TIDMFSFL
RNS Number : 9283L
Foresight Solar Fund Limited
16 September 2021
16 September 2021
Foresight Solar Fund Limited
('Foresight Solar', 'FSFL' or 'the Company')
Interim Results to 30 June 2021
Foresight Solar, a fund investing in a diversified portfolio of
ground-based solar PV and battery storage assets in the UK and
internationally, is pleased to announce its Interim Results for the
six months ended 30 June 2021.
Highlights
-- A strong recovery in power price forecasts in the short and medium
term was the main driver of increased NAV to GBP596.4m (31 December
2020: GBP582.2m) and the 2.3% increase in NAV per share to 98.0p
(31 December 2020: 95.8p).
-- Solid operational performance of the UK portfolio with generation
3.4% above base case, driven by high asset availability and higher
than expected irradiation levels.
-- Portfolio generation decreases to 2.3% below base case when the
international portfolio is included, due to the Australian assets.
Whilst operational problems were resolved during the period, irradiation
was low and network issues will persist into H2 2021.
-- First investment in battery storage systems in the UK, further increasing
the diversification of the Company's portfolio and providing an
additional source of attractive investment on a risk adjusted basis.
-- Successfully refinanced the Bannerton asset with A$81m senior debt
facility on significantly more attractive financing terms.
-- Total dividend of 3.49 pence per share declared during the period;
the Company remains on track to deliver its 2021 target dividend
of 6.98 pence.
Key Metrics
As at As at 31 December As at
30 June 2021 2020 30 June 2020
Net Asset Value ("NAV") GBP596.4m GBP582.2m GBP582.1m
-------------- ------------------ --------------
NAV per Share 98.0 pence 95.8 pence 96.0p
-------------- ------------------ --------------
Gross Asset Value ("GAV") GBP1,057.2 GBP1,054.6 GBP1,022.5
million* million* million*
-------------- ------------------ --------------
Total Dividend per Share 3.49 pence 6.91 pence 3.45 pence
for the period
-------------- ------------------ --------------
Annualised Total Shareholder
Return since IPO** 5.5% 5.9% 6.79%
-------------- ------------------ --------------
*Calculated as NAV plus outstanding debt.
** Annualised from IPO on 29 October 2013
Commenting on the Company's results, Alex Ohlsson, Chairman of
Foresight Solar Fund Limited, said:
"An increase in near-term power prices, a solid UK operational
performance and successful active management of power prices all
contributed to a strong performance by Foresight Solar over the
first six months of 2021.
"Following overwhelming shareholder approval in February to
allow the introduction of battery storage systems (BSS) to the
portfolio, we were pleased to reach a significant milestone in May
with our first BSS investment. We expect battery storage systems,
either stand-alone or co-locating with renewable generation, to
become increasingly utilised as further grid stability is required
and to provide value creating opportunities arising from the energy
transition drive in the UK and internationally.
"Looking forward, while we will remain focused on UK
acquisitions, the Board believes geographical diversification will
benefit shareholders over the longer term and the Investment
Manager, through its international reach, continues to review an
attractive pipeline of solar and battery assets in the UK and
internationally that can deliver growth opportunities. The Board of
Foresight Solar, supported by the Investment Manager, will continue
to aim to deliver its progressive dividend policy by optimising the
operational performance of the portfolio and ongoing active power
price management."
Results presentation
Foresight Solar Fund Ltd is holding a webcast presentation for
analysts at 08:30 today. Analysts wishing to attend should contact
foresightsolar@citigatedewerogerson.com . An investor presentation
will also be uploaded to the FSFL website.
Dividend Declaration
The Board is pleased to announce the second interim dividend
relating to 2021 of 1.745 pence per ordinary share ("the
Dividend"). The shares will go ex-dividend on 28 October 2021 and
the Dividend will be paid on 26 November 2021 to shareholders on
the register as at the close of business on 29 October 2021.
Foresight Solar confirms its dividend target of 6.98 pence per
ordinary share for 2021.
Full details of the scrip dividend alternative that is being
offered in respect of the Dividend (the "Scrip Offer") and the
Scrip Dividend Scheme can be found in the Scrip Dividend
Alternative Offer Document (the "Scrip Document") available on the
Company's website to view and/or download at
fsfl.foresightgroup.eu/investor-relations/. The Scrip Document is
also available on the National Storage Mechanism website at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and copies
are also available for inspection at JTC House, 28 Esplanade, St.
Helier, Jersey JE2 3QA.
The reference price of the new shares issued under the Scrip
Offer will be calculated and published on or around 4 November
2021.
Shareholders will receive the Dividend in cash, unless they have
previously completed a standing election (a "Form of Election") to
receive new shares pursuant to the Scrip Offer. Shareholders who
would like to receive such new shares rather than cash, and who
have not previously submitted a Form of Election, should complete
the Form of Election at the back of the Scrip Document and return
it to the Company's Receiving Agent, Computershare Investors
Service (Jersey) Limited by no later than 5.00pm on 15 November
2021.
The expected timetable in relation to the Dividend will be as
follows:
Ex-dividend Date 28 October 2021
Record Date 29 October 2021
-----------------
Scrip Price Announcement 4 November 2021
-----------------
Last Date for Submission of 15 November 2021
Forms of Election
-----------------
Last Date Crest Elections 15 November 2021
-----------------
Anticipated Listing of New 26 November 2021
Shares
-----------------
Dividend Payment Date 26 November 2021
-----------------
For further information, please contact:
Foresight Group
+44 (0)20 3911 2318
Nish Sivarajan
InstitutionalIR@ForesightGroup.eu
Jefferies International Limited
+44 (0)20 7029 8000
Neil Winward
Gaudi Le Roux
Citigate Dewe Rogerson
+44 (0)20 7638 9571
Toby Moore
Elizabeth Kittle
Lucy Gibbs
Notes to Editors
About Foresight Solar Fund Limited
Foresight Solar is a Jersey registered, closed-end investment
company investing in a diversified portfolio of ground-based solar
PV and battery assets in the UK and internationally.
Since its IPO in October 2013, FSFL has raised more than GBP634
million through multiple share placings. It is the largest
UK-listed dedicated solar energy investment company by solar
installed capacity and market capitalisation.
The Company targets a progressive dividend policy and has paid
all target dividends to date. The target dividend for 2021 is 6.98
pence per share.
FSFL is managed by Foresight Group, a leading independent Global
Infrastructure & Private Equity manager, which provides FSFL
with depth of experience in fund management, deal origination and
execution. The Company has a fully independent Board of Directors
and is chaired by Alex Ohlsson. The lead Investment Manager for the
Company is Ricardo Piñeiro, Partner at Foresight Group.
FORESIGHT SOLAR FUND LIMITED
UNAUDITED INTERIM REPORT
FOR THE SIX MONTHS TO 30 JUNE 2021
ABOUT US
Foresight Solar Fund Limited is a closed --ended investment
company investing in a diversified portfolio of ground-based solar
PV and battery storage assets in the UK and internationally.
The Company aims to deliver sustainable investment returns to
investors alongside strong environmental, social and governance
("ESG") benefits.
INVESTMENT OBJECTIVES
Deliver sustainable, progressive quarterly dividend
Develop geographical diversity
Preserve enhanced capital value
HIGHLIGHTS
AS AT 30 JUNE 2021
GBP596.4m 98.0p GBP1,057.2m
GROSS ASSET VALUE
NET ASSET VALUE ("NAV") NAV PER SHARE ("GAV")
(31 December 2020:
(31 December 2020: GBP582.2m) (31 December 2020: 95.8p) GBP1,054.6m)
----------------------------- ---------------------------- --------------------
3.49p 5.5% 5.9%
DIVID PER SHARE DECLARED ANNUALISED TOTAL SHAREHOLDER ANNUALISED TOTAL NAV
RELATING TO THE PERIOD RETURN SINCE IPO RETURN SINCE IPO
(Full year to 31 December (31 December 2020:
2020: 6.91p) (31 December 2020: 5.9%) 5.2%)
----------------------------- ---------------------------- --------------------
169,655
UK HOMES POWERED IN THE
PERIOD
----------------------------- ---------------------------- --------------------
-- A strong recovery in power price forecasts in the short and medium
term was the main driver of increased NAV to GBP596.4 million
(31 December 2020: GBP582.2 million) and the 2.3% increase in
NAV per share to 98.0 pence (31 December 2020: 95.8 pence)
-- Solid operational performance of the UK portfolio with generation
3.4% above base case, driven by high asset availability and higher
than expected irradiation levels
-- Portfolio generation decreases to 2.3% below base case when the
international portfolio is included, due to the Australian assets.
Whilst operational problems were resolved during the period, irradiation
was low and network issues will persist into H2 2021
-- First investment in battery storage systems in the UK, further
increasing the diversification of the Company's portfolio and
providing an additional source of attractive investment on a risk
adjusted basis
-- Successfully refinanced the Bannerton asset with A$81 million
senior debt facility on significantly more attractive financing
terms
-- Total dividend of 3.49 pence per share declared during the period;
the Company remains on track to deliver its 2021 target dividend
of 6.98 pence
GEOGRAPHIC FOOTPRINT
Our diversified portfolio consists of 59 assets with a total
global net peak capacity of 1.019GW.
UK
Assets:
1 Wymeswold Solar
2 Castle Eaton Solar
3 Highfields Solar
4 High Penn Solar
5 Pitworthy Solar
6 Hunters Race Solar
7 Spriggs Farm Solar
8 Bournemouth Solar
9 Landmead Solar
10 Kencot Hill Solar
11 Copley Solar
12 Atherstone Solar
13 Paddock Wood Solar
14 Southam Solar
15 Port Farm Solar
16 Membury Solar
17 Shotwick Solar
18 Sandridge Solar
19 Wally Corner Solar
20 Coombeshead Solar
21 Park Farm Solar
22 Sawmills Solar
23 Verwood Solar
24 Yardwall Solar
25 Abergelli Solar
26 Crow Trees Solar
27 Cuckoo Grove Solar
28 Field House Solar
29 Fields Farm Solar
30 Gedling Solar
31 Homeland Solar
32 Marsh Farm Solar
33 Sheepbridge Solar
34 Steventon Solar
35 Tengore Solar
36 Trehawke Solar
37 Upper Huntingford Solar
38 Welbeck Solar
39 Yarburgh Solar
40 Abbey Fields Solar
41 SV Ash Solar
42 Bilsthorpe Solar
43 Bulls Head Solar
44 Lindridge Solar
45 Manor Farm Solar
46 Misson Solar
47 Nowhere Solar
48 Pen Y Cae Solar
49 Playters Solar
50 Roskrow Solar
51 Sandridge Battery
51 Assets
Since IPO, FSFL has continued to grow its portfolio in the UK
and internationally. In 2021, the portfolio has been further
diversified with the first battery storage acquisition.
Australia
Assets:
1 Bannerton Solar
2 Longreach Solar
3 Oakey 1 Solar
4 Oakey 2 Solar
4 Assets
Spain
Assets:
1 Virgen del Carmen Solar
2 Los Llanos Solar
3 Los Salinas Solar
4 Los Picos Solar
4 Assets
CHAIRMAN'S STATEMENT
An increase in near-term power prices, a solid UK operational
performance and successful active management of power prices all
contributed to a strong performance by Foresight Solar over the
first six months of 2021.
Alexander Ohlsson
Chairman
On behalf of the Board, I am pleased to present the Unaudited
Interim Report and Financial Statements for Foresight Solar Fund
Limited (the "Company" or the "Fund") for the six months ended 30
June 2021.
The Company delivered strong performance over the first six
months of the financial year. An increase in near-term power
prices, solid UK operational performance and successful active
management of power prices were all key factors. The Board is
pleased with the support from the Investment Manager and
third-party suppliers in delivering a positive response since the
first national lockdown was announced in 2020. This support, in
optimising the asset management processes, has allowed the
Company's portfolio to continue to deliver a strong performance
with minimum operational disruptions. In the UK, electricity
generation for the period was 3.4% above base case, driven by high
asset availability and higher than expected irradiation levels.
The first six months of 2021 have consolidated the power price
recovery experienced at the end of 2020, resulting from higher
demand for electricity following the easing of COVID-19 pandemic
restrictions and strong gas and carbon prices. The Board reiterates
the Company's objective of achieving a high degree of cash flow
protection by maintaining a large proportion of its revenue fixed
via subsidy mechanisms or fixed price agreements.
The aim of this strategy is to deliver a stable dividend
distribution policy. The Board has reconfirmed the dividend target
for the financial year of 6.98 pence per share, having delivered
all its target dividends since IPO, representing a dividend yield
of 7.1% based on the share price of 99.0 pence per share as at 30
June 2021.
The Company reached a significant milestone during the period
with its first investment in battery storage systems ("BSS") in the
UK. The acquisition follows the change of the Company's investment
policy allowing an allocation to BSS of up to 10% of the Company's
GAV, approved overwhelmingly by Shareholders in February this year.
This exciting development is expected to further increase portfolio
diversification while enhancing the Company's growth prospects from
value creating opportunities arising from the energy transition
drive in the UK and internationally.
As global warming and the risk of extreme weather events
continue to increase, as recently highlighted by the United Nations
Intergovernmental Panel on Climate Change(1) ("UN IPCC"), the
Company continues to collaborate closely with the Investment
Manager and stakeholders to contribute to a reduction of the impact
of climate change, by developing clean energy generation and other
sustainability--driven initiatives at portfolio level.
1. www.ipcc.ch/report/ar6/wg1/
Key financials
In the six months to 30 June 2021, the NAV per Ordinary Share
increased to 98.0 pence (31 December 2020: 95.8 pence). One of the
key drivers of the increase was an upward revision of UK power
price forecasts obtained from independent third-party consultants.
This upward revision was a result of the strengthening in commodity
and carbon prices in the short and medium term, leading to a
positive impact to NAV of 0.7 pence per share for the first half of
the year.
The upward revision contrasted with the reduction in forecasts
during the first three months of 2021 as reflected in the 31 March
2021 NAV (negative impact on NAV of 2.3 pence per share), prior to
the COVID-19 social and economic restrictions being lifted.
The Company continues to actively manage its power price
exposure having successfully entered new fixed price agreements for
various UK portfolio assets during the period. The new agreements
were secured at prices significantly above forecast, delivering an
increase in NAV of approximately 0.9 pence per share. Fixed
revenues for the whole portfolio, as a percentage of the Company's
expected total revenues, increased to 75% in 2021, 74% in 2022 and
57% in 2023.
During the period the Company also successfully refinanced one
of its Australian assets, Bannerton. The new five-year term debt
facility has been secured on significantly more attractive
financing terms resulting in a positive impact on NAV of 0.7 pence
per share.
Other relevant NAV movements include the adjustment of actual
inflation figures for the first six months of 2021 (positive impact
on NAV of 0.9 pence per share) and the increase in UK corporation
tax to 25% from April 2023 (negative impact on NAV of 1.3 pence per
share).
Since IPO the Company's shares have delivered a total
shareholder return of 50.7% (5.5% annualised) and a total NAV
return of 55.8% (5.9% annualised) as at 30 June 2021.
Operational performance
During the first half of the year electricity generation from
the Company's UK portfolio was 3.4% above base case, with
irradiation levels 2.6% above base case assumptions. The portfolio
outperformance was driven by high asset availability of the
majority of the UK assets which continued to operate well through
the remaining COVID-19 related restrictions.
After including the international portfolio, electricity
generation was 2.3% below base case with irradiation levels 0.2%
below base case for the period. This is primarily due to the
underperformance of the assets in the Australian portfolio, which
whilst improving over each period to date and exporting at full
capacity, still impact negatively when considering the global
performance figures. We further explain the performance of the
Australian assets on page 21.
In Spain, the construction of the Virgen del Carmen subsidy-free
project continues to progress positively, with the remaining works
on site expected to be finalised by the end of September 2021. Grid
connection and first electricity export will remain subject to the
issuance of the final operational permits from relevant local
authorities and transmission network operator, expected in the
first quarter of 2022.
In relation to the 99MW subsidy--free solar portfolio in Spain
acquired on 31 December 2020, the Investment Manager continues to
evaluate long-term Power Purchase Agreement ("PPA") options with
creditworthy counterparties, including European energy suppliers.
When finalised later in the year, the agreement will contribute to
an increase in the level of contracted revenues across the
Company's portfolio.
Acquisitions
In May, the Company announced the acquisition of a 50% equity
stake in Sandridge Battery Storage Limited, a 50MW lithium-ion BSS
located in the UK, its first acquisition in the sector and one
which will provide diversification and operating efficiencies in
the portfolio. The asset is adjacent to the Sandridge solar park
owned by the Company and is expected to become operational in
October 2022.
The acquisition will represent a total investment of up to
GBP12.7 million, including the anticipated construction costs, and
will be funded using the Company's existing revolving credit
facilities ("RCF").
Dividend
The Company declared interim dividends of 3.49 pence per share
in the first half of 2021 and is on track to deliver its target of
6.98 pence per share for the year. The first 2021 interim dividend
of 1.745 pence was paid on 27 August 2021.
Cash flows for the 12 months to 30 June 2021 reflect the
decrease in UK wholesale power prices since the COVID-19 lockdown
measures were implemented. The revenues received in this period do
not fully reflect the increase in power prices since the end of
2020 due to the working capital delay resulting from payment terms
stipulated under the existing PPAs at portfolio level.
Despite the impact of low power prices on operational cash
flows, the Company expects the dividend cover for the year ending
31 December 2021 to reach a minimum of 1.10 times, as it continues
to meet its dividend target for the year, as it has done each year
since IPO.
Debt facilities
At 30 June 2021, the total outstanding debt of the Company and
its subsidiaries amounted to GBP460.8 million (31 December 2020:
GBP472.4 million), with long-term debt representing GBP379.9
million (December 2020: GBP391.5 million). Total gearing
represented 43.6% of GAV (December 2020: 44.8%). Long--term
structural gearing represented 35.9% of GAV (December 2020: 37.1%),
within the 40% long-term debt target. (See pages 33 and 34 for
details of GAV and gearing).
The Company's RCF totalled GBP130 million at 30 June 2021, of
which GBP49.1 million remained undrawn at the end of the period.
Allowing for the Company's funding commitments to recent
acquisitions, approximately GBP13 million remains available for new
investments.
The Company continues to benefit from the flexibility offered by
the RCF to support further growth, at a competitive cost of
capital, while limiting cash drag risk to investors. The Board and
the Investment Manager will continue to evaluate the optimal
capital structure for the Company, including considering the
possibility of future equity fundraisings to reduce leverage, while
maintaining financing capacity for the investment pipeline. The
Board believes the current level of debt to be appropriate to the
size and revenue profile of the Company.
Sustainability update
The Company continues to build on its well-established
sustainability credentials with each passing year. Its portfolio
generated enough clean energy to power 169,655 homes(1) for the
period. This, in turn, enabled savings of 432,704 tonnes of CO(2)
equivalent (tCO(2) e).
While COVID-19 lockdown restrictions have inevitably made
engagement with communities more challenging than usual, the
Company continues to support local communities through grants to
local projects. Educational site visits have been able to resume in
a controlled fashion, with local schools visiting UK portfolio
assets as a means of teaching students about the benefits of
transitioning to a low-carbon energy system.
As a signatory to the Principles for Responsible Investment
("PRI"), in its latest assessment the Investment Manager achieved
A+ ratings for both Strategy & Governance and Infrastructure,
the highest grades achievable, demonstrating the Investment
Manager's ongoing commitment to sustainability.
The Investment Manager is a signatory to the statement issued by
the UK solar trade association, Solar Energy UK. The statement
condemns any human rights abuse taking place in the global energy
supply chain and calls for the development of a supply chain
transparency protocol. In addition to this, a number of initiatives
are being undertaken by the Investment Manager to manage and reduce
this risk and engage with its key suppliers.
The Company is committed to maintaining sustainable practices
across its supply chain and monitoring for any potential abuses.
Hence, one of the focus areas for the Company's sustainability work
over the upcoming periods is on supply chain engagement. For
further details please refer to our Sustainability and ESG section.
(Please refer to page 26).
Following the successful roll--out of the O&M Sustainability
Agreements, the Asset Manager is in the process of implementing
sustainability--focused metrics for each individual asset in the
Company portfolio. The Board expects this initiative to deliver a
best-in-class approach to the implementation of its sustainability
strategy while enhancing the quality of the Company's monitoring
and reporting activities.
Outlook
Climate change initiatives and the UK Government net zero
targets are expected to continue to create a positive investment
environment for renewable energy generation and energy transition
acquisitions in the markets in which the Company operates. The UK
will be hosting COP26, the 26th UN Climate Change Conference of the
Parties, in November this year, a key milestone in the fight
against climate change.
Clean energy generation is expected to remain a key component of
climate change policies of most OECD countries, creating further
growth opportunities in the renewable generation sector. As
sustainability--driven objectives become more prominent within the
investment community, the increase in clean energy generation is
expected to also be matched by increases in capital allocation. In
addition, the power price recovery experienced in 2021 to date is
expected to further support the investment in subsidy--free assets.
Consequently, battery storage systems, either standalone or
co--locating with renewable generation, are also anticipated to
become increasingly utilised as further grid stability will be
required to respond to the intermittent nature of new renewable
energy generation.
The Investment Manager, through its international reach,
continues to review an attractive pipeline of solar and battery
assets in the UK and internationally that can deliver growth
opportunities for the Company. While the Company will remain
focused on UK acquisitions, the Board believes geographical
diversification, within the restrictions of the Company's
investment policy, will benefit Shareholders over the longer term.
Investment opportunities in subsidised, operational assets will
continue to be reviewed on a selective and opportunistic basis, as
yield compression in the UK market continues to impact expected
returns.
Exposure to power price volatility will continue to be actively
managed by the Investment Manager at portfolio level to ensure a
high proportion of contracted revenues are secured during the term
of the investment.
The portfolio has proven to be very resilient during the
COVID-19 pandemic despite the uncertainty experienced at
operational level. The strong portfolio performance during recent
periods, specifically in the UK, has supported delivery of a stable
dividend. The Board, supported by the Investment Manager, will
continue to aim to deliver on its progressive dividend policy by
optimising the operational performance of the portfolio and ongoing
active power price management.
1. Typical Domestic Consumption Value ("TDCV") provided by Ofgem,
where average electricity use for a medium household is 2,900
kWh/year. https://www.ofgem.gov.uk/sites/default/files/docs/2021/05/tdcv_decision_letter_2021_0.pdf
Alexander Ohlsson
Chairman
15 September 2021
INVESTMENT PORTFOLIO
Portfolio summary
As at 30 June 2021, the Company's portfolio comprised 59 assets
with a total net peak capacity of 1.019GW. In the UK, the Company
has an operational portfolio of 50 assets representing a total
installed capacity of 723MW. The Company's first investment into
battery storage systems represents 25MW. The Company owns a further
four operational assets in Australia which account for 146MW of
installed capacity.
Two acquisitions in 2020 comprising an additional four
subsidy-free assets in Spain will add 125MW on completion of
construction.
The Company's UK assets all benefit from regulatory support and
are accredited under the Renewables Obligation ("RO") scheme, with
the exception of Yardwall which is a Feed-in Tariff scheme ("FiT")
accredited asset (representing less than 1% of the UK portfolio).
The Australian assets benefit from subsidies in the form of
Large-Scale Generation Certificates ("LGC").
