TIDMGSF
RNS Number : 2897F
Gore Street Energy Storage Fund PLC
15 July 2021
15 July 2021
Gore Street Energy Storage Fund Plc
('Gore Street' or the 'Company')
Full Year Results
Gore Street Energy Storage Fund plc (ticker: GSF), London's
first listed energy storage fund investing in income producing
assets in the UK and internationally, today announces Full Year
Audited results for the year ended 31 March 2021.
Financial Highlights for the year ended 31 March 2021
-- NAV increased substantially to GBP145.1 million as at March
2021 (March 2020: GBP49.7 million), representing a 192%
increase
-- NAV per share increased 6.7% to 100.9 pence (31 March 2020: 94.6 pence)
-- Total shareholder return for the period of 18.2% and 25%
since inception as of 31 March 2021 (vs. 23.3% FTSE All-Share Index
total return over the period 31 March 2020 to 31 March 2021 )
-- Net income of GBP14.6 million, 3x increase compared to last
fiscal year (31 March 2020: GBP4.7million)
-- Quarterly dividend declared for the period of 1.0 pence per
share. Total dividend for the year of 7.0 pence per share, as
targeted
-- Following the issuance of a further 91.3 million shares
between June and December 2020, Issued Share Capital (ISC)
increased to 143.9 million shares (31 March 2020: 52.5 million
shares)
-- Earnings per share (basic and diluted) of 16.06 pence
Operational Highlights for the year ended 31 March 2021
-- Portfolio increased substantially to 440 MW as at 31 March 2021 (31 March 2020: 189 MW)
-- The Company is now the largest operator of energy storage on
the Irish grid with an estimated 66% market share and in addition
Gore Street holds c. 10% market share of the c.1GW installed
capacity of energy storage on the grid in Great Britain and is also
one of the largest operators in the region
-- Most importantly, Gore Street has been able to consolidate
its position as a central player while selecting only the most
attractive assets at prices that are considerably more attractive
than those gathered by our major competitors[1]
-- Operational assets producing income increased from four to
eleven projects in Great Britain (GB) and Ireland, resulting in an
aggregate operational portfolio generating 210 MW
o 50.0 MW Mullavilly project in Northern Ireland
o 50.0 MW Drumkee project in Northern Ireland
o 20.0 MW Lascar project in Manchester
o 20.0 MW Hulley project in Cheshire
o 19.5 MW Larport project in Derbyshire
o 11.2 MW Ancala project, comprised of 10 sites across GB
o 10.0 MW Breach Farm project in Derbyshire
o 10.0 MW Lower Road project in Essex
o 9.0 MW Port of Tilbury project in London
o 6.0 MW Boulby site in North Yorkshire
o 4.0 MW Cenin project in Swansea
-- All operational assets continued to perform within
expectations, delivering steady revenue for the Company, whilst
assets in construction remained on-track despite rolling
lockdowns
-- The Company's further 190 MW of sites under construction
remain on track as per the previously announced schedule
Post Period-end Highlights
-- Gross proceeds of GBP135.0 million raised in April 2021
through an institutional placing and a retail offer at 102.0 pence
per Ordinary Share, with the resultant total ISC increasing to
276.2 million
-- Acquisition of a new 80.0 MW project, Stony Energy Storage Limited
-- Portfolio increased to 15 projects with a total capacity of
520 MW of which 210 MW is operational
-- Pipeline of c.880MW with 300 MW under exclusivity, located in
GB, Ireland, Continental Europe and United States - as with other
assets under construction, capital expenditure requirements would
be staggered over a 12-to-18-month period
Environmental, Social and Governance
-- We have renewed our commitments to the Global Impact Investing network for the year
-- We are featured as a case study within the Green Economy
Report produced by the London Stock Exchange which will be
published 20 July 2021 as holders of the Green Economy Mark- which
acknowledges that the fund derives greater than 50% of its revenues
from green sources
-- We became a UNPRI signatory after the reporting period in July 2021
Net Asset Value
As at 31 March 2021, the audited estimated NAV per Ordinary
Share increased to 100.9 pence, compared with 94.6 pence per
Ordinary Share at 31 March 2020, representing a total return
including dividends over the period of 14.1 %.
Dividend Payment
The 1.0 pence per share declared dividend will be paid on or
around 13 August 2021 to shareholders on the register on 23 July
2021. The ex-dividend date will be 22 July 2021.
CEO of Gore Street Capital, the investment adviser to the
Company, Alex O'Cinneide commented:
"I am delighted to report that Gore Street had another
exceptional period of successful growth as we continued to deliver
successfully against our strategy and targets, delivering
attractive returns to our investors in an important ESG sector. We
grew substantially during the year with our portfolio of assets
totaling 520 MW in aggregate, of which 210 MW is already
operational, delivering strong cashflows for the company and
underpinning quarterly dividends to our shareholders. During the
period, we successfully raised a total of GBP90.7 million and post
period-end raised a further GBP135 million in April 2021. This
reflects the ongoing momentum of attractive opportunities in our
pipeline, in May 2021, we acquired Stony Energy Storage Limited, an
80 MW project and our largest single asset acquisition to date.
Gore Street is well set to continue to grow with c.880 MW in our
acquisition pipeline of which 300 MW is now under exclusivity and
expected to be executed in the near term.
The global transition to clean and renewable energy generation
remains a leading priority for governments in the UK and Ireland,
as well as further afield, and our assets play a major role in
enabling that transition, whilst creating significant value for our
shareholders. I look forward to updating shareholders on our
continued good progress."
Annual report
A copy of the annual report has been submitted to the National
Storage Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The annual
report and analyst presentation will also be available on the
Company's website at https://www.gsenergystoragefund.com where
further information on GSF can be found. Further, the annual report
is included with this announcement here:
http://www.rns-pdf.londonstockexchange.com/rns/2897F_1-2021-7-14.pdf
There will be a webinar for analysts at 9:30am (UK time) today.
The webinar will be hosted by Alex O'Cinneide and Sumi Arima,
respectively CEO and CIO of Gore Street Capital, GSF's Investment
Adviser. To register for the event, please contact
gorestreet@buchanan.uk.com .
Presentation materials will also be posted on the Company's
website www.gsenergystoragefund.com , alongside GSF's Annual
Financial Report.
The Legal Entity Identifier of the Company is
213800GPUNVGG81G4O21.
The person responsible for releasing this announcement is Susan
Fadil.
For further information:
Gore Street Capital Limited
Alex O'Cinneide / Paula Travesso Tel: +44 (0) 20 3826 0290
Shore Capital (Joint Corporate Broker)
Anita Ghanekar / Rose Ramsden (Corporate Tel: +44 (0) 20 7408 4090
Advisory)
Fiona Conroy / Henry Willcocks (Corporate
Broking)
J.P. Morgan Cazenove (Joint Corporate
Broker)
William Simmonds / Jérémie Tel: +44 (0) 20 7742 4000
Birnbaum (Corporate Finance)
Buchanan (Media Enquiries)
Charles Ryland / Henry Wilson / George Tel: +44 (0) 20 7466 5000
Beale
Email: Gorestreet@buchanan.uk.com
JTC (UK) Limited, Company Secretary Tel: +44 (0) 20 7409 0181
Notes to Editors
About Gore Street Energy Storage Fund plc
Gore Street is London's first listed energy storage fund and
seeks to provide Shareholders with a significant opportunity to
invest in a diversified portfolio of utility scale energy storage
projects. In addition to growth through exploiting its considerable
pipeline, the Company aims to deliver consistent and robust
dividend yield as income distributions to its Shareholders.
The Company targets an annual dividend of 7.0% of NAV per
Ordinary Share in each financial year, with a minimum annual target
of 7.0 pence per Ordinary Share, payable quarterly. Dividends are
discretionary.
Gore Street Energy Storage Fund plc is listed on the LSE's
Premium Segment of the main market and is LSE Green Economy Mark
accredited.
https://www.gsenergystoragefund.com
Figure 1: Key Metrics
31 March 2020 31 March 2021
Net Asset Value (NAV) GBP49.7 m GBP145.1 m
-------------- --------------
NAV per share* 94. 6p 100. 9p
-------------- --------------
NAV Total Return** 10.6% 14.1%
-------------- --------------
Number of issued Ordinary
shares 52.5 m 143.9 m
-------------- --------------
Share price based on
closing price of indicated
date 97.3 p 108.0 p
-------------- --------------
Premium to NAV*** 2.9% 7.0%
-------------- --------------
Market capitalisation GBP51. 1m GBP155.4m
based on closing price
at indicated date
-------------- --------------
Portfolio's total capacity 189.0 MW 380.0 MW
-------------- --------------
Dividends announced**** 7.0 p 7.0 p
-------------- --------------
Ongoing charges***** 2.2% 2.2%
-------------- --------------
* NAV per share is calculated as Total NAV divided by the total
number of shares outstanding within the respective period.
** NAV total return is calculated as the difference between the
closing NAV at 31 March 2021 and opening NAV at 31 March 2020 plus
dividend paid for the period divided by opening NAV
((100.9-94.6+7)/94.6)*100). This is an alternative performance
measure.
*** Premium to NAV calculated as the difference between the
closing price on 31 March of 2021 to NAV on 31
March of 2021. (108-100.9/100.9)*100) . This is an alternative performance measure.
**** A total of 6.0 pence in dividends was paid in the financial
year and the remaining 1.0 pence is expected to be paid following
the end of year Board meeting in July 2021.
***** Ongoing Charges: The expenses of managing the Company are
reviewed quarterly by the Board. Ongoing charges are those expenses
of a type that are likely to recur in the foreseeable future. The
ongoing charges figure of 2.2% exclusive of performance fee -
((2,339,714/104,226,092.25)*100), (2.7% inclusive of performance
fee - ((2,836,175/104,226,092.25)*100) is calculated as the ongoing
charges incurred by the Company (including costs charged to capital
but excluding interest) divided by the average undiluted net asset
value (with debt at market value) for the period and expressed as a
percentage. This is an alternative performance measure.
Net Asset Value
There was a NAV increase of 6.3 pence per share in the fiscal
year, which represents a net asset total return of 14.1 per cent
inclusive of dividends paid during the fiscal year. From IPO to 31
March 2021, the Company has delivered a net asset total return of
20.7 per cent inclusive of dividends paid during each fiscal
year.
Figure 2: Net Asset Value of GSF: quarterly progress
Quarter End Pence per share
Mar-20 94. 6
----------------
Jun-20 96.2
----------------
Sep-20 97.3
----------------
Dec-20 99.6
----------------
Mar-21 100.9
----------------
Dividend History
Since IPO, the Company has targeted an annual dividend of 7.0
pence in each financial year. The Company is pleased to announce
that as of the publication date, the Company has declared total
dividends of 7.0 pence with respect to the period ending 31 March
2021, as targeted.
Dividends in respect of Quarter Ends
Ordinary Shares
Quarter Dividends
30 June 2020 2.0p
----------
30 September 2020 2.0p
----------
31 December 2020 2.0p
----------
31 March 2021 1.0p*
----------
* 1.0 pence declared for the period, is expected to be paid
after the July board meeting.
Chairman's Statement
I am pleased to present Gore Street's third annual report and
accounts for the year ended 31 March 2021, which shows a material
progression in the growth of both our Company and the energy
storage industry in general. In a year marked with so much
volatility and uncertainty we are particularly proud of our
delivery of growth in the portfolio and our continued focus on
sustainability, as promised to our investors.
Year in Review
This fiscal year, once again, marks a number of milestones for
Gore Street.
We exceeded a GBP100 million market cap, ending the fiscal year
at GBP155.4 million. Post year-end (by the time of publication),
our market cap rose to GBP307.71 million* , resulting in our
inclusion in the FTSE All Share Index.
We increased our operational portfolio seven-fold in the past
year, and now have 210 MW across two different jurisdictions
generating revenue for the Company (constituting 48% of total
portfolio as of 31 March 2021). The size of the portfolio has
increased by a factor of sixteen since our IPO only three years
ago.
We became the largest operator of energy storage in Northern
Ireland, adding 100 MW to the Irish grid and acquired an additional
81 MW of operational assets in Great Britain, making us amongst the
largest energy storage portfolios in Britain and the largest in
Ireland.
We are pleased to have been featured recently in the LSE's 2021
Green Economy report, which notes the market's appreciation of the
role our energy storage portfolio plays in supporting "ever larger
amounts of renewable energy for hundreds of thousands of UK
homes"** .
We are changing our website to better communicate our services
and performance to the public. I expect soon to include data that
more deliberately tracks the environmental impact of our
operational services in the UK and Ireland.
Overview of Revenue and Operational Performance
The regulatory and market frameworks for energy storage are
maturing rapidly with many early participants leaving the energy
storage market as the required level of expertise and performance
increases.
We are proud to note that Gore Street and its partners, in
record time, have met the National Grid's demands for early
delivery to the grid of a new frequency service, dynamic
containment. Delivery of this service resulted in a 65 per cent
increase in the operational portfolio's average revenue against
anticipated earnings.
We maintained high operational performance of British assets in
the fiscal year, averaging a 93 per cent delivery success rate
across the portfolio*** , with no health or safety incidents in the
year. We faced some challenges with one of our earliest
developments, NK Boulby (6MW), which is undergoing a series of
upgrades to allow it to hold and meet its power requirements. With
the exception of NK Boulby, all assets delivered a robust and
reliable performance throughout the fiscal year, operating near
nameplate portfolio capacity at an average of 98%.
Our deal pipeline remains extensive. We have 300 MW in
exclusivity as of the date of publication. Our strong focus on cost
has allowed us to reduce our average cost of deployment per MW by
47% since IPO, which, alongside our expertise in monetisation of
our portfolio, marks us out as the preeminent investor in this
space. Our pipeline reflects that we are now looking beyond the UK
and Ireland to mainland Europe and North America for opportunities
to support and collaborate with regional and national power
stakeholders in the transition from fossil fuels to renewable
energy.
*Market captilisation as of 12 July 2021.
**Green Economy Report is available at: 20 July 2021.
*** Delivery success is calculated by measuring an asset's
availability for grid services, exclusive of downtime scheduled for
planned maintenance.
Dividends
The Board declared dividends amounting to 7p per Ordinary Share
in the fiscal year, with the final 1p payment scheduled for
distribution around the time of publication of this report.
Human Capital
We view the quality and culture of our investment management
team as key to our success. It is a high-performing culture that
emphasises productivity and financial and operational
responsibility. The manager has attracted great people representing
a diverse array of perspectives, cultures, and skills. This growing
team is working collaboratively and efficiently for the benefit of
the Company and has done so admirably notwithstanding the
challenges arising from remote working during the COVID-19
pandemic, a fact which I wish to acknowledge with thanks on behalf
of the Board.
Environmental and Social Sustainability
The Company's role in maintaining the stability of national and
regional grids during their transition to clean energy was recently
recognised by the award of the London Stock Exchange's Green
Economy Mark, which is provided to companies that derive 50% or
more of their revenues from environmental solutions. We have
started to collate data to better assess the impact and
effectiveness of our systems in supporting the net zero ambitions
of the grid systems that we support.
The Company aims always to operate in a manner that safeguards
public health, property and the environment and is proud to note
that it has had no health or safety incidents or community
complaints in the fiscal year.
Gore Street is aware of its responsibility as a leader in this
nascent industry to promote the continuous integration of
economically, environmentally and socially sustainable practices
into its investment, construction and operational decision making.
We commit to transparently communicating our progress in
implementing and improving our processes over the coming years.
COVID- 19 And Other Risks
The spread of the coronavirus (COVID-19) and its associated
public policy containment measures has created significant
volatility and uncertainty for businesses across the globe. In
accordance with government policy the Investment Manager closed its
offices obliging team members to work from their places of
residence whenever possible. It is to the great credit to all
involved, individually and as a team, that these restrictions have
not negatively impacted the Company's productivity nor its
construction activities in Northern Ireland. On the contrary, the
Mullavilly and Drumkee sites were commissioned slightly ahead of
schedule and both began generating revenue on March 30, 2021. It
remains to be seen what potential longer term effects, if any,
there will be as a result of prolonged social isolation on our
businesses, including the effects on our Investment Manager's
employees, our suppliers, vendors or on our operational
performance. We discuss COVID and other principal risks alongside
our mitigation strategies on pages 39 to 41.
DIRECTORS RESPONSIBILITIES PURSUANT TO SECTION 172
The Directors are responsible for acting in a way that they
consider to be in good faith and most likely promote the success of
the Company for the benefit of its members as a whole. In doing so,
Directors must have regard for the needs of stakeholders amongst
other matters set out in section 172 when performing their duties
as discussed in the corporate governance report on pages 50 to
52
VIABILITY AND GOING CONCERN
The Directors have assessed the prospects of the Company over a
period of five years and confirm our reasonable expectation of
viability and continuance over that term. The Board deemed this
period appropriate due to the early stage of development of both
the Company and its investment portfolio after 28 months of
trading, and the nature of the business in which the Company is
involved.
The Directors' assessment of Gore Street's viability and going
concern are discussed in the corporate governance report on pages
48 to 49.
