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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Foresight Solar Fund Limited | LSE:FSFL | London | Ordinary Share | JE00BD3QJR55 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.70 | -0.80% | 86.60 | 86.10 | 86.60 | 86.60 | 85.80 | 86.10 | 463,679 | 13:29:34 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | 162.99M | 154.47M | 0.2610 | 3.32 | 512.45M |
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Foresight Solar Fund Limited: Unaudited Consolidated Interim Report and
Financial Statements for the period 1 January 2017 to 30 June 2017
Highlights
-- At 30 June 2017, the underlying portfolio, which is fully operational and
accredited, totalled 18 assets with an installed capacity of 470MW. A
substantial average size of over 26MW per solar installation means the
portfolio benefits from efficiencies of scale particularly in terms of
lower asset management costs and operating and maintenance charges. Total
revenues earned across the portfolio amounted to GBP23.28 million. During
the period the portfolio generated 223.5 GWh of clean energy, sufficient
to power approximately 67,716 UK homes
-- Two significant acquisitions, Shotwick and Sandridge, 72MW and 50MW
respectively, were completed by 30 June 2017. These acquisitions were
primarily funded using the Company's revolving credit facilities.
-- Having delivered the target dividend of 6.17 pence for the year ended
31 December 2016, the first 2017 interim dividend of 1.58 pence per share
will be paid on 25 August 2017. The Company is on track to pay the target
dividend of 6.32 pence per share for the year ended 31 December 2017.
Since IPO, all target dividends have been achieved.
-- The Net Asset Value ("NAV") increased to GBP432.8 million over period,
taking the NAV per Ordinary Share to 104.6 pence, an increase of 1.7%
since 31 December 2016 (102.9 pence). The NAV has decreased slightly by
0.7% since the last reported NAV as at 31 March 2017 (105.3 pence),
primarily due to a reduction in short to medium term power price
forecasts. The discount rate has decreased by 0.25% to 7.25% to better
reflect market conditions and operational risk
-- A Placing Programme for 250 million new shares was launched earlier this
year. The first Placing under this Programme took place in March 2017
with the Company raising total gross proceeds of GBP78.5 million from new
and existing investors in an oversubscribed issuance. Since the Company's
IPO, this brings the total equity capital raised to GBP424.2 million.
-- While the UK market remains competitive, the Company continues to
successfully identify attractive opportunities to add to its portfolio.
-- The Company is currently actively looking to acquire solar projects in
selected markets outside of the UK, with stable economies and regulatory
regimes, where attractive returns can be achieved in line with the
current risk profile and investment policy
Dividend Timetable
Dividend Timetable Date
Ex-dividend Date 10 August 2017
Record Date 11 August 2017
Payment Date 25 August 2017
Key Metrics
As at 30 June 2017
Market Capitalisation GBP465.0 million
Share Price 112.38 pence
Total Dividend per Share for the period 1.58 pence
Gross Asset Value GBP625.3 million*
Net Asset Value GBP432.8 million
NAV per Share 104.6 pence
NAV Change per Share 1.7 pence
Total Return (NAV) 6.97%**
Total Shareholder Return 8.35%***
Equity Discount Rate 7.25%
Profit after Tax GBP11.5 million
Number of Shares with Voting Rights 413,801,536
* Of Company and its subsidiaries
** Annualised from IPO on 29 October 2013 and calculated in line with
AIC methodology, which does not include dividends approved but not paid.
*** Annualised from IPO on 29 October 2013
Commenting on today's results, Alex Ohlsson, Chairman of Foresight Solar
Fund Limited said:
"During the first half of 2017, the Company made two significant
purchases; the first being the 72MW acquisition of Shotwick and second
the 50MW acquisition of Sandridge, resulting in a total installed
capacity of 470MW.
As the solar industry becomes increasingly competitive, acquiring assets
at attractive prices is becoming more challenging. However, Foresight
Solar Fund Limited continues to make asset purchases at attractive
valuations and sees significant opportunities in the UK secondary solar
market as well as other developed overseas countries with stable
currencies.
The Company continues to be supported by existing and new shareholders,
as evidenced by the oversubscribed share placing earlier this year. This
signals investor support for the stable income flows generated by the
portfolio. The majority of the capital raised was used to repay the
short term credit facilities and the remainder will be used to support
growth. The Company will continue capital raising while there is
investor demand for infrastructure assets.
The Company has achieved all target dividends to date and is on track to
deliver a 6.32 pence dividend for the year ended 31 December 2017."
A conference call for analysts will be held at 9:00am on Wednesday 16
August 2017.
To register, please contact Shabnam Bashir at Citigate Dewe Rogerson by
email Shabnam.Bashir@citigatedr.co.uk or by phone +44 (0) 20 7282 2822
A presentation will be provided separately before the call.
A copy of the Report can be found on the Fund's website
http://www.foresightgroup.eu/fsfl-home
For further information, please contact:
Foresight Group
Romy Abrahams RAbrahams@ForesightGroup.eu +44 (0)20 3763 6956
Stifel Nicolaus Europe Limited +44 (0)20 7710 7600
Mark Bloomfield
Neil Winward
Tunga Chigovanyika
J.P. Morgan Cazenove
William Simmonds +44 (0)20 7742 4000
Notes to Editors
About Foresight Solar Fund Limited ("The Company" or "FSFL")
FSFL is a Jersey-registered closed-end investment company. The Company
invests in ground based UK solar power assets to achieve its objective
of providing Shareholders with a sustainable and increasing dividend
with the potential for capital growth over the long-term. Having raised
GBP150 million at IPO in October 2013, FSFL has since raised a further
GBP274.2 million from institutional investors and private investors.
About Foresight Group
Foresight is a leading independent infrastructure and private equity
investment manager which has been managing investment funds on behalf of
institutions and retail clients for more than 30 years.
Foresight has GBP2.7 billion of Assets under Management across a number
of funds, including Listed Vehicles, Limited Partnerships, Enterprise
Investment Schemes (EISs) and Venture Capital Trusts (VCTs).
Foresight is the second largest solar asset manager in the UK with over
780MW of installed capacity. In total, the team manages c. GBP1.6
billion invested in over 85 operating solar plants totalling over 900MW
of existing operational capacity across the UK, Italy, Australia and the
USA.
Foresight Group is headquartered in London, with international offices
in Rome, San Francisco and Sydney and regional UK offices in Nottingham,
Manchester and Guernsey.
www.foresightgroup.eu
Foresight Solar Fund Limited: Unaudited Consolidated Interim Report and
Financial Statements for the period 1 January 2017 to 30 June 2017
Financial Highlights as at 30 June 2017
As at 30 June 2017
Market Capitalisation GBP465.0 million
Share Price 112.38 pence
Dividend per Share for the period 1.58 pence
Gross Asset Value GBP625.3 million*
Net Asset Value GBP432.8 million
NAV per Share 104.6 pence
NAV Change per Share 1.7 pence
Total Return (NAV) 6.97%**
Total Shareholder Return 8.35%***
Equity Discount Rate 7.25%
Profit after Tax GBP11.5 million
Number of Shares with Voting Rights 413,801,536
* Of Company and its subsidiaries
** Annualised from IPO on 29 October 2013 and calculated in line with
AIC methodology, which does not include dividends approved but not paid.
*** Annualised from IPO on 29 October 2013
-- At 30 June 2017, the underlying portfolio, which is fully operational and
accredited, totalled 18 assets with an installed capacity of 470MW. A
substantial average size of over 26MW per solar installation means the
portfolio benefits from efficiencies of scale particularly in terms of
lower asset management costs and operating and maintenance charges. Total
revenues earned across the portfolio amounted to GBP23.28 million. During
the period the portfolio generated 223.5 GWh of clean energy, sufficient
to power approximately 67,716 UK homesTwo significant acquisitions,
Shotwick and Sandridge, 72MW and 50MW respectively, were completed by 30
June 2017. These acquisitions were primarily funded using the Company's
revolving credit facilities.
-- Having delivered the target dividend of 6.17 pence for the year ended
31 December 2016, the first 2017 interim dividend of 1.58 pence per share
will be paid on 25 August 2017. The Company is on track to pay the target
dividend of 6.32 pence per share for the year ended 31 December 2017.
Since IPO, all target dividends have been achieved.
-- The Net Asset Value ("NAV") increased to GBP432.8 million over period,
taking the NAV per Ordinary Share to 104.6 pence, an increase of 1.7%
since 31 December 2016 (102.9 pence). The NAV has decreased slightly by
0.7% since the last reported NAV as at 31 March 2017 (105.3 pence),
primarily due to a reduction in short to medium term power price
forecasts. The discount rate has decreased by 0.25% to 7.25% to better
reflect market conditions and operational risk.
-- A Placing Programme for 250 million new shares was launched earlier this
year. The first Placing under this Programme took place in March 2017
with the Company raising total gross proceeds of GBP78.5 million from new
and existing investors in an oversubscribed issuance. Since the Company's
IPO, this brings the total equity capital raised to GBP424.2 million.
-- While the UK market remains competitive, the Company continues to
successfully identify attractive opportunities to add to its portfolio.
-- The Company is currently actively looking to acquire solar projects in
selected markets outside of the UK, with stable economies and regulatory
regimes, where attractive returns can be achieved in line with the
current risk profile and investment policy.
Chairman's Statement
Alexander Ohlsson
During the first half of 2017, the Company made two significant
purchases; the first being the 72MW acquisition of Shotwick and second
the 50MW acquisition of Sandridge, resulting in a total installed
capacity of 470MW.
As the solar industry becomes increasingly competitive, acquiring assets
at attractive prices is becoming more challenging. However, Foresight
Solar Fund Limited continues to make asset purchases at attractive
valuations and sees significant opportunities in the UK secondary solar
market as well as other developed overseas countries with stable
currencies.
The Company continues to be supported by existing and new shareholders,
as evidenced by the oversubscribed share placing earlier this year. This
signals investor support for the stable income flows generated by the
portfolio. The majority of the capital raised was used to repay the
short term credit facilities and the remainder will be used to support
growth. The Company will continue capital raising while there is
investor demand for infrastructure assets.
The Company has achieved all target dividends to date and is on track to
deliver a 6.32 pence dividend for the year ended 31 December 2017.
Alexander Ohlsson, Chairman
On behalf of the Board, I am pleased to present the Unaudited Interim
Financial Statements for Foresight Solar Fund Limited (the "Company")
for the six months ended 30 June 2017.
During the period, the Net Asset Value per Ordinary Share increased by
1.7 pence from 102.9 pence as at 31 December 2016 to 104.6 pence as at
30 June 2017. The increase in net asset value is detailed in the
Investment Management report and was primarily driven by the
acquisitions of Shotwick and Sandridge. The Profit after Tax for the
period was GBP11.5 million resulting in Earnings per Share of 3.04
pence.
At the period end and following the acquisitions of Shotwick and
Sandridge, the fully operational and accredited portfolio totalled 18
assets across the UK with an installed capacity of 470MW.
Dividend and Dividend Growth
In keeping with the Company's Prospectuses, subject to market conditions
and Company performance, it is the Directors' intention to pay a
sustainable and inflation-linked level of dividend income to
Shareholders. The Company continues to achieve its dividend objectives
and has paid all target dividends since IPO. The Company remains on
track to deliver the targeted inflation-linked dividend of 6.32 pence
for the year ending 31 December 2017, to be paid in four equal quarterly
distributions. (2016: 6.17 pence).
Operational Performance
As described more fully in the Asset Manager's Report, the production of
the underlying portfolio during the period was 8% below expectations,
mainly attributable to specific and isolated operational issues. The
issues identified early on by the Asset Manager are currently being
rectified and are not expected to impact the long term performance of
the assets. When the portfolio production is adjusted for compensation
received as set out in the Asset Manager's report, the performance is
1.9% below expectations against irradiance variance of minus 1.4%. The
intervention by the Asset Manager was successful in minimising further
impact. The technical expertise and proactive negotiations of the Asset
Manager have also been instrumental in driving discussions with EPC
contractors resulting in satisfactory outcomes with regard to other
technical issues.
Specific events for which compensation will not be paid include external
grid outages as well as material rectification works being undertaken on
certain sites. These latter works have impacted availability during the
period, but lost revenues have already been made up from the work
undertaken and further benefits will accrue from the longer term
performance of the assets. The works have been funded by EPC
contractors.
Capital Raising and Financing
In the first half of 2017, the Company took advantage of strong market
demand and raised total additional equity capital of GBP78.5 million,
exceeding the GBP50 million initial target. This brings the total funds
raised in the last 12 months to GBP139.3 million. A total of 72,850,624
shares were issued by the Company in March 2017 under the Company's new
250 million share Placing Programme, with a balance of 177,149,376
shares available to be placed by 2 March 2018. Future issuances under
the Placing Programme will be subject to the Company identifying and
acquiring new solar assets.
In February 2017, a new short-term revolving credit facility of GBP55
million was agreed with Santander Global Corporate Banking at attractive
terms. This facility was primarily used to fund the acquisition of
Sandridge and repaid using the proceeds from the March Placing.
Portfolio Development
As a result of its successful capital raising activities, the Company is
well-placed to selectively pursue further acquisitions. During the
period, the Investment Manager evaluated over 700MW of solar assets from
primary and secondary vendors in the UK, demonstrating the availability
of assets in the market. The purchase of Sandridge and Shotwick was in
line with the Company's cautious growth strategy, minimising the impact
of cash drag for investors and demonstrating that NAV accretive
opportunities exist in the secondary market and continue to be sourced
by the Company.
Following the period end, the Company acquired a 1.2 ROC 5MW operational
project known as Wally Corner in Berinsfield, South Oxfordshire. This
acquisition was funded using the Company's existing short-term revolving
credit facility.
Solar Market Outlook
While there remains political uncertainty following the UK's decision in
June 2016 to withdraw from the European Union ('Brexit') and the recent
snap election, which resulted in a hung parliament, current indications
suggest that the UK Government remains committed to a carbon reduction
agenda. On 24 July 2017, as part of the Industrial Strategy, the
Business and Energy Secretary, Greg Clark, announced a plan to give UK
homes and businesses more control over their energy use and support
innovative new technologies. It is expected that this initiative will
maximise the use of renewable energy such as solar, while potentially
saving consumers up to GBP40 billion by 2020. A ban on the sale of new
petrol and diesel fuelled vehicles by 2040 has also been announced;
these will predominantly be replaced with electric cars.
There is now c.12GW of solar capacity in Great Britain with over 8GW of
ground mounted solar. The Department of Business, Energy and Industrial
Strategy ("BEIS") reported that at the end of 2016 energy from
renewables represented 24.4% of all electricity generation in the UK,
with solar PV representing c.12.4% of renewable generation in 2016. On
Friday 28 May 2017, the UK saw a new record for solar power generation,
when a quarter of the nation's electricity mix in one afternoon was
derived from solar generation. The UK produced more electricity from
solar than nuclear and coal power combined.
The end of March 2017 saw the closure of the Renewable Obligation scheme
to new solar projects, and as a result no new solar projects will
receive Renewable Obligation Certificates ("ROC") for energy generated.
ROCs have been replaced by the Contract for Difference ("CfD") subsidy
regime, however solar technology is currently not eligible for CfD
allocation. Although the lack of regulatory support for large scale
solar projects has reduced the availability of primary market solar
assets, the Company continues to see significant opportunities available
in the secondary market. The Investment Manager expects that between 1
and 2GW of projects will be sold in the secondary market in the coming
12-18 months. Post the approvals received at the General Meeting in
March 2017, the Company can now acquire assets with debt at asset level
which has provided greater flexibility and wider opportunities.