The Company's recently acquired greenfield projects in Spain
will not benefit from regulatory support but are expected to
benefit from long-term PPAs providing a high proportion of
contracted revenues from creditworthy counterparties that, when
calculated on a net present value basis over the life of the
projects, deliver an attractive risk profile considering the
Company's investment objectives.
Current portfolio
Installed
peak Operational/ Acquisition Revenue
Type Asset capacity (MW) under construction cost(1) (GBPm) type
--------- ------- ----------------- ------------- ------------------ -------------- ------------
UK
--------- ------- ----------------- ------------- ------------------ -------------- ------------
1 Solar Wymeswold(2) 34 Operational 45.0 Subsidy
2 Solar Castle Eaton 18 Operational 22.6 Subsidy
3 Solar Highfields 12 Operational 15.4 Subsidy
4 Solar High Penn 10 Operational 12.7 Subsidy
5 Solar Pitworthy 16 Operational 19.3 Subsidy
6 Solar Hunters Race 10 Operational 13.3 Subsidy
7 Solar Spriggs Farm 12 Operational 14.6 Subsidy
8 Solar Bournemouth 37 Operational 47.9 Subsidy
9 Solar Landmead 46 Operational 52.4 Subsidy
10 Solar Kencot Hill 37 Operational 49.5 Subsidy
11 Solar Copley 30 Operational 32.7 Subsidy
12 Solar Atherstone 15 Operational 16.2 Subsidy
13 Solar Paddock Wood 9 Operational 10.7 Subsidy
14 Solar Southam 10 Operational 11.1 Subsidy
15 Solar Port Farm 35 Operational 44.5 Subsidy
16 Solar Membury 16 Operational 22.2 Subsidy
17 Solar Shotwick 72 Operational 75.5 Subsidy
18 Solar Sandridge 50 Operational 57.3 Subsidy
19 Solar Wally Corner 5 Operational 5.7 Subsidy
Solar 36.6
(Acquired
20 Coombeshead 10 Operational as portfolio) Subsidy
21 Solar Park Farm 13 Operational Subsidy
22 Solar Sawmills 7 Operational Subsidy
23 Solar Verwood 21 Operational Subsidy
24 Solar Yardwall 3 Operational Subsidy
25 Solar Abergelli 8 Operational 3.7 Subsidy
26 Solar Crow Trees 5 Operational 1.8 Subsidy
27 Solar Cuckoo Grove 6 Operational 2.5 Subsidy
28 Solar Field House 6 Operational 3.1 Subsidy
29 Solar Fields Farm 5 Operational 1.7 Subsidy
30 Solar Gedling 6 Operational 1.9 Subsidy
31 Solar Homeland 13 Operational 5.2 Subsidy
32 Solar Marsh Farm 9 Operational 4.0 Subsidy
33 Solar Sheepbridge 5 Operational 1.9 Subsidy
34 Solar Steventon 10 Operational 4.2 Subsidy
35 Solar Tengore 4 Operational 1.3 Subsidy
36 Solar Trehawke 11 Operational 4.7 Subsidy
37 Solar Upper Huntingford 8 Operational 3.1 Subsidy
38 Solar Welbeck 11 Operational 4.4 Subsidy
39 Solar Yarburgh 8 Operational 3.4 Subsidy
40 Solar Abbey Fields 5 Operational 1.5 Subsidy
41 Solar SV Ash 8 Operational 3.4 Subsidy
42 Solar Bilsthorpe 6 Operational 1.9 Subsidy
43 Solar Bulls Head 6 Operational 2.2 Subsidy
44 Solar Lindridge 5 Operational 1.7 Subsidy
45 Solar Manor Farm 14 Operational 6.1 Subsidy
46 Solar Misson 5 Operational 2.0 Subsidy
47 Solar Nowhere 8 Operational 3.7 Subsidy
48 Solar Pen Y Cae 7 Operational 2.9 Subsidy
49 Solar Playters 9 Operational 4.0 Subsidy
50 Solar Roskrow 9 Operational 3.7 Subsidy
51 Battery Sandridge 25 Under construction 12.7 Subsidy free
--------- ------- ----------------- ------------- ------------------ -------------- ------------
UK subtotal 748 697.8
--------- ------- ----------------- ------------- ------------------ -------------- ------------
Australia
--------- ------- ----------------- ------------- ------------------ -------------- ------------
1 Solar Bannerton 53(3) Operational 22.9 Subsidy
2 Solar Longreach 8(3) Operational 2.7 Subsidy
3 Solar Oakey 1 15(3) Operational 4.4 Subsidy
4 Solar Oakey 2 70 Operational 34.0 Subsidy
Australia
subtotal 146 63.9
--------- ------- ----------------- ------------- ------------------ -------------- ------------
Spain
Virgen del
1 Solar Carmen 26 Under construction 18.0 Subsidy free
Solar 49 Under construction 64.2 Subsidy free
(Acquired
2 Los Llanos as portfolio)
3 Solar Los Salinas 30 Under construction Subsidy free
4 Solar Los Picos 20 Under construction Subsidy free
Spain subtotal 125 82.2
--------- ------- ----------------- ------------- ------------------ -------------- ------------
Total 1,019 843.9
--------- ------- ----------------- ------------- ------------------ -------------- ------------
1. Original equity cost at time of acquisition, including transaction
costs. For assets under construction, this includes estimated
construction costs to start of operations. International acquisition
costs converted to GBP including transaction costs at the applicable
rate at the time of acquisition.
2. Includes the 2MW extension acquired in March 2015.
3. Accounts for the 48.5% stake the Company holds of Bannerton (110MW)
and 49% stake held of Longreach (17MW) and Oakey 1 (30MW).
INVESTMENT MANAGER'S REPORT
Market developments
United Kingdom
The UK Government remains dedicated to climate change
initiatives with the "Build Back Better" and the "Green Recovery"
Ten Point Plan representing a firm commitment to the
decarbonisation of the economy, including the energy system. The
renewable energy industry is expected to have an important role in
the Government's agenda for the growth of the UK economy. The UK
remains bound by national and international renewable obligations,
including the commitment to "net-zero" carbon emissions by 2050
which is expected to continue to deliver further support for
renewable energy deployment.
In May, the Department for Business, Energy and Industrial
Strategy ("BEIS") confirmed that the fourth round of the Contracts
for Difference ("CfD") subsidy scheme will open in December this
year. The installed capacity remains unknown, but the market
expectation is for the fourth-round capacity to represent a
significant increase against the 5.8GW of renewable energy capacity
awarded in the 2019 third round. Eligible technologies will include
solar, onshore and offshore wind, tidal and floating offshore
wind.
In parallel, the UK solar industry continued its sustained
growth in a zero-subsidy environment during the period with
installed capacity on a subsidy-free basis surpassing 1GW since the
subsidy mechanisms were removed by the UK Government.
This growth has been supported by a high level of development
activity across solar and BSS, both on a standalone and co-located
basis, in recent periods as the economic prospects for
subsidy--free investments in the UK continue to improve. The
Investment Manager believes there is a strong pipeline of
opportunities for additional deployment into BSS assets in the
near-term.
Australia
The Australian market has been recovering from the COVID-19
related impacts in 2020 and has seen increased operational demand,
which was largely driven by higher heating demand due to colder
than average winter temperatures and relaxation of COVID--19
restrictions in most of the states.
The Victorian government has conducted a market sounding
exercise for its second round of renewable auctions (VRET 2), which
is expected to procure a minimum of 600MW of new solar and wind
energy capacity for the state.
It has also released an initial proposal to facilitate 16GW of
network capacity in the state's Renewable Energy Zones. In June
2021, the Queensland government announced it will invest A$2
billion (up from previously announced A$0.5 billion) into renewable
energy and hydrogen jobs as part of both its COVID-19 economic
recovery plan and its achievement of the state's Renewable Energy
Target (QRET). The New South Wales government is continuing its
work on its Electricity Infrastructure Roadmap to enable an
additional 12GW large--scale renewables by 2030.
In the past few years, Australian regulators have been
considering numerous changes to the regulatory framework as well as
to the network operational mechanisms.
Some of the changes are expected to be delayed and potentially
omitted as regulators and Ministers focus on economic growth and
jobs. The Investment Manager is actively engaging in the regulatory
dialogue through meetings with the regulators, written submissions
and participation in industry groups and closely monitoring
proposed regulatory changes.
On 25 May, an explosion in the Callide power station in
Queensland caused outages across multiple transmission lines and
independent generators. The incident affected the supply--demand
balance in Queensland and New South Wales, resulting in phases of
significant power price volatility for the remainder of the period.
The impact of the incident has renewed criticism regarding the lack
of reliability of coal-fired power generators and calls from
experts for additional renewable generation and battery
storage.
Spain
In January, the Spanish Government announced the result of the
first "pay-as-you-bid" renewable energy auction since 2017, with a
total awarded capacity of approximately 3GW from a total
participation pool of 9.7GW of projects. Solar PV projects
represented approximately 2GW of the total capacity awarded, with
onshore wind representing the remaining capacity.
The auction forms part of the Spanish Government strategy that
aims to deliver 60GW of additional renewable capacity in the
country until 2030. A second renewables auction for an additional
3.3GW of capacity has been approved by the Spanish government and
is scheduled for October this year.
In June, the Spanish Government announced a three-month
suspension of the 7% tax on power generation for the third quarter
of 2021 as part of provisional measures to mitigate the impact of
high wholesale electricity prices on consumers' bills as power
prices remain high since the end of 2020.
In terms of market activity, approximately 31GW of solar
projects have been announced in the market during the year to date,
highlighting the attractive investment opportunity presented by the
Iberian market. The majority of the projects announced are in their
development stage so the expected increase in installed capacity
remains uncertain.
Power prices
Historic power prices
United Kingdom
Wholesale power prices during the six-month period have been the
strongest since the inception of the fund. From a strong recovery
during the last six months of 2020 from the low average monthly
price of c.GBP22/MWh in May 2020 to c.GBP55/MWh by December 2020,
power prices have gone from strength to strength with May and June
2021 representing the highest wholesale power average monthly
prices since the fund's inception for each respective month. The
strong pricing is primarily a function of the commodity market,
most notably gas which remains one of the most significant drivers
of wholesale power prices. Gas prices in Europe have hit record
highs, driven by numerous factors including low inventories, supply
disruption from outages, strong demand from Asia and economic
activity recovering to pre-COVID-19 levels.
The average power price achieved across the UK portfolio during
the period, including fixed price arrangements, was GBP56.40/MWh,
versus GBP45.38/MWh in the first half of 2020, an increase of 24%
year--on--year.
As a result of the positive power price environment, the Company
has identified the opportunity to increase the percentage of annual
contracted revenues by entering new fixed price arrangements for
specific portfolio assets for periods up to 2023. The fixed price
arrangements were entered at prices above forecasts for the
respective periods. The Company will continue to monitor forward
electricity prices and, where appropriate, will enter into new
fixed price arrangements.
Australia
The time-weight average power price across the National
Electricity Market ("NEM") for the reporting period was A$60/MWh,
an increase of 17% compared to the average power price of A$52/MWh
in 2020 for the same reporting period. This increase was driven by
a strong rebound in Q2 2021 after two years in decline. The average
price of A$85/MWh in Q2 represents the highest quarterly average in
almost two years, occurring in what is typically a lower--priced
quarter.
In Queensland, the higher operational demand was driven by an
increased underlying demand from 1) increased heating requirements
due to colder-than-average temperatures in Brisbane, 2) lifting of
COVID-19 restrictions, and 3) increased liquefied natural gas
("LNG") production in Queensland to meet increased demand for LNG
export. As a result, Queensland recorded its highest quarterly
average price on record at A$128/MWh during Q2 2021. The average
price during this reporting period is A$85/MWh comparing to
A$44/MWh for the same period in 2020.
In Victoria, the increase in underlying demand was not as
significant as seen in Queensland given the state was under
COVID-19 restrictions for most of the time during the reporting
period. The colder weather and higher gas prices led to an increase
in power price from A$25/MWh in Q1 2021 to A$70/MWh in Q2 2021. The
average power price for the reporting period was A$48/MWh, down by
20% from A$59/MWh for the same period last year.
The average power price achieved across the Australian portfolio
during the period, including fixed price arrangements, was
A$45/MWh.
Marginal Loss Factors ("MLFs"), representing the transmission
losses impacting generators annual revenues based on the location
of the grid connection, were released for FY2022 in July 2021. The
renewed MLFs for three of the four Australian assets have seen a
4-7% increase comparing to the loss factor assigned last year.
Subsidy revenues
The Renewables Obligation Certificate ("ROC") buy-out price for
the 2020-2021 annual compliance period increased to GBP50.5
(2019--2020 compliance period: GBP48.78), reflecting the average
monthly percentage change in RPI during 2020. On average, the
Company received 1.42 ROC/MWh across the UK portfolio. The
2020-2021 FiT rate for the Yardall asset is GBP74.30/MWh
(2019-2020: GBP73.50/MWh).
In Australia, the average LGC price secured by the portfolio
assets in the first half of 2021 was A$32.05 per certificate.
During the period the Company entered new agreements for the sale
of LGCs at a fixed price with Origin Energy until 2030 for
Bannerton and Oakey 2, reducing the portfolio exposure to LGC
market price volatility. The new contracts had a minor positive
impact to NAV due to the higher contracted LGC price against the
market price forecast. In the case of Bannerton, the new agreement
will target the annual uncontracted LGC volume not sold under the
LGC agreement signed with the Victorian government until 2028.
Power price forecasts
The Investment Manager uses forward-looking power price
assumptions to assess the likely future income of the portfolio
assets for valuation purposes. The Company's assumptions are formed
from a blended average of the forecasts provided by three
third-party consultants, adjusted by the Investment Manager for the
expected capture price discounts for solar generation as deemed
appropriate. For assets with fixed price arrangements in place, the
contracted values are used in place of the blended forecast. For
assets with subsidiary arrangements in place for a period shorter
than the assumed useful economic life of the asset, the blended
forecast is used for the remaining period.
United Kingdom
During the period, power price forecasts in the short to medium
term increased materially compared to December 2020 due to the
increase in wider commodity prices as discussed in the previous
section. Longer-term price forecasts are lower compared to December
2020 due to greater renewable capacity forecast to enter the
generation mix which given the lower levelized cost of energy
("LCOEs"), applies downward pressure to wholesale prices.
As a result of the decrease in expected wholesale prices in the
long-term as well as the increasing solar capture price discounts,
the Company's forecasts reflect an average decrease in power prices
in real terms in the long term of 1.3% per annum.
Where the assumed asset life extends beyond 2050, the Investment
Manager has assumed no real growth in forecast power prices.
Australia
During the period, Queensland and Victoria power price forecasts
decreased by 7.1% and 9.6% respectively, mainly due to assumptions
around commodity prices and electricity demand.
The Company's forecasts assume an increase in Queensland and
Victoria power prices in real terms over the medium to long term of
1.5% and 1.9% respectively, per annum.
Revenue analysis
During the period, approximately 56% of revenue was derived from
subsidies, with the remaining 44% from the sale of electricity.
Contracted revenues for the Company portfolio, as a percentage
of the total expected revenues, increased to 75% in 2021, 74% in
2022 and 57% in 2023 during the period, as a result of the new
fixed electricity price arrangements entered by certain UK
portfolio assets.
On an NPV basis as at 30 June 2021, contracted revenues over the
entire investment period represented 50% of the total forecasted
revenues.
The Company intends to minimise the impact of power price
volatility to future cash flows by entering fixed price
arrangements for the sale of electricity to achieve a high
percentage of annual fixed revenues in the short and medium
term.
This will be predominantly achieved by actively managing the
power price exposure of the UK portfolio on a periodic basis,
primarily by fixing electricity sales in summer seasons due to the
seasonal production profile of solar assets, to support the Company
dividend policy while allowing it to capture potential upsides of
power price volatility.
Key investment metrics
Six months Year to Six months
to 30 June 31 December to 30 June
2021 2020 2020
------------------------------------------- ----------- ------------ -----------
Market capitalisation GBP602.7m GBP622.9m GBP660.9m
Share price 99.0p 102.5p 109.0p
Dividend declared per share for the period 3.49p 6.91p 3.45p
Gross Asset Value ("GAV") GBP1,057.2m GBP1,054.6m GBP1,022.5m
Net Asset Value ("NAV") GBP596.4m GBP582.2m GBP582.1m
NAV per share 98.0p 95.8p 96.0p
Annual total return (NAV) since IPO 5.9% 5.2% 5.51%
Annual total shareholder return since IPO 5.5% 5.9% 6.79%
Profit/(loss) after tax for the period GBP34.2m (GBP7.2m) (GBP26.7m)
------------------------------------------- ----------- ------------ -----------
Investment performance
The Net Asset Value per share as at 30 June 2021 increased by
2.3% to 98.0 pence compared to 95.8 pence as at 31 December
2020.
Movements in Net Asset Value
A breakdown in the movement of the Company's NAV during the
reporting period is shown in the table below.
NAV
NAV per share
------------------------------------------------------------------------ ----------- ---------
NAV as at 31 December 2020 GBP582.2m 95.8p
Dividend paid (GBP19.9m) (3.3p)
Fund costs (GBP4.9m) (0.9p)
Time value (an uplift resulting from moving the valuation date forward) GBP17.6m 2.9p
Other adjustments GBP7.2m 1.1p
Bannerton refinancing GBP4.0m 0.7p
Foreign exchange movements (GBP2.1m) (0.4p)
Power price forecasts GBP4.2m 0.7p
PPA fixes GBP5.3m 0.9p
Discount rate changes GBP0.7m 0.1p
Corporation tax change (GBP7.9m) (1.3p)
Inflation GBP5.3m 0.9p
Operational assumptions GBP4.7m 0.8p
------------------------------------------------------------------------ ----------- ---------
NAV as at 30 June 2021 GBP596.4m 98.0p
------------------------------------------------------------------------ ----------- ---------
Valuation methodology
The Investment Manager is responsible for providing fair market
valuations of the Company's underlying assets to the Board of
Directors. The Directors review and approve these valuations
following appropriate examination and challenge. Valuations are
undertaken quarterly. A broad range of assumptions are used in the
valuation models. These assumptions are based on long-term
forecasts and are not materially affected by short-term
fluctuations, economic or portfolio technical performance.
It is the policy of the Investment Manager to value with
reference to Discounted Cash Flows ("DCF") from the date of
acquisition. Assets under construction are valued at cost until the
date of commissioning and start of operations. Revenues accrued
during construction or commissioning process do not form part of
the DCF calculation in making a fair valuation.
The current portfolio consists of non-market traded investments
and valuations are based on a DCF methodology or held at cost where
the assets have not yet reached commissioning. This methodology
adheres to both IAS 39 and IFRS 13 accounting standards (page 57)
as well as the International Private Equity and Venture Capital
("IPEV") Valuation Guidelines.
The Company's Directors review and challenge the operating and
financial assumptions, including the discount rates, used in the
valuation of the Company's portfolio and approve them based on the
recommendation of the Investment Manager.
Discount rates for valuation
The Investment Manager regularly reviews the discount rates used
across the portfolio to ensure they remain in line with any changes
to the market and risk profile of the Company. This analysis is
based on valuation information received from participating in a
number of tender processes to acquire comparable assets. The
discount rate used for the UK portfolio is unchanged at 6.50% on a
levered basis (6.50% as at December 2020).
The discount rate used for UK asset cash flows which have
received lease extensions beyond the initial investment period of
25 years is 7.50% for subsequent years, reflecting the merchant
risk of the expected cash flows beyond the initial 25-year
period.
For the Australian portfolio, assets are valued using a discount
rate which is dependent on the level of contracted revenues in
place. The weighted average discount rate across the Australian
portfolio is 8.41% on a levered basis compared to 8.60% as at
December 2020.
The weighted average levered discount rate across the portfolio
is now 6.71% compared to 6.74% as at 31 December 2020.
Non-UK assets valuations are updated quarterly to reflect
movements related to exchange rates.
Asset life
The expected weighted average life of the UK portfolio as at 30
June 2021 is 30.6 years (31 December 2020: 30.6 years) from the
date of commissioning. This represents a remaining portfolio useful
life of 24.3 years when the historical operational periods are
taken into consideration.
The average useful economic life across 40 of the 50 operational
UK assets goes beyond 25 years, averaging 32.0 years from the date
of commissioning. Conservative operational and lifecycle costs are
incorporated into the extended useful life period.
The useful economic life for assets located in Australia is 30
years (31 December 2020: 30 years).
Dividends paid
The Company paid dividends of GBP19.9 million during the
six-month period to 30 June 2021 or 3.3 pence per share.
Fund costs
Total costs of GBP4.9 million, which include management fees,
financing, other costs and corporation tax, were incurred by the
Company and its subsidiaries on a consolidated basis, during the
period.
Time value
A value uplift resulting from moving the valuation date forward
and therefore bringing future cash flows closer to the present date
(and therefore discounting them less).
Other adjustments
Exceptional uplifts in the period include, amongst others, the
release of GBP3.7 million from compensation accounts under the
existing debt facilities for historical rectification works.
Bannerton refinancing
The Australian asset Bannerton was successfully refinanced in
the period, which has generated a NAV uplift via improved
terms.
Foreign exchange movements
Fluctuations in the exchange rate over the period impacted the
GBP valuation of Australian assets.
Power price forecasts
The Company uses forward--looking power price assumptions to
assess the likely future income of the portfolio assets for
valuation purposes. The Company's assumptions are based upon a
blended average of forecasts provided by third-party consultants
and are updated on a quarterly basis.
PPA price fixing
The Company has successfully fixed the pricing of additional PPA
across the UK portfolio at pricing in excess of the current market
forecasts used in the valuation modelling.
Discount rate changes
As reported, this change reflects the reduction of the
Australian weighted average discount rate ("WADR") from 8.60% to
8.41%.
UK corporation tax change
The corporation tax forecasts now assume 25% from April 2023 and
remains at this level for the duration of the asset lives.
Inflation
This update reflects actual inflation for the period which has
been in excess of the 3% forecast used in the valuation modelling.
The forecast for H2 2021 remains at 3% as previously reported.
Operational assumptions
The Company has adjusted the generation forecast at a selection
of assets which have displayed consistent overperformance above
budget. The Company has also recognised operating running cost
reductions where deemed appropriate.
Valuation sensitivities
Where possible, assumptions are based on observable market and
technical data. In many cases, such as forward power prices,
independent advisors are used to provide evidenced information
enabling the Investment Manager to adopt a prudent approach. The
Investment Manager has set out the inputs which it has ascertained
would have a material effect upon the NAV in note 16 of the
Financial Statements. All sensitivities are calculated
independently of each other.
CASE STUDY
SANDRIDGE BATTERY STORAGE ACQUISITION
Wiltshire, UK
Rationale:
Co-located Battery Storage Systems ("BSS") will offer the
Company:
-- Increased scale, diversification and operating efficiencies
-- Access to a broader renewable technology base
An element of "portfolio-level" power price hedging, as the BSS
-- assets will have a different power price and trading profile
The Company has identified the opportunity to acquire 50% of the
development rights of a 50MW battery storage located next to FSFL's
Sandridge solar site in Melksham, UK. The project will be located
on currently unused arable land adjacent to the solar PV site.
The project will be connected to Southern Electric Power
Distribution plc's distribution network and has a 50MW import and
export connection. The distribution network point of connection
will be shared with the Sandridge solar park already in
operation.
The opportunity to share grid infrastructure with the Sandridge
solar park made it a desirable initial battery storage investment,
with no adverse impact on the Sandridge solar park valuation or its
operations.
