28 February
2024
Bluefield Solar Income Fund
Limited
('Bluefield Solar' or
the 'Company')
Interim Report and
Unaudited Condensed Interim Financial Statements
for the six months ended 31
December 2023
Bluefield Solar (LON: BSIF), the
London listed UK income fund focused primarily on acquiring and
managing solar energy assets, is pleased
to announce its Interim Report for the six months ended 31 December
2023.
The Interim Report has been
submitted to the National Storage Mechanism and will shortly be
available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Highlights
As at 31 December 2023/ 30 June
2023
Net Asset Value
(NAV)
|
|
Dividend Target per
Share
|
£831.3m
£854.2m
|
8.80pps
8.60pps (actual)
|
NAV per
share
|
|
|
135.95p
139.70p
|
|
Six
month period to 31 December 2023 / 31 December 2022
|
Underlying
Earnings1
|
|
Total Shareholder
Return2
|
(pre
amortisation of debt)
|
2.50%
6.98%
|
£43.9m
£51.4m
|
|
|
Total Return in
year3
|
Underlying Earnings per
share1
|
0.47%
4.38%
|
(pre
amortisation of debt)
|
|
7.19p
8.41p
|
Total return to Shareholders
since IPO
|
|
110.14%
101.59%
|
Underlying Earnings per
share available for distribution1
|
|
|
(post
amortisation of debt)
|
3.57p
6.26p
|
|
|
|
Environmental, Social and
Governance (ESG)
|
ESG
KPIs
|
Ø Forecast estimated annual CO2e savings of 176,000
tonnes (June 2023: 173,000
tonnes)
|
Ø Approximately 315,000 homes to be powered with renewable
energy ⁴ (June 2023:
288,000)
|
Ø Payments of approximately
£290,000 to community benefit schemes⁵ (June 2023:
£287,000)⁶
|
|
|
|
|
Construction and Development
Pipeline
|
· 93 MW under
construction
|
|
|
· 778 MW
approved
|
1.53 GW
|
· 305 MW in
planning
|
(968 MW Solar, 563 MW
battery)
|
· 355 MW
potential capacity
|
|
1. Underlying earnings is an
alternative performance measure employed by the Company to
provide insight to the Shareholders by
linking the underlying financial performance of the operational
projects to the dividends declared and paid by the Company. Further
detail is provided below.
2. Total Shareholder Return is
based on share price movement and dividends paid in the
period. It is defined in
the Alternative Performance Measure appendix.
3. Total Return is based on the NAV
movement and dividends paid in the period.
It is defined in the Alternative
Performance Measure appendix.
4. For a year, based on forecasted
annual generation.
5. During the 2023/24 financial
year.
6. Total community benefit payments relating to the FY 22-23 were
approximately £287,000, updated from £253,000 (as presented in the
2023 Annual Report & Financial
Statements).
Results Summary:
|
Six months ended
31 December 2023
|
Six months ended 31 December
2022
|
Total operating income
|
£5,077,465
|
£38,845,159
|
Total comprehensive income before
tax
|
£3,991,019
|
£37,642,084
|
Total underlying
earnings1
|
£43,936,028
|
£51,438,238
|
Earnings per share (per
below)
|
0.65p
|
6.16p
|
Underlying EPS available for
distribution2
|
3.57p
|
6.26p
|
Underlying EPS brought
forward3
|
9.53p
|
3.39p
|
Total underlying EPS available for
distribution4
|
11.46p
|
9.65p
|
1st interim
dividend
|
2.20p
|
2.10p
|
NAV per share
|
135.95p
|
142.40p
|
Share Price as at 31
December
|
118.6p
|
136.0p
|
Total
Return5
|
0.47%
|
4.38%
|
Total Shareholder
Return6
|
2.50%
|
6.98%
|
Total Shareholder Return since
inception7
|
110.14%
|
101.59%
|
Dividends per share paid since
inception
|
74.19p
|
65.59p
|
1. Underlying
earnings is an alternative performance measure employed by the
Company to provide insight to the Shareholders by linking the
underlying financial performance of the operational projects to the
dividends declared and paid by the Company. Further detail is
provided below.
2. Underlying EPS is
calculated using underlying earnings available for distribution
divided by the weighted average number of shares in issue through
the period.
3. Underlying EPS brought
forward is calculated using the number of shares in
issue.
4. Total underlying EPS
available for distribution includes £10m of RCF repaid in the
period to 31 December 2023.
5. Total Return is based on NAV
per share movement and dividends paid in the period.
6. Total Shareholder Return is
based on share price movement and dividends paid in the
period.
7. Total Shareholder Return
since inception is based on share price movement and dividends paid
since the IPO.
John Scott, Chair of Bluefield Solar, said:
"I am pleased to present another robust set of results which
reflect continued operational progress across the Company's
portfolio. I reiterate our full year guidance of dividend
distributions for the financial year of not less than 8.8pps
(2022/23: 8.6pps), which we expect to be covered approximately two
times by earnings, net of debt amortisation and the EGL. Based on
yesterday's closing share price, this provides shareholders with a
yield of over 8.5%. The position of the Company today is further
enhanced by its high levels of regulated indexed revenues,
complemented by high fixed power sales contracts, a large
development pipeline, a defensive capital structure and a robust
NAV.
"In the meantime, the Company is delighted to have formed a
Strategic Partnership with GLIL, providing a partner with whom we
can co-invest for the long term, spreading our capital resources
over a greater range of investors.
"Despite these compelling attributes, it has been
disappointing to note the Company's share price discount to NAV
widen, at times exceeding 25%. Meanwhile ample transactional
evidence adds further weight to the credibility of the Company's
valuation, which is in stark contrast to the share price. We remain
entirely confident that Bluefield Solar is well placed to perform
the task it has executed so well for over a decade, playing a
significant role in the continuing development programme that is so
clearly required to expand the UK's supplies of indigenously
produced green electricity, while creating compelling growth and
income for shareholders, with a total return of 110.14% since
IPO."
Analyst presentation
A virtual meeting for analysts will
be hosted by James Armstrong and Neil Wood of Bluefield Partners
LLP at 09:30am today, 28 February 2024. For details, please contact
Buchanan on BSIF@buchanan.uk.com.
A copy of the presentation is
available via the Company's website at https://bluefieldsif.com/
and an audio webcast of the presentation will also be made
available after 9.30am today.
For further information:
Bluefield Partners
LLP (Company Investment
Adviser)
James Armstrong / Neil Wood / Giovanni Terranova
|
Tel: +44
(0) 20 7078 0020 www.bluefieldllp.com
|
Deutsche Numis
(Company Broker)
Tod Davis / David Benda / Matt Goss
|
Tel: +44 (0) 20 7260
1000 www.dbnumis.com
|
Ocorian (Company
Secretary & Administrator)
Chezi Hanford
|
Tel: +44 (0) 1481 742
742 www.ocorian.com
|
Media enquiries:
Buchanan (PR Adviser)
Henry Harrison-Topham / Henry Wilson
|
Tel: +44 (0) 20 7466
5000 www.buchanancomms.co.uk
BSIF@buchanan.uk.com
|
Notes to Editors
About Bluefield Solar
Bluefield Solar is a London listed
income fund focused primarily on acquiring and managing solar
energy assets. Not less than 75% of the Company's gross
assets will be invested into UK solar assets. The Company can
also invest up to 25% of its gross assets into other technologies,
such as wind and storage. Bluefield Solar owns and operates a UK
portfolio of 834MW, comprising 776MW of solar and 58MW of onshore
wind.
Further information can be viewed
at www.bluefieldsif.com
About Bluefield Partners
Bluefield Partners LLP was
established in 2009 and is an investment adviser to companies and
funds investing in renewable energy infrastructure. It has a
proven record in the selection, acquisition and supervision of
large-scale energy assets in the UK and Europe. The team has
been involved in over £6.5 billion renewable funds and/or
transactions in both the UK and Europe, including over £1 billion
in the UK since December 2011.
Bluefield Partners LLP has led the
acquisitions of, and currently advises on, over 100 UK based solar
PV assets that are agriculturally, commercially or industrially
situated. Based in its London office, it is supported by a
dedicated and experienced team of investment, legal and portfolio
executives. Bluefield Partners LLP was appointed Investment
Adviser to Bluefield Solar in June 2013.
Corporate Summary
Investment objective
The investment objective of the Company is to
provide Shareholders with an attractive return, principally in the
form of quarterly income distributions, by being invested primarily
in solar energy assets located in the UK. The Company also has the
ability to invest a minority of its share capital into wind, hydro
and energy storage assets.
Structure
The Company is a non-cellular company limited
by shares incorporated in Guernsey under the Law on 29 May 2013.
The Company's registration number is 56708, and it is regulated by
the GFSC as a registered closed-ended collective investment
scheme and it is accredited as a Green Fund after
successful application to the GFSC under the Guernsey Green Fund
Rules on 16 April 2019. The Company's Ordinary Shares
were admitted to the Premium Segment of the Official List and to
trading on the Main Market of the LSE following its IPO on 12 July
2013. The issued capital during the year comprises the Company's
Ordinary Shares denominated in Sterling.
The Company makes its investments via its
wholly owned subsidiary Bluefield Renewables 1 Limited (BR1) and
has the ability to use long term and short term debt at the holding
company level, as well as having long term, non-recourse debt at
the SPV level.
Investment Adviser
The Investment Adviser to the Company during
the period was Bluefield Partners LLP which is authorised and
regulated by the UK FCA under the number 507508. In May 2015
Bluefield Services Limited (BSL), a company with the same ownership
as the Investment Adviser, commenced providing asset management
services to the investment SPVs held by the UK limited company
parent, which changed from Bluefield SIF Investments Limited
(BSIFIL) to Bluefield Renewables 1 Limited (BR1) in May 2022 to
facilitate arrangement of the new Revolving Credit Facility
("RCF"). In August 2017 Bluefield Operations Limited (BOL), a
company with the same ownership as the Investment Adviser,
commenced providing operation and maintenance services to the
Company and provides services to approximately 80% of the capacity
of the investment portfolio held by the Company as at period
end.
In December 2020, Bluefield Renewables
Development Limited (BRD), a company with the same ownership as the
Investment Adviser, commenced providing BSIF with new build
development opportunities in addition to arrangements in place with
the Company's other development partners.
In October 2023, Bluefield Construction
Management Limited (BCM), a company with the same ownership as the
investment adviser, commenced providing BSIF with construction
management services on the new build portfolio.
Please refer below for the details of Company's
corporate structure.
Chair's Statement
Introduction
The six months to 31 December 2023
("H1 23/24", or the "Period") have seen a further half year of
strong results for your Company. Although spot power prices have
softened recently, BSIF was the beneficiary of our Investment
Adviser's strategy of fixing prices up to 36 months in advance,
with the result that, despite irradiation levels some 13% below
those experienced in the second half of calendar 2022, our revenues
for the Period grew as compared with the previous year. West
Raynham (at 50MW our second largest generating asset) was
unavailable for the first three months of the Period, resulting in
an additional constraint on power production.
The Company continues to work on
its extensive development programme; as at 31 December 2023 we had
660MW under active development and 778MW in pre-construction,
comprising a mixture of solar PV and battery storage projects, as
well as some wind projects. Our ability to convert this pipeline
into electricity generating assets is significantly restricted by
current conditions in the capital markets, which make it difficult
for us - and most participants in the renewable energy sector - to
raise additional equity. In response to this constraint, the
Company has entered into a Strategic Partnership with GLIL
Infrastructure ("GLIL"), covered in more detail below.
After the Period end, we saw a
significant widening in the discount to Net Asset Value ("NAV") at
which BSIF's shares trade and this prompted the Board to announce a
share buyback programme, to which an initial £20 million has been
allocated. This will commence once the Company is outside the
current closed period, which ends with the publication of this
Interim Report.
The main features of the Period
under review are:
· The
Company announced signing a Memorandum of Understanding ('MOU')
with GLIL Infrastructure;
· Work
on the Company's development pipeline continued apace, with
planning consents being secured on 137MW of solar projects and 90MW
of battery projects, while the wider pipeline grew to approximately
968MW of solar and 563MW of battery storage;
· The
Group reduced the outstanding balance on its revolving credit
facility (RCF) by £10 million, resulting in a loan balance of £167
million as at 31 December 2023;
· At
the November AGM, BSIF's shareholders voted overwhelmingly in
favour of the continuation of the Company for a further five
years;
· The
NAV per share decreased modestly, to 135.95pps as at 31 December 2023 (30
June 2023: 139.70pps);
· BSIF's closing share price on 31 December 2023 was 13% below
the Directors' Valuation, resulting in a discount to NAV consistent
with FY22/23. (30 June 2023: 14%);
· The
dividend target for FY23/24 has been set at not less than 8.80pps,
up from the 8.60pps dividends paid in respect of FY
22/23;
· Consistent with that target, a first interim dividend for
FY23/24 of 2.20pps was declared on 26 January 2024;
· Following the end of the Period, the first phase of the GLIL
Strategic Partnership was successfully completed, with an equity
investment by BSIF of £20 million and £200 million from GLIL to
fund the acquisition of a 247MW portfolio from Lightsource
bp;
·
Post Period end one solar project of 50MW
received planning permission.
At the end of 2023, the Group's
total outstanding debt stood at £577 million, and its leverage was
41% (31 December 2022: £531.1 million and leverage was
38%).
GLIL Infrastructure
("GLIL")
GLIL, a partnership of UK pension
funds, invests into core UK infrastructure. It invests on behalf of
Local Pensions Partnership Investments, Greater Manchester Pension
Fund, Merseyside Pension Fund, West Yorkshire Pension Fund and
Nest, and has a £3 billion portfolio of infrastructure
assets.
In December 2023, BSIF and GLIL
announced a Strategic Partnership, consisting of three phases. The
first of these saw GLIL and BSIF acquire together a 247MW UK solar
portfolio of Lightsource bp, with the transaction completing in
January 2024. Phase 2 comprises a provisional agreement for GLIL to
acquire a 50% stake in a portfolio of more than 100MW of BSIF's
existing solar assets at a price which is in line with the
Company's existing valuation. The proceeds of this partial sale
will be used, in part, to fund BSIF's participation in the rollout
of its development pipeline and, as appropriate, to reduce
debt.
In phase 3, Bluefield Solar and
GLIL intend via the Strategic Partnership to commit capital jointly
to a selection of the Company's development pipeline, assuming
market conditions are supportive. The identified development assets
are expected to be grid connected over the next two to three
years.
Underlying Earnings and Dividend
Income
The Underlying Earnings for the
Period, before amortisation of long-term finance, were £43.9m, or
7.19pps, and
underlying earnings for distribution, post debt repayments of
£22.1m (3.61pps), were £21.8m (3.57pps) (December 2022: £38.2m).
Including carried forward earnings from June 2023 of 9.53pps, and
the £10m of RCF repaid in the Period (-1.64pps), the total funds
available for distribution as at 31 December 2023 were 11.46pps
(December 2022: 9.65pps).
From an operational perspective,
the Company's portfolio had a more difficult half year, with solar
generation c.10% lower than in the second half of 2022, caused by a
combination of significantly lower irradiation and shortages of key
components, which reduced plant availability. The Company's strong
financial performance reflected the favourable power sales
contracts struck at a time of elevated UK wholesale power
prices.
Valuation and Discount
Rate
The political turmoil seen in the
United Kingdom which came to a head in 2022 eased with the
appointment of Rishi Sunak as Prime Minister at the end of the year
and a more coherent series of measures relating to energy policy
emerged. Inflation eased, but sterling interest rates remained at
levels which seemed very high by comparison with the near zero
environment of the previous decade; Base Rate stood at 5.25% at
year end and the fifteen year Gilt rate was approximately
4%.
The Investment Adviser continues
to see strong demand in the secondary market for operating solar
portfolios. Recent prices seen in the market range between £1.20m
and £1.45m/MW. The first weeks of 2024 have seen close to 1GW of UK
solar capacity change hands at prices which imply valuation metrics
comparable to or higher than those currently employed by
BSIF.
Higher interest rates and the
inclusion of onshore wind within BSIF's portfolio caused the Board
to increase the portfolio discount rate from the 7.25% used in the
December 2022 Directors' Valuation; this was raised to 8% for the
valuations at the end of June, September and December 2023. As at
31 December 2023, the enterprise value of the Company's operational
portfolio is £1,149m (c.£ 1.28m/MW for the solar assets vs.
£1.35m/MW in June 2023).
Inflation
In late 2023, inflation in the UK
started to ease, though staying stubbornly at levels well above the
UK's inflation target of 2%, with December 2023's number standing
at 5.3%. At the first Monetary Policy Committee meeting of 2024 the
Bank of England opted to maintain Base Rate at 5.25%, suggesting
that the fight to tame price rises is not yet over. Since a large
part of our income grows with inflation, resulting from the
indexation provisions in our regulated revenues, increases in RPI
have the effect of boosting both our earnings and the valuation of
our assets.