The Company is able to invest up to 25 percent of Gross Asset Value*
("GAV") in other jurisdictions, including Australia, the USA and other
European countries. The Investment Manager feels that this international
strategy offers considerable scope for value-accretive growth. As costs
fall, the deployment of solar power in other developed markets continues
to grow at a rapid pace with Bloomberg New Energy Finance predicting
global solar capacity will reach 92GW in 2018. Investing in solar
projects, however, remains a relatively niche activity in many countries
creating attractive risk/return investment opportunities for an
experienced investor such as Foresight Solar Fund Limited. The Board
believes that the Company is well-positioned to benefit from the
Investment Manager's existing knowledge and access to pipeline in
markets such as Australia and USA. While investors will not be exposed
to significantly different risk profiles compared to UK assets, the
acquisitions will be priced taking into account the cost of managing and
mitigating currency risk, using hedging strategies where appropriate.
Any overseas acquisitions will be in line with the Company's investment
policy and returns are expected to be in line with those of current UK
assets. *GAV including Company and Subsidiaries
The Investment Manager is actively reviewing a pipeline of more than
500MW of potential investments in the UK and other international markets,
but it will maintain a prudent approach to new acquisitions, making its
investment decisions based on NAV accretive projects within the remit of
the Company investment mandate.
The Investment Manager's fundraising strategy is also planned so as to
capitalise on the availability of assets and minimise investor cash
drag. The Company continues to be supported by existing and new
shareholders, illustrated through the oversubscribed equity issuance
earlier this year, evidencing strong investor support for the stable
income flows generated by the portfolio. The majority of the capital
raised was used to repay the short term credit facilities and the
remainder will be used to support growth. The Company will continue
raising capital through a combination of equity and debt, particularly
while the current low interest rate environment prevails and investor
sentiment remains positive for solar infrastructure assets.
Alexander Ohlsson
Chairman
15 August 2017
Corporate Summary and Investment Objective
Foresight Solar Fund Limited invests in a portfolio of predominantly UK
ground-based solar PV assets with the aim of achieving its objective of
providing Shareholders with a sustainable and increasing dividend with
the potential for capital growth over the long term.
THE COMPANY
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. Gross proceeds of GBP134.9 million were raised
under a subsequent 12 month placing programme initiated in September
2014. In September 2016, GBP28.9 million was raised through the
oversubscribed reissue of Shares out of Treasury and in October 2016 a
further GBP31.9 million was raised through a tap issue, which was also
oversubscribed. In March 2017 the Company announced a new Placing
Programme relating to the issue of up to 250 million new ordinary shares
in aggregate over a 12 month period. An oversubscribed Initial Placing
raised GBP78.5 million on 29 March 2017. To date, the Company has raised
a total of GBP424.2 million through equity issuance.
The Company had a market capitalisation at the end of the period of
GBP465.0 million and owns a portfolio of 18 large scale, ground based
solar power plants across the UK with a total installed capacity of
470MW.
CORPORATE SUMMARY
Foresight Solar Fund Limited ("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 13 August 2013, with
registration number 113721.
The Company has 413,801,536 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.
The Company makes its investments through intermediate holding companies
and underlying Project Vehicles/Special Purpose Vehicles ("SPVs") which
are ultimately wholly-owned by the Company.
INVESTMENT OBJECTIVE
The Company's objective is to provide investors with a sustainable and
inflation-linked quarterly dividend and to aim to preserve and where
possible enhance capital value, through the reinvestment of excess cash
flows, not required for the payment of dividends, in a diversified
portfolio of predominantly UK ground-based solar PV assets.
INVESTMENT POLICY
The Company will pursue its investment objective by acquiring
ground-based, operational solar power plants predominantly in the UK.
Investments outside the UK and assets which are still, when acquired,
under construction will be limited to 25 percent of the Gross Asset
Value of the Company and subsidiaries, calculated at the time of
investment.
The Company will seek to acquire majority or minority stakes in
individual ground-based solar assets. When investing in a stake of less
than 100 per cent 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 its portfolio and creditworthy
offtakers in the UK. Under the PPAs, the SPVs will sell solar generated
electricity and green benefits to the designated offtaker. The Company
may retain exposure to UK power prices through PPAs that avoid
mechanisms such as fixed prices or price floors.
Investment may be made in equity or debt or intermediate instruments but
not in any 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.
In order to spread risk and diversify its portfolio, at the time of
investment no single asset shall exceed in value (or, if it is an
additional stake in an existing investment, the combined value of both
the existing stake and the additional stake acquired) 30 percent of the
Company's Gross Asset Value post-acquisition. The Gross Asset Value 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, EPC contractors, O&M contractors, panel
manufacturers, landlords and distribution network operators.
The Articles provide that gearing, calculated as Group borrowings
(including any asset level gearing) as a percentage of the Company's
Gross Asset Value will not exceed 50 percent 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. borrowings between members of
the Group) and revolving credit facilities) as a percentage of the
Company's Gross Asset Value will not exceed 40 percent at the time of
drawdown.
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.
SIGNIFICANT SHAREHOLDERS
The Company's Shareholders include a substantial number of blue-chip
institutional investors.
Shareholders in the Company with more than a 5% holding as at 30 June
2017 are as follows:
Investor % Shareholding in Fund
Blackrock Investment Management Limited 12.79%
Newton Investment Management Limited 9.3%
Schroders Plc 7.91%
Legal & General Investment Mgmt. Ltd 7.17%
Rathbone Investment Management Limited 5.42%
Total 42.59%
ALTERNATIVE INVESTMENT FUND MANAGEMENT DIRECTIVE ("AIFMD")
The AIFMD, which was implemented across the EU on 22 July 2013 with the
transition period ending 22 July 2014, 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 Capitalised Alternative Investment Fund Manager.
Both the Company and the Investment Manager are located outside the
European Economic Area ("EEA") but the Company's marketing activities in
the UK are subject to regulation under the AIFMD.
The Investment Manager
The Company's Investment Manager is Foresight Group CI Limited
("Foresight Group CI"), which is responsible for the development and
management of the assets of the Company including the sourcing and
acquisition of future ground-based solar power plants predominantly
located in the UK, advising on the Group's borrowing strategy, the sale
of the electricity and the administering of green benefits. The
Investment Manager is a Guernsey registered company, incorporated under
the Guernsey Law with registered number 51471. The Investment Manager is
licensed and regulated by the Guernsey Financial Services Commission.
Foresight, defined here as Foresight Group CI and its subsidiaries, is a
privately-owned infrastructure and private equity Investment Manager,
managing assets of c. GBP2.7 billion, raised from pension funds and
other institutional investors, UK and international private and high net
worth individuals and family offices. Founded in 1984, in total
Foresight manages 27 funds on behalf of institutional and retail
investors including three venture capital trusts which are listed on the
premium segment of the Official List and are admitted to trading on the
Main Market. Headquartered in The Shard, London, with further offices in
Guernsey, Nottingham, Manchester, Rome, San Francisco and Sydney,
Foresight has over 190 staff.
Foresight established its solar investment team in 2007 and launched its
first solar fund, Foresight European Solar Fund, in early 2008.
Foresight Solar VCT plc was launched in November 2010 and the Group has
since raised over GBP200 million for solar-focused Enterprise Investment
Schemes. In 2013, Foresight-managed funds issued the largest UK solar
index linked bond at that date.
Foresight is the second largest solar asset manager in the UK with over
780MW of installed capacity. In total, the team manages c. GBP1.6
billion invested in over 85 operating solar plants totalling over 900MW
of existing operational capacity across the UK, Italy, Australia and the
USA. In February 2017, Foresight Group announced the acquisition of the
25MW Barcaldine Remote Community Solar Farm in Queensland, Australia to
bring its first Australian solar project under management. In July 2017,
Foresight made its first investment in an unsubsidised solar farm of 7.2
MW purchase in Portugal. This project represents the first investment in
a utility scale solar asset which does not benefit from any government
subsidy and is the first part of a larger unsubsidised solar portfolio
acquisition plan Foresight is implementing across Southern Europe.
In June 2017, Foresight Group also made its first battery storage
investment, acquiring the 35MW Port of Tyne project in the North East of
England. This investment consolidates Foresight's position as a leader
in not only renewable energy generation and also the flexible grid
infrastructure required to accommodate increasing penetration of
renewables, such as energy storage.
The Group's dedicated multinational infrastructure team consists of an
Investment Team of 36 investment professionals and an Asset Management
Team of 31 specialist portfolio accountants, in-house legal personnel
and specialised engineers. The team possesses a comprehensive suite of
capabilities, from investment origination and execution, including
sourcing and structuring transactions, to ongoing active asset
management within the specialist sector of energy infrastructure.
The team is supported by an extensive back office team comprising of
finance, investor relations, sales, marketing, HR and administration.
The Company's Investment Management team is led by four experienced
UK-based fund managers and is responsible for new asset acquisitions,
pipeline development, value enhancement of the Company and also advises
the Board on the optimal borrowing strategy of the Company. The
management team is supported by a team of UK-based solar investment
analysts with additional resource obtained from Foresight's US, Italian
and Australian investment teams. Foresight is overseen by an Executive
Committee of which Jamie Richards and Gary Fraser are members.
Foresight's Executive Committee provides strategic investment advice to
the management team and the Board.
The Asset Manager
The underlying investments have appointed Foresight Group LLP, a
subsidiary of Foresight Group CI, to act as Asset Manager. The Asset
Manager is responsible for the management of the operating assets
including relationships with contractors, asset performance, portfolio
optimisation and commercial negotiations during the operating phase.
Foresight Group LLP is authorised and regulated by the Financial Conduct
Authority. It is overseen by an experienced and majority independent
Board.
The Company's Asset Management team is led by a Director, responsible
for the financial and commercial operations of the assets, and a
Technical Director with over 12 years of European solar experience who
supervises the operational management of the Company's portfolio on a
day to day basis.
Foresight has developed a leading, in-house solar asset management team
through the active management of a large portfolio of operational and
construction stage assets. The team incorporates portfolio managers,
electrical engineers, legal assistants and accountants and is further
enhanced by an outsourced back office support function which provides
back office and administrative functions such as invoicing and financial
reporting for each solar power plant.
Foresight's experience in asset optimisation has been attained through
continual emphasis on operational efficiencies achieved through the
consolidation of costs across O&M activities and insurances, negotiating
attractive offtake pricing and ongoing equipment improvements.
Being an early entrant into the solar market, Foresight has a wealth of
experience in the sector and has been able to develop its own
centralised monitoring system so that all sites can be remotely
monitored in real time. This sophisticated asset management database
forms the basis of all performance analysis and reporting as well as
enabling the enforcement of contractual compliance. This a powerful tool
for being able to assess the performance of the portfolio of sites on a
continuous basis and ensures that all information is consistent,
accurate and relevant. It also allows Foresight's engineers to identify
and notify onsite contractors of incidents quickly and work with them in
order to minimise the impact on portfolio production. Foresight also
oversees each of the O&M contractors' performance, incident control and
technical reporting in order to ensure that each solar power plant is
operated and managed so as to maximise profits and reduce operating
risks.
Portfolio Assets
OVERVIEW
Installed
Peak Connection Acquisition Original Fair
Asset Location Status ROCs Capacity Date Date Ownership Cost(2) Value
Operational
and 2.0 32 November 2013
Wymeswold(1) Leicestershire accredited 1.4 2 March 2013 March 2015 100% GBP45.0m GBP50.0m
Operational
and
Castle Eaton Wiltshire accredited 1.6 18 March 2014 June 2014 100% GBP22.6m GBP21.3m
Operational
and
Highfields Essex accredited 1.6 12 March 2014 June 2014 100% GBP15.4m GBP14.6m
Operational
and
High Penn Wiltshire accredited 1.6 10 March 2014 June 2014 100% GBP12.7m GBP11.7m
Operational
and
Pitworthy North Devon accredited 1.4 16 March 2014 June 2014 100% GBP19.3m GBP17.8m
Operational
and
Hunters Race West Sussex accredited 1.4 11 July 2014 September 2014 100% GBP13.3m GBP13.4m
Operational
and
Spriggs Farm Essex accredited 1.6 12 March 2014 November 2014 100% GBP14.6m GBP14.6m
Operational
and September
Bournemouth Dorset accredited 1.4 37 2014 December 2014 100% GBP47.9m GBP50.1m
Operational
and December
Landmead Oxfordshire accredited 1.4 46 2014 December 2014 100% GBP52.4m GBP52.6m
Operational
and September
Kencot Oxfordshire accredited 1.4 37 2014 March 2015 100% GBP49.5m GBP48.4m
Operational
and December
Copley Lincolnshire accredited 1.3 30 2015 June 2015 100% GBP32.7m GBP37.5m
Operational
and July 2015
Atherstone Warwickshire accredited 1.4 15 March 2015 November 2016 100% GBP16.2m GBP16.3m
Operational
and July 2015
Paddock Wood Kent accredited 1.4 9 March 2015 November 2016 100% GBP10.7m GBP11.4m
Operational
and July 2015
Southam Warwickshire accredited 1.4 10 March 2015 November 2016 100% GBP11.1m GBP11.7m
Operational
and
Port Farm Wiltshire accredited 1.4 35 March 2015 August 2015 100% GBP44.5m GBP44.8m
Operational
and
Membury Berkshire accredited 1.4 16 March 2015 September 2015 100% GBP22.2m GBP21.6m
Operational
and
Shotwick Flintshire accredited 1.3 72 March 2016 February 2017 100% GBP75.5m GBP86.6m
Operational
and
Sandridge Wiltshire accredited 1.3 50 March 2016 February 2017 100% GBP57.3m GBP58.3m
Total Portfolio 470 GBP562.9m GBP582.7m
1 The 1.4 ROC banding and March 2015 acquisition date refer
to the 2.3MW Wymeswold extension finalised in March 2015.
2 Original cost at time of acquisition, including
transaction costs.
Investment Manager's Report
For the period ended 30 June 2017
KEY METRICS
As at As at
30 June 2017 31 December 2016
Market Capitalisation GBP465.0 million GBP354.9 million
Share Price 112.38 pence 104.10 pence
Total Dividend per Share for the period 1.58 pence 6.17 pence
Gross Asset Value GBP625.3 million* GBP549.0 million*
Net Asset Value GBP432.8 million GBP350.8 million
NAV per Share 104.6 pence 102.9 pence
NAV Change per Share 1.7 pence 3.9 pence
Total Return (NAV) 6.97% 7.04%
Total Shareholder Return since IPO 8.35% 6.58%
Equity Discount Rate 7.25% 7.5%
Profit after Tax GBP11.5 million GBP30.7 million
* of Company and its subsidiaries
PORTFOLIO SUMMARY
At the period end, the Company's portfolio consisted of 18 solar
installations across England and Wales with a total generating capacity
of 470MW. The portfolio's average size of over 26MW per solar
installation means the Company benefits from efficiencies of scale
particularly in terms of lower asset management costs and operating and
maintenance charges.
Assets have been selected to ensure diversification by geography, while
aiming to maximise exposure to regions with favourable irradiation
patterns. The portfolio is also diversified by technology and
counterparties in order to minimise risk. The individual selection of
solar assets also takes into account pricing, driven by the aim of
achieving portfolio growth but not at the expense of securing good value
for investors.