The project will add stability and strength to the grid in
multiple ways, by providing services which can include frequency
management, supply/demand management via Balancing Mechanism,
volatility reduction and load-shifting through wholesale trading,
and provision of capacity for peak demand via Capacity Market.
The lithium-ion technology the project employs benefits from
high efficiency, lower response time, lower cost, and availability
of throughput warranty. In addition to this lithium phosphate is
used which is cobalt--free, ensuring a sustainable supply chain.
The ability to replace the cells with new technology in the future,
as well as the available space on site allowing for increasing
capacity, ensures the project remains future-proof and flexible in
terms of the future services that might be needed.
The transition risk of climate change poses the primary threat
in that storage assets are reliant on grid provided electricity to
'charge' the system and are therefore intrinsically linked to the
grid's own transition risk susceptibility. The project is
considered to be generally resilient to extreme weather events,
given the key equipment is housed within a maritime container.
The portfolio expansion into battery storage offers an
attractive risk adjusted return, with a premium to conventional
renewable projects. The project provides diversification for the
fund away from baseload wholesale power price. The development
contributes to building a diversified, robust and sustainable
portfolio and will support the progressive dividend policy.
Investment overview
Company: Sandridge Battery Storage Limited
------------------ --------------------------------------------------------------------------------------------
Site location: Land next to FSFL-owned farm in Sandridge, England
------------------ --------------------------------------------------------------------------------------------
Technology: Lithium-ion battery energy storage
------------------ --------------------------------------------------------------------------------------------
Project size: 50MW
------------------ --------------------------------------------------------------------------------------------
Target operations
date: October 2022
------------------ --------------------------------------------------------------------------------------------
Investment amount: Total investment of up to GBP12.7 million, including the anticipated construction costs, and
will be funded using the Company's existing Revolving Credit Facilities
------------------ --------------------------------------------------------------------------------------------
ASSET MANAGER'S REPORT
The operational performance of the UK portfolio during the
period has been higher than expected driven by good plant
availability and irradiation 2.6% above base case.
Portfolio performance
The operational performance of the UK portfolio during the
period has been higher than expected with electricity generation
3.4% above base case, when adjusted for minor compensation payments
received from O&M counterparties. Performance has been driven
by good plant availability and irradiation 2.6% above base
case.
The impact of COVID-19 on operational performance has remained
negligible with site operators acting promptly when reactive
maintenance was required in the field. Similarly to 2020, where
preventative maintenance activities were postponed due to
restrictions, they are still to be completed within the contractual
year.
There have been minor performance-related issues during the
period that were promptly rectified and a number of short DNO
outages (Paddock Wood, Upper Huntingford, Lindridge). Response
times to material incidents for the period have been good, with a
number of transformer failures (Park Farm, Manor Farm, Wymeswold,
Marsh Farm) which were repaired promptly using the spare
transformers available.
Where possible, the failed transformers are being refurbished
and retained as spares to avoid potential long lead times for a new
replacement.
When including the international portfolio, electricity
generation for the Company portfolio was 2.3% below base case, with
irradiation levels 0.2% below base case. This is primarily due to
lower than expected irradiation levels affecting the Australian
portfolio and negative power pricing events driven by the extensive
maintenance works on the Queensland to New South Wales
interconnector, affecting the performance of the portfolio assets
located in Queensland during the period as the assets ramp down
production. The works are expected to last until October 2021. The
performance of the Australian assets has continued to improve
period on period despite the lower than expected generation during
the first six months of 2021. When network-related events are
excluded, the majority of the Australian assets are presenting
technical performance levels in line with expectations. In the case
of Oakey 2, the asset was also affected by irradiation levels below
base case during the period. The project continues to export at
100% of its nominal capacity and has progressed its staged
commissioning process. The project is expected to be fully
commissioned in late 2021.
Assets under construction
In Iberia, construction of the Virgen del Carmen project
commenced in mid-February and has progressed well during the
period. The key milestones in relation to construction have been
achieved and all plant and equipment was ordered and is being
delivered to the site in accordance with the construction schedule.
Testing and inspection of the delivered modules was carried out as
part of the scope of works to maintain quality control.
Construction works on site are expected to finalise in September,
with grid connection and first electricity export expected in the
first quarter of 2022 subject to the issuance of the final
operational permits from relevant local authorities and
transmission network operator.
In relation to the Andalusia portfolio acquired at the end of
2020, construction works started in July and key equipment is
expected to be delivered on site from September. The Manager
continues to evaluate long-term Power Purchase Agreement options
with major European energy suppliers for the portfolio, with the
intention to enter a Power Purchase Agreement and introduce a
project finance facility at portfolio level to partially fund
construction milestones before the end of 2021.
On the Sandridge Battery Storage asset, final design works are
ongoing with construction scheduled to start in January 2022.
Energisation and commercial operations are scheduled to commence in
October 2022.
Electricity generation
The generation figures below have been adjusted, where relevant,
for events where compensation has been, or will be, received.
UK
Total
electricity Generation Irradiation
variance variance
Connection generation vs vs
Site date MW (MWh) base case base case
------------------ --------------- ----- ----------- ---------- -----------
Abbey Fields March 2016 4.9 2,583 -3.9% -0.2%
Abergelli March 2015 7.7 3,841 -3.8% -0.6%
Atherstone March 2015 14.8 7,639 6.6% 5.9%
Bilsthorpe November 2014 5.7 2,961 3.7% 5.0%
Bournemouth September 2014 37.3 21,243 2.4% -2.4%
Bulls Head September 2014 5.5 2,781 2.4% 0.1%
Castle Eaton March 2014 17.8 9,209 7.7% 3.6%
Coombeshead December 2014 9.8 5,535 2.3% 2.6%
Copley December 2015 30.0 15,945 7.8% 4.1%
Crow Trees February 2016 4.7 2,368 4.0% 6.8%
Cuckoo Grove March 2015 6.1 3,565 -4.4% -3.9%
Field House March 2016 6.4 3,357 -1.5% -1.9%
Fields Farm March 2016 5.0 2,671 7.3% 1.5%
Gedling March 2015 5.7 2,924 4.8% 6.6%
High Penn March 2014 9.6 5,876 -0.8% 0.8%
Highfields March 2014 12.2 4,886 0.8% 2.1%
Homeland March 2014 13.2 7,173 -4.2% -5.5%
Hunters Race July 2014 10.3 5,683 0.9% -1.9%
Kencot Hill September 2014 37.2 19,250 2.1% 0.4%
Landmead December 2014 45.9 22,874 1.7% 4.1%
Lindridge January 2016 4.9 2,478 -0.7% 1.0%
Manor Farm October 2015 14.2 6,673 1.4% 1.7%
Marsh Farm March 2015 9.1 5,027 2.0% 1.1%
Membury March 2015 16.5 8,695 3.9% -0.8%
Misson March 2016 5.0 2,527 -0.1% 2.2%
Nowhere March 2015 8.1 4,505 6.9% 4.4%
Paddock Wood March 2015 9.2 5,018 4.0% 2.0%
Park Farm March 2015 13.2 6,455 2.7% 2.4%
Pen Y Cae March 2015 6.8 3,512 0.8% 3.0%
Pitworthy March 2014 15.6 8,625 12.2% 4.8%
Playters October 2015 8.6 4,520 -1.7% 0.0%
Port Farm March 2015 34.7 18,310 4.1% 0.8%
Roskrow March 2015 8.9 5,043 2.6% 4.1%
Sandridge March 2016 49.6 25,363 -0.9% 1.1%
Sawmills March 2015 6.6 3,710 4.0% 1.9%
Sheepbridge December 2015 5.0 2,562 4.1% 6.4%
Shotwick March 2016 72.2 38,127 8.9% 8.5%
Southam March 2015 10.3 5,250 2.8% 3.1%
Spriggs Farm March 2014 12.0 6,233 1.9% -2.3%
Steventon June 2014 10.0 5,374 2.2% 1.6%
SV Ash March 2015 8.4 4,611 11.7% 8.7%
Tengore February 2015 3.6 1,990 1.8% 0.0%
Trehawke March 2014 10.6 6,253 7.6% 7.9%
Upper Huntingford October 2015 7.7 4,150 6.3% 4.5%
Verwood February 2015 20.7 11,343 2.5% 2.1%
Wally Corner March 2017 5.0 2,649 1.2% -0.6%
Welbeck July 2014 11.3 5,839 2.9% 5.3%
Wymeswold March 2013 34.5 17,533 5.7% 5.4%
Yarburgh November 2015 8.1 4,280 1.4% 3.8%
Yardwall June 2015 3.0 1,708 0.7% 2.2%
Total 723.1 380,725 3.4%
----------------------------------- ----- ----------- ---------- -----------
Weighted Total 2.6%
----------------------------------- ----- ----------- ---------- -----------
Australia
Total
electricity Generation Irradiation
variance variance
Connection generation vs vs
Site date MW (MWh) base case base case
--------------- -------------- ----- ----------- ---------- -----------
Bannerton July 2018 53.4 44,519 -10.1% -4.6%
Longreach March 2018 8.5 7,751 -11.7% 3.9%
Oakey 1 February 2019 14.5 12,275 -9.8% -2.4%
Oakey 2 May 2019 70.0 47,222 -26.3% -11.8%
Total 146.5 111,767 -17.8%
------------------------------- ----- ----------- ---------- -----------
Weighted total -7.3%
------------------------------- ----- ----------- ---------- -----------
Overall portfolio
Total
electricity Generation Irradiation
variance variance
generation vs vs
MW (MWh) base case base case
------ ----- ----------- ---------- -----------
Total 869.6 492,492 -2.3% -0.2%
------ ----- ----------- ---------- -----------
SUSTAINABILITY AND ESG
ESG considerations are firmly at the centre of the Company's
strategy.
Approach
Sustainability and Environmental, Social and Governance ("ESG")
considerations are firmly at the centre of the Company's strategy,
helping to inform its investment process and its asset management
operations.
The first half of 2021 marked a period of continued development
in how the Company embeds sustainability and ESG considerations.
The Company recognises that such factors are of increasing
importance to global investors.
The nature of the Company's business means it is well positioned
to serve the needs of investors seeking to achieve positive
environmental and social outcomes alongside attractive financial
returns.
Sustainable development contribution
How do the assets contribute to global sustainability?
How can this be tracked against the UN's SDGs?
Environmental footprint
Do the assets follow good practice for limiting or mitigating
their environmental impact, in the context of its industry?
How do they encourage the responsible use of the world's
resources?
Social welfare
What impact do the assets have on their stakeholders and society
as a whole?
Are they taking steps to improve the lives of others, either
directly, such as through job creation, or indirectly?
Governance
Do the assets and their leadership team demonstrate
integrity?
Are the correct policies and structures in place to ensure they
meet legislative and regulatory requirements?
Third-party interactions
Is the principle of corporate responsibility evidenced in the
assets' supply chain?
How do the assets promote ESG values and share best
practice?
2021 interim highlights
-- Generated 492GWh of clean electricity, enough to power 169,655
UK homes
-- Provided GHG emissions savings of 432,704 tonnes of CO(2) equivalent
(tCO(2) e) that would have been emitted by traditional carbon-intensive
energy sources such as coal
-- Independent verification of EU Taxonomy compliance for new assets
has continued, with Virgen del Carmen the latest asset in the
portfolio to be verified
-- Enhanced workstream underway to assess forced--labour risk within
supply chain for both existing and construction stage assets
-- Roll-out of a suite of sustainability and ESG KPIs across each
of the assets
-- Contributed GBP64,900 to the communities in which it operates
via community benefits payments
Contribution to Sustainable Development Goals
Demonstrating Foresight Group's commitment to sustainability is
the Company's ability to report quantitatively against the United
Nations Sustainable Development Goals ("SDGs"). The SDGs, which
were adopted by all United Nations member states in 2015, comprise
the most urgent economic, social and environmental issues to be
addressed for peace and prosperity for people and the planet. The
following table represents the Company's contribution to the SDGs
for the period 1 January-30 June 2021:
Goal SDG target Contribution
-------------------------- ------------------------- ---------------------------------------------------------------
3 Good health and 3.9 Substantially reduce Achieved through the reduction
well-being the number of pollution and emitted greenhouse
of deaths and illnesses gases ("GHGs") by the installation
from hazardous and management of low-carbon energy
chemicals and air, water generation assets.
and soil Enabled pollutant savings of:
pollution and
contamination. * 432,704 tCO(2) e vs energy generated from coal
* 302,666kg of NOx (nitrous oxide)
* 221,955kg of SOx (sulphur dioxide)
* 5,246kg of PM10 (um10 particulate matter)
* 2,421kg of PM2.5 (um2.5 particulate matter)
-------------------------- ------------------------- ---------------------------------------------------------------
7 Affordable and clean 7.2 Increase Achieved by reducing reliance
energy substantially the on fossil fuels by investment
share of renewable energy in utility-scale, renewable energy
in the generation assets.
global energy mix.
* Produced 492GWh of renewable energy
* Produced enough electricity to power 169,655 UK homes
-------------------------- ------------------------- ---------------------------------------------------------------
9 Industry, innovation and 9.1 Develop quality, Achieved by future-proofing energy
infrastructure reliable, systems through investment in
sustainable and resilient de-centralised, interconnected
infrastructure, generation assets, using the latest
including regional and technologies to maximise electrical
transborder output.
infrastructure, to
support economic * As at 30 June 2021 the Company's portfolio comprises
development and human 59 solar assets with a net installed peak capacity of
well-being, 1.019GW
with a focus on
affordable and
equitable access for all.
-------------------------- ------------------------- ---------------------------------------------------------------
13 Climate action 13.3 Improve education, Achieved by raising awareness
awareness-raising and improving institutional capacity
and human and on climate change mitigation.
institutional capacity
on climate change
mitigation,
adaptation, impact
reduction and
early warning.
-------------------------- ------------------------- ---------------------------------------------------------------
15 Life on land 15.5 Take urgent and Achieved by preserving the integrity
significant of land through investment in
action to reduce the low-impact and low-polluting technologies
degradation and introducing environmental
of natural habitats, halt initiatives through active asset
the management, supporting biodiversity
loss of biodiversity and, and the ecosystem.
by 2020,
protect and prevent the * Enabled 48,194 TOE (Tonnes of Oil Equivalent) to be
extinction saved, contributing to the avoidance of fossil fuel
of threatened species. usage
-------------------------- ------------------------- ---------------------------------------------------------------
EU Taxonomy asset accreditation
The EU Taxonomy is a classification system that stipulates a
list of environmentally sustainable economic activities as a means
of enabling the scale up of sustainable investment to help
implement the European Green Deal. It intends to create security
for investors and protect them from greenwashing, whilst helping to
move capital to where it is most needed.
During 2020 the Company took the landmark step of seeking
independent validation of its compliance with the EU Taxonomy for
Sustainable Finance framework. The Company submitted two of its
assets for validation with environmental consultant Aardvark
Consulting Ltd, both of which were declared compliant with the
Taxonomy in December 2020.
This approach has been continued with new assets, with the
Virgen del Carmen project achieving validation in May 2021.
Details of the EU Taxonomy for Sustainable Activities is
available on the European Commission website:
https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en
Reducing risk of forced labour and modern slavery within the
solar supply chain
When acquiring a project, Foresight Group instructs third
parties to carry out technical due diligence checks on the module
manufacturer from which the EPC is sourcing products. For
greenfield projects these typically include obtaining documentation
around health and safety, remuneration and training, working
conditions and environmental issues relating to the module
manufacturing facilities. To date, checks have not been carried out
on companies further down the supply chain, such as those that
produce solar cells, wafers or polysilicon. Wafer manufacturers
usually blend polysilicon from different suppliers, which means
that a solar cell can contain polysilicon from various sources.
Panel manufacturers sometimes also source solar cells from various
suppliers.
In 2016, only 9% of the world's solar-grade polysilicon came
from Xinjiang, but in 2019 about one-third of polysilicon used to
make solar cells was sourced from that region. In 2020, China
accounted for roughly 80% of global polysilicon capacity while
manufacturers in Xinjiang supplied about 45% of the world's
supply.
It is widely recognised that the supply chain that supports the
manufacture of solar panels is complex and that it is particularly
difficult to have full visibility over the procurement of every
material used in panel production. To promote greater transparency,
Foresight Group signed a statement issued by the trade association,
Solar Energy UK, on 12 April 2021. This statement condemns any
human rights abuses taking place anywhere in the global energy
supply chain and calls for the development of a supply chain
transparency protocol.
Signed by many of the UK's leaders in solar energy, the aim is
to raise the profile of this issue and encourage greater
transparency throughout the broader supply chain. The Investment
Manager has since been working with a consultant to develop its own
Modern Slavery Statement, which is due for publication by October
2021. This will be shared with our key counterparties and be made
publicly available.
As members of Solar Energy UK's "Responsible Sourcing Task
Group" the Investment Manager is undertaking a two-pronged approach
to address due diligence directly in relation to forced labour,
with an initial focus on three key counterparty categories:
1. Operations and maintenance contractors
2. Inverter manufacturers
3. Panel/module manufacturers
The Investment Manager has developed a questionnaire requesting
information directly around modern slavery policies, practices and
responsible procurement processes. This will be sent to all
suppliers that fall within the above three categories. This will
help identify risk areas and suppliers that may require further
support or work to ensure their processes are more robust.
The Investment Manager is currently engaging with external
agencies that offer supply chain diligence. They cover key ESG
areas including anti-corruption, human rights, labour and
environment. Where risks or poor performance are identified through
this due diligence process, direct engagement with the supplier
will take place to request further clarity to enable an informed
decision as to whether the issue can be rectified and the working
relationship can continue.
Sustainability Key Performance Indicators
Following the successful roll--out of the O&M Sustainability
Agreements and the appointment of the Investment Manager's
portfolio Sustainability Lead, each asset is now expected to report
quarterly on a series of sustainability and ESG metrics. Operations
and maintenance contractors have been made aware of these
requirements where appropriate.
All data will be reported through our asset management system
"Sennen" which is currently being developed to include the suite of
sustainability KPIs required. The KPIs will evolve over time with
strategies and plans to be drawn up to support the Company in
continually improving sustainability and ESG performance. In 2022,
Foresight will look to set sustainability objectives and targets
based on the data collated as a result of these newly established
KPIs.
Key themes:
Natural capital and environmental impacts
* Enhance biodiversity and the natural environment at
each of our asset locations
* No environmental incidents or legal breaches as a
result of the operation of our assets
----------------------------------------- ------------------------------------------------------------
Carbon and greenhouse gas emissions
* Reduce scope 1 direct emissions
* All operations to import 100% renewable energy and
reduce scope 2 emissions
----------------------------------------- ------------------------------------------------------------
Circular economy and waste
* 100% diversion from landfill of all non--hazardous
waste
----------------------------------------- ------------------------------------------------------------
Climate change mitigation
* Mitigate against climate change through renewable
energy generation and low emission alternative
technologies
----------------------------------------- ------------------------------------------------------------
Community engagement
* Foster a positive relationship with the local
community
----------------------------------------- ------------------------------------------------------------
Socio-economic impact
* Promote productive employment and decent work for all
* Support community initiatives
----------------------------------------- ------------------------------------------------------------
Skills, employment and work practices
* All staff to have access to adequate training for
their role
----------------------------------------- ------------------------------------------------------------
Health, safety and well -- being
* Increased near miss reporting for decreased accidents
----------------------------------------- ------------------------------------------------------------
Supply chain and risk management
* Strengthen reputation as a high--performing
sustainability-led investment manager
* Conduct regular audits at asset and supplier level
----------------------------------------- ------------------------------------------------------------
The first half of 2021 marked a period of continued development
in how the Company embeds sustainability and ESG
considerations.
Sustainability and ESG priorities and progress in 2021
As has been stated in previous Annual Reports, Foresight's
Sustainability Evaluation Tool ("SET")(1) is used as a means of
assessing an asset's sustainability credentials. While the criteria
an asset is assessed under remain the same, the scoring is now
completed using more quantitative data, making the assessment less
subjective. The five criteria are:
-- Sustainable Development Contribution
-- Environmental Impact
-- Social Welfare
-- Governance
-- Third-Party Interactions
1. Formerly known as the Sustainability Evaluation Criteria ("SEC").
1. Sustainable Development Contribution
This theme supports reporting on the development of affordable
and clean energy, improved resource and energy efficiency and
contributions to the fight against climate change.
In the first half of 2021, the Company's operational portfolio
produced over 492GWh of renewable energy. Furthermore, using
Ofgem's assessment that the average UK household consumes 2.9MWh
per year, it can be inferred that the Company's portfolio generated
enough clean electricity to power 169,655 UK homes during the
period.
2. Environmental Footprint
Each asset is closely monitored for its localised environmental
impact. As such, this criterion assesses potential environmental
impacts such as emissions to air, land and water, effects on
biodiversity and noise and light pollution. The Asset Manager
ensures that solar power plants are managed in a manner that
maximises the agricultural, landscape, biodiversity and wildlife
potential, which can also contribute to lowering maintenance costs
and enhancing security.
The Asset Management team has continued to pursue a number of
initiatives to ensure the solar power plants are being effectively
managed for agriculture, landscape and biodiversity. Such schemes
include:
-- Hedgerow and tree planting
To date, more than 35km of hedgerows have been planted across
the portfolio. With hedgerow planting now complete, the hedgerows
are managed to ensure they develop into dense species-rich habitats.
Hedgerows help to promote biodiversity, absorb carbon, improve
both drainage and soil quality and reduce site exposure to extreme
weather conditions.
-- Building of animal refuges
Hibernacula, log piles and "insect hotels" have been established
at Kencot Hill, Crow Trees and Sheepbridge, and ponds and swales
have been installed or restored at Bilsthorpe, Castle Eaton,
Crow Trees, Gedling, Atherstone, Fields Farm, Paddock Wood, Sandridge,
Sheepbridge, Southam and Upper Huntingford to provide natural
habitat as well as to help improve natural drainage.
-- Bat and bird boxes
The Asset Manager installs bird and bat boxes to attract local
species to the sites.
-- Sheep grazing
Numerous sites have been either built or adapted through the
installation of barriers and the protection of cabling, to ensure
their suitability for continued sheep grazing.
-- Beehive installation
The Asset Manager continues to work with local beekeepers to
install and manage hives as a means of helping to restore the
native bee population, support crop pollination and honey production.
The Asset Manager also encourages the productivity of these hives
through the planting of nectar-rich wildflower species.
-- Climate change risk
Flood risk assessments have been carried out for all sites. Panels
are installed above the "worst--case scenario" water level and
land drains; swales and ponds are also maintained to ensure safe
working conditions and good soil conditions which further promotes
diverse grass and wildflower growth.
-- Grassland management
A grassland cutting timetable is being implemented to limit cutting
in the summer months. This promotes the growth, flowering and
seed spreading of wildflowers to encourage biodiversity and forage
for insects and birds.
3. Social Welfare
During the acquisition process, and throughout an asset's
lifecycle, the Asset Manager engages with contractors, local
residents, community organisations, landowners and local
authorities to promote public support for the project, maximising
the local benefit and minimising any actual or perceived negative
effects. This has been achieved through a number of
initiatives:
-- Community engagement
The Asset Manager regularly attends parish council and local
community meetings and conducts visits with O&M providers, landowners
and construction companies to encourage community engagement
and education. This ensures that local stakeholders understand
the Asset Manager's expectations of site management and to discuss
areas of improvement in management techniques.
