VH Global
Sustainable Energy Opportunities plc (the
"Company")
Interim results for
the period ended 30 June 2024
The Board of VH Global Sustainable Energy
Opportunities plc (ticker: GSEO) is pleased to report its
interim results for the period from 1 January
2024 to 30 June 2024.
The Interim Report will be made available on the
Company's website at https://www.vh-gseo.com. A copy of the Interim Report will be submitted
to the National Storage Mechanism and will shortly be available for
inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
VH Global Sustainable Energy Opportunities plc ("GSEO"
or the "Company") is an investment company that provides exposure
to a globally and technologically diversified portfolio of
sustainable energy infrastructure assets that support the
Sustainable Development Goals ("SDGs") and are essential for the
global transition towards net zero.
Company Highlights as
at 30 June 2024
Financial
- Net asset value:
£447.7m
- Net asset value per
share:110.84p
- Total leverage of GSEO as a
percentage of NAV: 1.9%
- Total annualised NAV return
since IPO (Feb 2021): 8.0%
- Dividend target for FY
2024: 5.68 pence per share
- Dividend coverage: 1.1x
- Total annualised NAV return
for H1 2024: (1.2%)
- Percentage of revenues
contracted and inflation linked: >90%
Sustainability
- Clean energy generated and
injected into the grid: 512,233 MWh
- Approximate equivalent UK
homes powered annually by clean energy: 130,000
- Tonnes of carbon dioxide
equivalent avoided: 80,734t
- Tonnes of sulfur oxides
displaced: 10,862t
The Company's LEI is 213800RFHAOF372UU580.
For further information, please contact:
Edelman
Smithfield (PR Adviser)
Ged
Brumby
+44 (0)7540 412 301
Hamza
Ali
+44 (0)7976 308 914
Victory Hill Capital
Partners LLP (Investment Manager)
Navin
Chauhan info@victory-hill.com
Deutsche Numis
(Corporate Broker)
David
Benda
+44 (0)20 7260 1000
Matt Goss
Apex Fund and
Corporate Services (UK) Limited (Company Secretary)
ukfundscosec@apexgroup.com
About Victory
Hill Capital Partners LLP
Victory Hill Capital Partners LLP ("Victory
Hill") is authorised and regulated by the Financial Conduct
Authority (FRN 961570).
Victory Hill is based in London and was
founded in May 2020 by an experienced team of energy
financiers that spun-out of a large established global project
finance banking group. The team has participated in more
than $200bn in transaction values across 91 conventional
and renewable energy-related transactions in over 30 jurisdictions
worldwide. Victory Hill is the investment manager of the
Company.
The Victory Hill team deploys its experience across
different financial disciplines in order to assess investments
holistically from multiple points of view. The firm pursues
operational stability and well-designed corporate governance to
generate sustainable positive returns for investors. It focuses on
supporting and accelerating the energy transition and the
attainment of the UN sustainable development goals.
Victory Hill is a signatory of the United Nations
Principles for Responsible Investing (UN PRI), the United Nations
Global Compact (UN GC), Net Zero Asset Managers Initiative (NZAMI),
a member of the Global Impact Investing Network (GIIN) and is a
formal supporter of the Financial Stability Board's Task-Force on
Climate-related Disclosures (TCFD).
ABOUT GSEO
Investment company with a
specialist mandate to support the global energy transition
VH Global Sustainable Energy Opportunities plc
("GSEO" or the "Company") is an investment company that provides
exposure to a globally and technologically diversified portfolio of
sustainable energy infrastructure assets that support the
Sustainable Development Goals ("SDGs") and are essential for the
global transition towards net zero.
The Company aims to achieve diversification
principally by making a range of sustainable energy infrastructure
investments across (1) a number of distinct geographies and
(2) a mix of proven technologies, that align with the SDGs,
where the investments are a direct contributor to the acceleration
of the energy transition towards a net zero carbon world.
The Company's investments in proven technologies may
include exposure to power generation (renewable and conventional),
biomass, transmission, distribution, storage and waste-to-energy.
These investments are in operational, construction or
'ready-to-build' assets but will not include assets that are in the
development phase.
No investment is made in projects involving the
extraction of fossil fuels or minerals.
GSEO is a closed-ended investment company launched in
February 2021 by way of listing on the premium segment of the
London Stock Exchange's Main Market. GSEO is classified as an SFDR
Article 9 Fund.
The Company is overseen by an independent board of
non‑executive directors and managed by Victory Hill Capital
Partners LLP ("Victory Hill" or the "Investment Manager").
ABOUT VICTORY HILL
Experienced and focused
leadership
Victory Hill's experienced team brings decades of
knowledge and practice dedicated to energy finance and
investment.
Victory Hill is 100% owned by its five co-founders,
who have focused on shaping the business in pursuit of long term
value for its clients. With a multitude of nationalities within the
wider team, Victory Hill has a highly-skilled and diverse team
focused on taking the necessary approach to sustainable energy
investing, with localised insight and understanding.
Why invest in GSEO?
A vehicle presenting a distinctive combination of
access, return and impact
Access
• Access to
global private markets energy investments
• A
geographically and technologically diversified portfolio of
actively managed, high-impact investments which aim to ensure an
effective and just climate transition
Return
• Targeting attractive
risk-adjusted returns from
around the world
• A highly diversified
mix of assets driving both
long-term capital growth and income generation
• High degree of
inflation linkage with over 90%
of revenues that are inflation-linked
Impact
• Creating environmental and social
impact transforming lives and communities without compromising on
returns
•
Transparent impact reporting
• SFDR
Article 9 fund
HIGHLIGHTS
Financial (as at 30 June
2024)
Net Asset
Value
£447.7m
31 Dec 23: £483.8m
|
NAV per
share*
110.84p
31 Dec 23: 116.46p
|
Total leverage of GSEO
as a % of NAV*
1.9%
31 Dec 23: 1.9%
|
Dividend coverage*
1.1x
31 Dec 23: 1.1x
|
Dividend target per share
for FY 2024
5.68p
FY 2023: 5.52p
|
Total annualised NAV return
since IPO (Feb 2021)*
8.0%
31 Dec 23: 10.0%
|
Total annualised NAV
return for H1-24*
(1.2%)
30 Jun 23: 4.6%
|
% of revenues contracted
and inflation linked
>90%
31 Dec 23: >90%
|
|
Sustainability (for the six-month
period ending 30 June 2024)
512,233
MWh
Clean energy generated
and injected into the grid
30 Jun 23: 516,585 MWh
|
130,000
Approximate equivalent
UK homes powered annually
by clean energy
30 Jun 23: 138,458
|
80,734*
tonnes
of carbon dioxide equivalent
emissions avoided
30 Jun 23: 53,423 tonnes
|
10,862 tonnes
of sulfur oxides
displaced
30 Jun 23: 11,359 tonnes
|
*Alternative performance measures are
defined below.
CHAIR'S STATEMENT
The Company's differentiated portfolio continues to
generate predictable and healthy income to support GSEO's
attractive dividends, while providing strong potential for capital
growth.
Bernard Bulkin
Chair
On behalf of the Board, I am pleased to present the
Interim Report for VH Global Sustainable Energy
Opportunities plc (the "Company" or "GSEO") for the six months
to 30 June 2024.
Whilst we are experiencing the second consecutive
financial year of turbulent market conditions, GSEO continues to
show resilience relative to the wider market, achieving key
milestones during the period under review.
GSEO delivered a total annualised Net Asset Value
("NAV") return since IPO to the end of the reporting period of
8.0%, and a fully cash-covered dividend. This reflects the
Company's differentiated portfolio, which continues to generate
predictable and healthy income to support GSEO's attractive
dividends, while providing strong potential for capital growth
through a combination of highly diversified and actively managed
operational assets, and assets in construction providing scope for
capital growth.
Financial
performance
As at 30 June 2024, the Company's NAV per share
was 110.84, a decrease of 5% during the six-month period under
review. The primary driver of the decrease in NAV per share was
unrealised foreign exchange movements on the Company's
investments.
Net cash flows from the underlying projects remain
robust, covering the cash dividend 1.1 times. In line with the
dividend target for the year ending 31 December 2024 of 5.68p
per Ordinary Share, the Company has paid a quarterly dividend of
1.42p per share with respect to Q1 2024 as well as a dividend of
the same amount per share with respect to Q2 2024, giving a total
of 2.84p per share for the period, compared to 2.76p per share for
the first half of 2023, an increase of c.3%.
While the Board is disappointed to see the Company
trade on a discount to NAV of 31.8%, it does believe this discount
materially undervalues the Company, especially considering the
covered 7.5% dividend yield based on the share price as at
30 June 2024.
Investment
activity
In Australia, an agreement to acquire and build two
new fully-permitted solar PV sites with
co- located battery energy storage systems ("BESS") in New South
Wales ("NSW") was signed on 28 March 2024 and the construction
phase started as planned in the first half of the year, with
completion expected in the next twelve months. The solar farm
components of the first three NSW sites also completed
commissioning during the period and the construction of the
co-located BESS on these sites has begun and is progressing in line
with expectations.
In Brazil, three of the remaining six solar sites have
entered the final stages of construction during the period, and all
16 assets are expected to be fully operational by the end of
2025.
Post-period, a major milestone was reached for the
10MW UK flexible power with Carbon Capture and Reuse ("CCR") asset,
with the successful completion of a series of hot commissioning
tests of the four Rolls Royce 16V engines. The testing and
integration of the CCR element of the asset is on track to be
completed by the end of 2024.
Furthermore, GSEO announced post-period the commitment
to acquire and construct a 59.8MW portfolio of five-operating,
ready-to-build ("RTB") and under construction solar and onshore
wind generation assets in Spain, Portugal and Sweden, for a total
consideration of EUR53m. In addition, the Company has acquired the
project rights for an additional 188.6MW of four RTB solar PV
assets in Spain, the construction of which is expected to be funded
by a co-investor and project finance debt.
This programme completes the investment of undeployed
funds and allows the Company to further strengthen and diversify
its portfolio by adding one new technology and three core Western
European energy markets.
The GSEO portfolio is expected to be fully operational
during the course of 2025.
Please refer to the Investment Manager's Report for
further details on the investment activity.
Sustainability and
ESG
The Company continues to deploy capital into
sustainable energy projects around the world and ensures that ESG
criteria are incorporated into all its investment decisions.
During the period under review, GSEO's assets have
generated a total of 512,233 MWh of renewable energy, equivalent to
powering over 130,000 average UK homes annually. A total of 80,734
tonnes of greenhouse gas emissions were avoided in the first half
of 2024, and 10,862 tonnes of sulfur oxides were displaced in the
same period, attributable to the US terminal storage assets.
The Company aims to implement market-leading standards
for transparency and disclosure. GSEO discloses as an
Article 9 Fund under the EU's Sustainable Finance Disclosure
Regulation and reports voluntarily its practice under the Task
Force on Climate-Related Financial Disclosures ("TCFD")
recommendations and requirements. The European Securities and
Markets Authority recently published final guidelines on the use of
ESG related terms in fund names. The Company is reviewing the
implications of the guidelines and will seek compliance under any
resulting regulation. Further details will be found in the
Sustainability section of this report.
GSEO remains committed to strengthening
climate-related financial disclosures over time, continuously
improving its data infrastructure tools to monitor the sustainable
impact of its investments efficiently. This also ensures accurate
reporting on key metrics, including carbon emissions avoided,
renewable energy generated, and life cycle analysis.
Discount
management
While the Company continues to perform well, the Board
acknowledges that the prolonged share price discount to NAV has
presented several challenges for shareholders which both the Board
and the Investment Manager are continuing to address.
A £10 million share buyback programme was
announced on 15 September 2023, and was increased by a further
£10 million on 22 February 2024. As at 30 June 2024,
the Company had bought back a total of £13.8 million worth of
its own shares, and remains active in executing this programme. The
Board continually reviews the capital allocation options available
to the Company, particularly in relation to weighing up investing
in new assets, or supporting current assets, against the benefits
of buying back the Company's shares at a discount. It is our
primary objective to deliver on the Company's financial objectives
of achieving a 10% total NAV return inclusive of an attractive and
progressive dividend, and playing a role in funding the global
energy transition.