To minimise exposure to construction risk, 17 of the 18 assets within
the portfolio were operational when acquired, thus maintaining the
Company's low risk strategy when making acquisitions.
ACQUISITIONS
In February 2017, the Company completed two significant solar site
acquisitions, the first being Shotwick solar park in Flintshire, North
Wales (72MW) ("Shotwick"), and the second Sandridge solar park located
in Wiltshire (50MW) ("Sandridge"). Shotwick solar farm is the largest
operational solar asset in the UK and is the biggest acquisition made by
the Company to date.
Shotwick was connected to the grid in March 2016 and has received ROC
accreditation of 1.3ROCs/MWh. The Company acquired the economic benefit
of all project cash flows from Shotwick since 1 December 2016.
Through a 25-year private wire agreement Shotwick provides renewable
electricity to the neighbouring Shotton paper mill owned by UPM, a
Finnish conglomerate with a market cap of EUR11.87 billion. The project
benefits from a shared grid connection and private wire agreement which
means the project can sell electricity directly to the paper mill but
can also export to the national grid. The private wire agreement created
the opportunity to enter a corporate PPA with UPM, allowing the Company
to obtain power prices materially above traditional utility PPAs
available in the market. The overall arrangement is attractive for both
the solar park and UPM as a major local employer, delivering long-term
environmental and economic benefits to the local community. The project
also sets a unique precedent for solar energy suppliers working with
energy intensive industry, and can be seen as part of a wider shift
towards corporates sourcing renewable electricity to better manage
ongoing energy costs and lower carbon emissions. The park enables the
business to run on up to 100% green energy during daylight hours and to
save up to 22,500 tonnes of carbon dioxide emissions per year.
Sandridge, the second largest asset acquired during the period, was
connected to the National Grid in March 2016 and has received ROC
accreditation of 1.3ROCs/MWh. The Company acquired the economic benefit
of all project cash flows since 1 January 2017. Sandridge was acquired
from Goldbeck, a developer the Investment Manager has worked with before
on previous deals. Established relationships such as this allows the
Company to gain access to high quality assets at attractive valuations.
The acquisition of Sandridge was primarily funded via the new GBP55m
revolving credit facility, announced on 23 February 2017, provided by
Santander Global Corporate Banking at competitive rates.
These large acquisitions reflect the prudent investment strategy and
preferred approach of acquiring assets that will be accretive in value
to Shareholders and also offer economies of scale.
More than 1GW of potential asset acquisitions were evaluated by the
Investment Manager during the first half year period in 2017. Of these,
750MW were considered appropriate for the Company, of which 148MW were
progressed to exclusivity and ultimately 122MW of additional installed
capacity acquired during the period.
FOLLOWING PERIOD
On 21 July 2017, the Company acquired a 5MW operational project known as
Wally Corner in Berinsfield, South Oxfordshire. The asset was acquired
from Ethical Power, a contractor the Investment Manager has worked with
in the past. This acquisition was funded using the short-term revolving
credit facility and will receive 1.2 ROC accreditation.
This now brings the total operational portfolio size to 475MW.
REGULATORY AND MARKET CHANGES
The past six months have seen new records being set for the level of
solar production as well as in relation to the wider energy mix with
historic lows for coal generation. According to the National Grid,
Friday 21 April 2017 was the first working day without coal power since
the Industrial Revolution.
The UK's total solar capacity has continued to grow even after the
closure of the Renewable Obligation scheme, which closed to new solar
projects at the end of March 2017. The ROC deadline led to many
acquisitions and installations and while there is often a lag in the
official statistics until all newly commissioned projects have been
accredited which can take some months, there is now c.12GW of solar
capacity in Great Britain with over 8GW in ground mounted solar.
Following the significant reduction of the Feed in Tariff for large
scale solar and the lack of visibility of future CfD auctions, it is
expected that there will be very limited new solar capacity added in the
near future. However, there has been a marked increase in secondary
market activity.
With the reduction in solar installation costs experienced in recent
periods, industry participants are also working to develop unsubsidised
projects and it is expected that the first of these projects will be
commissioned in the next 12 months, either benefitting from private wire
or PPA arrangements with corporates. In the short term however, the
economic viability of unsubsidised projects will remain marginal and
limited projects will be realised. This situation is expected to shift
over time as the cost of solar panels and the balance of system
continues to reduce, making projects cost competitive with other forms
of electricity generation.
In March 2017, Ofgem launched its Targeted Charging Review consultation
which will focus on network charging for embedded generation and could
result in a Significant Code Review for the industry. This has the
potential to materially affect the Embedded Benefits received by the
Portfolio, but represent less than 2.5% of future annual revenue.
There are further material changes to the Capacity and Balancing markets
which do not have a direct impact on the Portfolio, but which are likely
to affect the future energy mix and therefore wholesale power prices.
The UK triggered Article 50 of the Lisbon Treaty on 29 March 2017 to
formally initiate the two year process for withdrawing from the European
Union ('Brexit'). The uncertainty generated by Brexit continue to effect
the UK power market. It's unclear to what extent the UK market will
remain integrated with the wider EU power market and therefore what the
Impact on wholesale power prices will be. For the moment however, a
number of interconnector projects with EU members are still being
progressed, which is a positive indication. The Company will continue to
carefully monitor any potential effects of Brexit.
On the 8 June 2017, the UK voted in a snap General Election in which the
governing Conservative party lost its parliamentary majority. The
purpose of calling the snap election was an attempt by the Prime
Minister to strengthen the Governments' position in Brexit negotiations,
but this unexpectedly resulted in a hung parliament with the
Conservatives forming a minority government and having to team up with
the Democratic Unionist Party of Northern Ireland. The effects of this
election result are currently uncertain; however, the Company will
continue to monitor the newly formed Government's renewable energy
policies.
The General Election campaigns saw a focus on consumer energy costs, but
limited discussion of decarbonisation or energy policy more generally so
it is yet to be seen what direction the Government will take. The
Government's Emissions Reduction Plan which is due to set out how it
intends to meet the targets detailed in the Fifth Carbon Budget, was due
to be released in the first half of 2017, but is now expected prior to
the end of the year. Given the expectation that further renewable
generation will be required to comply with the budget, the Commission
for Energy Regulation may point to future markets or mechanisms to
enable new renewable generating capacity, including solar.
POWER PRICES
Following a winter of relatively high power prices, the spot price has
now returned to GBP42 per MWh as at 30 June 2017 (GBP50 per MWh
December 2016).
The average power price achieved across the portfolio during the
reporting period was GBP40.61 per MWh.
During the period 1 January 2017 to 30 June 2017 there was a downward
movement of c. 5.3% in the medium to long term power price forecast. 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 third party consultants and are updated on a
quarterly basis. Between its IPO in October 2013 and 30 June 2017, the
Company revised its power price forecasts downwards 11 times. The
Investment Manager's forecast for future power prices remains 31.4%
below the level at IPO. The Company's forecasts continue to assume an
increase in power prices in real terms over the medium to long-term of
1.7% per annum (31 December 2016: 1.7%), driven by higher gas and carbon
prices.
During the period, 61% of the Company's operational portfolio revenue
came from the sale of ROCs and other green benefits to an offtaker.
These revenues are directly and explicitly linked to inflation for 20
years from the accreditation date under the ROC regime and subject to
Retail Price Index ("RPI") inflationary increases applied by Ofgem in
April of each year.
The majority of the remaining 39% of revenues derive from electricity
sales which are subject to wholesale electricity price movements.
Electricity prices in the UK are a component of the RPI index basket of
goods and services and as a result present a degree of correlation with
the long term RPI. This direct indexation of revenues derived from ROC
benefits and the degree of inflation linkage of the wholesale
electricity price provides a significant percentage of cash flows
correlated with long-term inflation.
PPAs are entered into between each individual solar power asset and
offtakers in the UK electricity supply market. Under the PPAs, other
than Shotwick, each asset will sell the entirety of the generated
electricity and ROCs to the designated offtaker.
The Company's PPA strategy seeks to optimise revenues from the power
generated, while keeping the flexibility to manage the portfolio
appropriately. As of 30 June 2017, 16 of the 18 assets in the portfolio
had in place a floating rate PPA expiring March 2021, which tracks
market power prices. Wymeswold, which represents 7% of total installed
capacity, has fixed price arrangements in place until Q3 2017. Shotwick
has a short term floating PPA in place whilst metering works are carried
out. Once these works are complete, Shotwick will join the other 16
sites on the long term floating rate PPA expiring in March 2021. The
Company expects c. 50% of power generated from Shotwick to be sold
through a private wire agreement to UPM at a premium to market prices.
The Investment Manager is constantly reassessing conditions in the
electricity market and updating its view on likely future movements. The
Company retains the option to fix the PPAs of its portfolio assets at
any time. As part of the Investment Manager's ongoing efforts to
maximise the commercial performance of the portfolio, a PPA tendering
process across all assets has been undertaken. This process has seen a
significant reduction in fees charged by our offtakers.
FUNDRAISING
In March 2017 the Company announced a Placing Programme relating to the
issue of up to 250 million new Ordinary Shares over the next 12 months.
An oversubscribed Initial Placing raised GBP78.5 million on 29 March
2017.
Date Placing Price Shares Issued (million) Funds Raised
30 June 2016
(cumulative) - 281.8 GBP284.9m
13 September 2016 102.9 pence 28.2 GBP28.9m
Treasury Shares
28 October 2016 103.0 pence 31.0 GBP31.9m
New Shares
29 March 2017 107.8 pence 72.8 New shares GBP78.5m
30 June 2017 - 413.0 GBP424.2m
(cumulative)
GROSS ASSET VALUE ("GAV")
The GAV of the Company is GBP433.4 million as at 30 June 2017. The
reconciliation below shows the GAV as it would be on a consolidated
basis when all external debt at the intermediate holding level is
included. There is no external debt at asset level.
GAV of Company GBP433.40m
Less: Valuation of Investment (GBP376.61m)
Add: Valuation of underlying solar portfolio GBP582.70m
Less: other net assets of subsidiaries (GBP14.23m)
GAV of Company and Subsidiaries GBP625.26m
THIRD PARTY DEBT ARRANGEMENTS
Long Term Facilities
The current long-term facilities at a subsidiary level are shown in the
table below. Macquarie Infrastructure Debt Investment Solutions
("MIDIS") and Abbey National Treasury Services ("Santander") are the
providers of these loans.
Long- Term
Lender Tranche Size Maturity Dates Applicable Rate
Fixed-rate,
fully
MIDIS amortising GBP63m March 2034 3.78%
MIDIS Inflation GBP63m March 2034 RPI index +
linked, fully 1.08%
amortising
Santander Term Loan, fully GBP34m March 2024 LIBOR + 1.70%
amortising
The Term Loan tranche is priced over the London Interbank Offered Rate
("LIBOR") and benefits from an interest rate swap hedging 80% of the
outstanding debt during the term of the loan. At 30 June 2017 the
average cost of long-term debt was 2.39% per annum.
As at 30 June 2017, the total outstanding long-term debt was GBP155.8
million, representing 25% of GAV of the Company and Subsidiaries.
In addition, the terms under which the debt has been secured do not
limit the Company's flexibility and have not caused it to compromise on
any commercial terms that would be potentially disadvantageous. The
Company is fully able to maintain its strategy of retaining exposure to
UK power prices through PPAs that do not require mechanisms such as
fixed prices or price floors.
ACQUISITION FACILITIES
On 23 February 2017, a subsidiary of the Company entered into a new,
short-term revolving credit facility with Santander at a favourable rate
of LIBOR + 2.00%.
Below is a summary of the short term facilities to date:
Short -Term Lenders Size Maturity Dates Applicable rate
Santander GBP40m March 2019 LIBOR + 2.05%
Santander GBP55m February 2020 LIBOR + 2.00%
The applicable rate of 2.00% represents a decrease of five basis points
against the average applicable rate of the revolving facilities
refinanced in April 2016.
The credit facilities provide additional financial flexibility for
future pipeline opportunities. Of the total GBP95.0 million acquisition
facility, GBP67.5 million was repaid by 30 June 2017, leaving GBP27.5
million outstanding. At the 30 June 2017 the all-in annualised cost of
the short term facilities was 1.69%. The Investment Manager expects to
refinance the remaining balance either through future equity raisings or
other long term refinancing arrangement.
As at 30 June 2017, the total outstanding debt, including short term
facilities, was GBP183.3 million, representing 29% of GAV.
DIVIDS
At the time of the IPO, the Company targeted a 6.0 pence annual dividend
per Ordinary Share increasing in line with inflation from 1 January
2014, net of all fees and expenses. Since the IPO, the Company has met
all target dividends. The Company is targeting a full year dividend for
the period ending 31 December 2017 of 6.32 pence.
DIVID TIMETABLE FOR THE PERIOD 1 JANUARY 2017 TO 31 DECEMBER 2017
Dividend Amount Status Payment Date
Interim 1 1.58 pence Approved 25 August 2017
Interim 2 1.58 pence Expected 24 November 2017
Interim 3 1.58 pence Expected February 2018
Interim 4 1.58 pence Expected May 2018
TOTAL 6.32 pence
The first quarterly dividend of 1.58p was approved by the Board on the
12 June 2017 and will be paid on 25 August 2017.
Dividend Timetable 2017 - Interim 1 Date
Ex-dividend Date 10 August 2017
Record Date 11 August 2017
Payment Date 25 August 2017
Dividend Timetable 2017 - Interim 2 Date
Ex-dividend Date 9 November 2017
Record Date 10 November 2017
Payment Date 24 November 2017
The Company remains on target to pay the full dividend for the year.
DIVID COVER
Due to seasonality of cash flows the Investment Manager only provides
dividend cover analysis over a 12 month period, in the Annual Report.
Total dividends of GBP16.4 million were paid in the year to 30 June
2017. Against the relevant net cash flows of the Company and underlying
investments, these dividends were covered 1.34 times when dividends paid
to newly issued equity are excluded.
Only three dividends were paid during the year to June 2017 due to a
change in the dividend timetable. Including the fourth dividend related
to the period, this would have equated to a dividend cover of 1.01 times,
before any financial compensation is included. Including the financial
compensation, the dividend cover is 1.06 times.
ONGOING CHARGES
The ongoing charges ratio for the year to 30 June 2017 is 1.20% (2016:
1.21%). This has been calculated using methodology as typically
recommended by the Association of Investment Companies ("AIC").
Foresight Group LLP charge Asset Management Fees directly to the assets.
These fees are not included within the ongoing charge ratio. These fees
are disclosed on a regular basis and are charged at levels materially
below that of other listed renewable funds.
BASE EROSION AND PROFIT SHIFTING ("BEPS")
Over the last 18 months Foresight has contributed to the Infrastructure
Forum's response to the Treasury's proposed legislation regarding the
OECD's BEPS recommendations.
New rules determining the tax deductibility of corporate interest
expense were due to be included in the Finance Bill 2017. These provided
some clarity and the Investment Manager expects that the portfolio will
be subject to a new Fixed Ratio Rule, which broadly limits the amount of
deductible interest to a level equivalent to 30% of EBITDA. However, due
to the sudden general election the new rules were dropped from the
Finance Bill and are now expected to be introduced in the Autumn. A
further update on the likely impact on the Company will be provided in
the Annual Report once details are confirmed.
Investment Performance
The NAV per share for the Company as at 30 June 2017 increased to 104.6
pence compared to 102.9 pence as at 31 December 2016.
