Harmony Energy Income Trust (HEIT) has announced its results for the financial year ended the 31 October 2024. The company’s NAV as at 31 October 2024 was £201.05m (88.52 pence per ordinary share), a reduction of 23.30% (26.89 pence per ordinary share) from the NAV reported as at 31 October 2023. The NAV total return over the period was -21.57%. The share price total return was 2.9% over the same period.

The company noted several key factors which affected the NAV over the six month period:

• lower revenue assumptions based on the latest revenue forecasts published by independent providers. The investment advisor pre‑emptively revised its revenue forecast downwards in January 2024 (prior to the release of updated third-party revenue curves). However, subsequent revisions were also made in April and October 2024. The revision to the forecasts captures a reduction in near-term electricity demand as well as lower commodity pricing between 2024 and 2029, amounting to a reduction of 21.11 pence per ordinary share.
• Increased operating costs and delays in construction of the company’s remaining projects, which in aggregate led to a reduction of 6.04 pence per ordinary share. The changes to operating cost assumptions relate largely to network charges, which are set by distribution network operators and are not within the control of the company.
• A reduction in discount rates as projects were revalued when they moved from construction into operations was offset by a 25 bps increase in discount rates applied across all projects, leading to a net reduction of 0.70 pence per ordinary share.

The share price return for the company continues to be very volatile with the manager noting that this recovered by circa 70% between February 2024 and June 2024 before stabilising at around 50 pence per ordinary share during the final third of the period. Post-period end, the share price has rallied further as investors have reacted to positive updates regarding the company’s asset sale process.

In what has been a challenging few years for HEIT, Norman Crighton, chair of Harmony Energy Income Trust, said: “This year has seen the company reach a key milestone, energising 235.8 MWh / 117.9 MW during the period and in doing so, making the portfolio 100% operational at an opportune moment to take advantage of an improving revenue environment during the first quarter of the current financial year. It has been encouraging to see the portfolio show resilience and perform well in a variety of economic and meteorological circumstances over the past 12 months. Increasing investment in BESS is an essential course of action in decarbonising the UK energy system and a crucial component of the nation’s net zero strategy.”

Commenting on the results and the outlook for the company, he noted:

“With 2-hour duration BESS continuing to demonstrate its ability to outperform shorter-duration peers in arbitrage strategies, the company and its assets remain well placed to capitalise on the continuing trends of greater utilisation of BESS and greater renewables penetration. Now that the portfolio is 100% operational, the company has a more secure foundation and positive outlook. If revenue levels going forward are in line with assumptions used in the company’s valuation models, the board would expect this to allow a meaningful covered dividend in relation to this financial year. However, the company (along with the wider renewable infrastructure listed sector) continues to trade at a discount to published NAV, impacting shareholder returns and limiting opportunities for capital raisings and growth. After a prolonged period of trading at a significant discount to NAV, the board considered all strategic options and proactively moved to maximise shareholder value by exploring the potential for one or more asset sales, with the objective of proving that the true fair market value of the assets is not fully reflected in the market capitalisation of the company.

“On 19 December 2024, the company announced that it was progressing to a final stage of negotiations with a preferred bidder on an exclusive basis and in relation to the company’s full portfolio. The company announced on 20 February 2025 that the substantial due diligence requirements of the preferred bidder had resulted in an extension of exclusivity until 10 March 2025. Both parties are continuing to progress towards the conclusion of a definitive agreement, which will be conditional upon shareholder approval. Should such an agreement be approved by shareholders, the company would seek to return net sale proceeds to shareholders via a members’ voluntary liquidation process as soon as practicable.

“The company is required to hold an AGM on or before 30 April 2025, and I look forward to engaging with our shareholders at that meeting. In light of the company’s asset sale process, further details regarding the date and location of the company’s 2025 AGM will be published at a later date. As set out in our prospectus, a continuation resolution will be put at that AGM if the sales process does not progress.”

HEIT : Harmony Energy Income Trust looking to put challenges behind it