Gore Street Energy Storage Fund Plc (GSFL.XC) Earnings Call Transcript & Summary

Good morning, and welcome to the Gore Street Energy Storage Fund plc Interim Results Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Alex O'Cinneide. Good morning to you.

Good morning, and thank you all for joining here on this cold winter morning. We're happy to present the interim results for the last 6 months ending 30th of September. There is 5 of us here from the Manager and from the Board. So very pleased to welcome Angus, who will be our new Chair of GSF from the 19th of January, but has already joined the Board. He has some words at the end of this presentation. I'm also joined by our colleagues, John, Alicja and Alan in this presentation, and Paula will help moderate as well. So a full team here from Gore Street to take you through the interims. So first, let's start with some key metrics. We'll go into some detail on these, especially in John's section, but a few of the metrics to call out. So NAV per share, just over 90p. This is a decline. We'll go through the drivers of that decline. But in essence, they come down to the energy research houses curves for California, Texas and GB being lower than previously. Gore Street, through our 8 years of being in a listed vehicle, works with multiple energy research houses, takes their mid-case curves, takes the average of those and uses them to update the valuation. And so here, we see what is, in essence, driven by a victim of the success of energy storage, so a large build-out of storage in Texas, California and GB leading to a declining revenue over the medium term, and that's reflected here in this NAV of 90.1p. Annualized dividend yield, 8.5%. And so then on top of that, then we have our gearing at 18%. We're on target for the gearing level. We operate a very low geared environment, which we believe is in keeping with the merchant asset class. And that's delivered just under GBP 17 million of revenue for the period and just under GBP 9 million of EBITDA. Operational capacity as we leave this period, 643 megawatts. That has done so on the basis of a 94% availability, so a market-leading availability for our fleet. And during this period, all the construction assets were energized or made operational. So we're very pleased with that performance to bring up what is a complex worldwide portfolio. We've also started augmentation of the key GB assets. Alicja will go through in some detail how we've approached that. We have picked a period to undertake that augmentation, which is very advantageous to us given what we've seen in very significant CapEx declines. With monetization of the ITCs, we received our second payment of the ITC, and we monetized them above the guidance. So we're very happy with that result, and we will look forward to that ITC being released in the early new year. We also have a real quite differential thing in terms of the Middleton asset in working with the U.K. government on their long-duration tender. Alicja, again, will talk about that, but that is a potential game changer for our GB portfolio and the Middleton asset in particular. Next slide, please. A word then just to remind you on the portfolio. A very diversified portfolio, 500 megawatts in GB, 300 megawatts on the Island of Ireland, 200 megawatts in California, 145 megawatts in Texas and then a small asset in Germany of 20 megawatts. Total capacity is 1.16 gigawatts, so a very large portfolio, well diversified, diversified not only in location. And so we benefit from a high level of -- a low level of correlation between these individual markets. What revenues we receive in California is uncorrelated to our revenue in GB. A high level of diversification in terms of suppliers. So we have a fleet of assets, which have been utilizing different flavors of lithium-ion technology from different suppliers and so well diversified there. Also well diversified in terms of duration. So we have built these assets for the available revenue opportunity in each of these markets. And then finally, this portfolio is delivering, I think, best-in-class revenue. So we are trending above our peer group across these markets. And our internal function has also trended above the baseline for what revenues are available in the markets that we are trading these assets. So I think a very strong portfolio, one that is absolutely operates in a market where if there is more storage built out, available revenues will decline against the correlation of solar and wind, and we can see that in big build-outs of storage in the Texas and California market. But it is a portfolio that also benefits from a high level of contracted revenue, especially from our Californian asset with the RA contract. Just in terms of the structure of both the entity, but also this presentation, we're very pleased to have Angus join us for this presentation representing the Board. GSAM, the Investment Manager, John will go through the report on that. Commercial manager in terms of the actual portfolio assets, Alicja will take you through that report and then Alan in terms of the optimization and how we are maximizing the revenue from this portfolio. John?