While the minimal level of gearing does not require
the Company to sell assets to repay debt, the Board and the
Investment Manager are always looking for asset sale opportunities
that increase shareholder value. In pursuing a prudent capital
allocation policy, the Investment Manager and the Board remain
actively involved in increasing marketability and liquidity of
GSEO's shares by attracting new institutional and retail investors
to the shareholder register.
The Board will continue to ensure the Company is doing
everything it can to manage its discount and is fully focussed on
delivering long-term value for shareholders.
The Board and the Investment Manager, alongside
Deutsche Numis, the Company's broker, continue to have an active
dialogue with both existing and prospective shareholders. They also
have initiatives in place to continue targeting retail investors.
These investor relation and marketing initiatives continue to
showcase the attractiveness of GSEO, creating new buying in the
Company's shares with the objective of ultimately returning to
trading at a premium to NAV as merited by diversification,
expectation of future value from bringing projects to operations,
anticipated revenue growth and long-term inflation linked cashflows
backed by real assets that are fundamental to the country in which
they are operating.
Outlook
As one of the first listed global Infrastructure funds
to formally link the origination of its investments to the
sustainability agenda as defined by the UN Sustainable Development
Goals ("SDGs"), GSEO remains very well positioned to play an
important role in accelerating the world's energy transition to net
zero, while offering its shareholders differentiated and
sustainable returns over the long-term.
The Board and I are confident that the Company's share
price will recover over time. We remain focused on disciplined
capital allocation to optimise and enhance shareholder returns.
For the remainder of the year, the Investment
Manager's focus will be on enhancing the portfolio's value by
completing the construction of existing assets and continuing to
create additional value through active management of the
operational assets.
On behalf of the Board, I would like to thank
shareholders for their continued support, and the Investment
Manager, Victory Hill, for its hard work in continuing to deliver
on the Company's investment objective.
Bernard Bulkin, PhD, OBE
Chair
10 September 2024
INVESTMENT MANAGER'S
REPORT
"Traditional views on the underlying drivers for
increased power usage, including electrification, decarbonisation
of industry and electrification of transportation, have been
disrupted by the growth of data centres, cryptocurrency and notably
artificial intelligence (AI) technology."
Richard Lum
Victory Hill takes a holistic approach to addressing
the energy transition, across the energy value chain and across
borders, and we designed GSEO in order to meet the growing demands
for power and midstream infrastructure brought about by the global
phenomena for more energy.
Our investments are thematically aimed at supporting
the energy transition as energy markets globally internalise this
phenomena, leading to local market dislocations. GSEO's investment
in the UK is geared towards providing dependable and carbon free
flexible and baseload power in a system constrained by intermittent
renewables. We expect greater demand from AI driven data centres to
create further market constraints and potentially interesting
margin opportunities for our UK project to access.
Market backdrop & outlook
According to the International Energy Agency's (IEA)
World Energy Investment report for 2024, investment across the
global energy sector is due to exceed US$3 trillion dollars for the
first time in 2024, with 60% of it going into clean energy
technologies and infrastructure, demonstrating the centrality of
energy to the global economy. As population growth continues to
trend upwards and global economies continue on their pathway out of
the post‑covid slump, demand for energy will continue to grow.
It is clear that growth in electricity's share of
final energy consumption has also played a key role in stimulating
the overall demand growth for energy. According to the IEA,
electricity demand globally is expected to rise at a faster rate
over the next three years, at an average of 3.4% annually to 2026,
and its share of final energy consumption is expected to increase
to 30% in 2030 from 20% currently.
A behavioural shift in the type of final energy
economies consumed has therefore been a key factor in the energy
transition to net zero as we had previously observed.
Generative AI technology is a relatively new
phenomenon with potentially profound benefits for global society,
but at a cost of significant energy demand, and potentially large
emissions. AI processes are broken down into two
phases: firstly training, where large amounts of data are
collated and consumed, and secondly inference, where an AI model
utilises its training to reason and make predictions when presented
with a request, in a way which mimics human ability. The training
phase of AI models consumes significant amounts of energy. Indeed,
it is estimated that, overall, a ChatGPT query may consume anywhere
between 6 to 10 times more energy than a similar Google search.
The IEA estimates that data centres alone consumed an
estimated 460 terawatt-hours (TWh) of electricity in 2022, and its
consumption of electricity could reach more than 1,000 TWh in 2026,
equivalent to Japan's electricity consumption.
Global data centre demand for electricity driven by AI
is expected to result in a generational growth in power demand,
with some analysts (Goldman Sachs Equity Research April 2024)
estimating a 160% increase in data centre power demand by the end
of 2030, with data centres share of global power demand rising to
3-4% of global power demand by the end of the decade. If all
predicted data centre power demand growth was concentrated in a
single country, according to analysts, it would be among the top 10
power consuming countries in the world.
All of this demand for power will have significant
implications for the energy transition to net zero. Firstly, unless
all of the supply of additional electricity comes from renewable
sources, there is likely to be an impact in emissions growth. Data
centre requirements for power cannot be met with intermittent power
sources such as renewable generation alone. Centres operate
irrespective of the time of day and whether there is sufficient
wind or solar resource to power their mission. Conventional sources
of power will therefore still have a role to play in enabling this
technology over the medium term.
Some analysts predict that the jump in carbon dioxide
emitted from data centre requirements will be equivalent to a 100%
increase in 2030 over 2022 (equivalent to 215-220 million
tons), predicated on power from renewable PPA sources accounting
for up to 30% of the requirement, with the balance provided by
natural gas generation. Natural gas has 50% less carbon dioxide
when combusted compared to coal and is increasingly seen as a
decarbonising fuel source particularly in the US where cheap
supplies of domestically produced natural gas is abundant.
A Goldman Sachs report estimates that 47 GW of
incremental power generation capacity will be required in the USA
to support US data centre power demand growth cumulatively through
2030, met with about 60% gas and 40% renewable sources. This is
expected to translate to an additional $50 billion of capital
investment in US power generation capacity cumulatively through
2030. Further capital will also be required to upgrade transmission
infrastructure, and indeed gas processing, storage and distribution
channels.
In Europe, it is anticipated that electricity could
account for up to 55% of primary energy over the coming decade.
Much of this growth in power demand is expected to come from data
centres located (a) in countries such as the Nordics, Spain
and France, where baseload power from nuclear, wind, hydro and
solar is relatively cheap and well supplied; and (b) as well
as countries with large financial and service centres, or countries
that offer tax incentives such as Germany, the UK and Ireland. It
is estimated that AI-driven consumption of power will add around
220TWh of electricity demand in Europe.
In continental Europe, the recently announced
acquisition and build out of a renewables platform in Spain,
Portugal and Sweden will target opportunities for favourable
private PPAs as supply side constraints are addressed.
In the US, GSEO's midstream infrastructure platform is
well placed to access further opportunities arising from the need
to increase infrastructure build out to support gas fired power
generation, and in Australia, regional data centre demand is
anticipated to place further pressure on a constrained power
market, leading to more opportunities for margin access and
frequency support services from our solar and BESS storage hybrid
projects.
The IEA estimates that data centres alone consumed an
estimated 460 terawatt-hours (TWh) of electricity in 2022
A Goldman
Sachs report estimates that 47GW of incremental power generation
capacity will be required in the USA to support US data centre
power demand growth cumulatively through 2030
In Europe, it is anticipated that electricity could
account for up to 55% of primary energy over the coming decade
It is estimated that
AI-driven consumption of power will add around 220TWh of
electricity demand in Europe
Investment updates
1. Brazilian
solar PV assets
This programme is building a portfolio of distributed
generation plants across Brazil. There are currently 16 assets
under this portfolio, 10 of which are operational with the
remaining six currently under construction. All assets have useful
lives of 25 years and are fully contracted with a combination
of investment-grade offtakers or a consortium of offtakers. All 16
assets are expected to be fully operational by the end of 2025.
Update:
• During
the period under review, we replaced the contractor working on
three of the construction assets due to their below-expected
performance and to prevent further delays.
•
Performance of the operational assets is improving towards the
target levels from the original design as the Operations &
Maintenance teams continue to optimise their services.
2. Brazilian
hydro facility
The 198MW run-of-river hydropower plant was acquired
in 2022 from EDP Group. The facility is located in the state of
Espírito Santo, has been operational since 1974 and went through a
major repowering in 2011. The plant ownership was awarded under a
concession framework with three years remaining from previous cycle
and renewal planned for another 20 years thereafter. This
facility benefits from a portfolio of over 30 long-term inflation
linked PPAs with creditworthy counterparts in the regulated
utilities market. It also has the potential to commercialise power
with large energy consumers in the self-consumption segment of the
energy market.
Update:
• The hydro
facility in Brazil remains a strong performer in the portfolio,
exceeding expectations in the first half of the year.
• In June
the asset marked its 50th anniversary since commercial operations
started.
The milestone was celebrated by Paraty Energia, the
operating partner, with a series of events designed to honour the
plant's history, recognise the contributions of its employees over
the decades of operation, and engage with the local community. The
celebration included speeches, a documentary screening, community
activities and a commemorative plaque unveiling, recognising the
plant's significance to the region.
Over 200 villagers attended the celebration reflecting
the community interest and involvement.
The final day of celebrations focused on promoting
family and community connection, particularly aimed at the children
and families of employees and former employees. The latter
underlined a sense of continuity over the 50 year history. The
workforce was acknowledged, and the contributions of past and
present employees recognised in supporting successful plant
operations.
The 50th anniversary of the Mascarenhas Hydroelectric
Plant was a landmark event that celebrated the plant's rich history
and its deep connection with the community. Paraty Energia
demonstrated its commitment to honouring the past while looking
forward to continued success and community engagement in the
future.
3. US terminal
storage assets
In 2021, the Company acquired two operating liquid
storage terminals located in the Port of Brownsville, Texas, with
the objective to displace highly-pollutive fuel sources produced in
Mexico. Since acquisition, the capacity of the terminals has been
expanded from 525,000 barrels to 895,000 barrels. The sites have a
useful life of at least 30 years, and the operating partner is
Motus Energy LLC, which combines the team that built and
operated the assets from the previous owner and an established
cross-border fuel exporter.
Update:
• During the period under review,
the Company continued to implement operational optimisations and
preventive maintenance. Terminal 1 tank inspections and preventive
services were implemented, without interrupting the terminal's
normal operations.
• The
programme's operating partner, Motus, obtained the ISO 45001
health and safety management system certification as well as
ISO 14001 environmental management certification on its
operations, leading to safer and improved operational practices.
Motus was also awarded the ILTA (International Liquid Terminals
Association) 2024 Safety Award.
4. Australian
solar PV with battery storage assets
This programme is building a portfolio of
decentralised hybrid distributed solar and battery assets,
providing additional renewable energy and energy storage capacity,
both critically needed by the energy system in Australia. GSEO has
two operating assets in South Australia and Queensland totalling
17MWDC, with a 2-hour BESS on one of the assets to enhance its
commercial potential. The Company also owns three ready to build
sites in New South Wales ("NSW") of 4.95MW solar with a 2-hour
BESS. The solar farm component of these sites has completed
construction and construction of BESS is ongoing.
Update:
• The solar farm component of the three
NSW sites completed commissioning during the period and are
operational. Construction of the co-located BESS is progressing in
line with expectations.
• During
the period, we acquired two additional ready to build projects in
NSW comprised of 4.95MW solar PV sites with co-located 2-hour BESS.
Construction of the two hybrid sites has begun with completion
expected in the next 12 months.
• Once completed, the total capacity of
the Australian programme will be 37MW/60MWh, across seven assets.UK
flexible power with CCR asset
5. UK flexible
power with CCR asset
This programme consists of a flexible power generation
asset that provides a compelling solution to enable further
renewable energy penetration in the UK. It does so by providing a
source of dependable flexible energy, which enables the grid to
respond to intermittency issues caused by wind and solar power
generation. The project has a 15-year power offtake and gas supply
agreement with a major European utility, Axpo, as well as a 15-year
offtake agreement for food-grade CO2 with Buse, a specialist
industrial gases group. Additional sources of revenues for the
asset include grid ancillary services (i.e. balancing
mechanism, and capacity market payments). There is also optionality
for the asset to provide private wire power to local businesses.
