, in their view, power generation
will remain essential to the UK's infrastructure.
The Directors have reviewed Company forecasts and projections
which cover a period of three years from 31 March 2020, and as part
of the going concern assessment have modelled downside scenarios
taking into account foreseeable changes in investment and trading
performance, which show that the Company has sufficient financial
resources.
The Directors consider the following scenarios:
-- Covid-19 and the impact the outbreak could have on the
Company and the portfolio assets over a 12 month period. We have
assumed the Company's rate of expenditure over the year will remain
unchanged, that there are no contractual capital commitments at
fund level, that there is a single intercompany loan from the
Company to a subsidiary to finance the acquisition of a
pre-operational asset, and that there are no loan repayments
received from operational companies over the time frame.
-- A reverse stress test to determine the term over which the
Company can remain viable given its current resources before the
necessity for liquidation or protection from creditors. As the Fund
has no financial responsibility for its operating companies, the
only subsidiary expense included in the reverse stress test is an
imminent intercompany loan to a subsidiary to finance the
acquisition of a new asset.
-- An economic turmoil test to assess the impact of a continued
market slowdown during a three year term with no additional equity
raised and annual expenditures remaining the same over the three
year period.
After assessing the risks and reviewing the Company's liquidity
position, together with the forecasts of performance under various
scenarios, the Directors confirm that they have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities over a three year period.
SECTION 172 STATEMENT
The Role of the Board
The Board has overall responsibility for setting our purpose,
strategy and objectives, approving our investment activities -
including acquisitions and capital improvement programmes - and
reviewing our performance. The Board delegates day-to-day
responsibility for managing the portfolio to the Investment
Manager.
The Directors have had regard for the matters set out in section
172(1)(a) and (c) to (f) of the Companies Act 2006 when performing
their duty under section 172. Subsection (b) is not applicable to
the Company as it has no employees. The Directors consider that
they have acted in good faith in the way that would be most likely
to promote the success of the Company for the benefit of its
members as a whole, while also considering the broad range of
stakeholders who interact with and are impacted by our business,
especially with regard to major decisions.
In doing the above, the Directors have taken into account the
following:
(a) the likely consequences of any decision in the
long-term.
(c) the need to foster the Company's business relationships with
suppliers, customers and others.
(d) the impact of the Company's operations on the community and
the environment.
(e) the desirability of the Company maintaining a reputation for
high standards of business conduct; and
(f) the need to act fairly as between members of the
Company.
The Company continuously interacts with a variety of
stakeholders important to its success and strives to strike the
right balance between engagement and communication. The Company has
identified the following key stakeholders:
-- The Company's investors
-- The Company's Investment Manager
-- The Company's business partners and key service providers
Understanding our stakeholders' views has influenced our
investment strategy, including our focus on asset diversification
and introduction of a consolidated ESG policy.
Engagement with shareholders
The company would require further funding to continue with the
investment strategy and obtain additional pipeline investments.
Existing shareholders and prospective investors are therefore key
to implementing our strategy. We strive through our engagement
activities to obtain shareholder and prospective investor buy in
into our strategic objectives and have developed relationships with
several cornerstone shareholders. We have engaged with shareholders
and prospective investors through the following:
-- Interim and Annual Accounts.
-- Company's corporate broker and Investment Manager are in
regular communication with shareholders and shareholder views are
reported to the board.
-- One to one meetings with the Investment Manager.
-- Regular news and quarterly NAV updates.
The company will continue to engage with shareholders in future
as further expansion becomes necessary. These engagement activities
have ensured that the Company's investment pipeline and fund
raising programme have been aligned.
Engagement with the Investment Manager
The Investment Manager is responsible for the implementation of
the investment strategy, including acquisition identification. The
Investment Manager is crucial for the Company to meet dividend
expectations and its investment policy. The Board engage
constructively with the Investment Manager in order to ensure that
the expectations of the shareholders are being met and that the
Board are aware of challenges being faced. The Board and the
Investment Manager maintain an ongoing open dialogue on key issues
facing the Company, this open dialogue takes the form of ad hoc
board meetings and more informal contact, as appropriate. It
ensures that the Company and Investment Manager have aligned
interests to ensure the future success of the Company.
Engagement with business partners and key service providers
The Company has various key service providers who provide
management and administration services. The intention is to
maintain long-term and high-quality business partnerships to ensure
stability while the company pursues its growth strategy. Through
its Management Engagement Committee, the Company reviews all key
service providers to the Company and the terms of their engagement
on an annual basis, and seeks two-way engagement between the Board
and key service providers on service delivery expectations, and
feedback on important issues experienced by the service provider
during the period.
Engagement with communities
As we start to develop assets closer to communities we will look
to ensure that our environmental and social footprint takes account
of the local communities and is sympathetic to the locality, taking
account of local views which will be obtained via the planning
process.
Key Board Decisions
The Board's principal decisions each year typically include
approving acquisitions, capital expenditure and capital raises
(equity and debt), making acquisitions and payment and level of
dividends to meet expectations. During 2019, the Board also
approved the appointment of Gore Street Capital as the Company's
Investment Manager.
Where potential conflicts of interest arose, these were
discussed at the Board and resolved in line with the formal
Conflicts of Interest policy. No conflicts of interest occurred
that prevented the Directors from carrying out their duties during
the year.
The nature of the Company's business means that the Directors
must consider the long-term impact of its decisions, given that the
Company assumes its operational assets will perform for 30
years.
The Company relies on a reputation for high standards of
business conduct and this is reflected in one of our core values,
which is to always act openly and transparently with all of our
stakeholders. In relation to these key decisions stakeholders such
as key contractors were involved to ensure asset pipeline was
available to the Company on the timescales required. Shareholder
discussions were held to ensure clear communication was made in
relation to progress and market interest for expansion of the
Company. To ensure dividend expectations were deliverable the
Company worked with the Investment Manager.
3.2 Statement of Directors' Responsibilities in respect of the
preparation of the Annual Financial Report
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial period. Under that law the Directors
are required to prepare the Company financial statements, in
accordance with International Financial Reporting Standards
("IFRSs") as adopted by the EU.
Under company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss for the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them
consistently.
-- make judgements and accounting estimates that are reasonable
and prudent.
-- state whether they have been prepared in accordance with IFRS
as adopted by the EU, subject to any material departures disclosed
and explained in the financial statements;
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
-- prepare a Report of the Directors, a Strategic Report and
Directors' Remuneration Report which comply with the requirements
of the Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and 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 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 responsible
for ensuring that the Annual Report, taken as a whole, is fair,
balanced and understandable and provides the information necessary
for Shareholders to assess the Company's performance, business
model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the UK governing the preparation and
dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website ( https://www.gsenergystoragefund.com ) is
the responsibility of the Directors. The Directors'
responsibilities also extend to the ongoing integrity of the
financial statements contained therein.
Directors' Responsibilities pursuant to DTR4
The Directors confirm that to the best of their knowledge:
-- the Company's financial statements have been prepared in
accordance with IFRS as adopted by the EU and give a true and fair
view of the assets, liabilities, financial position and profit and
loss of the Company; and
-- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Company, together with a description of the principle risks and
uncertainties that they face.
Disclosure of information to the Auditor
The Directors who were members of the Board at the time of
approving the Directors' report have confirmed that:
-- so far as each director is aware, there is no relevant audit
information of which the Company's auditor is not aware; and
-- each director has taken all the steps that they ought to have
taken as a director in order to make themselves aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information.
Signed on behalf of the Board of Directors
Patrick Cox
Chairman
Date: 15 July 2020
3.3 Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors as further disclosed on pages 33 to 41. The Board
operates under a framework for corporate governance which is
appropriate for an Investment Company.
Gore Street Energy Storage Fund plc is an investment trust and
has been compliant with section 1158 of The Corporation Tax Act,
2010 . The ordinary shares were admitted to trading on the Premium
Segment of the Official List of the London Stock Exchange on 25 May
2018.
The Board of Gore Street Energy Storage Fund plc has considered
the principals and provisions of the Association of Investment
Companies Code of Corporate Governance (AIC Code). The AIC Code
addresses the Principals and Provisions set out in the UK Corporate
Governance Code (the UK Code), as well as setting out additional
Provisions on issues that are of specific relevance to the
Company.
The Board considers that reporting against the Principals and
Provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information to
shareholders.
The Company has complied with the Principals and Provisions of
the AIC Code. The AIC Code is available on the AIC website (
www.theaic.co.uk/aic-code-of-corporate-governance-0 ) It includes
an explanation of how the AIC Code adopts the Principals and
Provisions set out in the UK Code to make them relevant for
investment companies. The Company is a member of the Association of
Investment Companies.
Compliance with the 2019 Association of Investment Companies
(AIC) CODE
The below table sets out the Company's compliance with the 2019
AIC Code:
Section 5: Board Leadership and Purpose
Principle/Provision Details of how the Company complies
A. A successful Company is led by Strategic report, pages 7 to 10
an effective board, whose role is Chairman's Statement, page 7
to promote the long-term sustainable Corporate Governance Report, pages
success of the Company, generating 44 to 59
value for shareholders and contributing
to wider society.
B. The Board should establish the Strategic report, pages 7 to 10
Company's purpose, values, and strategy, Chairman's Statement, page 7
and satisfy itself that these and Corporate Governance Report, pages
its culture are aligned. All Directors 44 to 59
must act with integrity, lead by
example, and promote the desired
culture.
C. The Board should ensure that Environmental, social and governance
the necessary resources are in place report, page 8
for the Company to meet its objectives Principal risks and uncertainties,
and measure performance against them. pages 30 to 32
The Board should also establish a Audit Committee report, pages 60
framework of prudent and effective to 65
controls, which enable risk to be
assessed and managed.
D. In order for the Company to meet Stakeholders, pages 40 to 42
its responsibilities to shareholders Section 172 statement, pages 40 to
and stakeholders, the Board should 41
ensure effective engagement with, Corporate Governance Report, pages
and encourage participation from, 44 to 59
these parties.
E. [Intentionally left blank] [Per
the AIC Code]
Section 6: Division of Responsibilities
Principles
F. The chair leads the Board and Chairman's Statement, page 7
is responsible for its overall effectiveness Corporate Governance Report, pages
in directing the Company. They should 44 to 59
demonstrate objective judgement throughout
their tenure and promote a culture
of openness and debate. In addition,
the chair facilitates constructive
board relations and the effective
contribution of all non-executive
directors, and ensures that Directors
receive accurate, timely and clear
information.
G. The Board should consist of an Corporate Governance Report, pages
appropriate combination of Directors 44 to 59
(and, in particular, independent Biographies, pages 52 to 53
non-executive directors) such that Remuneration and Nomination Committee,
no one individual or small group pages 66 to 71
of individuals dominates the Board's
decision making.
H. Non-executive directors should Corporate Governance Report, pages
have sufficient time to meet their 44 to 59
board responsibilities. They should Remuneration and Nomination Committee
provide constructive challenge, strategic report, pages 66 to 71
guidance, offer specialist advice
and hold third party service providers Audit Committee report, pages 60
to account. to 65
Management Engagement Committee report,
page 72 to 74
I. The Board, supported by the Company Corporate Governance Report, pages
Secretary, should ensure that it 44 to 59
has the policies, processes, information, Audit Committee report, pages 60
time and resources it needs in order to 65
to function effectively and efficiently.
Section 7: Composition, Succession
and Evaluation
Principles
J. Appointments to the Board should Remuneration and Nomination Committee
be subject to a formal, rigorous report, pages 66 to 71
and transparent procedure, and an
effective succession plan should
be maintained. Both appointments
and succession plans should be based
on merit and objective criteria and,
within this context, should promote
diversity of gender, social and ethnic
backgrounds, cognitive and personal
strengths.
K. The Board and its committees Biographies, pages 52 to 53
should have a combination of skills,
experience and knowledge. Consideration
should be given to the length of
service of the Board as a whole and
membership regularly refreshed.
L. Annual evaluation of the Board Remuneration and Nomination Committee
should consider its composition, report, pages 66 to 71
diversity and how effectively members
work together to achieve objectives.
Individual evaluation should demonstrate
whether each director continues to
contribute effectively.
Section 8: Audit, Risk and Internal
Control
Principles
M. The Board should establish formal Audit Committee report, pages 60
and transparent policies and procedures to 65
to ensure the independence and effectiveness Notes 2 and 3 to the financial statements,
of external audit functions and satisfy pages 93 to 94
itself on the integrity of financial
and narrative statements.