Good. Thank you, Alex. So moving on to Slide 7. What we've illustrated here is a time series of revenue per megawatt by grid, which you'll see shows the inherent volatility within the asset class through the quarterly revenue trends per megawatt across the different grids in which we operate. So the dotted line represents the weighted average revenue across the portfolio. And as you can see on the far right-hand side of the chart, the overall revenue level remained low this quarter at around GBP 17,000 per megawatt per quarter. This itself represents the second lowest level on a quarterly basis we've seen since September 2020, which is a period, you may recall, was followed by a strong recovery, which you can see in the graph as well. So out of the 575 megawatts average capacity in this quarter, in terms of contribution, Great Britain accounts for approximately 40% of our capacity. And while GB revenue was low this quarter, the impact was, of course, mitigated by our diversification strategy. We did see strong contributions from Germany at around GBP 40,000 per megawatt for the quarter and Ireland at around GBP 30,000 per megawatt for the quarter. And those are shown by the light blue and dark blue bars in the graphs. Conversely, Texas at kind of below GBP 10,000 per megawatt for the quarter, represented in yellow, remained lower than the GB market in this period. And it's worth noting the benefits of the noncorrelated portfolio. So for example, back in September '23, when Texas delivered record highs of any given grid at around GBP 140,000 per megawatt per quarter, Germany was performing at roughly half its current level. So just to reiterate that point in terms of it being a cyclical market as we were. While we can't diversify away all market volatility, the chart does demonstrate the resilience of the geographically split portfolio. From a macro perspective, just to touch on, the grid continues to require support from storage. We're seeing, for example, growing demand from data centers and AI, which are causing large or huge load fluctuations and grid stress. And then we've also got initiatives such as Ofgem's LDES scheme, which Alicja will touch on later, which also confirms long-term macro requirement for the storage as an asset class. But I guess, broadly speaking, volatility and new project entries continues to impact the short-term supply and demand balance, which may continue. We're also cognizant that falling CapEx costs can lower revenue levels for incumbent storage assets as cheaper competition does enter the market. However, we're actively mitigating this impact. And we're also leveraging this lower CapEx environment to augment our existing assets at lower cost, which has always been kind of our viewpoint as to kind of where we saw the option to actually augment systems when the time was right, that is, when the most appropriate CapEx intersects with the business case for longer duration. We also, again, as I mentioned, talk about the advancement of Middleton towards the second phase of LDES, which stands to significantly transform the GB portfolio's profile if successful, and that would also increase the duration and percentage of contracted revenue across our fleet. So moving on to Slide 8. I'd like to just summarize our strategy to navigate some of these conditions. So our first pillar is diversification. So we're successfully mitigating downward revenue trends in GB by entering in such a market as just covered. In California, our Big Rock asset became operational at the end of August, and we expect full quarter contributions going forward. Importantly, this entry also increases our share of contracted revenue through the resource adequacy contract, which is in place in our CAISO project, which we secured last year and has been kind of in place since the summer. And again, just to touch on the LDES option for Middleton, it would provide significant revenue stability and potentially allow for more efficient project-level debt structures in place if we secure the LDES scheme at Middleton. Alan will also touch on this later, but our focus remains on outperforming the market average. So our GSAM trading team has consistently demonstrated against the Modo benchmarking GB. On the second pillar, which is capital structuring, we look at our current liquidity position on a practical standpoint. So we don't have sufficient cash to fund every potential augmentation or preconstruction project immediately, but we are actively looking to recycle capital. So we intend to sell or co-invest in some of the preconstruction assets, which we've already announced to the market. We've also successfully monetized our U.S. ITC above guidance. So these proceeds have now all been received, and the final tranche is being currently held in a lender-controlled account, and it will be released once kind of standard project financing conditions have been met. The monetization of the ITC was above the guidance from last year despite some unhelpful headwinds from the Trump administration throughout the past 12 months. And as mentioned, it's all now being received across the 2 projects, Dogfish and Big Rock. Finally, consistent with the merchant nature of our asset class, we've also shifted our dividend policy to be supported by underlying cash generation of the portfolio. So it's also aligned with strategic use of leverage to, for example, increase duration in the existing assets in order to improve cash generation profile going forward. The Board has declared a dividend of 0.69p per share as announced today, and that is calculated based on the total fund earnings for this period. So moving on to the next slide. I think we've already talked through a lot of these points in the previous slides, but just this details the execution of the strategy. So I won't repeat a lot of the aspects again, but just highlight a few of the operational achievements. So within GSAM, we successfully entered the ERCOT market this period, onboarding 3 assets. And when it got introduced, the new battery-specific bidding mechanism just a few weeks ago, this is the big change in bidding mechanism, and our team implemented this successfully from day 1. We're also looking and working on OpEx reductions by using a data-driven approach, and Alicja will go through that in more detail later on. On the development side, we brought the Big Rock and Dogfish projects online this year. We do continue to face some challenges with NDB in terms of kind of full operation, but our construction team is working hard, obviously, to resolve this. And then more recently, we also signed augmentation contracts for Stony and Ferrymuir at the lower end of our CapEx guidance. So that's a target COD of Q3 2026. Just mentioned the 0.69p dividend based on the this year's kind of interim profits. And then additionally, the revised investment manager fees are now 50% linked to market cap, which came into effect from October 1 this year. And lastly, on capital structure, just to point out, we've also, as part of the initial ITC proceeds, received Big Rock for the first tranche, which was half of the proceeds on signing. We reduced our U.S. debt facility by $30 million, and we're now also looking to replace that current facility with a longer-term project finance facility, which is linked to the underlying more contracted revenue profile. So moving on to financial highlights on the NAV bridge. So over the past 6-month period, there was an 11.7p decrease in NAV, which was largely driven, as you've heard, by decreases in revenue curves across the GB and U.S. markets. Our NAV per share has decreased from 102.8p in March to 90.1p in September. And this does represent the most significant movement in a single period since IPO in 2018. So if you look across the bridge regarding underlying portfolio returns, as discussed, revenue levels were subdued, which resulted in a return of 1.5p for the period. The primary driver of the NAV reduction is 10.2p negative from revised revenue assumptions, which I will go into further detail on the next slide. Regarding discount rates and OpEx, we saw a 1.4p reduction here, and this reflects a combination of higher discount rates in the U.S., which was kind of largely offset by our ERCOT and CAISO assets becoming operational, which the kind of corresponding increase in discount rate to account for the market volatility was offset by the relevant and relative project progression through to energization and operation. And then we've also in the updated OpEx forecast based on actuals as well. Fund expenses, this is negative 1.2p. This includes plc expenses and plc level debt interest. And then finally, 2p was paid during the period, which covers the quarters ending December '24 and March '25. So moving on to some of the specifics on the revenue forecast. So obviously, this is the key NAV driver as discussed. Consistent with our methodology, we've continued to utilize third-party forecasters and use the mid-case revenue curves for the long-term forecasting of each of the assets in each of the markets. And in many cases, we actually use more than 1, sometimes 2 different third parties and take the average of those when coming to our view for long-term forecasts. However, for the near term, where we've got better visibility through our kind of trading teams, we do adjust some of those, and we have made those changes. In GB market, the curves have actually moved down compared to the March period in general. While Elder scheme can support the Middleton project, we anticipate it will also drive the general increase in solar capacity in the GB market. So that can place pressure on merchant revenues for some of the shorter duration assets, which has led to a suppression in the longer-term viewpoint. In the U.S., we've also got a downward revision, which is primarily driven by near-term factors. In California, we're seeing saturation in ancillary service markets and lower wholesale spreads due to the reduced volatility and milder weather. And again, in ERCOT, similarly, mild weather has led to lower spreads and