This has not been assumed in the investment base case.
Update:
• During the period, the four
Rolls Royce 16V engines were fully commissioned and have been
generating power in the course of testing, enabling the site
operational phase processes. Whilst current construction phase
insurance prevents the 16V operations from being ramped up to full
capacity until the overall integrated project reaches completion,
power generated during this period was transmitted to the grid and
revenues were earned. Meanwhile, the construction work continues
based on the agreed construction plan in the new EPC contract.
• The full
commissioning of the plant with the CCR element is progressing and
completion is still expected in the second half of the year.
6. Post-period
investment:
Spanish, Portuguese and Swedish solar &
onshore wind assets
Post-period, we completed the acquisition of a new
programme of renewable energy assets focused on supporting the
anticipated increase in demand for power on the European
continent.
The aim of this programme is to continue to support
the global energy transition by identifying market dislocations and
providing investors with a differentiated return. The three markets
targeted in this programme are widely acknowledged to be at the
front-end of significant electricity demand in the coming years due
to increased electrification of the country, the implementation of
aggressive decarbonisation targets and the build out of new energy
intensive sectors including data centres and AI technology's
significant demand for power.
In Spain, the nationally mandated need to ensure quick
penetration of solar and wind generation, the accelerated
decommissioning of baseload generation sources such as nuclear
power, coupled with a limited interconnection with continental
Europe, ensure conditions are aligning to allow investors to secure
differentiated returns through pursuing private commercial revenue
contracts.
Portugal's decarbonisation strategy centres around
electrification and the expansion of renewables as part of the
electricity generation mix. As part of its National Energy and
Climate Plan (NECP), the country is targeting 80% of electricity
generation to come from renewables by 2030 and aims to reach a 47%
share of renewables in final energy consumption and 20% share of
renewables for transportation. Portugal has set technology-specific
renewable capacity targets for 2030 in its latest NECP to guide the
expansion of clean energy.
Sweden is a global leader in decarbonisation and has
targets to cut greenhouse gas emissions by 59% by 2030 compared
with 2005 and have 100% renewables in its energy mix. Sweden was
the first country to introduce carbon pricing and is one of the
countries with highest carbon price in the world which has proven
effective at driving decarbonisation. Major grid upgrades will
catalyse market integration and efficiency, alleviating existing
bottlenecks in the country and support higher, stable pricing in
the long term with higher wind captured prices. The latter is
accompanied by increased power demand in North Sweden. A major
growth in industrial demand in northern Sweden is predicted,
primarily driven by an agenda to decarbonise energy intensive
industries by locating these close to cheap sources of renewable
energy, such as AI-driven data centres, EV battery manufacturers,
and green steel which are expected to increase demand by 19TWh of
clean energy.
GSEO is partnering with Spanish Power SL, a
specialised developer and operator established in 1998, with a
track record of constructing over 540MW of projects and has
developed and sold around 1.8GW of solar and onshore wind projects.
Spanish Power SL will own 20% of this programme.
The Company acquired a 59.8MW portfolio of five
operating, ready-to-build ("RTB") and under construction solar and
onshore wind generation assets in Spain, Portugal and Sweden, for a
total consideration of EUR53m. In addition, the Company has
acquired the project rights for 188.6MW of four RTB solar PV assets
in Spain, construction of which is expected to be fully funded by a
European strategic fund and project-level debt, giving a total
program size of 248.4MW across nine assets.
The programme is split into two deployment legs, the
first of which, completed in July, was an investment from GSEO of
EUR53m to fund a 59.8MW portfolio consisting of:
• A
3.7MW operational solar PV
plant in Spain
• A
6MW operational onshore
wind asset in Sweden
• A
20MW solar PV plant under
construction in Portugal
• A
10.3MW solar PV plant under
construction in Spain
• A
19.8MW RTB onshore wind
asset in Spain
The second leg consists of funding the construction of
the 188.6MW RTB solar PV assets, for a total amount of EUR45m in Q4
of this year. Once the second leg is completed, GSEO will be the
largest owner of the portfolio with an effective ownership of
43.5%, with the balance split between the equity co-investor and
joint venture partners, Spanish Power.
This investment will bring the total number of assets
in the GSEO portfolio to 36, split across seven countries and six
technologies.
Portfolio operational & financial
performance
The operating assets' actual energy generation was
broadly above budget for the six-month period to 30 June
2024:
1. 10 Brazilian solar PV assets
• The
portfolio of 10 operational distributed solar PV assets in Brazil
continues to generate power, albeit below full capacity, primarily
due to overvoltage events during the first half of the year. This
has now been remedied and we expect the budget deviation to improve
in the second half of the year.
2. Brazilian hydro facility
• The
Brazilian hydro facility continues to be a strong performer in the
portfolio with earnings ahead of budget in the first half of the
year.
• This was
mainly driven by a combination of higher hydro resource
availability, high inflation impacting PPA prices positively and an
optimisation of operating costs during the period.
3. Five
operating Australian solar PV with
battery storage assets
• The Australian solar PV with
battery storage programme exceeded expectations during the period,
with performance above budget.
• Overall, revenues were supported by
higher wholesale prices compared to the previous year, driven by
increased demand from a colder winter in the region.
4. US terminal storage assets
• The H1
EBITDA for the terminal storage assets was below budget, owing to
weather-related events in the Mexican Gulf Coast. This disrupted
the rail system used to transport products from Mexico to the
storage terminals, causing a backlog of product deliveries during
the period.
*Brazil Hydro generation represents
gross power generation
** Brazil Solar PV generation
relates to production related to financial performance including
that consumed by the plant
Highly contracted portfolio with creditworthy
counterparties
Programme
|
Key
offtaker(s)
|
PPA
term
|
Asset
life
|
|
Brazilian solar PV
assets
|
|
20 years
|
25 years
|
|
Brazilian hydro
facility
|
More than
30 PPAs with
blue-chip utilities counterparties - e.g. EDP
|
up to
15 years
|
25 years
|
|
US terminal storage
assets
|
*
|
3 years rolling
|
30 years
|
|
UK flexible power with CCR
asset
|
|
15 years
|
25 years
|
|
Australian solar PV with
battery storage assets
|
Local
Australian utilities -
e.g. Diamond
Energy
|
Targeting
contracted revenues of up to 50% - the remainder is intentionally
left as merchant to capture the peak margin opportunity in
Australia
|
25 years
|
|
Note: Asset life: since
acquisition/commercial operational date ("COD")
* PMI is a 100% subsidiary of
PEMEX
CASE STUDY
The Australian power market
The Australian market is unique in that it has great
renewable resource potential (land availability, wind and solar
resources) but is predominantly positioned at the opposite end of
the energy spectrum in having the majority of the country's energy
needs generated by coal.
As the country advances its policy to move away from
coal and introduce more renewable energy to the grid, the issue of
grid stability increases. On cloudy days with no breeze, renewables
raise concerns about energy supply security and price stability.
Even when the sun is shining and the wind is blowing, solar power
and other intermittent renewables can be problematic for energy
grids.
Co-locating solar PV and BESS provides the system with
additional renewable energy. It also supports grid stability with
the storage solution, allowing the assets to better serve the needs
of the Australian power market in its energy transition.
Notably, GSEO expects to gain access to additional
energy arbitrage as well as frequency stability services revenue
streams from the co-located BESS.
The above chart shows the average demand in South
Australia during the summer workday from 2017 to 2022. Demand
volume for the network operator has been declining during daylight
hours due to increasing rooftop solar PV generation. Intense energy
production from rooftop solar PV throughout the day, followed by a
sharp drop in power production when the sun sets, does little to
meet energy demand which ramps up sharply in the afternoon. This
phenomenon is called the "duck curve". The duck curve - named due
to its shape - helps us understand the challenge of renewables
integration and the potential a storage solution like co-located
BESS has in such market.
Following the completion of the construction of our
co-located 2 hour 4.95MW BESS, the solar and storage hybrid system
in South Australia is capturing attractive power prices in the
intraday market. During H1 2024, the monthly average captured price
for BESS was over A$200/MWh, which is more than 4 times higher than
the average captured prices for solar during the same period. This
showcases how the asset is able to optimally shift its power
dispatch profile to capture high peak power prices in the early
morning and afternoon.
Furthermore, during H1 2024, South Australia
experienced electricity prices above A$1,000/MWh 42 times, reaching
at times the market cap price of A$16,600/MWh. Similarly in New
South Wales, we have observed events in May where prices were above
A$15,000/MWh. The reasons for such price spikes varied, including
variable renewable energy generation, weather, bushfires and
restricted import capacity from neighbouring regions. However, we
believe this trend will continue as this is an indication of prices
being highly sensitive to supply and demand fluctuations due to
grid constraints and increased intermittent renewable energy. This
continues to support our thesis on having flexible capacity within
the programme.
Net Asset Value
The NAV of the Company decreased from £483.8m at
31 December 2023 to £447.7m at 30 June 2024. The key
drivers for the NAV decrease were:
• An
unrealised foreign exchange loss of £22.2m mainly driven by a 14.5%
weakening of BRL against GBP during the period.
• £8.4m was spent by the
Company during the period on the ongoing share buybacks bringing
the total number of shares bought back to 18.6m.
• The decrease in NAV was partially
offset by the £9.9m received in distributions from the underlying
investments.
• The fair value movement on
investments was -£0.2m as the weighted average discount rate
applied to operational assets decreased by a moderate 9bps offset
by an updated inflation outlook.
• Total
fund expenses for the period of £3.4m or 1.5% in an ongoing charges
ratio.
Key sensitivities
Discount rate
A range of discount rates are applied in calculating
the fair value of the investments, considering risk free rate,
country-specific and asset-specific risk premia and betas. Discount
rates for operational assets at 30 June 2024 are 7.07%
(31 December 2023: 6.91%) in the US, 7.65%
(31 December 2023: 7.74%) in Australia, 9.40%
(31 December 2023: 9.54%) for the Brazilian hydro
facility and 9.46% (31 December 2023: 9.67%) for the
Brazilian solar PV assets. A 1.5% increase (decrease) in
discount rates across the portfolio decreases (increases) NAV by
8.2p (10.2p).
Inflation
The sensitivity assumes a 1% increase or decrease in
long-term inflation relative to the base case of 2.15% for the US
assets, 2.63% for the Australian assets and 3.00% for the Brazilian
assets for each year of asset life. A 1.0% increase (decrease)
in inflation rates across the portfolio increases (decreases) NAV
by 7.0p (5.8p).
Operating expenses
The sensitivity assumes a 5% increase or decrease in
operating expenses relative to respective contracts and budgets for
each asset. A 5% increase (decrease) in operating expenses
across the portfolio decreases (increases) NAV by 2.1p (2.1p).
Foreign exchange
The sensitivity assumes a 10% increase or decrease in
foreign exchange movements against the sterling. The Company seeks
to manage its exposure to foreign exchange movements by hedging
short-term distributions from non-sterling investments but, due to
long-term inflation-linked revenues stemming from these
investments, the Company does not hedge the principal value of the
investments. A 10% increase (decrease) in foreign exchange
rates across the portfolio decreases (increases) NAV by 7.5p
(9.2p).
Asset life
The sensitivity assumes a 1-year increase or decrease
in asset life relative to the base cases of 30 years for the
US terminal storage assets, 25 years for the Australian solar
PV with battery storage assets, Brazilian solar PV assets and
Brazilian hydro facility. A 1-year increase (decrease) in
asset lives across the portfolio increases (decreases) NAV by 1.3p
(1.2p).
Resource sensitivity
The portfolio has little resource risk sensitivity
given the availability-based nature of the US terminal storage
assets, the base load generation profile of the Brazilian hydro
facility, and the addition of battery storage to the Australian
solar PV assets to mitigate solar intermittency risk.
SUSTAINABILITY
"The Company recognises that achieving a successful
energy transition involves balancing three key
aspects: environmental sustainability, energy security and
access, and economic growth and development."