MOVEMENTS IN NAV
A breakdown in the movement of the NAV during the reporting period is
shown in the table below.
NAV
NAV per share
NAV as at 31 Dec 2016 350,769,982 102.9p
Dividend paid (6,413,924) (1.5)p
Equity raise 76,876,750 0.0p
Interest earned 15,923,611 4.2p
Management fee (2,176,511) (0.6)p
Finance costs (3,474,825) (1.0)p
Other cost (incl. Corporation Tax) (3,960,972) (1.0)p
Inflation assumption (998,142) (0.3)p
Acquisitions 10,717,322 3.1p
Valuation date 1,176,653 0.3p
Performance Ratio ("PR") 3,232,543 0.8p
Power curve (18,712,974) (4.9)p
Discount Rate 12,204,409 2.9p
Other movements (2,365,083) (0.3)p
NAV as at 30 June 2017 432,798,841 104.6p
VALUATION OF THE PORTFOLIO
The Investment Manager is responsible for providing fair market
valuations of the Company's underlying assets to the Directors. The
Directors review and approve these valuations following appropriate
challenge and examination. Valuations are undertaken quarterly. A broad
range of assumptions are used in our valuation models. These assumptions
are based on long-term forecasts and are not affected by short-term
fluctuations, be it economic or technical.
The current portfolio consists of non-market traded investments and
valuations are based on a Discounted Cash Flow ("DCF") methodology. This
methodology adheres to both IAS 39 and IFRS 13 accounting standards as
well as International Private Equity and Venture Capital ("IPEV")
Valuation Guidelines.
It is the policy of the Investment Manager to value with reference to
Discounted Cash Flows ("DCF") at the later of commissioning or
completion. The reason for this is partly due to the long periods
between agreeing an acquisition price and financial completion of the
acquisition. Quite often this delay incorporates construction as well as
time spent applying for, and achieving, ROC accreditation upon which the
Company's acquisition of assets is usually contingent. Revenues
generally accrue for the benefit of the purchaser. Revenues accrued do
not form part of the DCF calculation when making a fair and proper
valuation.
The Company's Board reviews the operating and financial assumptions,
including the discount rates, used in the valuation of the Company's
portfolio and approves them based on the recommendation of the
Investment Manager. These assumptions are reviewed as part of the annual
audit by KPMG.
VALUATION SENSITIVITIES
Where possible, assumptions are based on observable market and technical
data. In many cases, such as the forward power prices, professional
independent advisors are used to provide reliable and evidenced
information allowing the Investment Manager to adopt a prudent approach.
We set out the inputs we have ascertained would have a material effect
upon the NAV in note 16 of the financial statements. All sensitivities
are calculated independently of each other.
DIVID PAID
The Company paid dividends of GBP6.4 million during the period 1 January
2017 to 30 June 2017.
EQUITY RAISE
In March 2017 a Share Placing took place, raising net proceeds of
GBP76.9m from new and existing investors.
INTEREST EARNED
On a consolidated basis the Group accrued GBP15.9 million of investment
income during the reporting period.
COSTS
Total costs of GBP9.6 million which include management fees, finance
costs and other costs were incurred by the Group on a consolidated basis
during the period.
INFLATION ASSUMPTIONS
At the end of June 2016 the Investment Manager increased its
medium/long-term inflation assumption from 2.50% to 2.75% this remains
unchanged as at 30 June 2017. This movement represents updates to our
valuation models as a result of changes to published actual inflation
levels.
ACQUISITIONS
During the period the Company made two significant acquisitions,
Shotwick and Sandridge. These acquisitions brought an uplift of GBP10.7
million to the NAV calculation representing the difference between the
acquisition price paid and the current valuation.
VALUATION DATE
This movement represents the impact of moving from one valuation date to
another. Over the life of the asset this movement will reduce the asset
valuation to nil. Short term increases arise from moving towards higher
cash yields (and therefore discounting them less).
PERFORMANCE RATIO
The performance ratio assumptions in the valuation models have
historically been linked to contractually guaranteed performance and the
initial technical due diligence findings at the time of acquisition. The
long term assumptions are adjusted on an ongoing basis as more data
becomes available, recognising the actual performance ratios experienced
across the portfolio on an asset by asset basis. This approach is
applied on a quarterly basis to ensure valuation assumptions better
reflect the actual performance of the sites. The conservative movements
in assumed performance ratios are implemented at a rate that ensures
short term fluctuations do not inflate performance potential. Assumed
performance ratios can move up as well as down.
POWER PRICE
The Company's power price assumptions are formed from a blended average
of the forecasts provided by third party consultants.
Following a winter of relatively high power prices the spot price
returned to GBP42 per MWh at the 30 June 2017. There remains volatility
within the spot market, especially during the early morning and
evenings. As hours of sunlight reach their peak, the portfolio does
marginally benefit from this. The average power price achieved during
the first half of the year was GBP40.61 per MWh.
For the six month period the Manager made downwards revisions in the
long term power price forecast representing an average fall in prices of
5.3%.
The Company's forecasts continue to assume an increase in power prices
in real terms over the medium to long-term of 1.7% per annum (2016:
1.7%).
DISCOUNT RATE
The Company's equity discount rate was reduced by 0.25% to 7.25% to
reflect the current macro-economic environment and the increasing market
value for UK operating solar assets. The Investment Manager believes the
discount rate appropriately reflects current market valuations, the risk
profile of the operational assets that have been acquired, and the total
installed capacity at portfolio level and asset diversification. The
Investment Manager reviews the discount rate on a regular basis to
ensure it remains in line with any changes to the risk profile of the
Company and any changes in the macro-economic environment.
OTHER MOVEMENTS
This includes other factors behind the valuation movement such as
revisions in underlying assumptions regarding operational efficiencies,
such as insurance.
Pipeline AND OUTLOOK
The UK solar sector experienced another period of significant growth
driven by the closure of the Renewable Obligation scheme to new solar
projects in March 2017. The growth in total installed capacity was
predominantly achieved by the commissioning of solar parks of up to 5MW
in capacity and accredited under the 1.2 ROCs regime. This resulted in
the total installed solar capacity in the UK reaching c.12GW, with over
8GW of large scale solar.
Following the closure of the Renewable Obligation scheme the sector will
enter a period of limited regulatory support for new installed capacity
as solar technologies are not expected to receive allocation in the
upcoming CfD auction, based on the information published by BEIS in
relation to the second CfD allocation round.
In addition to the pipeline of 1,2 ROC portfolios commissioned by March
2017, there has been a marked increase in secondary market activity with
over 1GW of operational portfolios available for sale in the market over
the past six months. Market analysis shows these large portfolios are
being held by planned exit investors, including EPC contractors and
panel manufacturers.
The level of activity in the secondary market will continue in the short
and medium term with 1 to 2GW of operational projects expected to be
sold in the next 12 to 18 months. With the scarcity value of UK
operational portfolios increasing the Company will maintain a prudent
approach to acquisitions in the UK secondary market and making its
investment decisions based on NAV accretive projects within the remit of
the Company investment mandate.
As the UK enters a period of limited new regulatory support, global
solar markets continue to expand. In 2016 78 GW of new installed
capacity was commissioned globally, representing the tenth consecutive
year of growth of solar installation rates, resulting in a total global
solar installed capacity in excess of 300GW.
Investment opportunities in markets outside of the UK are expected to
deliver value-accretive growth opportunities while adding further
diversification to the Company's investment portfolio.
Any acquisition in jurisdictions outside of the UK will be priced taking
into account the cost of managing and mitigating currency risk through
hedging strategies where appropriate. New acquisitions will be in line
with the Company's investment policy and expected to deliver
risk-adjusted returns in line with current UK assets.
The Investment Manager is currently reviewing a pipeline of more than
500MW of potential investments in the UK and other international markets
including Western Europe, Australia and the USA, sourced through the
Investment Manager's local presence in each market and existing
relationships with asset managers, contractors and developers that build
solar power plants.
Asset Manager's Report
Portfolio Performance
Total electricity production for the period amounted to 223.5 GWh and
was 8% below expectations, but once compensation is included the
normalised production is equivalent to 1.9% below expectations. This
short term underperformance was largely attributable to specific issues
at a handful of sites. The Company remains confident in long term
production targets.
The Asset Manager is confident that all LDs received to date will more
than compensate the Fund for losses incurred while performing
rectification works. The Company has received c. GBP3 million from EPC
contractors to compensate for lost production across five sites. This
amount was funded by the claim submitted to the EPC contractors. This
amount is not included in the NAV or cashflow analysis.
Overall the Asset Manager is extremely pleased with the progress made in
rectifying known problems and expects production to exceed technical
assumptions in the medium to long term.
The production expectations of the Asset Manager are set at the time of
acquisition and are not adjusted for reporting purposes. The specific
issues identified in the first half of the year, have been resolved
quickly by the Asset Manager and its operators. The production figures
disclosed do not take into account compensation due, or already received,
by the Company. Compensation takes the form of insurance proceeds or
contractual protections provided by EPC contractors in the form of
Liquidated Damages ("LDs"). Insurance proceeds are recognised upon
receipt and LDs will only be recognised once technical advisors confirm
that the plants are no longer suffering from the problems that caused
the LDs to be payable. LDs are payable by EPC contractors based on the
recorded performance of the plants over the first two years of
operations and compensate the owner for extrapolated losses over a 25
year term based on the initial performance.
IRRADIATION
Annual irradiation forecasts are subject to an approximate 4% standard
deviation against long term historical averages across a 12 month
period. This means that annual variation of irradiation is typically
less than 4%, but occasionally can be more. This can be seen in the
table below.
The table below sets out the performance of the portfolio for the
period.
OVERVIEW OF PORTFOLIO PERFORMANCE
Adjusted
Irradiation Production Production Production
Variance (MW hours) Variance Variance*
Atherstone 0.3% 7,306 -0.1% -0.1%
Bournemouth -3.9% 20,853 -1.5% -1.5%
Castle Eaton -1.9% 7,606 -16.0% -3.0%
Copley Farm -1.4% 14,890 -1.3% -1.3%
High Penn -2.6% 3,534 -30.8% -4.2%
Highfields farm -0.4% 4,906 -23.4% -2.6%
Hunters Race 1.3% 5,872 2.1% 2.1%
Kencot Hill -1.5% 19,202 0.2% 0.2%
Landmead 3.8% 23,577 2.7% 2.7%
Membury -3.1% 8,509 -3.1% -3.1%
Paddock Wood 4.4% 5,285 7.4% 7.4%
Pitworthy Farm -8.4% 5,222 -38.4% -1.0%
Port Farms -1.7% 17,999 -1.6% -1.6%
Southam -2.3% 4,960 -4.8% -4.8%
Spriggs Farm -0.8% 5,263 -17.0% -17.0%
Wymeswold -3.0% 16,606 -1.8% -1.8%
Shotwick -2.4% 27,275 -24.4% -2.9%
Sandridge -0.6% 24,625 -5.3% -5.3%
Total 223,490 -8.0% -1.9%
Weighted Average -1.43%
* Adjusted production is calculated by including production
losses covered under insurance or EPC contracts
Shotwick
A transformer failure on 16 March 2017 prevented the site from
generating for a 28 day period. In line with the Asset Manager's
strategy of ensuring essential replacements are readily available, the
requirement for a spare transformer was identified prior to acquisition
and the equipment was already on order at the time of the failure. The
length of the outage was unusual due to the long lead time for the
specific parts. The site now has protections in place, similar to all
other assets, to cover such an incident occurring In future.
Castle Eaton, High Penn, Highfields and Pitworthy
The Asset Manager had previously identified varying degrees of
underperformance across Castle Eaton, High Penn, Highfields and
Pitworthy - the four sites constructed by SunEdison. The reasons behind
the underperformance were quickly identified and the relevant
notifications made to the EPC contractor at the appropriate time. The
Asset Manager remains confident that the decline in performance will be
reversed.
By 1 January 2017 the Investment Manager had appointed Brighter Green
Engineering ("BGE") as O&M contractor for the four assets. Since then
BGE has successfully completed a range of remedial works throughout the
sites. These works have resulted in a significant improvement in
technical performance but, in carrying them out, availability and
production levels have been reduced during the period. Across three of
the sites where works are suitably advanced, the performance ratios have
increase by an average of 2.3% compared to the performance during the
first two years of operations. The Asset Manager expects these works to
continue into the winter, but is confident that damages already received
from the EPC contractor will compensate for the cost of these works and
the lost production over the year.
Spriggs Farm
As disclosed in the 2016 Annual Report, Potential Induced Degradation
("PID") was identified as one of the causes of underperformance at
Spriggs Farm.
PID is a widely acknowledged module defect that, if not resolved, causes
the PV modules to degrade faster than would usually be expected,
reducing their efficiency over time. The effects of PID can be stopped
or reversed (with the EPC contractor required to meet the cost if
identified at an appropriate stage) through the implementation of
site-specific technical solutions.
The Investment Manager has been working closely with the EPC contractor;
remedial works on site have been carried out and are materially
completed. Results are encouraging and show a continuous improvement in
technical performance on a monthly basis.
Spriggs Farm also suffered from transformer failures during the period.
By 30 June 2017, all defective transformers had either been fully
refurbished or replaced, and were operating at 100% availability.
The Asset Manager is now processing a claim against the EPC in relation
to the failures.
SANDRIDGE
On 18 April 2017, approximately 7% of the site was affected by a
localised fire. The damage was repaired and the site returned to full
capacity at the cost of the EPC contractor. The site also suffered from
some short term grid disconnections due to major upgrades of local
infrastructure. The Investment Manager was aware of the upgrades prior
to acquisition and the vendor will compensate the project for lost
revenue related to grid works during 2017 and 2018.
PORTFOLIO OPTIMISATION
During the period the Asset Manager has run a number of concurrent
processes to maximise the free cash being generated by the portfolio. As
well as focusing on increasing the technical efficiency of the sites,
the asset management team has been able to significantly improve the
commercial terms across a number of contracts.
The size of the portfolio, the average MW per site under management and
the scale of the Asset Management operations allows for a cost efficient
structure at asset level at very competitive rates in the UK market.
Power Purchase Agreements
To date, the Company has adopted a PPA strategy that seeks to optimise
revenues from power generated, whilst maintaining the flexibility to
manage a rapidly growing portfolio appropriately.
As at 30 June 2017, 16 out of 18 assets in the portfolio have in place a
floating rate PPA expiring in March 2021. Through such PPAs, the Company
is able to take advantage of wholesale market movements through the
flexibility of being able to fix power prices at any point in time. As a
result, the risk of dividend reductions from significant downward
movements in price is successfully mitigated. It should also be noted
that the PPAs provide the flexibility to incorporate new technologies
such as batteries and storage, which may provide potential upside in the
future.
Maximising Value through the Final Acceptance Certificate ("FAC")
Process
As further assets in the portfolio approach the end of the two year EPC
warranty period in preparation for the issuance of a Final Acceptance
Certificate ("FAC"), Foresight continues to carry out a rigorous
analysis of the site. This aims to identify any possible defects and
ensure construction, planning and all equipment is in-line with
contractual obligations. In addition to a thorough site audit by
Foresight's engineers and a full evaluation of performance data for the
asset, the modules are tested by an accredited laboratory and
independent experts test the high voltage equipment including
transformers and switchgear. If deemed necessary cables are tested for
insulation faults. Through this process, the Asset Manager has become
aware of issues, minor in many cases. Subsequently, the EPC contractor
is notified of any operational underperformance relative to the levels
guaranteed at acquisition, or defects with the plant. Before the FAC is
issued, the Asset Manager negotiates with the EPC contractor for the
remedy of any faults or seeks to enforce the financial settlement agreed
in the EPC contract to fully compensate the Company for any lost
earnings likely to be incurred as a result of underperformance over the
life of the asset.