-- Community investment
The Company supports community benefit schemes which assist local
communities in developing and maintaining community assets and
organisations. In H1 2021, approximately GBP64,900 worth of grants
were provided to local communities throughout the UK. Examples
of community work to which the grants have contributed include
improvements to sports grounds, parks, playgrounds and community
halls. Smaller investments, still important to the lives of rural
communities, include bus shelters, installation of defibrillators
and installation of signs to encourage car speed reduction.
-- Educational initiatives
A large part of generating public support comes as a result of
educational initiatives, which help to promote an understanding
and appreciation of the benefit of solar power generation. The
usual programme of educational events was unfortunately disrupted
in 2020 and 2021 by the emergence of COVID-19. However, these
initiatives are starting to get back on track. In conjunction
with Lancaster University, a visit was arranged for local school
children to Park Farm solar farm to provide hands-on, experiential
learning to children aged seven to nine as a means of educating
children on the benefits of transitioning to a low-carbon energy
system. The visit was also filmed to enable dissemination in
other schools across the country.
-- Health and well-being
The management and monitoring of health and safety on site is
a top priority for O&M contractors, who are responsible for recording
and reporting all health and safety-related incidents to the
Asset Manager on an ongoing basis. Furthermore, to improve the
management of safety, health, environmental and quality, and
to reinforce best practice and ensure regulatory compliance,
the Asset Manager appoints independent professionally accredited
health and safety consultants. Consultants ensure that contractors
are appointed on the basis of their health and safety competence
and regularly visit the sites to ensure they are meeting industry
and legal standards.
4. Governance
The Asset Manager actively reviews the regulatory and property
consents of every solar asset to ensure compliance with the
permissions and conditions attached to each site and actively
engages with local government organisations to ensure ongoing
compliance. In addition to ensuring the Company is protected from
potential legal issues, this promotes trust with the sites' local
communities.
As of February 2021, all of the Company's UK assets have adopted
a suite of sustainability and ESG--focused policies for the year
2021/22. These policies include:
-- Health and Safety policy
-- Anti-Modern Slavery policy
-- Anti Bribery & Corruption policy
-- Sustainability & ESG policy
These policies were reviewed and approved by the Board of each
SPV and will continue to be adopted on an annual basis.
Compliance
Integral to the maintenance of the Company's reputation is its
regulatory compliance and adherence to relevant laws. The Company
is committed to carrying out business fairly, honestly and in
compliance with laws and regulations and the Investment Manager has
established policies and procedures to prevent bribery within its
organisation. The Company is also committed to a policy to conduct
all its business in an honest and ethical manner, taking a
zero--tolerance approach to facilitation of tax evasion, whether
under Jersey Law, UK law or under the law of any foreign
country.
As a means of ensuring that sustainability considerations are at
the forefront of the investment process, the Investment Manager
delivers "Best Practice" sessions to its staff. These sessions
focus on how the sustainability performance of a given asset can be
assessed, measured and improved, whilst also demonstrating how good
ESG management can result in financial benefits. Foresight Group's
staff are taken on induction tours of the assets and educated on
how the sites are managed for biodiversity and habitat gain, as
well as the processes undertaken to ensure the sites are in
compliance with environmental and planning laws.
More details of the Company's approach to governance are
contained in the Corporate Governance Report. Please refer to the
Audited Annual Report and Financial Statements for the year ended
31 December 2020, which can be found at:
fsfl.foresightgroup.eu/investor
--relations/publications/annual-results/
5. Third-Party Interactions
Counterparty due diligence forms an essential part of ensuring
that key counterparties are reputable, experienced, competent and
that they have robust and sustainable supply chains and have an
approach to governance, compliance and ESG aligned with the
Company, which must be evidenced by appropriate policies.
Two initiatives are being undertaken by the Investment Manager
to further enhance these processes, with a view to improving
overall asset performance and protecting the Company against
reputational risk.
-- Enhanced supplier and counterparty checks
The Investment Manager now contracts out due diligence to an
expert third party. Using a highly specialised legal advisory
and consultancy firm allows for a greater depth of analysis to
be conducted in a shorter space of time, thus speeding up the
acquisition process and providing a higher degree of assurance
that the counterparties involved are both legally and financially
sound. The Investment Manager plans to expand this due diligence
to an online ESG platform whereby suppliers are risk assessed
against key ESG metrics, thus enabling the proactive identification
of key ESG risks and constructive dialogue to mitigate against
this risk.
-- Active supplier engagement
The Investment Manager has established an O&M Sustainability
Agreement which has been signed by a number of the Company's
largest operational counterparties. The Investment Manager will
monitor compliance with this agreement on an annual basis via
direct engagement and seek to implement improvements in O&M working
practices where necessary.
While the Investment Manager actively tracks data pertaining
to the above criteria on an internal basis, it also seeks external
validation of its performance through third-party organisations.
-- Principles for Responsible Investment ("PRI")
The Investment Manager has been a signatory to the United Nations-backed
PRI since 2013. The PRI is a globally recognised voluntary framework
concerned with the incorporation of ESG considerations into the
investment decision-making process. As a signatory, the Investment
Manager reports annually on its responsible investment activities
by responding to asset-specific modules in the PRI's Reporting
Framework.
In its latest PRI assessment, the Investment Manager achieved
an A+ level rating for both "Strategy and Governance" and "Infrastructure",
the highest possible ratings in each category.
RISK AND RISK MANAGEMENT
The Directors consider the following as the principal risks and
uncertainties to the Company at this time:
Risks relating to the sale of electricity and potential impact
-- upon future power prices
-- Risks relating to regulatory changes to subsidy schemes
-- Risks relating to gearing
-- Risks relating to RPI inflation
Risks relating to the conclusion of post-Brexit UK/European Union
-- negotiations
Risks relating to marginal loss factors applicable to the Australian
-- assets
-- Risks relating to the construction of solar PV assets
-- Risks relating to exchange rate
Risk and risk management
The Company is exposed to a number of risks that have the
potential to materially affect the Company's valuation, reputation
and financial or operational performance. The nature and levels of
risk are identified according to the Company's investment
objectives and existing policies, with the levels of risk tolerance
ultimately defined by the Board. The principal risks and
uncertainties affecting the Company are considered to be unchanged
from those reported in pages 16 to 19 of the Audited Annual Report
and Financial Statements for the year ended 31 December 2020. Read
more about our risks in our Annual Report, which can be found at:
fsfl.foresightgroup.eu/investor
--relations/publications/annual-results/
Changes to the level of risk and uncertainty assessed by the
Board during the period or emerging risks that can have a short to
medium--term impact are identified below.
Risks related to COVID-19
The long-term financial and social impact of the COVID-19
pandemic remains uncertain. As the financial cost associated with
the pandemic continues to increase, the introduction of measures to
limit the governmental borrowing required to fund emergency
COVID-19 economic support measures, including changes to tax
legislation and periods of high inflation, can impact the Company
performance and valuation.
The disruption to freedom of movement during pandemic-related
lockdowns in 2020 resulted in little disruption to the Company's
operations but future restrictions could hinder the Company's
ability to service its assets as a result of shortage of qualified
personnel and supply chain disruptions. The Company continues to
work closely with the Investment Manager and key operational
counterparties to mitigate risks related to unforeseen construction
and operational disruptions.
Risks related to the sale of electricity
A decline in the wholesale price of electricity could materially
adversely affect the price of electricity generated by solar PV
assets and thus the Company's business, financial position, results
of operations and business prospects. The restrictions implemented
as a result of the Covid-19 pandemic in 2020 led to a collapse in
demand for electricity and a sharp fall in power prices in the
second quarter of 2020. Prices have recovered strongly since, with
the first six months of 2021 confirming a period of high
electricity prices supported partially by the higher demand of
electricity resulting from the easement of the COVID-19
restrictions.
Further economic and social disruption from global pandemics and
decreases in commodity and carbon prices remain principal risks to
the Company performance. The Company will aim to limit its
electricity price exposure by contracting a high proportion of its
annual cash flows via subsidy mechanisms or fixed electricity price
agreements.
Risks related to Brexit
The UK left the European Union on 31 January 2020. The EU-UK
Trade and Cooperation Agreement was agreed on 24 December 2020 and
ratified by the UK Parliament on 30 December 2020.
The impact of the agreement to the UK energy market and impact
to the regulatory environment, legal and commercial operations of
the portfolio assets remain uncertain.
During the period the level of disruption to supply chains
between the UK and European countries has generally increased. A
prolonged period of disruption to European supply chains could have
a negative economic impact and affect the Company operations.
The Company and the Investment Manager will continue to closely
monitor the impact of the EU-UK Trade and Cooperation Agreement on
the Company portfolio, with no meaningful disruption identified to
date.
Risks related to sustainability objectives
As the focus on climate change and sustainability targets
intensifies, there is an increasing risk the Company's investment
and asset management activities negatively impact its reputation
and market value. The Company recognises that risks traditionally
considered to be non--financial, such as climate change, have the
potential to impact long-term Shareholder returns. The Company aims
to have sustainability and environmental, social and governance
considerations at the centre of its investment process and asset
management activities.
FINANCIAL REVIEW
The Company applies IFRS 10 and Investment Entities: Amendments
to IFRS 10, IFRS 12 and IAS 28, which states that investment
entities should measure all their subsidiaries that are themselves
investment entities at fair value. The Company accounts for its
interest in its wholly owned direct subsidiary Foresight Solar (UK
Hold Co) Limited as an investment at fair value through profit or
loss.
The primary impact of this application, in comparison to
consolidating subsidiaries, is that the cash balances, the working
capital balances and borrowings in the intermediate holding
companies are presented as part of the Company's fair value of
investments.
The Company's intermediate holding companies provide services
that relate to the Company's investment activities on behalf of the
parent which are incidental to the management of the portfolio.
The Company and its intermediate holding companies (the "Group")
hold investments in 59 portfolio assets which make distributions in
the form of interest on loans and dividends on equity as well as
loan repayments and equity redemptions.
For more information on the basis of accounting and Company
structure please refer to the Notes to the Financial Statements
starting on pages 50 to 78.
Key metrics for the period ended 30 June 2021
Period
ended Year ended
30 June 31 December
All amounts presented in GBPmillion (except as noted) 2021 2020
----------------------------------------------------------------- ------- -----------
Net Asset Value ("NAV")(1) 596.4 582.2
Gross Asset Value ("GAV")(2) 1,057.2 1,054.6
Operating income and gains/(losses) on fair value of investments 37.5 (0.3)
NAV per share 98.0p 95.8p
Distributions, repayments and fees from portfolio 18.5 76.7
Profit/(loss) before tax 34.2 (7.2)
----------------------------------------------------------------- ------- -----------
1. Total net assets as per the Statement of Financial Position on
page 47.
2. Calculated as the sum of the NAV and total outstanding debt.
Net assets
Net assets increased from GBP582.2 million at 31 December 2020
to GBP596.4 million at 30 June 2021, detailed in the Investment
Manager's Report.
The net assets of GBP596.4 million comprise GBP1,004.2 million
portfolio value of UK, Australian and Spanish investments and the
Company's cash balance of GBP0.7 million, the intermediate holding
companies' cash balances of GBP49.7 million and the intermediate
holding companies' other assets of GBP2.8 million, offset by
GBP460.8 million of intermediate holding companies' net
liabilities, which comprises of long--term debt of GBP379.9 million
and a GBP80.9 million RCF, and the Company's other net liabilities
of GBP0.2 million.
Analysis of the Group's net assets at 30 June 2021
At At
30 June 31 December
All amounts presented in GBPmillion (except as noted) 2021 2020
----------------------------------------------------------- ----------- -----------
Gross portfolio value(1) 1,004.2 983.7
Intermediate holding companies' cash 49.7 69.0
Intermediate holding companies' long-term debt (379.9) (391.5)
Intermediate holding companies' Revolving Credit Facility (80.9) (80.9)
Intermediate holding companies' other assets/(liabilities) 2.8 (14.9)
----------------------------------------------------------- ----------- -----------
Fair value of the Company's investment in portfolio 595.9 565.4
Company's cash 0.7 16.9
Company's other liabilities (0.2) (0.1)
----------------------------------------------------------- ----------- -----------
Net Asset Value 596.4 582.2
----------------------------------------------------------- ----------- -----------
Number of shares 608,779,514 607,711,311
Net Asset Value per share 98.0p 95.8p
----------------------------------------------------------- ----------- -----------
1. Classified as the gross fair value of the underlying assets in
the portfolio.
Third-party debt arrangements and gearing position
As at 30 June 2021, total outstanding long-term debt was
GBP379.9 million, representing 35.9% of the GAV (calculated as NAV
plus outstanding debt) of the Company and its subsidiaries (31
December 2020: GBP391.5 million or 37.1% of GAV).
As at 30 June 2021, total outstanding debt including RCFs was
GBP460.8 million, representing 43.6% of GAV (31 December 2020:
GBP472.4 million or 44.8% of GAV).
The Company's Group net debt position, after deducting existing
Group cash balances, is GBP410.4 million, representing 38.8% of
GAV.
Long-term facilities
As at 30 June 2021, GBP379.9 million of long-term debt
facilities were outstanding.
Inflation-linked debt facilities represent GBP79.8 million of
total long-term debt outstanding as at 30 June 2021.
At 30 June 2021, the average cost of long-term debt was 2.82%
per annum, including the cost of inflation-linked facilities of
1.37% per annum. The cost of the inflation-linked facility is
expected to increase over time assuming the Company's long-term
annual RPI expectations of 3% in the medium term and 2.25%
post-2030 to reflect RPI reform.
During the period the Company successfully refinanced the
Bannerton project senior debt facility. The new facility will have
a five-year term and has been secured on a financing cost
approximately 250bps lower compared against the previous facility.
The size of the debt facility has remained unchanged.
The refinancing of the senior debt facilities for the Longreach
and Oakey 1 assets is expected to take place in the upcoming months
and is expected to be secured on financing terms more attractive
than the existing facilities.
Revolving credit facilities
The Company currently holds two separate RCFs totalling GBP130.0
million. The GBP65.0 million RCF provided by NatWest was upsized in
the period to GBP90.0 million. As at 30 June 2021, GBP49.1 million
remained undrawn.
At 30 June 2021, the weighted total cost of the RCFs was
2.3%.
The existing RCFs will expire in March and August 2022 and are
expected to be refinanced during the second half of the year.
Debt structure
The following table summarises the debt position of the Company
as at 30 June 2021.
Amount
Holding Facility outstanding Applicable
Borrower vehicle Provider type (m) Maturity rate
-------------- ----------- ---------------- -------------- ------------- ----------- ------------ -------------
Fixed rate,
fully
MIDIS amortising GBP58.9 March 2034 3.78%
---------------- -------------- ------------- ------------------------- ------------------------- -------------
Inflation
FS linked,
FS Holdco Holdco fully RPI Index
Ltd 1 MIDIS amortising GBP55.5 March 2034 + 1.08%
---------------- -------------- ------------- ----------- ------------ -------------
Term loan,
fully LIBOR +
Santander/Aviva amortising GBP15.1 March 2024 1.70%
-------------- ----------- ---------------- -------------- ------------- ----------- ------------ -------------
FS Term loan,
FS Debtco Holdco fully LIBOR +
Ltd 2 SMBC & Helaba amortising GBP7.11 March 2022 1.20%
-------------- ----------- ---------------- -------------- ------------- ----------- ------------ -------------
FS Term loan,
FS Debtco Holdco fully LIBOR +
Ltd 2 SMBC & Helaba amortising GBP154.3 March 2036 1.30%
-------------- ----------- ---------------- -------------- ------------- ----------- ------------ -------------
Second
Generation FS Fixed rate,
Portfolio Holdco fully August
1 Ltd 3 MIDIS amortising GBP3.7 2034 4.40%
-------------- ----------- ---------------- -------------- ------------- ------------------------- -------------
Second Inflation
Generation linked,
Portfolio FS fully August RPI Index
1 Ltd Holdco(1) MIDIS amortising GBP24.2 2034 + 1.70%
-------------- ----------- ---------------- -------------- ------------- ------------------------- -------------
Foresight Base rate
Solar FS (0.96%)
Australia Holdco + margin
Pty Ltd 4(1) CEFC Term loan A$39.3(2) June 2027 (2.00%)
-------------- ----------- ---------------- -------------- ------------- ------------------------- -------------
Longreach
Finco Pty Base rate
Ltd CEFC Term loan A$5.3(2) March 2022 (2.57%) + margin
--------------------------- ---------------- -------------- ------------- -----------
Longreach
Finco Pty Base rate (construction
Ltd MUFG Term loan A$5.3(1) March 2022 (3.28%)(1) -1.55%;
--------------------------- ---------------- -------------- ------------- -----------
Oakey 1
Finco Pty Base rate operation
Ltd CEFC Term loan A$8.0(1) March 2022 (2.58%) - 1.40%)
--------------------------- ---------------- -------------- ------------- -----------
Oakey 1
Finco Pty Base rate
Ltd MUFG Term loan A$8.0(1) March 2022 (3.14%)(1)
--------------------------- ---------------- -------------- ------------- ----------- ----------- -------------
Oakey 2
Finco Pty October Base rate (2.48%)
Ltd CEFC Term loan A$46.7 2022 + 2.25%
--------------------------- ---------------- -------------- ------------- ----------- --------------------------
Total long-term
debt GBP379.9
------------------------------------------------------------- ---------------------------------------- -------------
FS
FS Holdco Holdco Revolving LIBOR +
Ltd 1 Santander credit GBP40.0 March 2022 1.75%
-------------- ----------- ---------------- -------------- ------------- ------------------------- -------------
Foresight
Intermediate FS Top
Solar Holding Holdco Revolving August LIBOR +
Ltd 2 NatWest credit GBP40.9 2022 2.00%
-------------- ----------- ---------------- -------------- ------------- ------------------------- -------------
Total revolving
debt GBP80.9
------------------------------------------------------------- ---------------------------------------- -------------
Total debt GBP460.8
------------------------------------------------------------- ---------------------------------------- -------------
1. Interest rate swap for 100% of the outstanding debt during the
initial five years, 75% from years six to ten and 50% thereafter.
2. Australian debt prorated for Company's share of asset ownership.
AUD/GBP exchange rate of 0.542 as at 30 June 2021.
The Company continues to have limited exposure to benchmark rate
movements in the UK and Australia as a result of the long-term
interest rate swaps in place to protect the Company from underlying
interest rate movements. Sterling--denominated debt facilities
priced over LIBOR benefit from interest rate swaps hedging between
80% and 100% of the outstanding debt during the terms of the loans,
depending on the facility. In Australia, debt facilities entered
into with the CEFC have no exposure to the Bank Bill Swap Bid Rate
("BBSY") as the rate was fixed at financial close. Debt facilities
provided by Mitsubishi UFJ Financial Group ("MUFG") have in place
interest rate swaps on a decreasing nominal amount for a notional
tenor of 20 years.
In March 2021, the Financial Conduct Authority ("FCA") announced
that most LIBOR panels, including sterling panels, would cease to
be effective from 31 December 2021. LIBOR-linked facilities are
therefore required to transition to an alternative Risk-Free
Reference Rate. A transition to Sterling Overnight Index Average
("SONIA") has been agreed in principle with each of the lenders of
the facilities with a LIBOR base rate within the Group.
Company performance
Profit and loss
The Company's profit before tax for the period ended 30 June
2021 is GBP34.2 million, generating profits of 5.6 pence per
share.
In the period to 30 June 2021, the operating income and gains on
fair value of investments was GBP37.5 million, which comprised the
receipt of GBP18.9 million of interest on the Foresight Solar (UK
Hold Co) loan notes and GBP18.6 million net gains on investments at
fair value incurred in the period.
Operating expenses included in the income statement for the
period were GBP3.3 million, in line with expectations. These
comprise Investment Management fees of GBP2.9 million and GBP0.4
million of operating expenses. The details on how the Investment
Management fees are charged are set out in note 5 to the Financial
Statements.
Six --
month
period
ended Year ended
30 June 31 December
All amounts presented in GBPmillion (except as noted) 2021 2020
------------------------------------------------------------- ------- -----------
Interest received on Foresight Solar (UK Hold Co) loan notes 18.9 39.6
Net gains/(losses) on investments at fair value 18.6 (39.9)
------------------------------------------------------------- ------- -----------
Operating income and gains on fair value of investments 37.5 (0.3)
Operating expenses (3.3) (6.9)
------------------------------------------------------------- ------- -----------
Profit/(loss) before tax 34.2 (7.2)
Earnings per share 5.6p (1.2p)
------------------------------------------------------------- ------- -----------
Cash flow
The Company had a total cash balance at 30 June 2021 of GBP0.7
million (31 December 2020: GBP16.9 million). This amount excludes
cash held in subsidiaries. The breakdown of the movements in cash
during the year is shown below.
Cash flows of the Company only for the period to 30 June 2021
(GBPmillion)
Six --
month
period
ended Year ended
30 June 31 December
2021 2020
------------------------------------------------------------------ ------- -----------
Cash balance at 1 January 16.9 18.9
Interest on loan notes received from Foresight Solar (UK Hold Co) 7.0 45.1
Directors' fees and expenses (0.1) (0.2)
Investment Management fees (2.8) (7.3)
Administrative expenses (0.3) (0.9)
Dividends paid in cash to Shareholders (20.0) (38.7)
------------------------------------------------------------------ ------- -----------
Company cash balance at 30 June 0.7 16.9
------------------------------------------------------------------ ------- -----------
Consolidated profit and loss of underlying investments
The underlying operating investments in the UK and Australia
generated an operating profit of GBP44.7 million in the period to
30 June 2021, in line with expectations.
Consolidated profit and loss of the underlying investments for
the period to 30 June 2021 (GBPmillion)
UK Australia Consolidation
actual actual actual
For the period ended 30 June 2021 (GBPm) (A$m) (GBPm)
---------------------------------- ------ --------- -------------
Revenue
Wholesale revenue 21.5 4.9 24.2
Subsidised revenue 29.9 2.5 31.3
Other income 0.1 0.5 0.3
---------------------------------- ------ --------- -------------
Total revenue 51.7 7.9 55.7
---------------------------------- ------ --------- -------------
Operating expenditure
O&M quarterly (2.7) (0.6) (3.0)
O&M ad hoc (0.7) (0.0) (0.7)
Other operating expenditure (6.0) (2.3) (7.3)
---------------------------------- ------ --------- -------------
Total expenditure (9.5) (2.9) (11.0)
---------------------------------- ------ --------- -------------
Total operating profit 42.0 5.0 44.7
---------------------------------- ------ --------- -------------
The Australian assets are consolidated based on the fund's
ownership, using an average AUD/GBP exchange rate of 0.5481.
Subsidised revenues consist of ROC, ROC recycle, Feed-in Tariff,
embedded benefits and Large-Scale Generation Certificates
("LGCs").
Cash flows of the Company and intermediate holding companies for
the 12-month period to 30 June 2021 (GBPmillion)
During the 12 months to 30 June 2021 the underlying solar assets
paid GBP74.1 million of ordinary distributions to the intermediate
holding companies, in line with expectations.
Cash received from underlying solar investments covers the
long-term debt repayments, financing costs and the operating and
administrative expenses of the Company and the intermediate holding
companies as well as the dividends declared to Shareholders.
During the period, the Group released GBP4.5 million from
compensation accounts in relation to legacy issues within some UK
assets; GBP1.1 million of this cash was in relation to lost revenue
and therefore available for distribution.
Acquisition costs in the period are in relation to Sandridge
Battery Storage Limited and further investment into the Spanish
portfolio acquired in December 2020 to fund construction
milestones.