Eleanor
Fraser-Smith
Head of Sustainability (Victory Hill Capital
Partners LLP)
In the first half of 2024, the Company's investment
and asset management strategy maintained its impact and focus on
achieving this balanced approach. Investments continued to support
the phasing out of pollutive energy sources and supply of clean
energy to power grids to serve communities and business. The
Company also implemented operational improvements, generating
meaningful local environmental and social benefits through
engagement with its operating partners.
ESG Regulation & Framework Alignment
The Company's investment strategy, designed to align
with the UN Sustainable Development Goals (SDGs), focuses on
promoting and hastening the energy transition by investing in
sustainable energy infrastructure that benefits communities
globally. To reach these goals, the Investment Manager recognises
the importance of responsible and sustainable investment,
acknowledging the interconnectedness and mutual reinforcement of
social and environmental sustainability. Through the Company's
investments, the Investment Manager aims to bridge critical gaps in
energy markets, supporting energy security, accessibility, and
economic growth.
The Investment Manager is committed to adhering to the
principles of the UN Global Compact. This involves employing a
risk-based methodology to Company investments that prioritises
external validation of SDG strategy alignment, ensuring no
significant harm to SDG goals, and includes comprehensive ESG due
diligence, and materiality and risk-opportunity assessments.
Governance or management system gaps are identified,
and significant risks or opportunities to create sustainable value
are prioritised. Actions to mitigate these issues are outlined in
each investment-specific Sustainability Action Plan (SAP). The SAP
is an evolving document that is consistently reviewed and updated
in collaboration with the Company's operating partners. Performance
against these plans form part of an annual operating partner
assessment.
The Company's investment objective reflects its
commitment to sustainability, making it subject to the EU
Sustainable Finance Disclosure Regulation ("SFDR"). Disclosures are
available on the Company's website.
The European Securities and Markets Authority ("ESMA")
recently published final guidelines on the use of ESG related terms
in fund names. The Company is reviewing the guidelines' terminology
proscriptions and restrictions within the context of its
sustainability objective and underlying investments.
The Company is pursuing a label under the new FCA
Sustainable Disclosure Regulation ("SDR") and has explicitly
updated its investment objective to highlight sustainability goals
previously identified in the investment policy, with approval from
the Board and Investment Manager governance committees. The Company
is evaluating label options and preparing necessary documentation
to meet the December 2024 application deadline.
H1 2024 Sustainability Highlights
Solar
energy generated
40,838 MWh
30 June 2023: 28,334 MWh
Hydro power
generated
471,395* MWh
30 June 2023: 488,251 MWh
Equivalent
to powering over
130,000
houses annually in the UK**
30 June 2023: 138,458 households
Sulfur
oxides displaced
10,862 tonnes
30 June 2023: 11,359 tonnes
CO2e
emissions avoided
80,734*** tonnes
30 June 2023: 53,423 tCO2e
The
equivalent of removing over
44,074
average sized cars from UK roads
30 June 2023: 26,100
*
Hydro generation represents the power injected into the grid
only.
**
References for equivalency calculations: UK energy use -
www.ofgem.gov.uk UK mileage - www.dft.gov.uk
*** Increase
in avoided emissions (2023 interim comparison) is attributed to
increased carbon intensity of Brazilian grid (IEA published
emission factors).
H1-24 ESG OPERATIONAL PERFORMANCE
Half year 2024 ESG operational
performance1
Portfolio energy use and GHG
emissions2
Scope
|
Energy use (MWh)
H1 2024
|
Energy use (MWh)
H1 2023
|
GHG emission,
(t CO2e) H1 2024
|
GHG emission
(t CO2e) H1 2023
|
Scope 1
|
8,831
|
10,730±
|
1,597
|
1,963±
|
Scope 2
|
1,345
|
910±
|
366
|
269±
|
Total operational emissions
(Scope 1&2)
|
10,176
|
11,640±
|
1,963
|
2,232±
|
Scope 3
|
-
|
-
|
23,278
|
16,827±
|
Total Scope emissions
|
-
|
-
|
25,242
|
19,059±
|
The Company has reported progress against the net zero
asset managers target for the portfolio reporting a 12% reduction
in scope 1&2 emissions from H1 2023 to H1 2024. This was driven
primarily by efficiency gains in the terminal storage asset.
There has been a slight increase in operational
emissions due to additional operational assets, including the
Australian solar PV with battery storage assets. The increase in
Scope 2 is due primarily to the commissioning of the BESS assets in
Australia and increase in imported grid electricity. Improvements
in Scope 3 data capture and reporting is reflected in the increased
emissions data.
Operational environmental and social data
Metric
|
Units
|
2024 H1
|
2023 H1
|
Water Use
|
kilolitres
|
14,706
|
14,000
|
Water Quality Index -
Hydro
|
WQI
|
Good
|
Good
|
Waste
|
tonnes
|
7
|
66
|
NOX avoided
|
tonnes
|
1,078
|
1,129
|
PM 10 & 2.5 avoided
|
tonnes
|
960
|
1,002
|
Environmental performance is comparable to H1 2023
despite the additional assets. Avoided air emissions metrics
reflect a slight reduction in HSFO flow through the US terminal
storage asset.
Social
Metric
|
Units
|
2024 H1
|
2023 H1
|
Gender Diversity
|
|
|
|
Male
|
% of average
|
98
|
98
|
Female
|
% of average
|
2
|
2
|
Other
|
% of average
|
0
|
0
|
Staff turnover
|
% of average
|
21
|
2
|
Total number of employees
(asset)
|
Full time equivalent
(FTE)
|
67.5
|
61
|
Total number of employees
(operator)
|
Full time equivalent
(FTE)
|
57
|
NR
|
Health and Safety
|
|
|
|
Total incident
number3
|
Number of incidents
|
3
|
1
|
Total case injury
rate4
|
Total number of recordable
injuries
|
2
|
0
|
Staff turnover remains a challenge in the US where the
workforce is transient and the local labour market is competitive.
The operator is continuing to implement policies to support labour
retention. The Brazilian hydro facility also saw some turnover in
Q2 following a period of workforce stability.
Improving diversity for small mid-market operators
remains a challenge particularly in female representation.
Recruitment pipelines continue to draw from local talent pools that
lack diversity and the operators often lack resources for robust
diversity initiatives. The Company is committed to working with the
operators to overcome challenges and create a more diverse
workforce.
The Company is pleased that health and safety
continues to be a focus for operating partners. Root cause review
of two traffic related incidents in the Brazilian solar PV
programme has led to improved practices by the operating partner
and the Company continues to monitor progress.
1
ESG data is not assured. Limited assurance is achieved on end of
year data. For the most up to date assured ESG data please see the
2023 annual report and accounts.
2
Data with ± symbol is restated from 2023 interim report following
correction of energy use reporting at US terminal storage asset and
improved reporting with increase in Scope 3 categories
included.
3
This includes near miss and those resulting in employee
injury.
4
Number of recordable injuries reported.
CASE STUDY
Enhancing operations and
community engagement in the Brazilian distributed solar
portfolio
The Company's solar PV footprint in Brazil continues
to grow with ten operating solar sites and six currently under
construction. These are distributed across nine regions in
Brazil.
The Investment Manager works with its operating
partners to build capacity on sustainability and ESG topics and
provides guidance on environmental and social aspects of
operations. This collaboration supported the Company's operating
partner, Energea, in its efforts to improve ESG practices.
Strengthening health
and safety practices
In collaboration with Victory Hill, Energea has
prioritised health and safety across all sites with key initiatives
including:
•
Policy and procedures:
updating the health and safety manual to reflect best
practices.
• Training programs: implementing
training sessions for O&M specialists focusing on best
practices, emergency procedures and hazard recognition.
• Distribution of personal protective equipment
(PPE): ensuring all team members are equipped with the
necessary PPE to perform their duties safely.
• Site risk analysis: conducting in-depth
risk assessments for each site with expert external support to
identify potential hazards and implement corrective measures.
Addressing
transportation risks
Transportation between sites has been identified as a
key safety risk due to the significant distances involved. In the
first half of the year, two traffic-related incidents, fortunately
resulting in no serious injuries, prompted a thorough review of
transportation practices. Evaluation of current practices led to
the development of more stringent transportation protocols,
including:
•
Appropriate vehicles:
Ensuring that all vehicles used are company-provided and suitable
for the terrain and conditions of the routes between sites.
• Employee awareness: Reinforcing
transportation procedures through training and communication,
emphasising the use of company-provided vehicles only.
• Vehicle maintenance: Regular
maintenance schedules to keep the fleet in optimal condition,
ensuring safety and reliability.
Energea provides transportation for all site-based
teams and stipulates only company-owned vehicles can be used during
working hours. This policy not only enhances safety but also
ensures that vehicle maintenance is consistent and up to date.
Employee and
community engagement
In addition to focusing on internal operations,
Energea has taken significant steps to improve its engagement with
local communities:
• Improved signage: Installation of
clear, visible signage around all sites, highlighting potential
dangers and providing contact details for the site operator.
• Community outreach: Active engagement
with local businesses and residents to raise awareness of the sites
and their benefits.
• Stakeholder engagement plan: Using
an Investment Manager provided tool and guidance, Energea initiated
interviews with local community members to gather feedback on the
impact of the sites. Key themes included better signage,
recruitment opportunities, and infrastructure improvements such as
roads, drainage and access to renewable energy.
Outcomes and future
plans
Energea's proactive approach has enhanced local safety
culture, improved employee engagement and started to create
stronger community relationships through increased engagement and
responsiveness to community feedback.
The asset Sustainability Action Plan, agreed between
Energea and the Investment Manager, identifies priorities in 2024.
The operator will continue to focus on health, safety and security,
transportation safety, and community engagement. The operator is
committed to ongoing improvement, ensuring that its operations
benefit both employees and the surrounding communities.
The Investment Manager is working with Energea to set
the standard for responsible and sustainable renewable energy
operations.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors acknowledge responsibility for the
Interim Report and confirm that, to the best of their knowledge,
these condensed financial statements have been prepared in
accordance with IAS 34 "Interim Financial Reporting" and give a
true and fair view of the assets, liabilities, financial position
and profit of the Company, as required by DTR 4.2.4R. The Directors
confirm that the Interim Report (including the Chair's Statement
and the Investment Manager's Report) includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R, namely:
• An
indication of important events that have occurred during the first
six months of the financial year, and their impact on the condensed
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial period;
and
• Material
related party transactions that have taken place in the first six
months and any material changes in the related party transactions
described in the last Annual Report.
The Directors of the Company are noted on below.
The principal risks and uncertainties associated with
the Company's business include, but are not limited to, the risks
listed below. Information on these risks and how they are managed
is set out on pages 49 to 56 of the 2023 Annual Report. In the view
of the Board, the majority of the principal risks and uncertainties
were unchanged over the last six months and remain applicable to
the rest of the financial year.
Risks relating to the Company:
• Reliance
on Investment Manager
• Reliance
on third party service providers
• Currency
risks
• Liquidity
risks
Risks relating to the portfolio investment
strategy:
•
Illiquidity of investments
• Market
conditions
•
Concentration risk
Risks relating to investments:
•
Construction risks
• Due
diligence
•
Counterparty risks
• Uninsured
loss and damage
•
Curtailment risks
• Commodity
price risks
• ESG
risks
Risks relating to the Company's shares:
• Discount
to NAV
Risks relating to regulation:
•
Regulation
Operational risks:
• Operation
and management risks of the portfolio of assets
• Valuation
risk
Climate-related risks:
• Physical
risks
•
Transition risks
This Interim Report was approved by the Board of
Directors and the above Responsibility Statement was signed on its
behalf by:
Bernard Bulkin
Chair
10 September 2024
INDEPENDENT REVIEW REPORT
TO VH GLOBAL SUSTAINABLE ENERGY OPPORTUNITIES PLC
Conclusion
Based on our review, nothing has come to our attention
that causes us to believe that the condensed set of financial
statements in the half-yearly financial report for the six months
ended 30 June 2024 is not prepared, in all material respects,
in accordance with UK adopted International Accounting Standard 34
and the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
We have been engaged by the Company to review the
condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2024 which comprises
Condensed Statement of Comprehensive Income, Condensed Statement of
Financial Position, Condensed Statement of Changes in Shareholders'
Equity, Condensed Statement of Cash Flow and Notes to the
Financial Statements.