also increased solar capacity has also reduced some of the scarcity pricing events, which we saw kind of in the initial years we entered the Texas market. And resultingly, unfortunately, for both CAISO and ERCOT, the revenue level is lower than how we'd originally anticipated. However, we have made -- compared to the third-party curves, we've also reflected that. So for the first 2 years from '26 to '27, we've taken a cut to those revenue curves manually in order to reflect kind of where we see the market from the point of view of kind of the current market conditions and then revert to the longer-term trends received by the third-party forecasters going forward. If we look at the NAV assumptions, this slide outlines the other key assumptions. So they're relatively minor points on the NAV bridge, which are summarized. So on inflation, we made only very minor adjustments on inflation assumptions, again, using third-party data and forecasts. And that was a negligible impact on the NAV for the period. On discount rates, the weighted average discount rate is now 10.2%. And then as I mentioned before, while we reduced discount rates for assets like Big Rock and Dogfish reached operational status, we did increase the overall U.S. discount rate by 25 basis points to reflect market volatility, which effectively netted off the COD downwards adjustments. On sensitivities, if you can look at the chart, you'll see around 1% change in inflation of discount rates has a symmetrical impact of approximately kind of 12p to 13p per NAV. And then other sensitivities, obviously, with FX, roughly 40% of the portfolio is in GB. And then Northern Irish assets are also earning GB revenues, but this is linked to euro-denominated pricing. So a 3% FX move impacts NAV by roughly 2p, just over 2% of NAV, which is in line with the 60% international composition of the portfolio itself. On EPC, the sensitivity, plus or minus 2.4p captures the impact of the preconstruction assets and also augmentation CapEx and some of the remaining milestone payments, which we are making on some of the assets which have recently been commissioned. So moving on to the next slide, 14. So I just want to reiterate on this slide our consistent valuation methodology. So as I said before, we use a blended mid-case average. And as we've maintained limited leverage, our NAV valuation swing is significantly lower than within the kind of the wider storage investment trust sector. So we've also added kind of a peer comparison on this graph to just show how that NAV has been generally consistent across the piece and not being subject to kind of upwards and then downwards adjustments over time. We've consistently applied a DCF approach to valuing projects. So for the preconstruction portfolio, this has generally resulted in projects being held in line with costs. The graph here compares our NAV history, which is in orange against a peer in dark blue. And even with the NAV drop of 10p in this period, the variance in our NAV from peak to trough is, as I said, relatively lower. And then we've also added here the light blue dotted line, which illustrates our theoretical NAV had we stopped paying dividends in late 2023, like some of the others in the sector. And this, I think, just reiterates even more kind of stability across the NAV process. And this demonstrates further resilience of our valuation approach. So moving on to diversification of revenue sources. So this breaks down our revenue by market. The total revenue for the period was around GBP 16.7 million or just around GBP 8 megawatt per hour. GB generated GBP 6.7 million, which was around 40% of the total. And please note that ancillary services here includes trading revenue as well as our GSAM platform trades these seamlessly. And it's not possible to distinguish between which energy charge or discharge is due to pure trading or due to ancillary service dispatch. In Ireland, we contributed GBP 3.9 million. And this was mostly ancillary service market revenue, but there was also an element of wholesale trading revenue as well. And then the remainder of 30% comes from our international assets in Texas, California and Germany. This includes the initial contribution from California, which started in August and also Dogfish in Texas, which started at the end of May. So not full contributions for the half year in terms of full run rate. We did expect, as I mentioned, the larger merchant revenue and earlier RA contribution from the Big Rock assets. But as we will run through later, due to lower peak demand and lower day-ahead spreads, this has been kind of captured in the current results -- but yes, and it's fair to say the U.S. contribution from assets has been lower than we had anticipated. While the U.S. contribution was lower, our contracted revenue is increasing. So this includes capacity markets in GB and Ireland, the RA contract in California, which are shown in yellow on the graph. The DS3 capped contract is also a fixed price contract in our Irish portfolio, and this is captured in the ancillary service blue bar as well. So currently, the contracted revenue is in the mid-20% range for the portfolio. So while the uncontracted revenue in California is currently low, the high percentage of our contracted RA provides a strong floor against further downside. I think what I'd also kind of point out in terms of the contracted nature of capacity market and RA, these are not floors and tolls where you can effectively hand the keys over to another optimizer. This is fully stackable with other kind of merchants. So you get the benefit of the merchant upside alongside these contracted revenues as well. So we do continue to monitor tolling and floor agreements. But what we've seen to date is that tolling revenue offers we've had are lower than what we are achieving in the merchant model to date. And then regarding floors, you've got a route to market commission with the floor, which is significantly higher than a commission without the floor or the floor level itself is too low to be meaningful. So at the moment, we've not taken any tolling contracts or floor contracts, but we do kind of appreciate investors' preferences on stability of revenues. So we always continue to monitor these opportunities. And as we've mentioned earlier, LDES or Middleton is one option where there's a significant kind of cap on floor contract potential and for that asset. And then on to Slide 16. This provides a consolidated view of the bridge from revenue to total fund earnings for the period. So having taken investors' feedback, one of the most important was transparency for consolidated P&L rather than plc standalone accounts. This has been disclosed or included in previous disclosures, but we've tried to make the consolidated P&L more accessible or visible in the graph or bridge like this. So on the revenue, we start with the GBP 16.74 million, which is top line revenue. This revenue, to be clear, does not include any delay liquidated damages or capacity market revenue from assets which have not yet hit COD. Revenue-related cost of GBP 1.7 million is route to market optimizer fees and energy costs. They are generally variable costs except for some minor items. Operating costs of GBP 4.7 million includes O&M fees payable from SPVs to EPC, and they're also mostly fixed except for ad hoc ones such as spare parts or repairs. Admin costs of GBP 1.1 million include SPV admin costs and insurance costs. And just to point out, we've achieved roughly GBP 600,000 in insurance savings thanks to our data-driven site monitoring, which we can explain again later on. The dark blue bar of GBP 1.67 million adds back the liquidated damages and pre-operational capacity market earnings. And just to point, to be prudent, we've not included all LDES receivable, which we expect to receive in this number. So we're entitled to a significantly more amount than this. And also just to point out, the CM revenue from the pre-COD assets are included in this bucket as well. Moving across, the GBP 3.6 million cost is an expense at the plc level, including AFIM fees. And then finally, the GBP 3.01 million in debt costs, that includes as well as the plc costs from the RCF at the topco. It also includes interest on the U.S. facility following the COD of Big Rock in August as well. So this results in total fund earnings of GBP 3.5 million, which effectively covers the dividend declared of 0.69p per share. And just finally on my side, so closing on the Slide 18. This is regarding our second strategic pillar on capital recycling. Just on the kind of left-hand side, we look at the key metrics. So we maintain a cash balance of GBP 50.5 million as of September end, and we also have GBP 41.7 million in undrawn debt capacity, which is to fund our strategic growth. So just to clarify, that GBP 50.5 million includes the benefit of the second tranche of ITC receipts, which we received during September. And then we've subsequently received a third tranche in November, which is not included in this number because that was post-period end. And also post-period end, we also did pay out the 1.5p special dividend in relation to the second tranche received. So just want to make that clarification. So to fund our strategic growth, obviously, we have appointed sell-side advisers for the sale of the German asset Cremzow and some of the other preconstruction projects. As I mentioned, during the period, we monetized ITC proceeds for both U.S. projects. Dogfish proceeds were received upfront when the agreement was signed. And Big Rock, as I mentioned, received in tranches 50% upon signing, which went to pay down some of the project level debt at Big Rock down to $60 million and then 2 further tranches of 25% each. And as also referenced, the ITC -- the final proceeds have been received and currently sitting in the restricted account at the U.S. level, and that is pending the satisfaction of certain project financing conditions, which we're looking to satisfy as soon as possible. And once done, that will trigger the payment of the final 1.5p dividend.