N. The Board should present a fair, Strategic report, pages 7 to 10
balanced and understandable assessment Audit Committee report, pages 60
of the Company's position and prospects. to 65
Independent Auditor's report, pages
75 to 84
Financial statements, pages 85 to
90
O. The Board should establish procedures Principal risks and uncertainties,
to manage risk, oversee the internal pages 30 to 32
control framework, and determine Viability statement, page 39
the nature and extent of the principal Audit Committee report, pages 60
risks the Company is willing to take to 65
in order to achieve its long-term Management Engagement Committee report,
strategic objectives. pages 72 to 74
Section 9: Remuneration
Principles
P. Remuneration policies and practices Strategic report, pages 7 to 10
should be designed to support strategy Corporate Governance Report, pages
and promote long-term sustainable 44 to 59
success. Remuneration and Nomination Committee
report, pages 66 to 71
Q. A formal and transparent procedure Remuneration and Nomination Committee
for developing policy on remuneration report, pages 66 to 71
should be established. No director
should be involved in deciding their
own remuneration outcome.
R. Directors should exercise independent Remuneration and Nomination Committee
judgement and discretion when authorising report, pages 66 to 71
remuneration outcomes, taking account
of Company and individual performance,
and wider circumstances.
The Board
The Board consists of four non-executive directors, representing
a range of public service, investment, financial and business
skills, and has a depth of experience across these categories. The
Chairman of the Board is Patrick Cox. In considering the
independence of the Chairman, the Board took note of the provisions
of the UK Code relating to independence and has determined that Mr
Cox is an independent Director. The Senior Independent Director is
Mr Thomas Murley. The Company has no employees and consequently
there is no requirement for a chief executive.
In accordance with the AIC Code, all the Directors will retire
at the forthcoming AGM. Patrick Cox, Caroline Banszky, Thomas
Murley and Malcolm King, being eligible, will offer themselves for
re-election.
Full board meetings take place quarterly and the Board meets or
communicates more regularly to address specific issues. The Board
has a formal schedule of matters reserved for its decision which
includes, but is not limited to, considering recommendations of the
Investment Manager.
The Board has also established procedures whereby the Directors
wishing to do so in the furtherance of their duties may take
independent professional advice at the expense of the Company.
All Directors have access to the advice and services of the
Company Secretary. The Company Secretary provides the Board with
full information on the Company's assets and liabilities and other
relevant information requested by the Chair, in advance of each
board meeting.
In keeping with the provisions of the AIC Code, the Company's
policy is that every three years an external consultant, who has no
connection with the Company, carries out a formal review of the
Board's performance. The first such review will take place in 2021.
In the intervening years, an internal board evaluation will be
carried out with the assistance of the Company Secretary. Details
on the internal board evaluation carried out in 2020 can be found
in the Remuneration and Nomination Committee Report.
Board Responsibilities
The Directors are responsible for managing the business affairs
of the Company in accordance with the Articles and the investment
policy and have overall responsibility for the Company's activities
including its strategy, investment activities and reviewing the
performance of the portfolio.
The Board has a clearly articulated set of matters which are
specifically reserved to it and this is reviewed annually. These
include:
-- The strategic direction of the overall business, objectives,
budgets and forecasts, levels of authority to approve expenditure,
and any material changes to them.
-- The commencement, material expansion, diversification, or
cessation of any of the Company's activities.
-- The Company's regulatory, financial, and material operational policies.
-- Changes relating to the Company's capital, corporate, management or control structures.
-- Material capital or operating expenditures, outside
predetermined tolerances or beyond the delegated authorities.
-- Any material contract or joint venture and material
arrangements with customers or suppliers.
The Board may delegate certain functions to other parties such
as the Board committees, the Investment Manager, the Administrator,
the Company Secretary and the Registrar. In particular, the Board
has delegated responsibility for day to day management of the
investments comprised in the Company's portfolio to the Investment
Manager. The Directors have responsibility for exercising
supervision of the Investment Manager.
Culture & Purpose
In light of the new governance requirements, the Board has
devoted time this year to reviewing its culture and how this aligns
with the Company's purpose and strategy. As a young company, our
purpose and values are clear and fresh, and we believe that the
culture required to support these is straightforward and apparent -
respectful, pragmatic and to provide constructive challenge.
Our culture is driven by our purpose and core values.
Our purpose is to deliver seven percent income yield per annum
and long-term capital growth to its investors from its portfolio of
utility-scale energy storage assets located in the UK and the rest
of the OECD.
This forms the foundation of our strategic framework.
Our core values are:
-- To focus on the long term sustainability of our business.
-- To act openly and transparently with all our stakeholders.
-- To combine entrepreneurial nimbleness with the strength of a listed company.
Board Committees
The Board has delegated a number of areas of responsibility to
its three committees, the Audit Committee, the Management
Engagement Committee and the Remuneration and Nomination Committee.
Each committee has defined terms of reference and duties.
All the independent Directors serve on the Committees of the
Board, so the links and overlaps between the responsibilities of
the committees, are fully recognised and each committee has full
knowledge of the business and deliberations of the other
committees.
In addition, the Investment Manager, as AIFM, has a Risk
Committee, comprised of members of its own staff for the purposes
of monitoring the risk management framework of the Company.
Alternative Investment Fund Manager Directive ("AIFMD")
The Company is an Alternative Investment Fund (AIF) for the
purposes of the AIFMD and related regimes in EEA member states.
Service and Support
The Company has no employees and is externally managed by the
Investment Manager as the mandatory Alternative Investment Fund
Manager, supported by the Administrator.
The Management Engagement Committee formally reviews the
performance of the Investment Manager, the Administrator and other
service providers each year and makes recommendations to the Board
as it considers appropriate. Further details of these reviews, and
the relationships with the Investment Manager and Administrator are
given in the Management Engagement Committee Report on page 72 to
74.
The Investment Manager
Mirabella Financial Services LLP ("Mirabella") was the AIFM and
following approval by the FCA appointed Gore Street Capital Limited
to act as its AIFM in place of Mirabella, to provide investment
advice to the Company in respect of the assets of the Company and
to provide the day-to-day management of those investments.
Mirabella's services were terminated on 31 December 2019, upon the
appointment of the Investment Advisor as the new AIFM. The
transition was undertaken in open dialogue with no termination
payment applicable.
The new AIFM will receive a further GBP75,000 in addition to its
fee outlined in the Advisory and Services Agreement. This is to
cover the incremental cost of providing additional services as
AIFM.
The Depositary
Indos Financial Limited are the Depositary to the Company.
The Administrator
JTC (UK) Limited (JTC) was Administrator to the Company. On 1
April 2020, JTC ceased to provide Administration services and Sanne
Group Administration Services (UK) Limited were appointed to fulfil
the function of Administrator.
During the year ended 31 March 2020, as Administrator, JTC on
behalf of the Directors, is responsible for the maintenance of the
books and records, the management and financial accounts, and the
management of all cash movements of the Company and the
calculation, in conjunction with the Investment Manager, of the Net
Asset Value of the Company.
The Company Secretary
JTC are Company Secretary to the Company. As Company Secretary,
JTC is responsible for the production of the Company's accounts,
regulatory compliance and providing support to the Board's
corporate governance process and its continuing obligations. In
addition, JTC is responsible for liaising with the Company, the
Investment Manager and the Registrar in relation to the payment of
any dividends, as well as general secretarial functions required by
the Companies Act.
Meetings and attendance
Member Board Audit Committee Management Engagement Remuneration
Committee and Nomination
Committee
Patrick Cox 4/4 3/3 1/1 1/1
Caroline Banszky 4/4 3/3 1/1 1/1
Malcolm King 4/4 3/3 1/1 1/1
Thomas Murley 4/4 3/3 1/1 1/1
The Board meets formally on a quarterly basis and our attendance
is shown in the table above. We also have ad hoc meetings which are
generally called to approve special announcements or transactions
and frequently involve a quorate sub-committee of the Board, which
is appointed as necessary. The table above gives the names of all
of the Directors who served during the year and shows each
individual Director's attendance at the scheduled board and
committee meetings for which they were eligible to attend during
the year.
JTC attend all our meetings as Secretary to the Board. In
addition, we invite representatives of the Investment Manager, our
Independent Auditor and other advisors to attend as required.
The Board Agenda
At our quarterly meetings, the Board follows a formal agenda.
This agenda generally includes, amongst other things:
1. The Investment Manager's report for the period, including
strategic performance and acquisitions, a review of the performance
of the investments, operator performance and market conditions.
2. The AIFM report for the period, including discussion of risk.
3. The Depositary Report for the period.
4. Financial results against budget and cash flow forecasts,
including dividends declared and forecast.
5. Reports and updates on shareholder and investor communications.
6. The Corporate Governance and Secretary's Report, with a
review of policies and procedures, a compliance report, and an
update on legislative/regulatory obligations as appropriate.
7. Recommendations and updates from the Board committees as appropriate.
Key Activities of the Board during 2019/2020
The primary focus at regular Board meetings has been on
delivering the strategy and monitoring performance against our
strategic objectives (see the Strategic Report on pages 7 to 10 for
more details). This included:
-- Considering our capital structure.
-- Raising additional equity.
-- Discussing and approving portfolio acquisitions.
-- Reviewing conflicts of interest register and significant shareholdings.
-- Reviewing the Risk Register.
-- Considering our culture and how it aligns with the Company's purpose.
-- Approval of quarterly NAV and dividend.
-- Approval of the change in Investment Manager.
-- Approval of the interim report.
-- Monitoring performance of investments, risks and market conditions
-- Review of financial results against budget and cash flow
forecasts including dividends declared and forecast.
Board of Directors
Patrick Cox (Chairman)
Mr Cox has significant board experience and is currently the
Chairman of the Public Interest Committee for KPMG Ireland, a
member of the Appointment Advisory Committee for the European
Investment Bank, Chairman of Supernode Ltd, a non-executive director
of Appian Asset Management Ltd and a non-executive director Ecocem
Ltd. He also sits on the Boards of various think tanks and not-for-
profit organisations, including as a Senior Fellow and Board
Member of the Institute for International and European Affairs,
Ireland, a Board Member of the Third Age Foundation Ireland,
and President of Alliance Franc aise Dublin. He was formerly
the President of the European Parliament from 2002 - 2004, having
been a Member of the European Parliament for Munster, Ireland
from 1989 to 2004 and is now the European Coordinator for the
Scandinavian- Mediterranean TEN-T Core Network Corridor, appointed
by the European Commission. He has been bestowed National Honours
by Presidents of Austria, Bulgaria, Estonia, Italy, Latvia, Lithuania
and Romania, and is a Commander of the Legion of Honour, France.
He is a graduate of Trinity College, Dublin and holds Honorary
Doctorates from Trinity College Dublin, the National University
of Ireland, the University of Limerick, the Open University and
the American College Dublin.
Mr Cox was appointed on 22 nd February 2018 and has been a Director
to date. He sits on the Remuneration & Nomination Committee,
the Audit Committee and the Management Engagement Committee .
Ms Caroline Banszky
Ms Banszky is currently a non-executive director of 3i Group
plc, where she is the Chairman of the Audit and Compliance Committee
and a member of the Remuneration Committee, and a non-executive
director of IntegraFin Holdings plc where she is Chairman of
the Audit and Risk Committee. She is a past Committee member
of the Association of Investment Companies (AIC) Self-Managed
Investment Trusts, a director and General Committee member of
The Caledonian Club Trustees Ltd, a director of the AllChurches
Trust Limited and a member of their investment committee, a director
of the UK Stem Cell Foundation and a member of the Investment
Committee of The Open University. Prior to this, for 15 years
to August 2016, she was the CEO of The Law Debenture Corporation
plc. Between 1997 and 2002, she was the COO of SVB Holdings plc
(now Novae Group plc, a Lloyd's listed and integrated company).
Additionally, from 1981 to 1997, Ms Banszky worked at N.M. Rothschild
& Sons Ltd, where she held various senior management roles including
Finance Director and CFO. Ms Banszky is a graduate of the University
of Exeter and is a Chartered Accountant, having trained at Peat
Marwick & Mitchell (now KPMG).
Ms Banszky was appointed on 22(nd) February 2018 and has been
a Director for 2 years and 1 month. She is the Chairman of the
Audit Committee sits on the Remuneration & Nomination Committee,
and the Management Engagement Committee.
Malcolm King
Mr King has had a varied career in financial services, including
over 30 years in investment management. For 10 years Mr King
was the investment manager at Finsbury Asset Management where
he was responsible for the investments of seven investment trusts.
Subsequently he moved to J O Hambro Capital Management where
he was director and investment manager of two investment trusts
and a number of other portfolios. From 2004 until his retirement
in 2016, Mr King worked at Investec Asset Management where he
was the co-manager of various multi-asset funds invested in internal
and external funds, including closed-ended funds. A Chartered
Accountant, having trained at Peat, Marwick & Mitchell (now KPMG),
he is currently a non-executive director of Henderson Opportunities
Trust and Ecofin Global Utilities & Infrastructure Trust plc.
He writes regularly for MoneyWeek as well as having a number
of unpaid commitments. Mr King is an economics graduate of Trinity
College, Cambridge.
Mr King was appointed on 22(nd) February 2018 and has been a
Director for 2 years and 1 month. He sits on the Remuneration
& Nomination Committee, the Audit Committee and the Management
Engagement Committee.
