Though their arithmetic eludes me. A reduction in NAV of £7.0m from £890.2m to £822.6m
https://www.investegate.co.uk/article.aspx?id=202211280700096950H wrote:Post the balance sheet date, the UK government has released details of the 'Electricity Generator Levy' ("the Levy"), through which it intends to capture what it sees as excess profits being made in the wholesale electricity market by low carbon generators such as wind and solar. This Levy sees in-scope generators pay 45% of revenues earned on prices in excess of £75/MWh. A £10 million per year allowance will apply, such that revenues below this threshold will be exempt.
This constitutes a non-adjusting post-balance sheet event as the Levy was not known at the balance sheet date. However, there was an expectation that some form of government intervention would be introduced, as well as a recognition that high near-term power prices may not be captured in practice by generators. In the face of such uncertainty, the Directors used their judgement to reduce price forecast curves used in the valuation by 50% across the portfolio for the next 12 months, with this percentage stepping down by 10% per annum to zero over the next five years. This was applied to all UK generating assets including Renewables Obligation Certificate and Feed-in Tariff supported generators and gas assets supported under the Renewable Heat Incentive. Using this approach, the Directors valued the portfolio at £890.2 million as at the 30 September 2022, which results in a NAV per share of 125.4 pence.
The Directors have now assessed the impact of the Levy and have also considered the latest available price forecast curves and actual inflation, as well as removing the discounts that were applied to forecast curves for the valuation at the balance sheet date. This has led to a reduction in the NAV as calculated for the 30 September 2022 of £7.0 million to £822.6 million and equates to a NAV per share of 124.4 pence.