Thank you, John. Alicja.

Thank you Alex. Let's kick off with just a look at the developments in our operational markets, please. So looking at -- starting with Texas. So Texas has been behaving in a way that effectively has rolled out revenues below expectations, especially definitely below the performance that we have seen in 2023, underlying the nature of that market being very driven by scarcity and specific patterns that correlate and bind weather as well as available generation margins on the Texas network. So generally, Texas over the past couple of years has seen quite high availability of generation. So ERCOT has procured additional level of resource margins, and we also have seen generally milder summer weathers that not only increase the availability of generation as gas peakers tend to shut down in hotter weather, but also has seen lower load growth and load levels. And that just creates less availability of scarcity events that is also combined with generally lower gas prices. Moving on to GB. So GB, we have seen year-on-year growth in terms of revenue. If we were to compare the same period of 6 months of 63%, that specifically has demonstrated itself in decelerated revenues and generally just alignment of ancillary services prices with available opportunity in wholesale markets as well as general policy implementation. So we have seen alignment of non-BM asset with BM assets through ABSVD inclusion, but also inclusion of non-BM assets into quick reserve, which generally highlights the trends that batteries are needed and are becoming more and more fairly remunerated by the policymakers and NESO. Moving on to Germany. So in Germany, we have seen similar trends as in previous years. So summer generally has got strong revenue performance where operational gas peakers generally tend to be moved out of the value stack during those solar hours, and they recoup their losses in the evenings through increased prices in ancillary services, and that is something that drives the levels of revenue in Germany. In Ireland, generally, the levels of renewable generation satisfying the load on the network, which is the SNSP metric has seen consistent level even during summer, hence a strong performance in that market. We are also looking and observing policy changes in Ireland that should further sustain revenue levels for batteries. One of them is the scheduling dispatch program, which will support batteries in more efficient trading in wholesale markets and also prepare the market for slow phaseout of the DS3 program, which is now expected towards the end of 2027. In California, generally similar signals as in Texas. So particularly, California is subject to the same low levels of gas prices that drive the revenue opportunity, the merchant revenue opportunity. However, the market is also very driven by solar penetration, and we see that effectively during summer peak hours during the day, there are zero prices in the wholesale merchant followed by strong ramping levels in the afternoon supported by gas. However, low gas prices just drive those revenue delta during the day to lower levels, decreasing the overall opportunity for batteries. Next slide, please. In terms of operational portfolio, we're very pleased to report bringing online Big Rock assets and also Dogfish assets. So flagship asset in California, Big Rock, the huge effort from the team to bring that asset on time and began operating late April and access resource adequacy contract from 1st of August, complex asset in a complex market. However, it has been brought online on time and now successfully generating. And similarly, Dogfish as well, an asset that has been brought without any delays to energization or COD and now operating also from spring this year. Enderby is an asset that we're still working towards bringing all of the revenues to operational stack. So Enderby sitting behind tertiary connection. It has a more complex network in which it has to comply with grid codes. And that requires more fine-tuning from the control systems to be able to access all the fast-acting ancillary services. Hence, we are still working towards enabling the full stack for Enderby. In terms of operational portfolio and asset management, the team has been focusing the past 6 months on rolling out our data platform, so our analytics tools that allow us to increase our availability of the portfolio, but also be able to respond faster to any sort of downtime, any sort of faults that the assets display, but also be able to escalate more efficiently to our O&M partners. And that all leads to our ability to increase availability and decrease costs on the assets. This follows from an overall program that we have already implemented on the portfolio in the past where we have rolled out algorithmic prediction of potential thermal runway on the assets. And that has been recognized by our insurance providers as an enhancement to fire safety and allowed us to reduce our insurance costs by more than GBP 600,000 across the portfolio per year. Next slide, please. Finally, moving to an important development in GB. So we have now started off our augmentation program. We have selected 2 assets that have been effectively put into this program as the first ones. So Stony, 80-megawatt asset and Ferrymuir 50-megawatt assets. Those assets have been from inception designed to be able to allow a very fast augmentation program, which is only based on adding DC capacity, so only cells and does not interfere with any of the inverters capability or controls capability, which means that we are not interfacing with DNOs and grid. So that reduces the risk of overall augmentation complexity and allows us to, in 6 months, effectively from commencement to roll out, allows us to increase duration of those assets to 2 hours, and we expect them to come online towards autumn 2026. And the time is right because the CapEx numbers have been steadily declining to very low level, below 2022 levels that we have seen. And also, we can see a consistent trend of overperformance of 2-hour assets against 1 hour. So the timing is really correct, we believe, to do that augmentation now. Just touching quickly on the LDES program. So the team has mentioned we have now submitted our Middleton project, the largest GB project we have in our portfolio to LDES. This asset will be, if successful, a 100-megawatts, 8-hour system and if success, we'll secure a 25-year cap and floor program. And we believe that it has a very strong rationale to be awarded that contract sits at the critical boundary between Scotland and England and also is just next to Heysham nuclear plant that's being decommissioned next year. So we believe that there is a strong rationale to build out this asset, but also for it to be recognized by NESO and Ofgem as the right candidate for LDES program. Thank you. I'll pass on to the trading team.

