Gresham House Energy Sto... Share Discussion Threads

[cc2014] 29/11/2024 12:11

They say from borrowing.


I look at it this way. The gearing is currently 20% of GAV but that's against a published NAV of 110p a share. If I consider the NAV isn't 110p but let's say 80p (you pick your own number but the market clearly doesn't think it worth 110p) then the gearing is much higher than the published number. Say 30%, I can't be bothered to work it out.

So, how much is anyone going to lend them at any reasonable rate, because the more they borrow the more the margin over SONIA will be.


Edit: or put another way. GRID had to bin the dividend in order to complete the current build out as the RCF lender got uncomfortable. Now GRID want to re-instate the dividend an borrow more money. It's nuts

[craigso] 29/11/2024 12:10

Guest et. al certainly know that they have to grow or die.

However, turning £1 into 50p isn't the kind of "growth" that investors are interested in.

This smells a lot like fund managers hoping to save their fee income stream rather than acting in the best interests of their shareholders.

[marktime1231] 29/11/2024 11:54

Where is the money coming from to expand?

[cousinit] 29/11/2024 08:58

CC your spidey senses seemed pretty much spot on from the call.

I'd say that the 'asset sale' does look like a convoluted related party effort.

The £150m EBITDA number got my attention - took me a while to realise that it was a cumulative total rather than an annual aspiration!

The lender seems cautious regarding reinstating dividends.

This is quite a jigsaw puzzle - it's going to take a lot of effort and some luck to deliver what they are suggesting.

[cc2014] 29/11/2024 08:32

And come to think of it, if they are going to augment their existing 1.7MWh fleet to 3.2MWh, that means the batteries will become about 3.5hr batteries.

I'm just not sure there is an economic case for that in the UK.

[cc2014] 29/11/2024 08:16

And there we go.

capacity 1,701 MWh by the end of March 2025 taking the gearing to 20%

Additional capacity they plan in next 3 years is another 2,180MWh

And to more than double it, they plan to take the gearing to they don't say but let's guess 45%.

Which begs the question if they can build that much extra capacity for that little cost, it the existing capacity really worth what they say it is! And to be clear 680 out of the 2,180 is new projects on new sites so that's nothing to do with economies of scale

[marktime1231] 28/11/2024 22:51

Depending on whether things go to plan etc blah. And how has that gone so far?

I imagine lenders will have an eye on the discount, the falling NAV, the wafer thin net income, and how close debt is getting to the gearing limit. Might that force some asset sales before agreeing to refinance? And it will not be on cheap terms.

Given so many variables there has to be doubt whether GRID can restore even a trivial dividend in Q3. That expectation is too optimistic.

[cruelladeville] 28/11/2024 19:14

Thanks. So, to summarise, the next dividend is a year away and expected to resume quarterly from then.

[eekhoorn] 28/11/2024 18:24

There was a slide that detailed the future dividend policy. It reads as follows:Reinstating GRID's Dividend Policy? GRID expects to reinstate its Dividend Policy in 2025 having refinanced current debt? Future dividends covered after all costs ? Dividend distribution: first three quarters to be smaller and the final dividend larger ? Next distribution expected in Q3 relating to Q2 2025, subject to successful refinancing? If EBITDA reaches £45-55mn in 2025, cashflow* per share to be 4.5-6.2 p per share? Capital allocation: Balance between income and growth*Cashflow is calculated by deducting net interest costs and charges and Plc costs from EBITDA.

[stargazerspark] 28/11/2024 15:34

My takeaway was that the board think more as if they raised money for a corporate entity than an Investment Trust.
They appeared likely to reinvest cash in future projects even when the return on a share buy back at current levels would be an instant risk free gain. They will probably pay some covered dividend next summer.

I was happy with the projects, and personally think lower battery costs is a huge advantage for the assets due to augmentation value. The management seems to be in. good place, perhaps a fraction too cosy with Octopus.

To CC2004's point EBITDA was a big factor presented but no cost of interest or size of debt. Again this is an Investment Trust so EBITDA is a useless measure given the dividend is after costs while NAV remains volatile and unproven. However, earnings will rise in the near term as both more batteries come online and revenues improve per kWh of capacity.

IMHO they should be selling some of the projects that have the least upside and buying shares to prove they understand the dynamics of running an Investment Trust Share price needs to stay close to NAV. I'm sure if the price >> NAV we'd see shares being issued to balance the other side.

[ghhghh] 28/11/2024 15:23

Thanks cc but was there any mention of dividends? When will they restart and targeting what level?

[cruelladeville] 28/11/2024 15:18

Thanks for that. Appreciated.

[stargazerspark] 28/11/2024 15:03

It's here hxxps://greshamhouse.connectid.cloud/resources
you have to register, but I don't think there is any barrier to signing up.

[cruelladeville] 28/11/2024 13:38

Will GRID release any information regarding yesterday's capital markets day? Transcript or something?

[sleveen] 28/11/2024 10:15

Thanks for the write up CC2014.

[robertspc1] 27/11/2024 16:28

Anyone on today's Capital Markets call ..

[cruelladeville] 26/11/2024 21:03

Presently no OCGT generation. ~23 gigawatts CCGT, less than 3 nuclear. Only a matter of time before we see black outs in areas of the UK. Even if we muddle through. In the near future when Sizewell B shuts for maintenance or refuelling, Hinckley C not yet commissioned but the remaining elderly nukes decommissioned, then we'll be in the doo doo.

[cruelladeville] 26/11/2024 20:57

Large volatility in wind generation too. Today I've seen ~15 gigawatts wind generation and now less than 1.5. A 10 to 1 turndown in one day. Hopefully there's been opportunities for BESS facilities. Desperately need massive investment in longer duration energy storage facilities but it doesn't look like we're going to get any new pumped hydro or other alternative technologies any time soon. Lots of talk. Nothing much happening as far as I can see.

[cc2014] 26/11/2024 19:02

Current gas usage is as high as I can remember seeing it at 24.05GW. I wonder what the actual maximum capacity is.

Someone wanted in before tomorrow's presentation. There again someone also wanted out.

[george stobart] 26/11/2024 18:26

Capital Market Day tomorrow & 3yr plan

Rumour says they will announce they reinstate dividend payments as per RNS tomorrow @7am

Let's see

[marktime1231] 26/11/2024 18:10

Another price spike this evening which stored energy traders should be exploiting. We should just get by, using pricing to curtail demand, but once again the UK is within a few percent of not being able to generate enough power.

The UK plunging back in to the doldrums after recent high winds. A cold dark evening at a time when half our nuclear assets have chosen to shutdown for refuelling, and it looks like there are more problems with interconnectors too. Our gas power stations are operating at maximum capacity including peaker plant. Whoever is supplying the UK with gas must be raking it in, but since gas sets the price for everything else this should be good news briefly for renewables too. And boy do we need some.

[nickrl] 21/11/2024 22:21

@CC2014 arbitrage generally poor when demand is very high but this is only the system price there are dozens of traders/suppliers/generators needing to balance their books every half hour and from what was reported in the results they are doing reasonable well in wholesale trading having pretty well abandoned the BM and ancillary services.

[george stobart] 21/11/2024 12:23

fully agreed on the disaster results

Ben Guest needs to resign for his horrendous actions and destruction of shareholder value