Thomas Murley
Mr Murley has been involved in investing in renewable energy
projects for over 25 years in both Europe and the United States.
From 2004 to 2016 Mr Murley was a director at HgCapital, a London-based
private equity firm, where he established its renewable energy
investment fund business which raised and invested over US$1
billion in equity in over 70 EU wind, solar, biomass and hydroelectric
projects. From 2016 to 2018 Mr Murley continued to act as Chairman
and Senior Advisor to the HgCapital Renewable Energy team, which
spun out of HgCapital in December 2017 and is now trading as
Asper Investment Management, serving on investment and portfolio
committees. In 2012 Mr Murley was appointed as a non-executive
director to the inaugural board of the UK Green Investment Bank,
where he also served on the investment committee. Mr Murley remained
on the Board until the privatisation of the Green Investment
Bank in August 2017. In October 2016 he was appointed as an independent
non-executive director of Ameresco Inc., a renewable energy and
energy efficiency company listed on the New York Stock Exchange.
Mr Murley also serves as an independent investment committee
member for two private renewable energy investment funds, one
based in New York and the other in Amman, Jordan. From 1993-2003
Mr Murley was a lawyer and later Managing Director of EIF Group
in Boston Massachusetts, one of the first energy infrastructure
funds, where he was responsible for equity investments and renewable
and conventional power projects. Mr Murley was appointed a Director
of JCM Power Ltd in September 2019. Mr Murley has a degree in
History from Northwestern University in Evanston, Illinois and
a Law Degree, with honours, from Fordham University in New York.
Mr Murley was appointed on 22(nd) February 2018 and has been
a Director for 2 years and 1 month. He sits on the Remuneration
& Nomination Committee, the Audit Committee and the Management
Engagement Committee.
Information on the Investment Manager
The Company is managed by Gore Street Capital Limited which is
authorised and regulated by the UK's Financial Conduct Authority
("FCA") as a full scope Alternative Investment Fund Manager (the
"Investment Manager"). The Investment Management team has over 75
years of private equity and renewables experience and its offices
are located in the UK.
The Investment Manager is responsible for deal origination,
execution and asset management of the portfolio in accordance with
the Company's investment objectives and policy. The Board has
delegated authority to the AIFM to acquire or dispose of assets
without seeking further approval from the Board provided that the
Board is given the opportunity to consider each acquisition or
disposal before it is concluded.
Once a potential project which falls within the Company's
investment policy has been identified, and the Investment Manager
wishes to proceed with the acquisition of such project, its
Investment Committee approval is required to confirm that
financial, legal and technical diligence suggests that the proposed
transaction is consistent with the Company's investment policy.
The Investment Committee
Frank Wouters is a non-executive member of the Board of Gore
Street Capital. He is a Director of the EU-GCC Clean Energy Network
which fosters clean energy partnerships between EU and GCC energy
stakeholders. Previously he led the implementation of electricity
projects worth more than $3 billion at Abu Dhabi's government-owned
low-emissions project, Masdar and was the Deputy Director General
of the International Renewable Energy Agency (IRENA).
Suminori Arima is a Managing Director at Gore Street Capital.
He previously led renewable energy transactions as Managing Director
of Kleinwort Benson and has worked as MD of RHJ International
SA in Tokyo (parent company of Kleinwort Benson), responsible
for PE investment management for over $1B of AuM and JP Morgan
and McKinsey & Company.
Alex O'Cinneide is the founder and CEO of Gore Street Capital
and Chairman of the Investment Committee. His prior works includes
acting as Managing Director and Head of Europe for Paladin Capital,
a Senior Advisor to Kleinwort Benson Bank, serving on the Investment
Committee of IndoChina Capital and leading investments for Masdar,
Abu Dhabi's USD15 Billion SWF. He is a trustee of the London
Irish Centre, a UNICEF Advisor and chair of its Climate Change
Committee, a visiting researcher to the Energy Policy Group at
Cambridge University, a Fellow of the Royal Geographical Society,
and the Vice Chair of the Board of the Biomimicry Institute.
Approach to risk management and internal control
The Directors acknowledge their responsibility for maintaining
the Company's system of internal control and risk management, in
order to safeguard the Company's assets. This system is designed to
identify, manage, and mitigate the financial, operational and
compliance risks that are inherent to the Company, and to manage
rather than eliminate the risk of failure to achieve business
objectives. As such, it can only provide reasonable, but not
absolute, assurance against material misstatement or loss.
As part of each quarterly Board meeting during the period, the
Directors reviewed the financial position of the Company and
assessed any risks in relation to the Company's business model and
the Company's future performance, liquidity and solvency. To
facilitate this process the Investment Manager produced financial
reports, which included the latest management accounts, a review
and report on the Company's financial model, substantiation of any
dividend payments and a general update on the financial health of
the Company.
The Board considered whether the Company should employ an
internal audit function during the period and concluded that, due
to the Company's structure, the nature of its activities, and
taking into account the controls already in place and, more
particularly, the external service already provided by the
Administrator and the Manager, an internal audit function was not
necessary.
As part of the internal risk review, we identified that whilst
the Administrator has its own internal audit performed on an annual
basis, from which the Company reviews any findings and takes
particular comfort, the Company should also independently assess
whether these controls are sufficient and if they operate
effectively.
Internal Control
Although the Board is ultimately responsible for safeguarding
the assets of the Company, the Board has delegated, through written
agreements, the day to day operation of the Company (including the
Financial Reporting Process to the following advisers):
Investment Advisor: Gore Street Capital Limited
Investment Manager: Mirabella Financial Services LLP (up until
30 December 2019)
Investment Manager: Gore Street Capital Limited (with effect
from 31 December 2019)
Administrator: JTC (UK) Limited (up until 31 March 2020)
Administrator: Sanne Group (UK) Limited (with effect from 1
April 2020)
Company Secretary: JTC (UK) Limited
The Board keeps under review the effectiveness of the systems of
internal control and risk management, ensuring that the procedures
to be followed by the advisers and themselves are in place to
ensure that the controls remain relevant and were in operation
throughout the year.
The Company's principal risks and uncertainties are detailed on
pages 30 to 32 of this report. As further explained in the Audit
Committee Report, the risks of the Company are outlined in a risk
matrix which was reviewed and updated during the period. The Board
continually reviews its policy setting and updates the risk matrix
at least annually to ensure that procedures are in place with the
intention of identifying, mitigating and minimising the impact of
risks should they crystallise. The Board relies on reports
periodically provided by the Investment Manager, Investment
Advisor, and the Administrator regarding risks that the Company
faces.
As part of its regular risk assessment procedures, the Board
takes account of the significance of environmental, social and
governance matters to the business of the Company. The Board has
identified and assessed the significant ESG risks to the Company's
short and long-term value, as well as the opportunities to enhance
value that may arise from an appropriate response. Further
information on the Company's approach to ESG can be found on page
8.
When required, experts are employed to gather information,
including tax and legal advisors. The Board also regularly monitors
the investment environment and the management of the Company's
portfolio, and applies the principles detailed in the internal
control guidance issued by the FRC. The principal features of the
internal control systems which the Investment Manager, Investment
Advisor and the Administrator have in place in respect of the
Company's financial reporting include:
-- Internal reviews of all financial reports.
-- Review by the Board of financial information prior to its
publication.
-- Authorisation limits over expenditure incurred by the
Company.
-- Review of valuations.
-- Authorisation of investments.
Whistleblowing
The Board has considered the UK Code recommendations in respect
of arrangements by which staff of the Investment Manager, Company
Secretary or Administrator may, in confidence, raise concerns
within their respective organisations about possible improprieties
in matters of financial reporting or other matters. It has
concluded that adequate arrangements are in place for the
proportionate and independent investigation of such matters and,
where necessary, for appropriate follow up action to be taken
within their organisation.
Relations with Shareholders
The Company places great importance on communication with its
Shareholders, and welcomes the views of Shareholders. The
Investment Manager is available at all reasonable times to meet
with principal Shareholders and key sector analysts. The Chairman,
the Senior Independent Director and other Directors are also
available to meet with Shareholders if required. All Shareholders
have the opportunity to put questions to the Company at the
registered address.
The Company's AGM is scheduled to be held on 12 August 2020 and
notice of the meeting is published accompanying the Annual Report
and Accounts. Given the unprecedented circumstances, the Board will
be moving forward with the AGM but has decided to put in place
contingency arrangements that mean the AGM will not follow its
usual format. In so doing, the Board is relying on the provisions
of the Corporate Insolvency and Governance Act 2020. Only the
statutory, formal business (consisting of voting on the resolutions
proposed in the Notice of AGM) to meet the minimum legal
requirements will be conducted and the AGM will proceed as set out
below:
-- the AGM will be held virtually via videoconference, there
will therefore be no place of meeting;
-- there will be no presentation at the AGM,
-- Shareholders cannot attend the meeting in person, there will
therefore be no opportunity to ask questions of the Board or of the
Investment Manager at the meeting (although there will be an
opportunity to ask questions in advance of the meeting and further
information in relation to this is given below);
-- the votes on the resolutions to be proposed at the AGM will
be conducted on a poll and the chairman of the meeting will vote on
a poll in accordance with the proxies held; and
-- the results of the proxy votes will be published immediately
following the conclusion of the AGM by way of a stock exchange
announcement and on the Company's website.
Although this is a very unusual approach, the Board considers
that given the social distancing measures currently in force and in
light of the latest published government guidance and provisions of
the Corporate Insolvency and Governance Act 2020, proceeding with a
"technical" AGM is in the best interests not only of the Company,
but also of each of its individual shareholders.
The Board will continue to monitor the Government's advice and
urges all Shareholders to comply with any restrictions in place at
the time of the AGM. If circumstances change and if social
distancing measures are further relaxed before the AGM, the Company
may consider amending the proposed format of the AGM. In such
circumstances the Company will notify shareholders of any changes
to the proposed format for the AGM as soon as possible via RIS and
its website ( www.gsenergystoragefund.com )
The Board receives comprehensive Shareholder reports from the
Company's Registrar and regularly monitors the views of
Shareholders and the Shareholder profile of the Company. The Board
is also kept fully informed of all relevant market commentary on
the Company by the Investment Manager.
Shareholders may also find Company information or contact the
Company through its website:
www.gsenergystoragefund.com
The terms of reference of the Committees and the conditions of
appointment of non-executive directors are available to
Shareholders on request.
Patrick Cox
Director
Date: 15 July 2020
3.4 Audit Committee's Report
The Audit Committee (the Committee) is chaired by Caroline
Banszky and comprises all the directors. The Committee operates
within clearly defined terms of reference and includes all matters
indicated by Rule 7.1 of the UK FCA's DTRs and the AIC Code. The
terms of reference were reviewed during the year under review and
were updated to enhance the Committee's scope to consider key risks
facing the Company. The Board is satisfied that the Committee is
properly constituted with at least one member of the Committee who
is a chartered accountant with recent and relevant financial
experience.
The Committee plays an important role in the governance of the
Company, with its principal activities focused on the integrity of
financial reporting, quality and effectiveness of external audit,
risk management and the system of internal control.
The Committee meets a minimum of twice a year, and at such other
times as the Committee shall require. The Administrator and
representatives of the Investment Manager may be invited to attend
meetings as and when deemed appropriate.
Meetings
We met three times during the financial year ended 31 March
2020. These meetings were attended by the committee members, as
well as representatives of the Investment Manager, Gore Street
Capital Limited, the Company Secretary, JTC (UK) Limited, the
Independent Auditor, EY LLP and the independent valuer BDO LLP.
The Audit Committee operates within clearly defined terms of
reference which were put in place in this term, the first period of
operation, and approved by the Board. The terms of reference
include all matters indicated by Disclosure Guidance and
Transparency Rule 7.1 and the AIC Code.
Third parties may be invited to attend meetings as and when
deemed appropriate.
Summary of the Role and Work of the Audit Committee
The function of the Committee is to ensure that the Company
maintains the highest standards of integrity, financial reporting,
internal and risk management systems and corporate governance. The
main duties of the Audit Committee are:
1. Monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the Company's
financial performance and reviewing significant financial reporting
judgements contained in them.
2. Reporting to the Board on the appropriateness of the Board's
accounting policies and practices including critical judgement
areas and going concern and the viability statements.
3. Reviewing the valuation of the Company's investments prepared
by the Investment Manager and their underlying assumption, we
review the work of the independent valuer BDO LLP bi-annually prior
to making a recommendation to the Board on the valuation of the
Company's investments.
4. Meeting regularly with the Auditor to review their proposed
audit plan and the subsequent audit report, and assess the
effectiveness of the audit process and the levels of fees paid in
respect of both audit and non-audit work.
5. Making recommendations to the Board in relation to the
appointment, re-appointment or removal of the Auditor, and
approving their remuneration and the terms of their engagement.
6. Monitoring and reviewing annually the Auditor's independence,
objectivity, expertise, resources, qualification and non-audit
work.
7. Reviewing the effectiveness of the accounting and internal
control systems of the Company and considering annually whether
there is a need for the Company to have its own internal audit
function.