OUTLOOK
The Company has a robust pipeline in Great Britain, Western
Europe and North America. This reflects growing demand for large
scale grid storage solutions as systems transition from fossil
fuels to renewable energy. We will continue to build on our proven
track record of operational and technological skills in bringing
projects from the planning stage into operation, while doing so at
competitive deployment costs per MW and with a strong focus on
sustainable investment returns for shareholders
Patrick Cox
Chairman
Date: 14 July 2021
STRATEGIC REPORT
Importance of Storage
The UK and Ireland are among the many countries transitioning
from fossil fuels to renewable and other low carbon generation
options as part of the global commitment to mitigate climate
change. The transition presents challenges and opportunities. Among
the challenges are the intermittency of weather-dependent
renewables vis-a-vis consistent power demand, creating difficulty
for network operators. Rapid advancements in battery technology
have enabled grid-scale battery storage systems to emerge as a key
solution to solar and wind intermittency, as well as to serve as a
pivotal tool in avoiding major grid outages and blackouts.
Business Model
Gore Street is a pure-play energy storage investor.
The Company seeks to provide investors with a sustainable and
attractive growth portfolio over the long term by investing in a
diversified portfolio of utility-scale energy storage projects
primarily located in the UK and Ireland, while actively evaluating
opportunities for expansion into attractive market within OECD
countries. In addition, the Company aims to make annual
discretionary dividend payments to shareholders at a target rate of
7% of NAV (and a target minimum rate of 7p per Ordinary Share).
The Company will not invest in any projects under early-stage
development so that, save in respect of construction and final
delivery of the battery systems, the key components of the projects
(with respect to land, planning permissions and grid offers) are in
place before or at the time of acquisition.
Asset identification
Gore Street has assessed hundreds of opportunities since IPO and
maintains a discipline of only investing in energy storage
opportunities that meet our investment policy and criteria. We have
established a strong network of diligent project developers with an
understanding of the environmental and regulatory guidelines for
early-stage project development to ensure that projects identified
for investments meet (or will meet) land, planning and grid
energisation requirements by the time of acquisition.
Asset assessment
We have a coordinated and leveraged approach to investments in
the renewable energy sector. Our experienced team of investment
professionals have the necessary legal, financial and technical
experience to properly evaluate developmental and operational
opportunities within British, Irish, continental European and
American markets. We design our projects with flexibility in mind,
so that they are able to adapt to the evolving storage policy
climates in these markets and to the changing regulatory and
technological landscapes implemented by national and regional
grids.
Acquisition execution
We have a competent deal team to manage transaction structuring,
risk allocation, and project transfers in an efficient and timely
manner.
Responsible management and monitoring
We work to continuously integrate environmental, social and
governance considerations into every aspect of our investment
process. At the time of publication, we have applied to become a
UNPRI signatory and have committed to comply with the EU's SFDR
Article 8 regulations.
INVESTMENT MANAGER'S REPORT
Portfolio Overview
The Company has an interest in twenty-three assets held within
14 portfolio companies*.
* Stony Energy Storage Limited, the last of the 14 holding
companies, was acquired post-fiscal year.
Summary of Recent Portfolio Developments
In the fiscal year 2021, the Company increased its operational
portfolio seven-fold, and now has 210 MW generating revenue
(constituting 48% of total portfolio MW as of 31 March 2021).
The acquisition of Anesco's operational portfolio of 5 companies
comprising 14 sites in October 2020 increased the Company's British
operational portfolio by 81 MW, generating cashflow immediately
upon acquisition.
Despite construction during the peak of the Covid-19 pandemic,
the Company's assets in Northern Ireland, Mullavilly and Drumkee,
were commissioned in March 2021 generating revenues in the Irish
DS3 services market.
The acquisition of Ferrymuir in June 2020 represents the
Company's first activity in Scotland, with construction expected to
commence in the last quarter of 2021.
Porterstown, one of the Company's assets in the Republic of
Ireland, was one of just a few storage assets to be offered the
opportunity to expand its operational capacity from 30 MW to 90 MW.
The Company's other Irish asset, Kilmannock, has also applied for
increased capacity.
Stony, an 80 MW project in England, was acquired after the
fiscal year in May 2021, bringing the total Company portfolio as of
the date of publication to 460 MW. Upon approval of
Kilmannock's
application for expansion, the Company's portfolio would
increase to 520 MW.
Figure 4: Portfolio by Stage - in MW (460 MW as at the date of
publication)
[CHART]
As of the date of publication, the Company will have increased
the portfolio size by nearly 16 times since the date of its initial
public offering in May 2018, and upon approval of Kilmannock
expansion, will be at nearly 18 times larger since the date of its
IPO.
The Company has an 86 per cent increase in its operational
portfolio when compared to 2020 and a 69 per cent increase on
overall portfolio capacity when compared to 2020 (excluding the
potential Kilmannock expansion).
Asset Performance
Figure 6: Operational Performance for the Period
[CHART]
On average, the Company's delivery success rate throughout the
fiscal year was 93 per cent across its entire portfolio. NK Boulby
had periods of unplanned downtime during the fiscal year, although
by year end it was operational and delivering frequency response
services at a reduced capacity of 4MW. The Company is replacing
equipment at the site to better meet its power requirements. With
the exception of NK Boulby, all assets were operationally reliable
during the fiscal year, operating near nameplate portfolio capacity
at an average of 98%.
Health & Safety
There were no HSE incidents at any sites during the period.
Revenue Stacking During the Fiscal Year
The Investment Manager constantly assesses options for revenue
generation. Profitability maximisation remains a key aspect of Gore
Street's revenue stacking strategy. The majority of the portfolio
assets provide frequency services (EFR, FFR and DC) that reward the
Company for fast response with delivery durations of 30-minutes
minimum. An overview of the suite of available market services in
the British and Irish markets is provided in pages 26 to 29
below.
The Company received higher than anticipated frequency revenues
due to delivery of a new service, dynamic containment, which (for
the period between its introduction in October 2020 to March 2021)
was achieving prices capped at GBP 17/MW/h, as compared to GBP
10.3/MW/h for Fast Frequency Response during the same period**.
National Grid has announced an expected demand of 1 GW for dynamic
containment services and the Investment Manager intends to continue
to exploit its early participation in service delivery until demand
is satiated.
The Investment Manager participates in wholesale trading when
appropriate to exploit spikes in market volatility. For instance,
during the march-end quarter of 2021, the Investment Manager
identified and took advantage of revenue trading opportunities to
deliver payments higher than the available suite of frequency
response revenue.
The Company's sites in Northern Ireland became operational at
the end of the fiscal year. Both benefit from DS3 uncapped revenue
contracts and are expected to form a significant and meaningful
part of Company's revenue mix going forward, not least because of
EirGrid and SONI's announcement of an extension of the DS3
programme until 2024.
**Past performance is not a guarantee of future results.
Figure 7: Revenue Performance for the Period
[CHART]
GB Revenue Outlook
Electricity transmission and distribution network operations are
increasingly complex, due in part to increased penetration of
variable renewable energy, with more rapid changes in power
generated and increased frequency and power quality stability. As a
result, grid operators need to procure capacity that can react
quickly to fluctuations in generation and provide frequency and
power quality stability. This manifests itself in an
ever-increasing demand for battery storage projects which can
address the supply and quality issues.
The introduction of a new frequency service, Dynamic
Containment, in the British markets in October 2020, resulted in
the Company earning approximately double the revenue price of last
year's frequency response service. The GB storage market was
further incentivized in the reporting period, by certain changes to
market regulations in the form of reduced levies on stand-alone
storage facilities and a reduction in capacity charges of
approximately 30% (location-dependent). Storage is now also exempt
from variable 'BSUoS' charges (system charges related to National
Grid's balancing of the demand and generation on the transmission
system), which could potentially reduce the costs associated with
operating storage systems.
(a) Frequency Services:
Frequency services balance supply and demand of electricity to
ensure that frequency remains at 50 Hz (+/- 1%). As grid technology
increases in complexity, the need for balancing services
increases.
Dynamic Containment is a more complex form of frequency response
that requires a faster response in the event of a sudden demand or
generation loss in order to manage the imbalance in frequency in
under a second.
(b) Capacity Market:
The Capacity Market is a stable contract of between one to
fifteen years in duration, to deliver power at times of peak demand
to the grid. 87 per cent of the GB portfolio participates in the
capacity market (as at fiscal year-end) and 100 per cent of the
portfolio is expected to participate in the Capacity Market by
October 2021.
The Company's GB portfolio benefited in the fiscal year from the
highest capacity price awarded to storage at auction to date, with
the recent T-4 auction (delivery year 2025/26) generating 2.5X
previous revenues.
(c) Energy Trading:
The trading markets provide an opportunity to buy and sell power
at attractive rates. Energy storage systems remain well-suited to
take advantage of price volatility and the Company
opportunistically participates in both Balancing Mechanism actions
('instructions' by the National Grid to registered systems, to
balance the network in real-time) and in energy trades between
consumers and generators.
Irish Revenue Outlook
The Company's assets in Northern Ireland (NI) and the Republic
of Ireland (ROI) participate in the 'Delivering a Secure,
Sustainable Electricity System' program ("DS3"program) and the
Integrated Single Energy Market ("I-SEM") providing revenue streams
which are substantively similar to the ones in Great Britain.
DS3 services as a whole represent one of the most complex
packages of grid balancing activities available in the world, with
extensive prequalification testing and performance monitoring
requirements that confirm a battery system's capacity to manage a
'service system stacking' approach that generates similar revenue
stacks to those generated by the Company's systems in GB. The
Company's management of the DS3 complexities is rewarded by
lucrative revenues with potential to exceed the 10% IRR target.
In March 2021, the system operator announced a 12-month
extension of the DS3 service to 30 April 2024.
Our ESG Commitment
The Company is committed to the continuous integration of ESG
assessments into its investment, construction and operational
decision making, and aims to transparently communicate about our
progress through participation in the following initiatives:
UNPRI:
The Company has begun to adopt the UNPRI's six principles for
better understand of environmental, social and governance impact
and is taking active steps to improve its voluntary reporting by
2022 and to support the promotion of acceptance and implementation
of these principles in the industry. The Company became a UNPRI
signatory after the reporting period.
SFDR:
The Company is committed to integrating the Article 8
requirements of the EU's Sustainable Finance Disclosure Regulation
(SFDR), a component of the EU Action Plan on Sustainable
investment, and will disclose, in accordance with the regulations,
data on our assessments of the sustainability of our investment
strategy and operations, beginning in 2022.
TCFD:
The Company agrees that transparency and consistent disclosure
of environmental impact are key tools in improving the
sustainability. The TCFD Framework focuses on disclosure of
Governance, Strategy, Risk Management, and Metrics & Targets
and it is the Company's intent to continue to integrate information
on its performance into its financial reporting and climate-related
financial disclosures, beginning in 2022.
Principal Risks and Uncertainties
The Board routinely incorporates a review of the Company's risk
assessment matrix into its quarterly meetings and has carried out a
robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency or liquidity, as identified below.
Operational Risks
The Company has no employees and is reliant on the performance
of the Investment Manager and its other advisors to achieve its
investment goals.
Mitigant: The AIFM Agreement contains a key-man provision
allowing the Company to terminate the agreement if the chief
executive at the Investment Manager is unable to carry out his
duties and obligations to the Company
in accordance with the terms of his appointment. The investment, regulatory, asset management and transactional components of the Investment Manager's responsibilities are supervised by a team of management professionals to mitigate the key-man risks. The Investment Manager's team in turn self-regulates with the support and counsel of qualified market experts. With respect to asset valuation, the Investment Manager routinely engages reputable third-party valuers to confirm and review its NAV calculations on a bi-annual basis.
The Investment Manager also engages a third-party such as NEC,
Fluence, BYD and Tesla to conduct an annual audit of its risk and
compliance policies and procedures and to mitigate against any
cultural drivers that could harm investors or the portfolio.
Market Risks
Changes to the design of the energy market, or to the
specifications for revenue services, network charges, access to
networks or to other market rules or legislation, could impact
revenue projections for portfolio assets.
Mitigant: The diversification of assets across the United
Kingdom and Ireland mitigates the impact of changes in any single
market product. In addition, the Investment Manager aims to stack
revenue contracts, resulting in a diversification of income streams
available to each asset, in order to minimise the portfolio's
reliance on any single contract mechanism or market service and
protect against regulatory shifts within any specific market
service.
Technology Manufacturer Risks
Gore Street's portfolio currently consists only of lithium-ion
batteries provided by four different battery manufacturers: NEC,
Fluence, BYD and Tesla. Each site contains multiple battery stacks
connected in parallel, with each stack containing modules of
battery cells that are partially independent and can be replaced
and repaired separately, thereby partially limiting the impact of
failure of any module of cells. The performance of each asset is
nonetheless dependent on scheduled maintenance and timely repair by
these service providers.
Mitigant: The Company remains technologically agnostic and
continues to evaluate other economically viable energy storage
opportunities. The Company is not under an exclusivity agreement
with any individual manufacturer and will tender projects scheduled
to commence construction in 2022 and 2023 to multiple engineering,
procurement and construction (EPC) bids in order to continuously
diversify its portfolio of manufacturers and maintenance providers.
The Company utilises a full wrap, so that the EPC is responsible
for all equipment used in the BESS (Battery Energy Storage System)
and the EPC has subcontractors.
Valuation Risks
The Company's investments will predominantly be in unquoted
assets whose fair value involves the exercise of judgement.
Mitigant: The Investment Manager routinely utilises market
experts to opine on the reasonableness of key data utilised in the
asset valuation process (such as energy price forecasts). In
addition, portfolio assets are valued by independent third-parties
on a bi-annual basis, providing further objectivity to the
portfolio valuation process including the review of discount
rates.
COVID- 19 Disruption Risks
Lock-down restrictions and potential illness associated with the
Covid-19 pandemic could have the ability to delay the operations
and construction activities of the Company.
Mitigant: The Company remains in strict compliance with
Government guidelines to maximise the use of remote working and has
adopted software and collaboration programs to ensure the continued
efficiency of the Investment Management team. The Company's
contractors have implemented responsible policies and HSE
guidelines to ensure proper management of COVID risks during
construction. The Company works closely with its contractors and
their suppliers to mitigate the impact of potential supply chain
delays and ensure timely development of portfolio projects.
Brexit Risks
Britain's exit from the European Union and the resulting
decoupling of European and British electricity and Capacity markets
could result in electricity price volatility and further
legislative changes.
Mitigant: The Company will continue to monitor British market
regulations closely. It will also maintain its stacked revenue
strategies, which maximise participation in diverse ancillary
services and minimise exposure to the more volatile power trading
market. In addition, the Company aims to further diversify its
portfolio into North America in order to further diversify revenue
streams.
Construction Risks
The Company relies on EPC contractors for battery construction
and it relies on the relevant transmission systems operator (TSO)
for timely energisation and connection of that battery storage
asset to the national grid. There is a risk that either
construction party could delay the target commercialisation
date.
Mitigant: The Company works closely with EPC contractors to
ensure timely performance of services and imposes liquidated damage
payments under the EPC contracts for EPC delays in delivery. The
Company seeks commitments from TSOs to a target energisation date
as a condition to project acquisition and provides maximum
visibility on project development to TSOs in order to encourage
collaboration towards that target energisation date.
Currency Risks
Company financials (including any dividend payouts) are
denominated in British Pounds. However, the Company has assets in
Northern Ireland and Ireland with expenditures and revenues either
denominated in or pegged to Euros.
Mitigant: The Company is negotiating a hedging facility with
Santander bank to ensure appropriate management of its Euro
exposure.
Cyber-Security Risks
The Company is exposed (either directly or through its primary
service providers) to server, software, and communications risks in
managing its portfolio operations.
Mitigant: The Company manages server risks through
implementation of systems' firewalls and has installed redundancies
in its systems to manage communications risks. The Company has
implemented a requirement for annual certification from service
provides of system security as part of the Company's onboarding
process.
Emerging Risks
To ensure that the Company maintains a holistic view of risk
management, Gore Street and the Board will continue to monitor the
following emerging risks and assess their potential to adversely
impact operations: (i) insurance market requirements, (ii)
environmental frameworks governing energy storage, (iii) potential
changes to the UK tax structure; and (iv) changes to future
investor accreditation resulting from Brexit.
Governance
Directors' Report
The Directors present their report together with the audited
financial statements for the period from 1 April 2020 to 31 March
2021. The Corporate Governance Statement on pages 55 to 70 forms
part of this report. The Directors' Report together with the
Strategic report comprise the "management report" for the purposes
of Disclosure Guidance and Transparency Rule 4.1.5R.
Principal activity and status
The Company was incorporated in England and Wales on 19 January
2018 with company number 11160422 and registered as an investment
company limited by shares under Section 833 of the Companies Act
2006. On 25 May 2018, the Company's ordinary shares were admitted
as a Premium Listing and commenced dealings on the Main Market of
the London Stock Exchange ("LSE"). The Company has, subsequent to
its launch, entered the Investment Trust Company ("ITC") regime for
the purposes of UK taxation. The Company is a Member of the
Association of Investment Companies ("AIC").