Basis for conclusion
We conducted our review in accordance with Revised
International Standard on Review Engagements (UK) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" ("ISRE (UK) 2410 (Revised)"). A review of interim
financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial
statements of the Company are prepared in accordance with UK
adopted international accounting standards. The condensed set of
financial statements included in this half-yearly financial report
has been prepared in accordance with UK adopted International
Accounting Standard 34, "Interim Financial Reporting".
Conclusions relating to going concern
Based on our review procedures, which are less
extensive than those performed in an audit as described in the
Basis for Conclusion paragraph of this report, nothing has
come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or
that the Directors have identified material uncertainties relating
to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures
performed in accordance with ISRE (UK) 2410 (Revised), however
future events or conditions may cause the Company to cease to
continue as a going concern.
Responsibilities of directors
The Directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
In preparing the half-yearly financial report, the
Directors are responsible for assessing the Company's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the
financial information
In reviewing the half-yearly report, we are
responsible for expressing to the Company a conclusion on the
condensed set of financial statement in the half-yearly financial
report. Our conclusion, including our Conclusions Relating to Going
Concern, are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
Our report has been prepared in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority and
for no other purpose. No person is entitled to rely on this report
unless such a person is a person entitled to rely upon this report
by virtue of and for the purpose of our terms of engagement or has
been expressly authorised to do so by our prior written consent.
Save as above, we do not accept responsibility for this report to
any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
10 September 2024
BDO LLP is a limited liability partnership
registered in England and Wales (with registered number
OC305127).
CONDENSED STATEMENT OF
COMPREHENSIVE INCOME
For the period
1 January 2024 to 30 June 2024
|
|
For the
six-month period ended
30 June 2024
(unaudited)
|
For the
six-month period ended
30 June 2023
(unaudited)
|
|
Note
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Income
|
|
|
|
|
|
|
|
(Loss) /
Gain on investments
|
6
|
-
|
(23,229)
|
(23,229)
|
-
|
7,862
|
7,862
|
Investment
income
|
3
|
10,514
|
-
|
10,514
|
15,356
|
-
|
15,356
|
Total income and (losses) /
gains
|
|
10,514
|
(23,229)
|
(12,715)
|
15,356
|
7,862
|
23,218
|
Investment
management fees
|
13
|
(2,218)
|
-
|
(2,218)
|
(2,181)
|
-
|
(2,181)
|
Other
expenses
|
4
|
(1,156)
|
-
|
(1,156)
|
(917)
|
-
|
(917)
|
Profit / (loss) for the
period before taxation
|
|
7,140
|
(23,229)
|
(16,089)
|
12,258
|
7,862
|
20,120
|
Taxation
|
5
|
-
|
-
|
-
|
-
|
-
|
-
|
Profit / (loss) for the
period after taxation
|
|
7,140
|
(23,229)
|
(16,089)
|
12,258
|
7,862
|
20,120
|
Profit / (loss) and total
comprehensive income attributable to:
|
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
7,140
|
(23,229)
|
(16,089)
|
12,258
|
7,862
|
20,120
|
(Loss) / earnings per share -
basic and diluted (pence)
|
15
|
1.75
|
(5.68)
|
(3.93)
|
2.90
|
1.86
|
4.76
|
The total column of the Statement of Comprehensive
Income is the profit and loss account of the Company. The
supplementary revenue return and capital columns have been prepared
in accordance with the Association of Investment Companies
Statement of Recommended Practice (AIC SORP).
All revenue and capital items in the above statement
derive from continuing operations, no items are determined to be
unusual by their nature, size or incidence.
The above Statement of Comprehensive Income includes
all recognised gains and losses.
The notes below form part of these financial
statements.
CONDENSED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2024
|
Note
|
As at
30 June
2024
(unaudited)
£'000
|
As at
31 December 2023
(audited)
£'000
|
Non-current
assets
|
|
|
|
Investments
at fair value through profit or loss
|
6
|
371,956
|
369,047
|
Total non-current
assets
|
|
371,956
|
369,047
|
Current
assets
|
|
|
|
Cash and
cash equivalents
|
9
|
75,771
|
74,258
|
Cash
receivable
|
8
|
-
|
40,367
|
Other
receivables
|
8
|
541
|
441
|
Total current
assets
|
|
76,312
|
115,066
|
Total
assets
|
|
448,268
|
484,113
|
Current
liabilities
|
|
|
|
Accounts
payable and accrued expenses
|
10
|
(573)
|
(270)
|
Total current
liabilities
|
|
(573)
|
(270)
|
Total
liabilities
|
|
(573)
|
(270)
|
Net
assets
|
|
447,695
|
483,843
|
Capital and
reserves
|
|
|
|
Share
capital
|
11
|
4,225
|
4,225
|
Share
premium
|
11
|
186,368
|
186,368
|
Special
distributable reserve
|
11
|
218,624
|
227,067
|
Capital
reserve
|
|
35,466
|
58,694
|
Revenue
reserve
|
|
3,012
|
7,489
|
Total capital and reserves
attributable to equity holders of the Company
|
|
447,695
|
483,843
|
Net asset value per ordinary
share
|
|
110.84
|
116.46
|
The financial statements were approved and authorised
for issue by the Board of Directors on 10 September 2024 and
signed on its behalf by:
Bernard Bulkin
Chair
Company Registration Number 12986255
The notes below form part of these financial
statements.
CONDENSED STATEMENT OF
CHANGES IN SHAREHOLDERS' EQUITY
As at 30 June 2024
For the
six-month period ended 30 June 2024
|
Note
|
Share
capital
£'000
|
Share
premium
account
£'000
|
Special distributable reserve
£'000
|
Capital
reserve
£'000
|
Revenue reserve
£'000
|
Total
£'000
|
Opening
balance
|
|
4,225
|
186,368
|
227,067
|
58,694
|
7,489
|
483,843
|
Shares bought
back
|
11
|
-
|
-
|
(8,443)
|
-
|
-
|
(8,443)
|
Total comprehensive
income/(loss) for the period
|
|
-
|
-
|
-
|
(23,229)
|
7,140
|
(16,089)
|
Interim dividends paid during
the period
|
12
|
-
|
-
|
-
|
-
|
(11,616)
|
(11,616)
|
Balance at 30 June
2024
|
|
4,225
|
186,368
|
218,624
|
35,465
|
3,013
|
447,695
|
For the
six-month period ended
30 June 2023
|
Note
|
Share
capital
£'000
|
Share
premium
account
£'000
|
Special distributable reserve
£'000
|
Capital
reserve
£'000
|
Revenue reserve
£'000
|
Total
£'000
|
Opening
balance
|
|
4,225
|
186,368
|
232,467
|
26,177
|
7,936
|
457,173
|
Total comprehensive income
for the period
|
|
-
|
-
|
-
|
7,862
|
12,258
|
20,120
|
Interim dividends paid during
the period
|
12
|
-
|
-
|
-
|
-
|
(11,661)
|
(11,661)
|
Balance at 30 June
2023
|
|
4,225
|
186,368
|
232,467
|
34,039
|
8,533
|
465,632
|
A total of 422,498,890 ordinary shares were issued
since its incorporation to 30 June 2024.
During the period, the Company purchased for treasury
a total of 11,568,147 ordinary shares.
The capital reserve represents the unrealised gains or
losses on the revaluation of investments. The unrealised element of
the capital reserve is not distributable.
The special distributable and revenue reserves are
distributable to Shareholders of the Company.
The notes below form part of these financial
statements.
CONDENSED STATEMENT OF CASH
FLOWS
For the six months ended
30 June 2024
|
Note
|
For the
six-months
period ended
30 June 2024
(unaudited)
£'000
|
For the
six-months
period ended
30 June 2023
(unaudited)
£'000
|
Cash flows from operating
activities
|
|
|
|
(Loss) /
profit before tax
|
|
(16,089)
|
20,120
|
Adjustment
for:
|
|
|
|
Movement in
fair value of investments
|
6
|
23,217
|
(7,346)
|
Interest on
cash deposits
|
3
|
(1,417)
|
(2,776)
|
Operating result before
working capital changes
|
|
5,711
|
9,998
|
Decrease in
prepayments and other receivables
|
|
40,267
|
94
|
Increase /
(decrease) in accounts payable and accrued expenses
|
|
303
|
(17)
|
Net cash flow generated from
operating activities
|
|
46,281
|
10,075
|
Cash flows from investing
activities
|
|
|
|
Purchase of
investments
|
6
|
(26,126)
|
(6,902)
|
Interest on
cash deposits
|
3
|
1,417
|
2,776
|
Net cash used in investing
activities
|
|
(24,709)
|
(4,126)
|
Cash flows from financing
activities
|
|
|
|
Share
buybacks
|
11
|
(8,443)
|
-
|
Dividends
paid in the period
|
12
|
(11,616)
|
(11,661)
|
Net cash used in financing
activities
|
|
(20,059)
|
(11,661)
|
Net decrease in cash and cash
equivalents
|
|
1,513
|
(5,712)
|
Cash and
cash equivalents at beginning of the period
|
9
|
74,258
|
141,791
|
Cash and cash equivalents at
end of the period
|
9
|
75,771
|
136,079
|
The notes below form part of these financial
statements.
Notes to the financial
statements
1. General
information
VH Global Sustainable Energy Opportunities plc
(the "Company") is a closed-ended investment company, incorporated
in England and Wales on 30 October 2020 and registered as a
public company limited under the Companies Act 2006 with
registered number 12986255. The Company commenced operations on
2 February 2021 when its shares commenced trading on the
London Stock Exchange.
The Company has registered, and intends to carry on
business, as an investment trust with an investment objective to
generate stable returns, principally in the form of income
distributions, by investing in a diversified portfolio of global
sustainable energy infrastructure assets, predominantly in
countries that are members of the EU, OECD, OECD Key Partner and
OECD Accession Countries.
The interim condensed financial statements comprise
only the results of the Company for the six-month period ended
30 June 2024, as its investment in VH GSEO UK Holdings Limited
("GSEO Holdings") is measured at fair value through profit or loss
in line with IFRS 10 as explained in note 2.
The annual financial statements of the Company for the
year ended 31 December 2023 were approved by the Directors on
4 April 2024 and are prepared in accordance with UK adopted
International Accounting Standards. The annual financial statements
are available on the Company's website
https://www.vh-gseo.com/.
2. Significant
accounting policies
2.1 Basis of preparation
The condensed financial statements ("financial
statements") included in this Interim Report have been prepared in
accordance with IAS 34 "Interim Financial Reporting". The
financial statements have been prepared on the historical cost
basis, as modified for the measurement of certain financial
instruments at fair value through profit or loss. The principal
accounting policies are set out in Note 2.
The financial statements have also been prepared as
far as is relevant and applicable to the Company in accordance with
the Statement of Recommended Practice: Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP")
issued in July 2022 by the Association of Investment Companies
("AIC").
The financial statements are presented in sterling,
which is the Company's functional currency and are rounded to the
nearest thousand, unless otherwise stated.
The accounting policies, significant judgements, key
assumptions and estimates are consistent with those used in the
latest audited financial statements to 31 December 2023. These
condensed financial statements do not constitute statutory accounts
as defined in section 434 of the Companies Act 2006 and,
therefore, do not include all information and disclosures required
in the annual financial statements and should be read in
conjunction with the Company's annual financial statements for the
year ended 31 December 2023. The audited annual accounts for
the year ended 31 December 2023 have been delivered to the
Registrar of Companies. The Auditor's report thereon was
unqualified and did not contain statements under section
498(2) or (3) of the Companies Act 2006.
2.2 Review
This Interim Report has been reviewed by the Company's
Auditor in accordance with the International Standard on Review
Engagements (ISREs).
2.3 Going concern
The Directors have reviewed the financial position of
the Company and its future cash flow requirements, taking into
consideration current and potential funding sources, investment
into existing and near-term projects and the Company's working
capital requirements.