8. Reviewing and considering the UK Code, the AIC Code, the FRC
Guidance on Audit Committees and the Company's institutional
investors' commitment to the UK Stewardship code; and
9. Reviewing the risks facing the Company and monitoring the risk matrix.
The Audit Committee is required to report formally to the Board
on its findings after each meeting on all matters within its duties
and responsibilities.
Overview
During the year, the Audit Committee has had regular contact and
meetings with the Investment Advisor, the Administrator and the
Independent Auditor. These meetings and discussions focused on, but
were not limited to:
1. A detailed analysis of the Company's quarterly NAVs.
2. Reviewing the risk matrix of the Company.
3. Reviewing the Company's corporate governance framework.
4. Reviewing the internal controls framework for the Company,
and those of the Administrator and the Investment Advisor with
respect to the Company.
5. Considering the ongoing assessment of the Company as a going concern.
6. Considering the principal risks which took into consideration
the effects of the Covid-19 pandemic and period of assessment for
the longer-term viability of the Company.
7. Reviewing the detailed stress tests for the viability of the
Company to ensure that going concern basis is appropriate.
8. Monitoring compliance with AIFMD, the AIC code and other
regulatory and governance frameworks.
9. Reviewing and approving the audit plan in relation to the
audit of the Company's Annual Report and financial statements.
Financial Reporting
The primary role of the Committee in relation to financial
reporting is to review with the Investment Advisor, the
Administrator and the Auditor the appropriateness of the half-year
report and Annual Report and financial statements, concentrating
on, amongst other matters:
-- The quality and acceptability of accounting policies and practices.
-- The clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements.
-- Amendments to legislation and corporate governance reporting
requirements and accounting treatment of new transactions in the
year.
-- The impact of new and amended accounting standards on the Company's financial statements.
-- Whether the Audit Committee believes that proper and
appropriate processes and procedures have been followed in the
preparation of the half year report and Annual Report and financial
statements.
-- Whether the Annual Report and financial statements, taken as a whole, is fair, balanced, and understandable and provides the information necessary for shareholders to assess the Company's performance, going concern, viability, business model and strategy.
-- Material areas in which significant judgements and estimates
have been applied or there has been discussion with the Auditor;
and
-- Any correspondence from regulators in relation to the Company's financial reporting.
EY LLP, the Independent Auditor, attended the formal Audit
Committee meetings held during the period. Matters discussed
include the Independent Auditor's assessment of interactions with
the Investment Manager, Investment Manager and the Administrator,
confirmation that there has been no restriction in scope placed on
them, the independence of their audit and how they have exercised
professional skepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the Audit
Committee meeting in advance of the year end, the Audit Committee
discussed and approved the Independent Auditor's audit plan. The
Audit Committee considered:
-- the more bespoke disclosure regarding the assessment of going
concern and long term viability for the required statements by the
Board which took into consideration the effects of Covid 19
pandemic and having completed the assessment do not consider it to
be a key area of risk for the Company; and
-- identified the carrying value of investments as a key area of
risk of misstatement in the Company's financial statements.
Assessment of the Carrying Value of Investments
The Company's accounting policy is to designate investments at
fair value. As a consequence, the Committee reviewed valuation
policies processes and application. The most influential area of
judgement within the Accounts relates to the valuation of these
investments. The key estimates and assumptions include the useful
life of the assets, revenue estimates, the discount factors
utilised, the rate of inflation, and the price at which the power
and associated benefits can be sold. In particular, the Audit
Committee carefully considered the impact of the change in Capacity
Market Income recognition and associated assumptions in relation to
the valuation of the assets that have been included in the 31 March
2020 valuation. At the year end, the Company engaged BDO as
independent valuation experts/advisors to help the committee form a
view as to the reasonableness as to the valuations.
The uncertainty involved in determining the fair value
investment valuations represents significant risk in the Company's
financial statements. An inherent risk of management override is
present as the Investment Manager's fee is calculated based on NAV
(as disclosed in note 22 to the financial statements). The
Investment Manager is responsible for calculating the NAV with the
assistance of the Administrator, prior to approval by the
Board.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV. This analysis highlights any movements and
assumption alterations to the NAV of the previous quarter. NAV
movements and the principles behind changes in assumptions are
considered and challenged by the Chairman of the Audit Committee
and subsequently approved by the Board. The Audit Committee is
satisfied that the key estimates and assumptions used within the
valuation model are appropriate and that the investments have been
fairly valued.
Internal Control
The Audit Committee has established a set of ongoing processes
with a view to satisfying particular needs of the Company with
respect to managing the risks to which it is exposed. The process
is one whereby the Investment Manager has identified the key risks
to which the Company is exposed and recorded them on a risk matrix
together with the controls employed to mitigate these risks. The
Audit Committee is responsible for reviewing the risk matrix and
associated controls before recommending to the Board for
consideration and approval. The Audit Committee is also responsible
for challenging the Investment Manager's assumptions to ensure a
robust internal risk management process. By their nature, these
procedures provide a reasonable, but not absolute, assurance
against material misstatement or loss. Regular reports are provided
to the Audit Committee highlighting material changes to risk
ratings.
The Audit Committee discussed and reviewed the internal controls
in place at the Investment Advisor and the Administrator.
Discussions were centered around assurances at operational level;
internal oversight; and independent objective assurance.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial, regulatory and other risks, with
particular regard to the protection of the interests of the
Company's Shareholders.
Internal Audit
The Audit Committee has concluded that an Internal Audit
function specific to the Company is not considered a necessary
requirement at this juncture.
External Auditor
Effectiveness of the Audit Process
The Audit Committee assessed the effectiveness of the audit
process by considering EY LLP's fulfilment of the agreed audit
plan. This assessment included the review of reporting presented to
the Audit Committee by EY LLP and the discussions at the Audit
Committee meeting, highlighting such issues that arose during the
course of the audit. In addition, the Audit Committee also sought
feedback from the Investment Manager and the Administrator on the
effectiveness of the audit process. For this financial period, the
Audit Committee was satisfied that there had been appropriate focus
and challenge on the primary areas of audit risk and assessed the
quality of the audit process to be good.
Non-Audit Services
The Audit Committee seeks to ensure that any non-audit services
provided by the Independent Auditor do not conflict with their
statutory and regulatory responsibilities, as well as their
independence, before giving written approval prior to their
engagement.
The Audit Committee has a policy regarding the provision of
non-audit services by the external Auditor which precludes the
Independent Auditor from providing any of the prohibited non-audit
services as specified in the FRC Revised Ethical Standard December.
The Audit Committee monitors the Company's expenditure on non-audit
services provided by the Company's Auditor, who should be engaged
for non-audit services in circumstances where they are deemed to be
the most commercially viable supplier, and prior approval of the
Audit Committee has been sought. The Audit Committee was satisfied
that the provision of these Non-Audit Services did not provide
threats to the Independent Auditors independence.
Independence
The Audit Committee is required to consider the independence of
the Independent Auditor. In fulfilling this requirement, in
addition to its own internal assessment, the Audit Committee has
considered a report from EY LLP describing its arrangements to
identify, report and manage any conflict of interest and the extent
of non-audit services provided by them. The Audit Committee has
concluded that it considers EY LLP to be independent of the
Company.
Annual General Meeting
Due to the closed nature of the Company's AGM, it is not
anticipated that the Chairman of the Audit Committee will be
present at the Company's AGM to answer questions on the Audit
Committee's activity and matters within the scope of the Audit
Committee's responsibilities.
Fair, Balanced and Understandable Statements
The production and audit of the Company's Annual report and
accounts is a comprehensive process, requiring input from a number
of contributors. To reach a conclusion on whether the Company's
annual report and accounts, taken as a whole, are fair, balanced
and understandable, as required under the AIC Code, the Board
requested that the Audit Committee advise on whether we considered
that the Annual Report fulfilled these requirements.
In outlining our advice, we considered the detailed reviews
undertaken at various stages of the production process by the
Investment Manager, third party independent valuer, BDO LLP,
Administrator and the Audit Committee, which are intended to ensure
consistency and overall balance. We then discussed with the
Investment Manager and Administrator the process of how this was
put together and received a series of drafts of the Company's
Annual report and accounts. These were scrutinised and discussed
thoroughly at two separate Audit Committee meetings. Additional
comfort was also sought from the Investment Manager and
Administrator in relation to the conclusion reached by the
Board.
As a result of the work performed, we have concluded and
reported to the Board that the Annual Report and accounts for the
period ended 31 March 2020, taken as a whole, are fair, balanced
and understandable and provides the information necessary for
Shareholders to assess the Company's performance, business model
and strategy.
Effectiveness of the committee
A detailed and rigorous evaluation of the Committee was
undertaken as part of the overall evaluation. The skills and
experience of the members was found to appropriate, including
recent and relevant financial experience. The Committee will be
concentrating on personal development and training as the
regulatory focus on audit and Audit Committees increases. The
Committee was found to be functioning effectively.
Caroline Banszky
Chairman of the Audit Committee
Date: 15 July 2020
3.5 Remuneration & Nomination Committee Report
The Board has prepared this report in line with the AIC Code as
well as the requirements of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 (SI2008/410) and
the Companies Act 2006.
Under the requirements of Section 497 of the Companies Act 2006,
the Company's Auditor is required to audit certain disclosures
contained within the report. These disclosures have been
highlighted and the audit opinion thereon is contained within the
Auditor's Report on pages 75 to 84.
Annual Statement from the Chairman of the Remuneration &
Nomination Committee
The Committee comprises of the full Gore Street Energy Storage
Fund Plc Board with Pat Cox as Chair and consists solely of
non-executive directors. All of the Directors are independent from
the Investment Manager.
It has been a fairly straight forward year for the Committee,
despite the wider market changes in corporate governance. We have
conducted a gap analysis of the new governance and regulatory
requirements against our current practices and reporting and it is
clear that the majority of the changes to remuneration reporting
and approvals do not apply to the Company as we have no executive
directors or employees. We made some minor associated changes to
the Committee's terms of reference.
We concluded that there is no need to change the remuneration
policy this year, the policy being approved in 2019.
In accordance with the articles of association and the AIC Code,
we considered the current levels of remuneration and whether they
reflect the time commitment and responsibilities the Company calls
for. We decided that an increase would be considered during 2020
matched to reflect the growth of the Company. We have asked the
Investment Manager to conduct a peer review to ensure that any
change matches current market trends.
Role
The committee has two roles with various functions, the most
important of which are:
(1) Remuneration
The Committee has responsibility for reviewing the remuneration
of the Directors, specifically reflecting the time commitment and
responsibilities of the role and meets at least annually. The
Committee also undertakes external comparisons and reviews to
ensure that the levels of remuneration paid are broadly in line
with industry standards and members have access to independent
advice where they consider it appropriate.
During the year neither the Board nor the Committee has been
provided with external advice or services by any person but has
received industry comparison information from the Investment
Manager in respect of the Directors' remuneration. The remuneration
policy set by the Board is described below. Individual remuneration
packages are determined by the Remuneration and Nomination
Committee within the framework of this policy.
The Directors are not involved in deciding their own individual
remuneration, with each Director abstaining from voting on their
own remuneration.
Remuneration Policy
Below is Gore Street's remuneration policy. This policy was
adopted on 14 August 2019 and will next be put to a Shareholder
vote at the 2022 AGM.
The Company's policy is to determine the level of Directors'
fees with due regard to the experience of the Board as a whole, the
time commitment required, and to be fair and comparable to
non-executive directors of similar companies. The Company may also
periodically choose to benchmark Directors' fees with an
independent review to ensure they remain fair and reasonable.
Directors' fees will be adjusted from time to time and will be
subject to Shareholder approval in the subsequent AGM. The
Directors may elect to apply the cash amount equal to their annual
fee to subscribe for, or to purchase, ordinary shares. The
Directors are entitled only to their annual fee and their
reasonable expenses. No element of the Directors' remuneration is
performance related, nor does any Director have any entitlement to
pensions, share options or any long-term incentive plans from the
Company.
The Directors hold their office in accordance with the Articles
of Association and their appointment letters. No Director has a
service contract with the Company, nor are any such contracts
proposed. The Directors' appointments can be terminated in
accordance with the Articles of Association and without
compensation. Under the Company's Articles of Association, all
Directors are entitled to remuneration determined from time to time
by the Board and approved by the Shareholders.
Details of Directors' Remuneration (Audited)
The emoluments in respect of qualifying services of each person
who served as a Director during the period are shown below. All the
Directors are paid a basic annual fee of GBP18,000 quarterly in
arrears for their services. In addition to this fee, Pat Cox is
paid an additional GBP15,000 per annum for his role as Chair of the
Board. Caroline Banszky is paid an additional GBP3,000 per annum
for serving as Chair of the Audit committee. No Director has waived
or agreed to waive any emoluments from the Company in the current
year. No other remuneration was paid or payable by the Company
during the current period, nor were any expenses claimed by or paid
to them other than for expenses incurred wholly, necessarily and
exclusively in furtherance of their duties as Directors of the
Company.