Business review
During the period the Company, through GSES 1 Limited, has
successfully acquired four new facilities, of which all facilities
are majority owned by the Company. The registered address of GSES 1
Limited is The Scalpel, 18th Floor, 52 Lime Street, London, EC3M
7AF. The Chairman's statement and Investment Managers report
expands on the business activity and acquisitions in the
period.
Results and dividends
The financial statements of the Company for the period appear on
pages 96 to 101. Total Comprehensive income for the year 31 March
2021 was GBP14,594,694 (31 March 2020 GBP4,789,273). The Directors
recommend a fourth interim dividend of 1 pence per share be paid,
bringing the total dividend in respect of the period ended 31 March
2021 to 7 pence per share (7 pence per share 31 March 2020).
Dividend policy
Subject to market conditions and performance, financial position
and financial outlook, it is the Directors' intention to pay an
attractive level of dividend income to Shareholders on a quarterly
basis. The targeted annual dividend for 31 March 2021 of 7.0 pence
per Ordinary share will have been met, the annual target thereafter
is an annual dividend of 7.0 per cent of NAV per Ordinary Share in
each financial year, subject to a minimum target of 7.0 pence per
Ordinary Share.
Share capital
As at 31 March 2021, 276,224,622 ordinary shares were in issue
(52,548,815 31 March 2020) and no other classes of shares were in
issue at the respective 2020 and 2021 year end .
Risk management and internal control
The Board is responsible for financial reporting and controls,
including the approval of the Annual Report and Accounts, the
dividend policy, any significant changes in accounting policies or
practices, going concern and treasury policies including the use of
derivative financial instruments. The board takes comfort that it
has outsourced and received assurance from those service providers
regarding their internal controls and risk management processes.
During the period the Board has carried out a robust assessment of
the principal risks and uncertainties facing the Company and how
they are being mitigated, as described on pages 39 to 41.
The Board meets at least every quarter to review the Company's
performance against its strategic aims, objectives, business plans
and budgets and ensures that any corrective action considered
necessary is taken. Additional meetings are held as required to
deal with the business of the Company in a timely manner. Directors
are expected to attend all meetings of the Board and all meetings
of those committees on which they sit, as well as the Annual
General Meeting ("AGM"). Meetings called outside the scheduled
quarterly Board meetings may need to be convened at relatively
short notice and therefore at times when not every director is
available. Every meeting during the period was convened with an
appropriate quorum and with the Directors independent of the
Investment Manager.
Insurance
The Company maintains GBP10million of Directors' and Officers'
Liability Insurance cover for the benefit of the Directors, which
was in place throughout the period and which continues in effect at
the date of this report.
Directors
All Directors are Non-Executive Directors. All the Directors
will seek re-election at the AGM in accordance with the
recommendation of the AIC Code. Full details of the processes by
which Directors can be appointed or replaced are set out in the
Articles of Association.
Significant shareholdings
As at 31 March 2021 the following shareholders have a
disclosable interest of 3 per cent or more in the ordinary shares
of the Company:
Shareholder Number of ordinary Per centage of issued
shares share capital
Rathbones 12,385,200 8.61%
------------------- ----------------------
National Treasury Management
Agency 11,730,910 8.15%
------------------- ----------------------
Hargreaves Lansdown 11,180,567 7.77%
------------------- ----------------------
Interactive Investor 9,346,205 6.50%
------------------- ----------------------
Charles Stanley 8,362,440 5.81%
------------------- ----------------------
First Avenue Capital 7,987,357 5.55%
------------------- ----------------------
Senecca Investment
Managers 6,491,000 4.51%
------------------- ----------------------
Nippon Koei Energy 6,000,000 4.17%
------------------- ----------------------
AJ Bell 4,644,724 3.23%
------------------- ----------------------
EFG Harris Allday 4,611,324 3.21%
------------------- ----------------------
Hawksmoor Investment
Management 4,330,000 3.01%
------------------- ----------------------
Political contributions
The Company made no political contributions during the
period.
Greenhouse gas emissions reporting
The Board has considered the requirement to disclose the
Company's measured carbon emissions sources under the Companies Act
2006 (Strategic report and Director's report) Regulations 2013. The
Company is a closed-ended investment company which has no employees
and so its own direct environmental impact is minimal.
Employees
The Company has no employees and therefore no employee share
scheme or policies for the employment of disabled persons or
employee engagement.
Restrictions on transfer of securities in the Company
There are no restrictions on the transfer of securities in the
Company, except as a result of:
-- The FCA's Listing Rules, require certain individuals to have
approval to deal in the Company's shares: and,
-- The Company's Articles of Association, allow the Board to
decline to register a transfer of shares, or otherwise impose
restriction on shares, to prevent the Company, the Investment
Manager from breaching any law or regulation.
The Company is not aware of any agreements between holders of
securities that may result in restrictions on transferring
securities in the Company.
Securities carrying special rights
No person holds securities in the Company carrying special
rights with regards to control of the Company.
Change of control
The Company is not aware of any person who, directly or
indirectly, owns or controls the Company. The Company is not aware
of any arrangements the operations of which may give rise to a
change in control of the Company.
Director's share dealings
The Directors have adopted a code of Director's dealing in
ordinary shares, which is in accordance with the Market Abuse
Regulation. The Board is responsible for taking all proper and
reasonable steps to ensure any dealings by Director's, or persons
closely associated with them, are in compliance with the Market
Abuse Regulation.
Articles of Association
These are available on the Company's website at
https://www.gsenergystoragefund.com/ or by application to the
Company Secretary. Any amendment to the Company's Articles of
Association may only be made by passing special resolution of the
Shareholders of the Company.
Branches outside the UK
The Company does not have any branches outside the UK.
Powers of the Directors
The Board are responsible for managing the business affairs of
the Company in accordance with the Articles, the Companies Act and
the investment policy and have overall responsibility for the
Company's activities including its strategy, investment activities
and reviewing the performance of the portfolio.
Powers in relation to the Company issuing its shares
Subject to company law and the Articles of Association, the
Directors are authorised to issue shares of such number of tranches
and on such terms as they determine, provided that such terms are
consistent with the provision of the Articles.
Statutory information contained elsewhere in the annual
report
Information required to be part of this Directors' report can be
found elsewhere in the annual report and is incorporated into this
report by reference, as indicated below:
-- Future developments, pages 23 and 41
-- Engagement with suppliers, customers and others with business
relationships with the Company, pages 50 to 52
-- Corporate Governance statement, pages 55 to 70
-- Manager and service providers, pages 61 to 62
-- Directors' names and biographies, pages 64 to 66
-- Directors' interest in shares, page 80
-- Financial instruments, note 5, page 108
-- Share capital reserves, note 20, pages 129 to 131
-- Transactions with related parties, note 22, pages 133 to 134
-- Post balance sheet events, note 24, page 135
Other disclosures
Disclosures of financial risk management objectives and policies
and exposure to financial risks are included in note 18 to the
financial statements.
Disclosures in relation to the Company's business model and
strategy have been included within the Investment Manager's report
on pages 23 to 41. Disclosures in relation to the main industry
trends and factors that are likely to affect the future performance
and position of the business have also been included within the
Investment Manager's report.
Disclosure of information to Auditors
All of the Directors have taken all the steps that they ought to
have taken to make themselves aware of any information needed by
the auditors for the purposes of their audit, and to establish that
the auditors are aware of that information. The Directors are not
aware of any relevant audit information of which the auditors are
unaware.
Independent Auditors
Ernst & Young LLP were appointed as auditors by the
Directors during the period and have expressed their willingness to
continue as auditor for the financial year ending 31 March 2022. A
resolution to re-appoint Ernst & Young LLP as auditors to the
Company will be proposed at the AGM.
Corporate Governance Report
This Corporate Governance Report forms part of the Report of the
Directors as further disclosed on pages 42 to 47. The Board
operates under a framework for corporate governance which is
appropriate for an Investment Company.
Gore Street Energy Storage Fund plc is an investment trust and
has been compliant with section 1158 of The Corporation Tax Act,
2010. The ordinary shares were admitted to trading on the Premium
Segment of the Official List of the London Stock Exchange on 25 May
2018.
The Board of Gore Street Energy Storage Fund plc has considered
the principals and provisions of the Association of Investment
Companies Code of Corporate Governance (AIC Code). The AIC Code
addresses the Principals and Provisions set out in the UK Corporate
Governance Code (the UK Code), as well as setting out additional
Provisions on issues that are of specific relevance to the
Company.
The Board considers that reporting against the Principals and
Provisions of the AIC Code, which has been endorsed by the
Financial Reporting Council, provides more relevant information to
Shareholders.
The Company has complied with the Principals and Provisions of
the AIC Code. The AIC Code is available on the AIC website
(www.theaic.co.uk/aic-code-of-corporate-governance) It includes an
explanation of how the AIC Code adopts the Principals and
Provisions set out in the UK Code to make them relevant for
investment companies. The Company is a member of the AIC.
Audit Committee's Report
The Audit Committee (the Committee) is chaired by Caroline
Banszky and comprises all the Directors. The Committee operates
within clearly defined terms of reference and includes all matters
indicated by Rule 7.1 of the UK FCA's DTRs and the AIC Code. The
terms of reference were reviewed during the year under review and
were updated to enhance the Committee's scope to consider key risks
facing the Company. The Board is satisfied that the Committee is
properly constituted with at least one member of the Committee who
is a chartered accountant with recent and relevant financial
experience.
The Committee plays an important role in the governance of the
Company, with its principal activities focused on the integrity of
financial reporting, quality and effectiveness of external audit,
risk management and the system of internal control.
The Committee meets a minimum of twice a year, and at such other
times as the Committee shall require. The Administrator and
representatives of the Investment Manager may be invited to attend
meetings as and when deemed appropriate.
Meetings
We met two times during the financial year ended 31 March 2021.
These meetings were attended by the committee members, as well as
representatives of the Investment Manager, Gore Street Capital
Limited, the Company Secretary, JTC (UK) Limited, the Independent
Auditor, Ernst & Young LLP and the independent valuer BDO
LLP.
The Audit Committee operates within clearly defined terms of
reference which are reviewed on annual basis and approved by the
Board. The terms of reference include all matters indicated by
Disclosure Guidance and Transparency Rule 7.1 and the AIC Code.
Third parties may be invited to attend meetings as and when
deemed appropriate.
Summary of the Role and Work of the Audit Committee
The function of the Committee is to ensure that the Company
maintains the highest standards of integrity, financial reporting,
internal and risk management systems and corporate governance. The
main duties of the Audit Committee are:
1. Monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the Company's
financial performance and reviewing significant financial reporting
judgements contained in them.
2. Reporting to the Board on the appropriateness of the Board's
accounting policies and practices including critical judgement
areas and going concern and the viability statements.
3. Reviewing the valuation of the Company's investments prepared
by the Investment Manager and their underlying assumption, we
review the work of the independent valuer BDO LLP bi-annually prior
to making a recommendation to the Board on the valuation of the
Company's investments.
4. Meeting regularly with the Auditor to review their proposed
audit plan and the subsequent audit report and assess the
effectiveness of the audit process and the levels of fees paid in
respect of both audit and non-audit work.
5. Making recommendations to the Board in relation to the
appointment, re-appointment or removal of the Auditor, and
approving their remuneration and the terms of their engagement.
6. Monitoring and reviewing annually the Auditor's independence,
objectivity, expertise, resources, qualification and non-audit
work.
7. Reviewing the effectiveness of the accounting and internal
control systems of the Company and considering annually whether
there is a need for the Company to have its own internal audit
function.
8. Reviewing and considering the UK Code, the AIC Code, the FRC
Guidance on Audit Committees and the Company's institutional
investors' commitment to the UK Stewardship code; and
9. Reviewing the risks facing the Company and monitoring the risk matrix.
The Audit Committee is required to report formally to the Board
on its findings after each meeting on all matters within its duties
and responsibilities.
Overview
During the year, the Audit Committee has had regular contact and
meetings with the Investment Manager, the Administrator and the
Independent Auditor. These meetings and discussions focused on, but
were not limited to:
1. A detailed analysis of the Company's half year and interim NAVs.
2. Reviewing the risk matrix of the Company.
3. Reviewing the Company's corporate governance framework.
4. Reviewing the internal controls framework for the Company,
and those of the Administrator and the Investment Manager with
respect to the Company.
5. Considering the ongoing assessment of the Company as a going concern.
6. Considering the principal risks which took into consideration
the effects of the Covid-19 pandemic and period of assessment for
the longer-term viability of the Company.
7. Reviewing the detailed stress tests for the viability of the
Company to ensure that going concern basis is appropriate.
8. Monitoring compliance with AIFMD, the AIC code and other
regulatory and governance frameworks.
9. Reviewing and approving the audit plan in relation to the
audit of the Company's Annual Report and financial statements.
Financial Reporting
The primary role of the Committee in relation to financial
reporting is to review with the Investment Manager, the
Administrator and the Auditor the appropriateness of the half-year
report and Annual Report and financial statements, concentrating
on, amongst other matters:
-- The quality and acceptability of accounting policies and practices.
-- The clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements.
-- Amendments to legislation and corporate governance reporting
requirements and accounting treatment of new transactions in the
year.
-- The impact of new and amended accounting standards on the Company's financial statements.
-- Whether the Audit Committee believes that proper and
appropriate processes and procedures have been followed in the
preparation of the half year report and Annual Report and financial
statements.
-- Whether the Annual Report and financial statements, taken as a whole, are fair, balanced, and understandable and provides the information necessary for Shareholders to assess the Company's performance, going concern, viability, business model and strategy.
-- Material areas in which significant judgements and estimates
have been applied or there has been discussion with the Auditor;
and
-- Any correspondence from regulators in relation to the Company's financial reporting.
Ernst & Young LLP, the Independent Auditor, attended the
formal Audit Committee meetings held during the period. Matters
discussed included the Independent Auditor's assessment of
interactions with the Investment Manager and the Administrator,
confirmation that there has been no restriction in scope placed on
them, the independence of their audit and how they have exercised
professional skepticism.
Significant Issues
The Audit Committee discussed the planning, conduct and
conclusions of the external audit as it proceeded. At the Audit
Committee meeting in advance of the year end, the Audit Committee
discussed and approved the Independent Auditor's audit plan. The
Audit Committee considered:
-- the more bespoke disclosure regarding the assessment of going
concern and long term viability for the required statements by the
Board which took into consideration the effects of Covid 19
pandemic and having completed the assessment do not consider it to
be a key area of risk for the Company; and
-- identified the carrying value of investments as a key area of
risk of misstatement in the Company's financial statements.
Assessment of the Carrying Value of Investments
The Company's accounting policy is to designate investments at
fair value. As a consequence, the Committee reviewed valuation
policies processes and application. The most influential area of
judgement within the Accounts relates to the valuation of these
investments. The key estimates and assumptions include the useful
life of the assets, revenue estimates, the discount factors
utilised, the rate of inflation, and the price at which the power
and associated benefits can be sold. In particular, the Audit
Committee carefully considered the impact of the change in Capacity
Market Income recognition and associated assumptions in relation to
the valuation of the assets that have been included in the 31 March
2021 valuation. At the year end, the Company engaged BDO as
independent valuation experts/advisors to help the committee form a
view as to the reasonableness as to the valuations.
The uncertainty involved in determining the fair value
investment valuations represents significant risk in the Company's
financial statements. An inherent risk of management override is
present as the Investment Manager's fee is calculated based on NAV
(as disclosed in note 22 to the financial statements). The
Investment Manager is responsible for calculating the NAV with the
assistance of the Administrator, prior to approval by the
Board.
On a quarterly basis, the Investment Manager provides a detailed
analysis of the NAV. This analysis highlights any movements and
assumption alterations to the NAV of the previous quarter. NAV
movements and the principles behind changes in assumptions are
considered and challenged by the Chairman of the Audit Committee
and subsequently approved by the Board. The Audit Committee is
satisfied that the key estimates and assumptions used within the
valuation model are appropriate and that the investments have been
fairly valued.
Internal Control
The Audit Committee has established a set of ongoing processes
with a view to satisfying particular needs of the Company with
respect to managing the risks to which it is exposed. The process
is one whereby the Investment Manager has identified the key risks
to which the Company is exposed and recorded them on a risk matrix
together with the controls employed to mitigate these risks. The
Audit Committee is responsible for reviewing the risk matrix and
associated controls before recommending to the Board for
consideration and approval. The Audit Committee is also responsible
for challenging the Investment Manager's assumptions to ensure a
robust internal risk management process. By their nature, these
procedures provide a reasonable, but not absolute, assurance
against material misstatement or loss. Regular reports are provided
to the Audit Committee highlighting material changes to risk
ratings.
The Audit Committee discussed and reviewed the internal controls
in place at the Investment Manager and the Administrator.
Discussions were centered around assurances at operational level;
internal oversight; and independent objective assurance.
The Audit Committee concluded that these frameworks were
appropriate for the identification, assessment, management and
monitoring of financial, regulatory and other risks, with
particular regard to the protection of the interests of the
Company's Shareholders.
