TIDMFSFL
RNS Number : 8511J
Foresight Solar Fund Limited
22 August 2019
22 August 2019
Foresight Solar Fund Limited
('Foresight Solar' or 'the Company')
Interim Results to 30 June 2019 and Dividend Announcement
Foresight Solar, a fund investing in a diversified portfolio of
ground-based solar PV assets in the UK and internationally, is
pleased to announce its Interim Results for the six-month period
ended 30 June 2019.
Highlights
-- Continued solid operational performance of the portfolio, with production for the period 2.9%
above base case, generating over 400GWh of clean energy
-- NAV decreased to GBP601.5m (31 Dec 2018: GBP610.3m), being 109.6p per share (31 Dec 2018:
111.2p). This was predominantly driven by a downward revision of UK power price forecasts
but partially offset by a 0.25% reduction in the discount rate applied to the UK portfolio
and improved financing terms
-- Declared total dividend of 3.38p per share during the period and on track to deliver 2019
target dividend of 6.76p per share*
-- Positive progress on delivering value enhancing initiatives across the portfolio, including
a successful PPA re-tender for 22 UK assets in April 2019, resulting in improved commercial
terms for the sale of electricity and ROCs
-- Successful GBP245m refinancing closed post period end, negotiated on attractive terms delivering
significant value and capital structure flexibility. Due to the material impact of the new
terms, this has been taken into consideration for the NAV as at 30 June 2019
-- The Company's operating portfolio produced enough clean electricity to power c.130,000 UK
homes and avoid the equivalent of over 309,283 tonnes of C0(2) production
* Target returns are not a profit forecast. There can be no
assurance that target returns will be met and it should not be seen
as an indication of the Company's expected or actual results or
returns.
Key Metrics
As at As at
30 June 2019 30 June 2018
Gross Asset Value ("GAV") GBP1,100.6 million GBP749.0 million
------------------- -----------------
Net Asset Value ("NAV") GBP601.5 million GBP473.1 million
------------------- -----------------
NAV per Share 109.6 pence 105.2 pence
------------------- -----------------
Profit after Tax for the Year GBP9.4 million GBP6.0 million
------------------- -----------------
Total Dividend per Share for 3.38 pence 3.28 pence
the period
------------------- -----------------
Annual Total Shareholder Return
since IPO** 8.78% 7.03%
------------------- -----------------
** Annualised from IPO on 29 October 2013.
Commenting on the Company's results, Alex Ohlsson, Chairman of
Foresight Solar Fund Limited said:
"As expected, the first half of 2019 has been a successful
period of portfolio consolidation and performance optimisation for
the Company. I am particularly pleased with the work of the Asset
Management team in delivering substantial improvements to the
operational performance of the portfolio, with production
continuing to be above budget.
"We remain confident that, with the positive operational
performance of our assets, the delivery of value enhancing
initiatives and the successful refinancing of 28 UK assets
post-period, Foresight Solar continues to be well-positioned to
deliver further growth in the second half of the year.
"We remain on track to deliver the target total dividend of 6.76
pence per share for the year."
Results presentation
A presentation for analysts will take place at 09:00 today at
Foresight Group's offices, The Shard, 32 London Bridge Street,
London SE1 9SG. Analysts wishing to attend or dial in should
contact foresightsolar@citigatedewerogerson.com to register.
Dividend Declaration
Foresight Solar is also pleased to announce a second interim
dividend, in respect of the period 1 April 2019 to 30 June 2019, of
1.69 pence per ordinary share ("the Dividend"). The shares will go
ex-dividend on 24 October 2019 and the Dividend will be paid on 29
November 2019 to shareholders on the register as at the close of
business on 25 October 2019.
Full details of the scrip dividend alternative that is being
offered in respect of the Dividend (the "Scrip Offer") and the
Scrip Dividend Scheme can be found in the Scrip Dividend
Alternative Offer Document (the "Scrip Document") available on the
Company's website at
https://fsfl.foresightgroup.eu/investor-relations/dividend-history/.
