TIDMGSEO
RNS Number : 9673H
VH Global Sustainable Energy Oppt.
02 August 2023
VH Global Sustainable Energy Opportunities plc
02 August 2023
Financial & Operational Highlights
Interim Dividend
The Board of Directors of the Company announced an interim
dividend of 1.38p per share in respect to the period from 1 April
2023 to 30 June 2023, in line with the dividend target for
2023.
Income from the portfolio has remained robust during the quarter
and the dividend is 1.3x covered. As more projects become
operational, the dividend coverage ratio is expected to strengthen
further. The Company's operational assets also continue to benefit
from over 90% of contracted revenues.
Leverage
Total leverage of the Company is 2.2% of NAV, which relates to
the asset-level leverage on its US asset. The Company does not
currently employ leverage at the fund level and continues to target
a total NAV return of 10% net of the Company's costs and
expenses.
30 June 2023 Net Asset Value (NAV)
The Company's NAV as at 30 June 2023 was 110.21p per share,
compared to the NAV of 112.32p per share as at 31 March 2023. The
movements in the NAV during the quarter include:
Pence per Share
----------------
Net Asset Value per share as at 31 March
2023 112.32
Dividend paid during the quarter (1.38)
Fund expenses (0.38)
Movement in fair value of assets (0.32)
Movement in foreign exchange (0.03)
Net Asset Value per share as at 30 June 2023 110.21
----------------
Discount Rates
After a period of macroeconomic volatility, key macroeconomic
indicators have begun to stabilise. During the quarter, this
stability has been reflected in the discount rate decreasing by
28bps on average across the portfolio. Discount rates for
operational assets as at 30 June 2023 are 7.3% in the US, 6.9% in
Australia, 9.1% for the Brazilian hydro facility and 11.4% for the
Brazilian solar PV assets. The UK asset is in construction and
therefore currently held at cost.
Movement in Fair Value of Assets and Portfolio Update
The fair value movement of the portfolio was marginally down in
the quarter with fair value gains on the Brazilian hydro facility
offsetting a majority of fair value loss in the Brazilian solar PV
assets. Please refer below for the portfolio update by program:
-- Brazilian solar PV assets:
o The ten operating solar PV sites continued their strong
performance generating power ahead of budget in this quarter. These
sites benefit from 20-year-average-life and inflation-linked Power
Purchase Agreements ("PPAs") with creditworthy corporate energy
off-takers.
o Victory Hill, alongside our operating partner, continue to
work together to complete the remaining six sites under
construction. As highlighted in the Company's latest annual report
("Annual Report"), the Company is contracting a new engineering
procurement and construction ("EPC") company to finalise the
construction of six remaining solar sites in two phases. Three
sites are expected to commence operations in the first quarter of
2024 as part of Phase I, following which construction will commence
for the remaining three sites under Phase II.
o As stated in the Annual Report, the Company decided to
relocate two sites to seek improved operational performance. After
further analysis, the relocation option proved not to be adequate,
and the Company has decided to fully provide for the GBP4.5 million
of capital previously invested.
o As a result of the proactive asset management and the work
undertaken to complete the ten projects, the Brazilian solar PV
programme remains on target to return in excess of the Company's
total NAV return target of 10% net of the Company's costs and
expenses.
-- Brazilian hydro facility:
o The Brazilian hydro facility continues to be a strong
performer in the portfolio with earnings 13% ahead of budget in the
second quarter of the year, driven by a combination of higher hydro
resource availability, high inflation impacting PPA prices
positively and an optimization of operating costs during the
period.
-- US terminal storage assets:
o The two terminals continue to deliver a robust performance,
driven by higher throughput volumes and therefore higher ancillary
revenues with the T1 and T2 terminal earnings 21% and 16% ahead of
budget for the quarter respectively.
-- Australian solar PV with battery storage assets:
o The construction of the first upgraded solar and storage
hybrid system has been completed, through the addition of a 2 hour
4.95MW battery energy storage systems ("BESS"), which was delivered
on time and on budget and is connected to the existing operational
solar PV site in South Australia. This is one of the first hybrid
renewable energy plants in Australia and offers the Company access
to additional energy arbitrage and frequency stability services
revenue from the co-located BESS.
o In Q2, the earnings from the uncontracted Queensland solar
project reduced by 47%, offsetting the 113% above budget
performance in Q1. Performance YTD is 29% above budgeted
performance. The variance in revenue further demonstrates the
disorderly transition in the Australian energy market which the
Company is seeking to monetise through the implementation of
co-located BESS.
o Furthermore, the construction of the three solar sites in New
South Wales is progressing in-line with expectations, both from a
timing and a returns perspective, with commissioning expected in Q3
2023.