12-month
period
ended
30 June
2021
------------------------------------------------------------------ --------
Ordinary cash distributions from solar investments 74.1
Cash released from compensation accounts on behalf of investments 1.1
Administrative expenses (1.8)
Directors' fees and expenses (0.3)
Investment Management fees(1) (7.3)
Financing costs (net of interest income) (7.6)
Repayments of long-term debt facilities (18.5)
------------------------------------------------------------------ --------
Cash flow from operations 39.7
Acquisition of new assets (41.9)
Proceeds from RCF borrowings 40.9
Compensation account payments (4.5)
Dividends paid in cash to Shareholders (39.4)
------------------------------------------------------------------ --------
Cash movement in the period (5.2)
Opening cash balance 55.6
------------------------------------------------------------------ --------
Group cash balance at 30 June 50.4
------------------------------------------------------------------ --------
1. The 12-month period to 30 June 2021 includes an additional quarterly
Investment Management fee invoice settled late in July 2020 for
GBP1.5 million.
Dividend cover
Cash flows for the 12 months to 30 June 2021 reflect the
decrease in UK wholesale power prices over the same period, in
particular since COVID-19 lockdown measures were implemented. The
revenues received in this period do not fully reflect the recent
increase in power prices due to the working capital delay caused by
payment terms stipulated under the PPAs.
Despite the low power price environment, the Company is showing
a cash dividend cover of 1.05 times, when adjusting for the
additional quarterly Investment Management fee invoice paid in the
period. The Company expects the dividend cover for the year ending
31 December 2021 to be a minimum 1.10 times, as it continues to
meet its dividend target for the year, as it has done each year
since IPO.
Dividends
The Company is targeting a full-year dividend for the year
ending 31 December 2021 of 6.98 pence, representing a 1.00%
increase compared with the dividend declared for the 2020 financial
year. The Company has met all target dividends since IPO and
follows a progressive dividend policy, aiming to grow its dividend
over time.
Dividend timetable for FY2021
Payment
Amount Status date
--------- ----------- -------- -----------
27 August
Interim 1 1.745 pence Paid 2021
26 November
Interim 2 1.745 pence Declared 2021
Interim 3 1.745 pence Targeted Q1 2022
Interim 4 1.745 pence Targeted Q2 2022
--------- ----------- -------- -----------
Total 6.98 pence
--------- ----------- -------- -----------
On 15 September 2021 the Board approved the second interim
dividend relating to FY2021 of 1.745 pence per share.
Dividend timetable - Interim 2 Date
------------------------------ -----------
28 October
Ex-dividend date 2021
29 October
Record date 2021
26 November
Payment date 2021
------------------------------ -----------
Full details of the scrip dividend alternative that is being
offered in respect of the dividend (the "Scrip Offer"), its
timetable and the Scrip Dividend Scheme can be found in the Scrip
Dividend Alternative Offer Document (the "Scrip Document")
available on the Company's website to view and/or download at
fsfl.foresightgroup.eu/investor-relations/. The Scrip Document is
also available on the National Storage Mechanism website at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and copies
are also available for inspection at JTC House, 28 Esplanade, St.
Helier, Jersey JE2 3QA.
Foreign exchange
The Company is exposed to foreign exchange movements in respect
of its investments in Australia and Spain. As such, the Company
continues to implement a hedging strategy in order to reduce the
possible impact of currency fluctuations and to minimise the
volatility of equity returns and cash flow distributions.
Foreign exchange hedging will not be applied to the cost of the
equity investments, considering the long-term investment strategy
of the Company.
For Australian assets, the Company has entered into a rolling
two-year forward contracts strategy for an amount equivalent to
approximately 75% of its expected distributable foreign currency
cash flows at project level.
For the Spanish assets recently acquired, the Company has
implemented a ten-year rolling foreign currency hedging strategy
covering c.80% of the expected annual cash flows.
The Company reviews its foreign exchange strategy on a regular
basis with the objective of limiting the short-term volatility in
sterling distributable cash flows caused by foreign exchange
fluctuations and optimising the costs of the hedging
instruments.
Ongoing charges
The ongoing charges ratio for the period to 30 June 2021 was
1.18% (31 December 2020: 1.18%). This has been calculated using
methodology as recommended by the Association of Investment
Companies ("AIC"). Asset management fees charged by Foresight Group
LLP on an arm's length basis at project level are excluded from the
ongoing charges ratio.
CORPORATE SUMMARY
The Company is the largest UK-listed dedicated solar energy
investment company by installed capacity and market
capitalisation.
Corporate summary
The Company is a closed-ended company with an indefinite life
and was incorporated in Jersey under the Companies (Jersey) Law
1991, as amended on 2 March 2021, with registration number
113721.
The Company's Initial Public Offering on 24 October 2013 raised
GBP150 million, creating the largest dedicated solar investment
company listed in the UK at the time.
Following multiple equity raises since launch, the Company has
grown steadily and now owns a portfolio with a Gross Asset Value of
GBP1,057.2 million as at 30 June 2021. It is the largest UK-listed
dedicated solar energy investment company by installed capacity and
market capitalisation.
As at 30 June 2021, the Company has 608,779,514 Ordinary Shares
in issue which are listed on the Premium Segment of the Official
List and traded on the London Stock Exchange's Main Market.
Operating structure and business model
As an investment company, the Company has no direct employees
and outsources all operations to a number of key service
providers.
The Company makes its investments through intermediate holding
companies and underlying Project Vehicles/Special Purpose Vehicles
("SPVs").
The operating structure and key service providers are detailed
in the graphic below:
Significant Shareholders
The Company's Shareholders include a large mix of institutional
and retail investors.
Shareholders in the Company with more than a 5% holding as at 30
June 2021 are as follows:
% shareholding
Investor in fund
------------------------------------------ --------------
BlackRock Investment Management Ltd 16.39
Schroders Plc 7.88
Baillie Gifford & Co Ltd 7.86
Legal & General Investment Management Ltd 6.64
Valu-Trac Investment Management Ltd 6.63
------------------------------------------ --------------
Total 45.40%
------------------------------------------ --------------
Investment policy
The Company pursues its investment objective by acquiring
ground-based, operational solar power plants. The Company is also
permitted to invest in utility scale battery storage systems up to
a limit of 10% of the GAV of the Company, calculated at the time of
investment.
Investments in assets which are, when acquired, still under
construction will be limited to 25% of the GAV of the Company and
subsidiaries, calculated at the time of investment.
Investments outside the UK will be limited to 25% of the GAV of
the Company and subsidiaries, calculated at the time of
investment.
Amendments to the investment policy
At a General Meeting of the Company held post-period end on 15
February 2021, Shareholders overwhelmingly voted in favour of
proposals to amend the Company's investment policy. The policy
change permits investment into BSS of up to 10% of the GAV of the
Company.
Energy generated from renewable sources is expected to represent
an increasing proportion of the total energy generation capacity
versus other forms of generation. The intermittent nature of
primary renewable technologies (particularly solar and wind)
results in increased risk of imbalance between demand and supply on
the grid, leading to increased price volatility. BSS support a
rebalancing of the grid and prevent loss of inertia for the system
operator. In return, a number of financial incentives are available
to BSS in addition to potential arbitrage opportunities relating to
the wholesale market price itself.
Foresight Group was an early investor into the UK battery
storage market investing in c.100MW of battery storage assets since
2017. Foresight Group is also monitoring the landscape for BSS
across other countries, including those in which the Company holds
investments.
Although the new investment policy permits the Company to invest
in BSS assets without them having to be co-located on the Company's
solar power plants sites, co--located opportunities, greenfield or
alongside the existing solar portfolio assets, represent an
attractive accessible opportunity--base. Co--locating BSS with the
Company's existing solar power plants ensures a lower capital cost
for BSS development versus investing in standalone storage
assets.
This is achieved by sharing existing infrastructure with the
site, most importantly the grid connection, but also the land,
access tracks and security arrangements.
In addition to delivering higher diversification of cash flows
available for distribution, the co-location of battery storage,
when retrofitted onto an existing portfolio solar power plant site,
is not expected to impact the value of the solar power plant
investment, as the batteries will operate within the excess grid
capacity outside of the solar generation profile.
Investment strategy
The Company will seek to build a diversified portfolio of assets
by acquiring majority or minority stakes in individual ground-based
solar assets and BSS.
When investing in a stake of less than 100% in a solar power
plant SPV, the Company will secure its Shareholder rights through
Shareholders' agreements and other legal transaction documents.
Power Purchase Agreements ("PPAs") will be entered into between
each of the individual solar power plant SPVs in the portfolio and
creditworthy offtakers. Under the PPAs, the SPVs will sell solar
generated electricity and/or green benefits to the designated
offtaker. The Company may retain exposure to power prices through
PPAs that do not include mechanisms such as fixed prices or price
floors.
Investment may be made in equity, debt or intermediate
instruments but not in instruments traded on any investment
exchange.
The Company is permitted to invest cash held for working capital
purposes and awaiting investment in cash deposits, gilts and money
market funds.
Investment restrictions
In order to spread risk and diversify its portfolio, at the time
of investment no single asset shall exceed 30% of the Company's GAV
post-acquisition. If the investment is an additional stake in an
existing investment, the combined value of both the existing stake
and the additional stake acquired should also not exceed 30%.
The GAV of the Company will be calculated based on the last
published gross investment valuation of the Company's portfolio,
including cash, plus acquisitions made since the date of such
valuation at their cost of acquisition. The Company's portfolio
will provide diversified exposure through the inclusion of not less
than five individual solar power plants and the Company will also
seek to diversify risk by ensuring that a significant proportion of
its expected income stream is derived from regulatory support
(which will consist of, for example, without limitation, ROCs and
FiTs for UK assets). Diversification will also be achieved by the
Company using a number of different third-party providers such as
developers, engineering, procurement and construction ("EPC")
contractors, operations and maintenance ("O&M") contractors,
panel manufacturers, landlords and distribution network
operators.
The Articles provide that gearing, calculated as Group borrowing
(including any asset-level gearing) as a percentage of the
Company's GAV, will not exceed 50% at the time of drawdown. It is
the Board's current intention that long-term gearing (including
long-term, asset--level gearing), calculated as Group borrowings
(excluding intra--group borrowings (i.e. borrowing between members
of the Group) and Revolving Credit Facilities) as a percentage of
the Company's GAV will not exceed 40% at the time of drawdown.
Investments in BSS will be limited to 10% of the GAV of the
Company and subsidiaries, calculated at the time of investment.
Any material change to the investment policy will require the
prior approval of Shareholders by way of an ordinary resolution
(for so long as the Ordinary Shares are listed on the Official
List) in accordance with the Listing Rules.
Investment Manager
The Company's Investment Manager, Foresight Group LLP, is
responsible for the acquisition and management of the Company's
assets, including the sourcing and structuring of new acquisitions
and advising on the Company's borrowing strategy. Foresight Group
is authorised and regulated by the Financial Conduct Authority.
Foresight Group was founded in 1984 and is a leading
infrastructure and private equity investment manager. With a
long-established focus on ESG and sustainability-led strategies, it
aims to provide attractive returns to its institutional and private
investors from hard-to-access private markets. Foresight Group
manages over 300 infrastructure assets, with a focus on solar and
onshore wind assets, bioenergy and waste, as well as renewable
energy enabling projects, energy efficiency management solutions,
social and core infrastructure projects and sustainable forestry
assets. Its private equity team manages five regionally focused
investment funds across the UK, supporting over 100 SMEs. Foresight
Group operates from 12 offices across six countries in Europe and
Australia with AUM of GBP7.8 billion as at 30 June 2021. Foresight
Group Holdings Limited listed on the Main Market of the London
Stock Exchange in February 2021. https://www.fsg-investors.com/
Foresight Infrastructure's team consisted of 85 full-time
employees as at 30 March 2021. The team is comprised of:
(a) An investment management team of professionals responsible for
originating, assessing and pricing assets, managing due diligence
and executing transactions
(b) An asset management team with expertise across electrical and
civil engineering, finance and legal disciplines
The Foresight infrastructure team has substantial experience in
sourcing and executing all required elements of the capital
structure of an investment across geographies, including
project-level debt finance and other required forms of finance.
The key strengths of the infrastructure investment team include
(a) sourcing and execution of asset acquisitions; (b) experience of
pricing complex revenue streams; (c) pricing wholesale power
exposure; (d) managing construction projects; and (e) finance and
structuring, including bank debt and project finance.
The asset management team consists of individuals with
engineering, consulting and operations backgrounds, accountants and
in-house personnel responsible for the process of "on-boarding" and
managing acquired assets as well as a technical team of specialist
infrastructure engineers that help by evaluating an asset's
operational and physical characteristics during due diligence,
construction management and assist the asset management team to
manage the assets by identifying and implementing optimisations
post-acquisition. Members of these teams work together throughout
the investment lifecycle.
The asset management services provided ensure the day-to-day
operation of the sites is robust, with commercial and strategic
decisions clearly communicated to the O&M counterparties. The
services also include:
-- Portfolio optimisation including negotiation of project contracts,
component warranties and insurance policies, spare part and replacement
strategy and technology improvements
-- Oversight of Operation & Maintenance counterparties and operational
performance
-- Contractual compliance of all contracts
-- Reporting to debt providers and other debt compliance services
-- Accounting, bookkeeping, tax compliance and statutory reporting
of all SPVs
-- Corporate governance activities including health and safety compliance
Read more about the Investment Manager at:
www.fsfl.foresightgroup.eu
Alternative Investment Fund Management Directive ("AIFMD")
The AIFMD, which was implemented across the EU on 22 July 2013,
aims to harmonise the regulation of Alternative Investment Fund
Managers ("AIFMs") and imposes obligations on managers who manage
or distribute Alternative Investment Funds ("AIFs") in the EU or
who market shares in such funds to EU investors. Under the AIFMD,
the Company is self-managed and acts as its own Alternative
Investment Fund Manager.
The Company is located outside the European Economic Area
("EEA") but the Company's marketing activities in the UK are
subject to regulation under the UK AIFMD and the UK National
Private Placement Regime.
Read more about our Directors at: www.fsfl.foresightgroup.eu
Read more about S172 in our Annual Report, which can be found
at: www.fsfl.foresightgroup.eu
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Disclosure Guidance and Transparency Rules ("DTR") of the UK
Listing Authority require the Directors to confirm their
responsibilities in relation to the preparation and publication of
the Unaudited Half-Yearly Financial Report for the six months ended
30 June 2021.
The Directors confirm to the best of their knowledge that:
(a) The condensed set of Financial Statements, which has been prepared
in accordance with the applicable set of accounting standards,
gives a true and fair view of the assets, liabilities, financial
position and profit or loss of the issuer, or the undertakings
included in the consolidation as a whole as required by DTR 4.2.4
R
(b) The interim management report includes a fair review of the information
required by DTR 4.2.7 R
(c) The interim management report includes a fair review of the information
required by DTR 4.2.8 R
Alexander Ohlsson
Chairman
For and on behalf of Foresight Solar Fund Limited
15 September 2021
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD 1 JANUARY 2021 TO 30 JUNE 2021
Unaudited Unaudited Audited
Period Period Year
1 January 1 January 1 January
2021 to 2020 to 2020 to
30 June 30 June 31 December
2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
----------------------------------------------------------------- ----- --------- --------- -----------
Revenue
Interest income 4 18,896 19,695 39,630
Gains/(loss) on investments at fair
value through profit or loss 14 18,612 (43,131) (39,900)
----------------------------------------------------------------- ----- --------- --------- -----------
37,508 (23,436) (270)
----------------------------------------------------------------- ----- --------- --------- -----------
Expenditure
Management fees 5 (2,858) (2,907) (5,796)
Administration and accountancy expenses 6 (96) (91) (189)
Directors' fees 7 (130) (108) (230)
Other expenses 8 (216) (201) (712)
----------------------------------------------------------------- ----- --------- --------- -----------
Total expenditure (3,300) (3,307) (6,927)
----------------------------------------------------------------- ----- --------- --------- -----------
Profit/(loss) before tax for the period/year 34,208 (26,743) (7,197)
Taxation - - -
----------------------------------------------------------------- ----- --------- --------- -----------
Profit/(loss) for the period/year 34,208 (26,743) (7,197)
Other comprehensive income - - -
----------------------------------------------------------------- ----- --------- --------- -----------
Profit/(loss) and total comprehensive income for the period/year 34,208 (26,743) (7,197)
----------------------------------------------------------------- ----- --------- --------- -----------
Earnings per Ordinary Share (pence per share) 9 5.63 (4.42) (1.19)
----------------------------------------------------------------- ----- --------- --------- -----------
All items above arise from continuing operations, there have
been no discontinued operations during the period.
The accompanying notes on pages 50 to 78 form an integral part
of these Financial Statements.
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021
Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
------------------------------------------------------ ----- --------- --------- -----------
Assets
Non-current assets
Investments held at fair value through profit or loss 14 520,898 499,055 502,286
------------------------------------------------------ ----- --------- --------- -----------
Total non-current assets 520,898 499,055 502,286
Current assets
Interest receivable 10 75,033 79,948 63,137
Trade and other receivables 11 275 250 275
Cash and cash equivalents 12 668 4,655 16,875
------------------------------------------------------ ----- --------- --------- -----------
Total current assets 75,976 84,853 80,287
------------------------------------------------------ ----- --------- --------- -----------
Total assets 596,874 583,908 582,573
------------------------------------------------------ ----- --------- --------- -----------
Equity
Retained earnings (32,312) (44,107) (45,491)
Stated capital 17 628,687 626,174 627,649
------------------------------------------------------ ----- --------- --------- -----------
Total equity 596,375 582,067 582,158
------------------------------------------------------ ----- --------- --------- -----------
Liabilities
Current liabilities
Trade and other payables 13 499 1,841 415
------------------------------------------------------ ----- --------- --------- -----------
Total current liabilities 499 1,841 415
------------------------------------------------------ ----- --------- --------- -----------
Total liabilities 499 1,841 415
------------------------------------------------------ ----- --------- --------- -----------
Total equity and liabilities 596,874 583,908 582,573
------------------------------------------------------ ----- --------- --------- -----------
Net Asset Value per Ordinary Share 18 97.96 96.00 95.80
------------------------------------------------------ ----- --------- --------- -----------
The Financial Statements on pages 46 to 78 were approved by the
Board of Directors and signed on its behalf on 15 September 2021
by:
Alexander Ohlsson
Chairman
The accompanying notes on pages 50 to 78 form an integral part
of these Financial Statements.
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD 1 JANUARY 2021 TO 30 JUNE 2021 (UNAUDITED)
Stated Retained
capital earnings Total
Notes GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ----- ------- -------- --------
Balance as at 1 January 2021 627,649 (45,491) 582,158
--------------------------------------------------------- ----- ------- -------- --------
Total comprehensive income for the period:
Profit for the period - 34,208 34,208
Transactions with owners, recognised directly in equity:
Dividends paid in the period 21 - (19,991) (19,991)
Issue of scrip dividends 17 1,038 (1,038) -
--------------------------------------------------------- ----- ------- -------- --------
Balance as at 30 June 2021 628,687 (32,312) 596,375
--------------------------------------------------------- ----- ------- -------- --------
FOR THE PERIOD 1 JANUARY 2020 TO 30 JUNE 2020 (UNAUDITED)
Stated Retained
capital earnings Total
Notes GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ----- ------- -------- --------
Balance as at 1 January 2020 624,922 3,102 628,024
--------------------------------------------------------- ----- ------- -------- --------
Total comprehensive income for the period:
Loss for the period - (26,743) (26,743)
Transactions with owners, recognised directly in equity:
Dividends paid in the period 21 - (19,214) (19,214)
Issue of scrip dividends 17 1,252 (1,252) -
--------------------------------------------------------- ----- ------- -------- --------
Balance as at 30 June 2020 626,174 (44,107) 582,067
--------------------------------------------------------- ----- ------- -------- --------
FOR THE PERIOD 1 JANUARY 2020 TO 31 DECEMBER 2020 (AUDITED)
Stated Retained
capital earnings Total
Notes GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ----- ------- -------- --------
Balance as at 1 January 2020 624,922 3,102 628,024
Total comprehensive income for the year:
Loss for the year - (7,197) (7,197)
Transactions with owners, recognised directly in equity:
Dividends paid in the year 21 - (38,669) (38,669)
Issue of scrip dividends 17 2,727 (2,727) -
--------------------------------------------------------- ----- ------- -------- --------
Balance as at 31 December 2020 627,649 (45,491) 582,158
--------------------------------------------------------- ----- ------- -------- --------
The accompanying notes on pages 50 to 78 form an integral part
of these Financial Statements.
STATEMENT OF CASH FLOWS
FOR THE PERIOD 1 JANUARY 2021 TO 30 JUNE 2021
Unaudited Unaudited Audited
Period Period Year
1 January 1 January 1 January
2021 to 2020 to 2020 to
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------------------------------- --------- --------- -----------
Profit/(loss) for the period/year after tax from continuing operations 34,208 (26,743) (7,197)
Adjustments for:
Unrealised (profit)/loss on investments (18,612) 43,131 39,900
----------------------------------------------------------------------- --------- --------- -----------
Operating cash flows before changes in working capital 15,596 16,388 32,703
Increase/(decrease) in interest receivables (11,896) (11,395) 5,416
Decrease/(increase) in trade and other receivables - 5 (20)
Increase/(decrease) in trade and other payables 84 (62) (1,488)
Net cash inflow from operating activities 3,784 4,936 36,611
----------------------------------------------------------------------- --------- --------- -----------
Financing activities
Dividends paid (19,991) (19,214) (38,669)
----------------------------------------------------------------------- --------- --------- -----------
Net outflow from financing activities (19,991) (19,214) (38,669)
----------------------------------------------------------------------- --------- --------- -----------
Net decrease in cash and cash equivalents (16,207) (14,278) (2,058)
Cash and cash equivalents at the beginning of the period/year 16,875 18,933 18,933
----------------------------------------------------------------------- --------- --------- -----------
Cash and cash equivalents at the end of the period/year 668 4,655 16,875
----------------------------------------------------------------------- --------- --------- -----------
The accompanying notes on pages 50 to 78 form an integral part
of these Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD 1 JANUARY 2021 TO 30 JUNE 2021
1. Company information
Foresight Solar Fund Limited (the "Company") is a closed-ended
company with an indefinite life and was incorporated in Jersey
under the Companies Law (Jersey) 1991, as amended, on 13 August
2013, with registered number 113721. The address of the registered
office is: 28 Esplanade, St Helier, Jersey, JE2 3QA.
The Company has one investment, Foresight Solar (UK Hold Co)
Limited ("UK Hold Co").
UK Hold Co has investments in five subsidiaries: FS Holdco
Limited ("FS Holdco"), FS Holdco 3 Limited ("FS Holdco 3"), FS
Holdco 4 Limited ("FS Holdco 4"), FS Top Holdco 2 Limited ("Topco")
and a 50% shareholding in a new investment purchased during the
period, Sandridge Battery Storage Holding Limited ("SBSHL"). FS
Holdco 3 in turn has an investment in a subsidiary, SGP Holdings 1
Limited ("SGP Holdings 1") which in turn holds has an investment in
Second Generation Portfolio 1 ("SGP 1"). Topco in turn has an
investment in a subsidiary, Foresight Intermediate Solar Holdings
Limited ("FISH"); FISH in turn has an investment in a subsidiary,
FS Holdco 2 Limited ("FS Holdco 2") and FS Holdco 2 in turn has an
investment in a subsidiary, FS Debtco Limited ("FS Debtco"). FS
Holdco, FS Debtco, FS Holdco 3, SGP 1 and FS Holdco 4 invest in
further holding companies (the "SPVs") which then invest in the
underlying solar investments. SBSHL invests in the underlying
battery asset Battery Storage Limited ("SBSL").
