Gore Street Energy Storage Share Discussion Threads

[bbonsall] 23/8/2022 16:38

I thought this is the very sort of facility the country needs in the days of soaring energy prices. Energy costs going up, so energy storage costs must follow. That spells more profit for GS.

[mylands] 08/8/2022 10:09

Ex the 1p div on the 5th with no movement in the share price

[podgyted] 30/7/2022 14:15

Sold out on results day first thing as I didn't like the small rise in NAV - the resultant premium was too high for me.

Looking at the accounts in more detail its pretty obvious why - they held cash of £198m at the year end - in fact a few days later they added £150m to that. This will only help the NAV when converted into productive assets. Looking at a Shore Capital note most of that will only happen in 2023 to 2025.

On the dividend I totally disagree with the company its totally uncovered in the normal sense of the term. I hold NESF - they disclose a 1.2x cover which thay calculate as cash income from their investments less expenses. On this basis GSF made a loss - Income £5.5m, Expenditure £6.5m.

Just like the NAV they cannot have dividend cover until they get the productive assets.

[petewy] 29/7/2022 16:04

Thanks Carterit.

[carterit] 29/7/2022 12:45

Update from the telegraph - Questor today.....

Update: Gore Street Energy Storage/National Grid
At first sight it appears that our decision to sell National Grid in November 2020 and replace it with Gore Street Energy Storage was misconceived: shares in the latter have done well enough – a 14pc gain – but Grid’s have done even better and have risen by 26pc, although their ride has been bumpier.

Grid’s dividend has also been rising, from 49.16p last year to the 50.97p announced in March, while Gore Street’s has been constant at 7p a share since 2020; it confirmed that figure for the year to March when it published its annual results on Tuesday.

But there is a lot going on under the surface at Gore Street, which invests in battery storage that can supply power to the grid when generators can’t keep up. It is a new fund – it listed in May 2018 – and is fast growing. The crucial point is that many of its assets are still being developed so they are not yet supplying energy or generating revenues. When they do, we can expect more income and higher dividends.

In fact, a smaller proportion of the fund’s portfolio was operational at the end of March, 37pc, than a year previously (55pc). This reflects the pace at which the fund has invested in new development projects with the money raised from various share sales. It has raised another £150m in the current financial year.

Although the proportion of the portfolio in operation shrank as a result of the investment in projects in development, the total power capacity of the fund’s operational assets rose by 10.5pc compared with a year previously (since the end of the financial year it has risen further).

Net asset value per share rose by 6pc from 100.9p to 107.1p. The trust is also becoming more diversified and now has projects in Britain, Ireland, Germany and America. Australia may soon be added to the list.

We therefore expect plenty of growth in net asset value, the share price and the dividend over the coming years. Meanwhile we can bank a 6.6pc yield relative to our purchase price of 106p. National Grid, by contrast, is a mature business hemmed in by regulators. We’re happy with the decision we made. Hold.

Questor says: hold

Tickers: GSF, NG.

[scruff1] 28/7/2022 07:54

Interesting read. Could I enquire where you obtained £19m of fund management and central costs

[marktime1231] 28/7/2022 00:01

Wow coco so the "dividend was covered x1.09" is only true if you ignore about £19M of fund management and central costs, equivalent to about 5% of AUM which is indeed eyewatering. Are they saying those fund-level costs are all special one-offs? Otherwise the real story is that dividend was not covered by income net of all expenses, the cover was only x0.7.

Feels like we are being bluffed. Where are the auditors (EY eek) and non-execs supposed to be looking after shareholder interests and telling the plain truth. Not impressed, at all. How did GSF fund the shortfall to pay the dividend and to what extent will that be ongoing?

Did that income deficit cause a 2.1p drag on the NAV per share performance, did you spot a clear calculation to show how GSF got from 103.9p at 31 Dec 2021 to 107.1p at 31 Mar 2022? What might it be now, about the same taking all the plus and minus since March? With GSF share price at 121.5p that is a 13.4% premium.