Through its extensive operating experience, the Asset Manager has
managed the FAC process with numerous EPC contractors and fully utilises
the opportunity presented to support the future value of the assets in
the Company's portfolio and safeguard their long term performance.
Useful Economic Life of Assets
The DCF methodology used to value the assets within the portfolio
assumes a 25-year asset life with no residual value at the end of this
period. This assumption is based upon the market standard lease terms
for the properties on which the Company's solar assets are located and
planning consent periods initially granted by local planning offices.
The Investment Manager believes that this is a sensible approach,
however there are several factors that could justify the incorporation
of residual value within the portfolio valuation including:
-- The useful operating life of the equipment in the portfolio is
anticipated to be, according to independent technical advisers, up to
40 years.
-- All of the assets' connection agreements provide the right to generate
electricity into the grid with no specified expiry date; and
-- Six of the lease agreements in place have the option to extend beyond the
initial consented period to an average of 35 years.
As such, the Asset Manager has begun to explore the option of extending
leases and planning authority across the portfolio. Six sites, which
together represent 32% of installed portfolio capacity, already have in
place extended lease periods and planning authority for periods ranging
from 30 to 40 years from the start of operations. Applying the current
discount rate and extending current model assumptions as well as
incorporating enhanced capital expenditure to a capped life of 35 years
would have an immediate uplift on NAV of 3.2 pence.
For illustration purposes, in addition to incorporating the extensions
mentioned above, if the remaining 12 assets were to be valued on a
35-year basis from connection, the Company's NAV would increase by 10.1
pence. The table below illustrates the impact on NAV should the extended
asset lives be recognised
NAV (using Alternate NAV (recognising extended life where lease Alternate NAV (recognising extended life of all other
current lease and planning already available; assets)
assumptions) 6 assets)
104.6p 107.8p 114.7p
The Investment Manager expects to incorporate lease extensions into the
valuations as and when it is comfortable with the underlying assumptions
relevant to the extended periods of time.
BRIGHTER GREEN ENGINEERING
Brighter Green Engineering has ultimate Shareholders in common with
Foresight Group although they operate as separate entities and share no
common executive personnel. The tender process of O&M contracts for
Foresight's assets remains competitive and these are awarded on merit.
Further to the reduction in cost that the new O&M contracts bring, BGE
offers strong technical expertise and market leading incident response
times. BGE provides a comprehensive scope of work in excess of that
typically offered by competitors.
We expect efficiencies to be secured for the remaining assets in the
portfolio once the existing O&M contractual terms reach either the end
of their two year guaranteed performance period, when applicable, or
final contract term, further reducing costs to the Company.
As at 30 June 2017, Brighter Green Engineering ("BGE") is appointed as
O&M contractor to nine out of 18 assets in the portfolio, which
represent 188MW of total installed capacity.
The Company is renegotiating its O&M arrangements as part of contractual
benchmarking options and expect to conclude the process before year end
resulting in additional savings for the Company.
Principal Risks and Uncertainties
The Directors consider the following as relevant risks and uncertainties
and mitigants to the Company at this time:
-- Risks relating to regulatory changes in the UK electricity market
-- Risks relating to the sale of electricity
-- Risks relating to gearing
-- Risks relating to RPI
-- Risks relating to operation and maintenance contracts
-- Risks relating to the taxation of the Company
More detailed information on the risks and uncertainties affecting the
Company can be found on pages 19-37 of the Company's recent Prospectus
issued on the 3 March 2017 and the Risk Management section in the
Company's latest Full Year Results Report dated 31 December 2016.
Directors
The Directors, who are Non-Executive and, other than Mr Dicks,
independent of the Investment Manager, are responsible for the
determination of the investment policy of the Company, have overall
responsibility for the Company's activities including its investment
activities and for reviewing the performance of the Company's portfolio.
The Directors are as follows:
ALEXANDER OHLSSON (CHAIRMAN)
Mr Ohlsson is Managing Partner for the law firm Carey Olsen in Jersey.
He is recognised as a leading expert in corporate and finance law in
Jersey and is regularly instructed by leading global law firms and
financial institutions. He is the independent chairman of the States of
Jersey's Audit Committee and an Advisory Board member of Jersey Finance,
Jersey's promotional body. He is also a member of the Financial and
Commercial Law Sub-Committee of the Jersey Law Society which reviews as
well as initiates proposals for legislative changes. He was educated at
Victoria College Jersey and at Queens' College, Cambridge, where he
obtained an MA (Hons) in Law. He has also been an Advocate of the Royal
Court of Jersey since 1995.
Mr Ohlsson was appointed as a Non-Executive Director and Chairman on 16
August 2013.
CHRIS AMBLER
Mr Ambler has been the Chief Executive of Jersey Electricity Plc since 1
October 2008. He has experience in a number of senior positions in the
global industrial, energy and materials sectors working for major
corporations including ICI/Zeneca, The BOC Group and Centrica/British
Gas, as well as in strategic consulting roles. He is a Director on other
boards including a Non-Executive Director of Apax Global Alpha Limited,
a listed fund which launched on the London Stock Exchange on 15 June
2015.
Mr Ambler is a Chartered Director, a Chartered Engineer and a Member of
the Institution of Mechanical Engineers. He holds a First Class Honours
Degree from Queens' College Cambridge and an MBA from INSEAD.
Mr Ambler was appointed as a Non-Executive Director on 16 August 2013.
PETER DICKS
Mr Dicks is currently a Director of a number of quoted and unquoted
companies. In addition, he was the Chairman of Foresight VCT plc and
Foresight 2 VCT plc from their launch in 1997 and 2004 respectively
until 2010 and since then he has continued to serve on the Board of the
now merged Foresight VCT plc. He is also on the Board of ICG Enterprise
Trust plc and Mears Group plc. and Chairman of Unicorn AIM VCT plc, and
SVM Emerging Fund.
Mr Dicks was appointed as a Non-Executive Director on 16 August 2013.
Asset Summaries
Wymeswold, Leicestershire
Ownership 100%
ROCs 2.0/1.4
Acquisition Date
November 13/March 15
Solar Panels 142,000
Technology Polycrystalline Silicon
Panel Supplier
Trina Solar; Suntech Power
EPC Party Lark Energy
O&M Counterparty
Brighter Green Engineering
Inverter Supplier LTi REEnery
Grid Operator
Western Power Distribution
Castle Eaton, Wiltshire
Ownership 100%
ROCs 1.6
Acquisition Date June 14
Solar Panels 60,000
Technology Polycrystalline Silicon
Panel Supplier Canadian Solar
EPC Party SunEdison
O&M Counterparty
Brighter Green Engineering
Inverter Supplier Bonfiglioli
Grid Operator
Southern Electric Power
Highfields, Essex
Ownership 100%
ROCs 1.6
Acquisition Date June 14
Solar Panels 38,000
Technology Monocrystalline
Panel Supplier SunEdison
EPC Party SunEdison
O&M Counterparty
Brighter Green Engineering
Inverter Supplier Ingeteam
Grid Operator
UK Power Networks
High Penn, Wiltshire
Ownership 100%
ROCs 1.6
Acquisition Date June 14
Solar Panels 30,000
Technology Monocrystalline
Panel Supplier SunEdison
EPC Party SunEdison
O&M Counterparty
Brighter Green Engineering
Inverter Supplier Bonfiglioli
Grid Operator
SSE Power Distribution
UK Power Networks
Pitworthy, North Devon
Ownership 100%
ROCs 1.4
Acquisition Date June 14
Solar Panels 48,000
Technology Monocrystalline
Panel Supplier SunEdison
EPC Party SunEdison
O&M Counterparty
Brighter Green Engineering
Inverter Supplier Bonfiglioli
Grid Operator
Western Power Distribution
Hunters Race, West Sussex
Ownership 100%
ROCs 1.4
Acquisition Date September 14
Solar Panels 41,000
Technology Polycrystalline Silicon
Panel Supplier Hareon Solar
EPC Party Hareon Solar
O&M Counterparty
Brighter Green Engineering
Inverter Supplier Power One
Grid Operator
SSE Power Distribution
Spriggs Farm, Essex
Ownership 100%
ROCs 1.6
Acquisition Date November 14
Solar Panels 50,000
Technology Polycrystalline Silicon
Panel Supplier Talesun
EPC Party Bester Generation
O&M Counterparty
Brighter Green Engineering
Inverter Supplier Green Power Tech
Grid Operator
UK Power Networks
Bournemouth, Dorset
Ownership 100%
ROCs 1.4
Acquisition Date December 14
Solar Panels 146,000
Technology Polycrystalline Silicon
Panel Supplier REC
EPC Party Goldbeck
O&M Counterparty
Brighter Green Engineering
Inverter Supplier SMA
Grid Operator
SSE Power Distribution
Landmead, Oxfordshire
Ownership 100%
ROCs 1.4
Acquisition Date December 14
Solar Panels 483,000
Technology Thin film
Panel Supplier First Solar
EPC Party Belectric
O&M Counterparty Belectric
Inverter Supplier
GE Power Conversion
Grid Operator
SSE Power Distribution
Kencot, Oxfordshire
Ownership 100%
ROCs 1.4
Acquisition Date March 15
Solar Panels 144,000
Technology Polycrystalline Silicon
Panel Supplier Astronergy
EPC Party Conergy
O&M Counterparty
Brighter Green Engineering
Inverter Supplier SMA
Grid Operator
Southern Electric Power
Copley, Lincolnshire
Ownership 100%
ROCs 1.3
Acquisition Date June 15
Solar Panels 115,200
Technology Polycrystalline Silicon
Panel Supplier Renesola
EPC Party Cofely Fabricom N.V./S.A
O&M Counterparty
Cofely Fabricom N.V./S.A
Inverter Supplier SMA
Grid Operator
Western Power Distribution
Atherstone, Warwickshire
Ownership 100%
ROCs 1.4
Acquisition Date July 15
Solar Panels 154,200
Technology Thin film
Panel Supplier First Solar
EPC Party Belectric
O&M Counterparty Belectric
Inverter Supplier SMA
Grid Operator
Western Power Distribution
Paddock Wood, Kent
Ownership 100%
ROCs 1.4
Acquisition Date July 15
Solar Panels 97,200
Technology Thin film
Panel Supplier First Solar
EPC Party Belectric
O&M Counterparty Belectric
Inverter Supplier SMA
Grid Operator
UK Power Networks
Southam, Warwickshire
Ownership 100%
ROCs 1.4
Acquisition Date July 15
Solar Panels 103,350
Technology Thin film
Panel Supplier First Solar
EPC Party Belectric
O&M Counterparty Belectric
Inverter Supplier SMA
Grid Operator
Western Power Distribution
Port Farm, Wiltshire
Ownership 100%
ROCs 1.4
Acquisition Date August 15
Solar Panels 135,768
Technology Polycrystalline Silicon
Panel Supplier ReneSola
EPC Party Renesola UK Limited
O&M Counterparty
Renesola UK Limited
Inverter Supplier Schneider Electric
Grid Operator
SSE
Membury, Berkshire
Ownership 100%
ROCs 1.4
Acquisition Date September 15
Solar Panels 63,288
Technology Polycrystalline Silicon
Panel Supplier ReneSola
EPC Party Renesola UK Limited
O&M Counterparty
Renesola UK Limited
Inverter Supplier ABB
Grid Operator
SSE
Shotwick, Flintshire
Ownership 100%
ROCs 1.3
Acquisition Date February 17
Solar Panels 227,728
Technology Polycrystalline Silicon
Panel Supplier Jetion
EPC Party China Triumph International Engineering
Corporation ("CTIEC")
O&M Counterparty CTIEC
Inverter Supplier SMA
Grid Operator
Scottish Power
Sandridge, Wiltshire
Ownership 100%
ROCs 1.3
Acquisition Date February 17
Solar Panels 191,760
Technology Polycrystalline Silicon
Panel Supplier
Canadian Solar Inc: S-Energy
EPC Party Goldbeck
O&M Counterparty Goldbeck
Inverter Supplier Schneider Electric
Grid Operator
SSE
Statement of Directors' Responsibilities
For the period 1 January 2017 to 30 June 2017
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 2017.
The Directors confirm to the best of their knowledge that:
(a) the summarised set of financial statements has been
prepared in accordance with the pronouncement on interim reporting
issued by the Accounting Standards Board;
(b) the Unaudited Half-Yearly Financial Report for the six
months ended 30 June 2017 includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first
six months of the year and a description of principal risks and
uncertainties that the Company faces for the remaining six months of the
year);
(c) the summarised set of financial statements give a true and
fair view of the assets, liabilities, financial position and profit or
loss of the Company as required by DTR 4.2.4R; and
(d) the interim management report includes a fair review of
the information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
For and behalf of the Board
Alexander Ohlsson
Chairman
15 August 2017
Statement of Comprehensive Income
For the period 1 January 2017 to 30 June 2017
Unaudited
Unaudited Period 1 January 2017 Period
to 30 June 2017 Unaudited Period 1 January 2016 to 30 June 2016 (Restated) 1 January 2016 to 31 December 2016
Notes GBP'000 GBP'000 GBP'000
Revenue
Interest income 4 17,366 14,253 29,462
Gain / (Loss) on investments at fair value through
profit or loss 14 (4,222) (3,254) 4,775
13,144 10,999 34,237
Expenditure
Management fees 5 (1,306) (1,396) (3,054)
Administration and accountancy expenses 6 (134) (75) (228)
Directors' fees 7 (73) (76) (140)
Other expenses 8 (162) (161) (76)
Total expenditure (1,675) (1,708) (3,498)
Profit before tax for the year 11,469 9,291 30,739
Taxation - - -
Profit and total comprehensive income for the year 11,469 9,291 30,739
Earnings per Ordinary Share (pence per Share) 9 3.04 3.30 10.38
All items above arise from continuing operations, there have been no
discontinued operations during the year.
The accompanying notes form an integral part of these Financial
Statements.
Statement of Financial Position
As at 30 June 2017
Unaudited Unaudited
30 June 30 June 2016 Unaudited
2017 (Restated) 31 December 2016
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investments held at fair
value through profit or
loss 14 372,092 254,905 273,614
Total non-current assets 372,092 254,905 273,614
Current assets
Interest receivable 10 50,391 18,888 33,044
Trade and other
receivables 11 5,513 4,128 4,847
Cash and cash equivalents 12 5,401 2,871 39,381
Total current assets 61,305 25,887 77,272
Total assets 433,397 280,792 350,886
Equity
Retained earnings 16,822 343 11,767
Stated capital 17 415,977 279,403 339,003
Total equity 432,799 279,746 350,770
Liabilities
Current liabilities
Trade and other payables 13 598 1,046 116
Total current liabilities 598 1,046 116
Total liabilities 598 1,046 116
Total equity and
liabilities 433,397 280,792 350,886
Net Asset Value per
Ordinary Share 18 104.59 99.27 102.88
The Financial Statements were approved by the Board of Directors and
signed on its behalf on 15 August 2017 by:
Alexander Ohlsson
Chairman
The accompanying notes form an integral part of these Financial
Statements.