Internal Audit
The Audit Committee considers at least once a year whether or
not there is a need for an internal audit function. Currently it
does not consider there to be a need for an internal audit
function, given that there are no employees in the Company and all
outsourced functions are with parties who have their own internal
controls and procedures. In light of the growing portfolio of
assets under management the requirement for an internal audit
function is under active discussion and review with the Investment
Manager.
External Auditor
EFFECTIVENESS OF THE AUDIT PROCESS
The Audit Committee assessed the effectiveness of the audit
process by considering Ernst & Young LLP's fulfilment of the
agreed audit plan. This assessment included the review of reporting
presented to the Audit Committee by Ernst & Young LLP and the
discussions at the Audit Committee meeting, highlighting such
issues that arose during the course of the audit. In addition, the
Audit Committee also sought feedback from the Investment Manager
and the Administrator on the effectiveness of the audit process.
For this financial period, the Audit Committee was satisfied that
there had been appropriate focus and challenge on the primary areas
of audit risk and assessed the quality of the audit process to be
good.
NON-AUDIT SERVICES
The Audit Committee seeks to ensure that any non-audit services
provided by the Independent Auditor do not conflict with their
statutory and regulatory responsibilities, as well as their
independence, before giving written approval prior to their
engagement.
The Audit Committee has a policy regarding the provision of
non-audit services by the external Auditor which precludes the
Independent Auditor from providing any of the prohibited non-audit
services as specified in the FRC Revised Ethical Standard 2019. The
Audit Committee monitors the Company's expenditure on non-audit
services provided by the Independent Auditor, who should be engaged
for non-audit services in circumstances where they are deemed to be
the most commercially viable supplier, and prior approval of the
Audit Committee has been sought. During the year the only non-audit
service provided by EY was the interim review. The Audit Committee
was satisfied that the provision of these Non-Audit Services did
not provide threats to the Independent Auditors' independence.
INDEPENCE
The Audit Committee is required to consider the independence of
the external Auditor. In fulfilling this requirement, in addition
to its own internal assessment, the Audit Committee has considered
a report from Ernst & Young LLP describing its arrangements to
identify, report and manage any conflict of interest and the extent
of non-audit services provided by them. The Audit Committee has
concluded that it considers Ernst & Young LLP to be independent
of the Company.
AUDITOR'S TENURE
The Auditor is required to rotate the audit partner every five
years. The current partner is in her third year of tenure. There
are no contractual obligations restricting the choice of external
auditor and the Company will consider putting the audit services
contract out to tender at least every ten years. In line with the
FRC's recommendations on audit tendering, this will be considered
further when the audit partner rotates every five years. Under the
Companies Act, the reappointment of the external Auditor is subject
to shareholder approval at the AGM.
Having carried out the review described above and having
satisfied itself that the Auditor remains independent and
effective, the Audit Committee has recommended to the Board that
Ernst & Young LLP be reappointed as Auditor for the year ended
31 March 2022.
ANNUAL GENERAL MEETING
The Chair of the Committee will be present at the Company's AGM
to answer questions on the Audit Committee's activity and matters
within the scope of the Audit Committee's responsibilities.
FAIR, BALANCED AND UNDERSTANDABLE STATEMENTS
The production and audit of the Company's Annual report and
accounts is a comprehensive process, requiring input from a number
of contributors. To reach a conclusion on whether the Company's
annual report and accounts, taken as a whole, are fair, balanced
and understandable, as required under the AIC Code, the Board
requested that the Audit Committee advise on whether we considered
that the Annual Report fulfilled these requirements.
In outlining our advice, we considered the detailed reviews
undertaken at various stages of the production process by the
Investment Manager, third party independent valuer, BDO LLP,
Administrator and the Audit Committee, which are intended to ensure
consistency and overall balance. We then discussed with the
Investment Manager and Administrator the process of how this was
put together and received a series of drafts of the Company's
Annual report and accounts. These were scrutinised and discussed
thoroughly at an Audit Committee meeting. Additional comfort was
also sought from the Investment Manager and Administrator in
relation to the conclusion reached by the Board.
As a result of the work performed, we have concluded and
reported to the Board that the Annual Report and accounts for the
period ended 31 March 2021, taken as a whole, are fair, balanced
and understandable and provides the information necessary for
Shareholders to assess the Company's performance, business model
and strategy.
EFFECTIVENESS OF THE COMMITTEE
A detailed and rigorous evaluation of the Committee was
undertaken as part of the overall evaluation. The skills and
experience of the members was found to appropriate, including
recent and relevant financial experience. The Committee will be
concentrating on personal development and training as the
regulatory focus on audit and Audit Committees increases. The
Committee was found to be functioning effectively.
Caroline Banszky
Chairman of the Audit Committee
Date: 14 July 2021
Remuneration & Nomination Committee Report
The Board has prepared this report in line with the AIC Code as
well as the requirements of the Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 (SI2008/410) and
the Companies Act 2006.
Under the requirements of Section 497 of the Companies Act 2006,
the Company's Auditor is required to audit certain disclosures
contained within the report. These disclosures have been
highlighted and the audit opinion thereon is contained within the
Auditor's Report on pages 87 to 95.
Annual Statement from the Chairman of the Remuneration &
Nomination Committee
The Committee comprises of the full Gore Street Energy Storage
Fund Plc Board with Pat Cox as Chair and consists solely of
non-executive directors. The Committee has responsibility for
reviewing the remuneration of the Directors, specifically
reflecting the time commitment and responsibilities of the role and
meets at least annually. The Committee also undertakes external
comparisons and reviews to ensure that the levels of remuneration
paid are broadly in line with industry standards and members have
access to independent advice where they consider it
appropriate.
We concluded that there is no need to change the remuneration
policy this year, the policy being approved in 2019.
In accordance with the articles of association and the AIC Code,
we considered the current levels of remuneration and whether they
reflect the time commitment and responsibilities the Company calls
for. During the year neither the Board nor the Committee has been
provided with external advice of services by any person but has
received industry comparison information from the Company Secretary
in respect of Directors' remuneration. The remuneration policy set
by the Board is described below.
Individual remuneration packages are determined by the
Remuneration and Nomination Committee within the framework of the
remuneration policy. The Directors are not involved in deciding
their own individual remuneration with each Director abstaining
from voting on their own remuneration.
At the end of the preceding year the Committee undertook a
benchmarking exercise of directors' remuneration across the
Company's peer group and considered the current level of
remuneration for each individual board member. It was agreed that
directors' remuneration should increase in line with the increased
capitalisation of the Company up to a maximum capitalisation of
GBP100m to bring the directors remuneration in line with market
rates and the remuneration set out in the Prospectus at IPO from
which the directors' had taken a temporary reduction to reflect the
reduced market capitalisation of the Company. The Committee decided
in March 2021 that as directors had received increases during the
year to match the reflected growth of the Company, any further
additional increase was not appropriate at this time and that no
additional uplift would be made until such time as further growth
of substance had been achieved..
Remuneration Policy
Below is Gore Street's remuneration policy. This policy was
adopted on 14 August 2019 and will next be put to a Shareholder
vote at the 2022 AGM as part of the regulatory three yearly
approval process.
Policy
The Company's policy is to determine the level of Directors'
fees with due regard to the experience of the Board as a whole, the
time commitment required, and to be fair and comparable to
non-executive directors of similar companies. The Company may also
periodically choose to benchmark Directors' fees with an
independent review to ensure they remain fair and reasonable.
Directors' fees will be adjusted from time to time and will be
subject to Shareholder approval in the subsequent AGM. The
Directors may elect to apply the cash amount equal to their annual
fee to subscribe for, or to purchase, ordinary shares. The
Directors are entitled only to their annual fee and their
reasonable expenses. No element of the Directors' remuneration is
performance related, nor does any Director have any entitlement to
pensions, share options or any long-term incentive plans from the
Company.
The Directors hold their office in accordance with the Articles
of Association and their appointment letters. No Director has a
service contract with the Company, nor are any such contracts
proposed. The Directors' appointments can be terminated in
accordance with the Articles of Association and without
compensation. Under the Company's Articles of Association, all
Directors are entitled to remuneration determined from time to time
by the Board and approved by the Shareholders.
DIRECTORS' REMUNERATION REPORT
Details of Directors' Remuneration (Audited)
The emoluments in respect of qualifying services of each person
who served as a Director during the period are shown below. All the
Directors are paid a basic annual fee of GBP40,000 quarterly in
arrears for their services. In addition to this fee, Pat Cox is
paid an additional GBP17,500 per annum for his role as Chair of the
Board. Caroline Banszky is paid an additional GBP5,000 per annum
for serving as Chair of the Audit committee. No Director has waived
or agreed to waive any emoluments from the Company in the current
year. No other remuneration was paid or payable by the Company
during the current period, nor were any expenses claimed by or paid
to them other than for expenses incurred wholly, necessarily and
exclusively in furtherance of their duties as Directors of the
Company.
The remuneration levels for the Directors were set at the time
of IPO in May 2018 at a reduced level to reflect the GBP30million
of equity raise. As the market capitalisation of the Company has
grown during the year the Directors' remuneration was reviewed and
increased to reflect the current market capitalisation (capped at
GBP100million) to realign the Directors' remuneration in a stepped
process to reflect the original intended level of remuneration pre
IPO. Whilst this has resulted in stepped increases of substantial
change the directors' do not propose to apply any further
remuneration increases until such time as further Company growth of
substance has been achieved.
Director Year ended Year ended Year ended Percentage
31 March 2022 31 March 2021 31 March 2020 change 20-21
(GBP) (GBP)
Pat Cox* 57,500 43,387 33,000 31.48%
--------------- --------------- --------------- --------------
Caroline Banszky** 45,000 31,051 21,000 47.86%
--------------- --------------- --------------- --------------
Malcolm King 40,000 26,734 18,000 48.52%
--------------- --------------- --------------- --------------
Tom Murley 40,000 26,734 18,000 48.52%
--------------- --------------- --------------- --------------
Total 182,500 127,906 90,000 42.11%
--------------- --------------- --------------- --------------
*This includes GBP17,500 per annum in respect of serving as
Chair of the Board.
**This includes GBP5,000 per annum in respect of serving as
Chair of the Audit committee.
No director received any taxable benefits during the year ended
31 March 2021
2021/2022 Remuneration
The remuneration levels for the forthcoming year 2021/2022 for
the Directors are shown in the above table.
In accordance with FCA Listing Rules 9.8.6(R)(1), Directors'
interest in the shares of the Company (in respect of which
transactions are notifiable to the Company under FCA Disclosure and
Transparency Rule 3.1.2(R)) as at 31 March 2021 were as
follows:
(Audited)
Director Number of ordinary Per centage of Issued
shares share Capital
Pat Cox 49,996 0.01%
------------------- ----------------------
Caroline Banszky 50,000 0.01%
------------------- ----------------------
Malcolm King 50,000 0.01%
------------------- ----------------------
Tom Murley 0 0.00%
------------------- ----------------------
Total 149,996 0.05%
------------------- ----------------------
All the Directors' share interests shown above were held
beneficially.
Tom Murley as a US resident has limited options for owning
shares. The platform through which he owned shares closed and he
was forced to sell. He is looking for a new platform through which
to purchase shares.
Relative Importance of Spend on Pay
The difference in actual spend between 31 March 2021 and 31
March 2020 on Directors' remuneration in comparison to
distributions (dividends and share buybacks) and other significant
spending are set out in the table below:
Payments made during Payments made during
the year ended 31 March the year ended 31 March
2021 2020
Directors' total remuneration 127,906 90,000
------------------------- -------------------------
Dividends paid 10,090,637 3,552,638
------------------------- -------------------------
Buy back of Ordinary - -
Shares
------------------------- -------------------------
Company-wide considerations
There are no executive directors, nor are there any employees of
the Company, so there are no statements to make on any
consultations, comparisons, or pay and employment conditions within
the Company.
Statement of consideration of shareholder views
The levels of remuneration were set out in the Prospectus and
did not receive any negative comment from the investment community
before or after the IPO. The AGM will give the opportunity for
opinions to be aired and demonstrated formally through the voting
process and will provide the basis for future discussions and
developments.
Payments to past directors or for loss of office
There are no payments to disclose. Under the terms of the
Directors' Remuneration Policy there would be no compensation for
loss of office.
Statement of voting at general meeting
The Directors Remuneration Policy was put to a binding vote at
the AGM on 14 August 2019 and is due for renewal at the AGM in
2022. The Directors Remuneration Report was subject to an advisory
vote at the AGM on 19 August 2020.
The voting outcome is set out in the table below:
Resolution approve Resolution approve
directors' remuneration remuneration policy
report 2020 2019
Votes for* 30,512,395 19,676,187
------------------------- ---------------------
% 99.88% 97.77%
------------------------- ---------------------
Votes against 36,300 447,015
------------------------- ---------------------
% 0.12% 2.22%
------------------------- ---------------------
Total votes validly
cast 30,548,695 20,123,202
------------------------- ---------------------
Total votes cast as
a per-centage of issued
share capital 39.58% 65.76%
------------------------- ---------------------
Votes withheld+ 15,750 9,500
------------------------- ---------------------
*includes discretionary vote
+A vote withheld is not a vote in law and is not counted in the
calculation of votes for or against a resolution.
Approval of the Remuneration Report
An ordinary resolution for the approval of this Directors'
Remuneration Report will be put to Shareholders at the forthcoming
AGM.
(2) Nomination
The Committee's responsibilities are reviewing annually the
structure, size, and composition (including the skills, knowledge,
and experience) required of the Board and making recommendations to
the Board with regard to any necessary changes.
Considering the succession planning and replenishment of
Directors as the Board and Company progresses, identifying and
nominating candidates to fill Board vacancies as and when they
arise and taking into account the challenges and opportunities
facing the Company, and what skills and expertise are needed on the
Board for the future.
Reviewing annually the time required from the Directors and
using performance evaluation to assess whether the Directors are
spending enough time on their duties.
Diversity
The Board recognises the benefits that diversity brings. Our
approach is to appoint the best possible candidate, considered on
merit against objective criteria and in accordance with the
Equality Act 2010, rather than to set quotas for a particular
aspect that may deflect from achieving this fundamental target
every time. At the date of this report, 25% of the Board was
female.
In light of the ongoing development in governance best practice,
the Committee decided that the Company should have a formal
diversity policy, which the Board adopted on 19 September 2018.
Diversity includes and makes good use of differences in knowledge,
and understanding of relevant diverse geographies, peoples, and
their backgrounds including race or ethnic origin, sexual
orientation, gender, age, disability or religion. Appointments to
the Board will be made on merit and objective criteria, in the
context of complimenting and expanding the skills, knowledge and
experience of the Board as a whole.
Board Evaluation
A formal and rigorous board evaluation was conducted internally
this year. It was based on a questionnaire covering a range of
board level topics, with accompanying reviews of each Committee,
which addressed issues specific to that Committee, as well as
self-assessments by the Directors. The results were reviewed and
discussed by the Remuneration and Nomination Committee and then the
Board.
It was concluded that the Board members work effectively
together to achieve the Company's objectives and that each director
has the time and continues to contribute effectively.
The following actions were highlighted, and actions initiated
where appropriate:
-- More focus to be spent on long term strategy with a board and
investment manager session to be scheduled with this focus.
-- Delivery of reports for board packs should be improved and
delivered to the Company Secretary at least a week in advance.
-- As part of good practice, the Board should contact the top
shareholders, reminding them that they are available for
discussion. Due to Covid constraints the Board have yet to
undertake a site visit and this will be scheduled as soon as
government guidelines allow.
Succession Planning
The Nomination Committee considered succession planning during
the year and noted that currently all four Directors' tenure of
nine years expires on the same date and that therefore there was a
need to fresh the board over the next five years.
This Directors' Remuneration Report was approved by the Board on
14 July 2021 and is signed on its behalf by Patrick Cox (Director
and Chair of the Remuneration and Nomination Committee)
Patrick Cox
Chairman of the Remuneration and Nomination Committee
Date: 14 July 2021
Management Engagement Committee Report
Introduction
The Management Engagement Committee is comprised of all the
independent directors of the Company: Caroline Banszky, Malcolm
King, Thomas Murley and me, Patrick Cox (Chair). The Committee's
two principal functions are:
-- To review annually the compliance by the Investment Manager
with the Company's investment policy as established by the Board
and with the Advisory and Services Agreement entered into between
the Company and the Investment Manager from time to time (the
"Management Agreement"); and
-- To review annually the performance of any other key service providers to the Company.
The Committee is required to report formally to the Board on its
findings after each meeting on all matters within its duties and
responsibilities.
The Committee will meet as and when required, but formally at
least once a year.
JTC (UK) Limited attend our meetings as Secretary to the
Committee. In addition, we will invite representatives of the
Investment Manager to attend as required.
The Committee met once in the period under review and all
members were present. During this meeting, Committees terms of
reference were reviewed and no alterations were made.
Investment Manager Review
When reviewing the Investment Manager's performance, the
Committee considers its compliance with the terms of the Management
Agreement as well as its overall performance against the Company's
objectives.