The Company continues to meet day-to-day liquidity
needs through its cash resources. As at 30 June 2024, the
Company had net current assets of £75.7m and cash balances of
£75.8m, which are sufficient to meet current obligations as they
fall due. There is no external debt at the Company as at period
end.
The Company's major cash outflows include
discretionary expenses such as dividend payments and costs related
to acquiring new assets, as well as ongoing operating expenses.
The Directors have reviewed Company forecasts and
pipeline projections which cover a period of at least
12 months from the date of approval of this report,
considering foreseeable changes in investment and the wider
pipeline, which show that the Company has sufficient financial
resources to continue in operation for at least the next
12 months from the date of approval of this report.
Furthermore, the Directors have considered a worst case scenario in
which the Company is assumed to meet all of its remaining
investment commitments within the next 12 months, in addition
to dividend payments and ongoing operating expenses. Even in this
unlikely scenario, the Company has sufficient headroom to meet all
expected cash outflows with its existing cash balances.
The Directors have considered factors relating to the
wider global macroeconomic environment in 2024, in particular
changes in inflation and interest rates. As the Company's income is
primarily inflation-linked, a rise in inflation would have a
positive impact on cashflows from operating assets and an uplift in
valuation of the investment portfolio. An increase in interest
rates may result in an increase in risk-free rates, therefore
negatively impacting valuation of investments. Furthermore, the
Company has no physical assets in Ukraine, Russia or the Middle
East and therefore, regional geopolitical factors have an
immaterial impact on the Company.
Based on its assessment above, the Directors have a
reasonable expectation that the Company has sufficient resources to
continue in operation for at least 12 months from the date of
the approval of these financial statements. The Directors are not
aware of any material uncertainties that may cast significant doubt
upon the Company's ability to continue as a going concern.
Therefore, the financial statements have been prepared on the going
concern basis.
2.4 Critical accounting
judgements, estimates and assumptions
The preparation of the interim financial statements
requires the Directors of the Company to make judgements, estimates
and assumptions that affect the reported amounts recognised in the
financial statements. However, uncertainty about these assumptions
and estimates could result in outcomes that require a material
adjustment to the carrying amount of the asset or liability in the
future. The estimates and underlying assumptions underpinning our
investments are reviewed on an ongoing basis by both the Directors
and the Investment Manager. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in
any future periods affected. Significant estimates, judgements and
assumptions for the period are set out as follows:
Key estimation and uncertainty: Fair value
estimation for investments at fair value
Fair value is calculated by discounting, at an
appropriate discount rate, future cash flows expected to be
received by the Company's intermediate holdings from investments.
The discount rates used in the valuation exercise represent the
Investment Manager's and the Board's assessment of the rate of
return in the market for assets with similar characteristics and
risk profile. The discount rates are reviewed quarterly and
updated, where appropriate, to reflect changes in the market and in
the project risk characteristics. The estimates and assumptions
that are used in the calculation of the fair value of investments
are disclosed in note 6.
Key judgement: Equity and debt investment in VH
GSEO UK Holdings
In applying their judgement, the Directors have
satisfied themselves that the equity and debt investments into its
direct wholly owned subsidiary, VH GSEO UK Holdings, share the same
investment characteristics and, as such, constitute a single asset
class for IFRS 7 disclosure purposes.
Key judgement: Investment entity and basis of
non-consolidation
The Company has adopted the amendments to IFRS 10
which states that investment entities should measure all of their
subsidiaries that are themselves investment entities at fair value
(in accordance with IFRS 9 Financial
Instruments: Recognition and Measurement, and IFRS 13
Fair Value Measurement). Being investment entities, GSEO and its
wholly owned direct subsidiary, GSEO Holdings are measured at fair
value as opposed to being consolidated on a line-by-line basis,
meaning their cash and working capital balances are included in the
fair value of investments rather than the Group's current assets.
The Directors believe the treatment outlined above provides the
most relevant information to investors.
2.5 Segmental reporting
The Board of Directors is of the opinion that the
Company is engaged in a single segment of business, being
investment in global sustainable energy opportunities. The Company
has no single major customer. The internal financial information to
be used by the chief operating decision maker ("CODM") on a
quarterly basis to allocate resources, assess performance and
manage the Company will present the business as a single segment
comprising the portfolio of investments in energy efficiency
assets. The financial information used by the Board to manage the
Company presents the business as a single segment.
3. Investment
Income
|
For the
six-months period ended
30 June 2024
|
For the
six-months period ended
30 June 2023
|
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Interest on
cash deposits
|
1,417
|
-
|
1,417
|
2,776
|
-
|
2,776
|
Interest
income from investments
|
3,926
|
-
|
3,926
|
3,080
|
-
|
3,080
|
Dividend
income
|
5,171
|
-
|
5,171
|
9,500
|
-
|
9,500
|
Investment
income
|
10,514
|
-
|
10,514
|
15,356
|
-
|
15,356
|
4. Operating
expenses
|
For the six months period ended
30 June 2024
£'000
|
For the six months period ended
30 June 2023
£'000
|
Fees
payable to the Company's auditor (exclusive of VAT) for
the:
|
|
|
-Interim
assurance review
|
73
|
70
|
AIFM
fees
|
37
|
36
|
Directors'
fees
|
196
|
166
|
Other
expenses
|
650
|
849
|
Unrealised
FX gains and losses
|
-
|
(5)
|
Total
operating expenses
|
1,156
|
917
|
Fees with respect to the Investment Manager are set
out in note 13, related parties transactions.
The Company had no employees during the period.
Details of Directors' fees are disclosed in note 13, with no
other emoluments reported.
5. Taxation
Taxable income during the period was offset by
expenses and the tax charge for the period ended 30 June 2024
is £nil (30 June 2023: £nil).
6. Investments at
fair value through profit or loss
As set out in note 2.6, the Company designates
its interest in its wholly owned direct subsidiary GSEO UK Holdings
as an investment at fair value through profit or loss at each
balance sheet date in accordance with IFRS 13, which
recognises a variety of fair value inputs depending upon the nature
of the investment. Specifically:
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 recognised in the
financial statements on a recurring basis, the Company determines
whether transfers have occurred between levels in the hierarchy by
reassessing categorisation at the end of each reporting period.
The Company classifies all assets measured at fair
value as below:
Fair value hierarchy
As at
30 June 2024
|
Total
£'000
|
Quoted prices
in active
markets
(level 1)
£'000
|
Significant
Observable inputs
(level 2)
£'000
|
Significant
unobservable
inputs
(level 3)
£'000
|
Assets measured at fair
value:
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Investments
held at fair value through profit or loss
|
371,956
|
-
|
-
|
371,956
|
As at
31 December 2023
|
Total
|
Quoted prices
in active
markets
(level 1)
£'000
|
Significant
observable
inputs
(level 2)
£'000
|
Significant
unobservable
inputs
(level 3)
£'000
|
Assets measured at fair
value:
|
|
|
|
|
Non-current
assets
|
|
|
|
|
Investments
held at fair value through profit or loss
|
369,047
|
-
|
-
|
369,047
|
All of the Company's investments have been classified
as Level 3 and there have been no transfers between levels during
the period ended 30 June 2024.
|
As at
30 June
2024
£'000
|
As at
31 December 2023
£'000
|
Opening
balance at beginning of the period/year
|
369,047
|
315,133
|
Additions
during the period at cost
|
26,126
|
22,819
|
|
395,173
|
337,952
|
Fair value movement on
investments:
|
|
|
Change in
fair value of equity investments1
|
(23,229)
|
32,649
|
Interest on
loan investments2
|
12
|
1,554
|
Total fair
value movement on investments
|
(23,217)
|
31,095
|
Closing
balance
|
371,956
|
369,047
|
1
The £23,229k in the Statement of Comprehensive Income within other
expenses/ income and Statement of Changes in Equity is made up of
unrealised losses of £23,229k per this note and a realised
foreign exchange loss of £nil during the period.
²
This is the amount related to the unpaid shareholder loan interest
income as at the period end.
Further information on the basis of valuation is
detailed in note 2 to the financial statements.
Valuation methodology
As disclosed on pages 143 to 147 of the Company's
Annual Report for the year ended 31 December 2023,
IFRS 13 "Fair Value Measurement" requires disclosure of fair
value measurement by level. The level of fair value hierarchy
within the financial assets or financial liabilities ranges from
level 1 to level 3 and is determined on the basis of the lowest
level input that is significant to the fair value measurement. The
fair value of the Company's investments is the net asset value of
VH GSEO UK Holdings Limited by calculating and aggregating the fair
value of each of the individual investments in which the Company
holds an indirect investment. Due to their nature, they are always
expected to be classified as level 3 as the investments are not
traded and contain unobservable inputs. There have been no
transfers between levels during the six months ended 30 June
2024.
Valuation Assumptions
The following economic assumptions were used in the
valuation of operating assets.
Discount rates
|
The discount rate used in
the valuations is derived according to internationally recognised
methods.
|
|
Typical components of the
discount rate are risk free rates, country-specific and
asset-specific risk premia. The latter comprise the risks inherent
to the respective asset class as well as specific premia for other
risks such as construction.
|
Power price
|
Power prices are based on
power price forecasts from leading market consultants adjusted for
expected deployment of energy transition assets.
|
Energy yield
|
Estimated based on energy
yield assessments from leading technical consultants as well as
operational performance data (where applicable).
|
Inflation rates
|
Long-term inflation is based
on International Monetary Fund (IMF) forecasts for the respective
jurisdiction.
|
Asset life
|
Refer to the table below for
details. In individual cases a longer operating life may be assumed
where the contractual set-up supports such assumption.
|
Operating expenses
|
The operating expenses are
primarily based on the respective contracts and budgets.
|
Taxation rates
|
The underlying
country-specific tax rates are derived from leading tax consulting
firms.
|
Capital expenditure
|
Based on the contractual
arrangements (e.g. EPC agreement), where applicable.
|
Key Assumptions
|
|
|
30 June 2024
|
Discount
rate
|
Weighted
Average
|
US terminal
storage assets
|
7.07%
|
|
Weighted
Average
|
Australian
solar PV with battery storage assets
|
7.65%
|
|
Weighted
Average
|
Brazilian
solar PV assets
|
9.46%
|
|
Weighted
Average
|
Brazilian
hydro facility
|
9.40%
|
Long-term
inflation
|
United
States
|
US terminal
storage assets
|
2.15%
|
|
Australia
|
Australian
solar PV with battery storage assets
|
2.63%
|
|
Brazil
|
Brazilian
solar PV assets & Brazilian hydro facility
|
3.00%
|
Total Asset
Life
|
Years
|
US terminal
storage assets
|
30 years
|
|
Years
|
Australian
solar PV with battery storage assets
|
25 years
|
|
Years
|
Brazilian
solar PV assets
|
25 years
|
|
Years
|
Brazilian
hydro facility
|
25 years
|
Exchange
rates
|
GBP:USD
|
US terminal
storage assets
|
1:1.2645
|
|
GBP:BRL
|
Brazilian
solar PV assets & Brazilian hydro facility
|
1:7.0745
|
|
GBP:AUD
|
Australian
solar PV with battery storage assets
|
1:1.8960
|
Valuation sensitivity
The key sensitivities in the DCF valuation are
considered to be the discount rate used in the DCF valuation and
long-term assumptions in relation to inflation, operating expenses
and asset life.
The discount rate applied in the valuation of the
operating assets are as per the table above, which is considered to
be an appropriate base case for sensitivity analysis. A variance of
+/-1.50% is considered to be a reasonable range of alternative
assumptions for discount rate.
The base case long term inflation rate assumption
depends on the geographical location for assets in operation. These
are disclosed in the table above. A variance of +/-1% is considered
to be a reasonable range of alternative assumptions for
inflation.
For assets in construction, the Company has only
sensitised the impact of foreign exchange fluctuations. A variance
of +/-10% is considered to be a reasonable range of alternative
assumptions for foreign exchange.
The analysis below shows the sensitivity of the
investments value (and impact on NAV) to changes in key
assumptions. All sensitivity calculations have been performed on
the basis that each of the other assumptions remains constant and
unchanged.