Statement of Changes in Equity
For the period 1 January 2017 to 30 June 2017 (unaudited)
Stated Capital Retained Earnings Total
Notes GBP'000 GBP'000 GBP'000
Balance as at 1 January
2017 339,003 11,767 350,770
Total comprehensive income
for the period: - 11,469 11,469
Profit for the period
Transactions with owners,
recognised directly in
equity:
Dividends paid in the
period 21 - (6,414) (6,414)
Issue of Ordinary Shares 17 78,497 - 78,497
Issue costs 17 (1,523) - (1,523)
Balance as at 30 June 2017 415,977 16,822 432,799
For the period 1 January 2016 to 30 June 2016 (Restated):
Stated Capital Retained Earnings Total
Notes GBP'000 GBP'000 GBP'000
Balance as at 1 January
2016: 279,403 (297) 279,106
Total comprehensive income
for the period:
Profit for the period - 9,291 9,291
Transactions with owners,
recognised directly in
equity:
Dividends paid in the
period 21 - (8,651) (8,651)
Issue of Ordinary Shares 17 - - -
Issue costs 17 - - -
Balance as at 30 June 2016 279,403 343 279,746
For the period 1 January 2016 to 31 December 2016 (unaudited):
Stated Capital Retained Earnings Total
Notes GBP'000 GBP'000 GBP'000
Balance as at 1 January
2016: 279,403 (297) 279,106
Total comprehensive income
for the year:
Profit for the year - 30,739 30,739
Transactions with owners,
recognised directly in
equity:
Dividends paid in the year 21 - (18,675) (18,675)
Issue of Ordinary Shares 17 60,781 - 60,781
Issue costs 17 (1,181) - (1,181)
Balance as at 31 December
2016 339,003 11,767 350,770
The accompanying notes form an integral part of these Financial
Statements.
Statement of Cash Flows
For the period 1 January 2017 to 30 June 2017
Unaudited
Period
1 January 2016
to 31 December
Unaudited Period 1 January 2017 to 30 June 2017 Unaudited Period 1 January 2016 to 30 June 2016 (Restated) 2016
GBP'000 GBP'000 GBP'000
Profit for the year before tax from continuing
operations 11,469 9,291 30,739
Adjustments for:
Unrealised loss/(gain) on investments 4,222 3,254 (4,775)
Investment income (17,366) (14,253) (29,462)
Operating cash flows (1,675) (1,708) (3,498)
(Increase)/decrease in trade and other receivables (666) 8,024 7,305
Decrease/(increase) in trade and other payables 482 770 (160)
Net cash (outflow)/inflow from operating
activities (1,859) 7,086 3,647
Investing activities
Increase in loan notes to subsidiary - (34,000) (34,000)
(Increase)/decrease in shareholder loan to/from
subsidiary (102,700) 25,501 14,821
Investment income received 19 10 1,064
Net cash outflow from investing activities (102,681) (8,489) (18,115)
Financing activities
Dividends paid (6,414) (8,651) (18,675)
Issue costs paid (1,523) - (1,181)
Proceeds from issue of shares 78,497 - 60,781
Net cash inflow/(outflow) from financing
activities 70,560 (8,651) 40,925
Net (decrease)/increase in cash and cash
equivalents (33,980) (10,054) 26,457
Cash and cash equivalents at the beginning of the
period 39,381 12,925 12,924
Cash and cash equivalents at the end of the period 5,401 2,871 39,381
The accompanying notes form an integral part of these Financial
Statements.
Notes to the Financial Statements
For the year ended 1 January 2017
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"). Up to 31 March 2016, UK Hold Co invested in further
holding companies (the"SPVs") which then invested in the underlying
investments. On 11 January 2016, UK Hold Co incorporated a subsidiary,
FS Holdco Limited ("FS Holdco"). On 31 March 2016, UK Hold Co
transferred all equity investments and related shareholder loans in the
SPVs to FS Holdco in return for 16 ordinary shares issued by FS Holdco
Limited and a loan receivable equal to the fair value of the investments
transferred on 31 March 2016. FS Holdco 2 Limited ("FS Holdco 2") was
incorporated on 1 December 2016. FS Debtco Limited ("FS Debtco") was
incorporated on 2 December 2016. FS Holdco 2 is a subsidiary of UK Hold
Co and FS Debtco is a subsidiary of FS Holdco 2. The principal activity
of the Company, UK Hold Co, FS Holdco, FS Holdco 2 and FS Debtco
(together"the Group") is investing in operational UK ground based solar
power plants.
1. Summary of significant accounting policies
2.1. Basis of presentation
The Unaudited Condensed Interim Financial Statements (the"Interim
Financial Statements") for the period 1 January 2017 to 30 June 2017
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 2016.
These are not statutory accounts in accordance with Article 105 of the
Companies Law (Jersey) 1991, as amended and the financial information
for the period ended 30 June 2017 and 30 June 2016 has been neither
audited nor formally reviewed. Statutory accounts in respect of the
period to 31 December 2016 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 2016 have been reported on by the Company's auditors or
delivered to the Registrar of Companies.
For the period ended 30 June 2016 the Company consolidated its holding
in the UK Hold Co (including UK Hold Co's investments in the SPVs).
Further amendments to IFRS 10 effective 1 January 2016 were subsequently
implemented and have resulted in an accounting policy change in relation
to consolidation of subsidiaries. These changes are explained in note
2.3 Changes in Accounting Policy and note 2.4 Consolidation.
2.2. Going concern
The Directors have considered the Company's cash flow projections for a
period of no less than twelve months from the date of approval of these
Financial Statements together with the Company's borrowing facilities.
These projections show that the Company will be able to meet its
liabilities as they fall due.
The Directors have therefore prepared the Financial Statements on a
going concern basis.
2.3. Changes in accounting policies and disclosures
Changes in accounting policy
Amendments to IFRS 10, 'Consolidated Financial Statements' and IAS 28,
'Investments in Associates', or 'Investment entities' became effective
for accounting periods commencing on or after 1 January 2016 was applied
for the first time in the annual accounts for the year ended 31 December
2016.
The amendments to IFRS 10 confirm that an investment entity should
consolidate a subsidiary which is not an investment entity and whose
main purpose and activity is to provide services in support of the
investment entity's investment activities. However, the amendments
clarify that if the subsidiary is itself an investment entity, the
investment entity parent should measure its investment in the subsidiary
at fair value through profit or loss. This approach is required
regardless of whether the subsidiary provides investment-related
services to the parent or to third parties. This means that the Company
has to value its holding in UK Hold Co at fair value through profit or
loss rather than consolidating its holding in UK Hold Co.
In the 31 December 2016 Financial Statements the Company restated its
comparative figures for the year ended 31 December 2015 to no longer
consolidate its holding in UK Hold Co, but rather value its holding at
fair value through profit or loss. This accounting policy change was not
applied in the 30 June 2016 Interim Report and therefore the 30 June
2016 comparatives have been restated to implemented this change
retrospectively.
These changes have affected the Statement of Comprehensive Income, the
Statement of Financial Position, the Statement of Changes in Equity,
Statement of Cash Flows and the accompanying notes.
New standards, interpretations and amendments adopted by the Company
The accounting policies adopted in the preparation of the interim
financial statements are consistent with those followed in the
preparation of the Company's annual financial statements for the year
ended 31 December 2016. The Company has not early adopted any other
standard, interpretation or amendment that has been issued but is not
yet effective.
New and revised IFRSs in issue but not yet effective
At the date of authorisation of these Financial Statements, the
following standards and interpretations, which have not been applied in
these Financial Statements and which are applicable to the Company, were
in issue but not yet effective:
-- IFRS 15, 'Revenue from Contracts with Customers'. Effective for
accounting periods commencing on or after 1 January 2018.
-- IFRS 9, 'Financial Instruments - Classification and Measurement'.
Effective for accounting periods commencing on or after 1 January 2018.
-- IFRS 16, 'Leases'. Effective for accounting periods commencing on or
after 1 January 2019 (Endorsed by the EU).
These standards and interpretations will be adopted when they become
effective. The directors do not expect that the adoption of the
Standards listed above will have a material impact on the financial
statements in future periods, except that IFRS 9 may impact both the
measurement and disclosures of financial instruments and IFRS 15 may
have an impact on revenue recognition and related disclosures. Beyond
the information above, it is not practicable to provide a reasonable
estimate of the effects of IFRS 9 and IFRS 15 until a detailed review
has been completed.
2.4. Consolidation
Subsidiaries
All 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.
Under IFRS 10 "Consolidated Financial Statements", 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 at fair value through profit or loss. The directors
deem that the Company is an investment entity and therefore the Company
does not consolidate any of its subsidiaries but carries them at fair
value through profit or loss.
The defined criteria of an 'investment entity' are as follows:
-- It holds more than one investment;
-- It has more than one investor;
-- It has investors that are not related parties to the entity; and
-- It has ownership interests in the form of equity or similar interests.
However, the absence of one or more of these characteristics does not
prevent the entity from qualifying as an 'investment entity', provided
all other characteristics are met and the entity otherwise meets the
definition of an 'investment entity':
-- It obtains funds from one or more investors for the purpose of providing
those investor(s) with professional investment management services;
-- It commits to its investor(s) that its business purpose is to invest
funds solely for returns from capital appreciation, investment income or
both; and
-- It measures and evaluates the performance of substantially all of its
investments on a fair value basis.
The Company does not meet all the defined criteria of an 'investment
entity' as the Company only has one investment. However, the Directors
deem that the Company is nevertheless an 'investment entity' as the
remaining requirements has been met and, through UK Hold Co, FS Holdco
and FS Holdco 2, there is a diverse investment portfolio which will fill
the criteria of having more than one investment. The Company
consolidated its holding in UK Hold Co for the year ended 31 December
2015 as UK Hold Co provides investment related services to the Company
and was viewed as being simply an extension of the investment entity's
investing activities. However as a result of the amendments to IFRS 10
effective 1 January 2016, intermediate investment entities are not
permitted to be consolidated and must be held at fair value through
profit or loss. The Company therefore restated its comparative figures
for the period ended 30 June 2016 and 31 December 2015 to no longer
consolidate its holding in the UK Hold Co, but rather value its holding
at fair value through profit or loss. These changes have affected the
Statement of Comprehensive Income, the Statement of Financial Position,
the Statement of Changes in Equity, Statement of Cash Flows and its
accompanying notes.
UK Hold Co does not meet all the defined criteria of an"investment
entity" as it is 100% owned by the Company. However, the Directors deem
that UK Hold Co is nevertheless an intermediate investment entity as
through FS Holdco and FS Holdco 2, there is a diverse investment
portfolio which will fill the criteria of having more than one
investment and, the Company that holds 100% of share capital has a
number of investors.
FS Holdco and FS Holdco 2 do not meet all the defined criteria of an
'investment entity' as they are 100% owned by UK Hold Co. However, the
Directors deem that the companies are nevertheless 'investment entities'
as the remaining requirements have been met and the Company that holds
100% of the share capital of UK Hold Co has a number of investors.
Therefore, the Company meets the requirements of an 'investment entity'.
The Company accounts for its subsidiary at fair value through profit or
loss in accordance with IAS 39"Financial Statements: Recognition and
Measurement". The financial asset at fair value through profit or loss
carried in the Statement of Financial Position represents the Company's
investments in UK Hold Co. See note 14 and 16 for more detail on the
investments held at fair value through profit or loss.
As the UK Hold Co is no longer consolidated, its investments (plus their
underlying investments) are no longer separately presented at fair value
through profit or loss in the Company's accounts. However accounting
standards require that if an investment entity is the parent of another
investment entity, the parent shall also provide the additional
disclosures required by IFRS 12 interest in other entities. These
disclosures are set out in notes 15 and 16.
1. Critical accounting estimates and judgements
Disclosure is required of judgements and estimates made by management in
applying the accounting policies that have a significant effect on the
financial statements. The Company makes estimates and judgements
concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. Revisions to
accounting estimates are recognised in the year in which the estimate is
revised if the revision only affects that year, or in the year of the
revision and future years if the revision affects both current and
future years. The estimates and judgements that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are addressed below:
3.1. Fair value of underlying investments
The fair value of the underlying investments held by the Company's
subsidiaries, which impact the value of the company's subsidiaries, are
determined by using valuation techniques. The Directors base 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 ("IPEVC") Valuation Guidelines, using
unlevered Discounted Cash Flow principles (unless a more appropriate
methodology is applied). As described more fully in note 16, valuations
such as these entail assumptions about solar irradiance, power prices,
technological performance, discount rate, operating costs and inflation
over a 25 year period. It is in the opinion of the Investment Manager
that the IPEVC valuation methodology used in deriving a fair value is in
accordance with the fair value requirements of IAS 39.
The fair value of UK Hold Co is made up of the fair value of its net
assets. In the Director's opinion, this value represents the fair value
of the investments at the valuation date as all available information is
used in the valuation process. UK Hold Co has two direct subsidiary FS
Holdco and FS Holdco 2 and these investments are fair valued using the
FS Holdco and FS Holdco 2's net asset value as reported at period end.
The fair value of the underlying investments held by FS Holdco and FS
Holdco 2's subsidiaries are determined by using valuation techniques.
The Directors base the fair value of the investments based on
information received from the Investment Manager.
3.2. Determination of investment entities
The Directors of the Company have determined that it meets the
definition of an Investment Entity as per IFRS 10. Details of this
judgement is disclosed in note 2.4 Consolidation.
1. Interest income
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Bank interest income 19 10 13
Loan interest income 17,347 14,243 29,449
17,366 14,253 29,462
Loan interest comprises interest on loan notes and interest on
shareholder loans.
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 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. Total
interest of GBP15,549,068 was accrued during the period (1 January 2016
to 30 June 2016: GBP10,196,236, 1 January 2016 to 31 December 2016:
GBP27,314,252), GBP42,863,304 was receivable at period end (1 January
2016 to 30 June 2016: GBP13,791,052, 1 January 2016 to 31 December 2016:
GBP27,314,252). The loan notes balance at period end on which interest
is charged is GBP250,000,000 (1 January 2016 to 30 June 2016:
GBP250,000,000, 1 January 2016 to 31 December 2016: 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 for the cost of investments is more than the
total loan notes issued by the Company to UK Hold Co. Interest was
receivable at 9% per annum (reduced to 2% from 1 April 2017) and is
repayable in full on demand. Total interest of GBP1,797,936 was accrued
during the period (1 January 2016 to 30 June 2016: GBP4,046,291, 1
January 2016 to 31 December 2016: GBP2,135,009). GBP7,527,776 was
receivable at period end (1 January 2016 to 30 June 2016: GBP5,097,230,
1 January 2016 to 31 December 2016: GBP5,730,000). The shareholder loan
balance at period end is GBP126,609,725 (1 January 2016 to 30 June 2016:
GBP13,229,995, 1 January 2016 to 31 December 2016: GBP23,910,000). These
loans form part of the fair value of the investments as per note 14.
1. Management fees
The Investment Manager of the Company, Foresight Group CI Limited,
receives an annual fee of 1% of the Net Asset Value ("NAV") of the
Company. This is payable quarterly in arrears and is calculated based on
the published quarterly NAV. For the period ended 30 June 2017, the
Investment Manager was entitled to a management fee of GBP1,306,418 (1
January 2016 to 30 June 2016: GBP1,395,586, 1 January 2016 to 31
December 2016: GBP3,053,551) of which GBP498,574 was outstanding as at
30 June 2017 (1 January 2016 to 30 June 2016: GBP699,064, 1 January 2016
to 31 December 2016: GBP17,066).