Reflecting the latest economic
forecasts, as well as the transition from RPI to CPIH post 2030,
inflation assumptions supporting the Directors' Valuation are 3.5%
in 2024 (unchanged from June 2023) and thereafter 3.0% until 2029,
before dropping to 2.25%.
Power Prices
Russia's war in Ukraine continues
to affect energy markets, but as this conflict continues the world
adapts, seeking fresh sources of energy, new methods and routes for
its transportation, as well as alternative suppliers. Israel's war
in Gaza, which commenced on 7 October 2023, initially had limited
direct effect on energy markets, but of late that conflict has led
to the effective closure of the Suez Canal as Houthi rebels in
Yemen demonstrate their Palestinian solidarity by attacking
maritime traffic in the Red Sea, necessitating many lengthy detours
via the Cape of Good Hope. All of this results in extra costs,
longer journeys, pressure on shipping capacity and renewed
uncertainty concerning energy supplies.
The company's PPA sales strategy
is largely unchanged: approximately 90% of power sales prices are
fixed for between 12 and 36 months ahead, and BSIF went into 2024
with more than 78% of its merchant revenue sold forward to March
2025. The Board is confident that, post debt amortisation, it will
achieve a high level of dividend cover for the present and the 2025
financial years, taking into account both current and carried
forward earnings.
The Board and its
Committees
The process of refreshing the BSIF
Board continues. Following an exercise conducted by a Guernsey-based executive
search firm, I am delighted to welcome Chris Waldron as a
non-executive Director; he joined the BSIF Board on 1 December
2023. Chris is a Guernsey resident and has extensive experience of
financial markets and closed ended investment vehicles in
particular. With effect from 1 January 2024, Chris chairs the
Management Engagement and Service Providers Committee.
Paul le Page retired on 30
September 2023 and Libby Burne assumed his former role of chairing
the Audit and Risk Committee from 1 October 2023. During the
Period, a Remuneration Committee was established, chaired by
Michael Gibbons.
Share Buyback Programme
Post Period end, on 15 February
2024 the Company announced its intention to commence a share
buyback programme in response to the recent weakness in the
Company's share price and the excessive discount that the share
price represents to the value of the Company's assets. The Company
has made an initial allocation of £2o million for buybacks and
purchases will be accretive to NAV for continuing shareholders. It
is intended that shares repurchased will be held in
treasury.
The capital allocation policy of
the Company undergoes regular review, evaluating the relative
merits of further investment (into both new and existing assets),
the management of debt and returning value to
shareholders.
Conclusion
The Board is encouraged by the
continued progress made by your Company in the past six
months. From an operational perspective, most aspects of our
core business - namely the generation and sale of solar and wind
power - performed well, but it seems that for the moment no matter
how brightly the sun shines nor however hard the wind blows, our
share price is becalmed at levels which are significantly below net
asset value. While this has little if any effect on the
dividends we can pay, it constrains our ability to raise the new
equity capital needed to fund our further development. It also acts
to the detriment of shareholders who wish to exit and who have been
facing a discount of more than 25% to the underlying value of their
investment. There is ample transactional evidence of asset values
consistent with our latest Directors' Valuation of nearly 136pps,
so to see the Company's shares trading at close to £1 per share
suggests a serious disconnect between how BSIF is valued by public
markets and the prices being paid by institutional investors for
portfolios of solar PV and wind assets.
Your Board is delighted to have
formed its Strategic Partnership with GLIL, for whom the
arrangement provides access to an industry whose financial
characteristics meet many of the criteria sought by pension
providers, namely predictable long term cash flows with a high
degree of indexation and government support. For BSIF, we see in
GLIL a partner with whom we can co-invest for the long term, giving
us the ability to spread our capital resources over a greater range
of investments.
I remain confident that BSIF is as
well placed as any market participant to play a significant role in
the continuing development programme that is so clearly required to
expand the UK's supplies of indigenously produced green
electricity. For our shareholders, this offers the prospect of both
capital growth and rising dividends. We have already declared our
first quarterly dividend for the 2023/24 financial year, increasing
this to 2.20pps (2022/23: 2.10pps) and reiterating our guidance of
a full year dividend of not less than 8.80pps (2022/23: 8.60pps).
At the share price on 26 February 2024, this equates to a yield of
just under 9%.
John Scott
Chair
27 February 2024
The Company's Investment
Portfolio
[chart]
Analysis of the Company's
Investment Portfolio
[chart]
Report of the Investment
Adviser
Introduction from the Managing Partner of the Investment
Adviser
Bluefield Solar, and the listed
renewables sector more generally, have experienced share prices
remaining materially below NAV during this period under review and
into 2024. The irony for the Company is that its numbers are as
strong, on a range of measures, as they have been in its ten years'
history. It has circa two times dividend cover, high levels of
regulated indexed revenues, complemented by very high fixed power
sales contracts, a large development pipeline, a defensive capital
structure and a robust NAV. However, whilst the high performance of
the Company remains the same, the prolonged discount to NAV posed a
number of issues that have needed to be addressed by the
Company.
The discount in the share price
poses a multi-layered challenge to the Company. We need to keep
progressing the extensive pipeline of development opportunities,
otherwise there is the risk of a loss of value; we need to create
liquidity to reduce our RCF; and we need to address the discount to
NAV. Each of these challenges required a different strategy and as
such our response has been multi-layered. In December we announced
a Strategic Partnership with GLIL, the large infrastructure
investor, which addressed liquidity, the potential of debt
repayment and of progressing the development pipeline. The
agreement announced the following:
a. Phase 1 of
the partnership enabled Bluefield Solar to acquire a minority stake
in a highly attractive operational portfolio at an investment level
that used only retained earnings and did not increase the debt in
the Company. The agreement also has the option for Bluefield to
increase its stake, assuming there are available funds.
b. Phase 2 of
the partnership is a provisional agreement for GLIL to acquire a
50% stake in an operational portfolio currently owned by Bluefield
Solar, the proceeds of which we expect to use for paying down part
of the RCF and increasing our stake in the Phase 1 acquisition with
GLIL.
c. Phase 3
of the partnership is a commitment for GLIL and Bluefield Solar to
commit capital to a select group of development assets that are
expected to be funded and built over the next two to three
years.
In mid-February the Board
announced a share buyback programme to commence on the release of
the Interim Results in order to manage the discount to NAV. This
announcement delivers the third targeted strategy designed to
manage the short and long term challenges facing the Company. The
long term is so important as the Company has spent a decade
building a highly robust and durable financial model that has the
ability to deliver outperformance over the next decade as we have
delivered over the first ten years of the Company's life. The
Company's five core strengths are summarised below:
1.
Capital Structure: since
its 2013 IPO the Company has focused on a simple and deliberate
strategy of ensuring, outside of the Company's Revolving Credit
Facility, all debt within the structure is secured at portfolio
level with fixed interest rates on fully amortising terms. With a
current average cost of debt of c.3.5% on £410m of long-term
borrowings, the Company continues to be well insulated from today's
higher interest rate environment.
2. Power Sales Strategy: Bluefield Solar
focuses on fixing Power Price Agreements contracts at the short end
of the power curve (6-30 months), through competitive tender
processes, enabling it to maximise value for shareholders from the
most liquid part of the power market. The result delivered record
full year earnings to 30 June 2023 and continues to support
expectations of a c.2x covered dividend (net of debt amortisation
and the EGL) for the year to 30 June 2024.
3. Active Management: In the context of
Bluefield Solar's portfolio this means a dedicated workforce of 130
within Bluefield Partners and Bluefield Services, split across
specialist teams covering investment, ESG, development,
engineering, construction management, technical asset management,
operation and maintenance and commercial with over 82 different
core responsibilities. These specialist units have been established
across a decade of operation to deliver an aligned, dedicated and
diversely skilled workforce to an increasingly complex
business.
4. Proprietary Pipeline: Since listing in
2013, Bluefield has been able to establish the DNA of the business
around accessing primary opportunities and no better highlight of
this is the 1.5GW solar and storage proprietary pipeline the
Investment Adviser has built up exclusively for BSIF. This presents
a highly attractive level of optionality for the Company, as it can
either build out these projects (funding permitting) or crystallise
value through strategic sales.
5. Capital Discipline: Since listing in
2013, a judicious approach to deployment of capital has been
paramount as periods of significant investment activity have been
combined with periods of restraint. This approach was at the
forefront of the structuring of the Strategic Partnership with
GLIL, which demonstrates the strength of Bluefield's reputation in
the sector and provides an alternative source of capital to allow
BSIF to continue delivering on its investment
objectives.
A lot has been achieved in a
challenging market and we believe that the actions taken can
address the issues at hand whilst allowing the Company's long term
ambitions to remain undimmed.
James Armstrong
Managing Partner, Bluefield Partners LLP
1. About Bluefield Partners
LLP
Bluefield was established in 2009
and is an investment adviser to companies and funds investing in
renewable energy infrastructure. Our team has a proven record in
the selection, acquisition and supervision of large scale energy
and infrastructure assets in both the UK and Europe. The Bluefield
team has been involved in over £6.7 billion of renewable funds
and/or transactions in both the UK and Europe, including over £1.3
billion for BSIF in the UK since December
2011.
Bluefield was appointed Investment
Adviser to the Company in June 2013. Based in its London office,
Bluefield's partners are supported by a dedicated and highly
experienced team of investment, legal and portfolio executives. As
Investment Adviser, Bluefield is responsible for the origination
and selection of investment opportunities, which are then proposed
to the Board of BSIF. Bluefield has executed over 200 individual
SPV acquisitions on behalf of BSIF and other European vehicles
through geographically dedicated teams.
2. Structure
The Company's corporate structure
is summarised below:
[chart]
3.
Portfolio: Acquisitions, Performance and Value
Enhancement
Portfolio Overview
As at 31 December 2023, the
Company held an operational solar portfolio of 129 PV plants
(consisting of 87 large scale sites, 39 micro sites and 3 roof top
sites), 6 wind farms and 109 small scale UK onshore wind turbines
with a total capacity of 812.6MW.
During the period to 31 December
2023, the combined solar and wind portfolio generated an aggregated
total of 376.05GWh (31 December 2022: 391.8GWh), representing a
Generation Yield of 462.8 MWh/MW (31 December 2022:
511.4MWh/MW).
Investment Approach and Acquisitions in the
period
The Company has taken a
disciplined approach to the deployment of capital since listing,
investing only when there are projects of suitable quality at
attractive returns to complement the existing portfolio. Rigorous
adherence to restrained capital deployment inevitably means there
can be periods where acquisition activity falls, even when sector
activity appears in contrast, but this controlled approach is
beneficial in driving long term, sustainable growth for
Shareholders, as evidenced by Bluefield Solar's record of sector
leading returns since listing over a decade ago.
[chart]
Note: the chart shows the position as at period end, prior to
investment into the Lightsource bp portfolio with
GLIL
In December 2023, the Company
announced a three phase strategic partnership with GLIL
Infrastructure, which envisages both parties investing together
into UK focused solar assets, from development through to
operational plants. The partnership will also facilitate
de-leveraging of the Company. Post period end, the Company
announced the successful completion of the first phase of the
partnership, with BSIF investing £20 million alongside £200 million
from GLIL to acquire a 247MW portfolio of UK solar assets from
Lightsource bp. BSIF's ownership stake in the portfolio is
9%.
The Company continues to progress
phase 2 of the Strategic Partnership, where GLIL has provisionally
agreed to acquire a 50% stake in a portfolio of more than 100MW of
operational UK solar assets currently owned by the Company.
The provisional acquisition price is in line with the
Company's current valuation and completion of the sale is expected
in the coming months.
Portfolio Performance and Optimisation
Solar PV Performance
In the six months to 31 December
2023, irradiation levels were 3.9% lower than the Company's
forecasts and 13% lower than those recorded in the previous year.
The lower levels of irradiation contributed to generation for the
6-month period being proportionately lower than expected, at
294.05GWh, equivalent to 390MWh for each MW of installed
capacity.
The solar portfolio achieved a Net
PR of 74.17% (FY 2022/23: 76.96%) against a forecast of
78.92%. This was caused by
short-term availability issues, primarily ongoing
supply chain challenges as seen across the
industry. The Investment Adviser is undertaking a comprehensive
programme to reduce reliance on certain supply chains through key
inverter repowering projects and the purchase of strategic
HV spares, more
information on which can be found later in this report.
Table 1. Summary of Solar
Portfolio Performance for H1 2023/24:
|
H1
|
H1
|
Delta
to
|
H1
|
Delta
H1 23/24 to
|
|
2023/24
|
2023/24
|
Forecast (%
|
2022/23
|
H1
22/23 Actual (%
|
|
Actual
|
Forecast
|
change)
|
Actual
|
change)
|
Solar Portfolio Total
Installed
|
754.2
|
-
|
-
|
707.76
|
+6.56%
|
Capacity (MW)1
|
Weighted Average
|
522.79
|
543.97
|
-3.89%
|
601.03
|
-13.02%
|
Irradiation
(Hrs)1,2
|
Total Generation (MWh)
|
294,048
|
323,769
|
-9.18%
|
327,377
|
-10.18%
|
Generation Yield
|
389.90
|
429.31
|
-9.18%
|
462.56
|
-15.71%
|
(MWh/MW)
|
Average Revenue
|
261.47
|
259.70
|
+0.68%
|
180.96
|
+44.49%
|
(£/MWh)3
|
Notes to Table 1.
1. Periods of irradiation where irradiance
exceeds the minimum level required for generation to occur
(50W/m2)
2. Excluding grid outages and significant periods
of constraint or curtailment that were outside the Company's
control (for example, DNO-led outages and
curtailments)
3. Average Revenue includes all income associated
with the sale of power, all subsidy payments, liquidated damages
and insurance claims amounts. ROC recycle revenue is included
assuming a 10% recycle rate for both Actual and Forecast
Revenue
[chart]
Total Revenue for the Period was
£76.92m, representing a 29.8% increase compared to the same period
in FY 22/23 (£59.24m), largely due to the acquisition of a 46.4MW
operational solar portfolio from Fengate Asset Management in
December 2022, and PPAs with higher prices being secured in the
intervening period. The Average Revenue received per MWh generated
was £261.47, marginally above expectations, and 44.5% higher than
that recorded for FY 2022/23.
Operational costs for the Period
(incorporating all fixed, contracted costs such as lease payments,
and O&M fees) totalled c.£14.3m, 2.9% lower than forecasted.
Costs have increased from the same period in FY 2022/23 due to
increased capital deployment for repowering and enhancement
projects.
Solar PV Optimisation & Enhancement
Activity
A core focus of the Investment
Adviser's activities is protecting, optimising, and enhancing the
value of the Company's operational portfolio.
Principally this is done through
in-depth performance monitoring and carefully tailored preventative
maintenance programmes, ensuring that improvement or repowering
works requiring full or partial outages are completed during the
months of low irradiation (being October to March).
A rolling capital investment
programme is essential for optimising the long-term operational
performance of the portfolio. The Investment Adviser, working in
conjunction with the Asset Manager, has identified that one of the
key causes of lower than expected availability is a long lead time
for spare parts for major components, notably central inverters,
due to industry demand from construction projects and other
operators' repowering works. To rectify this impact on
availability, the Investment Adviser has instigated multiple
inverter repowering projects and accelerated the purchase of
strategic spares for the entire portfolio.
Two significant string-inverter
repowering projects and the replacement of three transformers at
Hall Farm were completed during the period to improve both the
current and future performance of the assets. Further inverter
repowering and optimisation projects are planned for FY
23/24.
As at 31 December 2023, 494.6MW
(being 65.6% of the solar PV portfolio), have leases that allow for
remaining terms beyond 30 years, with 338.2MW benefitting from
planning terms in excess of 30 years, with the Investment Adviser
continuing to pursue lease extensions on the remaining assets in
the portfolio.
Onshore Wind Performance
As at 31 December 2023, the
Company held an operational onshore wind portfolio of 135
installations, comprising 109 small scale turbines (55-250kW) and
26 wind farm turbines (850kW-2.3MW), with an aggregated capacity
58.4MW.
The onshore wind portfolio
generated 82.0GWh during the reporting period, in line with the
forecast. The fleet recorded a generation yield of 1,405MWh per MW
of installed capacity, equivalent to a 27.4% increase from FY
2022/23. This was due to the Company's continued programme of
improvement and re-powering works supporting greater availability,
alongside slightly higher-than-expected wind resource.