The principal activity of the Company, UK Hold Co, FS Holdco,
Topco, FISH, FS Holdco 2, FS Debtco, FS Holdco 3, SGP Holdings 1,
SGP 1 and FS Holdco 4 (together "the Group") is investing in UK,
Spanish and Australian ground--based solar power plants. On 15
February 2021, Shareholders voted in favour of proposals to amend
the Company's Investment Policy. The policy change permits
investment into BSS of up to 10% of the GAV of the Company.
In 2021 the Company announced the acquisition of a 50% equity
stake in SBSHL, the shareholder of SBSL. SBSL holds the development
rights to construct the Sandridge battery storage project, a 50MW
lithium-ion battery energy storage system based in Melksham, UK,
adjacent to the Sandridge solar park which is already owned by the
Company.
2. Summary of significant accounting policies
2.1 Basis of presentation
The Unaudited Interim Financial Statements (the "Interim
Financial Statements") for the period 1 January 2021 to 30 June
2021 have been prepared in accordance with International Accounting
Standard 34 "Interim Financial Reporting" ("IAS 34").
The Interim Financial Statements do not include all the
information and disclosures required in the annual Financial
Statements, and should be read in conjunction with the annual
Financial Statements as at 31 December 2020.
These are not statutory accounts in accordance with Article 105
of the Companies Law (Jersey) 1991, as amended, and the financial
information for the periods ended 30 June 2021 and 30 June 2020 has
been neither audited nor formally reviewed. Statutory accounts in
respect of the period to 31 December 2020 have been audited and
reported on by the Company's auditors and delivered to the
Registrar of Companies and included the report of the auditors
which was unqualified and did not contain a statement under Article
113B (3) or 113B (6) of the Companies Law (Jersey) 1991. No
statutory accounts in respect of any period after 31 December 2020
have been reported on by the Company's auditors or delivered to the
Registrar of Companies.
2.2 Going concern
Throughout the period to 30 June 2021, market conditions have
continued to stabilise, and captured power prices have continued to
recover from the impact of COVID-19. In addition, short--term,
medium--term and long--term power price forecasts have also
continued to recover. Despite the recovery, the impact of COVID-19
continues to be monitored along with the potential for another
global economic slowdown following further outbreaks of the
virus.
Although the pandemic impacted the Financial Statements as at 31
December 2020 as a result of lower power price forecasts, the
short--term power price curves have since shown a recovery in 2021
from the impact of COVID-19 and therefore the Directors do not see
any further impact on cash flows and are confident that the Group's
cash flow will remain stable beyond 30 June 2021. The Directors
also do not believe the Financial Statements as at 30 June 2021
have been further impacted by COVID-19 and the Directors do not
believe there is any impact on the Company's ability to continue as
a going concern. The Directors refer to cash flow forecasts
prepared by the Investment Manager for the period of at least 12
months following the date of these accounts, which includes an
assessment of the severe possible downside of a six--month period
with no income.
In making this assessment the Investment Manager has considered
the largely predictable revenue streams stemming from the
underlying portfolio companies trading on solar sites, a large
proportion of which are fixed through PPAs as well as
government--backed subsidies.
The Directors have concluded that the impacts of movements in
market prices do not significantly impact the Company's ability to
continue as a going concern. The Directors have considered
forward-looking power prices assumptions by third-party providers
in making this assessment.
The Manager continues to monitor developments relating to
COVID-19 and continues to coordinate its operational response based
on existing business continuity plans and on guidance from global
health organisations, relevant governments, and general pandemic
response best practices.
After the completion of Brexit, the Company faces certain risks
in relation to the operation of the UK solar portfolio (discussed
in note 19.4) and the Asset Manager continues to monitor the robust
spare parts provision in the UK and continues to work with the
operating and maintenance providers and their downstream suppliers
to ensure any downtime is minimised across the portfolio as much as
possible.
The Company's business activities, together with the factors
likely to affect its future development, performance and position
are set out in this report. The financial position of the Company,
its cash flows, liquidity position and borrowing facilities are
referred to in the Chairman's Statement, Investment Manager's
Report and Notes to the Financial Statements. In addition, the
Financial Statements include the Company's objectives, policies and
processes for managing its capital; its financial risk management
objectives; and its exposures to credit risk and liquidity
risk.
The subsidiaries of the Company, FS Holdco Limited, FS Debtco
Limited and Foresight Intermediate Solar Holding Limited, are
required to complete quarterly debt compliance reporting. The three
covenants that the subsidiaries are required to report on are the
12 months look back debt service cover ratio, the 12 months look
forward debt service cover ratio and the loan life cover ratio. The
Directors are happy to confirm that there were no instances of
non-compliance throughout the period or subsequently.
The Company has sufficient financial resources together with
investments and income generated. Consequently, the Directors are
confident that the Company will have sufficient funds to continue
to meet its liabilities as they fall due for the 18--month period
ending 31 December 2022 and have therefore prepared the Financial
Statements on a going concern basis.
2.3 Changes in accounting policies and disclosures
New and revised IFRSs adopted by the Company
The accounting policies adopted are consistent with those of the
previous financial year. Management have assessed all new standards
and amendments to standards and interpretations that are effective
for annual periods after 1 January 2021 and have deemed none of
them to be applicable to the Company.
New and revised IFRSs in issue but not yet effective
There are no standards, amendments or interpretations in issue
at the reporting date which are effective after 1 January 2021 that
are deemed to be material to the Company.
2.4 Consolidation
Subsidiaries
Subsidiaries are entities over which the Company has control.
The Company controls an entity when the Company is exposed to, or
has the rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity.
Associates
Associates are entities over which the Company has significant
influence, being the power to participate in the financial and
operating policy decisions of the investee (but not control or
joint control).
Investment entity exemption
Qualifying entities that meet the definition of an investment
entity are not required to produce a consolidated set of Financial
Statements and instead account for subsidiaries, joint ventures and
associates at fair value through profit or loss.
Under the definition of an investment entity, the entity should
satisfy all three of the following tests:
-- Obtains funds from one or more investors for the purpose of providing
those investors with investment management services
-- Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment
income, or both (including having an exit strategy for investments)
-- Measures and evaluates the performance of substantially all its
investments on a fair value basis
In assessing whether the Company meets the definition of an
investment entity set out in IFRS 10 the Directors note that:
-- The Company is an investment company that invests funds obtained
from multiple investors in a diversified portfolio of solar energy
infrastructure assets and related infrastructure assets and has
appointed the Investment Manager to manage the Company's investments
-- The Company's purpose is to invest funds for investment income
and potential capital appreciation and will exit its investments
at the end of their economic lives or when their planning permissions
or leasehold land interests expire (unless it has repowered their
sites) and may also exit investments earlier for reasons of portfolio
balance or profit
-- The Board evaluates the performance of the Company's investments
on a fair value basis as part of the quarterly management accounts
review and the Company values its investments on a fair value
basis twice a year for inclusion in its annual and interim Financial
Statements with the movement in the valuations taken to the income
statement and, therefore, is measured within its earnings
Taking these factors into account, the Directors are of the
opinion that the Company has all the typical characteristics of an
investment entity and meets the definition set out in IFRS 10.
The Directors believe the treatment outlined above provides the
most relevant information to investors.
As UK Hold Co is not consolidated, its subsidiaries (plus their
underlying investments) are not separately presented at fair value
through profit or loss in the Company's accounts. Should
subsidiaries fail to meet the definition of an investment entity
the Company would have to consolidate its subsidiaries.
3. Critical accounting estimates and judgements
The preparation of Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Company's accounting policies.
The Board considers that the only areas where management make
critical estimates that may have a significant effect on the
Financial Statements are in relation to the valuation of
investments held at fair value through profit and loss; the most
significant judgement is related to the determination that the
Company meets the definition of an investment entity.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgements about the carrying value of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates and underlying
assumptions are reviewed on an ongoing basis.
The Board considers that the determination that the Company
meets the definition of an investment entity involves significant
judgement.
In assessing whether the Company meets the definition of an
investment entity set out in IFRS 10, the Board used the below
criteria to make their significant judgement:
-- The Company is an investment company that invests funds obtained
from multiple investors in a diversified portfolio of solar energy
infrastructure assets and related infrastructure assets and has
appointed the Investment Manager to manage the Company's investments
-- The Company's purpose is to invest funds for investment income
and potential capital appreciation and will exit its investments
at the end of their economic lives or when their planning permissions
or leasehold land interests expire (unless it has repowered their
sites) and may also exit investments earlier for reasons of portfolio
balance or profit
-- The Board evaluates the performance of the Company's investments
on a fair value basis as part of the quarterly management accounts
review and the Company values its investments on a fair value
basis twice a year for inclusion in its annual and interim Financial
Statements with the movement in the valuations taken to the income
statement and, therefore, is measured within its earnings
Taking these factors into account, the Directors are of the
opinion that the Company has all the typical characteristics of an
investment entity and meets the definition set out in IFRS 10.
The Board considers that the fair value of the underlying
investments not quoted in an active market involves critical
accounting estimates because it is determined by the Directors
using their own valuation models, which are based on valuation
methods and techniques generally recognised as standard within the
industry and in line with the applicable standards. Directors rely
on significant unobservable inputs about the output of the asset
(including assumptions such as solar irradiation and technological
performance of the asset), power prices, operating costs, discount,
inflation rates applied to the cash flows, and the duration of the
useful economic life of the asset. The Directors calculate the fair
value of the investments based on information received from the
Investment Manager.
The Investment Manager's assessment of fair value of investments
is determined in accordance with the International Private Equity
and Venture Capital 2018 ("IPEVC") Valuation Guidelines, using a
discounted cash flow valuation methodology. Furthermore, changes in
these inputs and assumptions could affect the reported fair value
of financial instruments. The determination of what constitutes
"observable" requires 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 COVID-19 pandemic has impacted the Net Asset Value of the
investments as a result of lower power price forecasts used in
determining the valuation of investments.
4. Interest income
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------ ------- ------- -----------
Interest on loan notes 15,836 16,618 33,442
Interest on Shareholder loans 3,060 3,077 6,188
------------------------------ ------- ------- -----------
18,896 19,695 39,630
------------------------------ ------- ------- -----------
Loan notes were issued by the Company to UK Hold Co for the
purchase of investments. Interest is payable at 9% per annum in
arrears on each Interest Payment Date (28/29 February and 31 August
each year). Where interest is not paid on the payment date, it will
compound and future interest shall accrue at 11% per annum from the
due date up to the date of actual payment, compounding on each
Interest Payment Date. The loan notes balance at period end on
which interest is charged is GBP250,000,000 (30 June 2020:
GBP250,000,000, 31 December 2020: GBP250,000,000). These loans form
part of the fair value of the investments as per note 14.
A Shareholder loan is created when the total amount paid by the
Company on behalf of UK Hold Co to acquire the underlying
investments is more than the total loan notes issued by the Company
to UK Hold Co. Interest is accrued at 2% per annum and is repayable
in full on demand. The Shareholder loan balance at period end is
GBP304,316,450 (30 June 2020: GBP304,316,450, 31 December 2020:
GBP304,316,450). These loans form part of the fair value of the
investments as per note 14.
5. Management fees
The investment manager of the fund is Foresight Group LLP (the
"Investment Manager").
The Investment Manager receives an annual fee of 1% of the Net
Asset Value ("NAV") of the Company up to GBP500 million - NAV in
excess to this is charged at 0.9% per annum. This is payable
quarterly in arrears and is calculated based on the published
quarterly NAV. For the period ended 30 June 2021, the Investment
Manager was entitled to a management fee of GBP2,858,257 (1 January
2020 to 30 June 2020: GBP2,907,302, 1 January 2020 to 31 December
2020: GBP5,795,475) of which GBP140,443 was outstanding as at 30
June 2021 (30 June 2020: GBP136,500, 31 December 2020:
GBP34,410).
6. Administration and accountancy fees
Under an Administration Agreement, the Administrator of the
Company, JTC (Jersey) Limited, is entitled to receive minimum
annual administration and accountancy fees of GBP156,000 (2020:
GBP156,000) payable quarterly in arrears. For the period ended 30
June 2021, total administration and accountancy fees were GBP95,550
(1 January 2020 to 30 June 2020: GBP91,000, 1 January 2020 to 31
December 2020: GBP188,925) of which GBP91,000 was outstanding as at
30 June 2021 (30 June 2020: GBP136,500, 31 December 2020:
GBP91,100).
7. Directors' fees
No members of staff were employed during the period (period
ended 30 June 2020: nil, year ended 31 December 2020: nil).
Total Directors' fees were GBP130,000 (1 January 2020 to 30 June
2020: GBP107,500, 1 January 2020 to 31 December 2020:
GBP229,552).
8. Other expenses
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------- ------- ------- -----------
Legal and professional fees 162 200 482
Other expenses 54 1 230
---------------------------- ------- ------- -----------
216 201 712
---------------------------- ------- ------- -----------
Included within legal and professional fees is GBP20,270 (1
January 2020 to 30 June 2020: GBP18,850, 1 January 2020 to 31
December 2020: GBP40,641) relating to the accrual of the 2021 audit
fees. The total audit fee paid to KPMG LLP in relation to the audit
of the Group was GBP200,000 for the year ended 31 December 2020.
There were no other fees paid to the auditors for non-audit
services (1 January 2020 to 30 June 2020: GBPnil, 1 January 2020 to
31 December 2020: GBPnil).
9. Earnings per Ordinary Share - basic and diluted
The basic and diluted profit per Ordinary Share for the Company
is 5.63 pence per share (period ended 30 June 2020: 4.42 loss, year
ended 31 December 2020: 1.19 loss). This is based on the profit for
the period of GBP34,208,116 (1 January 2020 to 30 June 2020:
GBP26,743,535 loss, 1 January 2020 to 31 December 2020:
GBP7,196,980 loss) and on 607,996,259 (1 January 2020 to 30 June
2020: 605,680,167, 1 January 2020 to 31 December 2020: 606,924,133)
Ordinary Shares, being the weighted average number of shares in
issue during the period.
There is no difference between the weighted average ordinary and
diluted number of shares.
10. Interest receivable
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------- ------- ------- -----------
Interest receivable on loan notes 48,012 59,098 39,176
Interest receivable on Shareholder loan 27,021 20,850 23,961
---------------------------------------- ------- ------- -----------
75,033 79,948 63,137
---------------------------------------- ------- ------- -----------
Information about the Company's exposure to credit and market
risk and impairment losses for interest receivable is included in
note 19.
11. Trade and other receivables
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------ ------- ------- -----------
Prepaid expenses 25 - 25
Other receivables 250 250 250
------------------ ------- ------- -----------
275 250 275
------------------ ------- ------- -----------
Information about the Company's exposure to credit and market
risk and impairment losses for trade and other receivables is
included in note 19.
12. Cash and cash equivalents
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------- ------- ------- -----------
Cash at bank 668 4,655 16,875
------------- ------- ------- -----------
668 4,655 16,875
------------- ------- ------- -----------
Information about the Company's exposure to credit and market
risk and impairment losses for cash and cash equivalents is
included in note 19.
13. Trade and other payables
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
------------------------------- ------- ------- -----------
Accrued expenses 312 1,654 228
Amounts due to subsidiaries(1) 187 187 187
------------------------------- ------- ------- -----------
499 1,841 415
------------------------------- ------- ------- -----------
Amounts due to subsidiaries are unsecured, interest free and repayable
1. on demand.
14. Investments at fair value through profit or loss
The following table presents the Company's investments at fair
value through profit or loss:
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------- -------- -------- -----------
Investment in UK Hold Co - Equity 0 0 0
- Loans 520,898 499,055 502,286
----------------------------------------- -------- -------- -----------
520,898 499,055 502,286
----------------------------------------- -------- -------- -----------
Book cost as at 1 January 554,315 554,315 554,315
Opening investment holding (losses) (52,029) (12,129) (12,129)
----------------------------------------- -------- -------- -----------
Valuation as at 1 January 502,286 542,186 542,186
Movements during the period
Purchase at cost - - -
Investment holding gains/(losses) 18,612 (43,131) (39,900)
----------------------------------------- -------- -------- -----------
Valuation as at 30 June/31 December 520,898 499,055 502,286
----------------------------------------- -------- -------- -----------
Book cost as at 30 June/31 December 544,315 544,315 554,315
Closing investment holding losses (33,417) (55,260) (52,029)
----------------------------------------- -------- -------- -----------
520,898 499,055 502,286
----------------------------------------- -------- -------- -----------
The Company has one investment in Foresight Solar (UK Hold Co)
Limited ("UK Hold Co"). This investment consists of both debt and
equity (share capital of GBP100) and is not quoted in an active
market. Accordingly, the investment in UK Hold Co has been valued
using its net assets.
In turn, UK Hold Co has five investments in FS Holdco Limited
("FS Holdco"), FS Holdco 3 Limited ("FS Holdco 3"), FS Holdco 4
Limited ("FS Holdco 4"), FS Top Holdco 2 Limited ("Topco") and
Sandridge Battery Storage Limited ("SBSL"). FS Holdco 3 has one
investment in SGP Holdings 1 Limited ("SGP Holdings 1") which in
turn has one investment in Second Generation Portfolio 1 ("SGP 1").
Topco has one investment in Foresight Intermediate Solar Holdings
Limited ("FISH"). FISH has one investment in FS Holdco 2 and FS
Holdco 2 has one investment in FS Debtco Limited ("FS Debtco").
These investments also consist of both debt and equity and are not
quoted in an active market. FS Holdco and FS Debtco are fair valued
using their Net Asset Value as reported at period end, with
adjustments to their long-term external debt to reflect the fact
that the carrying value at amortised cost is not considered to be
the best approximation of their fair value. FS Holdco 3, SGP
Holdings 1, FS Holdco 4, FISH, FS Holdco 2 and Topco are fair
valued using their Net Asset Value as reported at period end.
In turn, FS Holdco, FS Debtco, FS Holdco 3, SGP 1 and FS Holdco
4's investment portfolios consist of unquoted investments in solar
projects, the valuations of which are based on a discounted cash
flow methodology (as set out in note 16) for solar projects that
are operational. SBSL is held at cost as it is not yet
operational.
Fair value hierarchy
IFRS 13 "Fair Value Measurement" requires disclosures relating
to fair value measurements using a three-level fair value
hierarchy. The level within which the fair value measurement is
categorised in its entirety is determined on the basis of the
lowest level input that is significant to the fair value
measurement.
Assessing the significance of a particular input requires
judgement, considering factors specific to the asset or liability.
The following table shows investments recognised at fair value,
categorised between those whose fair value is based on:
Level 1 - Quoted (unadjusted) market prices in active markets
(a) for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly
(b) or indirectly observable
Level 3 - Valuation techniques for which the lowest level input
(c) that is significant to the fair value measurement is unobservable
All investments held at fair value through profit or loss are
classified as level 3 within the fair value hierarchy.
As UK Hold Co's Net Asset Value is not considered observable
market data, the investment in UK Hold Co has been classified as
level 3. There were no movements between levels during the
period.
As at 30 June 2021:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------- ------- ------- -------
Unquoted investment - - 520,898 520,898
-------------------- ------- ------- ------- -------
- - 520,898 520,898
-------------------- ------- ------- ------- -------
As at 30 June 2020:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------- ------- ------- -------
Unquoted investment - - 499,055 499,055
-------------------- ------- ------- ------- -------
- - 499,055 499,055
-------------------- ------- ------- ------- -------
As at 31 December 2020:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------- ------- ------- -------
Unquoted investment - - 502,286 502,286
-------------------- ------- ------- ------- -------
- - 502,286 502,286
-------------------- ------- ------- ------- -------
Sensitivity analysis
Due to the nature of the Group structure and the underlying
valuation basis of UK Hold Co, FS Holdco, Topco, FISH, FS Holdco 2,
FS Debtco, FS Holdco 3, FS Holdco 4 and the underlying solar
project investments, the valuation of the Company's investment at
fair value through profit or loss is directly linked to the
valuation of the underlying solar investments. Therefore, the
unobservable inputs driving the valuation of the Company's
investments in UK Hold Co are directly attributable to the
valuation of the unquoted investments in FS Holdco, FS Debtco, FS
Holdco 3 and FS Holdco 4 which are discussed further in note
16.