The Committee also reviews the relationship with the Investment
Manager including (but not limited to):
-- Making recommendations on the Investment Manager's remuneration;
-- Approving the terms of engagement of the Investment Manager
and the terms of the Management Agreement;
-- Assessing annually the Investment Manager's independence and
objectivity taking into account relevant regulatory
requirements;
-- Assessing annual the qualifications, expertise and resources of the Investment Manager; and
-- Meeting regularly with the Investment Manager and at least
twice a year, to discuss the Investment Manager's remits, the
performance of the Company's investments and any issues arising
from the management of the Company's investments.
The Committee also reviews the level and method of remuneration
of the Investment Manager pursuant to the terms of the Management
Agreement, including the methodology of calculation of the relevant
annual fee. The review of these fee arrangements seeks to ensure
that the methodology does not encourage excessive risk and that it
rewards demonstrably superior performance by the Investment Manager
in managing or advising on the portfolio against the stated
investment objective when compared to a suitable benchmark or peer
group.
Under the terms of the Management Agreement, the Investment
Manager is entitled to receive from the Company an advisory fee
payable quarterly in arrears calculated at the rate of one-fourth
of one per cent of Adjusted Net Asset Value minus "Uncommitted
Cash", where uncommitted Cash means cash that has not been
allocated for repayment of a liability on the balance sheet of any
member of the Group. Adjusted Net Asset Value means Net Asset
Value, minus cash on the Company balance sheet.
The Investment Manager is also entitled to a performance fee
calculated by reference to the movements in the Net Asset Value
(before subtracting any accrued performance fee) which is linked to
gross proceeds raised on the Company's IPO plus a 7% hurdle, and is
set out in the Prospectus dated 30 November 2020.
The Investment Manager is paid a further fixed fee of GBP75,000
per annum to cover the incremental costs of providing additional
services as AIFM.
During the year the Management Agreement was amended to:
- change the term of adjusted NAV to mean net asset value minus
uncommitted cash. Uncommitted cash means all cash on the Company's
balance sheet other than committed cash. Committed cash means cash
that has been allocated for repayment of a liability on the balance
sheet of any member of the group.
-- an additional fixed fee payable quarterly in advance with
effect from 1 October 2020 to the Investment Manager of GBP50,000
per annum to support the administrative and accounting function,
plus an additional per asset fee of GBP6,000 per annum in respect
of each energy storage project held by the group beginning with
(and including) the tenth energy storage project, calculated and
payable quarterly in arrear with effect from 1 October 2020 and
based on the number of energy storage assets held by the Group at
each quarter end.
-- a fixed fee of GBP10,382.97 per month payable monthly in
arrear with effect from 1 October 2020 to Investment Manager for
the provision of corporate services. Corporate services is defined
in the side letter and is in relation to supporting the execution
of investment transactions and managing third party advisors.
In addition, the following changes to the management agreement
were implemented with fees being payable to the Investment Manager
by each respective subsidiary:
-- a short-term fee for development and management of assets
through to completion of construction, for a maximum term of one
and one-half years.
-- During the period the Investment Manager and Company entered
into a Commercial Management Agreement for the provision of the
Construction Services and the Operational Services. The Investment
Manager shall be entitled to receive a fixed fee of GBP110,750 per
Development Project per annum (the "Construction Services Fee"),
for a maximum term of 1.5 years in respect of each Development
Project and in respect of the Operational Services to be provided
by the Commercial Manager pursuant to this Agreement, the
Commercial Manager shall be entitled to receive a fixed fee of
GBP20,000 per Operational Asset per annum, save for the Ancala
Assets in respect of which the fixed fee shall be GBP6,000 per
annum.
The Committee reviewed the fee arrangements, compared them with
comparable Investment Trusts and concluded that they were
reasonable. The Committee agreed to undertake a full review of the
Investment Manager's remuneration and terms and conditions in
2022.
Following its review, the Committee have determined that the
Investment Manager was generally performing satisfactorily and had
complied with the terms of its engagement and had met its
obligations to the Company. The Committee and Investment Manager
discuss opportunities for improvements in communications on an
ongoing basis. The committee recommended the Investment Manager's
continued appointment to the Board.
Other service providers
The Committee also review the performance of the Company's other
service providers and in particular:
-- Monitors compliance by providers of other services to the
Company with the terms of their respective agreement from to
time;
-- Reviews and considers the appointment and remuneration of
providers of services to the Company; and
-- Considers any points of conflict which may arise between the
providers of services to the Company.
The Committee also carried out a full performance review of all
its service providers at its last meeting during which all terms of
engagement and fees were carefully considered by the Committee.
Administrator
Sanne Group Administration Services (UK) Limited ("Sanne")
served as Administrator during the period.
Under the terms of the Administration Agreement, Sanne is
entitled to:
(a) an annual fee in respect of the accounting and
administration services it will provide of GBP50,000.
(b) and,
(c) an annual value fee of:
-- 0.05% of NAV to the extent that NAV is between GBP30m and GBP75m.
-- 0.025% of NAV to the extent that NAV is between GBP75m and GBP150m; and,
-- 0.02% of NAV to the extent that such NAV exceeds GBP150m.
The Committee found the Company's service providers were all
performing satisfactorily and concluded that the relevant
appointments should continue.
Committee evaluation
An evaluation of the Committee was undertaken as part of the
overall evaluation. The Committee was found to be functioning
effectively.
Patrick Cox
Committee Chair
Date: 14 July 2021
FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the Year Ended 31 March 2021
Notes Year Ended 31 March 2021 Year Ended 31 March 2020
------------------------- ------ --------------------------------------- --------------------------------------
Revenue Capital Total Revenue Capital Total
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------------- ------ ------------ ----------- ------------ ------------ ---------- ------------
Net gain on investments
at fair value through
profit and loss 7 - 16,205,729 16,205,729 - 5,585,522 5,585,522
Investment income 8 1,233,000 - 1,233,000 915,111 - 915,111
Administrative
and other expenses 9 (2,844,035) - (2,844,035) (1,711,360) - (1,711,360)
Profit before tax (1,611,035) 16,205,729 14,594,694 (796,249) 5,585,522 4,789,273
Taxation 10 - - - - - -
------------------------- ------ ------------ ----------- ------------ ------------ ---------- ------------
Profit after tax
and profit for
the year (1,611,035) 16,205,729 14,594,694 (796,249) 5,585,522 4,789,273
------------------------- ------ ------------ ----------- ------------ ------------ ---------- ------------
Total comprehensive
income for the
year (1,611,035) 16,205,729 14,594,694 (796,249) 5,585,522 4,789,273
------------------------- ------ ------------ ----------- ------------ ------------ ---------- ------------
Profit per share
(basic and diluted)
- pence per share 11 16.06 11.78
All Revenue and Capital items in the above statement are derived
from continuing operations.
The Total column of this statement represents Company's Income
Statement prepared in accordance with IFRS. The return on ordinary
activities after taxation is the total comprehensive income and
therefore no additional statement of other comprehensive income is
presented.
The supplementary revenue and capital columns are presented for
information purposes in accordance with the Statement of
Recommended Practice issue by the Association of Investment
Companies.
The notes on pages 102 to 135 form an integral part of these
financial statements.
1.1 Statement of Financial Position
As at 31 March 2021
Company Number 11160422
Notes 31 March 2021 31 March 2020
(GBP) (GBP)
----------------------------------- ------ --- -------------- --- --------------
Non - Current Assets
Investments at fair value through
profit or loss 12 80,694,275 30,412,493
----------------------------------- ------ --- -------------- --- --------------
80,694,275 30,412,493
Current assets
Cash and cash equivalents 13 60,152,317 15,028,142
Trade and other receivables 14 5,364,168 4,963,527
----------------------------------- ------ --- -------------- --- --------------
65,516,485 19,991,669
Total assets 146,210,760 50,404,162
----------------------------------- ------ --- -------------- --- --------------
Current liabilities
Trade and other payables 15 1,075,819 713,659
----------------------------------- ------ --- -------------- --- --------------
1,075,819 713,659
Total net assets 145,134,941 49,690,503
----------------------------------- ------ --- -------------- --- --------------
Shareholders equity
Share capital 20 1,438,717 525,488
Share premium 20 107,713,725 19,707,058
Special reserve 20 186,656 186,656
Capital reduction reserve 20 17,446,348 25,516,500
Capital reserve 20 21,226,187 5,020,458
Revenue reserve 20 (2,876,692) (1,265,657)
----------------------------------- ------ --- -------------- --- --------------
Total shareholders equity 145,134,941 49,690,503
Net asset value per share 19 1.01 0.95
Statement of Financial Position (continued)
As at 31 March 2021
Company Number 11160422
The annual financial statements were approved and authorised for
issue by the Board of directors and are signed on its behalf
by;
Patrick Cox
Chairman
Date: 14 July 2021
The notes on pages 102 to 135 form an integral part of these
financial statements.
1.2 Statement of Changes in Equity
For the Year Ended 31 March 2021
Share Share premium Special Capital Capital Revenue Total
capital reserve reserve reduction reserve reserve shareholders
(GBP) reserve equity
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------ ---------- -------------- --------- ------------ ----------- ------------ ------------------
As at 1 April
2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
Profit for the
year - - - - 16,205,729 (1,611,035) 14,594,694
------------------ ---------- -------------- --------- ------------ ----------- ------------ ------------------
Total
comprehensive
profit for the
year - - - - 16,205,729 (1,611,035) 14,594,694
------------------ ---------- -------------- --------- ------------ ----------- ------------ ------------------
Transactions with owners
------------------------------ -------------- --------- ------------ ----------- ------------ ------------------
Ordinary shares
issued at a
premium during
the year 913,229 89,850,900 - - - - 90,764,129
Share issue
costs - (1,844,233) - - - - (1,844,233)
Dividends paid - - - (8,070,152) - - (8,070,152)
As at 31 March
2021 1,438,717 107,713,725 186,656 17,446,348 21,226,187 (2,876,692) 145,134,941
------------------ ---------- -------------- --------- ------------ ----------- ------------ ------------------
Capital reduction reserve and revenue reserves are available to
the Company for distributions to Shareholders as determined by the
Directors.
The notes on pages 102 to 135 form an integral part of these
financial statements.
Statement of Changes in Equity (continued)
For the Year Ended 31 March 2020
Share capital Share premium Special Capital Capital Revenue Total
reserve reserve reduction reserve reserve shareholders
(GBP) (GBP) reserve equity
(GBP) (GBP) (GBP) (GBP) (GBP)
----------------- -------------- -------------- --------- ------------ ---------- ------------ ----------------
As at 1 April
2019 306,000 67,476 186,656 28,590,177 (565,064) (469,408) 28,115,837
Profit for the
year - - - - 5,585,522 (796,249) 4,789,273
----------------- -------------- -------------- --------- ------------ ---------- ------------ ----------------
Total
comprehensive
profit for the
year - - - - 5,585,522 (796,249) 4,789,273
----------------- -------------- -------------- --------- ------------ ---------- ------------ ----------------
Transactions with owners
--------------------------------- -------------- --------- ------------ ---------- ------------ ----------------
Ordinary shares
issued at a
premium during
the year 219,488 20,235,032 - - - 20,454,520
Share issue
costs - (595,450) - 13,199 - (582,251)
Dividends paid - - - (3,086,876) - (3,086,876)
As at 31 March
2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
----------------- -------------- -------------- --------- ------------ ---------- ------------ ----------------
The notes on pages 102 to 135 form an integral part of these
financial statements.
1.3 Statement of Cash Flows
For the Year Ended 31 March 2021
Year Ended Year Ended
31 March 31 March
Notes 2021 2020
(GBP) (GBP)
------------------------------------------ -------- ------------- --- -------------
Cash flows used in operating activities
Profit for the year 14,594,694 4,789,273
Net profit on investments at fair
value through profit and loss (16,205,729) (5,585,522)
Increase in trade and other receivables (400,641) (346,914)
Increase in trade and other payables 362,160 506,149
------------------------------------------ -------- ------------- --- -------------
Net cash used in operating activities (1,649,516) (637,014)
Cash flows used in investing activities
Purchase of investments (34,076,053) (18,344,007)
Net cash used in investing activities (34,076,053) (18,344,007)
Cash flows used in financing activities
Proceeds from issue of ordinary
shares at a premium 90,764,129 20,454,520
Share issue costs (1,844,233) (582,251)
Dividends paid (8,070,152) (3,086,876)
Net cash inflow from financing
activities 80,849,744 16,785,393
Net increase / (decrease) in cash
and cash equivalents for the year 45,124,175 (2,195,628)
------------------------------------------ -------- ------------- --- -------------
Cash and cash equivalents at the
beginning of the year 15,028,142 17,223,770
------------------------------------------ -------- ------------- --- -------------
Cash and cash equivalents at the
end of the year 60,152,317 15,028,142
------------------------------------------ -------- ------------- --- -------------
During the year, interest received by the Company totaled GBP1,098,000
(2020: GBP634,192).
The notes on pages 102 to 135 form an integral part of these
financial statements.
Notes to the Financial Statements
For the Year Ended 31 March 2021
1. General information
Gore Street Energy Storage Fund plc (the "Company") was incorporated
in England and Wales on 19 January 2018 with registered number
11160422. The registered office of the Company is 18th Floor,
The Scalpel, 52 Lime Street, London, EC3M 7AF.
Its share capital is denominated in Pound Sterling (GBP) and currently
consists of ordinary shares. The Company's principal activity
is to invest in a diversified portfolio of utility scale energy
storage projects primarily located in the UK and the Republic
of Ireland, although the Company will also consider projects in
North America and Western Europe.
2. Basis of preparation
Statement of compliance
The annual financial statements have been prepared in accordance
with I with International Accounting
Standards in conformity with the requirements of the Companies
Act 2006. The Company has also adopted the Statement of Recommended
Practice issued by the Association of Investment Companies which
provides guidance on the presentation of supplementary information.
The financial statements have been prepared on a historical cost
basis except for financial assets and liabilities at fair value
through the profit or loss.
The Company is an investment entity in accordance with IFRS 10
which holds all its subsidiaries at fair value and therefore prepares
separate accounts only.
Functional and presentation currency
The currency of the primary economic environment in which the
Company operates (the functional currency) is Pound Sterling ("GBP
or GBP") which is also the presentation currency.
Going Concern
In assessing the going concern basis of accounting the Directors
have had regard to the guidance issued by the Financial Reporting
Council. After making enquiries and bearing in mind the nature
of the Company's business and assets, the Directors consider the
Company to have adequate resources to continue in operational
existence over the period to 31 July 2022, being at least 12 months
from the date of approval of the financial statements. As such,
they have adopted the going concern basis in preparing the annual
report and financial statements.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
2. Basis of preparation (continued)
In our going concern assessment, we have taken into account the
impact of Covid-19 and the Company's ability to generate revenue
from its operational assets continues and remains largely unaffected
by the pandemic. A potential key risk facing the Company is that
Covid-19 may affect the ability of operators to adequately ensure
operational integrity of the projects, particularly in terms of
operations and maintenance. The Company and the Investment Manager
have worked closely and liaised with the operators to ensure that
commercial activities remain operational and, in their view, power
generation will remain essential to the UK's infrastructure.
The going-concern analysis assumes continued annual expenditure
at the rate of current expenditure and continued discretionary
dividend payments to shareholders at the target annual rate of
7 pence per ordinary share. With expenditure and discretionary
dividends assumed unchanged, the Company will continue to be operational
and will have excess cash after payment of its liabilities for
at least the next 12 months to 31 July 2022.
As at 31 March 2021, the Company had net current assets of GBP145.13
million and had cash balances of GBP60.15 million (excluding cash
balances within investee companies), which are sufficient to meet
current obligations as they fall due. The major cash outflows
of the Company are the payment of dividends and costs relating
to the acquisition of new assets, both of which are discretionary.
The Company had no outstanding debt as at 31 March 2021.
The Directors acknowledge their responsibilities in relation to
the financial statements for the year ended 31 March 2021 and
the preparation of the financial statement on a going concern
basis remains appropriate and the Company expects to meet its
obligations as and when they fall due for at least the next twelve
months to 31 July 2022.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements requires management
to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amount of
assets, liabilities, income and expenses. Estimates and underlying
assumptions are reviewed on an ongoing basis. Revisions to the
accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
During the period the Directors considered the following significant
judgements, estimates and assumptions:
Assessment as an investment entity
Entities that meet the definition of an investment entity within
IFRS 10 are required to measure their subsidiaries at fair value
through profit or loss rather than consolidate them unless they
provided investment related services to the Company. To determine
that the Company continues to meet the definition of an investment
entity, the Company is required to satisfy the following three
criteria:
a) the Company obtains funds from one or more investors for
the purpose of providing those investors with investment
management services;
b) the Company commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income, or both; and
c) the Company measures and evaluates the performance of substantially
all of its investments on a fair value basis.