Table 2. Aggregated Wind
Portfolio Performance, H1 2023/24
|
H1
|
H1
|
Delta
to
|
H1
|
Delta
23/24 to
|
|
2023/24
|
2023/24
|
Forecast (%
|
2022/23
|
22/23
Actual (%
|
|
Actual
|
Forecast
|
Change
|
Actual
|
change)
|
Portfolio Total Installed
|
58.36
|
N/A
|
N/A
|
58.36
|
0.00%
|
Capacity (MW)
|
Total Generation (MWh)
|
82,008
|
82,629
|
-0.75%
|
64,392
|
27.36%
|
Generation Yield
|
1405.21
|
1415.85
|
-0.75%
|
1,103.36
|
27.36%
|
(MWh/MW)
|
Average Revenue
|
£184.40
|
£186.28
|
-1.01%
|
£203.59
|
-9.43%
|
(£/MWh)
|
Notes to Table 2.
Average Revenue includes all income associated with the sale
of power, all subsidy payments, liquidated damages and insurance
claims amounts. ROC recycle revenue is included assuming a 10%
recycle rate for both Actual and Forecast Revenue
During the Period the fleet
achieved a total revenue of £15.1m, -1.75% below forecast, largely
due to those plants with PPAs which track the day-ahead market
prices achieving slightly lower-than-expected floating power
prices.
Onshore Wind Optimisation & Enhancement
Activity
In Northern Ireland, 17 of the 29
small-scale turbines have been identified for repowering with
replacement EWT 250kW turbines. These assets are being repowered to
increase efficiency and output, whilst maintaining their respective
NIRO accreditation status.
As at 31 December 2023, 11
turbines have been repowered and returned to operation, with a
further three projects undergoing construction, with commissioning
expected during H2, FY 2023/24. Planning applications for the
remaining projects have been submitted to the relevant Local
Planning Authorities.
A technical adviser has now
completed a feasibility study for similar repowering opportunities
across the GB portion of the fleet, which the Investment Adviser is
currently assessing.
General Portfolio
Ofgem Audits
As part of the industry-wide
audits of FiT and RO-accredited generating assets, the Investment
Adviser and Asset Manager have been working closely with the
regulator on those assets (randomly) selected for audit. All of the
Company's assets that have completed Ofgem audits to date have been
classified as 'satisfactory' and so are
deemed by Ofgem as being compliant.
Health and Safety Activities
The Investment Adviser continues
to ensure that health and safety awareness, policies, processes and
procedures remain at the forefront of every activity around the
portfolio. Health and safety policies and logs are reviewed at
least annually. All main contractors (including asset management
and O&M providers) are audited annually by a qualified
third-party specialist consultant, with new retained contractors
(associated with operational projects acquired by BSIF, for
example) audited immediately following acquisition.
Cyber Security
The Investment Adviser arranged
penetration testing as part of a periodic cyber security review by
a specialist external consultant. The testing covered approximately
50% of the solar portfolio, with all results satisfactory. Whilst
cyber security across the portfolio is appropriate, the Investment
Adviser has arranged for all the recommendations to further enhance
cyber security to be undertaken, including both hardware and
software upgrades, with works to commence shortly. The remainder of
the PV portfolio and all wind farms are now undergoing penetration
testing, expected to be complete by the end of the FY
23/24.
4. Power Purchase Agreements
The Investment Adviser continues
to employ its strategy of fixing short-term power price agreements
for periods of between 12 and 36 months. As at 31 December 2023,
the average term of the fixed-price PPAs across the portfolio is
27.8 months (FY 22/23: 28.4 months).
The Investment Adviser actively
monitors power market conditions, ensuring contract renewals are
spread evenly throughout any 12-month period, with competitive
tender processes involving several offtakers running for each PPA
renewal in the 3-month period prior to the commencement of a new
fixing period. This method acts as a natural hedging strategy
against wholesale market fluctuations. The predominantly fixed
price approach allows for high levels of confidence in the
Company's revenue forecasting and limits exposure to market
volatility, but the short-term nature of the contracts also allows
for some flexibility to 'pull forward' batches to fix, should
market dynamics present a compelling case.
In addition, up to 10% of PPAs (of
the aggregated portfolio capacity) are executed on a 'floating'
mechanism, whereby prices move in line with the day-ahead (N2EX)
market. This allows a portion of the portfolio to capture
short-term volatile price spikes in the wholesale market. PPA
counterparties are selected on a competitive basis, but with a
clear focus on achieving value and diversification of counterparty
risk. Flexibility within the Company's capital structure enables
PPA counterparties to be selected on a competitive basis and not be
influenced by lenders requiring long term contracts with one
offtaker. Evidence of this is reflected in the BSIF's fixed average
seasonal weighted power price, which for the 12 months ended 31
December 2023 increased by 97.2% compared to the same period in FY
22/23, rising to £169.2/MWh from £85.8/MWh in the previous calendar
year.
As at 31 December 2023, the
Company has a price confidence level of 90%, reducing to 78% to
June 2024 (including subsidy revenues), representing the percentage
of the portfolio that already has a fixed price in place for the
sale of power, and thus no exposure to power market uncertainty.
Looking ahead, the strategy has secured power price fixes at levels
that are materially in excess of the latest industry forecaster
expectations as highlighted in the chart below:
Chart 1. PPA Fixed Power Prices
(Average for Fixes completed during period)
Price as
at:
|
Jan
24
|
Jul 24
|
Jan 25
|
Jul
25
|
BSIF
Portfolio Weighted Averaged Fixed Contract Price (£/MWh)
|
170.98
(707.03MW)
|
147.13
(496.83MW)
|
158.41
(466.03MW)
|
136.81
(308.51MW)
|
BSIF
Blended Curve (nominal terms) as at Dec 23
|
104.97
|
104.97
|
98.06
|
98.06
|
Footnote: MW stated in the BSIF
Portfolio Weighted Average Contract price refers to the total
amount of the portfolio fixed for that period.
Power Market Summary
Despite the Company's average
weighted fixed price remaining strong, wholesale power prices
continued to fall from the levels of H1 2023 and the spikes seen
during 2022 (as demonstrated in Chart 2 below).
However, despite the general
decline, October and November 2023 saw the day-ahead (N2EX) prices
increase to £86.2/MWh and £91.3MWh respectively from September's
average of £82.4/MWh due to low renewable generation during these
months. The average power price in December was £66.6/MWh, a 27%
decrease from November and a 72.6% decrease compared to December
2022. The fall in the average N2EX price during December was
largely due to lower gas and carbon prices, as well as
significantly higher-than-expected onshore and offshore wind
generation.
Chart 2. UK Natural Gas &
Wholesale Day-ahead (N2EX) Power Prices (1 June 2021 - December
2023)
[chart]
Source data: Bloomberg
5. Proprietary
Pipeline
Over the Company's ten year
history, building a proprietary development pipeline and then
funding the construction of new projects has been at the heart of
its success. Entering earlier in the value chain brings some
additional risk but, if managed appropriately, we believe it also
allows us to control the quality of projects far better, which
ultimately brings enhanced risk-adjusted returns to
Shareholders.
Over the past four years, the
Company has continued to implement its new build strategy across
the solar value chain to ensure that BSIF continues to build its
market share amongst UK solar power producers. We have also
expanded our strategy to battery storage, which in time will
provide some diversification of BSIF's revenues by enabling it to
benefit from the expected increase in power price volatility as the
capacity of renewables increases.
This focus on development
activities has enabled the Company to accumulate a significant
pipeline of assets which can be built over the next five years. As
our projects progress, we are working with selected construction
contractors to ensure that projects are designed and built to a
high specification for long term performance.
We are pleased to report that the
new build strategy has delivered well on its objectives thus far:
the development pipeline now stands at over 1.5 GW and the first
development to be funded, Yelvertoft, is progressing well through
construction. This 49MW project is set to be connected to the grid
in the first quarter of 2024 and it has entered into a Contract for
Difference ("CfD") for its output.
The following sections provide a
more detailed update on both our construction and development
programmes.
Construction Programme
As at the end of the Period, BSIF
had 93 MW of solar assets under construction. These are
Yelvertoft Solar Farm, a 49MW solar PV park in
Northamptonshire, and Mauxhall Farm Energy Park, a 44MW solar PV
project in North East Lincolnshire. Yelvertoft signed a fixed price
EPC contract with Bouygues in September 2022 and is targeting
connection to the grid in Q1 2024, while Mauxhall Farm signed a
fixed price EPC contract with EQUANS in March 2023 and is expected
to be operational in Q2 2024. Mauxhall Farm is planned to be a
co-located project and construction of a 25MW battery energy
storage scheme is expected to commence shortly after the solar
plant has been commissioned.
As the EPC agreements require
contractors to provide full procurement activity and to supply all
materials, the Investment Adviser completes a full assessment of
each contractor's procurement and supply chain management processes
to ensure compliance with the Company's ESG policies and
standards.
In addition to projects in
construction, BSIF had solar assets with a capacity of 545MW and
battery storage assets with 233MW capacity that are fully consented
and are in the pre-construction phase. The projects have expected
connection dates between 2024 and 2030.
Projects with CfDs
In July 2022, the Investment
Adviser successfully secured CfDs on 65MW of ready to build PV
plants (Yelvertoft 49MW, Romsey 8MW and Oulton 8MW). By securing a
CfD contract, the plants will benefit from CPI-linked revenues for
15 years at the AR4 solar PV strike price of £45.99/MWh (in 2012
equivalent prices), equating to £61.51 /MWh in today's prices. The contracts commence from 31 March 2025
and the strike prices will be adjusted appropriately for
CPI.
In September 2023, BSIF achieved
allocations of CfDs on all four of its projects submitted to AR5.
The combined capacity of these sites is expected to be c.212MW. The
projects received a strike price of £47.00/MWh (in 2012 prices), or
£62.86/MWh in today's equivalent prices.
Development Programme - Outline of developments and valuation
approach
The Investment Adviser has been
pursuing its development strategy since 2019 to enable BSIF to
continue to be a key player in the UK renewable energy market.
Since that time, a portfolio of approximately 960MW of solar and
over 560MW of batteries has been built up across 28 projects (in
the Period, consent was received for three projects, totalling
147MW solar and 90MW battery, while post Period end one project of
50MW solar received consent). BSIF has a 5% investment limit
in pre-construction development stage activities, of which less
than 1% is currently committed.
Currently, no value is attributed
to projects without planning consent. Once developments receive
planning consent and move from the development stage to
pre-construction, the Investment Adviser believes it is appropriate
to reflect this change in the Company valuation. At this point in
their lifecycle the projects will have received all the necessary
planning consents, land rights and valid grid connection offers and
so have discernible value beyond the direct costs of
development.
The current pipeline status and
valuation is summarised in the graphic below.
Current pipeline status and valuation
[chart]
6. Analysis of underlying earnings
The total generation and revenue
earned in the period by the Company's portfolio, split by subsidy
regime, is outlined below:
Subsidy
Regime
|
Generation (MWh)
|
PPA
Revenue (£m)
|
Regulated Revenue (£m)
|
FiT
|
28,743
|
2.4
|
5.9
|
4.0
ROC
|
8,134
|
0.6
|
2.0
|
2.0
ROC
|
8,696
|
0.7
|
1.1
|
1.6
ROC
|
48,766
|
6.4
|
5.0
|
1.4
ROC
|
126,553
|
24.5
|
11.2
|
1.3
ROC
|
30,185
|
3.9
|
2.5
|
1.2
ROC
|
59,005
|
11.1
|
4.9
|
1.0
ROC
|
23,388
|
2.0
|
1.4
|
0.9
ROC
|
42,584
|
3.7
|
2.3
|
Total
|
376,054
|
55.3
|
36.3
|
The Company includes ROC Recycle
assumptions within its long term forecasts and applies a market
based approach on recognition within any current financial period,
including prudent estimates within its accounts where there is
clear evidence that participants are attaching value to ROC Recycle
for the current accounting period.
In November 2023, Ofgem announced
the value for ROC Recycle for the period April 2022 to March 2023
(CP21) was £6.81/ROC (equivalent to 12.9% of CP21 ROC buyout
prices). This was slightly ahead of the 12.5% ROC Recycle estimate
the Company had recognised in its 30 June 2023 Financial
Statements.
The key drivers behind the changes
in underlying earnings between H1 2022/23 and H1 2023/24 are the
combined effects of the Dec 2022 acquisition, PPA fixes and
increased REGO pricing from a revenue perspective, and the addition
of the Electricity Generator Levy (EGL) increasing group operating
costs.
Underlying Portfolio Earnings
|
Half
year period to
31 Dec
23
(£m)
|
Half
year period to
31 Dec
22
(£m)
|
Full
year to
30 June
23
(£m)
|
Full
year to
30 June
22
(£m)
|
Portfolio Revenue
|
91.6
|
78.6
|
184.4
|
111.4
|
Liquidated damages and Other
Revenue*
|
3.7
|
0.8
|
5.4
|
1.6
|
Portfolio Income
|
95.3
|
79.4
|
189.8
|
113.0
|
Portfolio Costs
|
-21.2
|
-16.1
|
-36.3
|
-27.8
|
Project Finance Interest
Costs
|
-6.4
|
-5.5
|
-13.6
|
-4.7
|
Total Portfolio Income Earned
|
67.7
|
57.8
|
139.9
|
80.5
|
Group Operating
Costs#**
|
-17.7
|
-4.6
|
-25.4
|
-8.3
|
Group Debt Costs
|
-6.1
|
-1.8
|
-6.1
|
-5.4
|
Underlying Earnings
|
43.9
|
51.4
|
108.4
|
66.8
|
Group Debt Repayments
|
-22.1
|
-13.2
|
-18.3
|
-13.8
|
Underlying Earnings available for
distribution
|
21.8
|
38.2
|
90.1
|
53.0
|
|
|
|
|
|
Brought forward
reserves***
|
48.4
|
20.9
|
20.9
|
13.4
|
Total funds available for distribution
|
70.2
|
59.1
|
111.0
|
66.4
|
Target distribution****
|
N/A
|
N/A
|
51.4
|
45.2
|
|
|
|
|
|
Actual Distribution
|
13.5
|
12.8
|
52.6
|
45.5
|
Underlying Earnings carried forward
|
N/A
|
N/A
|
58.4
|
20.9
|
*Other Revenue includes insurance
proceeds, ROC Recycle late payment and Mutualisation, REGOs,
O&M settlement agreements and rebates received.
#Includes the Company, BR1 and any
tax charges, including EGL.
**Excludes one-off transaction
costs and the release of up-front fees related to the Company's
debt facilities.
***FY23 carried forward reserves
of £58.4m less RCF Repayment of £10m in the Period.
****Target distribution is based
on funds required for total target dividend for each financial
period.
The table below presents the
underlying earnings on a per share basis.
|
Half
year to
31 Dec
23
(£m)
|
Half
year to
31 Dec
22
(£m)
|
Full
year to
30 June
23
(£m)
|
Full
year to
30 June
22
(£m)
|
Target Distribution -
£m
|
N/A
|
N/A
|
52.6
|
45.2
|
Total funds available for distribution (inc. reserves) -
£m
|
70.2
|
59.1
|
111.0
|
66.4
|
Average number of shares in the
period*
|
611,452,217
|
611,452,217
|
611,452,217
|
554,042,715
|
Target Dividend (pps)
|
N/A
|
N/A
|
8.40
|
8.16
|
Total funds available for distribution
(pps)
|
11.46
|
9.65
|
18.13
|
12.22
|
Total Dividend Declared for the
period (pps)**
|
2.20
|
2.10
|
8.60
|
8.20
|
Reserves carried forward (pps)
***
|
N/A
|
N/A
|
9.53
|
3.39
|
*Average number of shares is
calculated based on shares in issue at the time each dividend was
declared.
**First interim dividend for FY
23/24 of 2.20pps declared 26 January 2024, with a payment date on
or around 9 March 2024.
***Reserves carried forward are
based on the shares in issue at the point of Annual Accounts
publication (being c.611m shares for both 30 June 2023 and 30 June
2022).
7. NAV and Valuation of the
Portfolio
The Investment Adviser is
responsible for advising the Board in determining the Directors'
Valuation and, when required, carrying out the fair market
valuation of the Company's investments.
Valuations are carried out on a
quarterly basis at 30 September, 31 December, 31 March and 30 June
each year, with the Company committed to conducting independent
reviews as and when the Board believes it benefits
Shareholders.
As the portfolio comprises only
non-market traded investments, the Investment Adviser has adopted
valuation guidelines based upon the IPEV Valuation Guidelines
published by the BVCA (the British Venture Capital Association).
The application of these guidelines is considered consistent with
the requirements of compliance with IFRS 9 and IFRS 13.
Following consultation with the
Investment Adviser, the Directors' Valuation adopted for the
portfolio as at 31 December 2023 was £1,001.1m (30 June 2023,
£1,018.4m).
