NAV & Valuation Assumptions

Net Asset Value

 

The Company’s NAV is calculated quarterly and based on the valuation of the investment portfolio provided by the Investment Adviser and the other assets and liabilities of the Company calculated by the Administrator. The NAV is reviewed and approved by the Investment Manager and the Board. All variables relating to the performance of the underlying assets are reviewed and incorporated in the process of identifying relevant drivers of the discounted cash flow valuation.

 

Updates to Net Asset Value (“NAV”) assumptions

 

The Company has made the following updates to its valuation assumptions for the 31 December 2023 NAV calculation:

• Updated inflation assumptions to reflect the latest available third-party inflation data from HM Treasury Forecasts and long-term implied rates from the Bank of England for its UK assets.  For international assets, IMF forecasts are used.
• Updated power price forecasts capturing the latest available third-party advisor long-term power curves.

 The updated NAV assumptions are disclosed in the relevant sections below.

 

NAV Bridge

	NAV p/share	NAV
At 30 September 2023	108.3p	£640.0m
Time value	2.3p	£13.5m
Project actuals	(0.7p)	(£4.4m)
Power price forecasts	(3.0p)	(£17.4m)
Changes in short-term inflation	2.6p	£15.4m
Sale of Hatherden	1.3p	£7.5m
Cash dividends paid	(2.5p)	(£14.7m)
Capital movements (no net NAV impact):
–          New assets at cost	1.4p	£8.1m
–          Repayment of RCF using cash on hand	2.3p	£13.5m
–          Cash used to fund investments and repayment of RCF	(3.7p)	(£21.6m)
Other movements in residual value	(0.6p)	(£3.5m)
At 31 December 2023	107.7p	£636.4m

 

The movement in the NAV over the period was driven primarily by the following factors:

• Increase due to time value, reflecting the change in the valuation as a result of changing the valuation date, prior to adjusting for any outflows of the Company. The increase in value is attributable to the unwinding of the discount applied to cash flows for the period when calculating the DCF.
• A decrease in short-term (2023-2027) UK power price forecasts provided by Consultants, mainly as a result of lower gas price futures, influenced by above-average gas storage levels and milder weather across winter 23/24.
• The valuation incorporates the published inflation figures for 2023 which have been reflected in the ROC price announced for 2024/25, and revisions to short-term inflation forecasts from external third parties.
• Completion of the first phase of the Capital Recycling Programme through the sale of Hatherden.
• The dividends declared and operating costs incurred during the year.
• Other movements in residual value include changes in FX rates, Fund Opex, and other non-material movements.