Performance of REDSIDE funds in May 2023

Monthly reporting of REDSIDE funds for the period 5/2023

NOVA Real Estate

In May 2023, the NOVA Real Estate Fund's appreciation was 0.22%, and year-to-date performance is 1.71%.

As of the end of May, the real estate portfolio is 99.5% leased, of which retail is 99.8% leased, offices are 97.1% leased and the industrial hall in Trencin is full.

In Asset Management, we have successfully negotiated a three-year lease extension for the Penny Market unit in Ledec nad Sázavou, which is approximately 1,100 sqm in size.

The Panorama Business Center building welcomed a new tenant, Stapro, which leased 283 sqm of office space.

In June, we also connected a small photovoltaic project with a capacity of 8.5 KWp on the roof of our Anděl 16 building.

Report NOVA Real Estate

NOVA Green Energy Sub-Fund 1

The valuation of Sub-Fund 1 was 0.19% in May 2023 and amounted to 1.83% YTD for 2023.

In the Krnča biomass heating plant, Subfund 1 continues to take steps towards financial and operational stabilisation.

We believe that in the long term, the price ratios for wood chips and electricity will level out and these types of heating plants will continue to be profitable. However, the current market pricing of wood chips and electricity currently offers the possibility of only partially covering input prices. There has been a slight increase in the spot price of electricity over the last few days, but the price ratio of wood chips to electricity is still unfavourable and Sub-Fund 1 has thus decided to temporarily shut down/close down the CHP plant for the time being. The CHP plant will be reopened once the electricity, heat and woodchip price ratio is more evenly balanced in the longer term.

The two biomass heating plant projects, whose secured receivables also form the assets of Subfund 1, are facing similar price-operating problems as the Krnča heating plant, however, like the current management, we believe in the long-term prospects of the heating plants. A payment order has been filed and court proceedings have been initiated in Austria to recover the receivables from these two thermal power plants, with the first hearing set for October 2023.

With effect from 1 August 2022, Sub-Fund 1 does not formally plan to make further investments in new resources in view of the phasing out of its operations. On the other hand, it is focusing on the management and optimization of the assets falling under the "Side Pocket", with the aim of eliminating all risks and transferring these assets to Sub-Fund 2. Detailed information in the form of questions and answers regarding the fund split project has been published on the website of Sub-Fund 1 in the "FAQ - "Side Pocket" section.

Report NOVA Green Energy podfond 1

NOVA Green Energy Sub-Fund 2

The valuation of Sub-Fund 2 was 0.32% in May 2023 and reached 2.74% YTD for 2023.

In May, work continued on the development of several PV plants, mainly in the Czech and Slovak Republics. We received studies for 12 rooftop installations on the roofs of buildings owned by our sister fund NOVA Real Estate. These studies show that these 12 rooftops could be fitted with PV plants of up to 3 MWp. For investment in these PV plants we are considering investment subsidy support from a subsidy program of the Ministry of Environment or the Ministry of Industry and Trade. The remaining applications for connection of the plants to the distribution grid are being submitted, and discussions are currently underway with tenants on the purchase or sale of electricity at the site of PV production/installation. For some rooftop PV plants we are considering the use of innovative technologies such as integrated panel technology, where the panels directly form the roof covering, another technology under consideration is the flexible flexible panel, which stands out for its low weight.

Work on the PV pilot project on the roof of the Orlice shopping centre is progressing as expected and is slowly coming to an end. The installation of the panels and accessories has been completed and we are currently finalizing the connection to the grid together with the approval.

Again after several months - the last time it was about windfall tax, legislative changes are being discussed in the energy sector in the Czech Republic. In May 2023, an austerity package was introduced by the government with the aim of saving government expenditure, including on subsidies provided, including support for RES. Since the introduction, no further details are known to date, so it is not possible to assess the impact on the Fund's assets in the Czech Republic. This month, analyses and some information from the government have been published, which suggest that subsidies might rather not be cut, but that there could be a change in the financing of RES, whereby payments between small consumers and large industrial customers, who previously paid a lower fee for renewables than small consumers, would be aligned compared to the situation before the energy crisis.

In Slovakia, we have completed the replacement of inverters and accessories at one PV plant, which will result in higher generation efficiency in the main lighting season. The replacement itself was carried out "on the fly" and non-production hours were reduced to a minimum. In the autumn we will plan to replace the inverters at two more Slovak PV plants.

The Hungarian government has approved the extension of the capping of the main interest rate, on which the financing costs are based, until the end of 2023. This will help the financial health of our Hungarian PV plants.

Report NOVA Green Energy podfond 2