The table below shows a breakdown
of the Directors' Valuations over the last four interim and annual
reporting periods:
Valuation Component (£m)
|
Dec 2023
|
June 2023
|
Dec 2022
|
June 2022
|
Enterprise Portfolio DCF value
(EV)
|
1,149.1
|
1,195.2
|
1,222.2
|
1,180.6
|
Construction and Consented Solar and
Battery Storage Development rights*
|
103.7
|
67.5
|
30.4
|
13.8
|
Deduction of Project Co
debt
|
-410.1
|
-430.8
|
-410.1
|
-390.3
|
Project Net Current
Assets
|
158.4
|
186.5
|
145.1
|
135.8
|
Directors' Valuation
|
1,001.1
|
1,018.4
|
987.6
|
939.9
|
Portfolio Size (MW)
|
812.6
|
812.6
|
812.6
|
766.2
|
*Includes £64.4m in construction,
£31.3m consented and £8.0m of Gladiator repowering awaiting
accreditation
Discounting Methodology
The Directors' Valuation is based
on the discounting of post-tax, projected cash flows of each
investment, based on the Company's current capital structure, with
the result then benchmarked against comparable market multiples, if
relevant. The discount rate applied on the project cash flows is
the weighted average discount rate. In addition, the Board
continues to adopt the approach under the 'willing buyer/willing
seller' methodology, that the valuation of the Company's portfolio
be appropriately benchmarked to pricing against comparable
portfolio transactions.
Key factors behind the Directors' Valuation
There have been a number of key
factors that have been considered in the Investment Adviser's
recommendation to the Directors' Valuation (and which are
quantified in the Directors' Valuation and NAV movement chart
below):
(i)
RPI inflation assumptions for 2024 onwards have remained in line
with those used in June 2023 (3.5% in 2024, 3.0% to 2029, 2.25%
post 2030) reflecting expectations that UK inflation has peaked and
is on the path to more normalised long term levels;
(ii)
The portfolio discount rate remains unchanged at 8.00% (8.00% in
June 2023 and 7.25% in December 2022) as base rate increases slowed
(rising from 5.0% in June 23 to 5.25% as at 31 December 2023) and
15 year gilt yields contracted from highs of c.5.0% in June 2023 to
c.4.0% as at 31 December 2023;
(iii) The
value attributed to BSIF's development and construction portfolio
has risen during the period, reflecting sites receiving planning
permission and further progress and investment into construction
projects;
(iv) Review
of fixed costs and first time inclusion of revenue for REGOs
(Renewable Energy Guarantees of Origin) for the period 2026 to
2030. This adoption follows evidence that value is now being
attributed to REGOs beyond the period of PPA fixes currently in
place.
By reflecting the core factors
above within the Directors' Valuation for 31 December 2023, the EV
of the portfolio is £1,149m (June 2023: £1,195.2m) with the
effective price for the solar component being c.£1.28m/MW (June
2023: £1.35m/MW).
These metrics sit within the
pricing range of precedent market transactions and the 'willing
buyer-willing seller' methodology upon which the Directors'
Valuation is based.
Valuation Assumptions - Further detail
Power Price
The blended forecast of three
leading consultants used within the latest Directors' Valuation, as
shown in the graph below, is based on forecasts released in the
quarter to December 2023. For illustration
purposes, the graph below also includes the blended curve used in
the Company's June 2023 Annual accounts.
The curves used in the 31 December
2023 Directors' Valuation reflect the following key
updates:
1.
Short-term European gas prices have fallen, driven in part by high
gas storage levels, with a similar trend reflected in the wholesale
power price curve;
2. Higher
renewable generation capacity deployment levels in the medium term
(with ambitions for up to 50GW offshore wind by 2030) as the UK
strives to meet its net zero targets and fully decarbonise its
power system by 2035; and
3.
Annual demand for power in Great Britain, driven
principally by electrification of heat and transport, is expected
to rise from 296TWh in 2024 to 439TWh by 2035.
[chart]
Please note, the blended forecast
varies depending on whether the asset is a solar or a wind project,
reflecting different forecasts for technology specific capture
rates. The solar forecast is shown in the chart.
BSIF consistently outperforms these figures so
the Company considers them conservative.
Directors' Valuation and NAV Movement
(£m)
[chart]
Directors' Valuation movement
|
|
|
|
(£million)
|
As % of
valuation
|
|
30
June 2023 Valuation
|
|
|
1,018.4
|
|
|
New
investments acquired
|
|
|
0
|
|
|
Rebased Valuation
|
|
1,018.4
|
|
|
|
|
|
|
|
Development uplift
|
36.2
|
|
|
3.6%
|
|
Cash receipts from
portfolio
|
(27.7)
|
|
|
(2.7)%
|
|
Date change and
degradation
|
(62.0)
|
|
|
(6.1)%
|
|
Power curve updates (incl.
PPAs)
|
2.3
|
|
|
0.2%
|
|
ROC inflation
|
12.0
|
|
|
1.2%
|
|
Operational cost update
|
(6.4)
|
|
|
(0.6)%
|
|
Include REGOs
|
5.6
|
|
|
0.5%
|
|
Balance of portfolio
return
|
22.7
|
|
|
2.2%
|
|
31
December 2023 Valuation
|
|
1,001.1
|
(1.7)%
|
|
|
|
|
|
|
|
|
| |
There have been no material
changes to assumptions regarding the future performance or cost
optimisation of the portfolio when compared to the Directors'
Valuation of 30 June 2023.
The assumptions set out in this
section remain subject to continuous review by the Investment
Adviser and the Board.
Reconciliation of Directors' Valuation to Balance
sheet
|
Balance at Period
End
|
Category
|
31
December 2023 (£m)
|
30 June
2023 (£m)
|
31
December 2022 (£m)
|
30 June
2022 (£m)
|
Directors' Valuation
|
1,001.1
|
1,018.4
|
987.6
|
939.9
|
Portfolio Holding Company Working
Capital
|
(3.3)
|
(12.5)
|
2.9
|
(13.6)
|
Portfolio Holding Company
Debt
|
(167.0)
|
(153.0)
|
(121.0)
|
(70.0)
|
Financial Assets at Fair Value per Balance
sheet
|
830.3
|
852.9
|
869.5
|
856.3
|
Gross Asset Value
|
1,407.3
|
1,438.0
|
1,400.6
|
1,316.7
|
Gearing (% GAV*)
|
41%
|
41%
|
38%
|
35%
|
*GAV is
the Financial Assets, as at 31 December 2023, at Fair Value of
£830.3m plus RCF of £167m and third party portfolio debt of £410m
(giving total debt of £577m).
Directors' Valuation sensitivities
Valuation sensitivities are set
out in tabular form in note 7 of the financial statements. The
following diagram reviews the sensitivity of the EV of the
portfolio to the key underlying assumptions within the discounted
cash flow valuation.
[chart]
8. Financing
Debt Strategy
Since its IPO the Company has
focused on a simple and defensive approach to debt. This means
having debt agreements that have, primarily, fixed interest rates
and are amortising. Debt split into (1) long-term asset-level debt,
and (2) revolving credit facility at fund-level for short-term
funding. Debt in the portfolio is generally not subject to
stringent lender requirements on PPAs, allowing BSIF to take
advantage of more competitive PPA pricing.
The Company's weighted average
cost of long-term debt is 3.5% and is largely locked-in via fixed
interest rates. Whilst BSIF has a modest amount of index-linked
debt, it also has significant levels of RPI linked revenues,
leaving the Company a net beneficiary of inflation.
The fund's revolving credit
facility (RCF) is the only non amortising debt instrument in the
portfolio and represents 29% of the total debt balance. 70% of
asset-level debt has a fixed interest rate. 30% of principal for
long-term debt is inflation-linked.
Revolving Credit Facility
On 22 June 2023, the Group agreed
a £110 million increase to its existing committed £100 million
revolving credit facility ('RCF'), bringing the total committed
amount to £210 million. The facility also has an uncommitted
accordion feature allowing it to be increased by up to a further
£30 million. As part of the increase, the Group has sought to
broaden the lender group through the introduction of Lloyds Bank
Plc, alongside the existing lenders RBS International and Santander
UK. The term of the facility has been extended to May 2025 and the
facility's margin remains unchanged at 1.9%.
As at 31 December 2023, the
Company's subsidiary BR1 had drawn £167m from its RCF.
External Debt
Excluding the Group's RCF, total
outstanding loans to third party lenders as at 31 December is
£410m, with each loan secured against a portfolio of assets and
fully amortising within the life of the respective assets'
subsidies.
The average interest cost,
excluding the Group's RCF, across the external debt facilities in
the table below is 3.55%.
Debt
|
Principal Outstanding
(£m)
|
Maturity
|
% of Interest
Fixed(1)
|
All-in Interest
Rate
|
Syndicate - Fund RCF
|
167
|
May-25
|
0%
|
6.34%
|
Bayern LB - Project
Finance
|
7
|
Sep-29
|
100%
|
5.50%
|
Syndicate - Project
Finance
|
68
|
Dec-33
|
100%
|
3.50%
|
Aviva
(fixed)
Project Finance
|
83
|
Sep-34
|
100%
|
2.88%
|
Aviva
(index-linked) Project Finance
|
64
|
Sep-34
|
100%
|
3.70%
|
Macquarie
(fixed) Project
Finance
|
7
|
Mar-35
|
100%
|
4.60%
|
Macquarie (indexed-linked) Project
Finance
|
20
|
Mar-35
|
100%
|
4.70%
|
Gravis (index-linked)
Project Finance
|
37
|
Jun-35
|
100%
|
6.48%
|
NatWest - Project
Finance
|
123
|
Dec-39
|
85%
|
2.70%
|
Total/Wtd Avg
|
577
|
|
68%
|
4.36%
|
Total/Wtd Avg excl. RCF
|
410
|
|
96%
|
3.55%
|
Note: Index-linked debt treated as fixed for the purposes of
this table as proportion fixed represents interest rate risk
only
NatWest 3 year term loan maturity and
refinancing
On 2 May 2023, the Group announced
the re-financing of its £110 million three-year term loan with
NatWest.
The original loan, with minimum
75% hedged with a swap at circa 0.35% over a notional 18-year
period, had a maturity of September 2023 and has been increased to
£130 million and extended in maturity to December 2039.
Hedging has been put in place for
the tenor of the loan on £110 million, at an effective all-in cost
of c.2.7% (being margin and swap rate).
The financing is secured against
the UK-based portfolio of 31 operational PV plants with a total
installed capacity of 139MW and benefitting from attractive
subsidies; 29 of the assets are accredited under the ROC regime
with tariffs ranging from 1.2 - 2.0 ROCs, while two are accredited
under the FiT scheme.
The additional debt of £20 million
is being used to provide financing for the construction of
Yelvertoft, the Company's 49MW CfD-backed solar PV project in
Northamptonshire. Once construction is complete, expected in Q2
2024, the Company will review whether to enter hedging arrangements
on this tranche.
GAV Leverage
The Group's total outstanding
debt, as at 31 December 2023, was c.£577 million and its leverage
stands at c.41% of GAV (41% as at 30 June 2023) within the 35% -
45% range the Directors have previously outlined as desirable for
the Group.
9. Market Developments
UK renewable generation capacity and
deployment
Latest Government data shows that
UK solar photovoltaic (PV) capacity stands at over 15.5GW, across
c.1.4 million installations. Of this amount, around 7.3GW (c.48% of
the total solar capacity in the UK) and 5.1GW (33%) is accredited
under the RO and FiT schemes respectively, and c.3GW (19%) is
unaccredited. Onshore and offshore wind installed capacity stands
at around 15.5GW and 14.8GW, respectively. The UK has 3.5GW of
operational battery storage capacity, according to data from energy
association, Renewable UK.
The UK's total renewable
generation capacity is projected to continue to grow over the
coming years as the Government strives to meet its net zero targets
and meet power demand from the electrification of the domestic
heat, transport and industrial sectors. Deployment is expected to
be supported by policies such as the CfD scheme, which is described
in more detail in the next section of this report.
The UK Government aims to increase
solar capacity to 70GW by 2035 and has signalled its support for
ground and rooftop solar technologies on brownfield, industrial and
low/medium grade agricultural land. The Government also aims to
develop up to 50GW of offshore wind by 2030.
The chart below illustrates the
distribution of total installed capacity across different renewable
generation technologies at the end of the third quarter of 2023
(the latest data available at the time of this report), compared
with a year earlier.
[chart]
Source: UK government Department for
Business, Energy & Industrial Strategy *Anaerobic Digestion
includes sewage sludge digestion, animal biomass
Secondary market transactions, development and construction
activity
Transactional activity in the UK
renewables market has eased to some extent, as inflation and higher
interest rates have kept investor uncertainty elevated.
Acquisitions of new build and
operational renewable energy projects across established
technologies have totalled c.190MW in solar, c.660MW in offshore
wind (across several shares of sites) and c.45MW onshore wind in
the period[1].
Activity in the UK development
market has continued to be driven by factors such as ambitious
decarbonisation targets, increasing preferences by customers for
clean energy, demand for ESG investments and the inclusion of solar
PV in upcoming CfD auction rounds. Development activity has been
particularly noticeable in the battery storage area as developers
seek to provide solutions to help manage the grid as larger
quantities of intermittent renewables are added to the system.
Solar development activity has, however, slowed recently, primarily
due to grid constraints.
Moderate construction activity has
also been observed in the UK solar and battery storage area,
although this is against a backdrop of challenges with equipment
lead times and relatively high interest rates. Converting the UK's
significant development pipeline into operational solar
projects over the next five years will
require developers to adopt an innovative approach to overcome
current macroeconomic challenges, as well as challenges surrounding
higher construction costs and grid connection lead
times.
10. Regulatory Environment
The regulatory environment remains
under the spotlight as the Government seeks to support renewable
energy deployment under particularly tough macroeconomic
conditions. Key themes are outlined below.
Update on Contracts for
Differences (CfD)
In September 2023, the UK
Government announced support for c.3.7GW of new build renewable
generation capacity through its CfD scheme, allocation round 5
(AR5) with expected deliveries in 2025-28
and with strike prices at or close to the administrative strike
price (ASP) caps set by the Government. Around 1.9GW was awarded for solar projects, c.1.5MW for
onshore wind and c. 289MW across the less established
remote island wind, tidal stream and geothermal
projects. The overall budget for AR5 - across pot 1 and 2
technologies - was £227 million per year (£68m lower than AR4's
budget).
In November 2023, the UK
Government published the draft Allocation Framework for AR6. The
ASPs for all technologies were raised from AR5 levels following
extensive lobbying from industry participants for more competitive
strike prices given the current high inflationary and cost of
capital environment. AR6 application window is due to open on 27
March 2024 and the accompanying Budget notice is scheduled to be
released on 13 March, according to the latest Government
timeline. The upcoming auction will have a
three-technology pot structure, with offshore wind returning to its
own pot, having been included in pot 1, alongside solar PV and
onshore wind in AR5.
The Government is exploring new
ways to ensure the CfD scheme remains fit for purpose, especially
as the electricity system evolves overtime. A consultation on
scheme changes applicable to AR7 (scheduled to open in 2025) as
well as longer-term schemes considerations, such as changes to the
inflation indexation methodology, is underway and scheduled to
close on 7 March 2024.
Autumn Statement
In November's Autumn Statement
2023, the Chancellor of the Exchequer Jeremy Hunt announced several
energy focused measures to incentivise public and private sector
investment. These included a commitment to improving grid
connection queue times, reforming the UK's planning system process,
developing supply chains and manufacturing in low-carbon
industries, indefinitely extending the 100% full expensing of
capital investment in plant and machinery, as well the introduction
of a new investment exemption for the Electricity Generator Levy
(EGL). The EGL is scheduled to end on 31 March
2028.
Review of Electricity Market Arrangements
The Government's second planned
consultation on the UK's Review of Electricity Market Arrangements
(REMA) is expected to open shortly. REMA aims to identify necessary
reforms needed to transition to a cost effective, lower carbon and
secure electricity system. Several wholesale energy market reforms
are still under consideration, including zonal and nodal market
pricing.
Bluefield Partners LLP
|
27 February 2024
|
Environmental, Social and
Governance Report
1. Introduction from the
Chair
An introduction from the Chair
Decarbonisation remains at the
forefront of the political and economic agenda. Climate finance was
a key focus at COP28; commitments were made totalling $57 billion,
including private and blended climate-related funds, climate
finance pledges, and climate adaptation
packages[2]. COP28
also saw the UAE Consensus advocate for a tripling of global
renewable energy capacity by 2030[3]; an ambition that the Company is well
positioned to support.
In addition to climate finance,
the ESG regulatory and reporting landscape has also continued to
evolve, with the FCA publishing its Sustainability Disclosure
Requirements (SDR) and investment labels policy
statement[4], launch
of the UK's Transition Plan Taskforce (TPT) disclosure
framework[5], and
the recent consultation from the European Supervisory Authorities
(ESAs) on the Sustainable Finance Disclosure
Regulation[6]. The
Company will continue to review the applicability of emerging ESG
regulation and reporting frameworks to maintain compliance and
ensure its ESG achievements and challenges are reported
transparently to stakeholders.