Thanks, Alicja. Okay. So good morning, everyone. It's been a very good period for GSET's internal trading and optimization team. We onboarded a further 5 assets this period with 2 important milestones hit there. So in GB, we onboarded Kenon and Stony, Stony being the biggest asset in our portfolio now at 80 megawatts. And in ERCOT, we onboarded Snyder, Sweetwater and Westover. These were our first assets under management for optimization outside of GB. So that takes us to a total of 192 megawatts under management in total. So we continue to deliver really good performance with these assets. We have a 23% premium to the benchmark, the Modo benchmark in GB, and we're consistently delivering market-leading results for 1 hour assets in this market. Now we did see a slight dip in performance in September. This is mostly due to asset unavailability. We had some forced outages and also very subdued market conditions. I'm happy to say that post period, we are back on track. So October and November, we are seeing a return to kind of 25% performance over the benchmark, which is positive. In Texas, performance has been very good since we took over. I'm very happy with how the system is running those assets. Although as Alicja touched on there, we have seen market conditions have remained poor. And so revenue hasn't been exceptional. Now there are a couple of changes. One has just happened, one is coming in ERCOT, which I'm excited about. So the first is a rollout to a new system, RTC+B, which is real-time co-optimization plus batteries. And the key thing with this change to the market is the introduction of real-time ancillary service procurement. So we now can win contracts for 5 minutes, which are awarded pretty much in real time. So previously, these contracts were ordered at their ahead time and were for 1-hour contracts. This is very good for our system, which is highly algorithmic as we're naturally very dynamic in our approach. And so we can use everything in the battery for just a 5-minute period, and we don't have to hold ourselves out of the trading markets for that full period. So since the 5th of December when this went live, we have been taking a lot more ancillary service contracts than we had previously and filling the gaps where previously we'd be sat waiting for the prices to emerge. We also have an upcoming third party in ERCOT who are bringing an intraday market. So this is the first time it's happened in ERCOT. And then similar to kind of how we do it in GB, which we obviously have a lot of skill and a lot of experience with. So I think this is quite a big potential opportunity for us out in Texas, and we'll be making the most of that when it comes. I'm expecting it early next year. So just a final note then on the optimization software that we developed in-house. It has been very reliable, very little downtime so far since we put it in place. We always designed it with the idea that we'll be moving to new markets. So actually moving into the ERCOT market was relatively pain-free for us. It is a very different market structure, specifically with central dispatch and also a very different set of ancillary services. So the engine or the brain of the system is very different to what we do in GB, but it does use a lot of the same background systems that we built previously, which has been great. We are continually improving and updating the system and so far, I'm very happy with how it's performing. And this is actually really important to me because it means it gives me and the team the time and space to develop the system to investigate new ideas and to test and to push new improvements to the systems, which all in all enables us to maintain and increase the edge that we currently have in the market. So with that, I'll pass over to Angus to discuss the Board of Directors.