Director Period ended 31 March Period ended 31 March
2020 2019
(GBP) (GBP)
Pat Cox* 33,000 29,083
Caroline Banszky** 21,000 18,853
Malcolm King 18,000 16,295
Tom Murley 18,000 16,295
Total 90,000 80,526
*This includes GBP15,000 per annum in respect of serving as
Chair of the Board.
**This includes GBP3,000 per annum in respect of serving as
Chair of the Audit committee.
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 31 March 2020 were as
follows:
Director Number of Percentage of Issued
ordinary shares share Capital
Pat Cox 49,996 0.10%
Caroline Banszky 35,000 0.07%
Malcolm King 25,000 0.05%
Tom Murley 30,000 0.06%
Total 139,996 0.28%
All the Directors' share interests shown above were held
beneficially.
Approval of the Remuneration Report
An ordinary resolution for the approval of this Directors'
Remuneration Report will be put to Shareholders at the forthcoming
AGM.
Company-wide considerations
There are no executive directors, nor are there any employees of
the Company, so there are no statements to make on any
consultations, comparisons, or pay and employment conditions within
the Company.
Recruitment
The same diversity policy will be applied for any recruitment
purposes.
Statement of consideration of shareholder views
The levels of remuneration were set out in the Prospectus and
did not receive any negative comment from the investment community
before or after the IPO. The AGM will give the opportunity for
opinions to be aired and demonstrated formally through the voting
process and will provide the basis for future discussions and
developments.
Payments to past directors or for loss of office
There are no payments to disclose. Under the terms of the
Directors' Remuneration Policy there would be no compensation for
loss of office.
Statement of implementation of remuneration policy for financial
year 2020
The remuneration levels for the Board were set at the time of
the IPO in May 2018 at a reduced level to reflect the amount of
equity raised of GBP30m. There have been no changes since that
time. The market capitalisation of the company is now in excess of
GBP52m and as such it is considered appropriate to review the
amounts that the Board is paid. At the Remuneration and Nomination
Committee Meeting held on 27 February 2020, a review of the current
level of remuneration for each individual director took place. It
was agreed that Directors' Remuneration would be adjusted to bring
in line with the Company's increased NAV growth with effect from 1
April 2020. It is envisaged that Directors' Remuneration will be
reviewed periodically and adjusted so that it increases as the
Company raises additional equity. The adjusted remuneration for
2020/2021 is:
Director Annual Fee 2019/20 Annual Fee 2020/2021
GBP
Pat Cox 33,000 37,000
Caroline Banszky 21,000 25,000
Malcolm King 18,000 21,000
Tom Murley 18,000 21,000
External Advisors
The Board has not received any external advice with respect to
remuneration and has not appointed an external remuneration
Advisor.
Statement of voting at general meeting
The Directors Remuneration Policy was put to a binding vote at
the AGM on 14 August 2019 and is due for renewal at the AGM in
2022. The Directors Remuneration Report was subject to an advisory
vote at the AGM on 14 August 2019.
The voting outcome is set out in the table below:
Resolution approve directors' Resolution approve
remuneration report remuneration policy
Votes for* 19,676,187 19,676,187
% 97.77% 97.77%
Votes against 447,015 447,015
% 2.22% 2.22%
Total votes validly
cast 20,123,202 20,123,202
Total votes cast as
a percentage of issued
share capital 65.76% 65.76%
Votes withheld+ 9,500 9,500
*includes discretionary vote
+A vote withheld is not a vote in law is not counted in the
calculation of votes for or against a resolution.
(2) Nomination
Reviewing annually the structure, size, and composition
(including the skills, knowledge, and experience) required of the
Board and making recommendations to the Board with regard to any
necessary changes.
Considering the succession planning and replenishment of
Directors as the Board and Company progresses, identifying and
nominating candidates to fill Board vacancies as and when they
arise and taking into account the challenges and opportunities
facing the Company, and what skills and expertise are needed on the
Board for the future.
Reviewing annually the time required from the Directors and
using performance evaluation to assess whether the Directors are
spending enough time on their duties.
Diversity
The Board recognises the benefits that diversity brings. Our
approach is to appoint the best possible candidate, considered on
merit against objective criteria and in accordance with the
Equality Act 2010, rather than to set quotas for a particular
aspect that may deflect from achieving this fundamental target
every time. At the date of this report, 25% of the Board was
female.
In light of the ongoing development in governance best practice,
the Committee decided that the Company should have a formal
diversity policy, which the Board adopted on 19 September 2018.
Diversity includes and makes good use of, differences in knowledge,
and understanding of relevant diverse geographies, peoples, and
their backgrounds including race or ethnic origin, sexual
orientation, gender, age, disability or religion. Appointments to
the Board will be made on merit and objective criteria, in the
context of complimenting and expanding the skills, knowledge and
experience of the Board as a whole.
Board Evaluation
A formal and rigorous board evaluation was conducted internally
this year. It was based on a questionnaire covering a range of
board level topics, with accompanying reviews of each Committee,
which addressed issues specific to that Committee, as well as
self-assessments by the Directors. The results were reviewed and
discussed by the Remuneration and Nomination Committee and then the
Board.
It was concluded that the Board members work effectively
together to achieve the Company's objectives and that each director
has the time and continues to contribute effectively.
The following actions were highlighted, and actions initiated
where appropriate:
-- Pressure needs to be maintained on clarity regarding strategy
and decision making and more streamlined processes.
-- The Audit Committee needs to introduce more rigor in meeting
with the auditor without the Investment Manager.
-- As part of good practice, the Board should contact the top
shareholders, reminding them that they are available for
discussion.
-- Being a relatively new board the need to consider succession
planning is not currently a priority but will need to be on the
Nomination Committee's agenda for the future.
Patrick Cox
Chairman of the Remuneration and Nomination Committee
Date: 15 July 2020
3.6 Management Engagement Committee Report
Introduction
This has been a year of transition in how the Company is
managed. Following approval by the FCA on 1 January 2020, Gore
Street Capital Limited, who had been our Investment Advisor, was
appointed as the UK Alternative Investment Fund Manager ("AIFM") to
the Company. The Board were supportive of the proposed change which
would streamline how the Company is managed and do so at lower
cost. On 1 January 2020, Mirabella Financial Services LLP
("Mirabella") ceased to act as Investment Manager for the
Company.
The Management Engagement Committee has a membership comprised
of all the independent directors of the Company: Caroline Banszky,
Malcolm King, Thomas Murley and me, Patrick Cox (Chair).
The Management Engagement Committee will meet as and when
required, but formally at least once a year. It met on 27 February
2020. For the year under review, we have reviewed the performance
of the key service providers and compliance by the Investment
Advisor and AIFM.
JTC (UK) Limited attend our meetings as Secretary to the
Committee. In addition, we will invite representatives of the
Investment Advisor, the Investment Manager and our Independent
Auditor to attend as required.
Role
The committee has several functions, the most important of which
are:
-- To review annually the compliance by the Investment Advisor
and AIFM with the Company's investment policy, as established by
the Board, and with the Advisory and Services Agreement entered
into between the Company, the AIFM and the Investment Advisor.
-- To review annually the performance of any other key service providers to the Company.
Investment Advisor and AIFM
Gore Street Capital Limited served as Investment Advisor during
the year, and as AIFM to the Company from 31 December 2019. Under
the terms of the Advisory and Services Agreement, the Investment
Advisor provided certain advisory services to the Group
including:
-- Ongoing monitoring of the assets and asset management; and
-- Sourcing potential opportunities in which the Company may invest.
Review of performance
The Committee reviewed the performance of the Investment
Advisor, including the acquisitions made during the year, the
processes in place to achieve these and the quality of advice and
information provided to the Board to make decisions. The Board
viewed the Investment Advisor's performance in these areas to be
overall satisfactory.
We have determined that the Investment Advisor's appointment
should continue, and asked the Board to ratify this decision, which
it has done.
Review of the remuneration of the Investment Manager
Under the terms of the Advisory and Services Agreement, the
Investment Advisor was entitled to a management fee together with
reimbursement of reasonable expenses incurred by it in the
performance of its duties.
The Investment Manager receives a management fee equal to one
percent of the NAV of the Company, and is also entitled to a
performance fee which is linked to share price at IPO plus a 7%
hurdle, and is set out in the Prospectus.
In addition, it receives a short-term fee for development and
management of assets through to completion of construction, for a
maximum term of one and one-half years.
The Investment Manager is paid a further fixed fee of GBP75,000
per annum to cover the incremental costs of providing additional
services as AIFM. The appointment of Gore Street Capital Limited as
AIFM will result in a saving to the Company of GBP15,000 per
annum
The Committee reviewed the fee arrangements, compared them with
comparable Investment Trusts and concluded that they were
reasonable. The Committee agreed to undertake a full review of the
Investment Manager's remuneration and terms and conditions in
2022.
Mirabella Financial Services LLP
During the period, Mirabella Financial Services LLP
("Mirabella") acted as AIFM to the Company up until 31 December
2019. Mirabella was appointed as AIFM to the Company to provide
portfolio and risk management services. In this role it provided
the customary services of discretionary investment management.
Under the terms of the AIFM Agreement, Mirabella was entitled to
an annual fee of GBP90,000 together with reimbursement of all costs
and expenses properly incurred by it in the performance of its
duties.
Administrator and Company Secretary
JTC (UK) Limited ("JTC") served as Administrator and Company
Secretary during the period.
Under the terms of the Administration Agreement, JTC is entitled
to:
(a) an annual fee in respect of the accounting and
administration services it will provide of GBP25,000.
(b) an annual fee in respect of the Company Secretary provision
of GBP35,000; and,
(c) an annual value fee of:
-- 0.1% of NAV to the extent that NAV is between GBP30m and GBP75m.
-- 0.05% of NAV to the extent that NAV is between GBP75m and GBP150m; and,
-- 0.04% of NAV to the extent that such NAV exceeds GBP150m.
Review of other service providers
The Committee also reviewed the service level of the other
service providers of the Company and concluded that performance was
satisfactory and that the relevant appointments should
continue.
Committee evaluation
An evaluation of the Committee was undertaken as part of the
overall evaluation. The Committee was found to be functioning
effectively.
Patrick Cox
Committee Chair
Date: 15 July 2020
4 FINANCIAL STATEMENTS
4.1 Statement Of Comprehensive Income
For the Year Ended 31 March 2020
Notes Period
Year Ended 31 March 2020 19 January 2018 to 31 March
2019
Revenue Capital Total Revenue Capital Total
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
Net gain / (loss)
on investments
at fair value
through profit
and loss 7 - 5,585,522 5,585,522 - (565,064) (565,064)
Investment income 8 915,111 - 915,111 139,341 - 139,341
Administrative
and other expenses 9 (1,711,360) - (1,711,360) (608,749) - (608,749)
Profit / (loss)
before tax (796,249) 5,585,522 4,789,273 (469,408) (565,064) (1,034,472)
Taxation 10 - - - - - -
Profit / (loss)
after tax and
profit / (loss)
for the year /
period (796,249) 5,585,522 4,789,273 (469,408) (565,064) (1,034,472)
Total comprehensive
income / (loss)
for the year /
period (796,249) 5,585,522 4,789,273 (469,408) (565,064) (1,034,472)
Profit / (loss)
per share (basic
and diluted) -
pence per share 11 11.78 (3.38)
All Revenue and Capital items in the above statement are derived
from continuing operations.
The Total column of this statement represents Company's Income
Statement prepared in accordance with IFRS. The return on ordinary
activities after taxation is the total comprehensive income and
therefore no additional statement of other comprehensive income is
presented.
The supplementary revenue and capital columns are presented for
information purposes in accordance with the Statement of
Recommended Practice issue by the Association of Investment
Companies.
The notes on pages 91 to 123 form an integral part of these
financial statements.
4.2 Statement of Financial Position
As at 31 March 2020
Company Number 11160422
Notes 31 March 2020 31 March
2019
(GBP) (GBP)
Non - Current Assets
Investments at fair value through
profit or loss 12 30,412,493 6,482,964
30,412,493 6,482,964
Current assets
Cash and cash equivalents 13 15,028,142 17,223,770
Trade and other receivables 14 4,963,527 4,616,613
19,991,669 21,840,383
Total assets 50,404,162 28,323,347
Current liabilities
Trade and other payables 15 713,659 207,510
713,659 207,510
Total net assets 49,690,503 28,115,837
Shareholders equity
Share capital 20 525,488 306,000
Share premium 20 19,707,058 67,476
Special reserve 20 186,656 186,656
Capital reduction reserve 20 25,516,500 28,590,177
Capital reserve 20 5,020,458 (565,064)
Revenue reserve 20 (1,265,657) (469,408)
Total shareholders equity 49,690,503 28,115,837
Net asset value per share 19 0.95 0.92
The annual financial statements were approved and authorised for
issue by the Board of directors and are signed on its behalf
by;
Patrick Cox
Chairman
Date: 15 July 2020
The notes on pages 91 to 123 form an integral part of these
financial statements.