As at
30 June 2024
|
Change in input
|
Changes in fair value of investments
(£'000)
|
Change in NAV per share
(pence)
|
Discount
rate - US terminal storage assets
|
-1.50%
|
21,854
|
5.41
|
1.50%
|
(17,261)
|
-4.27
|
Discount
rate - Australian solar PV with battery storage assets
|
-1.50%
|
2,440
|
0.60
|
1.50%
|
(1,972)
|
-0.49
|
Discount
rate - Brazilian solar PV assets
|
-1.50%
|
2,873
|
0.71
|
1.50%
|
(2,361)
|
-0.58
|
Discount
rate - Brazilian hydro facility
|
-1.50%
|
14,130
|
3.50
|
1.50%
|
(11,516)
|
-2.85
|
Discount rate -
All
|
-1.50%
|
41,296
|
10.22
|
1.50%
|
(33,110)
|
-8.20
|
As at
30 June 2024
|
Change in input
|
Changes in fair value of investments
(£'000)
|
Change in NAV per share
(pence)
|
Inflation -
US terminal storage assets
|
-1.00%
|
(9,861)
|
-2.44
|
1.00%
|
11,561
|
2.86
|
Inflation -
Australian solar PV with battery storage assets
|
-1.00%
|
(1,295)
|
-0.32
|
1.00%
|
1,269
|
0.31
|
Inflation -
Brazilian solar PV assets
|
-1.00%
|
(1,797)
|
-0.45
|
1.00%
|
2,114
|
0.52
|
Inflation -
Brazilian hydro facility
|
-1.00%
|
(10,480)
|
-2.59
|
1.00%
|
13,366
|
3.31
|
Long-term Inflation -
All
|
-1.00%
|
(23,432)
|
-5.80
|
1.00%
|
28,310
|
7.01
|
As at
30 June 2024
|
Change in input
|
Changes in fair value of investments
(£'000)
|
Change in NAV per share
(pence)
|
Asset life
- US terminal storage assets
|
-1 year
|
(1,921)
|
-0.48
|
+1 year
|
2,227
|
0.55
|
Asset life
- Australian solar PV with battery storage assets
|
-1 year
|
(455)
|
-0.11
|
+1 year
|
292
|
0.07
|
Asset life
- Brazilian solar PV assets
|
-1 year
|
(368)
|
-0.09
|
+1 year
|
344
|
0.09
|
Asset life
- Brazilian hydro facility
|
-1 year
|
(2,238)
|
-0.55
|
+1 year
|
2,241
|
0.55
|
Asset life -
All
|
-1 year
|
(4,982)
|
-1.23
|
+1 year
|
5,104
|
1.26
|
As at
30 June 2024
|
Change in input
|
Changes in fair value of investments
(£'000)
|
Change in NAV per share
(pence)
|
Operating
expenses - US terminal storage assets
|
5.00%
|
(4,254)
|
-1.05
|
-5.00%
|
4,273
|
1.06
|
Operating
expenses - Australian solar PV with battery storage
assets
|
5.00%
|
(251)
|
-0.06
|
-5.00%
|
252
|
0.06
|
Operating
expenses - Brazilian solar PV assets
|
5.00%
|
(775)
|
-0.19
|
-5.00%
|
781
|
0.19
|
Operating
expenses - Brazilian hydro facility
|
5.00%
|
(3,143)
|
-0.78
|
-5.00%
|
3,143
|
0.78
|
Operating expenses -
All
|
5.00%
|
(8,423)
|
-2.09
|
-5.00%
|
8,450
|
2.09
|
As at
30 June 2024
|
Change in input
|
Changes in fair value of investments
(£'000)
|
Change in NAV per share
(pence)
|
FX
(GBP:USD)
|
-10.00%
|
13,910
|
3.44
|
10.00%
|
(11,381)
|
-2.82
|
FX
(GBP:BRL)
|
-10.00%
|
19,520
|
4.83
|
10.00%
|
(15,971)
|
-3.95
|
FX
(GBP:AUD)
|
-10.00%
|
3,782
|
0.94
|
10.00%
|
(3,095)
|
-0.77
|
FX - All
|
-10.00%
|
37,212
|
9.21
|
10.00%
|
(30,446)
|
-7.54
|
The sensitivities above are assumed to be independent
of each other. Combined sensitivities are not presented.
7. Unconsolidated
Subsidiaries
The following table shows subsidiaries of the Company.
As the Company is regarded as an investment entity, these
subsidiaries have not been consolidated in the preparation of the
financial statements.
Investments
|
Place of
Business
|
Ownership
interests as at 30 June 2024
|
VH GSEO UK
Holdings Limited
|
United
Kingdom
|
100%
|
Victory
Hill Distributed Energy Investments Limited
|
United
Kingdom
|
100%
|
Victory
Hill Flexible Power Limited
|
United
Kingdom
|
100%
|
Rhodesia
Power Limited
|
United
Kingdom
|
100%
|
Victory
Hill USA Holdings LLC
|
United
States
|
100%
|
Victory
Hill Midstream Investments LLC
|
United
States
|
100%
|
Victory
Hill Midstream Energy LLC
|
United
States
|
100%
|
Motus T1
LLC
|
United
States
|
100%
|
Motus T2
LLC
|
United
States
|
100%
|
Victory
Hill Australia Investments Pty Ltd
|
Australia
|
100%
|
Victory
Hill Distributed Power Pty Ltd
|
Australia
|
100%
|
Mobilong
Solar Farm Pty Ltd
|
Australia
|
100%
|
Dunblane
Solar Pty Ltd
|
Australia
|
100%
|
Dubbo Solar
Project Pty Ltd
|
Australia
|
100%
|
Narrandera
Solar Project Pty Ltd
|
Australia
|
100%
|
Coleambally
East Solar Farm Pty Ltd
|
Australia
|
100%
|
Tabbita
Solar Farm Pty Ptd
|
Australia
|
100%
|
Griffith
Solar Pty Ltd
|
Australia
|
100%
|
VH
Participacoes Hidreletricas do Brasil LTDA
|
Brazil
|
98.25%
|
VH Hydro
Brasil Holding S.A.
|
Brazil
|
100%
|
Energest S.A.
|
Brazil
|
100%
|
Victory
Hill Holdings Brasil S.A.
|
Brazil
|
99.99%
|
Energea
Itaguaí I Ltda. *
|
Brazil
|
100%
|
Energea
Itaguaí II Ltda. *
|
Brazil
|
100%
|
Energea
Itaguaí III Ltda. *
|
Brazil
|
100%
|
Energea
Nova Friburgo Ltda. *
|
Brazil
|
100%
|
Energea
Itabaiana Ltda. *
|
Brazil
|
100%
|
Energea
Redenção Ltda. *
|
Brazil
|
100%
|
Energea
Itaporanga Ltda. *
|
Brazil
|
100%
|
Energea
Bataguassu Ltda. *
|
Brazil
|
100%
|
Energea
Palmas S.A. *
|
Brazil
|
100%
|
Energea
Itacarambi Ltda. *
|
Brazil
|
100%
|
Energea
Vassouras I Ltda. *
|
Brazil
|
100%
|
Energea
Seropédica Ltda. *
|
Brazil
|
100%
|
Energea
Paraíba do Sul Ltda. *
|
Brazil
|
100%
|
Energea
Taquaritinga Ltda. *
|
Brazil
|
100%
|
Energea
Nova Cruz Ltda. *
|
Brazil
|
100%
|
At 30 June 2024, the Company has one direct
subsidiary and owns 100% of GSEO Holdings. The Company owns
investments in the other entities per the table above through its
ownership of GSEO Holdings. GSEO Holdings owns 100% of Victory Hill
USA Holdings LLC, Victory Hill Australia Investments
Pty Ltd, Victory Hill Distributed Energy Investments Limited
and Victory Hill Flexible Power Limited and 98.25% of VH
Participacoes Hidreletricas do Brasil Ltda.
The Company's investments in Victory Hill Midstream
Investments LLC, Victory Hill Midstream Energy LLC, Motus
T1 LLC and Motus T2 LLC are held through Victory Hill USA
Holdings LLC. These relate to the US terminal storage
assets.
The Company's investments in Brazilian solar PV assets
are held through Victory Hill Distributed Energy Investments
Limited, which holds 99.99% of Victory Hill Holdings
Brasil S.A. The holdings of Victory Hill Holdings
Brasil S.A. are indicated by an asterisk in the list of
unconsolidated subsidiaries above.
The Company's investments in VH Hydro Brasil
Holding S.A. and Energest S.A. are held through VH
Participacoes Hidreletricas do Brasil LTDA. These relate to
the Brazilian hydro facility.
The Company's investments in Victory Hill Distributed
Power Pty Ltd, Mobilong Solar Farm Pty Ltd, Dubbo Solar
Project Pty Ltd, Narrandera Solar Project Pty Ltd,
Coleambally East Solar Farm Pty Ltd and Dunblane Solar
Pty Ltd are held through Victory Hill Australia Investments
Pty Ltd. These relate to the Australian solar PV with battery
storage assets.
The Company's investment in Rhodesia Power Limited is
held through Victory Hill Flexible Power Limited. These relate to
the UK flexible power with CCR asset.
8. Other
receivables
|
As at
30 June
2024
£'000
|
As at
31 December 2023
£'000
|
Other
receivables
|
93
|
95
|
Interest
receivable on loan
|
326
|
317
|
Receivable
from affiliates
|
83
|
-
|
Prepayments
|
39
|
31
|
Total other
receivables
|
541
|
441
|
The Directors have analysed the expected credit loss
in respect of receivables and concluded that there was no material
exposure for the period/year ended 30 June 2024 and
31 December 2023.
Cash of £nil is held on behalf of the Company by VH
GSEO UK Holdings Limited (31 December
2023: £40,367k).
9. Cash and cash
equivalents
|
As at
30 June
2024
£'000
|
As at
31 December 2023
£'000
|
Cash at
bank
|
4,805
|
30,542
|
Cash on
deposit1
|
70,966
|
43,716
|
Total cash at
bank
|
75,771
|
74,258
|
1 Cash
on deposit consists of funds held with State Street amounting to
£70.8m (31 December 2023: £26.4m) and in a 32-day notice
deposit account with Barclays Bank plc amounting to £0.2m
(31 December 2023: £43.7m).
10. Accounts payable and
accrued expenses
|
As at
30 June
2024
£'000
|
As at
31 December 2023
£'000
|
Accrued
expenses
|
421
|
270
|
Other
payables
|
152
|
-
|
Accounts payable and accrued
expenses
|
573
|
270
|
The Directors consider that the carrying amount of
trade and other payables matches their fair value.
11. Share Capital
Date
|
Issued and fully paid
|
Number of shares
|
Share
Capital
(A)
£'000
|
Share premium
(B)
£'000
|
Special Distributable Reserve
(C)
£'000
|
Total
(A+B+C)
£'000
|
Opening
balance
|
|
422,498,890
|
4,225
|
186,368
|
232,467
|
423,060
|
Buyback of
Ordinary shares
|
|
-
|
-
|
-
|
(5,400)
|
(5,400)
|
At 31 December 2023
(audited)
|
|
422,498,890
|
4,225
|
186,368
|
227,067
|
417,660
|
Opening
balance
|
|
422,498,890
|
4,225
|
186,368
|
227,067
|
417,660
|
Buyback of
Ordinary shares
|
|
-
|
-
|
-
|
(8,443)
|
(8,443)
|
At 30 June 2024
(unaudited)
|
|
422,498,890
|
4,225
|
186,368
|
218,624
|
409,217
|
During the period under review, the Company purchased
for treasury a total of 11,568,147 Ordinary Shares at an aggregate
cost of £8,443,168 (including stamp duty and other fees) at an
average price per Ordinary Share of 72.5p.
Shareholders are entitled to all dividends paid by the
Company and on a winding up, provided that the Company has
satisfied all its liabilities, the Shareholders are entitled to all
pf the residual assets of the Company.