The Company meets the criteria as follows:
-- the stated strategy of the Company is to deliver stable
returns to shareholders through a mix of energy storage
investments;
-- the Company provides investment management services and
has several investors who pool their funds to gain access
to infrastructure related investment opportunities that
they might not have had access to individually; and
-- the Company has elected to measure and evaluate the performance
of all of its investments on a fair value basis. The fair
value method is used to represent the Company's performance
in its communication to the market, including investor
presentations. In addition, the Company reports fair value
information internally to Directors, who use fair value
as the primary measurement attribute to evaluate performance.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
3. Significant accounting judgements, estimates and assumptions
(continued)
Having assessed the criteria above and in their judgement, the
Directors are of the opinion that the Company has all the typical
characteristics of an investment entity and continues to meet
the definition in the standard. This conclusion will be reassessed
on an annual basis.
Valuation of Investments
Significant estimates in the Company's financial statements include
the amounts recorded for the fair value of the investments. By
their nature, these estimates and assumptions are subject to measurement
uncertainty and the effect on the Company's financial statements
of changes in estimates in future periods could be significant.
These estimates are discussed in more detail in note 17.
4. New and revised standards and interpretations
New and revised standards and interpretations
The accounting policies used in the preparation of the financial
statements have been consistently applied during the year ended
31 March 2021.
IAS1: Presentation of Financial Statements
IAS8: Accounting Policies, Changes in Accounting Estimates and
Errors
The International Accounting Standards Board has redefined its
definition of material, issued practical guidance on applying
the concept of materiality and issued proposals focused on the
application of materiality to disclosure of other accounting policies.
The amendments do not have a material impact on the Company's
financial statements.
New and revised IFRSs in issue but not yet effective
In February 2021, the International Accounting Standards Board
issued further amendments to IAS8: Accounting Policies, Changes
in Accounting Estimates and Errors. Those amendments clarify the
distinction between changes in accounting estimates, changes in
accounting policies and correction of errors. They further clarify
how entities use measurement techniques and inputs to develop
accounting estimates. These amendments are effective for periods
beginning on or after 1 January 2023 and having reviewed the amendments,
the Board is of the opinion that these amendments will not have
a material impact on the Company's financial statements.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
5. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below:
Investment Income
Interest income is recognised on an accrual basis in the Revenue
account of the Statement of Comprehensive Income.
Investment income arising from the portfolio assets is recognised
on an accruals basis in totality, with amounts received in cash
recognised in investment income and the unrealised portion disclosed
in net gain on investments at fair value through profit and loss.
Expenses
Expenses are accounted for on an accrual basis and charged to
the Statement of Comprehensive Income. Share issue costs are taken
from equity. Expenses are charged through the Revenue account
except those which are capital in nature, these include those
which are incidental to the acquisition, disposal or enhancement
of an investment, which are accounted for through the Capital
account.
Net gain or loss on investments at fair value through profit and
loss
Gains or losses arising from changes in the fair values of investments
are recognised in the Capital account of the Statement of Comprehensive
Income in the period in which they arise. The value of the investments
may be increased or reduced by the assessed fair value movement.
Taxation
The Company is approved as an Investment Trust Company ("ITC")
under sections 1158 and 1159 of the Corporation Taxes Act 2010
and Part 2 Chapter 1 Statutory Instrument 2011/29999 for accounting
periods commencing on or after 25 May 2018. The approval is subject
to the Company continuing to meet the eligibility conditions of
the Corporations Tax Act 2010 and the Statutory Instrument 2011/29999.
The Company intends to ensure that it complies with the ITC regulations
on an ongoing basis and regularly monitors the conditions required
to maintain ITC status.
From 1 April 2015 there is a single corporation tax rate of 19%.
Current Tax and movements in deferred tax asset and liability
is recognised in the Statement of Comprehensive Income except
to the extent that it relates to the items recognised as direct
movements in equity, in which case it is similarly recognised
as a direct movement in equity. Current tax is the expected tax
payable on any taxable income for the period, using tax rates
enacted or substantively enacted at the end of the relevant period.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
5. Summary of significant accounting policies (continued)
Taxation (continued)
Deferred taxation is recognised in respect of all timing differences
that have originated but not reversed at the Statement of Financial
Position date where transactions or events that result in an obligation
to pay more tax or a right to pay less tax in the future have
occurred. Timing differences are differences between the Company's
taxable profits and its results as stated in the financial statements.
Deferred taxation assets are recognised where, in the opinion
of the Directors, it is more likely than not that these amounts
will be realised in future periods, at the tax rate expected to
be applicable at realisation.
Investment in subsidiaries
Subsidiaries are entities controlled by the Company. Control exists
when the Company is exposed, or has rights, to variable returns
from its involvement with the subsidiary entity and has the ability
to affect those returns through its power over the subsidiary
entity. In accordance with the exception under IFRS 10 Consolidated
financial statements, the Company is an investment entity and
therefore only consolidates subsidiaries if they provide investment
management services and are not themselves investment entities.
All subsidiaries are held at fair value in accordance with IFRS
9 and therefore not consolidated.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and call deposit
held with the bank on a 32 day notice which can be readily converted
to cash.
Trade and other receivables
Trade and other receivables are recognised initially at fair value
and subsequently stated at amortised cost less loss allowance
which is calculated using the provision matrix of the expected
credit loss model.
Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently stated at amortised cost.
Dividends
Dividends are recognised, as a reduction in equity in the financial
statements. Interim equity dividends are recognised when legally
payable. Final equity dividends will be recognised when approved
by the Shareholders.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
5. Summary of significant accounting policies (continued)
Equity
Equity instruments issued by the Company are recorded at the amount
of the proceeds received, net of directly attributable issue costs.
Costs not directly attributable to the issue are immediately expensed
in the Statement of Comprehensive Income.
Financial Instruments
In accordance with IFRS 9, the Company classifies its financial
assets and financial liabilities at initial recognition into the
categories of amortised cost or fair value through profit or loss.
Financial assets
The Company classifies its financial assets at amortised cost
or fair value through profit or loss on the basis of both:
* the entity's business model for managing the
financial assets
* the contractual cash flow characteristics of the
financial asset
Financial assets measured at amortised cost
A debt instrument is measured at amortised cost if it is held
within a business model whose objective is to hold financial assets
in order to collect contractual cash flows and its contractual
terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
The Company includes in this category short-term non-financing
receivables including cash and trade and other receivables.
Financial asset measured at fair value through profit or loss
(FVPL)
A financial asset is measured at fair value through profit or
loss if:
a) its contractual terms do not give rise to cash flows on specified
dates that are solely payments of principal and interest (SPPI)
on the principal amount outstanding; or
b) it is not held within a business model whose objective is either
to collect contractual cash flows, or to both collect contractual
cash flows and sell; or
c) it is classified as held for trading (derivative contracts
in an asset position).
The Company includes in this category equity instruments and loans
to investments.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
5. Summary of significant accounting policies (continued)
Financial Instruments (continued)
Financial liabilities
Financial liabilities measured at fair value through profit or
loss (FVPL)
A financial liability is measured at FVPL if it meets the definition
of held for trading of which the Company had none. The Company
includes in this category, derivative contracts in a liability
position.
Financial liabilities measured at amortised cost
This category includes all financial liabilities, other than those
measured at fair value through profit or loss, including short-term
payables.
Recognition and derecognition
Financial assets and liabilities are recognised on trade date,
when the Company becomes party to the contractual provisions of
the instrument. A financial asset is derecognised where the rights
to receive cash flows from the asset have expired, or the Company
has transferred its rights to receive cash flows from the asset.
The Company derecognises a financial liability when the obligation
under the liability is discharged, cancelled or expired.
Impairment of financial assets
The Company holds trade receivables with no financing component
and which have maturities of less than 12 months at amortised
cost and, as such, has chosen to apply the simplified approach
for expected credit losses (ECL) under IFRS 9 to all its trade
receivables. Therefore the Company does not track changes in credit
risk, but instead recognises a loss allowance based on lifetime
ECLs at each reporting date.
The Company's approach to ECLs reflects a probability-weighted
outcome, the time value money and reasonable and supportable information
that is available without undue cost or effort at the reporting
date about past events, current conditions and forecasts of future
economic conditions.
The Company uses the provision matrix as a practical expedient
to measuring ECLs on trade receivables, based on days past due
for groupings of receivables with similar loss patterns. Receivables
are grouped based on their nature. The provision matrix based
on historical observed loss rates over the expected life of the
receivables and is adjusted for forward looking estimates.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
5. Summary of significant accounting policies (continued)
Fair value measurement and hierarchy
Fair value is the price that would be received on the sale of
an asset, or paid to transfer a liability, in an orderly transaction
between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction
takes place either in the principal market for the asset or liability,
or in the absence of a principal market, in the most advantageous
market. It is based on the assumptions that market participants
would use when pricing the asset or liability, assuming they act
in their economic best interest.
The fair value hierarchy to be applied under IFRS 13 is as follows:
Level 1: Quoted (unadjusted) market prices in active markets for
identical assets or liabilities.
Level 2: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly
or indirectly observable.
Level 3: Valuation techniques for which the lowest level input
that is significant to the fair value measurement is unobservable.
For assets and liabilities that are carried at fair value and
which will be recorded in the financial information on a recurring
basis, the Company will determine whether transfers have occurred
between levels in the hierarchy by reassessing categorisation
at the end of each reporting period.
6. Fees and expenses
Accounting, Secretarial and Directors
JTC (UK) Limited had been appointed to act as secretary for the
Company through the Administration and Company Secretarial Agreement.
With effect from 1 April 2020, JTC (UK) Limited is entitled to
a GBP50,000 annual fee for the provision of Company Secretarial
services That fee will increase in line with the market capitalisation
of the Company and be applied as follows:
-- GBP55,000 per annum: market capitalisation greater than
GBP65 million
-- GBP60,000 per annum: market capitalisation greater than
GBP75 million
-- GBP65,000 per annum: market capitalisation greater than
GBP85 million
-- GBP70,000 per annum: market capitalisation greater than
GBP100 million
During the year, expenses incurred with JTC (UK) Limited for secretarial
services amounted to GBP92,150 with GBP12,500 being outstanding
and payable at the year end. This included fees for the transfer
and migration of accounting and administration services to Sanne
Group (UK) Limited.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
6. Fees and expenses (continued)
Accounting, Secretarial and Directors (continued)
Sanne Group (UK) Limited ("Sanne") was appointed as administrator
with effect 1 April 2020. Through an Administration agreement,
Sanne is entitled to an initial establishment and take-on fee
of GBP6,000 and then an annual fee of GBP50,000 for the provision
of accounting and administration services based on a Company Net
Asset Value of up to GBP30 million. An ad valorem fee based on
total assets of the Company which exceed GBP30 million will be
applied as follows:
-- 0.05% on assets from GBP30 million to GBP75 million,
plus
-- 0.025% on assets from GBP75 million to GBP150 million,
plus
-- 0.02% thereafter
During the year, expenses incurred with Sanne for accounting and
administrative services amounted to GBP63,568. There were no fees
outstanding and payable at the year end.
AIFM
The AIFM, Gore Street Capital Limited (the "AIFM"), was entitled
to receive from the Company, in respect of its services provided
under the AIFM agreement, a fee of GBP75,000 per annum for the
term of the AIFM agreement.
During the year, AIFM fees amounted to GBP75,246, there were no
outstanding fees payable at the year end.
At the year end, an amount of GBP18,854 paid in the year to Gore
Street Capital Limited in respect of these fees, is being disclosed
in prepayments as it relates to the period 1 April 2021 to 30
June 2021.
Investment Advisory
The fees relating to the Investment Advisor are disclosed within
note 22 Transactions with related parties.
7. Net gain on investments at fair value through profit and loss
31 March 31 March
2021 2020
(GBP) (GBP)
---------------------------------------------- ----------------------------- ------- --------------------------
Net gain on investments at fair value
through profit and loss 16,205,729 5,585,522
16,205,729 5,585,522
---------------------------------------------- ----------------------------- ------- --------------------------
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
8. Investment Income
31 March 31 March
2021 2020
(GBP) (GBP)
--------------------------------------------- ---------- --- ----------
Bank interest income - 38,092
Investment income 1,098,000 596,100
Interest income (on advance to NEC) 135,000 248,919
Management fee income - 32,000
1,233,000 915,111
--------------------------------------------- ---------- --- ----------
9. Administrative and other expenses
31 March 31 March
2021 2020
(GBP) (GBP)
--------------------------------------------- ---------- --- ----------
Accounting and Company Secretarial fees 155,718 63,211
Audit fees (see below) 211,600 140,000
Bank interest and charges 6,810 2,074
Directors' remuneration 135,378 94,656
Directors & Officers insurance 13,431 11,183
Foreign exchange loss 1,050 1,643
Investment advisory fees 1,128,107 458,258
Irrecoverable VAT (26,626) 400,000
Legal and professional fees 483,724 338,939
AIFM fees 75,246 101,316
Marketing fees 80,144 20,378
Performance fees 496,461 -
Sundry expenses 82,994 79,702
2,844,035 1,711,360
--------------------------------------------- ---------- --- ----------
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
9. Administrative and other expenses (continued)
During the year, the Company received the following services from
its auditor, Ernst & Young LLP.
31 March 31 March
2021 2020
(GBP) (GBP)
-------------------------------------------------------- --------- -------------- -------------------------
Audit services
Statutory Annual accounts - current
audit year 191,100 115,000
Annual accounts - prior
year
under accrual 5,000 5,000
196,100 120,000
--------- -------------- -------------------------
Non-audit services
Other assurance services 15,500 20,000
Total audit and non-audit services 211,600 140,000
-------------------------------------------------------- --------- -------------- -------------------------
The statutory auditor is remunerated GBP119,000 (2020: GBP63,000),
in relation to SPV audits. This amount is not included in the
above.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
10. Taxation
The Company is recognised as an Investment Trust Company ("ITC")
for accounting periods beginning on or after 25 May 2018 and is
taxed at the main rate of 19%.
31 March 31 March
2021 2020
(GBP) (GBP)
(a) Tax charge in profit and loss account
UK Corporation tax - -
(b) Reconciliation of the tax charge
for the year
Profit / (loss) before tax 14,594,694 4,789,273
Tax at UK standard rate of 19% 2,772,992 909,962
Effects of:
Unrealised gain / (loss) on fair value
investments (3,079,089) (1,061,249)
Expenses not deductible for tax purposes 20,600 -
Group relief surrendered - 103,648
Deferred tax not recognised 285,497 47,639
Tax charge for the year - -
------------ ------------
Estimated losses not to be recognised
due to insufficient evidence of future
profits 2,142,752 640,136
Estimated deferred tax thereon 19% (2020:
19%) 407,123 121,626
As at 31 March 2021, the Company has excess management expenses
that are available to offset future tax revenues. A deferred tax
asset, measured at the prospective corporate rate of 19% (2020:
19%) of GBP407,123 (2020: GBP121,626) has not been recognised
in respect of these expenses since they are recoverable only to
the extent that the Company has sufficient future taxable revenue.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
11. Earnings per share
Earnings per share (EPS) amounts are calculated by dividing the
profit or loss for the period attributable to ordinary equity
holders of the Company by the weighted average number of ordinary
shares in issue during the period. As there are no dilutive instruments
outstanding, basic and diluted earnings per share are identical.
31 March 31 March
2021 2020
------------------------------------------------------ --------------- --------------
Net gain attributable to ordinary shareholders GBP 14,594,694 GBP 4,789,273
Weighted average number of ordinary shares
for the year 90,860,919 40,669,724
Profit per share - Basic and diluted (pence) 16.06 11.78
------------------------------------------------------ --------------- --------------
12. Investments
Place of Percentage 31 March 31 March
business ownership 2021 2020
---------------------------- ----------- ----------- --------------- --------------
England &
GSES1 Limited ("GSES1") Wales 100% 80,694,275 30,412,493
The Company meets the definition of an investment entity. Therefore,
it does not consolidate its subsidiaries or equity method account
for associates but, rather, recognises them as investments at
fair value through profit or loss. The Company is not contractually
obligated to provide financial support to the subsidiaries and
associate and there are no restrictions in place in passing monies
up the structure.
The investment in GSES1 is financed through equity and a loan
facility available to GSES1. The facility may be drawn upon, to
any amount agreed by the Company as lender, and is available for
a period of 20 years from 28 June 2018. The rest is funded through
equity. The amount drawn on the facility at 31 March 2021 was
GBP59,472,534 (2020: GBP25,396,482). The loan is interest bearing
and attracts interest at 5% per annum. Investments in the indirect
subsidiaries are also structured through loan and equity investments
and the ultimate investments are in energy storage facilities.