The Company plays a key role in
providing low carbon energy to a decarbonising UK economy. Through
the continued integration of sustainability considerations into its
investment approach, the Company aims to achieve its purpose of
delivering renewable energy, responsibly.
John Scott,
Chair
2. ESG Highlights
Estimated annual figures based on
actual and forecasted generation data for the period 1 July 2023 -
30 June 2024:[7]
· Over
850 GWh of renewable energy generation
· Estimated annual CO2e savings of 176,000
tonnes[8]
· Approximately 315,000 houses to be powered with renewable
energy[9]
· Payments of approximately £290,000 to community benefit
schemes
In recognition of its positive
environmental contribution, the Company has been awarded the
following accreditations:
- Guernsey Green Fund[10]
- TISE Sustainable[11]
- LSE Green Economy Mark[12]
3. ESG Regulation &
Framework Alignment
SFDR & EU Taxonomy
The Company is an Article 8
classified fund under the Sustainable Finance Disclosure Regulation
(SFDR) and as at 30 June 2023, had a proportion of 97.39%
sustainable investments. Please refer to the Company's Periodic
Annex IV, appended to its 2023 Annual Report and Financial
Statements, and the Company's website for further information
regarding its ongoing compliance with the SFDR and EU
Taxonomy.
The Company is currently preparing
its annual Principal Adverse Impact (PAI) statement relating to the
2023 calendar year, which will be available on its website before
30 June 2024.
UK Sustainability Disclosure Requirements & UK Green
Taxonomy
The FCA's Sustainability
Disclosure Requirements (SDR) aim to promote transparency and
accountability within financial markets regarding a product's
sustainability-related characteristics, ensuring that products are
marketed correctly and have an evidence-base to their
sustainability claims[13].
As a non-UK AIF, the Company is
not currently in scope of this regime. However, the applicability
of the framework to overseas funds is currently pending, and it is
likely that it will be expanded to cover overseas funds in some
capacity in due course. As such, the Company is currently reviewing
its alignment with the SDR
framework.
As a UK authorised firm, the
Company's Investment Adviser is within scope of the SDR's
anti-greenwashing rule and is currently reviewing the implications
of this new rule to ensure the firm's compliance. The Investment
Adviser is continuing to follow progress of the UK Green
Taxonomy.
Sustainability Disclosure Standards
In June 2023 the ISSB published
two IFRS sustainability disclosure standards, IFRS S1 and S2, which
will form the basis of the UK's Sustainability Disclosure Standards
(SDS), expected to be finalised later this
year[14]. During the
interim period, the Company has undertaken a review of its
alignment with the requirements of the IFRS sustainability disclosure standards, which will help to inform
the Company's sustainability reporting approach moving
forward.
Task Force on Climate-related Financial
Disclosures
The Company has aligned on a
voluntary basis with the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD), and its second TCFD
report was presented within the Company's 2023 Annual Report and
Financial Statements.
Task Force on Nature-related Financial
Disclosures
The Company is currently
developing a Nature Strategy, aligned with the recommendations of
the Task Force on Nature-related Financial Disclosures (TNFD) to
build a framework through which the Company can manage its material
nature-related risks and opportunities.
4. The Company's ESG
Strategy
ESG Strategy
The Company's ESG strategy
reflects stakeholder expectations and has been developed to deliver
positive value across the Company's portfolio of investments.
Material ESG topics are defined within each of the Company's key
pillars:
[chart]
ESG Risk Management
The Board of the Company has
ultimate responsibility and oversight of ESG risks and
opportunities, and ESG is considered by the Directors as part of
every Board meeting, as well as investment decisions and risk
management. Daily management of ESG is outsourced to the Investment
Adviser, with the Board regularly updated on ESG activity through
investment committee papers, Board meetings, ESG Committee
meetings, ad hoc calls, and written updates.
ESG risks are considered as part
of the Company's risk management processes, and are identified,
assessed, and discussed by the Audit and Risk Committee and
included as part of the Company's risk matrix. The Company also
discloses potential impacts relating to physical and transitional
climate-related risks within its TCFD reports, which are included
within the Company's Annual Report and Financial
Statements.
Commitments & KPIs
Please refer to the Company's 2023
Annual Report and Financial Statements for its ESG commitments and
KPIs for the current financial year.
5. Key Activity Update
Key progress during the interim
period includes:
Greenhouse Gas (GHG) Accounting & Net
Zero
The Company is currently
finalising its GHG inventory relating to the 2023 calendar year,
calculated in line with the GHG Protocol Corporate Accounting
Standard, which will be disclosed as part of the Company's upcoming
SFDR PAI report.
The Company is also in the process
of modelling potential Net Zero targets to serve as the foundation
of its decarbonisation pathway, which is currently in development.
As part of this process, the Company will assess the feasibility of
validating its chosen targets and will develop roadmaps to help
ensure delivery of its decarbonisation goals.
Given the Company's role in the
Net Zero transition, it is cognisant of the need to select a Net
Zero target which both supports its ambition to grow the portfolio
and build out its development pipeline, while also ensuring it is
being transparent and taking accountability for emissions both
within its operations and supply chain.
Climate Scenario Analysis
The Company is finalising its
second physical scenario analysis, following the "extreme heat"
scenario analysis published within the Company's 2023 Annual Report
and Financial Statements, which focused on its solar PV portfolio.
The purpose of the current assessment is to investigate the
potential impact of changing wind patterns, associated with
different climate scenarios, upon the Company's wind
portfolio.
Results of both physical scenario
analyses will be consolidated and used to inform the development of
a climate change adaptation plan for the Company's portfolio, and
to enrich the Company's risk management processes, strategic and
investment-related decision-making, and financial planning.
Findings will be presented within the Company's 2024 TCFD
disclosure.
Bluefield Partners LLP
27 February 2024
Statement of Principal and
Emerging Risks and Uncertainties for the Remaining Six Months of
the year to 30 June 2024
As described in the Company's annual financial
statements as at 30 June 2023, the Company's principal and emerging
risks and uncertainties include the following:
· Portfolio
acquisition risk;
· Portfolio
operational risk;
· Supply chain
risks;
· Valuation
error;
· Physical and
transitional climate-related risks;
· Changing
electricity market conditions;
· Changes in tax
regime;
· Changes to
Government plans;
· Cyber
risk;
· Reputational
risk;
· Access to
capital, and
· Evolving ESG
reporting
The Board believes that these risks are
unchanged in respect of the remaining six months of the year to 30
June 2024.
Further information in relation to
these principal risks and uncertainties may be found on pages 55 to
58 of the Company's annual financial statements as at 30 June
2023.
These inherent risks associated
with investments in the renewable energy sector could result in a
material adverse effect on the Company's performance and value of
Ordinary Shares.
Risks including emerging risks are
mitigated and managed by the Board through continual review, policy
setting and regular reviews of the Company's risk matrix by the
Audit and Risk Committee to ensure that procedures are in place
with the intention of minimising the impact of the above mentioned
risks. The Board carried out a formal review of the risk matrix at
the Audit and Risk Committee meeting held on 27 November 2023. The
Board relies on periodic reports provided by the Investment Adviser
and Administrator regarding risks that the Company faces. When
required, experts will be employed to gather information, including
tax advisers, legal advisers, and environmental
advisers.
Directors' Statement of
Responsibilities
The Directors are responsible for preparing
the Interim Report and Unaudited Condensed Interim Financial
Statements in accordance with applicable regulations. The Directors
confirm that to the best of their knowledge:
§ the Unaudited
Condensed Interim Financial Statements have been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted by
the European Union; and
§ the interim
management report which includes the Chair's Statement, Report of
the Investment Adviser and Statement of Principal and Emerging
Risks and Uncertainties for the remaining six months of the year to
30 June 2024 includes a fair review of the information required
by:
a. DTR 4.2.7R of the Disclosure
Guidance and Transparency Rules, being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the Unaudited Condensed Interim
Financial Statements; and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
b. DTR 4.2.8R of the Disclosure Guidance
and Transparency Rules, being related party transactions that have
taken place during the first six months of the financial year and
that have materially affected the financial position or performance
of the Company during that period; and any changes in the related
party transactions described in the last annual report that could
do so.
The Board is responsible for the maintenance
and integrity of the corporate and financial information included
on the Company's website, and for the preparation and dissemination
of financial statements. Legislation in Guernsey governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
On behalf of the Board
Elizabeth Burne
|
Chris Waldron
|
Director
|
Director
|
27 February 2024
|
27 February 2024
|
Independent Review Report to Bluefield Solar Income Fund
Limited
Conclusion
We have been engaged by Bluefield
Solar Income Fund Limited (the "Company") to review the condensed
set of financial statements in the half-yearly financial report for
the six months ended 31 December 2023 of the Company, which
comprises the unaudited condensed statement of financial position,
the unaudited condensed statement of comprehensive income, the
unaudited condensed statement of changes in equity, the unaudited
condensed statement of cash flows and the related explanatory
notes.
Based on our review, nothing has
come to our attention that causes us to believe that the condensed
set of financial statements in the half-yearly financial report for
the six months ended 31 December 2023 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted by the EU and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct
Authority ("the UK FCA").
Scope of review
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the
Financial Reporting Council for use in the UK. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly
financial report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in
scope than an audit conducted in accordance with International
Standards on Auditing (UK) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusions relating to going
concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Scope of review section of this report, nothing
has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or
that the directors have identified material uncertainties relating
to going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410.
However future events or conditions may cause the Company to cease
to continue as a going concern, and the above conclusions are not a
guarantee that the Company will continue in operation.
Directors'
responsibilities
The half-yearly financial report is
the responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the interim financial
report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual
financial statements of the Company are prepared in accordance with
International Financial Reporting Standards as adopted by the
EU. The directors are responsible for preparing the condensed
set of financial statements included in the half-yearly financial
report in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU.
In preparing the half-yearly
financial report, the directors are responsible for assessing the
Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going
concern basis of accounting unless they either intend to liquidate
the Company or to cease operations, or have no realistic
alternative but to do so.
Our responsibility
Our responsibility is to express
to the Company a conclusion on the condensed set of financial
statements in the half-yearly financial report based on our review.
Our conclusion, including our conclusions relating to going
concern, are based on procedures that are less extensive than audit
procedures, as described in the scope of review paragraph of this
report.
The purpose of our review work and
to whom we owe our responsibilities
This report is made solely to the
Company in accordance with the terms of our engagement letter to
assist the Company in meeting the requirements of the DTR of the UK
FCA. Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report
and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than
the Company for our review work, for this report, or for the
conclusions we have reached.
Barry Ryan
for
and on behalf of KPMG Channel Islands Limited
Chartered Accountants, Guernsey
27 February 2024
Unaudited Condensed Statement of
Financial Position
As at 31
December 2023
|
|
31 December
2023
|
30 June
2023
|
|
|
Unaudited
|
Audited
|
|
Note
|
£'000
|
£'000
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Financial assets held at fair value
through profit or loss
|
7
|
830,253
|
852,844
|
Total non-current assets
|
|
830,253
|
852,844
|
|
|
|
|
Current assets
|
|
|
|
Trade and other
receivables
|
8
|
467
|
910
|
Cash and cash equivalents
|
9
|
1,033
|
969
|
Total current assets
|
|
1,500
|
1,879
|
|
|
|
|
TOTAL ASSETS
|
|
831,753
|
854,723
|
|
|
|
|
LIABILITIES
|
|
|
|
Current liabilities
|
|
|
|
Other payables and accrued
expenses
|
10
|
477
|
534
|
Total current liabilities
|
|
477
|
534
|
|
|
|
|
TOTAL LIABILITIES
|
|
477
|
534
|
|
|
|
|
NET
ASSETS
|
|
831,276
|
854,189
|
|
|
|
|
EQUITY
|
|
|
|
Share capital
|
|
663,809
|
663,809
|
Retained earnings
|
|
167,467
|
190,380
|
TOTAL EQUITY
|
12
|
831,276
|
854,189
|
|
|
|
|
Number of Ordinary Shares in issue
at
period/year end
|
12
|
611,452,217
|
611,452,217
|
|
|
|
|
Net
Asset Value per Ordinary Share (pence)
|
6
|
135.95
|
139.70
|
These unaudited condensed interim financial
statements were approved and authorised for issue by the Board of
Directors on 27 February 2024 and signed on their behalf
by:
Elizabeth
Burne
|
Chris
Waldron
|
Director
|
Director
|
27 February 2024
|
27 February 2024
|
The accompanying notes form an
integral part of these unaudited condensed interim financial
statements.
Unaudited Condensed Statement of
Comprehensive Income
For the six
months ended 31 December 2023
|
|
Six months
ended
|
Six months
ended
|
|
|
31 December
2023
|
31 December
2022
|
|
|
Unaudited
|
Unaudited
|
|
Note
|
£'000
|
£'000
|
Income
|
|
|
|
Income from investments
|
4
|
450
|
437
|
Bank interest
|
|
13
|
-
|
|
|
463
|
437
|
|
|
|
|
Net gains on financial assets held
at fair value through profit or loss
|
7
|
4,614
|
38,408
|
Operating income
|
|
5,077
|
38,845
|
|
|
|
|
Expenses
|
|
|
|
Administrative expenses
|
5
|
1,086
|
1,203
|
Operating expenses
|
|
1,086
|
1,203
|
|
|
|
|
Operating profit
|
|
3,991
|
37,642
|
|
|
|
|
Total comprehensive income
for
the period
|
|
3,991
|
37,642
|
|
|
|
|
Attributable to:
|
|
|
|
Owners of the Company
|
|
3,991
|
37,642
|
|
|
|
|
Earnings per share:
|
|
|
|
Basic and diluted (pence)
|
11
|
0.65
|
6.16
|
|
|
|
|
All items within the above statement have been
derived from continuing activities.
The accompanying notes form an
integral part of these unaudited condensed interim financial
statements.
Unaudited Condensed Statement of
Changes in Equity
For the six
months ended 31 December 2023
|
Note
|
Number of
Ordinary
Shares
|
Share
capital
|
Retained
earnings
|
Total
equity
|
|
|
|
£'000
|
£'000
|
£'000
|
Shareholders' equity at 1 July 2023
|
|
611,452,217
|
663,809
|
190,380
|
854,189
|
|
|
|
|
|
|
Dividends paid
|
12,13
|
-
|
-
|
(26,904)
|
(26,904)
|
Total comprehensive income for the
period
|
|
-
|
-
|
3,991
|
3,991
|
|
|
|
|
|
|
Shareholders' equity at 31 December 2023
|
|
611,452,217
|
663,809
|
167,467
|
831,276
|
For the six
months ended 31 December 2022
|
Note
|
Number of
Ordinary
Shares
|
Share
capital
|
Retained
earnings
|
Total
equity
|
|
|
|
£'000
|
£'000
|
£'000
|
Shareholders' equity at 1 July 2022
|
|
611,452,217
|
663,809
|
194,582
|
858,391
|
|
|
|
|
|
|
Dividends paid
|
12,13
|
-
|
-
|
(25,314)
|
(25,314)
|
Total comprehensive income for the
period
|
|
-
|
-
|
37,642
|
37,642
|
|
|
|
|
|
|
Shareholders' equity at 31 December 2022
|
|
611,452,217
|
663,809
|
206,910
|
870,719
|
The accompanying notes form an
integral part of these unaudited condensed interim financial
statements.
Unaudited Condensed Statement of
Cash Flows
For the six
months ended 31 December 2023
|
|
Six months
ended
|
Six months
ended
|
|
|
31 December
2023
|
31 December
2022
|
|
|
Unaudited
|
Unaudited
|
|
Note
|
£'000
|
£'000
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
Total comprehensive income for the
period
|
|
3,991
|
37,642
|
Adjustments:
|
|
|
|
Decrease/(increase) in trade and
other receivables
|
|
443
|
(393)
|
(Decrease)/increase in other
payables and accrued expenses
|
|
(57)
|
185
|
Net gains on financial assets held
at fair value through profit or loss
|
7
|
(4,614)
|
(38,408)
|
Net
cash used in operating activities*
|
|
(237)
|
(974)
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Receipts from unconsolidated
subsidiary**
|
7
|
27,205
|
25,300
|
Net
cash generated from investing activities
|
|
27,205
|
25,300
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Dividends paid
|
12,13
|
(26,904)
|
(25,314)
|
Net
cash used in financing activities
|
|
(26,904)
|
(25,314)
|
|
|
|
|
Net increase/(decrease) in cash and
cash equivalents
|
|
64
|
(988)
|
Cash and cash equivalents at the
start of the period
|
|
969
|
1,619
|
|
|
|
|
Cash and cash equivalents at the end of the
period
|
9
|
1,033
|
631
|
The accompanying notes form an
integral part of these unaudited condensed interim financial
statements.
