Harmony Energy Income Trust (HEIT) H1 2024 earnings summary

Executive summary

• Portfolio consists of 790.8 MWh/395.4 MW BESS assets, with 70% operational and the remainder expected online in Q3 2024.

• Net Asset Value (NAV) declined 16.6% to £218.53m (96.21p/share) as of 30 April 2024, mainly due to lower revenue forecasts and market conditions.

• Revenue for the period was £8.0m, up from £2.3m year-over-year, with a 48% sequential increase in Q2.

• Dividend policy changed from a fixed 8p/share to a dynamic payout of at least 85% of operational free cash flow; Q1 dividend cancelled.

• Asset sale process initiated to address disconnect between NAV and market capitalization.

Financial highlights

• Revenue for H1 2023/24: £8.0m (vs £2.3m H1 2022/23); revenue per MW/year: £57,685.

• Operating free cash flow improved as operational capacity increased; weighted average operational MW rose to 277.5.

• Loss after tax: £39.0m (vs £6.8m loss H1 2022/23), driven by £45.1m loss on investments at fair value.

• NAV per share: 96.21p (down from 115.40p at 31 Oct 2023); NAV total return for the period: -14.89%.

• Dividend of 2p/share paid for Q4 2022/23; no dividend declared for the current period.

Outlook and guidance

• Remaining three projects (235.8 MWh/117.9 MW) expected to be operational in Q3 2024, increasing capacity by 42%.

• Revenue expected to rise proportionally with new capacity; guidance for covered dividend in 2025 if market forecasts hold.

• Market outlook for BESS remains positive, with increased BM participation and revenue opportunities as GB decarbonizes.