Good morning to you all. So the current Board has been in position since the beginning of this company when the company was only about GBP 30 million. It's obviously significantly bigger than that now. And so it was time for a refreshment of the Board. And we are in the middle of that process, although probably slightly over halfway in that Simon Merriweather there in the middle, joined just at the end of this reporting period. Norman and I joined just in the middle of October. So we've all been on a pretty steep learning curve, but we are excited to be on this Board and think we bring complementary skills and skills that will be good for you, the shareholders and also the company itself. There was a formal strategy review earlier in the year that didn't involve any of the 3 of us. And so we are going to continue to look at the strategy of this company. And I think that the main thing is to make sure that the key areas for shareholders and for the company as a whole, led by the Board, is to make sure that, a, the market understands what we're trying to do, what the manager is trying to do, but also to make sure that there is robust governance and governance that people can buy into. There is transparency, and you would have seen this morning that there's been a lot more transparency in the NAV bridge and things like that this morning, which is a good thing. But the main thing is just to make sure that this company has got a sustainable future with a proper investment case backing it up so that you, the shareholders, can support it and benefit from what is going on. I'm conscious of the time, so I won't go more than that. But other than to say that we are available, we are keen to help and keen to support the future and the upwards future of this company.

Thank you, Angus. So a few words just in closing before we hand over to questions. As the company sits today, we have strong liquidity. You would have heard John run through our balance sheet, also paying down debt while also continuing to pay dividends. And that is built on building these assets at the cheapest possible cost, building at the right time and not overlevering. Long-term upside. So though we witnessed for the first time actually in the 8 years of being public, a decline in NAV of this level, driven by, in essence, energy storage being very, very successful. So lots of storage getting built out in California and Texas putting pressure on revenues. But with a large percentage of contractual revenue, nearly 30% of the portfolio contracted, and a very strong perspective on optimizing revenue being driven by our own internal function, we see good upside in terms of rebuilding of that NAV. We also, of course, engage in understanding how best this portfolio is situated, a huge amount of work going into a diversification strategy, and we have here a portfolio which, against our peer group, is delivering much higher revenues in uncorrelated markets built on best cost of megawatt installed and built on a low level of leverage. But for instance, we have announced looking at disposing of our German asset, a 20-megawatt asset, as well as our preconstruction assets. And so whether that is full disposal or partnering with other players, we are open to in conversations with the Board and shareholders. Very focused on the unlocking of value. So very big focus now for the next year in terms of decreasing cost, increasing revenue, optimizing this portfolio over the medium to long term. And with that, I will hand over to take questions.