GRID on the other hand with a share price around 157.5p is at an 8.6% premium to a NAV per share which it has already guided will be about 145p as at 30 Jun. In contrast to GSF that seems reasonable. Whereas GSF suddenly looks way over bought.

[nerja] 27/7/2022 19:15

Cocopah, fair play to you mate pretty spot on with your forcast pre results , I topped sliced after what you put out on this and grid, purely as a safety measure so thanks, not sure if and when to buy them back may wait for another placement or drop, but to me this is what a BB s really about, honest assessments right or wrong from peep so we can all make proper judgements so thanks from me anyway.

[cocopah] 27/7/2022 18:18

#marktime123 note 3 (below) says that the reason that the net income differs from the EBITDA is:

(3) Dividend coverage means the number of times the Company could pay dividends to its common shareholders using its net income over the fiscal year. The Company's dividend coverage from the EBITDA of its operational portfolio exceeds the coverage achieved based on Company-level EBITDA because it excludes fund-level expenses.

Seems like a lot of ‘fund level’ expenses to me!🤷‍♂️ԅ80;🤔

[marktime1231] 27/7/2022 17:49

It possibly is valid to compare historic income to historic dividend ratio, and even more useful to look at current ratio or future projections.

GSF keep confusing portfolio which is now 291MW with portfolio+pipeline of 668MW. As the operating assets increase yes income must improve, but the outlook is worse if as you say the number of shares has increased even faster. Where are we at with costs of debt, management fees etc? All a bit of a worry if historic cover was only 0.7x.

To maintain the dividend at 7p based on a bullish statement about current cash flow is questionable when we are presented with a battery (ha ha) of different figures which cannot easily be resolved in to a clear picture. Well I am questioning the sustainability of it all anyway, I am not going to take management word for it. I foolishly did that on Carillion. It will take someone a lot smarter than me to do an intimate and rigorous financial analysis to judge things. My instinct is this is a situation in the balance and might become a trap where management feel obliged to behave confidently.

A clue about dividend coverage comes from GRID. They had surplus net income over dividends paid which helped boost the NAV per share figure. Does that explain why GSF has reported relatively modest NAV per share progress, I have looked but cannot see a transparent calculation. Was there a drag from an income-to-dividend deficit?

In which case the dividend is kept up by raiding funds generated from share issues or borrowings? Eeek!

[fordtin] 27/7/2022 13:50

Looking at dividend cover as it was four months ago is irrelevant in a rapidly evolving company like this imo.

As at 31 March 2022 the company reported “ Operational assets producing income increased to 12 projects, with a total capacity of 231.7 MW “.

• Post Period-end Highlights show; “ Portfolio increased to 21 projects with a total capacity of 668.3 MW of which 291.6 MW is operational”.

Over 25% uplift in operational capacity compared to 39% uplift in issued shares might seem like it could reduce the dividend cover even further. However, looking a bit further ahead, they are not far away from adding another 49.9MW.

"Under Construction
Project - Ferrymuir
Location - Scotland, UK
Capacity - 49.9 MW
% Owned by the Company - 100%
Site Type - Greenfield
Status - Pre-construction
Commissioning/
Expected commissioning - Q4 2022
Battery provider - To be confirmed"




With another 49.9MW added in, capacity of operational assets producing income will be raised to a 47.4% uplift since 31 March 2022. Which compares much more favourably to the 39% uplift in issued shares since 31 March 2022.
As the rest of the 668.3 MW comes on line the numbers should just keep getting better and better.



“The 291.6 MW operational portfolio[5] continues to deliver significant cash flow for the Company and has ensured we have maintained our robust dividend of 7 pence per share. The end of the period saw the GB and Northern Irish assets perform extremely well, outperforming revenue expectations considerably.”

[bbonsall] 26/7/2022 23:06

Surely the low dividend cover must be because of the large increase in number of shares due to the massive fundraising. There has not yet been time for those funds to produce returns on investment.