The Scrip Document is also available on the National Storage
Mechanism website at www.morningstar.co.uk/uk/NSM and copies are
also available for inspection at JTC House, 28 Esplanade, St.
Helier, Jersey JE2 3QA.
The reference price of the new shares issued under the Scrip
Offer will be calculated and published on or around 31 October
2019.
Shareholders will receive the Dividend in cash, unless they have
previously completed a standing election (a "Form of Election") to
receive new shares pursuant to the Scrip Offer. Shareholders who
would like to receive such new shares rather than cash, and who
have not previously submitted a Form of Election, should complete
the Form of Election at the back of the Scrip Document and return
it to the Company's Receiving Agent, Computershare Investors
Service (Jersey) Limited by no later than 5.00pm on 11 November
2019.
The expected timetable in relation to the Dividend will be as
follows:
Ex-Dividend Date 24 October 2019
Record Date 25 October 2019
--------------------
Scrip Price Announcement 31 October 2019
--------------------
Last Date for Submission of 11 November 2019 at
Forms of Election 17h00
--------------------
Last Date Crest Elections 11 November 2019 at
17h00
--------------------
Anticipated Listing of New Shares 29 November 2019
--------------------
Dividend Payment Date 29 November 2019
--------------------
For further information, please contact:
Foresight Group
+44 (0)20 3763 6932
Louise Chesworth
InstitutionalIR@ForesightGroup.eu
Stifel Nicolaus Europe Limited
+44 (0)20 7710 7600
Mark Bloomfield
Neil Winward
Gaudi Le Roux
Citigate Dewe Rogerson
+44 (0)20 7638 9571
Nick Hayns
Elizabeth Kittle
Lucy Eyles
LEI: 213800VO4O83JVSSOX33
Notes to Editors
About Foresight Solar Fund Limited
Foresight Solar is a Jersey registered, closed-end investment
company investing in a diversified portfolio of ground-based solar
PV assets in the UK and internationally.
Since its IPO in October 2013, the Company has more than tripled
in size and raised more than GBP569 million through share placings.
The Company targets an index-linked annualised dividend inflated by
RPI and has paid all target dividends to date. The target dividend
for 2019 is 6.76 pence per share.
Foresight Solar Fund Limited is managed by Foresight Group, a
leading independent global infrastructure and private equity
manager, which provides the Company with depth of experience in
fund management, deal origination and execution. The Company has a
fully independent Board of Directors and is chaired by Alex
Ohlsson. The lead Investment Manager for the Company is Ricardo
PiƱeiro, Head of UK Solar at Foresight Group.
Chairman's Statement
On behalf of the Board, I am pleased to present the Unaudited
Interim Report and Financial Statements for Foresight Solar Fund
Limited (the "Company" or the "Fund") for the six months ended 30
June 2019.
The Company has had an encouraging start to the year delivering
on a number of portfolio and capital structure optimisation
initiatives and benefiting from continued positive operational
performance, despite the decrease in UK wholesale power prices
during the period.
The portfolio continued to perform above base case. Electricity
production for the six-month period was 2.9% above expectations,
driven by high levels of irradiation for the period and the
continued work of the asset management team, including optimising
asset performance and portfolio consolidation. Post period end, the
Company successfully closed the refinancing of 28 UK assets, adding
significant value and flexibility to the Company's capital
structure.
KEY FINANCIALS
In the six months to 30 June 2019, the NAV per Ordinary Share
decreased to 109.6 pence (31 December 2018: 111.2 pence). The key
driver behind the decrease was a material downward revision of UK
power price forecasts obtained from independent third-party
consultants.
During the period, the Investment Manager undertook a review of
the discount rates applied to UK asset valuations. As a result of
this analysis, discount rates for the UK assets have been reduced
by 0.25% to reflect the current market valuation of operational
solar assets.