Thanks, Alex. I'll ask the team to be efficient in responding because there are a lot of questions, and we will start with the ones that were submitted during the slide presentation. Jean-Marc, he mentioned validation of NAV assumptions with real transactions. And [indiscernible] also asked that with some renewables investment trust failing continuation votes, could we expect some sort of fire sale? So Alex, can you comment on transactions within the sector, please?

Yes. I think there's 2 things there in terms of the fire sale. What I would say is where we have seen across sector trusts get into trouble, and it's where companies get into trouble, it is too much leverage, right? I'm very proud that we've built this portfolio while utilizing a best-in-class level of leverage. So we have invested in a portfolio. It is well diversified. It is built with a good price. We do not have too much leverage. So we do not have that type of kind of cliff in front of us. What we have is a portfolio which we need to optimize through cost and revenue. In terms of transactions getting done, it's a little bit of old news, of course, now at this point. But of course, we saw the Harmony transaction actually this year, though. So it's not that old, but it took place at the start of this year where transactions took place at NAV. We also see continuing flows into the sector. So we see kind of the large cap investors like Copenhagen Investment Partners, GIP, BlackRock, all making investments into this sector. So there's a lot of things taking place in the private markets, which is not reflective of the public market transactions. And that continued build-out really goes to the robustness of the sector. So for sure, lots and lots of transactions taking place in the private sector, continued flows of capital into it. But from our perspective, looking at this portfolio, it's about running it at the lowest cost, do not overlever it and to give us optionality in terms of disposals not necessarily to pay down debt, though we did pay down debt this year, but to look at where we can recycle capital for best return for shareholders.

Sandeep has asked the large reason for the value movement announced today is the power curves. Does the GSF business not rely on volatility in prices rather than the absolute level of prices. So the actual level of the curve should not impact NAV at this level. One for Alan or John, please.

So there's definitely a correlation between high prices and volatility. So when you see high prices, you tend to get volatility with it. Low prices tend to be set at the cost of turning down wind, which is 0 or negative. And so obviously, it's then the gap between that price and the high price that gives you the volatility. So the higher the prices tend to go, the higher volatility is. I think there's also -- the curves that we have aren't necessarily just power price curves. They are revenue curves for batteries. So obviously, that's just a direct result of the volatility. So that's probably the more important point.

Yes. Just to reiterate that, that's the fact that the curves we've shown are specific, best kind of forward-looking revenue curves. They're not power curves.

Thanks. Robin and Nick have both demonstrated frustration with share price, and they have asked directors and managers what will be done to mitigate or to decrease that gap between NAV and share price.

So I will give some answer, maybe Angus would like to jump in. But from a manager perspective, what we outlined in the end of the summer in terms of adding value to the portfolio, so point augmentations point now at a time of very low CapEx. So increasing our 1-hour portfolio in GB to 2 hours, and we believe adds significant value to the portfolio. Working to increase revenue above the benchmark, which we're very pleased to see that progress and success on, and of course, looking to lower costs in the overall portfolio. All of those things we're engaged very heavily, and all of those things we can point to real successes in, and we would hope that, that flows through into share price. I think if we look across to our peers, it seems to us that the benefit of the diversification, the higher revenue, the less debt have not been come through into the share price, and we need to keep pushing on those messages. In terms of actual mechanics around share price, I don't know if Angus and the Board have a comment.

Yes. Thank you, Alex. I mean we should just say that we're not alone in this and that the other similar companies also have the frustrations of large discounts at the moment. So there will be, to a certain extent, where the market takes us. But also, we just need -- as I said earlier, we need to be making sure that we are building a proper investment case. Part of that is how the assets are managed, and part of that is messaging. And so it's very important as far, as I can see, that we get both of those right. And Alex and the team are doing one of those. And I think that with a new Board and that sort of thing, we can perhaps help get the messaging right. There are, of course, some mechanics that we could do, and that will be part of our ongoing strategic thoughts, whether one buys back shares or not, which we haven't done to date, et cetera, et cetera. So one needs to see that. But one also needs to make sure that we're not going against the tide that can't be stopped. So don't worry. We are fully aware of the frustrations, fully aware of the issues involved, and we will be doing our best to close that discount over time. It's not going to happen immediately, but let's hope that it follows the good performance of the company.

Thanks, Angus. Steve Y is asking, and this is one for Alicja. If Enderby will be fully operating just next year, why then not include it for that operating from 1 hour to 2 hours on this priority portfolio?

So one of the reasons that we have not included yet Enderby is because it only has effectively started its operation. As I said, it's not fully onboarded to all the revenue streams, and that's a very important focus point for us over the next couple of months. And also Enderby generates a new asset. So we would like to see a certain amount of time in operation and cash generation before we include it in the augmentation program. Also, the augmentation program will be slightly different than the one for Stony and Ferrymuir. Stony and Ferrymuir have been built by Nidec, while Enderby has been built by Fluence, so the different technology augmentation. So it will be just included in a different augmentation program.

Bob M and Mark B have both asked about the dividend policy and what does that mean for future dividend expectation? Alex, Angus?

