23
May 2024
VH
Global Sustainable Energy Opportunities plc
Net
Asset Value and Factsheet
GSEO Overview
GSEO is focused on enabling the
energy transition globally through its investments. Its 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. Through its investments, the
Company aims to have positive environmental and social impacts,
transforming lives and communities without compromising on
returns.
About Victory Hill Capital Partners LLP
Victory Hill is a London-based
specialist investment management firm founded by an experienced
team of energy financiers. The investment team has participated in
more than $200bn in transaction values across 91 conventional and
renewable energy related transactions in over 30 jurisdictions
worldwide.
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.
Capital Allocation
The Company remains focused on
disciplined capital allocation to optimise and enhance shareholder
returns. Given the minimal level of gearing, the Company does not
need to sell assets to repay debt. However, in pursuing a prudent
capital allocation and portfolio management strategy, the
Investment Manager monitors the M&A market regularly to
determine potential sale opportunities, the relative merits of
deployment of capital into new or existing projects, and returning
capital to shareholders either via dividends or share
buybacks.
The Company announced a £10 million
share buyback programme on 15 September 2023, which was further
increased by £10 million on 22 February 2024, bringing the total
share buyback programme to £20 million. As at 31 March 2024, the
Company had bought back a total of £9.1 million worth of its own
shares. During the quarter, the buyback added 0.13p to the NAV per
share.
Financial & Operational Highlights
Dividends
The Company announced an interim
dividend of 1.42p per share in respect to the period from 1 January
2024 to 31 March 2024, in line with the dividend target for
2024.
As at 31 March 2024, the dividend
was 1.1x covered by the strong underlying cash generation from the
operating assets, which make up 61.5% of the current portfolio. As
the remaining construction assets achieve operational status in
early 2025, the dividend cover is expected to grow. Today, the
Company's operational assets benefit from over 90% of contracted
and inflation-linked revenues, minimising commodity price
exposure.
Leverage
Total leverage of the Company is
1.8% of NAV as at 31 March 2024, which comprises asset-level
leverage at its US asset. The Company does not currently employ
short-term leverage at the fund level.
31 March 2024 Net Asset Value
(NAV)
The Company's NAV as at 31 March
2024 was 116.0p per share, compared to the NAV of 116.5p per share
as at 31 December 2023, a 0.4% decrease. The movements in the NAV
during the quarter include:
|
|
Pence per
share
|
|
Net
Asset Value per share as at 31 December 2023
|
116.5
|
|
Dividend paid during the
quarter
|
(1.4)
|
|
Distributions from investments &
fair value of assets movement
|
2.2
|
|
Fund expenses
|
(0.3)
|
|
Movement in foreign
exchange
|
(1.1)
|
|
Share buyback
|
0.1
|
|
Net
Asset Value per share as at 31 March 2024
|
116.0
|
Movement in Fair Value of Assets - Key
Drivers
During the quarter, discount rates
reduced by 28bps on average across the portfolio. This decline was
primarily driven by a compression in the inflation differentials
between Brazil and Australia when compared to the US, although
partially mitigated by a 26bps rise in the 20-year US Treasury rate
during the period. Discount rates for operational assets as at 31
March 2024 are 6.93% in the US, 7.48% in Australia, 9.04% for the
Brazilian hydro facility and 9.14% for the Brazilian solar PV
assets. Pending the commissioning of the integrated plant, the UK
asset remains held at cost.
Portfolio update
Brazilian hydro facility:
· The
hydro facility in Brazil remains a strong performer in the
portfolio, exceeding expectations in the first quarter of the
year.
· While
the deadly flooding in southern Brazil had no impact on our hydro
facility, we are deeply saddened by the tragic impact on so many
peoples' lives.
- The
rainfall was concentrated in the far southern regions of the
country, distant from our hydro facility. As part of Victory Hill's
sustainability efforts, we were already exploring preventive
measures for the facility to mitigate against such
events.
US terminal storage
assets:
· The US
terminal assets performed in line with expectations during the
period.
Australian solar PV with battery
storage assets:
· An
agreement to acquire and build two new fully-permitted solar PV
sites with co-located battery energy storage systems ("BESS") in
New South Wales ("NSW") was signed, for a total consideration of
£16.9m. This brings the total capacity of the Australian programme
to 37MW/60MWh, across seven assets.
· The
construction of these two hybrid sites in NSW will begin in Q2
2024, with completion expected in early 2025.
· The
solar farm components of the three NSW sites completed
commissioning during the period and are operational. The
construction of the co-located BESS on these sites has begun and is
progressing in line with expectations.
UK flexible power with carbon
capture and reuse (CCR) asset:
· A
major milestone was reached post-period for the 10MW asset with the
successful completion of a series of hot commissioning tests of the
four Rolls Royce 16V engines. These tests were conducted by
Landmark Power, Yellow Power and Rolls Royce MTU under the
supervision of National Grid Energy Distribution. The testing and
commissioning process took two weeks during which the units
successfully generated power to the grid.
· The
testing and integration of the CCR element of the asset is still on
track to be complete in H2 2024. All key equipment, including the
ASCO CO2 scrubbing units and exhaust piping, are on site and
installed.
Brazilian solar PV
assets:
· Three
of the remaining six solar sites have entered the final stages of
construction, with mechanical completion for two of them expected
in H1 2024. The third site is expected to reach mechanical
completion in H2 2024.
· Sites
in operation have undergone technical, commercial and operational
ramp-up adjustments, with underlying financial performance in line
with expectations.
Foreign exchange
During the first quarter, GBP
weakened versus USD by 0.84% but strengthened against BRL and AUD
by 2.49% and 3.69% respectively. A net strengthening of GBP against
the portfolio currencies resulted in FX losses. The Company hedges
the short-term distributions from investments from local currency
to GBP.
Sustainability Update
· A
total of 52,395 tonnes of greenhouse gas emissions were avoided in
the first quarter of 2024.
· A
total of 340,965 MWh of renewable energy was generated from the
portfolio over the same time period, equivalent to over 126,000
average UK homes powered annually.
· Almost
5,789 tonnes of sulfur were avoided in the first quarter,
attributable to the US terminal storage assets.
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 Partners LLP (Investment
Manager)
Navin
Chauhan info@victory-hill.com
Deutsche Numis (Corporate Broker)
David
Benda
+44 (0)20 7260 1000
Matt Goss
Apex Fund and Corporate Services (UK) Limited (Company
Secretary)
ukfundscosec@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 have 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