15. Subsidiaries and associates
Investments in subsidiaries
Proportion
Direct of shares
Country
or indirect of and voting
rights
Name holding incorporation Principal activity held
------------------------------------------------------ ------------ -------------- -------------------- ----------
Foresight Solar (UK Hold Co) Limited ("UK Hold Co") Direct UK Holding Company 100%
FS Holdco Limited ("FS Holdco") Indirect UK Holding Company 100%
FS Top Holdco 2 Limited ("Topco") Indirect UK Holding Company 100%
Foresight Intermediate Solar Holdings Limited ("FISH") Indirect UK Holding Company 100%
FS Holdco 2 Limited ("FS Holdco 2") Indirect UK Holding Company 100%
FS Debtco Limited ("FS Debtco") Indirect UK Holding Company 100%
FS Holdco 3 Limited ("FS Holdco 3") Indirect UK Holding Company 100%
FS Holdco 4 Limited ("FS Holdco 4") Indirect UK Holding Company 100%
Sandridge Battery Storage Holding Limited ("SBSHL") Indirect UK Holding Company 50%
FS Wymeswold Limited Indirect UK SPV Holding Company 100%
FS Castle Eaton Limited Indirect UK SPV Holding Company 100%
FS Pitworthy Limited Indirect UK SPV Holding Company 100%
FS Highfields Limited Indirect UK SPV Holding Company 100%
FS High Penn Limited Indirect UK SPV Holding Company 100%
FS Hunters Race Limited Indirect UK SPV Holding Company 100%
FS Spriggs Limited Indirect UK SPV Holding Company 100%
FS Bournemouth Limited Indirect UK SPV Holding Company 100%
FS Landmead Limited Indirect UK SPV Holding Company 100%
FS Kencot Limited Indirect UK SPV Holding Company 100%
FS Copley Limited Indirect UK SPV Holding Company 100%
FS Port Farms Solar Limited Indirect UK SPV Holding Company 100%
FS Membury Limited Indirect UK SPV Holding Company 100%
FS Southam Solar Limited Indirect UK SPV Holding Company 100%
FS Atherstone Solar Limited Indirect UK SPV Holding Company 100%
FS Paddock Wood Solar Farm Limited Indirect UK SPV Holding Company 100%
Southam Holdco Limited Indirect UK SPV Holding Company 100%
Atherstone Holdco Limited Indirect UK SPV Holding Company 100%
Paddock Wood Holdco Limited Indirect UK SPV Holding Company 100%
FS Shotwick Limited Indirect UK SPV Holding Company 100%
FS Sandridge Limited Indirect UK SPV Holding Company 100%
FS Wally Corner Limited Indirect UK SPV Holding Company 100%
Acquisition Co 4 Limited Indirect UK SPV Holding Company 100%
FS Welbeck Limited Indirect UK SPV Holding Company 100%
FS Trehawke Limited Indirect UK SPV Holding Company 100%
FS Homeland Limited Indirect UK SPV Holding Company 100%
FS Marsh Farm Limited Indirect UK SPV Holding Company 100%
FS Steventon Limited Indirect UK SPV Holding Company 100%
FS Fields Farm Limited Indirect UK SPV Holding Company 100%
FS Gedling Limited Indirect UK SPV Holding Company 100%
FS Sheepbridge Limited Indirect UK SPV Holding Company 100%
FS Tengore Limited Indirect UK SPV Holding Company 100%
FS Cuckoo Limited Indirect UK SPV Holding Company 100%
FS Field House Limited Indirect UK SPV Holding Company 100%
FS Upper Huntingford Limited Indirect UK SPV Holding Company 100%
FS Abergelli Limited Indirect UK SPV Holding Company 100%
FS Crow Trees Limited Indirect UK SPV Holding Company 100%
FS Yarburgh Limited Indirect UK SPV Holding Company 100%
FS Nowhere Solar Limited Indirect UK SPV Holding Company 100%
FS Bilsthorpe Solar Limited Indirect UK SPV Holding Company 100%
FS Bulls Head Solar Limited Indirect UK SPV Holding Company 100%
FS Roskrow Solar Limited Indirect UK SPV Holding Company 100%
FS Abbeyfields Solar Limited Indirect UK SPV Holding Company 100%
FS Lindridge Solar Limited Indirect UK SPV Holding Company 100%
FS Misson Solar Limited Indirect UK SPV Holding Company 100%
FS Playters Solar Limited Indirect UK SPV Holding Company 100%
FS PS Manor Farm Solar Limited Indirect UK SPV Holding Company 100%
FS SV Ash Solar Park Limited Indirect UK SPV Holding Company 100%
FS Pen Y Cae Solar Limited Indirect UK SPV Holding Company 100%
Second Generation Portfolio Holdings 1 Indirect UK SPV Holding Company 100%
Second Generation Portfolio 1 Indirect UK SPV Holding Company 100%
FS Oakey 2 Pty Limited Indirect Australia SPV Holding Company 100%
Foresight Solar Spain Holding S.L ("FSSH") Indirect Spain SPV Holding Company 100%
Sandridge Battery Storage Limited ("SBSL") Indirect UK Investment 50%
Wymeswold Solar Farm Limited ("Wymeswold") Indirect UK Investment 100%
Castle Eaton Solar Farm Limited ("Castle Eaton") Indirect UK Investment 100%
Pitworthy Solar Farm Limited ("Pitworthy") Indirect UK Investment 100%
Highfields Solar Farm Limited ("Highfields") Indirect UK Investment 100%
High Penn Solar Farm Limited ("High Penn") Indirect UK Investment 100%
Hunters Race Solar Farm Limited ("Hunters Race") Indirect UK Investment 100%
Spriggs Solar Farm Limited ("Spriggs") Indirect UK Investment 100%
Bournemouth Solar Farm Limited ("Bournemouth") Indirect UK Investment 100%
Landmead Solar Farm Limited ("Landmead") Indirect UK Investment 100%
Kencot Hill Solar Farm Limited ("Kencot") Indirect UK Investment 100%
Copley Solar Limited ("Copley") Indirect UK Investment 100%
Port Farms Solar Limited ("Port Farm") Indirect UK Investment 100%
Membury Solar Limited ("Membury") Indirect UK Investment 100%
Atherstone Solar Farm Ltd ("Atherstone") Indirect UK Investment 100%
Southam Solar Farm Ltd ("Southam") Indirect UK Investment 100%
Paddock Wood Solar Farm Ltd ("Paddock Wood") Indirect UK Investment 100%
Shotwick Solar Limited ("Shotwick Solar") Indirect UK Investment 100%
Sandridge Solar Power Limited ("Sandridge") Indirect UK Investment 100%
Wally Corner Limited ("Wally") Indirect UK Investment 100%
Foresight Solar Australia Pty Limited Indirect Australia Investment 100%
RE Oakey Pty Limited Indirect Australia Investment 100%
Oakey Network Pty Limited Indirect Australia Investment 100%
Longreach Asset Company Pty Limited Indirect Australia Investment 100%
Second Generation Yardwall Limited ("Yardwall") Indirect UK Investment 100%
Second Generation Verwood Limited ("Verwood") Indirect UK Investment 100%
Second Generation Park Farm Limited ("Park Farm") Indirect UK Investment 100%
Second Generation Coombeshead Limited ("Coombeshead") Indirect UK Investment 100%
Second Generation Sawmills Limited ("Sawmills") Indirect UK Investment 100%
Welbeck Limited ("Welbeck") Indirect UK Investment 100%
Trehawke Limited ("Trehawke") Indirect UK Investment 100%
Homeland Limited ("Homeland") Indirect UK Investment 100%
Marsh Farm Limited ("Marsh Farm") Indirect UK Investment 100%
Steventon Limited ("Steventon") Indirect UK Investment 100%
Fields Farm Limited ("Fields Farm") Indirect UK Investment 100%
Gedling Limited ("Gedling") Indirect UK Investment 100%
Sheepbridge Limited ("Sheepbridge") Indirect UK Investment 100%
Tengore Limited ("Tengore") Indirect UK Investment 100%
Cuckoo Limited ("Cuckoo") Indirect UK Investment 100%
Field House Limited ("Field House") Indirect UK Investment 100%
Upper Huntingford Limited ("Upper Huntingford") Indirect UK Investment 100%
Abergelli Limited ("Abergelli") Indirect UK Investment 100%
Crow Trees Limited ("Crow Trees") Indirect UK Investment 100%
Yarburgh Limited ("Yarburgh") Indirect UK Investment 100%
Nowhere Solar Limited ("Nowhere Solar") Indirect UK Investment 100%
Bilsthorpe Solar Limited ("Bilsthorpe Solar") Indirect UK Investment 100%
Bulls Head Solar Limited ("Bulls Head Solar") Indirect UK Investment 100%
Roskrow Solar Limited ("Roskrow Solar") Indirect UK Investment 100%
Abbeyfields Solar Limited ("Abbeyfields Solar") Indirect UK Investment 100%
Lindridge Solar Limited ("Lindridge Solar") Indirect UK Investment 100%
Misson Solar Limited ("Misson Solar") Indirect UK Investment 100%
Playters Solar Limited ("Playters Solar") Indirect UK Investment 100%
PS Manor Farm Solar Limited ("PS Manor Farm Solar") Indirect UK Investment 100%
SV Ash Solar Park Limited ("SV Ash Solar Park") Indirect UK Investment 100%
Pen Y Cae Solar Limited ("Pen Y Cae Solar") Indirect UK Investment 100%
Virgen del Carmen Solar S.L ("Virgen") Indirect Spain Investment 100%
Solar Energy Veintisiete S.L ("Lorca") Indirect Spain Investment 100%
------------------------------------------------------ ------------ -------------- -------------------- ----------
Investments in associates
Proportion
Direct of shares
Country
or indirect of and voting
rights
Name holding incorporation Principal activity held
---------------------------------------------- ------------ -------------- -------------------- ----------
Kiamco Hanwha Foresight Bannerton Pty Limited Indirect Australia SPV Holding Company 48.50%
Longreach New Holdco Pty Limited Indirect Australia SPV Holding Company 49%
Oakey 1 New Holdco Pty Limited Indirect Australia SPV Holding Company 49%
---------------------------------------------- ------------ -------------- -------------------- ----------
16. Fair value of the investments in unconsolidated entities
Valuation process
Valuations are the responsibility of the Board of Directors. The
Investment Manager is responsible for submitting fair market
valuations of Group assets to the Directors. The Directors review
and approve these valuations following appropriate challenge and
examination. Valuations are carried out quarterly. The current
portfolio consists of non--market traded investments and valuations
are based on a discounted cash flow methodology. The Investment
Manager's assessment of fair value of investments is determined in
accordance with the International Private Equity and Venture
Capital 2018 ("IPEVC") Valuation Guidelines, using levered and
unlevered discounted cash flow principles.
The Investment Manager and Directors consider that the
discounted cash flow methodology used in deriving a fair value is
in accordance with the fair value requirements of IFRS 13. Certain
investments held by FS Holdco 4 were valued at cost as at 30 June
2021, 30 June 2020 and 31 December 2020 as these projects were not
yet operational and are therefore not included in the sensitivity
analysis on the following pages. As at 30 June 2021, the new
investment in UK Hold Co SBSHL, has also been valued at cost as it
is not yet operational.
Useful economic lives ("UELs")
The valuation of the Company's investments is determined based
on the discounted value of future cash flows of those investments
over their UELs.
The UEL of individual assets is determined by reference to a
fixed contractual lease term, and therefore the Board and
Investment Manager do not consider that the UEL can have a
significant impact on the valuation of the investments.
However, the Board notes that if extended contractual lease
terms were negotiated for individual assets, this would increase
the value of those assets. Similarly, if the assets did not operate
for the duration of the fixed contractual period, this would reduce
the value of those assets.
Sensitivity analysis of significant changes in unobservable
inputs within level hierarchy of underlying investments
The majority of the Company's underlying investments (indirectly
held through its unconsolidated subsidiaries FS Holdco, FS Debtco,
FS Holdco 3 and FS Holdco 4) are valued with reference to the
discounted value of future cash flows. The Directors consider the
valuation methodology used, including the key assumptions and
discount rate applied, to be appropriate. The Board reviews, at
least annually, the valuation inputs and, where possible, makes use
of observable market data to ensure valuations reflect the fair
value of the investments. A broad range of assumptions are used in
the valuation models. These assumptions are based on long-term
forecasts and are not affected by short--term fluctuations in
inputs, be it economic or technical.
The Investment Manager has adjusted the sensitivities
calculation methodology from an asset level cash flows only basis
to a calculation based on asset level cash flow less holdco level
debt cash outflows. This has resulted mainly in a reduction of the
discount rate sensitivity disclosed below.
The base valuation of GBP581.0 million represents the levered
discounted value of future cash flows of the underlying operational
assets with assets under construction held at cost, less the
long-term debt held at holding companies level. The valuation of
the Australian assets is net of debt.
The base valuation of GBP581.0 million is equal to the NAV of
GBP596.4 million less items deemed not subject to the sensitivities
applied.
30 June
2021
------------------------------------------------------------- -------
Base case for sensitivities 581.0
Items not subject to sensitivities:
Cash in UK assets 3.7
Assets in construction valued at cost 40.7
Company and intermediate holding companies' cash 50.4
Compensation reserve account (8.3)
RCF outstanding (80.9)
Other adjustments 7.2
Other Company and intermediate holding companies' net assets 2.6
------------------------------------------------------------- -------
Net Asset Value at 30 June 2021 596.4
------------------------------------------------------------- -------
The Directors consider the following to be significant inputs to
the discounted cash flow ("DCF") calculation.
Discount rate
The weighted average discount rate used is 6.71% (2020: 6.74%).
The Directors do not expect to see a significant change in the
discount rates applied within the solar infrastructure sector.
Therefore a variance of +/- 0.5% is considered reasonable.
-0.50% -0.25% Base +0.25% +0.50%
------------------------------------- ------ ------ ----- ------ ------
Portfolio valuation (GBPm) 603.7 592.2 581.0 570.2 559.8
Change in portfolio valuation (GBPm) 22.7 11.1 - (10.8) (21.2)
NAV per share change (pence) 3.7 1.8 98 (1.8) (3.5)
------------------------------------- ------ ------ ----- ------ ------
Production
Base case production is a function of a number of separate
assumptions including irradiation levels, availability of the sites
and technical performance of the equipment. A sensitivity of +/-10%
is considered reasonable given stable levels of irradiation,
contractual availability guarantees and understanding of future
performance levels of the equipment.
-10.0% Base +10.0%
------------------------------------- ------- ----- ------
Directors' valuation (GBPm) 479.0 581.0 682.2
Change in portfolio valuation (GBPm) (102.0) - 101.1
NAV per share change (pence) (16.8) 98 16.6
------------------------------------- ------- ----- ------
Power price
DCF models assume power prices that are consistent with the
Power Purchase Agreements ("PPA") currently in place. At the PPA
end date, the model reverts to the power price forecast.
The power price forecasts are updated quarterly and based on
power price forecasts from leading independent sources. The
forecast assumes an average annual decrease in power prices in real
terms of approximately 1.3%.
During the period, c.56% of the investment's operational
revenues came from regulatory support mechanisms. The remaining
c.44% of revenue is derived from electricity sales which are
partially subject to power price movements. On a net present value
basis, future electricity sales which are subject to price
movements represent c.48% of total revenues.
-20.0% -10.0% Base +10.0% +20.0%
------------------------------------- ------ ------ ----- ------ ------
Directors' valuation (GBPm) 487.0 533.5 581.0 628.2 674.7
Change in portfolio valuation (GBPm) (94.0) (47.5) - 47.1 93.6
NAV per share change (pence) (15.4) (7.8) 98 7.7 15.4
------------------------------------- ------ ------ ----- ------ ------
Inflation
A variable of 0.5% to 1.0% is considered reasonable given
historic fluctuations. An inflation rate of 3.00% (2020: 3.00%) has
been used to 2030 and then 2.25% (2020: 2.275%) thereafter.
-1.0% -0.5% Base +0.5% +1.0%
------------------------------------- ------ ------ ----- ----- -----
Directors' valuation (GBPm) 519.1 548.9 581.0 615.0 650.0
Change in portfolio valuation (GBPm) (61.9) (32.2) - 33.9 69.0
NAV per share change (pence) (10.2) (5.3) 98 5.6 11.3
------------------------------------- ------ ------ ----- ----- -----
Operating costs (investment level)
Operating costs include operating and maintenance ("O&M"),
insurance and lease costs. Other costs are fixed and are therefore
not considered to be sensitive to changes in unobservable inputs.
Base case costs are based on current commercial agreements. We
would not expect these costs to fluctuate widely over the life of
the assets and are comfortable that the base case is prudent. A
variance of +/-5.0% is considered reasonable, a variable of 10.0%
is shown for information purposes.
-10.0% -5.0% Base +5.0% +10.0%
------------------------------------- ------ ----- ----- ----- ------
Directors' valuation (GBPm) 597.3 589.5 581.0 573.5 564.7
Change in portfolio valuation (GBPm) 16.3 8.4 - (7.6) (16.3)
NAV per share change (pence) 2.7 1.4 98 (1.2) (2.7)
------------------------------------- ------ ----- ----- ----- ------
Tax rate
On 3 March 2021, the UK Chancellor, as part of his Budget,
announced his intention to increase the rate of UK corporation tax
from 19% to 25% from 2023.
The impact of this proposal is reflected in the 30 June 2021
NAV. On that basis, a variable of 1.0% is considered reasonable
given historic information.
-1.0% Base +1.0%
------------------------------------- ----- ----- ------
Directors' valuation (GBPm) 582.7 581.0 579.4
Change in portfolio valuation (GBPm) 1.7 - (1.7)
NAV per share change (pence) 0.3 98 (0.3)
------------------------------------- ----- ----- ------
AUD/GBP exchange rate
The fund is directly exposed to fluctuations in foreign currency
due to its investments in Australian dollar denominated assets.
Whilst the Group mitigates its exposure to fluctuations in AUD
through the use of forward contracts, the valuations of these
assets will be directly impacted. Whilst we would not expect to see
fluctuations quite this large, a variable of 20% is considered
appropriate.
Following the acquisition of the Spanish assets, the fund is
exposed to fluctuations in EUR. A sensitivity has not been included
for EUR/GBP exchange rates as the Spanish assets are currently held
at cost.
-20.0% -10.0% Base +10.0% +20.0%
------------------------------------- ------ ------ ----- ------ ------
Directors' valuation (GBPm) 572.2 576.6 581.0 585.5 589.9
Change in portfolio valuation (GBPm) (8.8) (4.4) - 4.4 8.8
NAV per share change (pence) (1.5) (0.7) 98 0.7 1.5
------------------------------------- ------ ------ ----- ------ ------
17. Stated capital and share premium
The share capital and share premium of the Company consists
solely of Ordinary Shares of nil par value and therefore the value
of the stated capital relates only to share premium. At any General
Meeting of the Company each Shareholder will have, on a show of
hands, one vote and on a poll one vote in respect of each Ordinary
Share held. Stated capital is the net proceeds received from the
issue of Ordinary Shares (net of issue costs capitalised). The
holders of the Ordinary Shares are entitled to receive dividends
from time to time.
Authorised Ordinary Shares
30 June 30 June 31 December
2021 2020 2020
Shares Shares Shares
------------------------------- --------- --------- -----------
Ordinary Shares - nil par value Unlimited Unlimited Unlimited
------------------------------- --------- --------- -----------
Issued Ordinary Shares
30 June 30 June 31 December
2021 2020 2020
Shares Shares Shares
---------------------------------------------- ----------- ----------- -----------
Opening balance 607,711,311 605,196,526 605,196,526
Issued during the period/year - - -
Scrip dividends issued during the period/year 1,068,203 1,115,370 2,514,785
---------------------------------------------- ----------- ----------- -----------
Closing balance 608,779,514 606,311,896 607,711,311
---------------------------------------------- ----------- ----------- -----------
30 June 30 June 31 December
2021 2020 2020
Shares Shares Shares
-------------------------------- ------- ------- -----------
Opening balance 627,649 624,922 624,922
Proceeds from share issue - - -
Value of scrip dividends issued 1,038 1,252 2,727
Less: issue costs capitalised - - -
-------------------------------- ------- ------- -----------
Closing balance 628,687 626,174 627,649
-------------------------------- ------- ------- -----------
18. NAV per Ordinary Share
The Net Asset Value ("NAV") per redeemable Ordinary Share for
the Company is 97.96 pence per Ordinary Share (period ended 30 June
2020: 96.00 pence, year ended 31 December 2020: 95.80 pence). This
is based on the Net Asset Value at the reporting date of
GBP596,374,983 (30 June 2020: GBP582,066,505, 31 December 2020:
GBP582,157,904) and on 608,779,514 (30 June 2020: 606,311,896, 31
December 2020: 607,711,311) redeemable Ordinary Shares, being the
number of Ordinary Shares in issue at the end of the period.
19. Financial instruments and risk profile
The Company holds cash and liquid resources as well as having
receivables and payables that arise directly from its operations.
The underlying investments of the Company's investment activities
indirectly expose it to various types of risk associated with solar
power. The main risks arising from the Company's financial
instruments are market risk, liquidity risk, credit risk and
interest rate risk.
The Directors regularly review and agree policies for managing
each of these risks and these are summarised below:
19.1 Market risk
(a) Foreign exchange risk
Foreign currency risk, as defined in IFRS 7, arises as the
values of recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign
exchange rates. Transactions in foreign currency are translated at
the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are translated to pounds sterling at the
foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in income.
The Company has no direct exposure to foreign currency risk,
however through its underlying investment in FS Holdco 4 it has
indirect exposure. FS Holdco 4 is directly exposed to fluctuations
in foreign currency due to its investments in euro and Australian
dollar denominated assets. The Group mitigates its exposure to
fluctuations in foreign currency through the use of forward
exchange contracts.
The carrying amount of FS Holdco 4's foreign currency exposure
at the reporting date is as follows:
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---- ------- ------- -----------
AUD 46,396 50,092 44,643
EUR 39,741 - 26,619
---- ------- ------- -----------
The FX rate applied at 30 June 2021 was AUD/GBP 0.5421 (30 June
2020: 0.5572, 31 December 2020: 0.5646) and EUR/GBP 0.8571 (31
December 2020: 0.8951). The Group had no euro denominated assets in
June 2020.
The sensitivities linked to the assets denominated in Australian
dollars and euros are set out in note 16 as these assets are held
in the underlying investments.
(b) Price risk
The Company's investments are susceptible to market price risk
arising from uncertainties about future values of the instruments.
The Board's Investment Manager provides the Company with investment
recommendations. The Investment Manager's recommendations are
reviewed and approved by the Board before the investment decisions
are implemented. To manage the market price risk, the Investment
Manager reviews the performance of the investments on a regular
basis and is in regular contact with the management of the
non--current investments for business and operational matters.
Price risk is the risk that the fair value or cash flows of a
financial instrument will fluctuate due to changes in market
prices. At 30 June 2021, the Company's only investment was valued
at net assets excluding the outstanding loans issued by the
Company. Were this value to increase by 10%, the increase in net
assets attributable to Shareholders for the period would have been
GBP52,089,824 (30 June 2020: GBP49,905,537, 31 December 2020:
GBP50,228,573). The impact of changes in unobservable inputs to the
underlying investments is considered in note 16.
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company's exposure to the
risk of changes in market interest rates relates primarily to the
Company's long-term borrowing to its subsidiary. At period end the
Company had no long--term borrowings with third parties (1 January
2020 to 30 June 2020: GBPnil, 1 January 2020 to 31 December 2020:
GBPnil).
Weighted
average
Weighted time
Total average for which
interest rate is
portfolio rate fixed
30 June 30 June 30 June
2021 2021 2021
GBP'000 % Days
------------------ --------- -------- ---------
Loan notes 250,000 11.00 1,508
Shareholder loans 304,316 2.00 2,015
Cash 668 0.05 -
------------------ --------- -------- ---------
554,984
------------------ --------- -------- ---------
Weighted
average
Weighted time
Total average for which
interest rate is
portfolio rate fixed
30 June 30 June 30 June
2020 2020 2020
GBP'000 % Days
------------------ --------- -------- ---------
Loan notes 250,000 11.00 1,327
Shareholder loans 304,316 2.00 1,834
Cash 4,655 0.05 -
------------------ --------- -------- ---------
558,971
------------------ --------- -------- ---------
Weighted
average
Weighted time
Total average for which
interest rate is
portfolio rate fixed
31 December 31 December 31 December
2020 2020 2020
GBP'000 % Days
Loan notes 250,000 11.00 1,511
Shareholder loans 304,316 2.00 2,018
Cash 16,875 0.05 -
------------------ ----------- ----------- -----------
571,191
------------------ ----------- ----------- -----------
19.2 Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due as a result of the
maturity of assets and liabilities not matching. An unmatched
position potentially enhances profitability but can also increase
the risk of losses. Liquidity could be impaired by an inability to
access secured and/or unsecured sources of financing to meet
financial commitments. The Board monitors the Company's liquidity
requirements to ensure there is sufficient cash to meet the
Company's operating needs.
30 June 2021:
Greater
Carrying Contractual Less than 6 to than
amount total 6 months 12 months 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- --------- --------- ---------
Financial assets
Investments 520,898 520,898 - - 520,898
Trade and other receivables 275 275 275 - -
Interest receivable 75,033 75,033 75,033 - -
Cash and cash equivalents 668 668 668 - -
---------------------------- -------- ----------- --------- --------- ---------
Total financial assets 596,874 596,874 75,976 - 520,898
Trade and other payables (499) (499) (499) - -
---------------------------- -------- ----------- --------- --------- ---------
Total financial liabilities (499) (499) (499) - -
---------------------------- -------- ----------- --------- --------- ---------
Net position 596,375 596,375 75,477 - 520,898
---------------------------- -------- ----------- --------- --------- ---------
30 June 2020:
Greater
Carrying Contractual Less than 6 to than
amount total 6 months 12 months 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- --------- --------- ---------
Financial assets
Investments 499,055 499,055 - - 499,055
Trade and other receivables 250 250 250 - -
Interest receivable 79,948 79,948 79,948 - -
Cash and cash equivalents 4,655 4,655 4,655 - -
---------------------------- -------- ----------- --------- --------- ---------
Total financial assets 583,908 583,908 84,853 - 499,055
Trade and other payables (1,841) (1,841) (1,841) - -
---------------------------- -------- ----------- --------- --------- ---------
Total financial liabilities (1,841) (1,841) (1,841) - -
---------------------------- -------- ----------- --------- --------- ---------
Net position 582,067 582,067 83,012 - 499,055
---------------------------- -------- ----------- --------- --------- ---------
31 December 2020:
Greater
Carrying Contractual Less than 6 to than
amount total 6 months 12 months 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- ----------- --------- --------- ---------
Financial assets
Investments 502,286 502,286 - - 502,286
Trade and other receivables 275 275 275 - -
Interest receivable 63,137 63,137 63,137 - -
Cash and cash equivalents 16,875 16,875 16,875 - -
---------------------------- -------- ----------- --------- --------- ---------
Total financial assets 582,573 582,573 80,287 - 502,286
Trade and other payables (415) (415) (415) - -
---------------------------- -------- ----------- --------- --------- ---------
Total financial liabilities (415) (415) (415) - -
---------------------------- -------- ----------- --------- --------- ---------
Net position 582,158 582,158 79,872 - 502,286
---------------------------- -------- ----------- --------- --------- ---------
19.3 Credit risk
a) Exposure to credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Company.