4.3 Statement of Changes in Equity
For the Year Ended 31 March 2020
Share Share Special Capital Capital Revenue Total shareholders
capital premium reserve reduction reserve reserve equity
reserve reserve (GBP)
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
As at 1 April
2019 306,000 67,476 186,656 28,590,177 (565,064) (469,408) 28,115,837
Profit for the
year - - - - 5,585,522 (796,249) 4,789,273
Total comprehensive
profit for the
year - - - - 5,585,522 (796,249) 4,789,273
Transactions with owners
Ordinary shares
issued at a premium
during the year 219,488 20,235,032 - - - - 20,454,520
Share issue costs - (595,450) - 13,199 - - (582,251)
Dividends paid - - - (3,086,876) - - (3,086,876)
As at 31 March
2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
Capital reduction reserve and revenue reserves are available to
the Company for distributions to Shareholders as determined by the
Directors.
The notes on pages 91 to 123 form an integral part of these
financial statements.
Statement of Changes in Equity
For the Period 19 January 2018 (incorporation date) to 31 March
2019
Share Share premium Special Capital Capital Revenue Total shareholders
capital reserve reserve reduction reserve reserve equity
(GBP) reserve (GBP)
(GBP) (GBP) (GBP) (GBP) (GBP)
As at 19 January -
2018 - - - - - -
Loss for the period - - - - (565,064) (469,408) (1,034,472)
Total comprehensive
loss for the period - - - - (565,064) (469,408) (1,034,472)
Transactions with owners
Ordinary shares
issued at a premium
during the period 306,000 30,294,000 - - - 30,600,000
Share issue costs - (531,691) - - - (531,691)
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 - -
Dividends paid - - - (918,000) - (918,000)
As at 31 March
2019 306,000 67,476 186,656 28,590,177 (565,064) (469,408) 28,115,837
The notes on pages 91 to 123 form an integral part of these
financial statements.
4.4 Statement of Cash Flows
For the Year Ended 31 March 2020
Period
Year Ended 19 January
2018
Notes 31 March to 31 March
2020 2019
(GBP) (GBP)
Cash flows used in operating activities
Profit / (loss) for the year /
period 4,789,273 (1,034,472)
Net (profit) / loss on investments
at fair value through profit and
loss (5,585,522) 565,064
Increase in trade and other receivables (346,914) (4,616,613)
Increase in trade and other payables 506,149 207,510
Net cash used in operating activities (637,014) (4,878,511)
Cash flows used in investing activities
Purchase of investments (18,344,007) (8,561,656)
Proceeds from investments - return
of capital - 1,513,628
Net cash used in investing activities (18,344,007) (7,048,028)
Cash flows used in financing activities
Proceeds from issue of ordinary
shares at a premium 20,454,520 30,600,000
Share issue costs (582,251) (531,691)
Issue of redeemable preference
shares - 12,500
Redemption of redeemable preference
shares - (12,500)
Dividends paid (3,086,876) (918,000)
Net cash inflow from financing
activities 16,785,393 29,150,309
Net (decrease) / increase in cash
and cash equivalents for the year
/ period (2,195,628) 17,223,770
Cash and cash equivalents at the
beginning of the year / period 17,223,770 -
Cash and cash equivalents at the
end of the year / period 15,028,142 17,223,770
During the year, interest received by the Company totaled GBP634,192
(2019: GBP81,390).
The notes on pages 91 to 123 form an integral part of these
financial statements.
Notes to the Financial Statements
For the Year Ended 31 March 2020
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 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 and the
Republic of Ireland, although the Company will also consider
projects in North America and Western Europe.
2. Basis of preparation
Statement of compliance
The annual financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRSs") and
interpretations adopted by the European Union, and in accordance
with the Companies Act 2006 as applicable to companies using IFRS.
The Company has also adopted the Statement of Recommended Practice
issued by the Association of Investment Companies which provides
guidance on the presentation of supplementary information.
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.
The Company is an investment entity in accordance with IFRS 10
which holds all its subsidiaries at fair value and therefore
prepares separate accounts only.
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 annual report and
financial statements.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
2. Basis of preparation (continued)
The impact of the Coronavirus pandemic (COVID-19)
Given the impact of the COVID-19 pandemic and the associated
global lockdown, Gore Street Capital (the "Manager") on behalf of
the Company has undertaken an assessment of the impact and risk to
the Fund's viability over the next three years.
The full human and economic impact of the COVID-19 pandemic and
resulting lock-down remains difficult to assess.
The Company's ability to generate revenue from its four
operational assets continues and is unaffected by the pandemic.
There was limited interruption in its construction activities for
the two new assets in Northern Ireland. In addition, the EPC for
the Northern Irish assets has reported that it anticipates short
term supply chain delays as a result of COVID-19. However, the
Company does not currently anticipate that the anticipated delays
will impact the assets' ability to meet the market deadlines for
commencement of service.
There has also been no interruption in contracting and design
work for the two new assets (Kilmannock and Kilteel) in the Republic
of Ireland.
The Directors have made an assessment of the going concern by
reviewing the current performance, business outlook and the likely
effects of COVID-19 in near term. A stress test analysis was
undertaken on liquidity, the adequacy of the Company to meet
its short-term obligations and its ability to remain operational
within a three year timeframe. As part of this going concern
assessment and stress testing, the Company assumed that the pandemic
will impact investment activity and that no capital growth beyond
the date of issue of this financial statement.
The going-concern analysis further assumes continued annual expenditure
at the rate of current expenditure and continued discretionary
dividend payments to shareholders at the target annual rate of
7 pence. With expenditure and discretionary dividends assumed
unchanged over the next 12 months, the Company will continue
to be operational and will have excess cash after payment of
its liabilities over the next 12 months.
The next general meeting and vote on the continuation of the
Company is scheduled for May 2023. The Company, holds no debts
or other contractual financial commitments.
After assessing the risks and reviewing the Company's liquidity
position, together with the forecasts of performance under various
scenarios, the Directors confirm that they have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as and when they fall due for the foreseeable
future.
.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amount of
assets, liabilities, income and expenses. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to the
accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
During the period the Directors considered the following
significant judgements, estimates and assumptions:
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.
-- Having assessed the criteria above and in their judgement,
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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
3. Significant accounting judgements, estimates and assumptions (continued)
Valuation of Investments
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. These estimates are discussed in more detail in note
17.
4. New and revised standards and interpretations
New and revised standards and interpretations
The accounting policies used in the preparation of the financial
statements have been consistently applied during the year ended 31
March 2020.
IFRIC 23: Uncertainty over Income Tax Treatments
In June 2017, the IASB issued guidance on the interpretation of
the accounting for income taxes when tax treatments involve
uncertainty, when applying IAS 12 Income Taxes. The Company has
adopted IFRIC 23, however, the Directors have determined there to
be no uncertain tax positions, therefore application of IFRIC 23
does not have an impact on the Company's financial statements.
IFRS 16: Leases
In January 2016, the IASB published IFRS 16: Leases,
establishing principles for the recognition, measurement,
presentation and disclosure of leases with the objective of
ensuring that lessees and lessors provide relevant information that
faithfully represents those transactions. The Company has adopted
IFRS 16, however, as the Company does not directly participate in
leasing arrangements, the Directors are of the opinion that this
standard does not have any impact on the presentation of these
financial statements.
New and revised IFRSs in issue but not yet effective
There are no further 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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
5. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below:
Investment Income
Interest income is recognised on an accrual basis in the Revenue
account of the Statement of Comprehensive Income.
Investment income arising from the portfolio assets is
recognised on a cash basis, whereas its unrealized portion is
disclosed in unrealized gain / loss on investments.
Expenses
Expenses are accounted for on an accrual basis and charged to
the Statement of Comprehensive Income. Share issue costs are taken
from equity. Expenses are charged through the Revenue account
except those which are capital in nature, these include those which
are incidental to the acquisition, disposal or enhancement of an
investment, which are accounted for through the Capital
account.
Net gain or loss on investments at fair value through profit and
loss
Gains or losses arising from changes in the fair values of
investments are recognised in the Capital account of the Statement
of Comprehensive Income in the period in which they arise. The
value of the investments may be increased or reduced by the
assessed fair value movement.
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%.
Current Tax and movements in deferred tax asset and liability 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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
5. Summary of significant accounting policies (continued)
Taxation (continued)
Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the Statement
of Financial Position date where transactions or events that result
in an obligation to pay more tax or a right to pay less tax in the
future have occurred. Timing differences are differences between
the Company's taxable profits and its results as stated in the
financial statements. Deferred taxation assets are recognised
where, in the opinion of the Directors, it is more likely than not
that these amounts will be realised in future periods, at the tax
rate expected to be applicable at realisation.
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. All subsidiaries are held at fair value in accordance
with IFRS 9 and therefore not consolidated.
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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
5. Summary of significant accounting policies (continued)
Dividends
Dividends are recognised, as a reduction in equity in the
financial statements. Interim equity dividends are recognised when
legally payable. 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).
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
5. Summary of significant accounting policies (continued)
Financial Instruments (continued)
The Company includes in this category equity instruments and
loans to investments.
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 and liabilities are recognised on trade date,
when the company becomes party to the contractual provisions of the
instrument. 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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
5. Summary of significant accounting policies (continued)
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.
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.
6. Fees and expenses
Accounting, Secretarial and Directors
JTC (UK) Limited had 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 year, expenses incurred with JTC (UK) Limited for
administrative and secretarial services amounted to GBP63,211 with
GBP15,000 being outstanding and payable at the period end.
During the year, the Directors agreed to engage Sanne Group (UK)
Limited to act as administrator for the Company with effect 1 April
2020 with JTC (UK) Limited continuing to act as secretary from that
date.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
6. Fees and expenses (continued)
Accounting, Secretarial and Directors
AIFM
The AIFM, Mirabella Financial Services LLP (the "AIFM"), was
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 GBP82,566, which include
fees relating to the prior period, there were no fees outstanding
and payable at the period end.
On the 30 December 2019, Mirabella Financial Services LLP resigned
its engagement as AIFM, and Gore Street Capital Limited was appointed
as AIFM with effect from that date. Gore Street Capital Limited
in entitled to receive a fee in respect of its engagement of
GBP75,000 per annum.
At the period end, a total of GBP37,500 had been paid to Gore
Street Capital Limited in respect of these fees, with GBP18,750
being disclosed in Prepayments as it relates to the period 1
April 2020 to 30 June 2020.
Investment Advisory
The fees relating to the Investment Advisor are disclosed within
note 22 Transactions with related parties.
7. Net gain / (loss) on investments at fair value through profit
and loss
31 March 31 March
2020 2019
(GBP) (GBP)
Net gain / (loss) on investments at fair
value through profit and loss 5,585,522 (565,064)
5,585,522 (565,064)
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
8. Investment Income
31 March 31 March
2020 2019
(GBP) (GBP)
Bank interest income 38,092 81,390
Loan interest income 845,019 57,951
Management fee income 32,000 -
915,111 139,341
9. Administrative and other expenses
31 March 31 March
2020 2019
(GBP) (GBP)
Administration fees 63,211 54,594
Audit fees (see below) 140,000 89,000
Bank interest and charges 2,074 1,051
Directors' remuneration 94,656 80,526
Directors & Officers insurance 11,183 9,725
Foreign exchange loss 1,643 -
Investment advisory fees 458,258 92,468
Irrecoverable VAT 400,000 -
Legal and professional fees 338,939 133,298
AIFM fees 101,316 66,347
Marketing fees 20,378 27,519
Sundry expenses 79,702 54,221
1,711,360 608,749
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
9. Administrative and other expenses
(continued)
During the year, the Company received the following services from
its auditor, Ernst & Young LLP.
31 March 31 March
2020 2019
(GBP) (GBP)
Audit services
Statutory
audit Annual accounts - current year 115,000 65,000
Annual accounts - prior year under
accrual 5,000 -
Initial annual accounts - 24,000
120,000 89,000
Non-audit services
Other assurance services 20,000 -
Total audit and non-audit services 140,000 89,000
The statutory auditor is remunerated GBP63,000 (2019: GBP17,500),
in relation to SPV audits. This amount is not included in the above.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
10. 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%.
31 March 31 March
2020 2019
(GBP) (GBP)
(a) Tax charge in profit and loss account
UK Corporation tax - -
(b) Reconciliation of the tax charge for
the year / period
Profit / (loss) before tax 4,789,273 (1,034,472)
Tax at UK standard rate of 19% 909,962 (196,550)
Effects of:
Unrealised gain / (loss) on fair value
investments (1,061,249) 107,362
Expenses not deductible for tax purposes - 40,858
Group relief surrendered 103,648 -
Deferred tax not recognised 47,639 48,330
Tax charge for the year / period - -
Estimated losses not to be recognised
due to insufficient evidence of future
profits 640,136 254,370
Estimated deferred tax thereon (19% (2019:
17%) 121,626 43,243
As at 31 March 2020, the Company has excess management expenses
that are available to offset future tax revenues. A deferred
tax asset, measured at the prospective corporate rate of 19%
(2019: 17%) of GBP121,626 (2019: GBP43,243) has not been recognised
in respect of these expenses since they are recoverable only
to the extent that the Company has sufficient future taxable
revenue.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
11. 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.