1. 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 (2016: GBP100,000) payable quarterly
in arrears. For the period ended 30 June 2017, total administration and
accountancy fees were GBP133,534 (1 January 2016 to 30 June 2016:
GBP74,985, 1 January 2016 to 31 December 2016: GBP227,452) of which
GBP39,000 was outstanding as at 30 June 2017 (1 January 2016 to 30 June
2016: GBP58,985, 1 January 2016 to 31 December 2016: GBP50,002).
1. Directors' fees
Remuneration of the Directors of the Company is currently paid at a
total rate of GBP73,000 (1 January 2016 to 30 June 2016: GBP76,000, 1
January 2016 to 31 December 2016: GBP140,000). All of the Directors are
Non-Executive Directors. Remuneration paid for the period ended 30 June
2017 is detailed below:
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Peter Dicks 18 19 35
Alexander Ohlsson 31 32 60
Christopher Ambler 24 25 45
73 76 140
1. Other Expenses
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Annual fees 17 17 32
Audit fees 6 18 17
Legal and professional
fees 139 126 27
162 161 76
1. Earnings per Ordinary share - basic and diluted
The basic and diluted profits per Ordinary Share for the Company are
based on the profit for the period of GBP11,469,047 (1 January 2016 to
30 June 2016: GBP9,291,019, 1 January 2016 to 31 December 2016:
GBP30,738,374) and on 377,780,949 (1 January 2016 to 30 June 2016:
281,803,232, 1 January 2016 to 31 December 2016: 296,123,500) Ordinary
Shares, being the weighted average number of shares in issue during the
period.
1. Interest receivable
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Interest receivable on
loan notes 42,863 13,791 27,314
Interest receivable on
shareholder loan 7,528 5,097 5,730
50,391 18,888 33,044
1. Trade and other receivables
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Prepaid expenses 14 34 -
Amounts due from
subsidiaries 4,694 4,094 4,694
Other receivables 805 - 153
5,513 4,128 4,847
1. Cash and cash equivalents
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Cash at bank 5,401 2,871 39,381
5,401 2,871 39,381
1. Trade and other payables
30 June
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Accrued expenses 598 1,046 116
598 1,046 116
1. 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
2017 30 June 2016 (Restated) 31 December 2016
GBP'000 GBP'000 GBP'000
Investment in UK
Hold Co Equity - - -
Loans 372,092 254,905 273,614
372,092 254,905 273,614
Book cost as at 1 January 273,909 254,730 254,730
Opening investment
holding (losses)/gains (295) (5,070) (5,070)
Valuation as at 1 January 273,614 249,660 249,660
Movements during
the period
Purchase at cost 102,700 34,000 34,000
Disposal proceeds - (25,501) (14,821)
Investment holding
(losses)/gains (4,222) (3,254) 4,775
Valuation as at 30 June/
31 December 372,092 254,905 273,614
Book cost as at 30 June/
31 December 376,609 263,229 273,909
Closing investment
holding (losses)/gains (4,517) (8,234) (295)
372,092 254,905 273,614
The Company has one investment in Foresight Solar (UK Hold Co) Limited
("UK Hold Co"). This investment consists of both debt and equity 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 two investments in FS Holdco Limited ("FS
Holdco") and FS Holdco 2 Limited ("FS Holdco 2"). These investments also
consists of both debt and equity and are not quoted in an active market.
Accordingly, the investments in FS Holdco and FS Holdco 2 have been
valued using their net assets.
In turn, FS Holdco and FS Holdco 2's investment portfolio consists of
unquoted investments in solar projects, the valuations of which are
based on a discounted cash flow methodology (as set out in note 16).
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:
(a) Level 1 - Quoted (unadjusted) market prices in active markets for
identical assets or liabilities;
(b) Level 2 - Valuation techniques for which the lowest level input
that is significant to the fair value measurement is directly or
indirectly observable; and
(c) Level 3 - Valuation techniques for which the lowest level input
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 year.
As at 30 June 2017:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Unquoted investment - - 372,092 372,092
- - 372,092 372,092
As at 30 June 2016 (Restated):
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Unquoted investment - - 254,905 254,905
- - 254,905 254,905
As at 31 December 2016:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Unquoted investment - - 273,614 273,614
- - 273,614 273,614
Sensitivity Analysis
Due to the nature of the Group structure and the underlying valuation
basis of UK Hold Co, FS Holdco, FS Holdco 2 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
and FS Holdco 2 which is discussed further in note 16.
1. Related undertakings
Details of the undertakings which the unconsolidated subsidiaries held
as at 30 June 2017 are listed below:
Direct or Proportion
indirect Country of Principal of shares and voting rights
Name holding incorporation activity held
Foresight Solar
(UK Hold Co)
Limited ("UK Hold Holding
Co") Direct UK Company 100%
FS Holdco Limited
("FS Holdco") Indirect UK Subsidiary 100%
FS Holdco 2
Limited ("FS
Holdco 2") Indirect UK Subsidiary 100%
FS Debtco Limited
("FS Debtco") Indirect UK Subsidiary 100%
FS Wymeswold
Limited Indirect UK SPV 100%
FS Castle Eaton
Limited Indirect UK SPV 100%
FS Pitworthy
Limited Indirect UK SPV 100%
FS Highfields
Limited Indirect UK SPV 100%
FS High Penn
Limited Indirect UK SPV 100%
FS Hunter's Race
Limited Indirect UK SPV 100%
FS Spriggs Limited Indirect UK SPV 100%
FS Bournemouth
Limited Indirect UK SPV 100%
FS Landmead
Limited Indirect UK SPV 100%
FS Kencot Limited Indirect UK SPV 100%
FS Copley Limited Indirect UK SPV 100%
FS Port Farms
Solar Limited Indirect UK SPV 100%
FS Membury Limited Indirect UK SPV 100%
FS Southam Solar
Limited Indirect UK SPV 100%
FS Atherstone
Solar Limited Indirect UK SPV 100%
FS Paddock Wood
Solar Farm
Limited Indirect UK SPV 100%
Atherstone Hold Co
Limited Indirect UK SPV 100%
Southam Hold Co
Limited Indirect UK SPV 100%
Paddock Wood Hold
Co Limited Indirect UK SPV 100%
Acquisition Co 1 Indirect UK SPV 100%
Acquisition Co 2 Indirect UK SPV 100%
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%
Hunter's Race
Solar Farm
Limited
("Hunter's
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 Indirect UK Investment 100%
Sandridge Solar
Power Limited Indirect UK Investment 100%
Period ended 30 June 2017
The following table represents the fair values of the investments held
by FS Holdco Limited as required by IFRS12.
Cost at 1 January 2017 Additions/ (Disposals) Cost as at 30 June 2017 Unrealised gain/(loss) as at 1 January 2017 Movement on unrealised gain/(loss) Unrealised gain/(loss) as at 30 June 2017 Fair value as at 30 June 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Wymeswold 48,590 - 48,590 1,510 (100) 1,410 50,000
Castle Eaton 21,630 - 21,630 270 (600) (330) 21,300
Pitworthy 18,210 - 18,210 90 (500) (410) 17,800
Highfields 14,300 - 14,300 700 (400) 300 14,600
High Penn 11,310 - 11,310 690 (300) 390 11,700
Hunter's
Race 13,160 - 13,160 340 (100) 240 13,400
Spriggs 14,580 - 14,580 220 (200) 20 14,600
Bournemouth 50,060 - 50,060 1,240 (1,200) 40 50,100
Landmead 51,580 - 51,580 2,520 (1,500) 1,020 52,600
Kencot 47,210 - 47,210 1,790 (600) 1,190 48,400
Copley 35,670 - 35,670 2,330 (500) 1,830 37,500
Paddock Wood 10,621 - 10,621 879 (100) 779 11,400
Atherstone 16,004 - 16,004 596 (300) 296 16,300
Southam 11,145 - 11,145 655 (100) 555 11,700
Port Farms 44,215 - 44,215 1,785 (1,200) 585 44,800
Membury 21,160 - 21,160 740 (300) 440 21,600
429,445 - 429,445 16,355 (8,000) 8,355 437,800
Period ended 30 June 2017
The following table represents the fair values of the investments held
by FS Holdco 2 Limited as required by IFRS12.
Cost at acquisition Additions/ (Disposals) Cost as at 30 June 2017 Unrealised gain/(loss) as at acquisition Movement on unrealised gain/(loss) Unrealised gain/(loss) as at 30 June 2017 Fair value as at 30 June 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Shotwick
Solar 75,517 - 75,517 - 11,083 11,083 86,600
Sandridge
Solar
Power 57,748 - 57,748 - 552 552 58,300
133,265 - 133,265 - 11,635 11,635 144,900
FS Holdco 2 commenced trading during the period and therefore no
comparatives are shown.
Year ended 30 June 2016 (Restated)
The following table represents the fair values of the investments held
by FS Holdco Limited as required by IFRS12.
Cost at 1 January 2016 Additions/ (Disposals) Cost as at 30 June 2016 Unrealised gain/(loss) as at 1 January 2016 Movement on unrealised gain/(loss) Unrealised gain/(loss) as at 30 June 2016 Fair value as at 30 June 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Wymeswold 49,090 (500) 48,590 - 440 440 49,030
Castle Eaton 21,630 - 21,630 - 58 58 21,688
Pitworthy 18,210 - 18,210 - (432) (432) 17,778
Highfields 14,300 - 14,300 - 292 292 14,592
High Penn 11,310 - 11,310 - 149 149 11,459
Hunter's
Race 13,160 - 13,160 - 6 6 13,166
Spriggs 14,580 - 14,580 - (88) (88) 14,492
Bournemouth 50,060 - 50,060 - 68 68 50,128
Landmead 51,580 - 51,580 - 1,292 1,292 52,872
Kencot 47,210 - 47,210 - 413 413 47,623
Copley 35,670 - 35,670 - 95 95 35,765
Paddock Wood 6,190 - 6,190 - 336 336 6,526
Atherstone 12,520 - 12,520 - 276 276 12,796
Southam 7,780 - 7,780 - 209 209 7,989
Port Farms 44,720 (505) 44,215 - 872 872 45,087
Membury 21,160 - 21,160 - (86) (86) 21,074
419,170 (10,005) 418,165 - 3,900 3,900 422,065
Year ended 31 December 2016
The following table represents the fair values of the investments held
by FS Holdco Limited as required by IFRS12.
Cost as
at
Cost at 1 January 2016 Additions/ (Disposals) 31 December 2016 Unrealised gain/(loss) as at 1 January 2016 Movement on unrealised gain/(loss) Unrealised gain/(loss) as at 31 December 2016 Fair value as at 31 December 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Wymeswold 49,090 (500) 48,590 - 1,510 1,510 50,100
Castle Eaton 21,630 - 21,630 - 270 270 21,900
Pitworthy 18,210 - 18,210 - 90 90 18,300
Highfields 14,300 - 14,300 - 700 700 15,000
High Penn 11,310 - 11,310 - 690 690 12,000
Hunter's
Race 13,160 - 13,160 - 340 340 13,500
Spriggs 14,580 - 14,580 - 220 220 14,800
Bournemouth 50,060 - 50,060 - 1,240 1,240 51,300
Landmead 51,580 - 51,580 - 2,520 2,520 54,100
Kencot 47,210 - 47,210 - 1,790 1,790 49,000
Copley 35,670 - 35,670 - 2,330 2,330 38,000
Paddock Wood 6,190 4,431 10,621 - 879 879 11,500
Atherstone 12,520 3,484 16,004 - 596 596 16,600
Southam 7,780 3,365 11,145 - 655 655 11,800
Port Farms 44,720 (505) 44,215 - 1,785 1,785 46,000
Membury 21,160 - 21,160 - 740 740 21,900
419,170 10,275 429,445 - 16,355 16,355 445,800
1. 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 Valuation Guidelines ("IPEVCV"), using
unlevered Discounted Cash Flow principles. It is in the opinion of the
Investment Manager and Directors that the IPEVCV methodology used in
deriving a fair value is in accordance with the fair value requirements
of IFRS 13.
Sensitivity analysis of significant changes in unobservable inputs
within Level hierarchy of underlying Investments
The Company's investments 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 review, at least annually, the
valuation inputs and where possible, make 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 Directors consider the following assumptions to be significant
inputs to the DCF calculation.
Discount rate
The weighted average discount rate used is 7.25%. 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. The Directors review the discount rate on a
regular basis to ensure it remains in line with any changes to the risk
profile of the Company and any changes in the macro-economic
environment.
-0.50% -0.25% Base +0.25% +0.50%
Directors' valuation (GBPm) 607.5 594.9 582.7 570.8 559.3
NAV per share (pence) 110.6 107.5 104.6 101.7 98.9
Change vs Base Case (%) 4.25 2.09 0.00 (2.05) (4.02)
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% Base +10%
Directors' valuation (GBPm) 517.7 582.7 643.5
NAV per share (pence) 88.9 104.6 119.3
Change vs Base Case (%) (11.16) 0.00 10.44
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 Investment Manager
adjusts where more conservative assumptions are considered appropriate
and applies expected PPA sales discounts. The forecast assumes an
average annual increase in power prices in real terms of approximately
1.7%.
-20.0% -10.0% Base +10.0% +20.0%
Directors' valuation (GBPm) 520.3 552.2 582.7 612.3 641.6
NAV per share (pence) 89.5 97.2 104.6 111.7 118.8
Change vs Base Case (%) (10.70) (5.23) 0.00 5.07 10.11
Inflation
A variable of 1.5% is considered reasonable given historic fluctuations.
A long term inflation rate of 2.75% has been used for 2017.
-1.50% -0.75% Base +0.75% +1.50%
Directors' valuation (GBPm) 521.3 551.3 582.7 615.8 652.1
NAV per share (pence) 89.8 97.0 104.6 112.6 121.4
Change vs Base Case (%) (10.53) (5.38) 0.00 5.68 11.91
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) 590.4 586.5 582.7 578.7 574.8
NAV per share (pence) 106.4 105.5 104.6 103.6 102.7
Change vs Base Case (%) 1.32 0.65 0.00 (0.68) (1.35)
1. Stated Capital
The stated capital 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).
Ordinary Shares
30 June 30 June 2016 31 December
2017 (Restated) 2016
Shares Shares Shares
Opening balance 340,950,912 281,803,232 281,803,232
Issued during the period 72,850,624 - 59,147,680
Repurchased and held in Treasury - - -
Closing balance 413,801,536 281,803,232 340,950,912
30 June 30 June 2016 31 December
2017 (Restated) 2016
GBP'000 GBP'000 GBP'000
Opening balance 339,003 279,403 279,403
Proceeds from share issue 78,497 - 60,781
Less: issue costs (1,523) - (1,181)
Closing balance 415,977 279,403 339,003
1. NAV per Ordinary Share
The Net Asset Value ("NAV") per redeemable Ordinary Share for the
Company is based on the Net Asset Value at the reporting date of
GBP432,798,841 (1 January 2016 to 30 June 2016: GBP279,745,961, 1
January 2016 to 31 December 2016: GBP350,769,981) and on 413,801,536 (1
January 2016 to 30 June 2016: 281,803,232, 1 January 2016 to 31 December
2016: 340,950,912) redeemable Ordinary Shares, being the number of
Ordinary Shares in issue at the end of the period.