*Net cash used in operating
activities includes £450,000 (31 December 2022: £437,500) of
investment income.
**Receipts from unconsolidated
subsidiary includes £14.1 million (31 December 2022: £6.2 million)
of interest.
Notes to the Unaudited Condensed
Interim Financial Statements
For the six
months ended 31 December
2023
1. General
information
The Company is a non-cellular company limited
by shares, incorporated in Guernsey under the Law on 29 May 2013.
The Company's registration number is 56708, and it is regulated by
the GFSC as a registered closed-ended collective investment
scheme.
The investment objective of the Company is to
provide Shareholders with an attractive return, principally in the
form of quarterly income distributions, by being invested primarily
in solar energy assets located in the UK. The Company also has the
ability to invest a minority of its share capital into wind, hydro
and energy storage assets.
The Company has appointed Bluefield Partners
LLP as its Investment Adviser.
2. Accounting policies
a) Basis of
preparation
The financial statements, included in this
interim report, have been prepared in accordance with IAS 34
'Interim Financial Reporting', as adopted by the EU and the DTR.
These financial statements comprise only the results of the Company
as all of its subsidiaries are measured at fair value as explained
in Note 2.c. The financial statements have been prepared on a basis
that is consistent with accounting policies applied in the
preparation of the Company's annual financial statements for the
year ended 30 June 2023, approved for issue on 27 September
2023.
These financial statements have been prepared
under the historical cost convention with the exception of
financial assets held at fair value through profit or loss and in
accordance with the provisions of the DTR.
These financial statements do not include all
information and disclosures required in the annual financial
statements and should be read in conjunction with the Company's
audited financial statements for the year ended 30 June 2023, which
were prepared under full IFRS requirements and the DTRs of the UK
FCA.
Seasonal and cyclical variations
Although the bulk of the Company's
electricity generation occurs during the summer months when the
days are longer, the Company's results do not vary significantly
during reporting periods as a result of seasonal
activity.
b) Going
concern
The Directors, in their consideration of going
concern, have reviewed cash flow forecasts prepared by the
Investment Adviser, future projects in the pipeline and the
performances of the current solar and wind plants in
operation.
The Board has considered the Directors'
Valuation, which uses a blend of power price forecasts from leading
industry consultants. These forecasts are based on updated analysis
on European fuels and carbon forward prices as well as the expected
evolution of the UK's overall power supply and demand position in
the longer term. Electricity prices continued to fall during the
Period, with UK day-ahead base load priced pricing falling to
£85.92/MWh on average in the six months to 31 December 2023, down
from £110.75/MWh the previous six-month period to 30 June
2023.
The Company's PPA sales strategy is largely
unchanged: power sales prices are fixed for between 12 and 36
months ahead and went into 2024 with more than 78% of its merchant
revenue sold forward to March 2025, and is therefore not impacted
by the current fall in power prices. The Group continues to
generate a significant cash surplus and has been able to move cash
up the structure to comfortably meet the dividend requirements of
its parent. The Board is confident that, post debt amortisation, it
will achieve a high level of dividend cover for the present and the
2025 financial years, taking into account both current and carried
forward earnings.
On 22 June 2023, the Group agreed a £110
million increase to its existing committed £100 million RCF,
bringing the total committed amount to £210 million. The facility
also has an uncommitted accordion feature allowing it to be
increased by up to a further £30 million. As at 31 December 2023,
the Group had drawn £167 million from its RCF and has £410 million
of project level debt. Discussions are constantly held with lenders
to ensure extensions are secured comfortably ahead of maturity.
Given the strong cash generation, the Board is satisfied that debt
repayments will be met and confirms that no covenant breaches have
occurred in the period.
At the AGM held on 28 November 2023, BSIF's
shareholders voted overwhelmingly in favour of the continuation of
the Company for a further five years. Whilst there has been
volatility in the share price of the Company recently, this is
consistent with other funds in the sector. The portfolio continues
to benefit from high energy prices and strong cash generation even
when the impact of the Electricity Generator Levy is
considered.
On 15 February 2024 BSIF announced its
intention to commence a share buyback programme in response to the
recent weakness in BSIF's share price and the significant discount
that the share price represents to the value of BSIF's assets. The
capital allocation policy of BSIF undergoes regular review,
evaluating the relative merits of further investment (into both new
and existing assets), the management of debt and returning value to
shareholders. This review, and in the context of addressing what
the Board views as the excessive discount at which BSIF's shares
currently trade relative to the underlying NAV, led to the Board's
announcement of the share buyback programme. The initial cash
allocation has been set at £20 million for the purchase of its own
shares from existing cash reserves.
The Directors have concluded that it is
appropriate to adopt the going concern basis of accounting in
preparing these financial statements.
c) Accounting for subsidiaries
The Board considers that the
Company is an investment entity. In accordance with IFRS 10, all
subsidiaries are recognised at fair value through profit and
loss.
d)
Segmental reporting
IFRS 8 'Operating Segments' requires a
'management approach', under which segment information is presented
on the same basis as that used for internal reporting
purposes.
The Board, as a whole, has been determined as
constituting the chief operating decision maker of the Company. One
of the key measures of performance used by the Board to assess the
Company's performance and to allocate resources is the total return
on the Company's NAV, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss
used by the Board and that contained in these financial
statements.
For management purposes, the Company is
engaged in a single segment of business, being investment in
renewable energy infrastructure assets via SPVs, and in one
geographical area, the UK.
e) Fair value of subsidiary
The Company holds all of the
shares in the subsidiary, BR1, which is a holding vehicle used to
hold the Company's investments. The Directors believe it is
appropriate to value this entity based on the fair value of its
portfolio of SPV investment assets held plus its other assets and
liabilities. The SPV investment assets held by the subsidiary,
inclusive of their intermediary holding companies, are valued
semi-annually as described in Note 7 based on referencing
comparable transactions supported by discounted cash flow analysis
and are referred to as the Directors' Valuation.
3. Critical
accounting judgements, estimates and assumptions in applying the
Company's accounting policies
The preparation of these financial statements
under IFRS requires management to make judgements, estimates and
assumptions that affect the application of policies and reported
amounts of assets and liabilities, income and expenses. The
estimates and associated assumptions are based on historical
experience and other factors that are believed to be reasonable
under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results
may differ from these estimates.
The area involving a high degree of judgement
or complexity or area where assumptions and estimates are
significant to the financial statements has been identified as the
valuation of the portfolio of investments held by BR1 (see Note
7).
The estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision
and future period if the revision affects both current and future
periods.
As disclosed in Note 7, the Board believes it
is appropriate for the Company's portfolio to be benchmarked on a
£m / MW basis against comparable portfolio transactions and on this
basis the weighted average discount rate remains 8.00% (8.00% in
June 2023), which reflects the return hurdles in the market for
lowly levered assets with high levels of regulated
income.
4. Income from
investments
|
Six months
ended
|
Six months
ended
|
|
31 December
2023
|
31 December
2022
|
|
£'000
|
£'000
|
Monitoring fee in relation to loans
supplied (note 14)
|
450
|
437
|
|
450
|
437
|
The Company provides monitoring and loan
administration services to BR1 for which an annual fee is charged
and is payable in arrears.
5.
Administrative expenses
|
Six months
ended
31 December
2023
|
Six months
ended
|
|
31 December
2022
|
|
£'000
|
£'000
|
Investment advisory base fee (see
Note 14)
|
335
|
397
|
Administration fees
|
252
|
289
|
Legal and professional
fees
|
152
|
140
|
Directors' remuneration (see Note
14)
|
120
|
137
|
Audit fees
|
59
|
53
|
Regulatory Fees
|
58
|
50
|
Non-audit fees (interim
review)
|
48
|
45
|
Broker fees
|
25
|
25
|
Registrar fees
|
12
|
35
|
Insurance
|
7
|
12
|
Listing fees
|
3
|
3
|
Other expenses
|
15
|
17
|
|
1,086
|
1,203
|
6. Net Asset
Value per Ordinary Share
The calculation of NAV per Ordinary Share is
arrived at by dividing the total net assets of the Company as at
the unaudited condensed statement of financial position date by the
number of Ordinary Shares of the Company at that date.
7. Financial
assets held at fair value through profit or loss
|
|
Six months
ended
|
Twelve months
ended
|
|
|
31 December
2023
|
30 June
2023
|
|
|
|
Total
|
Total
|
|
|
|
£'000
|
£'000
|
Opening balance (Level 3)
|
|
|
852,844
|
856,380
|
Change in fair value
|
|
|
(22,591)
|
(3,536)
|
Closing balance (Level 3)
|
|
|
830,253
|
852,844
|
Investments at fair value through profit or
loss comprise the fair value of the investment portfolio, which the
Investment Adviser recommends on a quarterly basis, including a
complete review of all valuation assumptions on a semi-annual
basis, subject to the Board's approval, and the fair value of BR1,
the Company's single, direct subsidiary being its cash, working
capital and debt balances. A reconciliation of the investment
portfolio value to financial assets at fair value through profit
and loss in the Unaudited Condensed Statement of Financial Position
is shown below.
|
|
|
31 December
2023
|
30 June
2023
|
|
|
|
Total
|
Total
|
|
|
|
£'000
|
£'000
|
Investment portfolio, Directors'
Valuation
|
|
1,001,053
|
1,018,350
|
|
|
|
|
|
Immediate Holding Company
|
|
|
|
|
Cash
|
|
24,952
|
26,407
|
|
Working capital
|
|
(28,752)
|
(38,913)
|
|
Debt
|
|
(167,000)
|
(153,000)
|
|
|
|
(170,800)
|
(165,506)
|
|
|
|
|
|
Financial assets at fair value through profit or
loss
|
830,253
|
852,844
|
Analysis of net gains on financial assets held at fair value
through profit or loss (per unaudited condensed statement of
comprehensive income)
|
|
|
|
Six months
ended
|
Six months
ended
|
|
|
|
31 December
2023
|
31 December
2022
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Unrealised change in fair value of
financial assets held at fair value through profit or
loss
|
|
|
(22,591)
|
13,108
|
|
|
|
|
|
Cash receipts from unconsolidated
subsidiary*
|
|
|
27,205
|
25,300
|
|
|
|
|
|
Net
gains on financial assets held at fair value through profit and
loss
|
|
|
4,614
|
38,408
|
*Comprising of repayment of
loans and Eurobond interest
Fair value
measurements
Financial assets and financial liabilities are
classified in their entirety into only one of the following three
levels:
·
Level 1 - quoted prices (unadjusted) in active
markets for identical assets or liabilities;
·
Level 2 - inputs other than quoted prices included within
Level 1 that are observable for the assets or liabilities, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices);
·
Level 3 - inputs for assets or liabilities that are not based
on observable market data (unobservable inputs).
The determination of what constitutes
'observable' requires significant judgement by the Company. The
Company considers observable data to be market data that is readily
available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
The only financial instruments carried at fair
value are the investments held by the Company, through BR1, which
are fair valued at each reporting date. The Company's investments
have been classified within Level 3 as BR1's investments are not
traded and are valued using unobservable inputs.
Transfers
during the period
There have been no transfers between levels
during the six month period ended 31 December 2023. Any transfers
between the levels will be accounted for on the last day of each
financial period. Due to the nature of investments, these are
always expected to be classified as Level 3.
Directors'
Valuation methodology and process
The same valuation methodology and process for
operational assets is followed in these financial statements as was
applied in the preparation of the Company's financial statements
for the year ended 30 June 2023.
Before planning has been achieved,
no value is attributed to the Company's development
pipeline.
However, once the projects receive
planning permission they are then valued according to the following
criteria:
· Projects purchased by the Company from developers
are valued at investment cost (deemed to be
approximate fair value).
· Other projects in the
Company's pipeline are valued on an
asset-by-asset basis and benchmarked against values from wider
market processes.
During the construction stages
assets continue to be valued at investment cost (deemed to be
approximate fair value). The Investment Adviser intends for newly
built projects to be valued on a DCF basis shortly after they
become operational.
Investments that are operational are valued on
a DCF basis over the life of the asset (typically more than 25
years) and, under the 'willing buyer-willing seller' methodology,
prudently benchmarked on a £/MW basis against comparable
transactions for large scale portfolios.
Each investment is subject to full UK corporate
taxation at the prevailing rate with the tax shield being limited
to the applicable capital allowances from the Company's SPV
investments.
The Investment Adviser recommends the fair
value on a quarterly basis, which includes a complete review of all
valuation assumptions on a semi-annual basis, subject to the
Board's approval. The key inputs, as listed below, are derived from
various internal and external sources. The key inputs to a DCF
based approach are: the equity discount rate, the cost of debt
(influenced by interest rates, gearing level and length of debt),
power price forecasts, long term inflation rates, irradiation
forecasts, average wind speeds, operational costs, asset life and
taxation. Given discount rates are a product of not only the
factors listed previously but also regulatory support, perceived
sector risk and competitive tensions, it is not unusual for
discount rates to change over time. Evidence of this is shown by
way of the revisions to the original discount rates applied between
the first renewable acquisitions and those witnessed in the past
twelve months.
The Electricity Generator Levy ("EGL") on
excess profits produced by electricity generators was announced by
the Chancellor of the Exchequer in the Autumn Statement in November
2022 is a temporary 45% tax on the extraordinary returns made by
electricity generators last year while European energy prices
soared in the wake of Russia's 2022 invasion of Ukraine. The EGL
will be in place from 1 January 2023 until 31 March 2028, with the
benchmark price linked to UK Consumer Price Inflation. The
Investment Adviser previously sought external advice from its legal
and tax advisers on how to model the EGL within the valuation
methodology.
Given the fact discount rates are subjective,
there is sensitivity within these to the interpretation of factors
outlined above.
Judgement is used by the Board in determining
the weighted average discount rate of 8.00% (8.00% as at 30 June
2023), with four key factors that have impacted the adoption of
this rate outlined below:
a.
Transaction values have remained broadly consistent at
c.£1.20m-1.45m/MW for large scale solar portfolios and which the
Board have used to determine that an effective price of £1.28m/MW
is an appropriate basis for the valuation of the BSIF solar
portfolio as at 31 December 2023;
b.
Inclusion of the latest blended long term power forecasts from the
Company's three providers;
c.
Inclusion of inflation assumptions;
d.
Decrease in the cost of debt.
In order to smooth the sensitivity of the
valuation to forecast timing or the opinion taken by a single
forecast, the Board continues to adopt the application of a blended
power curve from three leading forecasters.
The fair value of operational SPVs is
calculated on a discounted cash flow basis in accordance with the
IPEV Valuation Guidelines. The Investment Adviser recommends the
fair value on a quarterly basis, which includes a complete review
of all valuation assumptions on a semi-annual basis, subject to the
Board's approval as at 30 June and 31 December each
year.
Sensitivity
analysis
The table below analyses the sensitivity of the
fair value of the Directors' Valuation to an individual input,
while all other variables remain constant.
The Board considers the changes in inputs to be
within a reasonable expected range based on its understanding of
market transactions. This is not intended to imply that the
likelihood of change or that possible changes in value would be
restricted to this range.
|
|
31 December
2023
|
30 June
2023
|
Input
|
Change in
input
|
Change in fair
value
of Directors'
Valuation
£m
|
Change in NAV per
share
(pence)
|
Change in fair
value
of Directors'
Valuation
£m
|
Change in
NAV
per share
(pence)
|
Discount rate
|
+
0.5%
|
(18.5)
|
(3.03)
|
(18.8)
|
(3.07)
|
-
0.5%
|
19.1
|
3.12
|
19.4
|
3.17
|
Power prices
|
+10%
|
58.2
|
9.52
|
54.2
|
8.86
|
-10%
|
(59.9)
|
(9.80)
|
(56.9)
|
(9.31)
|
Inflation rate
|
+
0.5%
|
42.7
|
6.98
|
31.7
|
5.19
|
-
0.5%
|
(40.4)
|
(6.61)
|
(30.2)
|
(4.94)
|
Energy yield
|
10
year P90
|
(101.7)
|
(16.63)
|
(105.0)
|
(17.17)
|
10
year P10
|
108.4
|
17.73
|
111.9
|
18.30
|
Operational costs
|
+10%
|
(9.2)
|
(1.50)
|
(9.1)
|
(1.49)
|
-10%
|
9.2
|
1.50
|
9.1
|
1.49
|
Subsidiaries and Associates
The Company holds investments
through subsidiary companies which have not been consolidated as a
result of the adoption of IFRS 10:
Investment entities exemption to consolidation. Below is the legal
entity name and ownership percentage for the SPVs which are all
incorporated in the UK except for Bluefield Durrants GmBH which is incorporated in
Germany.