31 March 31 March
2020 2019
Net gain / (loss) attributable to ordinary GBP 4,789,273 GBP (1,034,472)
shareholders
Weighted average number of ordinary shares
for the year / period 40,669,724 30,600,000
Profit / (loss) per share - Basic and
diluted (pence) 11.78 (3.38)
12. Investments
Place of Percentage 31 March 31 March
business ownership 2020 2019
England &
GSES1 Limited ("GSES1") Wales 100% 30,412,493 6,482,964
The Company meets the definition of an investment entity. Therefore,
it does not consolidate its subsidiaries or equity method account
for associates but, rather, recognises them as investments at
fair value through profit or loss. The Company is not contractually
obligated to provide financial support to the subsidiaries and
associate and there are no restrictions in place in passing monies
up the structure.
The investment in GSES1 is financed through equity and a loan
facility available to GSES1. The facility may be drawn upon,
to any amount agreed by the Company as lender, and is available
for a period of 20 years from 28 June 2018. The rest is funded
through equity. The amount drawn on the facility at 31 March
2020 was GBP25,396,482 (2019: GBP7,052,474). The loan is interest
bearing and attracts interest at 5% per annum. Investments in
the indirect subsidiaries are also structured through loan and
equity investments and the ultimate investments are in energy
storage facilities.
Realisation of increases in fair value in the indirect subsidiaries
will be passed up the structure as distributions on the equity
investment. GSES1 controls NKESS, GSC LRPOT and GSF IRE as listed
below which in turn hold an interest in project companies as
disclosed in the in table below.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
12. Investments (continued)
Immediate Place of business Percentage Investment
Parent Ownership
NK Energy Storage
Solutions Limited
("NKESS") (*) GSES1 England & Wales 100%
NK Boulby Energy Storage NKESS England & Wales 99.998% Boulby
Limited
Kiwi Power ES B NKESS England & Wales 49% Cenin
GSC LRPOT Limited
("GSC LRPOT") (**) GSES1 England & Wales 100%
OSSPV001 Limited GSC LRPOT England & Wales 100% Lower Road
Port of Tilbury
GSF IRE Limited GSES1 England & Wales 100%
Mullavilly Energy GSF IRE Northern Ireland 51% Mullavilly
Limited
Drumkee Energy Limited GSF IRE Northern Ireland 51% Drumkee
Porterstown Battery GSF IRE Republic of 51% Kilteel
Storage Limited Ireland
Kilmannock Battery GSF IRE Republic of 51% Kilmannock
Storage Limited Ireland
(*) NK Energy Storage Solutions Limited changed its name to
GSF Albion Limited with effect from 16 June 2020.
(**) GSC LRPOT Limited changed its name to GSF England Limited
with effect from 11 June 2020.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
13. Cash and cash equivalents
31 March 31 March
2020 2019
(GBP) (GBP)
Cash at bank 15,028,142 223,770
Notice deposit held at Barclays Bank - 17,000,000
15,028,142 17,223,770
14. Trade and other receivables
31 March 31 March
2020 2019
(GBP) (GBP)
VAT recoverable 72,427 22,554
Prepaid Director's and Officer's insurance 7,629 298
Other Prepayments 29,619 23,800
Other Debtors 66,534 69,961
Management fee income receivable 38,400 -
Advance to NEC ES 4,500,000 4,500,000
Interest on advance to NEC ES 248,918 -
4,963,527 4,616,613
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 remains 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 of which the
Company takes possession / ownership of. If for example the value
of the investment is GBP4.5 million, the fund will not pay any
more.
As NEC ES was 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, it was
subsequently agreed that NEC ES would within 14 days of the end of
the 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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
14. Trade and other receivables (continued)
At the end of the initially described term, but not a termination
of the agreement, it was agreed between NEC ES and the Company
that NEC ES could continue to hold the GBP4.5m advance, accruing
interest payable at a 3% coupon.
As at 31 March 2020, although EPC contracts were signed between
NEC ES and the Company and projects are under construction, no
payment under these EPC contracts were due at year end and the
balance remained outstanding, with interest accruing at the rate
of 3 per cent, per annum. It is expected that this advance will
be settled within 18 months from when the assets become operational
within the EPC contracts currently in place.
15. Trade and other payables
31 March 31 March
2020 2019
(GBP) (GBP)
Administration fees 15,000 15,000
AIFM fees - 66,346
Audit fees 135,000 65,000
Directors remuneration 3,124 9,725
Accrued IPO costs - 13,200
Professional fees 129,569 25,553
Other creditors 30,966 12,686
VAT payable 400,000 -
713,659 207,510
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
16. Categories of financial instruments
31 March 31 March
2020 2019
(GBP) (GBP)
Financial assets
Financial assets at amortised cost
Cash and cash equivalents 15,028,142 17,223,700
Trade and other receivables 4,963,527 4,616,613
Fair value through profit and loss account
Investment 30,412,493 6,482,964
Total financial assets 50,404,162 28,323,347
Financial liabilities
Financial liabilities at amortised cost
Trade and other payables 713,659 207,510
Total financial liabilities 713,659 207,510
At the balance sheet date, all financial assets and liabilities
were measured at amortised cost except for the investment in
equity and loans to subsidiaries which are measured at fair value.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
17. Fair Value measurement
Valuation approach and methodology
There are three traditional valuation approaches that are
generally accepted and typically used to establish the value of a
business; the income approach, the market approach and the net
assets (or cost based) approach. Within these three approaches,
several methods are generally accepted and typically used to
estimate the value of a business.
The Company has chosen to utilise the income approach, which
indicates value based on the sum of the economic income that an
asset, or group of assets, is anticipated to produce in the future.
Therefore, the income approach is typically applied to an asset
that is expected to generate future economic income, such as a
business that is considered a going concern. Free cash flow to
total invested capital is typically the appropriate measure of
economic income. The income approach is the DCF approach and the
method discounts free cash flows using an estimated discount rate
(WACC).
The International Valuation Standards Council ("IVSC") issued
guidance in March 2020 in response to the COVID-19 pandemic.
It notes that one of the main issues when dealing with valuation
is uncertainty and that valuation is not a fact, but an estimate of
the most probable of a range of possible outcomes based on the
assumptions made in the valuation process.
Valuation uncertainty can be caused by various factors,
including market disruption, input availability and the choice of
method or model of valuation.
The guidance issued by the IVSC was considered by the Investment
Advisor in the determination of the valuations disclosed at 31
March 2020.
Valuation process
In the year, the Company acquired a 51% interest in four assets
with a total capacity of 160.0 Megawatt ("MW"), bringing the
Company's portfolio of lithium-ion energy storage investments to a
total capacity of 189.0 MW. As at 31 March 2020, 29.0 MW were
operational and 160.0 MW pre-operational (the "Investments")
through its subsidiary companies. The Investments comprise eight
projects: Boulby, Cenin (49% owned by the Company), Lower Road,
Port of Tilbury, operational and Mullavilly, Drumkee, Kilteel and
Kilmannock, pre-operational.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
17. Fair value measurement (continued)
Valuation process (continued)
All of these investments are based in the UK and the Republic
of Ireland. The Directors review and approve these valuations
following appropriate challenge and examination. The current
portfolio consists of non-market traded investments and valuations
are analysed using forecasted cash flows of the assets and used
the discounted cash flow approach as the primary approach for
the purpose of the valuation. The Company engages external, independent
and qualified valuers to determine the fair value of the Company's
investments or are produced by the office of the Investment Advisor.
As at 31 March 2020, the fair value of the investment in NK Boulby
Energy Storage Limited, (which owns Boulby Project), OSSPV001
Limited (Lower Road and Port of Tilbury), Mullavilly Energy Limited
and Drumkee Energy Limited (Mullavilly and Drumkee respectively),
and Kilmannock Battery Storage Limited and Porterstown Battery
Storage Limited (Kilmannock and Kilteel respectively) have been
determined (presented by the Investment Advisor and reviewed)
by BDO LLP.
Quantitative information
The below table summarises the significant unobservable inputs
to the valuation of investments.
Investment Portfolio Valuation Significant Inputs Fair Value
technique
Description (Range) 31 March 31 March
2020 2019
(GBP) (GBP)
Great Britain DCF Discount Rate 6% - 8% 6,732,557 6,485,965
(excluding Northern Revenue / GBP5.5 -
Ireland) MW H GBP40
Northern Ireland DCF Discount Rate 9.5% 16,138,800 -
Revenue / GBP8 - GBP21
MW H
Republic of Ireland DCF Discount Rate 9.5% 5,739,200 -
Revenue /
MW H EUR6 - EUR15
Holding Companies NAV 1,801,936 (2,999)
Total Investments 30,412,493 6,482,964
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
17. Fair value measurement (continued)
The fair value of the holding companies represents the net assets
together with any cash held within those companies in order to
settle any operational costs.
Sensitivity Analysis
The below table reflects the range of sensitivities in respect
of the fair value movements of the Company's investments.
Investment Portfolio Valuation Estimated effect on
technique Significant Inputs Fair Value
Description Sensitivity 31 March 31 March
2020 2019
(GBP) (GBP)
Great Britain DCF Revenue + 10% 2,000,000 1,384,900
(excluding Northern
Ireland) - 10% (2,200,000) (1,550,047)
Discount
rate +1% (600,000) (618,700)
-1% 800,000 686,693
Northern Ireland DCF Revenue + 10% 3,400,000 -
- 10% (3,500,000) -
Discount
rate +1% (2,400,000) -
-1% 2,800,000 -
Republic of Ireland DCF Revenue + 10% 1,900,000 -
- 10% (3,400,000) -
Discount
rate +1% (1,900,000) -
-1% 2,300,000 -
High case (+10%) and low case (-10%) revenue information used
to determine sensitivities are provided by third party pricing
sources.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
17. Fair value measurement (continued)
Valuation of financial instruments
The investments at fair value through profit or loss are Level
3 in the fair value hierarchy and the reconciliation in the movement
of this Level 3 investment is presented below. No transfers between
levels took place during the period.
Reconciliation 31 March 31 March
2020 2019
(GBP) (GBP)
Opening balance 6,482,964 -
Purchases during the year / period 18,344,007 8,561,656
Proceeds from investments - return of
capital - (1,513,628)
Total fair value movement through the
profit and loss 5,585,522 (565,064)
30,412,493 6,482,964
A minority shareholder of Boulby has a right to receive a certain
share of Boulby distributions once NK Energy Solutions realises
excess return over an agreed hurdle return from its investment
into Boulby.
Based on free cash flow forecast used to compute the net asset
value of Boulby for this period, it is not expected to reach
the threshold return and thus no payment to the minority shareholder
is taken into account. However, if the actual cash flow significantly
exceeds the forecast cash flow used for current net asset value,
a part of the excess cash flow may be distributed to the minority
shareholder, impacting the ultimate fair value.
18. Financial risk management
The Company is exposed to certain risks 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 is considered potentially material
to the Company, how it arises and the policy for managing it
is summarised below:
-- 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 gains. 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.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
18. Financial risk management (continued)
-- 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 projects, 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 location 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 accounts for its
exposure to counterparty risk through the fair value of its
investments by using appropriate discount rates which adequately
reflects its risk exposure.
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. During the year, the Company has expanded its
investment base to include Northern Ireland and the Republic of
Ireland. The Company intends to further limit its exposure to
concentration risk through considering projects in North America
and Western Europe.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
18. Financial risk management (continued)
-- 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
bank's 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. Management has completed a high-level analysis which
considers both historical and forward-looking information and based
on this analysis the expected credit loss from cash and other
assets is not material and therefore no impairment adjustments were
accounted for. The Company recognises it has a significant exposure
to the advance made to NEC as disclosed in note 14 of the
GBP4,500,000 advance and GBP248,918 associated interest on that
advance, and believes that they have adequately assessed this risk
and are confident that the risk of default will be low.
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.
-- Currency risk
The majority of investments, together with the majority of all
transactions during the current period were denominated in Pounds
Sterling.
The Company holds two investments (Kilmannock and Kilteel) in
the Republic of Ireland and acquisition costs were denominated in
Euros, creating an exposure to currency risk. These investments
have been translated into Pounds Sterling at year end and represent
18.87% (2019: nil) of the Company's fair valued investment
portfolio. The contracted revenue stream due from these investments
has been agreed in Pounds Sterling, thus limiting the exposure to
fluctuations in exchange rates.
Any expenditure denominated in Euros will be translated into
Pounds Sterling at the transaction date and any gain or loss
resulting from the foreign exchange exposure will be taken to the
Statement of Comprehensive Income.