[marktime1231] 26/7/2022 17:54

Still don't understand. Reports eps of 14.15p which would be £68.06M, net income of £42.5M and operational ebitda of £23.3M. So which is it? It feels like the first two numbers include non-operational gains or are before deductions so not truly net. Can't find a definition of what "net" income of £42.5M includes, £19.2M which is not operational ebitda, are you sure this is bottom line profit? And, what were operational earnings after itda, surely that is relevant too? On the numbers presented operational ebitda, eg the net trading income from selling energy and services from the live portfolio before itda, only provides 0.7x dividend cover.

[riverman77] 26/7/2022 16:53

From briefly looking at this a couple of months ago, I think it's more to do with GRID having somehow taken advantage of short term power price volatility, whereas GSF revenues tend to be a bit more stable, with fixed contracts. As I say, I haven't looked into this yet, but I believe it's something along those lines. Perhaps this whole sector is too complex and I should just move onto something else?

[cocopah] 26/7/2022 16:21

#riverman77 it could just be that #GRID have more sites commissioned than we do ... I don't know if that's the case though.

[riverman77] 26/7/2022 15:34

Without knowing these funds very well, any reason in particular why GRID seen such spectacular NAV gains, whereas GSF has been a bit more pedestrian? I get the impression both management teams know exactly what they're doing, so presumably this is because of differing strategies, rather than because GRID is a superior fund with better assets. Where GRID taking higher risks to achieve these returns?

[cocopah] 26/7/2022 15:29

In terms of dividend cover I prefer to work with what we've got now (i.e. the number of shares currently in circulation) which is 481 million, so a dividend of 7p costs £33.67 million per year ... if we assume that net profit stays at £42.5 m next year then the cover is just about OK. The RNS earlier in the year said a 0.5p rise in the dividend would be triggered if the NAV stays above £1.07 on an annualised basis (which would cost £36.1 million) ... getting a bit tight.

The problem is ... we don't know when more shares to fund further development assets will happen in 2022/20223 ... we can't rely on elevated prices for storage (though the short-term looks good) ... and as far as I am aware most of the UK development assets we own don't come on-line until Q4 2023 (Milton Keynes, Enderby, Kilmarnock and Ferrymuir) although Porterstown is due Q3 this year. The USA ones (Mineral Wells, Cedar Hill, Wichita Falls, Mesquite and Skyline)are all "H2 2023".

The NAV improved from 103.9 in December to 107.1 ... not earth-shattering compared to (say) #GRID but not poor either. I do worry that income will be flattish next year though. GLA!

[williamcooper104] 26/7/2022 12:09

When trusts raise equity there's often a divi coverage shortfall as they've got the extra shares and need to pay dividends on those but haven't yet deployed the cash

[marktime1231] 26/7/2022 12:03

Is the dividend covered by income? The report says 1.09x operational cover but just 0.7x Company cover. Whatever that means, but it doesn't read well.

[scruff1] 26/7/2022 10:00

mmm. Not really sure what to conclude. Probably the comment about 63% of the portfolio under constuction sums it up. Earnings obviously increased substantially (would have been a warning if they hadnt) and would expect that to continue at least for the short to medium. Not been translated to the Divi though which remains the same. Understandable though I suppose with the product of the raise not yet completed and contributing to earnings. Would have been nice though. Pretty much as you were I guess. Good potential but a work in progress. Anyone else got any comments/observations?

[mylands] 26/7/2022 09:13

Results out in 15 minutes at 9.30am today.

[mirandaj] 26/7/2022 09:00

As the NAV was stated as at 31st March 2020 there is scope for an uplift in this financial year methinks.

" NAV increased 154% to £369.6 million[1] (31 March 2021: £145.1 million)

NAV per share increased 6% to 107.1 pence[2] (31 March 2021: 100.9 pence), NAV Total Return of 13%"