Name
|
Ownership percentage
|
Name
|
Ownership percentage
|
Bluefield Renewables 1
Limited
|
100
|
Holly Farm Solar Park
Limited
|
100
|
Bluefield Renewables 2
Limited
|
100
|
Kellingley Solar Farm
Limited
|
100
|
Bluefield SIF Investments
Limited
|
100
|
Little Bear Solar Limited
|
100
|
Bunns Hill Solar Limited
|
100
|
Place Barton Farm Solar Park
Limited
|
100
|
HF Solar Limited
|
100
|
Willows Farm Solar
Limited
|
100
|
Hoback Solar Limited
|
100
|
Southwick Solar Farm
Limited
|
100
|
Littlebourne Solar Farm
Limited
|
100
|
Butteriss Down Solar Farm
Limited
|
100
|
Molehill PV Farm Limited
|
100
|
Goshawk Solar Limited
|
100
|
Pashley Solar Farm
Limited
|
100
|
Kite Solar Limited
|
100
|
ISP (UK) 1 Limited
|
100
|
Peregrine Solar Limited
|
100
|
Solar Power Surge Limited
|
100
|
Promothames 1 Limited
|
100
|
West Raynham Solar
Limited
|
100
|
Rookery Solar Limited
|
100
|
Sheppey Solar Limited
|
100
|
Mikado Solar Projects (2)
Limited
|
100
|
Capelands Solar Farm
Limited
|
100
|
Mikado Solar Projects (1)
Limited
|
100
|
North Beer Solar Limited
|
100
|
KS SPV 5 Limited
|
100
|
WEL Solar Park 2 Limited
|
100
|
Eagle Solar Limited
|
100
|
Hardingham Solar Limited
|
100
|
Kislingbury M1 Solar
Limited
|
100
|
Redlands Solar Farm
Limited
|
100
|
Thornton Lane Solar Farm
Limited
|
100
|
WEL Solar Park 1 Limited
|
100
|
Gretton Solar Farm
Limited
|
100
|
Saxley Solar Limited
|
100
|
Wormit Solar Farm Limited
|
100
|
Frogs Lake Solar Limited
|
100
|
Langlands Solar Limited
|
100
|
Old Stone Farm Solar Park
Limited
|
100
|
Bluefield Merlin Limited
|
100
|
Bradenstoke Solar Park
Limited
|
100
|
Harrier Solar Limited
|
100
|
GPP Langstone LLP
|
100
|
Rhydy Pandy Solar Limited
|
100
|
Ashlawn Solar Limited
|
100
|
New Energy Business Solar
Limited
|
100
|
Betingau Solar Limited
|
100
|
Corby Solar Limited
|
100
|
Grange Solar Limited
|
100
|
Falcon Solar Farm Limited
|
100
|
Hall Solar Limited
|
100
|
Folly Lane Solar Limited
|
100
|
Oulton Solar Limited
|
100
|
New Road Solar Limited
|
100
|
Romsey Solar Limited
|
100
|
Blossom 1 Solar Limited
|
100
|
Salhouse Solar Limited
|
100
|
Blossom 2 Solar Limited
|
100
|
Tollgate Solar Limited
|
100
|
New Road 2 Solar Limited
|
100
|
Trethosa Solar Limited
|
100
|
GPP Eastcott LLP
|
100
|
Welborne Energy LLP
|
100
|
GPP Blackbush LLP
|
100
|
Barvills Solar Limited
|
100
|
GPP Big Field LLP
|
100
|
Clapton Farm Solar Park
Limited
|
100
|
Oak Renewables 2 Limited
|
100
|
Court Farm Solar Park
Limited
|
100
|
Oak Renewables Limited
|
100
|
East Farm Solar Park
Limited
|
100
|
Creathorne Farm Solar Park Limited
(formerly Good Energy Creathorne Farm Solar Park (003)
Limited)
|
100
|
Gypsum Solar Farm Limited
|
100
|
Lower End Farm Solar Park Limited
(formerly Good Energy Lower End Farm Solar Park (026)
Limited)
|
100
|
Woolbridge Solar Park Limited
(formerly Good Energy Woolbridge Solar Park (010)
Limited)
|
100
|
Wind Energy Holdings
Limited
|
100
|
Rook Wood Solar Park Limited
(formerly Good Energy Rook Wood Solar Park (057)
Limited)
|
100
|
Wind Energy 1 Hold Co
Limited
|
100
|
Carloggas Solar Park Limited
(formerly Good Energy Carloggas Solar Park (009)
Limited)
|
100
|
Crockbaravally Wind Holdco
Limited
|
100
|
Cross Road Plantation Solar Park
Limited (formerly Good Energy Cross Road Plantation Solar Park
Limited)
|
100
|
Crockbaravally Wind Farm
Limited
|
100
|
Delabole Windfarm Limited (formerly
Good Energy Delabole Windfarm Limited)
|
100
|
Dayfields Solar Limited
|
100
|
Hampole Windfarm Limited (formerly
Good Energy Hampole Windfarm Limited)
|
100
|
Farm Power Apollo Limited
|
100
|
Renewable Energy Assets Limited
(formerly Good Energy Generation Assets No. 1 Limited)
|
100
|
Freathy Solar Park
Limited
|
100
|
Aisling Renewables
Limited
|
100
|
IREEL FIT TopCo Limited
|
100
|
Wind Energy 3 Hold Co
Limited
|
100
|
IREEL FIT HoldCo Limited
|
100
|
Wind Energy (NI) Limited
|
100
|
IREEL Wind TopCo Limited
|
100
|
Ash Renewables No 3
Limited
|
100
|
IREEL Solar HoldCo
Limited
|
100
|
Ash Renewables No 4
Limited
|
100
|
IREL Solar HoldCo Limited
|
100
|
Ash Renewables No 5
Limited
|
100
|
Ladyhole Solar Limited
|
100
|
Ash Renewables No 6
Limited
|
100
|
Morton Wood Solar Limited
|
100
|
Wind Beragh Limited
|
100
|
Nanteague Solar Limited
|
100
|
Wind Camlough Limited
|
100
|
Newton Down Wind HoldCo
Limited
|
100
|
Wind Cullybackey Limited
|
100
|
Newton Down Windfarm
Limited
|
100
|
Wind Dungorman Limited
|
100
|
Padley Wood Solar Limited
|
100
|
Wind Killeenan Limited
|
100
|
Peel Wind Farm (Sheerness)
Limited
|
100
|
Wind Mowhan Limited
|
100
|
Port of Sheerness Wind Farm
Limited
|
100
|
Wind Mullanmore Limited
|
100
|
Sandys Moor Solar Limited
|
100
|
Carmoney Energy Limited
|
100
|
St Johns Hill Wind Holdco
Limited
|
100
|
Errigal Energy Limited
|
100
|
St Johns Hill Wind
Limited
|
100
|
Galley Energy Limited
|
100
|
Trickey Warren Solar
Limited
|
100
|
S&E Wind Energy
Limited
|
100
|
Whitton Solar Limited
|
100
|
Wind Energy 2 Hold Co
Limited
|
100
|
LPF UK Equityco Limited
|
100
|
Boston RE Limited
|
100
|
LPF UK Solar Limited
|
100
|
DC21 Earth SPV Limited
|
100
|
LPF Kinetica UK Limited
|
100
|
E5 Energy Limited
|
100
|
Wind Energy Scotland (Fourteen Arce
Fields) Limited
|
100
|
E6 Energy Limited
|
100
|
Wind Energy Scotland (Birkwood
Mains) Limited
|
100
|
E7 Energy Limited
|
100
|
Wind Energy Scotland (Holmhead)
Limited
|
100
|
Hallmark Powergen 3
Limited
|
100
|
Mosscliff Power 5 Limited
|
100
|
Warren Wind Limited
|
100
|
Mosscliff Power 10
Limited
|
100
|
Wind Energy Three Limited
|
100
|
Mosscliff Power 2 Limited
|
100
|
Mosscliff Power 3 Limited
|
100
|
BF33C LHF Solar Limited
|
60
|
Mosscliff Power 4 Limited
|
100
|
AR006 GF Solar Limited
|
100
|
Mosscliff Power 6 Limited
|
100
|
Mauxhall Farm Energy Park
Limited
|
100
|
Mosscliff Power 7 Limited
|
100
|
BF16D BHF Solar Limited
|
100
|
Mosscliff Power Limited
|
100
|
BF33E BHF Solar Limited
|
60
|
E2 Energy PLC
|
100
|
WSE Hartford Wood Limited
|
60
|
Wind Energy One Limited
|
100
|
BF58 Hunts Airfield Solar
Limited
|
60
|
Wind Energy Two Limited
|
100
|
Twineham Energy Limited
|
60
|
New Road Wind Limited
|
100
|
Sheepwash Lane Energy Barn
Limited
|
100
|
Yelvertoft Solar Farm
Limited
|
100
|
Whitehouse Farm Energy Barn
Limited
|
100
|
Peradon Solar Farm
Limited
|
100
|
Bluefield Durrants GmBH
|
100
|
Lower Tean Leys Solar Farm
Limited
|
60
|
Lightning 1 Energy Park
Limited
|
100
|
Lower Mays Solar Farm
Limited
|
100
|
Abbots Ann Farm Solar Park
Limited
|
100
|
Longpasture Solar Farm
Limited
|
60
|
Canada Farm Solar Park
Limited
|
100
|
Leeming Solar Farm
Limited
|
60
|
Kinetica 846 Limited
|
100
|
Wallace Wood Solar Farm
Limited
|
60
|
Kinetica 868 Limited
|
100
|
LEO1B Energy Park Limited
|
60
|
New Road Solar 3 Limited
|
100
|
LH DNO Grid Services
Limited
|
60
|
New Road Solar 4 Limited
|
100
|
Sweet Briar Solar Farm
Limited
|
60
|
Galton Manor Solar Park
Limited
|
100
|
BF31 WHF Solar Farm
Limited
|
60
|
Renewable Energy Hold Co
Limited'
|
100
|
BF27 BF Solar Limited
|
60
|
Westover Gridco Limited
|
50
|
BF13A TF Solar Limited
|
60
|
Lyceum Solar Limited
|
9
|
HW Solar Farm Limited
|
100
|
|
|
AR108 Bolt Solar Farm
Limited
|
100
|
|
|
|
|
|
|
|
|
|
|
8. Trade and other receivables
|
31 December
2023
|
30 June
2023
|
|
£'000
|
£'000
|
Current assets
|
|
|
Monitoring fees
receivable
|
450
|
900
|
Other receivables
|
17
|
10
|
|
467
|
910
|
There are no material past due or impaired
receivable balances outstanding at the period end. The probability
of default of BSIFIL and BR1 was considered low and so no allowance
has been recognised based on 12-month expected credit loss as any
impairment would be insignificant.
The Board considers that the carrying amount
of all receivables approximates to their fair value.
9. Cash
and cash equivalents
Cash and cash equivalents comprise cash held
by the Company and short term bank deposits held with maturities of
up to three months. The carrying amounts of these assets
approximate their fair value.
10. Other payables and accrued
expenses
|
31 December
2023
|
30 June
2023
|
|
£'000
|
£'000
|
Current liabilities
|
|
|
Investment advisory fees (see Note
14)
|
163
|
164
|
Administration fees
|
134
|
136
|
Directors' Fees (see Note
14)
|
61
|
72
|
Audit fees
|
55
|
109
|
Other payables
|
64
|
53
|
|
477
|
534
|
The Company has financial risk management
policies in place to ensure that all payables are paid within the
agreed credit period. The Directors consider that the carrying
amount of all payables approximates to their fair value.
11. Earnings per share
|
Six months
ended
|
Six months
ended
|
|
31 December
2023
|
31 December
2022
|
|
|
|
Profit attributable to Shareholders
of the Company
|
£3,991,019
|
£37,642,084
|
Weighted average number of Ordinary
Shares in issue
|
611,452,217
|
611,452,217
|
Basic and diluted earnings from continuing operations and
profit for the period (pence per share)
|
0.65
|
6.16
|
12. Share capital and
reserves
The authorised share capital of the Company is
represented by an unlimited number of Ordinary Shares of no par
value which, upon issue, the Directors may designate into such
classes and denominate in such currencies as they may
determine.
Number of Ordinary Shares
|
Six months
ended
31 December
2023
|
Year ended
30 June
2023
|
|
Number of
Ordinary
Shares
|
Number of
Ordinary
Shares
|
|
|
|
Opening balance
|
611,452,217
|
611,452,217
|
Shares issued for cash
|
-
|
-
|
Closing balance
|
611,452,217
|
611,452,217
|
Shareholders' equity
|
Six months
ended
31 December
2023
|
Year ended
30 June
2023
|
|
£'000
|
£'000
|
|
|
|
Opening balance
|
854,189
|
858,391
|
Dividends paid
|
(26,904)
|
(50,995)
|
Total comprehensive
income
|
3,991
|
46,793
|
Closing balance
|
831,276
|
854,189
|
Rights
attaching to shares
The Company has a single class of Ordinary
Shares which are entitled to dividends declared by the Company. At
any General Meeting of the Company each ordinary Shareholder is
entitled to have one vote for each share held. The Ordinary Shares
also have the right to receive all income attributable to those
shares and participate in dividends made and such income shall be
divided pari passu among the holders of Ordinary Shares in
proportion to the number of Ordinary Shares held by
them.
Retained
earnings
Retained earnings comprise of accumulated
retained earnings as detailed in the unaudited condensed statement
of changes in equity.
13.
Dividends
On 7 August 2023, the Board
declared a third interim dividend of £12,840,497, in respect of the
year ended 30 June 2023, equating to 2.10pps (third interim
dividend in respect of the year ended 30 June 2022: 2.05pps), which
was paid on 1 September 2023 to Shareholders on the register on 18
August 2023.
On 28 September 2023, the Board
declared a fourth interim dividend of £14,063,401 in respect of the
year ended 30 June 2023, equating to 2.30pps (fourth interim
dividend in respect of the year ended 30 June 2022: 2.09pps), which
was paid on 6 November 2023 to Shareholders on the register on 6
October 2023.
14. Related Party
Transactions and Directors' Remuneration
In the opinion of the Directors, the Company
has no immediate or ultimate controlling party.
The total Directors' fees expense for the
Period amounted to £120,376 (31 December 2022:
£136,965) of which £61,220
was outstanding at 31 December 2023 (30 June 2023:
£71,517).
Remuneration paid to each Director is as
follows:
|
|
31 December
2023
|
31 December
2022
|
|
|
£'000
|
£'000
|
John Scott
|
|
34
|
24
|
Elizabeth Burne
|
|
25
|
22
|
Michael Gibbons (appointed 7 October
2022)
|
|
20
|
10
|
Meriel Lenfestey
|
|
24
|
23
|
Paul Le Page (retired 30 September
2023)
|
|
13
|
26
|
John Rennocks (retired 22 February
2023)
|
|
N/A
|
32
|
Chris Waldron (appointed 1 December
2023)
|
|
4
|
N/A
|
|
|
120
|
137
|
The number of Ordinary Shares held by each
Director is as follows:
|
|
31 December
2023
|
31 December
2022
|
John Scott*
|
|
643,929
|
625,619
|
Elizabeth Burne
|
|
15,000
|
15,000
|
Michael Gibbons (appointed 7 October
2022)
|
|
17,800
|
-
|
Meriel Lenfestey
|
|
7,693
|
7,693
|
Paul Le Page (retired 30 September
2023)
|
|
N/A
|
35,000
|
John Rennocks* (retired 22 February
2023)
|
|
N/A
|
320,388
|
Chris Waldron (appointed 1 December
2023)
|
30,000
|
N/A
|
|
|
714,422
|
1,003,700
|
*Includes shares held by PCAs.
John Scott and Michael Gibbons are Directors
of BR1. Neil Wood and James Armstrong, who are partners of the
Investment Adviser, are also Directors of BSIFIL and
BR1.
Fees paid during the period by SPVs to BSL, a
company which has the same ownership as that of the Investment
Adviser, totalled £2,681,775 (31 December 2022:
£1,971,264).
Fees paid during the period by SPVs to BOL, a
company which has the same ownership as that of the Investment
Adviser, totalled £ 5,834,327 (31 December 2022:
£3,706,826).
Fees paid during the period by SPVs to BRD, a
company which has the same ownership as that of the Investment
Adviser, totalled £386,197 (31 December 2022: £379,295).