Realisation of increases in fair value in the indirect subsidiaries
will be passed up the structure as distributions on the equity
investment. GSES1 controls NKESS, GSC LRPOT and GSF IRE as listed
below which in turn hold an interest in project companies as disclosed
in the in table below.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
12. Investments (continued)
Immediate Place of business Percentage Investment
Parent Ownership
GSF Albion Limited
("GSF Albion")
Formerly NK Energy
Storage Solutions
Limited GSES1 England & Wales 100%
NK Boulby Energy GSF Albion England & Wales 99.998% Boulby
Storage Limited
Kiwi Power ES B GSF Albion England & Wales 49% Cenin
GSF England Limited
("GSF England")
Formerly GSC LRPOT
Limited GSES1 England & Wales 100%
OSSPV001 Limited GSC LRPOT England & Wales 100% Lower Road
Port of Tilbury
GSF IRE Limited GSES1 England & Wales 100%
Mullavilly Energy GSF IRE Northern Ireland 51% Mullavilly
Limited
Drumkee Energy Limited GSF IRE Northern Ireland 51% Drumkee
Porterstown Battery GSF IRE Republic of 51% Kilteel
Storage Limited Ireland
Kilmannock Battery GSF IRE Republic of 51% Kilmannock
Storage Limited Ireland
Ferrymuir Energy GSF Albion England & Wales 100% Ferrymuir
Storage Limited
Ancala Energy Storage GSF England England & Wales 100% Beeches, Blue
Limited House Farm,
Brookhall,
Fell View,
Grimsargh,
Hermitage,
Heywood Grange,
High Meadow,
Hungerford,
Low Burntoft
Breach Farm Energy GSF England England & Wales 100% Breach Farm
Storage Limited
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
12. Investments (continued)
Hulley Road Energy GSF England England & Wales 100% Hulley Road
Storage Limited
Larport Energy Storage GSF England England & Wales 100% Larport
Limited
Lascar Battery Storage GSF England England & Wales 100% Lascar
Limited
(*) NK Energy Storage Solutions Limited changed its name to GSF
Albion Limited with effect from 16 June 2020.
(**) GSC LRPOT Limited changed its name to GSF England Limited
with effect from 11 June 2020.
13. Cash and cash equivalents
31 March 31 March
2021 2020
(GBP) (GBP)
Cash at bank 60,152,317 15,028,142
60,152,317 15,028,142
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
14. Trade and other receivables
31 March 31 March
2021 2020
(GBP) (GBP)
----------------------------------------------------- ---------- ---- ---------------------
VAT recoverable 359,954 72,457
Prepaid Director's and Officer's
insurance 6,239 7,629
Other Prepayments 37,384 29,619
Other Debtors 76,673 66,534
Management fee income receivable - 38,400
Advance to NEC ES 4,500,000 4,500,000
Interest on advance to NEC ES 383,918 248,918
5,364,168 4,963,527
----------------------------------------------------- ---------- ---- ---------------------
The Company advanced to NEC ES an advance of GBP4,500,000 on the
date at which it was admitted to the Premium segment of the London
Stock Exchange. The advance remains to be used in conjunction
with the Company's purchase of products, equipment and / or services
from NEC ES for the projects in which the Company is to be invested.
The Company's purchase of such products and equipment from NEC
ES is conditional upon NEC ES' ability to meet the requirements
of the Company's projects and subject to the terms and pricing
of the products, equipment and/or services being provided on market
standard terms (as defined by the Company). The advance will be
utilised against the value of products and equipment of which
the Company takes possession / ownership of from NEC ES. If for
example the value of the investment is GBP4.5 million, the fund
will not pay any more.
The advance letter provided that if NEC ES did not sell to the
Company products, equipment and / or services on terms agreeable
to the Company to the value of the Company's advance within 12
months from the date of the Company's admission on the London
Stock Exchange, NEC ES would within 14 days of the end of the
such period pay to the Company:
a) the balance of the advance payment less the amount of value
that has been supplied to the Company in that period; and
b) interest on the balance accrued from the date of admission
at a rate of 3 per cent, per annum.
As at the end of the 12 month term in May 2019, the Company and
NEC ES had not completed a sale of products, equipment and/or
services. As at 31 March 2021, NEC ES has not paid back the amounts
nor the interest amounts due.
Under two EPC contracts signed between NEC (UK) Limited and the
Company with a contract value in excess of Euros 34 million which
has now reduced to 32 million post year end, due to the recent
offsets made by the Company, the Company has the option (in its
discretion) to set off the GBP4.5 million advance against amounts
due to NEC (UK) Limited. As at the date of publication the Company
has offset GBP3.6 million of the prepayment leaving a balance
of GBP0.87 million. The Company still demand payment of the interest
totalling GBP0.38 million as at 31 March 2021.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
15. Trade and other payables
31 March 31 March
2021 2020
(GBP) (GBP)
----------------------------------------------------- ---------------- ---- ---------------
Administration fees 25,826 15,000
Audit fees 127,400 135,000
Directors remuneration 6,669 3,124
Professional fees 529,549 129,569
Other creditors 13,003 30,966
VAT payable 370,372 400,000
1,075,819 713,659
----------------------------------------------------- ---------------- ---- ---------------
16. Categories of financial instruments
31 March 31 March
2021 2020
(GBP) (GBP)
----------------------------------------------------- ---------------- ---- ---------------
Financial assets
Financial assets at amortised cost
Cash and cash equivalents 60,152,317 15,028,142
Trade and other receivables 5,364,168 4,963,527
Fair value through profit and loss
account
Investment 80,694,275 30,412,493
Total financial assets 146,210,760 50,404,162
----------------------------------------------------- ---------------- ---- ---------------
Financial liabilities
Financial liabilities at amortised
cost
Trade and other payables 1,075,819 713,659
Total financial liabilities 1,075,819 713,659
----------------------------------------------------- ---------------- ---- ---------------
At the balance sheet date, all financial assets and liabilities
were measured at amortised cost except for the investment in equity
and loans to subsidiaries which are measured at fair value.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
17. Fair Value measurement
Valuation approach and methodology
There are three traditional valuation approaches that are generally
accepted and typically used to establish the value of a business;
the income approach, the market approach and the net assets (or
cost based) approach. Within these three approaches, several methods
are generally accepted and typically used to estimate the value
of a business.
The Company has chosen to utilise the income approach, which indicates
value based on the sum of the economic income that an asset, or
group of assets, is anticipated to produce in the future. Therefore,
the income approach is typically applied to an asset that is expected
to generate future economic income, such as a business that is
considered a going concern. Free cash flow to total invested capital
is typically the appropriate measure of economic income. The income
approach is the DCF approach and the method discounts free cash
flows using an estimated discount rate (WACC).
The International Valuation Standards Council ("IVSC") issued
guidance in March 2020 in response to the COVID-19 pandemic.
It notes that one of the main issues when dealing with valuation
is uncertainty and that valuation is not a fact, but an estimate
of the most probable of a range of possible outcomes based on
the assumptions made in the valuation process.
Valuation uncertainty can be caused by various factors, including
market disruption, input availability and the choice of method
or model of valuation.
The guidance issued by the IVSC was considered by the Investment
Advisor in the determination of the valuations disclosed at 31
March 2021.
Valuation process
In the year, the Company acquired its first asset in Scotland,
Ferrymuir with a capacity of 50MW, together with Anesco's operational
portfolio, five UK companies with a total capacity of 80.7MW,
bringing the Company's portfolio of lithium-ion energy storage
investments to a total capacity of 440.0 MW (2020: 189.0 MW).
As at 31 March 2021, 210.0 MW of the Company's total portfolio
was operational and 230.0 MW pre-operational (the "Investments").
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
17. Fair Value measurement (continued)
Valuation process (continued)
The Investments comprise twenty three project, all of these are
based in the UK and the Republic of Ireland. The Directors review
and approve these valuations following appropriate challenge
and examination. The current portfolio consists of non-market
traded investments and valuations are analysed using forecasted
cash flows of the assets and used the discounted cash flow approach
as the primary approach for the purpose of the valuation. The
Company engages external, independent and qualified valuers to
determine the fair value of the Company's investments or are
produced by the office of the Investment Advisor.
As at 31 March 2021, the fair value of all the investments held
within the portfolio, with the exception of the of the investment
in Cenin, have been determined, (presented by the Investment
Advisor and reviewed) by BDO LLP and further presented to and
reviewed by the Company's board of directors.
The fair value of the investment in Cenin has been determined
by the Investment Advisor and presented directly to and reviewed
by the Company's board of directors.
The below table summarises the significant unobservable inputs
to the valuation of investments.
Investment Portfolio Valuation Significant Inputs Fair Value
technique
------------------------- ------------
Description (Range) 31 March 31 March
2021 2020
(GBP) (GBP)
--------------- -------- ------------ --------------- --------- ----------- -----------
Great Britain DCF Discount Rate 6% - 8% 49,216,281 6,732,557
(excluding Northern Revenue / MWH GBP5.5
Ireland) - GBP40
Northern Ireland DCF Discount Rate 9.5% 23,968,276 16,138,800
Revenue / MWH GBP8 -
GBP21
Republic of
Ireland DCF Discount Rate 9.5% 6,015,352 5,739,200
EUR6 -
Revenue / MWH EUR15
Holding Companies NAV 1,494,366 1,801,936
Total Investments 80,694,275 30,412,493
--------------------------------------- -------------------------- ----------- -----------
The fair value of the holding companies represents the net assets
together with any cash held within those companies in order to
settle any operational costs.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
17. Fair value measurement (continued)
Sensitivity Analysis
The below table reflects the range of sensitivities in respect
of the fair value movements of the Company's investments.
Investment Portfolio Valuation Estimated effect on
technique Significant Inputs Fair Value
------------------------------ -------------
Description Sensitivity 31 March 31 March
2021 2020
(GBP) (GBP)
------------------ ---------- ------------- -------------- ------------- ------------ -------------
Great Britain DCF Revenue + 10% 9,626,000 2,000,000
(excluding Northern
Ireland) - 10% (9,846,000) (2,200,000)
Discount
rate +1% (4,278,000) (600,000)
-1% 4,919,000 800,000
Northern Ireland DCF Revenue + 10% 4,210,000 3,400,000
- 10% (4,095,000) (3,500,000)
Discount
rate +1% (2,407,000) (2,400,000)
-1% 2,787,000 2,800,000
Republic of Ireland DCF Revenue + 10% 715,000 1,900,000
- 10% (1,392,000) (3,400,000)
Discount
rate +1% (2,999,000) (1,900,000)
-1% 2,787,000 2,300,000
High case (+10%) and low case (-10%) revenue information used
to determine sensitivities are provided by third party pricing
sources.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
17. Fair value measurement (continued)
Valuation of financial instruments
The investments at fair value through profit or loss are Level
3 in the fair value hierarchy and the reconciliation in the movement
of this Level 3 investment is presented below. No transfers between
levels took place during the year.
Reconciliation 31 March 31 March
2021 2020
(GBP) (GBP)
--------------------------------------------- ----------------- --- ---------------
Opening balance 30,412,493 6,482,964
Purchases during the year 34,076,053 18,344,007
Total fair value movement through the
profit and loss 16,205,729 5,585,522
80,694,275 30,412,493
--------------------------------------------- ----------------- --- ---------------
A minority shareholder of Boulby has a right to receive a certain
share of Boulby distributions once NK Energy Solutions realises
excess return over an agreed hurdle return from its investment
into Boulby.
Based on free cash flow forecast used to compute the net asset
value of Boulby for this period, it is not expected to reach
the threshold return and thus no payment to the minority shareholder
is taken into account. However, if the actual cash flow significantly
exceeds the forecast cash flow used for current net asset value,
a part of the excess cash flow may be distributed to the minority
shareholder, impacting the ultimate fair value.
18. Financial risk management
The Company is exposed to certain risks through the ordinary
course of business and the Company's financial risk management
objective is to minimise the effect of these risks. The management
of risks is performed by the Directors of the Company and the
exposure to each financial risk is considered potentially material
to the Company, how it arises and the policy for managing it
is summarised below:
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
18. Financial risk management (continued)
* Capital risk management
The capital structure of the Company at year end consists of equity
attributable to equity holders of the Company, comprising issued
capital, reserves and accumulated gains. The Company has no return
on capital benchmark, but the Board continues to monitor the balance
of the overall capital structure so as to maintain investor and
market confidence. The Company is not subject to any external
capital requirements.
* Counterparty risk
The Company is exposed to third party credit risk in several instances
and the possibility that counterparties with which the Company
and its subsidiaries, together the Group, contracts may default
or fail to perform their obligations in the manner anticipated
by the Group. Such counterparties may include (but are not limited
to) manufacturers who have provided warranties in relation to
the supply of any equipment or plant, EPC contractors who have
constructed the Company's projects, who may then be engaged to
operate assets held by the Company, property owners or tenants
who are leasing ground space and/or grid connection to the Company
for the location of the assets, contractual counterparties who
acquire services from the Company underpinning revenue generated
by each project or the energy suppliers, or demand aggregators,
insurance companies who may provide coverage against various risks
applicable to the Company's assets (including the risk of terrorism
or natural disasters affecting the assets) and other third parties
who may owe sums to the Company. In the event that such credit
risk crystallises, in one or more instances, and the Company is,
for example, unable to recover sums owed to it, make claims in
relation to any contractual agreements or performance of obligations
(e.g. warranty claims) or require the Company to seek alternative
counterparties, this may materially adversely impact the investment
returns.
Further the projects in which the Company may invest will not
always benefit from a turnkey contract with a single contractor
and so will be reliant on the performance of several suppliers.
Therefore, the key risks during battery installation in connection
with such projects are the counterparty risk of the suppliers
and successful project integration. The Company accounts for its
exposure to counterparty risk through the fair value of its investments
by using appropriate discount rates which adequately reflects
its risk exposure.
The Company regularly assesses the creditworthiness of its counterparties
and enters into counterparty arrangements which are financially
sound and ensures, where necessary, the sourcing of alternative
arrangements in the event of changes in the creditworthiness of
its present counterparties.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
18. Financial risk management (continued)
* Concentration risk
The Company's investment policy is limited to investment in energy
storage infrastructure, which will principally operate in the UK.
This means that the Company has a significant concentration risk
relating to the UK energy storage infrastructure sector. Significant
concentration of investments in any one sector may result in greater
volatility in the value of the Group's investments and consequently
the Net Asset Value and may materially and adversely affect the
performance of the Group and returns to Shareholders. During the
year, the Company has expanded its investment base to include Northern
Ireland and the Republic of Ireland. The Company intends to further
limit its exposure to concentration risk through considering projects
in North America and Western Europe.
* Credit risk
Cash and other assets that are required to be held in custody will
be held at bank. Cash and other assets may not be treated as segregated
assets and will therefore not be segregated from the bank's own
assets in the event of the insolvency of a custodian. Cash held
with the bank will not be treated as client money subject to the
rules of the FCA and may be used by the bank in the ordinary course
of its own business. The Company will therefore be subject to the
creditworthiness of the bank. In the event of the insolvency of
the bank, the Company will rank as a general creditor in relation
thereto and may not be able to recover such cash in full, or at
all. Management has completed a high-level analysis which considers
both historical and forward-looking information and based on this
analysis the expected credit loss from cash and other assets is
not material and therefore no impairment adjustments were accounted
for. The Company recognises it has a significant exposure to the
advance made to NEC as disclosed in note 14 of the GBP4,500,000
advance and GBP383,918 (2020: GBP248,918) associated interest on
that advance, and believes that they have adequately assessed this
risk and are confident that the risk of default will be low.
The Company regularly assesses its credit exposure and considers
the creditworthiness of its customers and counterparties. Cash
and bank deposits are held with Barclays plc, a reputable financial
institution with a Moody's credit rating A2.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
18. Financial risk management (continued)
* Currency risk
The majority of investments, together with the majority of all
transactions during the current period were denominated in Pounds
Sterling.
The Company holds two investments (Kilmannock and Kilteel) in the
Republic of Ireland and acquisition costs were denominated in Euros,
creating an exposure to currency risk. These investments have been
translated into Pounds Sterling at year end and represent 7.45%
(2020: 18.87%) of the Company's fair valued investment portfolio.
The contracted revenue stream due from these investments has been
agreed in Pounds Sterling, thus limiting the exposure to fluctuations
in exchange rates.
Any expenditure denominated in Euros will be translated into Pounds
Sterling at the transaction date and any gain or loss resulting
from the foreign exchange exposure will be taken to the Statement
of Comprehensive Income. The Company does not hold any financial
instruments at period end which are not denominated in Pounds Sterling
and is therefore does not believe it is exposed to any significant
currency risk.
* Interest rate risk
Interest rate risk arises from the possibility that changes in
interest rates will affect future cash flows or the fair values
of financial instruments. The Company is exposed to interest rate
risk on its cash balances held with counterparties, bank deposits,
advances to counterparties and through loans to related parties.
Bank deposits and NEC ES advance carry a fixed rate of interest
for a definite period and loans to related parties carry a fixed
rate of interest for an initial period of 20 years. The Company
is not exposed to changes in variable market rates of interest
and has therefore not considered any sensitivity to interest rates.
* Liquidity risk
The objective of liquidity management is to ensure that all commitments
which are required to be funded can be met out of readily available
and secure sources of funding. Although there is no present intention
to utilise borrowings, the Company may, where the Board deems it
appropriate, use short term leverage to acquire assets but with
the intention that such leverage be repaid with funds raised through
a new issue of equity or cash flow from the Company's portfolio.