1. 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 risks 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
regulatory 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. As the
Company to date operates only within the United Kingdom and Jersey, the
Directors have concluded that the Company is not exposed to foreign
exchange risk.
(b) Price risk
The Company's investments are susceptible to market price risk arising
from uncertainties about future values of the instruments. The Company's
Investment Manager provides the Company with investment recommendations.
The Company's Investment Manager's recommendations are reviewed and
approved by the Investment Manager before the investment decisions are
implemented. To manage the market price risk, the Company's 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
2017, 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 GBP37,209,200 (1 January 2016 to 30 June 2016:
GBP25,490,500, 1 January 2016 to 31 December 2016: GBP27,361,400). The
impact of changes in unobservable inputs to the underlying investments
is considered in note 16.
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 2017
6 to 12
Carrying amount Contractual Total Less than 6 months Months Greater than 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial
Assets
Investments 372,092 372,092 - - 372,092
Trade and
other
Receivables 5,513 5,513 5,513 - -
Interest
receivable 50,391 50,391 50,391 - -
Cash and
cash
equivalents 5,401 5,401 5,401 - -
Total
Financial
assets 433,397 433,397 61,305 - 372,092
Trade and
other
payables (598) (598) (598) - -
Total
financial
liabilities (598) (598) (598) - -
Net position 432,799 432,799 60,707 - 372,092
30 June 2016 (Restated)
6 to 12
Carrying amount Contractual Total Less than 6 months Months Greater than 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial
Assets
Investments 254,905 254,905 - - 254,905
Trade and
other
Receivables 4,128 4,128 4,128 - -
Interest
receivable 18,888 18,888 18,888 - -
Cash and
cash
equivalents 2,871 2,871 2,871 - -
Total
Financial
assets 280,792 280,792 25,887 - 254,905
Trade and
other
payables (1,046) (1,046) (1,046) - -
Total
financial
liabilities (1,046) (1,046) (1,046) - -
Net position 279,746 279,746 24,841 - 254,905
19.2. Liquidity risk (continued)
31 December 2016
6 to 12
Carrying amount Contractual Total Less than 6 months Months Greater than 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial
Assets
Investments 273,614 273,614 - - 273,614
Trade and
other
Receivables 4,847 4,847 4,847 - -
Interest
receivable 33,044 33,044 33,044 - -
Cash and
cash
equivalents 39,381 39,381 39,381 - -
Total
Financial
assets 350,886 350,886 77,272 - 273,614
Financial
Liabilities
Trade and
other
payables (116) (116) (116) - -
Total
financial
liabilities (116) (116) (116) - -
Net position 350,770 350,770 77,156 - 273,614
19.3. 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. In
order to mitigate such risks, cash is maintained with major
international financial institutions. During the year and at the
reporting date, the Company maintained relationships with the following
financial institutions:
Moody's
Credit 30 June 2017
Rating GBP'000
Cash in hand:
Royal Bank of Scotland International Limited P2 24
Lloyds Bank International Limited P1 5,377
Santander UK plc P1 -
Total Company cash and cash equivalents and total
cash in hand 5,401
Total Company cash balances held by banks 5,401
Moody's
Credit 30 June 2016 (Restated)
Rating GBP'000
Cash in hand:
Royal Bank of Scotland International Limited P2 256
Lloyds Bank International Limited P1 2,615
Total Company cash and cash equivalents and total
cash in hand 2,871
Total Company cash balances held by banks 2,871
19.3. Credit risk (continued)
Moody's
Credit 31 December 2016
Rating GBP'000
Cash in hand:
Royal Bank of Scotland International Limited P2 327
Lloyds Bank International Limited P1 18,684
Santander UK plc P1 20,370
Total Company cash and cash equivalents and total
cash in hand 39,381
Total Company cash balances held by banks 39,381
19.4. 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 lending to
its subsidiary. At period end the Company had no long term borrowings
with third parties (1 January 2016 to 30 June 2016: GBPNil, 1 January
2016 to 31 December 2016: GBPNil).
Weighted average time for which rate
Total portfolio Weighted average interest rate is fixed
30 June 2017 30 June 2017 30 June 2017
GBP'000 % Days
Loan notes 250,000 11.00% 961
Shareholder
loans 126,610 5.50% 1,468
Cash 5,401 - -
382,011
Weighted average time for which rate
Total portfolio Weighted average interest rate is fixed
30 June 2016 (Restated) 30 June 2016 (Restated) 30 June 2016 (Restated)
GBP'000 % Days
Loan notes 250,000 10.93% 598
Shareholder
loans 13,230 9.00% 1,105
Cash 2,871 - -
266,101
19.4. Interest rate risk (continued)
Weighted average time for which rate
Total portfolio Weighted average interest rate is fixed
31 December 2016 31 December 2016 31 December 2016
GBP'000 % Days
Loan notes 250,000 10.93% 780
Shareholder
loans 23,910 9.00% 1,287
Cash 39,381 - -
313,291
19.5. 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.
1. 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.
1. Dividends
Dividends paid during the year comprise an interim dividend in respect
of quarter 1 (1 January 2017 to 31 March 2017) and quarter 2 (1 April
2017 to 30 June 2017) of GBP6,413,924 (1.55 pence per Ordinary Share).
1. 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.
During the period the Company issued no additional Loan Notes to UK Hold
Co (1 January 2016 to 30 June 2016: GBP34,000,000, 1 January 2016 to 31
December 2016: GBP34,000,000), with the total issued to UK Hold Co
remaining at GBP250,000,000 (1 January 2016 to 30 June 2016:
GBP250,000,000, 1 January 2016 to 31 December 2016: GBP250,000,000), on
which interest of GBP15,549,068 was receivable for the period (1 January
2016 to 30 June 2016: GBP10,196,236, 1 January 2016 to 31 December 2016:
GBP27,314,252). As at the reporting date interest of GBP42,863,304 was
receivable (1 January 2016 to 30 June 2016: GBP13,791,052, 1 January
2016 to 31 December 2016: GBP27,314,940).
As at the reporting date, the Company has a Shareholders loan receivable
from UK Hold Co totalling GBP126,609,725 (1 January 2016 to 30 June
2016: GBP13,229,995, 1 January 2016 to 31 December 2016: GBP23,910,000).
Total interest of GBP1,797,936 was receivable for the period (1 January
2016 to 30 June 2016: GBP4,046,291, 1 January 2016 to 31 December 2016:
GBP2,135,009). As at the reporting date interest of GBP7,527,776 was
receivable (1 January 2016 to 30 June 2016: GBP5,097,230, 1 January 2016
to 31 December 2016: GBP2,135,009).
On 18 January 2017 the Company issued an additional GBP35,200,000
shareholders loans, funded using equity proceeds raised during the prior
year, to UK Hold Co. This GBP35,200,000 was utilised in the acquisition
of Atem Solar Limited (Shotwick Solar) on 2 February 2017 by FS Holdco
2, a direct subsidiary of UK Hold Co.
The Company also issued an additional GBP67,500,000 to UK Hold Co on 7
April 2017, funded using equity proceeds raised in March 2017 . UK Hold
Co transferred GBP12,500,000 of this amount to FS Holdco to repay a
portion of its Short Term Revolving Facility with Abbey National
Treasury Services ("Santander"). The remaining GBP55,000,000 was paid to
FS Debtco, a direct subsidiary of FS Holdco 2, to repay its
GBP55,000,000 loan to Santander that was utilised in the acquisition of
Sandridge Solar Power Limited. As a result, FS Debtco has a loan payable
to UK Hold Co of GBP55,000,000 on which interest of GBP632,876 was
charged during the period and was still outstanding at reporting date.
On 31 March 2016, UK Hold Co transferred all shareholder loans which
formed part of the investment in its subsidiaries, being GBP343,730,873,
to FS Holdco in return for a loan payable by FS Holdco to UK Hold Co of
GBP343,730,873, On 14 April 2016, UK Hold Co's outstanding loan balance
with The Royal Bank of Scotland Plc (the"RBS") of GBP149,503,500 was
paid by FS Holdco on behalf of UK Hold Co. On 23 December 2016, FS
Holdco increased its loan to UK Hold Co by GBP34,000,000 and on 7 April
UK Hold Co transferred GBP12,500,000 to FS Holdco. The total interest
payable for the period was GBP13,560,860 (2016: GBP20,511,723).
FS Holdco was entitled to loan interest on the shareholder loans, from
the SPVs, totalling GBP13,115,111, of which GBP28,834,192 was
outstanding as at the reporting date. During the period, FS Holdco
received repayments of shareholder loans from the SPVs totalling GBPNil.
During the period UK Hold Co issued a shareholder loan of GBP79,379,733
to FS Holdco 2. Interest of GBP1,333,726 on this loan was charged during
the period of which GBP1,333,726 was outstanding at period end. FS
Holdco 2 used this loan to issue a loan of the exact amount to FS
Debtco. Interest of GBP1,579,953 was charged during the period and was
still outstanding at reporting date.
All of the SPVs are cash generating solar farms. On occasion revenues
received and expenses are paid on their behalf by FS Holdco. All of
these transactions are related parties. At year end, the following SPVs
had amounts payable and receivable to FS Holdco:
30 June 30 June 2016 31 December
2017 (Restated) 2016
GBP'000 GBP'000 GBP'000
Receivable
Bournemouth 142 - -
Castle Eaton 258 - -
Copley 80 116 116
High Penn 123 - -
Highfields 244 - -
Hunters Race 229 - -
Landmead 130 - -
Pitworthy 202 - -
1,408 116 116
Payable
Kencot - (293) (293)
Membury - (758) (758)
Funds held on behalf of Projects (6,928) - -
(6,928) (1,051) (1,051)
Total payable to SPVs (5,520) (935) (935)
During the prior year, UK Hold Co made use of a tax credit of
GBP1,003,322 availed by its subsidiary, FS Holdco, to reduce the tax
liability of the Group at the reporting date.
The manager is considered a related party as it provides key management
services to the Group. Refer to note 23 for transactions with the
manager.
1. Transactions with the manager
Foresight Group CI Limited, acting as investment manager to the Group in
respect of its investments, earned fees of GBP1,306,418 during the
period (1 January 2016 to 30 June 2016: GBP1,395,586, 1 January 2016 to
31 December 2016: GBP3,053,551), of which GBP498,574 was outstanding as
at 30 June 2017 (1 January 2016 to 30 June 2016: GBP699,064, 1 January
2016 to 31 December 2016: GBP17,066).
Foresight Group CI Limited charged fees to FS Holdco of GBPNil (1
January 2016 to 30 June 2016: GBP680,000, 1 January 2016 to 31 December
2016: GBP680,000) during the period in relation to the arrangement and
transaction advice of the long term refinancing of the Group, of which
GBPNil (1 January 2016 to 30 June 2016: GBPNil, 1 January 2016 to 31
December 2016: GBPNil) was outstanding as at period end.
Foresight Group LLP, a related party of Foresight Group CI, charged
asset management fees to the underlying projects of GBP280,000 during
the period (1 January 2016 to 30 June 2016: GBP256,000, 1 January 2016
to 31 December 2016: GBP512,000).
Brighter Green Engineering, a related party of Foresight Group LLP,
charged fees to the underlying projects under both the O&M contracts and
EPC defect remedial work of GBP1,260,543 during the period (1 January
2016 to 30 June 2016: GBP20,286, 1 January 2016 to 31 December 2016:
GBP853,203)
Pursuant to the terms of the Prospectus, the total launch costs to be
borne by the Shareholders of the Company were capped at 2% of the launch
proceeds of GBP150,000,000 (i.e. GBP3,000,000) with any excess launch
costs being reimbursed to the Company from Foresight Group CI Limited.
Launch costs for the period to be reimbursed from Foresight Group CI
Limited amounted to GBP652,202 (1 January 2016 to 30 June 2016:
GBP213,644, 1 January 2016 to 31 December 2016: GBP213,644).
1. Commitments and contingent liabilities
There are no commitments nor contingent liabilities.
1. 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.
1. Post balance sheet events
On 21 July 2017, the Company acquired a 5MW operational project known as
Wally Corner in Berinsfield, South Oxfordshire, for GBP5,637,631. The
asset was acquired from Ethical Power, a contractor the Company has
worked with in the past. This acquisition was funded using equity
proceeds from the Company's March Share Placing.
Advisors
ADMINISTRATOR & COMPANY SECRETARY
JTC (Jersey) Limited
JTC House
28 Esplanade
St. Helier Jersey
JE4 2QP
REGISTRAR
Computershare Investor Services (Jersey)
Queensway House
Hilgrove Street
St. Helier Jersey
JE1 1ES
JOINT CORPORATE BROKERS
Stifel Nicolaus Europe Limited (formerly Oriel Securities)
150 Cheapside
London
EC2V 6ET
J. P. Morgan Cazenove
25 Bank Street,
Canary Wharf
London
E14 5JP
INVESTMENT MANAGER
Foresight Group CI Limited
PO Box 156
Dorey Court
St. Peter Port
Guernsey
GY1 4EU
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
INDEPENT AUDITOR
KPMG LLP
15 Canada Square
London
E14 5G
Glossary of Terms
AIC The Association of Investment Companies
AIC Code The Association of Investment Companies Code of Corporate
Governance
AIC Guide The Association of Investment Companies Corporate
Governance Guide for Investment Companies
AIFMD The Alternative Investment Fund Management Directive
BEIS The Department for Business, Energy & Industrial Strategy
BEPS Base Erosion and Profit Shifting
Brexit Departure of the UK from the EU
CfD Contract for Difference
Company Foresight Solar Fund Limited
DCF Discounted Cash Flow
DECC The Department of Energy and Climate Change
DNO Distribution Network Operator
EPC Engineering, Procurement & Construction
EU The European Union
FAC Final Acceptance Certificate
FiT Feed-in Tariff
GAV Gross Asset Value on Investment Basis including debt
held at SPV level
GWh Gigawatt hour
IAS International Accounting Standard
IFRS International Financial Reporting Standards as adopted
by the EU
Investment Manager Foresight Group CI Limited
IPEV International Private Equity and Venture Capital
IPO Initial Public Offering
KPMG LLP KPMG is the Company's Auditor
LCF Levy Control Framework
LD Liquidated damages awarded to renewable energy projects
in relation to their clean energy production which
were typically monetised under PPA contracts to offset
levies due under the Climate Change Levy to energy
suppliers.
LIBOR London Interbank Offered Rate
Listing Rules The set of FCA rules which must be followed by all
companies listed in the UK
Main Market The main securities market of the London Stock Exchange
MIDIS Macquarie Infrastructure Debt Investment Solutions
MWh Megawatt hour
MWp Megawatt peak
NAV Net Asset Value
Official List The Premium Segment of the UK Listing Authority's
Official List
O&M Operation and Maintenance contractors
PID Potential Induced Degradation
PPA Power Purchase Agreements
PR Performance Ratio
PV Photovoltaic
RO Scheme Energy suppliers meet their obligations by presenting
Renewable Obligation Certificates (ROCs) to Ofgem.
Where suppliers do not have sufficient ROCs to cover
their obligation, a payment is made into the buy-out
fund.
ROC Renewable Obligation Certificates
RPI The Retail Price Index
SPV 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
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Foresight Solar Fund Limited via Globenewswire
(END) Dow Jones Newswires
August 16, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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