The Company places cash with authorised deposit-takers and is
therefore potentially at risk from the failure of such
institutions.
In respect of credit risk arising from other financial assets
and liabilities, which mainly comprise of cash and cash
equivalents, exposure to credit risk arises from default of the
counterparty with a maximum exposure equal to the carrying amounts
of these instruments. To mitigate such risks, cash is maintained
with major international financial institutions. During the period
and at the reporting date, the Company maintained relationships
with the following financial institutions:
30 June
Moody's 2021
credit
rating GBP'000
--------------------------------------------- -------- -------
Cash in hand:
Royal Bank of Scotland International Limited P2 668
--------------------------------------------- -------- -------
Total cash balances held by banks 668
------------------------------------------------------- -------
30 June
Moody's 2020
credit
rating GBP'000
--------------------------------------------- -------- -------
Cash in hand:
Royal Bank of Scotland International Limited P2 4,655
Lloyds Bank International Limited P1 -
--------------------------------------------- -------- -------
Total cash balances held by banks 4,655
------------------------------------------------------- -------
31 December
Moody's 2020
credit
rating GBP'000
--------------------------------------------- -------- -----------
Cash in hand:
Royal Bank of Scotland International Limited P2 16,875
--------------------------------------------- -------- -----------
Total cash balances held by banks 16,875
------------------------------------------------------- -----------
The Company is also indirectly exposed to credit risk through
its investment in UK Hold Co. The Board of UK Hold Co has
determined that the maximum exposure to credit risk in relation to
investments is GBP646,785,870 being the portion of UK Hold Co
investments that are made up of loans as at 30 June 2021 (30 June
2020: GBP607,327,419, 31 December 2020: GBP633,946,309). Included
within this are the related party loans as disclosed within note 22
as well as an external long--term debt facility entered into by FS
Holdco, FS Debtco and FISH with Santander and NatWest respectively.
The balance of the external debt facilities as at period end
amounted to GBP366,972,423 (30 June 2020: GBP342,351,760, 31
December 2020: GBP373,331,640).
b) Expected credit loss assessment
Investments held at fair value through profit or loss are not
subject to IFRS 9 impairment requirements.
The Company applies the simplified approach to measuring
expected credit losses, as permitted by IFRS 9, which uses a
lifetime expected credit loss allowance for all trade receivables.
The expected credit loss on trade receivables and the balance at
year end was deemed by management to be not material and therefore
no impairment adjustments were accounted for.
19.4 Other risks
Political and economic risk
The value of Ordinary Shares may be affected by uncertainties
such as political or diplomatic developments, social and religious
instability, changes in government policies, taxation or interest
rates, currency repatriation and other political and economic
developments in law or regulations and, in particular, the risk of
expropriation, nationalisation, and confiscation of assets and
changes in legislation relating to the level of foreign
ownership.
Governmental authorities at all levels are actively involved in
the promulgation and enforcement of regulations relating to
taxation, land use and zoning and planning restrictions,
environmental protection, safety, and other matters. The
introduction and enforcement of such regulations could have the
effect of increasing the expense and lowering the income or rate of
return from, as well as adversely affecting the value of, the
Company's assets.
For the Company's UK solar sites, the main risks from Brexit,
that the Company still considers as material, are the stability of
the operating and maintenance ("O&M") companies that are
employed across the portfolio and the supply chain of components as
part of either corrective or preventative maintenance work.
In relation to the O&M companies themselves, all of the
primary O&M companies across a majority of the UK portfolio are
UK--based operations who are wholly owned by UK entities.
The supply chain for spare parts is the other main risk that
management foresees due to Brexit in terms of getting spare parts
to sites promptly from other parts of the EU.
After the completion of Brexit, the Asset Manager continues to
ensure that there is a robust spare parts provision in the UK and
continues to work with the O&M providers and their downstream
suppliers to ensure downtime is minimised across the portfolio as
much as possible.
For the last year and a half the emergence of the COVID-19
pandemic has prompted the Directors and the Investment Manager to
assess the risks to the Company and the portfolio. The Directors
consider the risks identified are still the material ones, but it
is clear that COVID-19 has changed the way in which some of these
risks may be experienced in the future. The key risk COVID-19 posed
to the Company is a negative impact on the power price market,
therefore adversely affecting the distributions received from
underlying solar investments. The power prices are therefore
continuously reviewed by the Investment Manager, with a proportion
of the assets opting to fix the power prices they receive in the
short term. In respect to the operations of the underlying
investments, the Investment Manager has reviewed the business
continuity plans of all subcontractors and PPA offtakers and
continues to review their performance during the pandemic.
The Directors do not believe there to be any material impact on
the short-term cash flows of the Company and the Directors do not
believe there is any further financial impact to the Financial
Statements as at 30 June 2021, as a result of this event. The
Investment Manager is monitoring developments relating to COVID-19
and is coordinating its operational response based on existing
business continuity plans and on guidance from global health
organisations, relevant governments, and general pandemic response
best practices.
20. Capital management
The Company's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for Shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the
Company may adjust the amount of dividends paid to Shareholders,
return capital to Shareholders, issue new shares (up to its
authorised number of shares) or sell assets to reduce debt.
21. Dividends
30 June 2021 Pence/ 30 June 2020 Pence/ 31 December 2020 Pence/
2021 Ordinary 2020 Ordinary 2020 Ordinary
GBP'000 Share GBP'000 Share GBP'000 Share
---------- ------- ----------- ------- ----------- ----------- -----------
Quarter 1 10,345 1.73 9,552 1.69 9,552 1.69
Quarter 2 9,646 1.73 9,662 1.69 9,662 1.69
Quarter 3 N/A N/A N/A N/A 9,659 1.72
Quarter 4 N/A N/A N/A N/A 9,796 1.73
---------- ------- ----------- ------- ----------- ----------- -----------
19,991 19,214 38,669
---------- ------- ----------- ------- ----------- ----------- -----------
During quarter one, 166,923 shares at a value of GBP1.012 per
share were issued in lieu of cash dividends. During quarter two,
901,280 shares at a value of GBP0.965 per share were issued in lieu
of cash dividends.
On 21 July 2021, the Company announced the first interim
dividend, in respect of the period 1 January 2021 to 31 March 2021,
of 1.745 pence per Ordinary Share. The shares went ex-dividend on
29 July 2021 and the dividend was paid on 27 August 2021 to
Shareholders on the register as at the close of business on 30 July
2021.
22. Related party disclosures
For the purposes of these Financial Statements, a related party
is an entity or entities who are able to exercise significant
influence directly or indirectly on the Company's operations.
As noted in note 2, the Company does not consolidate its
subsidiary. However, the Company and its subsidiaries (direct and
indirect) are a Group and, therefore, are considered to be related
parties.
Transactions with UK Hold Co
For the period ended 30 June 2021:
Opening
balance Increase Repayment
as at in of Closing
balance
1 January loan/interest loan/interest as at
30 June
2021 charged repaid 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------------- --------- ------------- ------------- -------
Loan notes 250,000 - - 250,000
Interest on loan notes 39,176 15,836 (7,000) 48,012
Shareholder loan 1 304,316 - - 304,316
Interest on shareholder loan 1 23,961 3,060 - 27,021
Non-interest bearing loan included in trade and other payables 187 - - 187
--------------------------------------------------------------- --------- ------------- ------------- -------
For the period ended 30 June 2020:
Increase Repayment
Opening in of Closing
balance balance
as at loan/interest loan/interest as at
1 January 30 June
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ --------- ------------- ------------- -------
Loan notes 250,000 - - 250,000
Interest on loan notes 50,780 16,618 (8,300) 59,098
Shareholder loan 1 304,316 - - 304,316
Interest on shareholder loan 1 17,773 3,077 - 20,850
Non-interest bearing loan included in trade and other receivables 187 - - 187
------------------------------------------------------------------ --------- ------------- ------------- -------
For the year ended 31 December 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 31 December
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------------- --------- ------------- ------------- -----------
Loan notes 250,000 - - 250,000
Interest on loan notes 50,780 33,442 (45,046) 39,176
Shareholder loan 1 304,316 - - 304,316
Interest on shareholder loan 1 17,773 6,188 - 23,961
Non-interest bearing loan included in trade and other payables 187 - - 187
--------------------------------------------------------------- --------- ------------- ------------- -----------
Transactions between UK Hold Co and its underlying
subsidiaries
Transactions with FS Holdco
For the period ended 30 June 2021:
Opening
balance Increase Repayment
as at in of Closing
balance
1 January loan/interest loan/interest as at
30 June
2021 charged repaid 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ --------- ------------- ------------- ---------
Interest bearing investment loan 1 343,731 - - 343,731
Interest on investment loan 1 59,774 13,635 (9,463) 63,946
Interest bearing investment loan 2 (40,000) - - (40,000)
Interest on investment loan 2 (5,253) (992) - (6,245)
Non-interest bearing loan (143,504) - - (143,504)
Non-interest bearing loan included in trade and other receivables 875 - - 875
------------------------------------------------------------------ --------- ------------- ------------- ---------
For the period ended 30 June 2020:
Increase Repayment
Opening in of Closing
balance balance
as at loan/interest loan/interest as at
1 January 30 June
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ --------- ------------- ------------- ---------
Interest bearing investment loan 1 343,731 - - 343,731
Interest on investment loan 1 51,701 13,674 - 65,375
Interest bearing investment loan 2 (40,000) - - (40,000)
Interest on investment loan 2 (3,253) (995) - (4,248)
Non-interest bearing loan (143,504) - - (143,504)
Non-interest bearing loan included in trade and other receivables 875 - - 875
------------------------------------------------------------------ --------- ------------- ------------- ---------
For the year ended 31 December 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 31 December
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------------------------------- --------- ------------- ------------- -----------
Interest bearing investment loan 1 343,731 - - 343,731
Interest on investment loan 1 51,701 27,423 (19,350) 59,774
Interest bearing investment loan 2 (40,000) - - (40,000)
Interest on investment loan 2 (3,253) (2,000) - (5,253)
Non-interest bearing loan (143,504) - - (143,504)
Non-interest bearing loan included in trade and other
receivables 875 - - 875
---------------------------------------------------------------- --------- ------------- ------------- -----------
Transactions with Topco
For the period ended 30 June 2021:
Opening
balance Increase Repayment
as at in of Closing
balance
1 January loan/interest loan/interest as at
30 June
2021 charged repaid 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- --------
Interest bearing investment loan 167,256 - - 167,256
Interest on investment loan - 4,704 (4,704) -
Interest bearing investment loan 2 40,867 - - 40,867
Non-interest bearing loan (22,288) (4,243) - (26,531)
----------------------------------- --------- ------------- ------------- --------
For the period ended 30 June 2020:
Increase Repayment
Opening in of Closing
balance balance
as at loan/interest loan/interest as at
1 January 30 June
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- ------------- ------------- --------
Interest bearing investment loan 167,256 - - 167,256
Interest on investment loan - 4,717 (4,663) 54
Non-interest bearing loan (8,850) (10,776) - (19,626)
--------------------------------- --------- ------------- ------------- --------
For the year ended 31 December 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 31 December
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -----------
Interest bearing investment loan 1 167,256 - - 167,256
Interest on investment loan (3,193) 9,485 (6,292) -
Interest bearing investment loan 2 - 40,867 - 40,867
Non-interest bearing loan (8,850) (13,438) - (22,288)
----------------------------------- --------- ------------- ------------- -----------
Transactions with FISH
There were no transactions between UK Hold Co and FISH.
Transactions with FS Holdco 2
There were no transactions between UK Hold Co and FS Holdco 2
for the period.
Transactions with FS Debtco
For the period ended 30 June 2021:
Opening
balance Increase Repayment
as at in of Closing
balance
1 January loan/interest loan/interest as at
30 June
2021 charged repaid 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ------------- ------------- -------
Interest bearing loan 1 55,000 - - 55,000
Interest on loan 1 10,269 1,364 - 11,633
Non-interest bearing loan 140 - - 140
-------------------------- --------- ------------- ------------- -------
For the period ended 30 June 2020:
Increase Repayment
Opening in of Closing
balance balance
as at loan/interest loan/interest as at
1 January 30 June
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ------------- ------------- -------
Interest bearing loan 1 55,000 - - 55,000
Interest on loan 1 7,519 1,368 - 8,887
Non-interest bearing loan 140 - - 140
-------------------------- --------- ------------- ------------- -------
For the year ended 31 December 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 31 December
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- --------- ------------- ------------- -----------
Interest bearing loan 1 55,000 - - 55,000
Interest on loan 1 7,519 2,750 - 10,269
Non-interest bearing loan 140 - - 140
-------------------------- --------- ------------- ------------- -----------
Transactions with FS Holdco 3
For the period ended 30 June 2021:
Opening
balance Increase Repayment
as at in of Closing
balance
1 January loan/interest loan/interest as at
30 June
2021 charged repaid 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -------
Interest bearing investment loan 1 36,124 - - 36,124
Interest on investment loan 1 - 896 - 896
Non-interest bearing loan payable (6,165) - - (6,165)
----------------------------------- --------- ------------- ------------- -------
For the period ended 30 June 2020:
Increase Repayment
Opening in of Closing
balance balance
as at loan/interest loan/interest as at
1 January 30 June
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -------
Interest bearing investment loan 1 36,124 - - 36,124
Interest on investment loan 1 911 898 - 1,809
Non-interest bearing loan payable (2,595) - - (2,595)
----------------------------------- --------- ------------- ------------- -------
For the year ended 31 December 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 31 December
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -----------
Interest bearing investment loan 1 36,124 - - 36,124
Interest on investment loan 1 911 1,806 (2,717) -
Non-interest bearing loan payable (2,595) (3,570) - (6,165)
----------------------------------- --------- ------------- ------------- -----------
Transactions with FS Holdco 4
For the period ended 30 June 2021:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 30 June
2021 charged repaid 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -------
Interest bearing investment loan 1 28,970 - - 28,970
Interest on investment loan 1 4,346 718 - 5,064
Interest bearing investment loan 2 12,482 - - 12,482
Interest on investment loan 2 2,035 309 - 2,344
Interest bearing investment loan 3 10,380 - - 10,380
Interest on investment loan 3 1,423 257 - 1,680
Interest bearing investment loan 4 8,386 - - 8,386
Interest on investment loan 4 1,046 208 - 1,254
Interest bearing investment loan 5 3,141 - - 3,141
Interest on investment loan 5 421 78 - 499
Interest bearing investment loan 6 26,619 13,153 - 39,772
Non-interest bearing loan 1,243 164 - 1,407
----------------------------------- --------- ------------- ------------- -------
For the period ended 30 June 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 30 June
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -------
Interest bearing investment loan 1 28,970 - - 28,970
Interest on investment loan 1 2,897 720 - 3,617
Interest bearing investment loan 2 12,482 - - 12,482
Interest on investment loan 2 1,411 310 - 1,721
Interest bearing investment loan 3 10,380 - - 10,380
Interest on investment loan 3 904 258 - 1,162
Interest bearing investment loan 4 8,386 - - 8,386
Interest on investment loan 4 627 209 - 836
Interest bearing investment loan 5 3,141 - - 3,141
Interest on investment loan 5 264 77 - 341
Non-interest bearing loan 1,506 - (194) 1,312
----------------------------------- --------- ------------- ------------- -------
For the year ended 31 December 2020:
Opening Closing
balance Increase Repayment balance
as at in of as at
1 January loan/interest loan/interest 31 December
2020 charged repaid 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ------------- ------------- -----------
Interest bearing investment loan 1 28,970 - - 28,970
Interest on investment loan 1 2,897 1,449 - 4,346
Interest bearing investment loan 2 12,482 - - 12,482
Interest on investment loan 2 1,411 624 - 2,035
Interest bearing investment loan 3 10,380 - - 10,380
Interest on investment loan 3 904 519 - 1,423
Interest bearing investment loan 4 8,386 - - 8,386
Interest on investment loan 4 627 419 - 1,046
Interest bearing investment loan 5 3,141 - - 3,141
Interest on investment loan 5 264 157 - 421
Interest bearing investment loan 6 - 26,619 - 26,619
Non-interest bearing loan 1,506 - (263) 1,243
----------------------------------- --------- ------------- ------------- -----------
Transactions between FS Holdco, FS Debtco, FS Holdco 3, FS
Holdco 4 and their SPVs
All the SPVs are cash-generating solar farms (except for the
non-operational Australian and Spanish investments). On occasion,
revenues are received and expenses are paid on their behalf by FS
Holdco, FS Holdco 2, FS Debtco, FS Holdco 3 and FS Holdco 4. All
these transactions are related party transactions.
For the period ended 30 June 2021:
Opening
balance Amounts Net amount
receivable/(payable) paid on behalf Amounts received (payable)/receivable
as at 1 January as at 30 June
2021 of SPV 2021 from SPV 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------------- -------------- ---------------- ---------------------
FS Holdco and its SPVs (33,646) 13,823 (8,909) (28,732)
FS Debtco and its SPVs (11,092) 14,688 (8,304) (4,708)
----------------------- -------------------- -------------- ---------------- ---------------------
For the period ended 30 June 2020:
Opening balance Amounts Net amount
receivable/(payable) paid on behalf Amounts received (payable)/receivable
as at 1 January as at 30 June
2020 of SPV 2020 from SPV 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------------- -------------- ---------------- ---------------------
FS Holdco and its SPVs (24,183) 11,510 (9,337) (22,010)
FS Debtco and its SPVs (834) 11,442 (6,894) 3,714
----------------------- -------------------- -------------- ---------------- ---------------------
For the year ended 31 December 2020:
Opening balance Amounts Net amount
(payable)/receivable
receivable/(payable) paid on behalf Amounts received as
as at 1 January at 31 December
2020 of SPV 2020 from SPV 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------------------- -------------- ---------------- ---------------------
FS Holdco and its SPVs (24,183) 28,894 (38,357) (33,646)
FS Debtco and its SPVs (834) 29,620 (39,878) (11,092)
----------------------- -------------------- -------------- ---------------- ---------------------
Transactions with the manager
The investment manager of the Fund was Foresight Group LLP (the
"Investment Manager").
The Investment Manager, a related party of Foresight Group CI,
charged asset management fees to the underlying projects of
GBP792,182 during the period (1 January 2020 to 30 June 2020:
GBP792,182, 1 January 2020 to 31 December 2020: GBP1,584,364).
23. Commitments and contingent liabilities
There are no commitments nor contingent liabilities.
24. Controlling party
In the opinion of the Directors, there is no controlling party
as no one party has the ability to direct the financial and
operating policies of the Company with a view to gaining economic
benefits from its direction.
25. Post balance sheet events
There were no post balance sheet events requiring
disclosure.
ADVISORS
Administrator & Company Secretary
JTC (Jersey) Limited
JTC House
28 Esplanade
St. Helier
Jersey JE2 3QA
Registrar
Computershare Investor Services (Jersey)
Queensway House
Hilgrove Street
St. Helier
Jersey JE1 1ES
Corporate Broker
Jefferies International Limited
100 Bishopsgate
London EC2N 4JL
Investment Manager
Foresight Group LLP
The Shard
32 London Bridge Street
London SE1 9SG
Legal Advisors to the Company as to English Law
Dickson Minto W.S.
Broadgate Tower
20 Primrose Street
London EC2A 2EW
Legal Advisors to the Company as to Jersey Law
Ogier
Ogier House
The Esplanade
St. Helier
Jersey JE4 9WG
Legal Advisors to the Company as to the acquisition of solar
assets
Osborne Clarke
One London Wall
London EC2Y 5EB
Independent Auditor
KPMG LLP
15 Canada Square
London E14 5GL
GLOSSARY OF TERMS
AIC The Association of Investment Companies
AIFs Alternative Investment Funds
AIFMs Alternative Investment Fund Managers
AIFMD The Alternative Investment Fund Managers Directive
Asset Manager The Company's underlying investments have appointed
Foresight Group LLP, a subsidiary of Foresight
Group CI, to act as Asset Manager
BBSY Bank Bill Swap Bid Rate
BSS Battery storage system
CEFC The Clean Energy Finance Corporation
Company Foresight Solar Fund Limited
DCF Discounted cash flow
DNO Distribution Network Operator
EEA European Economic Area
EPC Engineering, Procurement & Construction
ESG Environmental, Social and Governance
FCA Financial Conduct Authority
FiT Feed-in Tariff. The Feed-in Tariff scheme is
the financial mechanism introduced on1 April
2010 by which the UK Government incentivises
the deployment of renewable and low--carbon electricity
generation of up to 5MW of installed capacity
GAV Gross Asset Value on investment basis including
debt held at SPV level
Group borrowing Group borrowing refers to all third--party debt
by the Company and its subsidiaries
GWh Gigawatt hour
Hibernacula A shelter occupied during the winter by a dormant
animal
IAS International Accounting Standard
IFRS International Financial Reporting Standards as
adopted by the EU
Investment Manager Foresight Group CI Limited
IPEV Valuation Guidelines International Private Equity and Venture Capital
Valuation Guidelines
IPO Initial Public Offering
KPMG LLP KPMG is the Company's auditor
LCOE Levelized cost of energy
LGC Large-Scale Generation Certificate
LIBOR London Interbank Offered Rate
Listing Rules The set of FCA rules which must be followed by
all companies listed in the UK
LRET Large-Scale Renewable Energy Target. The LRET
creates a financial incentive in Australia for
the establishment and growth of renewable energy
power stations, such as wind and solar farms,
or hydroelectric power stations
Main Market The main securities market of the London Stock
Exchange
MIDIS Macquarie Infrastructure Debt Investment Solutions
MLF Marginal Loss Factor
MUFG Bank of Tokyo-Mitsubishi UFJ
MWh Megawatt hour
NAV Net Asset Value
Official List The Premium Segment of the UK Listing Authority's
Official List
Ofgem Office of Gas and Electricity Markets (UK Government
regulator)
O&M Operation and maintenance contractors
PPA Power Purchase Agreements
PRI Principles for Responsible Investment
PV Photovoltaic
RCF Revolving Credit Facility
RO Scheme 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 Renewable Obligation Certificates
RPI The Retail Price Index
SDG United Nations Sustainable Development Goal
SPVs The Special Purpose Vehicles which hold the Company's
investment portfolio of underlying operating
assets
UK The United Kingdom of Great Britain and Northern
Ireland
------------------------- --------------------------------------------------------
[ends]
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END
IR UVVKRASUKAAR
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September 16, 2021 02:00 ET (06:00 GMT)
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