Such leverage will not exceed 15 per cent. at the time of borrowing
of Gross Asset Value without Shareholder approval. The Company's
only financial liabilities are trade and other payables. The Company
has sufficient cash reserves to cover these in the short-medium
term. The Company's cash flow forecasts are monitored regularly
to ensure the Company is able to meet its obligations when they
fall due. The Company's investments are level 3 and thus illiquid
and this is taken into assessment of liquidity analysis.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
18. Financial risk management (continued)
* Liquidity risk
The following table reflects the maturity analysis of financial
assets and liabilities.
31 March 2021 < 1 year 1 to 2 2 to 5 years > 5 years Total
years
--------------------------------------- ----------- ------- ------------- -------------- --------------
Financial assets
Cash and cash equivalents 60,152,317 - - - 60,152,317
Trade and other receivables 5,364,168 - - - 5,364,168
Fair value through profit
and loss
Investments - - - 80,694,275 80,694,275
Total financial assets 65,516,485 - - 80,694,275 146,210,760
--------------------------------------- ----------- ------- ------------- -------------- --------------
Financial liabilities
Financial liabilities at amortised
cost
Trade and other payables 1,075,819 - - - 1,075,819
Total financial liabilities 1,075,819 - - - 1,075,819
--------------------------------------- ----------- ------- ------------- -------------- --------------
31 March 2020 < 1 year 1 to 2 2 to 5 > 5 years Total
years years
--------------------------------------- ----------- ------- ------------- -------------- --------------
Financial assets
Cash and cash equivalents 15,028,142 - - - 15,028,142
Trade and other receivables 4,963,527 - - - 4,963,527
Fair value through profit and
loss
Investments - - - 30,412,493 30,412,493
Total financial assets 19,991,669 - - 30,412,493 50,404,162
--------------------------------------- ----------- ------- ------------- -------------- --------------
Financial liabilities
Financial liabilities at amortised
cost
Trade and other payables 713,659 - - - 713,659
Total financial liabilities 713,659 - - - 713,659
--------------------------------------- ----------- ------- ------------- -------------- --------------
Investments include both equity and debt instruments. As the equity
instruments have no contractual maturity date, they have been included
with the >5 year category. Additionally, the debt instruments have
an original maturity of 20 years.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
18. Financial risk management (continued)
* Market risk
Market risk is the risk that the fair value or cash flows of a
financial instrument will fluctuate due to changes in market prices.
Market risk reflects interest rate risk, currency risk and other
price risks. The objective is to minimise market risk through managing
and controlling these risks to acceptable parameters, while optimising
returns. The Company uses financial instruments in the ordinary
course of business, and also incurs financial liabilities, in order
to manage market risks.
Price risk is the risk that the fair value or cash flows of a financial
instrument will fluctuate due to changes in market prices. If the
market prices of the investments were to increase by 10%, there
will be a resulting increase in net assets attributable to ordinary
shareholders for the period of GBP8,069,427 (2020: GBP3,041,249).
Similarly, a decrease in the value of the investment would result
in an equal but opposite movement in the net assets attributable
to ordinary shareholders. Similarly, a decrease in the value of
the investment would result in an equal but opposite movement in
the net assets attributable to ordinary shareholders. The Company
relies on the market knowledge of the experienced Investment Advisor,
the valuation expertise of the third party valuer BDO and the use
of third party market forecast information to provide comfort with
regard to fair market values of investments reflected in the financial
statements.
19. Net asset value per share
Basic NAV per share is calculated by dividing the Company's net
assets as shown in the Statement of Financial Position that are
attributable to the ordinary equity holders of the Company by the
number of ordinary shares outstanding at the end of the period.
As there are no dilutive instruments outstanding, basic and diluted
NAV per share are identical.
31 March 31 March
2021 2020
-------------------------------------------- -------------------- ------------------
Net assets per Statement of Financial GBP 145,134,941 GBP 49,690,503
Position
Ordinary shares in issue as at 31 March 143,871,681 52,548,815
NAV per share - Basic and diluted (pence) 100.88 94.56
-------------------------------------------- -------------------- ------------------
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
20. Share capital and reserves
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve
reserve reserve
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------- ---------- ------------ --------- ------------ ----------- ------------ ------------
At 1 April 2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
Issue of ordinary
GBP0.01 shares:
30 June 2020 30,000 2,853,000 - - - - 2,883,000
Issue of ordinary
GBP0.01 shares:
8 July 2020 216,274 20,567,624 - - - - 20,783,898
Issue of ordinary
GBP0.01 shares:
30 October 2020 66,955 7,030,276 - - - - 7,097,231
Issue of ordinary
GBP0.01 shares:
16 December 2020 600,000 59,400,000 - - - - 60,000,000
Share issue costs - (1,844,233) - - - - (1,844,233)
Dividends paid - - - (8,070,152) - - (8,070,152)
Profit for the
year - - - - 16,205,729 (1,611,035) 14,594,694
At 31 March 2021 1,438,717 107,713,725 186,656 17,446,348 21,226,187 (2,876,692) 145,134,941
------------------- ---------- ------------ --------- ------------ ----------- ------------ ------------
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
20. Share capital and reserves (continued)
Share Share Special Capital Capital Revenue Total
capital premium reserve reduction reserve reserve
reserve reserve
(GBP) (GBP) (GBP) (GBP) (GBP) (GBP) (GBP)
------------------- --------- ----------- --------- ------------ ---------- ------------ ------------
At 1 April 2019 306,000 67,476 186,656 28,590,177 (565,064) (469,408) 28,115,837
Issue of ordinary
GBP0.01 shares:
19 August 2019 69,621 6,265,934 - - - - 6,335,555
Issue of ordinary
GBP0.01 shares:
14 October 2019 101,066 9,378,934 - - - - 9,480,000
Issue of ordinary
GBP0.01 shares:
23 October 2019 12,641 1,173,058 - - - - 1,185,699
Issue of ordinary
GBP0.01 shares:
11 February 2020 306,000 30,294,000 - - - - 30,600,000
Share issue costs - (595,450) - 13,199 - - (582,251)
Dividends paid - - - (3,086,876) - - (3,086,876)
Profit for the
year - - - - 5,585,522 (796,249) 4,323,262
At 31 March 2020 525,488 19,707,058 186,656 25,516,500 5,020,458 (1,265,657) 49,690,503
------------------- --------- ----------- --------- ------------ ---------- ------------ ------------
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
20. Share capital and reserves (continued)
Share Issues
On 30 June 2020, the Company issued 3,000,000 ordinary shares at
a price of 96.10 pence per share, raising net proceeds from the
Placing of GBP2,883,000. Admission subsequently took place on 30
June 2020.
On 8 July 2020, the Company issued 21,627,365 ordinary shares at
a price of 96.10 pence per share, raising net proceeds from the
Placing of GBP20,783,898. Admission subsequently took place on
8 July 2020.
On 30 October 2020, the Company issued 6,695,501 ordinary shares
at a price of 94.33 pence per share, raising net proceeds from
the Placing of GBP7,097,231. Admission subsequently took place
on 30 October 2020.
On 16 December 2020, the Company issued 60,000,000 ordinary shares
at a price of 100 pence per share, raising net proceeds from the
Placing of GBP60,000,000. Admission subsequently took place on
16 December 2020.
Ordinary shareholders are entitled to all dividends declared by
the Company and to all of the Company's assets after repayment
of its borrowings and ordinary creditors.
Ordinary shareholders have the right to vote at meetings of the
Company. All ordinary shares carry equal voting rights.
The nature and purpose of each of the reserves included within
equity at 31 March 2021 are as follows:
* Share premium reserve: represents the surplus of the
gross proceeds of share issues over the nominal value
of the shares, net of the direct costs of equity
issues and net of conversion amount.
* Special reserve: represents a distributable reserve
totalling the amount of outstanding creditors at the
date of the Company's approved reduction in capital.
* Capital reduction reserve: represents a distributable
reserve created following a Court approved reduction
in capital.
* Capital reserve: represents a non-distributable
reserve of unrealised gains and losses from changes
in the fair values of investments as recognised in
the Capital account of the Statement of Comprehensive
Income.
* Revenue reserve: represents a distributable reserve
of cumulative net gains and losses recognised Revenue
account of the Statement of Comprehensive Income.
The only movements in these reserves during the period are disclosed
in the Statement of Changes in Equity.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
21. Dividends
Dividend 31 March 31 March
per share 2021 2020
(GBP) (GBP)
----------------------------------- ------------- ------------ -----------
Dividends paid during the year
For the 3 month period ended
31 March 2019 1 pence - 306,000
For the 3 month period ended
30 June 2019 2 pence - 751,243
For the 3 month period ended
30 September 2019 2 pence - 978,657
For the 3 month period ended
31 December 2019 2 pence - 1,050,976
For the 3 month period ended 1 pence 771,761 -
31 March 2020
For the 3 month period ended 2 pence 1,543,523 -
30 June 2020
For the 3 month period ended 2 pence 2,877,434 -
30 September 2020
For the 3 month period ended 2 pence 2,877,434 -
31 December 2020
8,070,152 3,086,876
-------------------------------------------------- ------------ -----------
The table below sets out the proposed final dividend, together
with the interim dividends paid, in respect of the financial year,
which is the basis on which the requirements of Section 1158 of
the Corporation Tax Act 2010 are considered.
31 March 31 March
2021 2020
(GBP) (GBP)
-------------------------------------------------- ------------ -----------
Interim dividends for 2021 - 6 pence
(2020: 6 pence) 7,298,391 2,780,876
Proposed final dividend for 2021 - 1
pence (2020: 1 pence) 2,792,246 771,762
10,090,637 3,552,638
----------------------------------- ------------- ------------ -----------
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
22. Transactions with related parties
Following admission of the ordinary shares (refer to note 20),
the Company and the Directors are not aware of any person who,
directly or indirectly, jointly or severally, exercises or could
exercise control over the Company. The Company does not have an
ultimate controlling party.
Details of related parties are set out below:
Directors
During the year, it was agreed to increase each of the directors'
renumeration and as at 31 March 2021, Patrick Cox, Chairman of
the Board of Directors of the Company, is paid a director's remuneration
of GBP57,500 per annum, (2020: GBP33,000), Caroline Banszky is
paid a director's remuneration of GBP45,000 per annum, (2020: GBP21,000)
with the remaining directors being paid directors' remuneration
of GBP40,000 per annum, (2020: GBP18,000).
Total director's remuneration and associated employment costs of
GBP135,378 were incurred in respect of the period with GBP6,669
being outstanding and payable at the year end.
Investment Advisor
The Investment Advisor, Gore Street Capital Limited (the "Investment
Advisor"), is entitled to advisory fees under the terms of the
Investment Advisory Agreement amounting to 1/4(th) of 1% of Adjusted
Net Asset Value. The advisory fee will be calculated as at each
NAV calculation date and payable quarterly in arrears.
For the avoidance of doubt, where there are C Shares in issue,
the advisory fee will be charged on the Net Asset Value attributable
to the Ordinary Shares and C Shares respectively.
For the purposes of the quarterly advisory fee, Adjusted Net Asset
Value means:
(i) for the four quarters from First Admission, Adjusted Net Asset
Value shall be equal to Net Asset Value;
(ii) for the next two quarters, Adjusted Net Asset Value shall be
equal to Net Asset Value minus Cash on the Company's Statement
of Financial Position, plus any committed Cash on the Company's
Statement of Financial Position;
(iii) thereafter, Adjusted Net Asset Value shall be equal to Net Asset
Value minus Cash on the Company's Statement of Financial Position.
During the year, the management agreement was amended to change
the term of adjusted NAV to mean net asset value minus uncommitted
cash. Uncommitted cash means all cash on the Company's balance
sheet other than committed cash. Committed cash means cash that
has been allocated for repayment of a liability on the balance
sheet of any member of the group. Investment advisory fees of GBP
1,029,876 (2020: GBP 403,683 ) were paid during the year, there
were no outstanding fees as at 31 March 2021, (2020: GBP31,175
outstanding ). During the prior period the Investment Advisor waived
a portion of its fees which resulted in a reduction of 61.24% on
the actual fees incurred by the Company.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
22. Transactions with related parties (continued)
Investment Advisor
In addition to the advisory fee, the Advisor is entitled to a performance
fee by reference to the movement in the Net Asset Value of Company
(before subtracting any accrued performance fee) over the Benchmark
from the date of admission on the London Stock Exchange.
The Benchmark is equal to (a) the gross proceeds of the Issue at
the date of admission increased by 7 per cent. per annum (annually
compounding), adjusted for: (i) any increases or decreases in the
Net Asset Value arising from issues or repurchases of Ordinary
Shares during the relevant calculation period; (ii) the amount
of any dividends or distributions (for which no adjustment has
already been made under (i)) made by the Company in respect of
the Ordinary Shares at any time from date of admission; and (b)
where a performance fee is subsequently paid, the Net Asset Value
(after subtracting performance fees arising from the calculation
period) at the end of the calculation period from which the latest
performance fee becomes payable increased by 7 per cent. per annum
(annually compounded).
The calculation period will be the 12 month period starting 1 April
and ending 31 March in each calendar year with the first year commencing
on the date of admission on the London Stock Exchange.
The performance fee payable to the Investment Advisor by the Company
will be a sum equal to 10 per cent. of such amount (if positive)
by which Net Asset Value (before subtracting any accrued performance
fee) at the end of a calculation period exceeds the Benchmark provided
always that in respect of any financial period of the Company (being
1 April to 31 March each year) the performance fee payable to the
Investment Advisor shall never exceed an amount equal to 50 per
cent of the Advisory Fee paid to the Investment Advisor in respect
of that period. Performance fees are payable within 30 days from
the end of the relevant calculation period. Performance fees of
GBP496,461 were accrued as at 31 March 2021, (2020: GBPnil) .
During the period the Investment Advisor provided operations management
services to SPV companies resulting in charges in the amount of
GBP686,025 (2020: GBP510,735) being paid by the SPV companies to
the Investment Advisor.
Notes to the Financial Statements (continued)
For the Year Ended 31 March 2021
23. Capital commitments
The Company together with its direct subsidiary, GSES1 Limited
entered into Facility and Security Agreements with Santander UK
PLC in May 2021 for GBP15 million. Under these agreements, the
Company acts as chargor and guarantor to the amounts borrowed under
the Agreements by GSES1 Limited. As at 31 March 2021, no amounts
had been drawn on this facility.
The Company had no contingencies and significant capital commitments
as at the 31 March 2021.
24. Post balance sheet events
The Directors have evaluated the need for disclosures and / or
adjustments resulting from post balance sheet events through to
14 July 2021, the date the financial statements were available
to be issued.
The full economic impact of the COVID-19 pandemic and resulting
lock-down remains difficult to assess and its full impact is not
anticipated to be fully realized for the foreseeable future. The
Directors have made an assessment of the impact at the current
time, and are continuing to review that as described on pages 48
and 49 of this report.
Despite the COVID-19 pandemic, the Company continues to grow and
has further increased the number of shares in issue to 276.2 million
shares as of the date of publication (31 March 2020: 52.5 million
shares), following a recent placing of GBP135 million to institutional
investors and a retail offer through PrimaryBid.
There was also an acquisition of an 80 MW asset Stony Energy Storage
Limited which occurred on 12 May 2021 and will be valued at cash
paid (GBP2.15 million).
There were no adjusting post balance sheet events and as such no
adjustments have been made to the valuation of assets and liabilities
as at 31 March 2021.
Directors and Advisors
Directors Administrator
Patrick Cox - Chairman Sanne Group (UK) Limited
Caroline Banszky Articus Building
Malcolm Robert King 2nd Floor
Thomas Scott Murley 21 Palmer Street
London
Registered office SW1H 0AD
18th Floor
52 Lime Street Company Secretary
London JTC (UK) Limited
EC3M 7AF 18th Floor
52 Lime Street
AIFM London
Gore Street Capital Limited EC3M 7AF
Michelin House
81 Fulham Road Registrar and Receiving Agent
London Computershare Investor Services
SW3 6RD Plc
The Pavilions
Investment Manager Bridgewater Road
Gore Street Capital Limited Bristol
Michelin House BS13 8AE
81 Fulham Road
London Joint Placing Agent and Broker
SW3 6RD Shore Capital Limited
Cassini House
57 St James Street
London
Joint Placing Agent and Broker SW1A 1LD
J.P. Morgan Cazenove Depositary
Floor 29 INDOS Financial Limited
25, Bank Street St Clements House
London 27-28 Clements Lane
E14 5JP London
EC4N 7AE
Independent Auditor
Ernst & Young LLP Independent Valuer
25 Churchill Place BDO LLP
Canary Wharf 55 Baker Street
London London
E14 5EY W1U 7EU
LEGAL ADVISOR Ticker: GSF
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
[1] Installed costs for GSF estimated based on date of IPO for
seed assets (2018), and date of energisation of assets for
subsequent years. Installed costs for Comparable funds based on
publicly available information. Note: Installed cost GBP/MW for GSF
may include the present value of future EPC milestone payments
discounted at 10%.
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July 15, 2021 02:00 ET (06:00 GMT)
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