I can go first, if that's okay, Angus. So the Board set a dividend policy to pay dividends out of operational cash flow. It is, I think, worth noting that Gore Street throughout its history has continuously paid dividends while maintaining a low level of debt and building out this portfolio. So I think we should acknowledge that. We generated 0.69 to 1.4p of dividends -- cash available for dividends depending on how we count liquidated damages. And Board looked at the pure operational point of that to pay out this dividend. So that is the policy that is in situation. That is the policy that's been implemented this quarter. That's outside, of course, of the 1.5p from ITC, which the second tranche has been received.

I don't think I can add very much to that. But clearly, the revenue streams are a lot more than the actual dividend paid. And therefore, Alex talked about cost cutting and that sort of thing as well. So if we can squeeze it at both ends, then one hopes that we are now at a position whereby it can't get any worse.

There was a question that back in 2023, the company expected to triple its installed capacity. What went wrong for not achieving that? And I'll cover that one. In 2023, this company had 290 megawatts, 643 megawatt hour in operation -- and sorry, 290 megawatt-hour in operation. Today, it has 643 megawatts, 863 megawatt-hours in operation, which is factually tripling what was announced in December 2023. The next question from Pietro N. It's regarding a footnote for the NI assets and the JV distribution of those assets, considering there's a minority shareholder holding 49% of that, asking if that cash flow would have to be adjusted based on this equity stake. John?

No, that's already adjusted for the 49% stake. So that was applied from the 1st of April this year. So for the H1 September '25 is already kind of 51% contribution to GSF. The GBP 4.9 million, just to clarify, I think you're referencing is Ireland in total. So that's both NI and also PBSL, which -- PBSL is the Republic of Ireland asset, which is 30 megawatts, which we 100% own. So that needs to be kind of -- that to be taken into account. But I would say because NI is the kind of uncapped contract, which is far more lucrative than the PBSL contract, the majority of that GBP 4.9 million is attributable to NI anyway.

Thanks, John. David M. has asked: "you talk about peers, but who exactly are those priorities? Those are pure-play energy storage investment trusts, obviously, with Harmony no longer trading. So this will be great. Angus F had asked, "The upper end of revenue curve's assumption seems to have increased quite considerably for Northern Islands, ROI, Republic of Ireland and OECD. Could you please highlight what has led to these optimistic expectations? And what was the overall impact on NAV? John, I think this is for you as well.

Yes. I think the -- what we kind of set out in terms of the curves for Ireland, Germany, in particular, that the kind of net impact overall across the kind of NAV piece for this period is a relatively minor impact uptick. Again, in terms of where we derived the forecast from third parties, so those curves reflect those, and we didn't adjust those curves specifically. In Ireland, I'd say some of the -- kind of the changes are due to DS3 kind of policy being changed, whereby initially, there's an expectation that those DS3 revenues would only be up until 2024 when we initially invested, and those have been pushed out, I guess, to our benefit over time. So again, there's an expectation that those DS3 revenues, I think, have been pushed out again. So I guess that's one of the points on the Irish side. And in Germany, obviously, there's a kind of burgeoning market. There are some questions around kind of grid connections and difficulty in assessing new grid connections in the German market. And that's, I think, being reflected in some of the kind of curves as well. But as I said, in terms of NAV impact for those 2 markets, it isn't very material in terms of kind of how that's moved the needle. It's far more kind of related to the GB and U.S. kind of downward curves.

Thanks, John. Bob M have asked, "Are plc costs increasing or decreasing and what is anticipated? We also had a pre-submitted question about the GSE fees, the AFM and the CMA. Alex, could you cover those both, please?

Yes. So both are decreasing. So a full renegotiation of the AFAM fee this year, taking effect from the 1st of October, where we moved to a split between market cap and NAV. And so that will be a significant saving for shareholders over the coming years. In terms of then kind of what we would say pure operational costs in the SPV, that has also been decreasing quarter-on-quarter, and we're looking to have a significant decrease through the course of '26 on that as well.

Thank you. I'm conscious of time here, and there's still a lot of questions. We'll read a couple more, but do submit your questions to the IR e-mail if they're not covered today. Neil T asked and we have asked, there was a presubmitted one as well. You expect to pay the second ITC dividend before the end of 2025. That was before this announcement today. When are we -- do you expect this second tranche?

So we're glad to have received the second tranche. So it is in our U.S. bank. It is being held until 2 outstanding items, to be honest, with our lender, which are administrative rather than anything else. And I think it's fair to say that we are hopeful to complete those items in the very early new year.

Thank you. I will now hand back to Alex and Angus for any final markups and do submit your questions if they are not answered today to the IR e-mail and team.

Yes. Thank you, Paula. And yes, I reiterate that. Please do send any other questions. We'll do our best to answer them by e-mail. Hopefully, in this presentation, which has been a long presentation and a detailed one as we try and produce more and more information for the benefit of our shareholders around this portfolio. But thank you all for your time. And Angus, any closing remarks?

No, I think just to say thank you, extremely comprehensive from the team and thank you for taking the time to listen to them. [indiscernible]. Thank you. That's great.

Thank you very much all for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Gore Street Energy Storage Fund plc, we'd like to thank you for attending today's presentation, and good morning to all.