Under the terms of the Investment Advisory
Agreement, the Investment Adviser is entitled to a base fee. The
base fee is payable quarterly in arrears in cash, at a rate
equivalent to 0.80% per annum of the NAV up to and including
£750,000,000, 0.75% per annum of the NAV above £750,000,000 and up
to and including £1,000,000,000 and 0.65% per annum of the NAV
above £1,000,000,000. The base fee will be calculated on the NAV
reported in the most recent quarterly NAV calculation as at the
date of payment. During the period an updated Investment Advisory
Agreement was approved with an amendment to the base fee taking
effect on 21 December 2023; at a rate equivalent to 0.80% per annum
of the NAV up to and including £750,000,000, 0.75% per annum of the
NAV above £750,000,000 and up to and including £900,000,000 and
0.65% per annum of the NAV above £900,000,000.
The Company and BR1's investment advisory fees
for the period amounted to £3,342,456 (31 December 2022:
£3,650,104) of which £545,719 (30 June 2023: £554,919) was
outstanding at the period end and is to be settled in cash. The
investment advisory fees for the period attributable to the Company
amounted to £334,859 (31 December 2022: £397,329) of which £162,673
(30 June 2023: £163,984) was outstanding at the period
end.
The Company's loan monitoring fee income for
the period, due from its subsidiary BR1, amounted to £450,000 (31
December 2022: £437,500) of which £450,257 was outstanding at the
period end (30 June 2023: £900,257).
15. Risk
Management Policies and Procedures
As at 31 December 2023 there has been no
change to financial instruments risk to those described in note 15
of the financial statements to 30 June 2023.
16. Subsequent
events
On 25 January 2024, the Company
announced the successful completion of the first phase of the
partnership with GLIL, with £20 million invested in equity
alongside £200 million from GLIL to acquire a 247 MW portfolio of
UK solar assets from Lightsource bp. BSIF's ownership stake in the
portfolio is 9%. The Company funded the acquisition using earnings
which arose in the financial year ended 30 June 2023, after the
payment of dividends, debt amortisation and the EGL.
On 26 January 2024, the Board
declared its first interim dividend of £13,451,949, in respect of
the year ending 30 June 2024, equating to 2.20pps (first interim
dividend in respect of the year ended 30 June 2023: 2.10pps), which
will be paid on or around 9 March 2024 to Shareholders on the
register on 9 February 2024.
On 15 February 2024, the Company
announced a share buyback programme in
which it has allocated £20 million to purchase its own shares post
closed period. This announcement was made in response to recent
weakness in the Company's share price. This buy back will be funded
from a combination of available liquidity, excess operating cash
flows from the portfolio and the proceeds from any asset sales as
already announced.
Post period end, in early January
one solar project of 50MW received planning permission located in
Durham.
Glossary of Defined
Terms
Administrator means Ocorian
Administration (Guernsey) Limited
AGM means the Annual General
Meeting
AIC means the Association of
Investment Companies
AIC Code means the
Association of Investment Companies Code of Corporate
Governance
AIF means Alternative
Investment Fund
AIFM means Alternative
Investment Fund Manager
AIFMD means the Alternative
Investment Fund Management Directive
Articles means the Memorandum
of 29 May 2013 as amended and the Articles of Incorporation as
adopted by special resolution on 7 November 2016.
Auditor means KPMG Channel
Islands Limited (see KPMG)
Aviva Investors means Aviva
Investors Limited
BEIS means the Department for
Business, Energy & Industrial Strategy
BEPS means Base erosion and
profit shifting
Bluefield means Bluefield
Partners LLP
Bluefield Group means
Bluefield Partners LLP and Bluefield Companies
BOL means Bluefield
Operations Limited
Board means the Directors of
the Company
BR1 means Bluefield
Renewables 1 Ltd being the only direct subsidiary of the
Company
BRD means Bluefield Renewable
Developments Limited
BSIF means Bluefield Solar
Income Fund Limited
BSIFIL means Bluefield SIF
Investments Limited
BSL means Bluefield Asset
Management Services Limited
BSUoS means Balancing
Services Use of System charges: costs set to ensure that network
companies can recover their allowed revenue under Ofgem price
controls
Business days means every
official working day of the week, generally Monday to Friday
excluding public holidays
CAGR means compound annual
growth rate
Calculation Time means the
Calculation Time as set out in the Articles of
Incorporation
CCC means Committee on
Climate Change
CfD means Contract for
Difference
Company means Bluefield Solar
Income Fund Limited (see BSIF)
Companies Law means the
Companies (Guernsey) Law 2008, as amended (see Law)
Cost of debt means the
blended cost of debt reflecting fixed and index-linked
elements
CO2e means Carbon Dioxide
equivalent
CSR means Corporate Social
Responsibility
CPIH means Consumer Price
Index including owner occupiers' housing costs
DCF means Discounted Cash
Flow
DECC means the Department of
Energy and Climate Change
Defect Risk means that there
is an over-reliance on limited equipment manufacturers which could
lead to large proportions of the portfolio suffering similar
defects
DNO means Distribution
Network Operator
DSCR means Long Term Debt
Service Cover Ratio calculated as net operating income as a
multiple of debt obligations due within one year
DTR means the Disclosure
Guidance and Transparency Rules of the UK's Financial Conduct
Authority
EBITDA means earnings before
interest, tax, depreciation and amortisation
EGL means Electricity
Generator Levy
EGM means Extraordinary
General Meeting
EIS means Enterprise
Investment Scheme
EPC means Engineering,
Procurement & Construction
EPS means Earning per
share
ESG means Environmental,
Social and Governance
EU means the European
Union
EV means enterprise
valuation
FAC means Final Acceptance
Certificate
FATCA means the Foreign
Account Tax Compliance Act
Financial Statements means
the unaudited condensed interim financial statements
FiT means Feed-in
Tariff
GAV means Gross Asset Value
on investment basis including debt held at SPV level
GDPR means General Data
Protection Regulation
GFSC means the Guernsey
Financial Services Commission
GHG means greenhouse
gas
GHG Protocol supplies the
world's most widely used greenhouse gas accounting
standards
Group means Bluefield Solar
Income Fund Limited, Bluefield Renewables 1 Limited and its
subsidiaries
Guernsey Code means the
Guernsey Financial Services Commission Finance Sector Code of
Corporate Governance
GWh means Gigawatt
hour
GW means Gigawatt
IAS means International
Accounting Standard
IASB means the International
Accounting Standards Board
IFRS means International
Financial Reporting Standards as adopted by the EU
Investment Adviser means
Bluefield Partners LLP
IPEV Valuation Guidelines means the International Private Equity and Venture Capital
Valuation Guidelines
IPO means initial public
offering
IRR means Internal Rate of
Return
IVSC means The International
Valuation Standards Council
KID mans Key Information
Document
KPI means Key Performance
Indicators
KPMG means KPMG Channel
Islands Limited (see Auditor)
kWh means Kilowatt
hour
kW means Kilowatt
Law means Companies
(Guernsey) Law, 2008 as amended (see Companies Law)
LD means liquidated
damages
Listing Rules means the set
of FCA rules which must be followed by all companies listed in the
UK
Lloyds means Lloyds Bank
Group plc
LSE means London Stock
Exchange plc
LTF means long term facility
provided by Aviva Investors limited
Macquarie means Macquarie
Bank Limited
Main Market means the main
securities market of the LSE
MW means Megawatt (a unit of
power equal to one million watts)
MWh means Megawatt
hour
NatWest means NatWest
International plc
NAV means Net Asset Value as
defined in the prospectus
NMPI means Non-mainstream
Pooled Investments and Special Purpose Vehicles and the rules
around their financial promotion
NPPR means the AIFMD National
Private Placement Regime
O&M means Operation and
Maintenance
OECD means The Organisation
for Economic Cooperation and Development
Official List means the
Premium Segment of the UK Listing Authority's Official
List
Ofgem means Office of Gas and
Electricity Markets
Ordinary Shares means the
issued ordinary share capital of the Company, of which there is
only one class
Outage Risk means that a
higher proportion of large capacity assets hold increased exposure
to material losses due to curtailments and periods of
outage
P10 means Irradiation
estimate exceeded with 10% probability
P90 means Irradiation
estimate exceeded with 90% probability
PCA means Persons Closely
Associated
PPA means Power Purchase
Agreement
pps means pence per Ordinary
Share
PR means Performance Ratio
(the ratio of the actual and theoretically possible energy
outputs)
PRIIPS means Packaged Retail
and Insurance - Based Investment Products
PV means
Photovoltaic
RBSI means Royal Bank of
Scotland International plc
RCF means Revolving Credit
Facility
REGO means
Renewable Energy Guarantees of Origin
REMA means Review of
Electricity Market Arrangements
RO Scheme means the Renewable
Obligation Scheme which is the financial mechanism by which the UK
government incentivises the deployment of large-scale renewable
electricity generation by placing a mandatory requirement on
licensed UK electricity suppliers to source a specified and
annually increasing proportion of electricity they supply to
customers from eligible renewable sources or pay a
penalty
ROC means Renewable
Obligation Certificates
ROC recycle means the payment
received by generators from the redistribution of the buy-out fund.
Payments are made into the buy-out fund when suppliers do not have
sufficient ROCs to cover their obligation
RPI means the Retail Price
Index
Santander UK means Santander
UK plc
SASB means Sustainability
Accounting Standards Board
SDG means the United Nations
Sustainable Development Goals
SFDR means Sustainable
Finance Disclosure Regulation
SONIA means Sterling Over
Night Indexed Average
SPA means Share Purchase
Agreement
SPVs means a Special Purpose
Vehicle which hold the Company's investment portfolio of underlying
operating assets
Sterling means the Great
British pound currency
TISE means The International
Stock Exchange (based in the Channel Islands)
UK means the United Kingdom
of Great Britain and Northern Ireland
UK Code means the UK
Corporate Governance Code
UK
FCA means the UK Financial Conduct
Authority
UNGC means the United Nations
Global Compact
United Nations Principles for Responsible
Investment means an approach to
investing that aims to incorporate environmental, social and
governance factors into investment decisions, to better manage risk
and generate sustainable, long term returns.
Alternative Performance Measures
Unaudited
APM
|
Definition
|
Purpose
|
Calculation
|
Total
return
|
The
percentage increase/(decrease) in NAV, inclusive of dividends paid,
in the reporting period.
|
A key
measure of the success of the Investment Adviser's investment
strategy.
|
The
change in NAV for the period plus any dividends paid divided by the
initial NAV.
(135.95-139.70+2.10+2.30)/139.70=0.47%
|
Total
Shareholder Return
|
The
percentage increase/(decrease) in share price, inclusive of
dividends paid, in the reporting period.
|
A measure
of the return that could have been obtained by holding a share over
the reporting period.
|
The
change in share price for the period plus any dividends paid
divided by the initial share price.
(118.6-120.0+2.10+2.30)/120.0=2.50% The measure excludes
transaction costs.
|
Total
Dividends Declared in Period
|
This is
the sum of the dividends that the Board has declared relating to
the reporting period.
|
A measure
of the income that the company has paid to shareholders that can be
compared to the Company's target dividend.
|
The
linear sum of each dividend declared in the reporting
period.
|
Underlying Earnings
|
Total net
income of the Company's investment portfolio.
|
A measure
to link the underlying financial performance of the operational
projects to the dividends declared and paid by the
Company.
|
Total
income of the Company's portfolio minus Group operating costs minus
Group debt costs.
|
Market
Capitalisation
|
The total
value of the Company's issued share capital.
|
This is a
key indicator of the Company's liquidity.
|
The price
per share multiplied by the number of shares in issue.
|
NAV per
Ordinary Share
|
The
Company's closing NAV per share at the period end.
|
A measure
of the value of one Ordinary Share.
|
The net
assets attributable to Ordinary Shares on the statement of
financial position (£831.3m) divided by the number of ordinary
shares in issue (611,452,217) as at the calculation
date.
|
Sale of
Electricity
|
The total
proportion of revenue generated by the Company's portfolio that is
attributable to electricity sales.
|
A measure
to understand the proportion of revenue attributable to sales of
electricity.
|
The
amount of revenue attributable to electricity sales divided by the
total revenue generated by the Company's portfolio, expressed as a
percentage.
|
Total
Revenue
|
Total net
income of the Company's investment portfolio.
|
A measure
to outline the total revenue of the portfolio on per MW
basis.
|
Total
income of the Company's portfolio owned for the period.
|
PPA
Revenue
|
Revenue
generated through PPAs.
|
A measure
to outline the revenue earned by the portfolio from power
sales.
|
Total
revenue from all power price sales during the period from the
Company's portfolio.
|
Regulated
Revenue
|
Revenue
generated from the sale of FiTs and ROCs.
|
A measure
to outline the revenue earned by the portfolio from government
subsidies.
|
Total
revenue from all subsidy income earned during the period from the
Company's portfolio.
|
Ongoing charges ratio
|
The recurring costs that the Company
and BR1 has incurred during the period excluding performance fees
and one off legal and professional fees expressed as a percentage
of the Company's average NAV for the period.
|
A measure of the minimum gross
profit that the Company needs to produce to make a positive return
for Shareholders.
|
Calculated in accordance with the AIC methodology detailed in
the table below.
|
Weighted Average ROC
|
A relative indicator of the
regulatory revenues within a renewable portfolio.
|
A measure of the Company's portfolio
earnings as a proportion of its assets.
|
Total
Regulated Revenue received by the portfolio divided by the product
of the current market value of a ROC and the annual generation
capacity of the portfolio.
|
Weighted Average Life
|
The average operational life of the
Company's portfolio.
|
A measure of the Company's progress
in extending the life of its portfolio beyond the end of the
subsidy regime in 2036.
|
The sum
of the product of each plant's operational capacity in MW and the
plant's expected life divided by the total portfolio capacity in
MW.
|
Directors' Valuation
|
The gross value of the SPV
Investments held by BR1, including their holding companies minus
Project level debt.
|
An estimate of the sum that would be
realised if the Company's portfolio was sold on a willing buyer,
willing seller basis.
|
A
reconciliation of the Directors' Valuation to Financial assets at
fair value through profit and loss is shown in Note 7 of the
financial statements.
|
Gross Asset Value
|
The Market Value of all Assets
within the Company.
|
A measure of the total value of the
Company's Assets.
|
The total
assets attributable to Ordinary Shares on the Statement of
Financial Position.
|
Total Outstanding Debt
|
The total outstanding balances of
all debt held within the Company and its subsidiaries.
|
A measure that is used to establish
the Company's level of gearing.
|
The sum
of the Sterling equivalent values of all loans held within the
Company.
|
Ongoing Charges
|
Six
month period to 31 December 2023
|
|
The Company
|
BR1
|
Total
|
|
£'000
|
£'000
|
£'000
|
Fees to Investment Adviser
|
335
|
3,008
|
3,343
|
Legal and professional
fees*
|
84
|
24
|
108
|
Administration fees
|
252
|
-
|
252
|
Directors' remuneration
|
120
|
7
|
127
|
Audit fees
|
59
|
9
|
68
|
Other ongoing expenses
|
119
|
103
|
222
|
|
|
|
|
Total ongoing expenses
|
969
|
3,151
|
4,120
|
|
|
|
|
Average NAV
|
|
|
839,798
|
|
|
|
|
Annualised Ongoing Charges (using AIC
methodology)
|
0.98%
|
* Includes non-audit fee
(interim review)
General Information
Board of
Directors (all
non-executive)
John Scott (Chair and
Chair of Nomination Committee)
Elizabeth Burne
(Chair of Audit and Risk Committee and Management Engagement and
Service Providers Committee)
Michael Gibbons CBE
(Senior Independent Director and Chair of Remuneration
Committee)
Meriel Lenfestey
(Chair of Environmental, Social and Governance
Committee)
Paul Le Page (retired
30 September 2023)
Chris Waldron
(appointed 1 December 2023)
|
Registered Office
PO Box 286
Floor 2, Trafalgar
Court
Les Banques, St Peter
Port
Guernsey, GY1 4LY
Administrator, Company Secretary and
Designated Manager
Ocorian
Administration (Guernsey) Limited
Floor 2, Trafalgar Court
Les Banques, St Peter
Port
Guernsey, GY1 4LY
Independent Auditor
KPMG Channel Islands
Limited
Glategny Court,
Glategny Esplanade
St Peter
Port
Guernsey, GY1
1WR
Registrar
Computershare Investor Services (Guernsey)
Limited
13 Castle Street
St Helier
Jersey, JE1 1ES
Principal Bankers
NatWest International
plc
35 High
Street
St Peter
Port
Guernsey, GY1
4BE
|
Investment Adviser
Bluefield Partners
LLP
6 New Street
Square
London, EC4A
3BF
Sponsor, Broker and Financial
Adviser
Deutsche Numis
Securities Limited
45 Gresham
Street
London, EC2V
7BF
Legal Advisers to the
Company (as to English law)
Norton Rose Fulbright
LLP
3 More London
Riverside
London, SE1
2AQ
Legal Advisers to the
Company
(as to Guernsey law)
Carey
Olsen
PO Box 98, Carey
House
Les Banques, St Peter
Port
Guernsey, GY1
4BZ
|