-- UK flexible power with carbon capture and reuse (CCR)
assets:
o The construction of the 10MW site is well advanced, with key
equipment already manufactured and installed at the site. As a
result of issues faced by the programmes incumbent EPC contractor,
Victory Hill and our operating partner have identified a new EPC
contractor to complete construction. The Company has signed a
Memorandum of Understanding with the replacement contractor,
following which Victory Hill and our operating partner have
advanced exclusive negotiations on the terms of the EPC contract.
In the interim, the Company has engaged subcontractors to continue
civil works at the project site. Due to the change in EPC
contractor, first power is now expected by the end of the year and
full commissioning of the integrated plant with CCR is expected to
be reached in Q1 2024.
o The Company confirms that the key project partners including
Rolls Royce, Mitsubishi Turboden, Climeon, Asco, Axpo and Buse
Group remain committed to and involved in the project.
o All contracts including the carbon dioxide contract, power
offtake contract, and the 15-year contract at GBP63/kW/year in the
UK Capacity Markets Auction T-4 are unaffected by these
changes.
Foreign Exchange
During the quarter, GBP strengthened versus USD by 3.0% and AUD
by 3.3% but weakened against BRL by 2.6%. A net strengthening of
GBP against the portfolio currencies resulted in a marginal
decrease in the NAV due to foreign exchange. The Company has a
mandate to hedge the short-term distributions from investments from
local currency to GBP.
Investment Objective & Strategy Summary
The Company's investment objective is to generate stable
returns, principally in the form of income distributions, by
investing in a diversified portfolio of global sustainable energy
infrastructure assets, predominantly in countries that are members
of the EU, OECD, OECD Key Partner countries or OECD Accession
Countries.
The Company continues to support the global energy transition
while offering its shareholders both a progressive income stream
and capital growth. The Company confirms that there is no change to
its 2023 income target or dividend target. The Company targets a
total NAV return of 10%, net of the Company's costs and expenses
and a progressive annual dividend target, paid quarterly (currently
targeting 5.52p for the year ending 31 December 2023) and is 1.3x
covered. As further projects become operational, the dividend
coverage is expected to strengthen further. Total leverage of the
Company continues to be minimal, at 2.2% of NAV as at 30 June 2023,
which includes asset-level leverage to the US asset.
The factsheet will be available on the Company's website.
www.vh-gseo.com
The Company's LEI is 213800RFHAOF372UU580.
For further information, please contact:
Edelman Smithfield (PR Adviser)
Ged Brumby + 44 (0)7540 412 301
Hamza Ali + 44 (0)7976 308 914
Victory Hill Capital Advisors LLP (Investment Adviser)
Navin Chauhan info@victory-hill.com
Numis (Corporate Broker)
David Benda +44 (0)20 7260 1000
Matt Goss
Apex Fund and Corporate Services (UK) Limited (Company
Secretary)
ukfundcosec@apexgroup.com
About Victory Hill Capital Partners LLP
Victory Hill Capital Partners LLP ("Victory Hill") is authorised
and regulated by the Financial Conduct Authority (FRN 961570).
Victory Hill is based in London and was founded in May 2020 by
an experienced team of energy financiers that spun-out of a large
established global project finance banking group. The team has
participated in more than $200bn in transaction values across 91
conventional and renewable energy-related transactions in over 30
jurisdictions worldwide. Victory Hill is the investment manager of
the Company.
The Victory Hill team deploys its experience across different
financial disciplines in order to assess investments holistically
from multiple points of view. The firm pursues operational
stability and well-designed corporate governance to generate
sustainable positive returns for investors. It focuses on
supporting and accelerating the energy transition and the
attainment of the UN sustainable development goals.
Victory Hill is a signatory of the United Nations Principles for
Responsible Investing (UN PRI), the United Nations Global Compact
(UN GC), Net Zero Asset Managers Initiative (NZAMI), a member of
the Global Impact Investing Network (GIIN) and is a formal
supporter of the Financial Stability Board's Task-Force on
Climate-related Disclosures (TCFD).
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCUPURARUPWGAG
(END) Dow Jones Newswires
August 02, 2023 02:00 ET (06:00 GMT)
Vh Global Sustainable En... (LSE:GSEO)
Historical Stock Chart
From Jul 2024 to Aug 2024
Vh Global Sustainable En... (LSE:GSEO)
Historical Stock Chart
From Aug 2023 to Aug 2024