Gresham House Energy Storage Fund (GRID) H2 2022 earnings summary

Executive summary

• FY22 delivered strong growth in earnings, operational capacity and NAV per share, with the 7.0p dividend fully covered at 1.28x.

• NAV total return was 39.1%; since IPO, NAV total return reached 93.2%, equivalent to 17.2% annualised.

• Operational capacity rose to 550MW; 477MW was under construction for 2023 commissioning, supporting a target of 1,027MW operational by year-end 2023.

Financial highlights

• Underlying portfolio revenue was £62.7mn, up 21.9% YoY; EBITDA was £48.8mn, up 14.8% reported and 22% on a fully comparable basis.

• Profit and total comprehensive income rose 170% to £217.1mn, including £191.8mn of capital gains on investments at fair value.

• NAV increased 64% to £841.7mn; NAV per share rose 33.1% to 155.51p from 116.86p at FY21.

• Basic and diluted EPS was 43.53p, comprising 5.07p revenue return and 38.46p capital return, versus 20.59p in FY21.

• FY22 dividends totalled 7.0p per share; dividend yield was 4.3% at the 161.50p year-end share price.

Outlook and guidance

• Operational capacity is expected to reach 1,027MW by end-2023 and ~1.5GW in 2024; 477MW is targeted to commission in 2023 and a further ~500MW to enter construction.

• Underlying portfolio EBITDA is expected to grow in 2023 as projects commission; the Board targets a 7.35p dividend per share, up 5% from FY22.

• Q1 2023 NAV per share was expected to benefit by 3.3p from project revaluations and 2.2p from newly awarded Capacity Market contracts, subject to other valuation factors.

• Longer-duration projects, increasingly designed for two-hour operation, are expected to expand MWh capacity faster than MW capacity through 2025.

• A small-scale trading revenue trial could add an income stream if successful; international expansion and revenue diversification are also priorities.