The Company does not hold any financial instruments at period
end which are not denominated in Pounds Sterling and is therefore
does not believe it is exposed to any significant currency
risk.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
18. Financial risk management (continued)
-- 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 parties.
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.
-- 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 Company's investments are level
3 and thus illiquid and this is taken into assessment of liquidity
analysis. The following table reflects the maturity analysis of
financial assets and liabilities. The following table reflects the
maturity analysis of financial assets and liabilities.
31 March 2020 < 1 year 1 to 2 2 to 5 > 5 years Total
years years
Financial assets
Cash and cash
equivalents 15,028,142 - - - 15,028,142
Trade and other
receivables 4,963,527 - - - 4,963,527
Fair value through profit and
loss
Investments - - - 30,412,493 30,412,493
Total financial assets 19,991,669 - - 30,412,493 50,404,162
Financial liabilities
Financial liabilities at amortised
cost
Trade and other
payables 713,659 - - - 713,659
Total financial
liabilities 713,659 - - - 713,659
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
18. Financial risk management (continued)
-- Liquidity risk
31 March 2019 < 1 year 1 to 2 2 to 5 > 5 years Total
years years
Financial assets
Cash and cash
equivalents 17,223,770 - - - 17,223,770
Trade and other
receivables 4,616,613 - - - 4,616,613
Fair value through profit and
loss
Investments - - - 6,482,964 6,482,964
Total financial assets 21,840,383 - - 6,482,964 28,323,347
Financial liabilities
Financial liabilities at amortised
cost
Trade and other
payables 207,510 - - - 207,510
Total financial
liabilities 207,510 - - - 207,510
-- 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. If the market prices of the investments were to increase
by 10%, there will be a resulting increase in net assets attributable
to ordinary shareholders for the period of GBP3,041,249 (2019:
GBP648,296). 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. 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.
The Company relies on the market knowledge of the experienced
Investment Advisor, the valuation expertise of the third party
valuer BDO and the use of third party market forecast information
to provide comfort with regard to fair market values of investments
reflected in the financial statements.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
19. 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.
31 March 31 March
2020 2019
Net assets per Statement of Financial GBP GBP
Position 49,690,503 28,115,837
Ordinary shares in issue as at 31 March 52,548,815 30,600,000
NAV per share - Basic and diluted (pence) 0.95 0.92
20. Share capital and reserve
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve
reserve reserve
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
At 1 April
2019 306,000 67,476 186,656 28,590,177 (565,064) (469,408) 28,115,837
Issue of
ordinary
GBP0.01
shares:
19 August
2019 69,621 6,265,934 - - - - 6,335,555
Issue of
ordinary
GBP0.01
shares:
14 October
2019 101,066 9,378,934 - - - - 9,480,000
Issue of
ordinary
GBP0.01
shares:
23 October
2019 12,641 1,173,058 - - - - 1,185,699
Issue of
ordinary
GBP0.01
shares:
11 February
2020 36,160 3,417,106 - - - - 3,453,266
Share issue
costs - (595,450) - 13,199 - - (582,251)
Dividends
paid - - - (3,086,876) - - (3,086,876)
Profit for
the
year - - - - 5,585,522 (796,249) 4,323,262
At 31 March
2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
20. Share capital and reserves (continued)
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve
reserve reserve
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
At 19 January - - - - - - -
2018
Issue of
redeemable
preference
shares - 12,500 - - - - 12,500
Redemption
of
redeemable
preference
shares - (12,500) - - - - (12,500)
Issue of
ordinary
GBP0.01
shares:
25 May 2018 306,000 30,294,000 - - - - 30,600,000
Share issue
costs - (531,691) - - - - (531,691)
Transfer
between
reserves - (29,694,833) 186,656 29,508,177 - - -
Dividends
paid - - - (918,000) - - (918,000)
Loss for the
period - - - - (565,064) (469,408) (1,034,472)
At 31 March
2019 306,000 67,476 186,656 28,590,177 (565,064) (469,408) 28,115,837
Share capital and share premium account and capital reduction
reserve
Following the Company's initial issuance of shares and its 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 was created out the distributable
reserve for creditors outstanding as at 16 August 2018, an amount
of GBP186,656.
The capital reduction reserve is classed as a distributable reserve
and dividends paid by the Company are currently being offset
against this reserve.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
20. Share capital and reserves (continued)
Share Issues
On 5 June 2019, the Board approved the proposed placing and
offer for subscription (together the "Placing") of up to 50 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 be admitted to trading on the Premium Segment
of the Main Market of the London Stock Exchange ("Admission").
On 19 August 2019, the Company issued 6,962,148 ordinary shares
at a price of 91.0 pence per share, raising net proceeds from the
Placing of GBP6,130,651. Admission subsequently took place on 19
August 2019.
On 11 October 2019, the Company issued 10,106,610 ordinary
shares at a price of 93.8 pence per share, raising net proceeds
from the Placing of GBP9,277,253. Admission subsequently took place
on 11 October 2019.
On 17 October 2019, the Company issued 1,264,071 ordinary shares
at a price of 93.8 pence per share, raising net proceeds from the
Placing of GBP1,113,925. Admission subsequently took place on 17
October 2019.
On 11 February 2020, the Company issued 3,615,986 ordinary
shares at a price of 95.5 pence per share, raising net proceeds
from the Placing of GBP3,337,241. Admission subsequently took place
on 11 February 2020.
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.
The nature and purpose of each of the reserves included within
equity at 31 March 2020 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.
-- Special reserve: represents a distributable reserve totalling
the amount of outstanding creditors at the date of the Company's
approved reduction in capital.
-- Capital reduction reserve: represents a distributable reserve
created following a Court approved reduction in capital.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
20. Share capital and reserves (continued)
-- Capital reserve: represents a non-distributable reserve of
unrealised gains and losses from changes in the fair values of
investments as recognised in the Capital account of the Statement
of Comprehensive Income.
-- Revenue reserve: represent a distributable reserve of cumulative
net gains and losses recognised Revenue account of the Statement
of Comprehensive Income.
The only movements in these reserves during the period are disclosed
in the Statement of Changes in Equity.
21. Dividends
Dividend per 31 March 31 March
share 2020 2019
(GBP) (GBP)
Dividends paid during the year
For the period ended
31 December 2018 3 pence - 918,000
For the 3 month
period ended 31
March 2019 1 pence 306,000 -
For the 3 month
period ended 30
June 2019 2 pence 751,243 -
For the 3 month
period ended 30
September 2019 2 pence 978,657 -
For the 3 month
period ended 31
December 2019 2 pence 1,050,976 -
3,086,876 918,000
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
21. Dividends (continued)
The table below sets out the proposed final dividend, together
with the interim dividend paid, in respect of the financial year,
which is the basis on which the requirements of Section 1158
of the Corporation Tax Act 2010 are considered.
31 March 31 March
2020 2019
(GBP) (GBP)
Interim dividend for 2020 - 6 pence (2019:
3 pence) 2,780,876 918,000
Proposed final dividend for 2020 - 1
pence (2019: 1 pence) 771,762 306,000
3,552,638 1,224,000
22. Transactions with related parties
Following admission of the ordinary shares (refer to note 20), the
Company and the Directors are not aware of any person who, directly
or indirectly, jointly or severally, exercises or could exercise
control over the Company. The Company does not have an ultimate
controlling party.
Details of related parties are set out below:
Directors
Patrick Cox, Chairman of the Board of Directors of the Company,
is paid director's remuneration of GBP33,000 per annum, Caroline
Banszky is paid director's remuneration of GBP21,000 per annum,
with the remaining directors being paid directors' remuneration
of GBP18,000 per annum.
Total director's remuneration and associated employment costs of
GBP94,656 were incurred in respect of the period with GBP3,124 being
outstanding and payable at the period end.
Investment Advisor
The Investment Advisor, Gore Street Capital Limited (the "Investment
Advisor"), is entitled to advisory fees under the terms of the Investment
Advisory Agreement amounting to 1/4(th) of 1% of
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
22. Transactions with related parties (continued)
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 GBP403,683 (2019: GBP116,268) was
paid during the year, with GBP31,175 still outstanding as at 31
March 2020, (2019: GBP23,800 was paid in advance). During the prior
period the Investment Advisor waived a portion of its fees which
resulted in a reduction of 61.24% on the actual fees incurred by
the Company.
The Investment Advisor has also waived a portion of its fees at
the beginning of this year. From 4 June 2019, the fees to the
Investment Advisor were being accrued at the full agreed rate in
accordance with the Investment Advisory Agreement. This waiver
resulted in a reduction of 5.00% on the actual fees incurred for
the year by the Company.
In addition to the advisory fee, the Advisor is entitled to a
performance fee by reference to the movement in the Net Asset Value
of Company (before subtracting any accrued performance fee) over
the Benchmark from the date of admission on the London Stock
Exchange.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
22. Transactions with related parties (continued)
Investment Advisor (continued)
The Benchmark is equal to (a) the gross proceeds of the Issue at
the date of admission increased by 7 per cent. per annum (annually
compounding), adjusted for: (i) any increases or decreases in the
Net Asset Value arising from issues or repurchases of Ordinary
Shares during the relevant calculation period; (ii) the amount of
any dividends or distributions (for which no adjustment has already
been made under (i)) made by the Company in respect of the Ordinary
Shares at any time from date of admission; and (b) where a
performance fee is subsequently paid, the Net Asset Value (after
subtracting performance fees arising from the calculation period)
at the end of the calculation period from which the latest
performance fee becomes payable increased by 7 per cent. per annum
(annually compounded).
The calculation period will be the 12 month period starting 1
April and ending 31 March in each calendar year with the first year
commencing on the date of admission on the London Stock
Exchange.
The performance fee payable to the Investment Advisor by the
Company will be a sum equal to 10 per cent. of such amount (if
positive) by which Net Asset Value (before subtracting any accrued
performance fee) at the end of a calculation period exceeds the
Benchmark provided always that in respect of any financial period
of the Company (being 1 April to 31 March each year) the
performance fee payable to the Investment Advisor shall never
exceed an amount equal to 50 per cent of the Advisory Fee paid to
the Investment Advisor in respect of that period. Performance fees
are payable within 30 days from the end of the relevant calculation
period. No performance fees were accrued as at 31 March 2020 .
During the period the Investment Advisor provided operations
management services to SPV companies resulting in charges in the
amount of GBP510,735 (2019: GBP91,994) being paid by the SPV
companies to the Investment Advisor.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
22. Transactions with related parties (continued)
Shareholders
NEC ES is a related party to the Company by virtue of also being
a significant shareholder within the structure and details of
transactions with the entity can be found in note 23 and note
14.
23. Capital commitments
The Company has a commitment of circa. GBP8 million to invest
into projects that involve NEC ES. Of this amount, GBP4.5 million
has been advanced to NEC ES as mentioned in note 14. These projects
depend on NEC ES providing, directly or indirectly, a supply of
products, equipment and/ or services required for those projects
within 12 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 than the
amount of the NEC ES investment, or the lapse of the commitment
period. At the period end, this commitment is still in existence as
a consequence of the duration of contracts which are nearing
completion.
The Lower Road and Port of Tilbury acquisitions completed post
year end. Upon formal takeover of these sites, NEC will issue
takeover certificates with the relevant milestone payments due and
offset firstly against the GBP4.5 million prepaid amount, before
any other payments fall due. The prepayment amount is expected to
be utilised within 15 months of the formal takeover.
The Company had no other contingencies and significant capital
commitments at the reporting date.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2020
23. Post balance sheet events
The Directors have evaluated the need for disclosures and / or
adjustments resulting from post balance sheet events through
to 15 July 2020, the date the financial statements were available
to be issued.
Post year end, the Company acquired Ferrymuir Energy Storage
Limited for GBP1.3m, a project with rights to develop a 50MW
energy storage system in Fife, Scotland, bringing the total portfolio
size to 239MW, the largest of any UK based manager. This is the
Company's first investment in Scotland.
At the time of publication, the Company is also at the exclusivity
stage of the acquisition of an additional 151MW of assets, of
which 81MW are operational.
The full economic impact of the COVID-19 pandemic and resulting
lock-down remains difficult to assess and its full impact is
not anticipated to be fully realized for the foreseeable future.
The Directors have made an assessment of the impact at the current
time and are continuing to review that as described on pages
38 and 39 of this report.
Despite the COVID-19 pandemic, the Company continues to grow
and has further increased the number of shares in issue to 77.1
million shares as of the date of publication, following a recent
placing of GBP23.7m to institutional investors, a retail offer
through PrimaryBid and a subscription for shares by Nippon Oil,
the largest petroleum company in Japan, as part of its clean
energy strategy (31 March 2020: 52.5 million shares).
There were no adjusting post balance sheet events and as such
no adjustments have been made to the valuation of assets and
liabilities as at 31 March 2020.
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
FR KKPBNNBKBBOD
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