12. Dividends
|
Pence per Ordinary Share
|
Total dividend
|
Date paid
|
1 October 2023 - 31 December 2023
|
1.42p
|
£5.8m
|
22 March 2024
|
1 January 2024 - 31 March 2024
|
1.42p
|
£5.8m
|
25 June 2024
|
13. Transactions with the
Investment Manager and Related Parties
Investment Manager
Victory Hill is the Company's investment manager and
AIFM with overall responsibility for the risk management and
portfolio management of the Company, providing investment
management services and ensuring compliance with the requirements
of the AIFM Rules, subject to the overall supervision of the Board
of Directors in accordance with the policies set by the Directors
from time to time and the investment restrictions as set out in the
Alternative Investment Fund Management Agreement ("AIFM
Agreement").
The AIFM Agreement provides that the Company will pay
to the Investment Manager a fixed monthly AIFM fee of £5,833,
exclusive of VAT.
The Investment Manager is also entitled to receive
from the Company an annual investment management fee to be
calculated as percentages of the Company's net assets, 1% on the
first £250m of NAV, 0.9% on NAV in excess of £250m and up to and
including £500m and 0.8% on NAV in excess of £500m exclusive of
VAT.
Furthermore, if in any fee period, the annual fee paid
to the Investment Manager exceeds:
a) £3.5m, the Investment Manager
shall apply 8% of the annual fee, subject to a maximum amount of
£400,000, to subscribe for or acquire ordinary shares of £0.01 each
in the capital of the Company.
b) £2.5m, the
Investment Manager shall apply 2% of the annual fee to be paid as a
charitable donation to a suitable registered charity aimed at
promoting sustainable energy, as selected by the Investment
Manager, provided that if, following the Investment Manager's
reasonable endeavours, a suitable charity cannot be found, this 2%
portion of the annual fee (net of any applicable taxes) will be
applied to the subscription for or acquisition of ordinary
shares.
The AIFM Agreement may be terminated on
12 months' written notice, provided that such notice may not
be served before 2 February 2025. The AIFM Agreement may be
terminated with immediate effect on the occurrence of certain
events, including insolvency or in the event of a material and
continuing breach.
The investment management fees for the period ended
30 June 2024 amounted to £2,217,913 (30 June
2023: £2,211,211) (including VAT) of which £nil
(31 December 2023: £nil) was outstanding and included in
accounts payable and accrued expenses at the end of the period.
The Company will also reimburse the Investment Manager
for reasonable expenses properly incurred by the Investment Manager
in the performance of its obligations under the AIFM Agreement.
Directors
The Directors have been entitled to aggregate annual
remuneration (excluding expenses) of:
|
For the
six month period ended 30 June 2024
£'000
|
For the
six month period ended 30 June 2023
£'000
|
Bernard
Bulkin OBE
|
47
|
41
|
Margaret
Stephens
|
36
|
29
|
Richard
Horlick
|
32
|
29
|
Louise
Kingham CBE
|
31
|
29
|
Daniella
Carneiro
|
31
|
27
|
|
177
|
155
|
The Directors are not eligible for bonuses, pension
benefits, share options or long-term incentive schemes. There is no
amount set aside or accrued by the Company in respect of contingent
or deferred compensation payments or any benefits in kind payable
to the Directors.
The Directors held the following beneficial interests
in the ordinary shares of the Company as at 30 June 2024.
|
As at
30 June 2024
|
|
Number of ordinary shares
held
|
% of ordinary shares in
issue
|
Bernard
Bulkin OBE
|
68,101
|
0.016
|
Margaret
Stephens
|
56,960
|
0.013
|
Richard
Horlick
|
300,000
|
0.071
|
Louise
Kingham CBE
|
26,753
|
0.006
|
During the period, interest income totalling £4.0m
was paid to the company in respect of the interest bearing loans
between the Company and its subsidiaries.
14. Contingent liabilities
and commitments
As at 30 June 2024, the Company had no
contingencies or commitments.
15. (Loss) / earnings per
share
Earnings per share ("EPS") is calculated by dividing
profit for the period attributable to ordinary equity holders of
the Company by the weighted average number of ordinary shares in
issue on 1 January 2024 to 30 June 2024. Amounts shown
below are both basic and diluted measures as there were no dilutive
instruments in issue throughout the period.
|
For the
period ended 30 June 2024
|
For the
period ended 30 June 2023
|
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
Revenue
£'000
|
Capital
£'000
|
Total
£'000
|
(Loss) /
earnings (£'000)
|
7,140
|
(23,229)
|
(16,089)
|
12,258
|
7,862
|
20,120
|
Weighted
average number of ordinary shares
|
409,063,127
|
409,063,127
|
409,063,127
|
422,498,890
|
422,498,890
|
422,498,890
|
EPS
(p)
|
1.75
|
(5.68)
|
(3.93)
|
2.90
|
1.86
|
4.76
|
16. Net asset value per
share
Net asset value per share is calculated by dividing
the net assets attributable to ordinary equity holders of the
Company by the number of ordinary shares outstanding at the
reporting date. Amounts shown below are both basic and diluted
measures as there were no dilutive instruments in issue throughout
the current period.
|
Period ended 30 June 2024
£'000
|
Year ended
31 December 2023
£'000
|
NAV
(£'000)
|
447,695
|
483,843
|
Number of
ordinary shares
|
403,903,422
|
415,471,569
|
NAV per
share (p)
|
110.84
|
116.46
|
17. Post balance sheet
events
On 25 July 2024, the Company announced it had
invested EUR 53m in a 248.4MW solar and onshore wind portfolio
in Spain, Portugal and Sweden.
On 7 August 2024, the Company declared an interim
dividend in respect of the period from 1 April 2024 to
30 June 2024 of 1.42 pence per Ordinary Share, will be
paid on 13 September 2024 to Shareholders on the register on
16 August 2024.
Post period end, the Company had announced cumulative
buybacks of 4,950,000 shares between 1 July 2024 and
10 September 2024.
ALTERNATIVE PERFORMANCE MEASURES
Alternative Performance Measures (APMs) are often used
to describe the performance of investment companies although they
are not specifically defined under IFRS. Calculations for APMs used
by the Company are shown below.
In reporting financial information APMs are not
defined or specified under the requirements of IFRS. The Company
believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders
with additional helpful information on the performance of the
Company.
The APMs presented in this report are shown below:
NAV per share
NAV per share is calculated by dividing the Company's
NAV by the total number of outstanding shares at year end.
|
Page
|
|
NAV as at
30 June 2024
|
|
£447,694,992.00
|
Total
number of outstanding shares as at 30 June 2024
|
|
£403,903,422.00
|
NAV per
share
|
5
|
110.84
|
Ongoing charges
A measure expressed as a percentage of average net
assets, of the regular, recurring annual costs of running an
investment company, calculated in accordance with the AIC
methodology.
|
Page
|
|
Average
undiluted NAV
|
|
£463,669,875.00
|
Recurring
costs in the year to date
|
|
£6,828,368.00
|
Ongoing
charges
|
22
|
1.5%
|
Total return
A measure of performance that includes both income and
capital returns. This takes into account capital gains and
reinvestment of any dividends paid out by the Company, with
reinvestment on ex-dividend date.
Period
ended 30 June 2024
|
|
NAV
|
Opening as
at 1 January 2024
|
a
|
116.46p
|
Closing as
at 30 June 2024
|
b
|
110.84p
|
Dividends
paid during the period
|
|
2.84p
|
Dividend
adjustment factor
|
c
|
1.038p
|
Adjusted
closing
|
d = b x c
|
115.04p
|
Total return for the period
(%)
|
d / a - 1
|
-1.2%
|
From IPO to
30 June 2024
|
|
NAV
|
Opening as
at 2 February 2021
|
|
98.00p
|
Closing as
at 30 June 2024
|
b
|
110.84p
|
Dividends
paid to date since IPO
|
|
13.3p
|
Dividend
adjustment factor
|
c
|
1.15p
|
Adjusted
closing
|
d = b x c
|
127.19p
|
Total
return since IPO (%)
|
e = d/a - 1
|
29.8%
|
Number of
years since IPO
|
f
|
3.40p
|
Total annualised NAV return
since IPO (%)
|
(1 + e)^(1/f)-1
|
8.0%
|
Dividend cover
The dividend cover ratio is calculated by dividing the
cash available for distribution by the dividends paid during the
period ended 30 June 2024. Cash available for distribution
comprises underlying asset earnings (post tax and profit share),
net of interest expense and fund expenses.
Dividend
cover
|
|
Cash
available for distribution
|
£16,643,478
|
Interest
service cost
|
£411,383
|
Fund
expenses
|
£3,414,186
|
Cash
available for distribution
|
£12,817,909
|
Dividends
paid
|
£11,616,275
|
Dividend
cover
|
1.10
|
Gearing
The total leverage percentage is calculated by
dividing the GBP value of the debt held in the US terminal storage
assets divided by the net asset value of the fund as at
30 June 2024.
Gearing
|
Page
|
|
Debt
(£'k)
|
|
8,300
|
Fund NAV
(£'k)
|
35
|
447,695
|
Leverage
|
5
|
1.85%
|
GLOSSARY
AIC
|
Association
of Investment Companies
|
AIFM
|
Victory Hill Capital
Partners LLP
|
COD
|
Commercial Operations
Date
|
Company
|
VH Global Sustainable Energy
Opportunities plc
|
Discount
|
The amount, expressed as a
percentage, by which the share price is less than the net asset
value per share
|
Distribution
|
Distributions consist of
dividends, interest and returns of capital
|
Dividend
|
Income receivable from an
investment in shares
|
EPC
|
Engineering, procurement and
construction
|
ESG
|
Environmental, social and
governance
|
EU
|
European Union
|
Ex-dividend date
|
The date from which you are
not entitled to receive a dividend which has been declared and is
due to be paid to shareholders
|
Financial Conduct
Authority
|
The independent body that
regulates the financial services industry in the UK
|
Gearing
|
A way to magnify income and
capital returns, but which can also magnify losses
|
GHG
|
Green House Gases
|
Investment Manager / Victory
Hill
|
Victory Hill Capital
Partners LLP
|
Investment Company
|
A company formed to invest
in a diversified portfolio of assets
|
Investment Trust
|
An investment company which
is based in the UK and which meets certain tax conditions which
enables it to be exempt from UK corporation tax on its capital
gains. The Company is an investment trust
|
IPO
|
Initial Public Offering
|
MW
|
Megawatt
|
MWh
|
Megawatt Hour
|
NAV per ordinary share
|
NAV divided by the number of
ordinary shares in issue (excluding any shares held in
treasury)
|
Net asset value or NAV
|
An investment company's
assets less its liabilities
|
OECD
|
Organisation for Economic
Co-operation and Development
|
Ongoing charge
|
The 'ongoing charges' ratio
is an indicator of the costs incurred in the day-to-day management
of the Company, expressed as a percentage of average net assets.
This ratio calculation is based on Association of Investment
Companies ('AIC') recommended methodology
|
Ordinary shares
|
The Company's ordinary
shares in issue
|
PPA
|
Power Purchase Agreement
|
PV
|
Photovoltaic
|
SDG
|
UN Sustainable Development
Goals
|
SFDR
|
Sustainable Finance
Disclosure Regulation
|
Share premium
|
The amount, expressed as a
percentage, by which the share price is more than the net asset
value per share
|
Share price
|
The price of a share as
determined by a relevant stock market
|
TCFD
|
Task Force on
Climate-Related Financial Disclosures
|
COMPANY INFORMATION
Non-executive
Directors
Bernard Bulkin OBE
(Chair)
Daniella Carneiro
Richard Horlick
Louise Kingham CBE
Margaret Stephens
Registered
office
6th Floor
125 London Wall
London
EC2Y 5AS
Investment
Manager
Victory Hill Capital
Partners LLP
4 Albemarle Street
London
W1S 4GA
Corporate
Broker
Deutsche Numis Securities
Limited
45 Gresham Street
London
EC2V 7BF
Legal
Adviser
Eversheds Sutherland
(International) LLP
One Wood Street
London
EC2V 7WS
|
Administrator and
Company Secretary
Apex Fund and Corporate
Services (UK) Limited
6th Floor
125 London Wall
London
EC2Y 5AS
Depositary
Apex Depositary (UK)
Limited
6th Floor
125 London Wall
London
EC2Y 5AS
Registrar
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol
BS99 6ZY
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
|
Company
number: 12986255
Country of incorporation: England and Wales