Profit for the period was GBP9.4 million (six months to June
2018: GBP6.0 million) and Earnings per Share increased to 1.71
pence, up from 1.34 pence in June 2018.
CAPITAL STRUCTURE OPTIMISATION
At 30 June 2019, the total outstanding debt of the Company and
its subsidiaries amounted to GBP499.1 million (31 December 2018:
GBP504.4 million), with long term debt representing GBP394.1
million (December 2018: GBP399.4 million). The total gearing level
remained flat at 45% of GAV (December 2018: 45%). Long-term gearing
represents 36% of GAV (2018: 36%), which remains within the 40%
long-term debt target set by the Board.
The Company's Revolving Credit Facilities ("RCFs") totalled
GBP105 million at 30 June 2019, granting the Company the
flexibility to adjust its gearing position in the short term. The
RCFs were fully utilised at 30 June 2019.
Post period end, on 2 August 2019, the Investment Manager
successfully completed the refinancing of 28 of its UK assets
(321MW). The Company secured a GBP245 million debt refinancing
comprising a GBP170 million long-term loan facility, a GBP65
million RCF and a GBP10 million debt service reserve facility. The
facilities were secured on attractive terms and overall at a lower
interest cost compared to the previous facilities. Due to the
material impact of the new terms, this has been taken into
consideration for the NAV as at 30 June 2019.
OPERATIONAL PERFORMANCE
Electricity generation from the Company's portfolio during the
first half of the year was 2.9% above base case. In the UK,
irradiation levels were 3.1% above base case assumptions, whilst UK
asset performance, when adjusted for compensation received,
outperformed base case by 2.9%. Asset outperformance during the
period was driven by the strong performance of the majority of our
UK assets, as we continue to experience a reduction in the number
of operational incidents compared to previous periods. The Board is
pleased with the continued stable performance of the Company's UK
portfolio and is confident that the Asset Manager has remedied
certain historic issues, evidenced by recent sustained periods of
outperformance.
In Australia, three of the four assets are now operational and
exporting at full capacity with the remaining asset due to be
commissioned during the second half of 2019. Whilst there have been
delays in the construction and commissioning of the Australian
assets, the Investment Manager does not expect these to have a
material adverse financial impact as the Company is contractually
protected.
During the period, the Asset Manager delivered further
operational improvements. A successful PPA re-tender for 22 of our
UK assets was completed in April 2019. The outcome of the retender
has resulted in an improvement to the commercial terms on which
Renewables Obligation Certificates ("ROCs") and power are sold by
the relevant assets, resulting in an average increase in expected
revenue generation of approximately 2% for a period of 10 years.
The Asset Manager continues to explore operational optimisation
initiatives that are expected to secure long-term value for the
Company.
DIVID
The Company has declared a dividend of 3.38 pence per share in
the first half and is on track to deliver its target of 6.76 pence
per share for the year. The second 2019 interim dividend of 1.69
pence will be paid on 30 August 2019.
Dividend cover for the period on a cash basis was 1.12 times,
down from 1.14 times for the prior year on a like-for-like basis as
a result of the decrease in UK wholesale power prices experienced
in the period.
The target dividend for 2019 is 6.76 pence, which has grown in
line with the UK's RPI 2019.
Following shareholder approval at the AGM on 11 July 2019, the
Company is now offering shareholders a Scrip Dividend alternative
to the Dividend. The Scrip Dividend Scheme provides shareholders
with the opportunity to receive dividends in the form of new
ordinary shares rather than cash and applies to any subsequent
interim or final Dividends in respect of which a Scrip Dividend
alternative is offered.
Since IPO, the Company has met all target dividends and has
maintained dividend growth in line with UK inflation rates. As
previously noted, the Board reviews the dividend policy on an
ongoing basis to ensure it remains reflective of the ongoing
correlation between power prices and inflation levels as well as
the expected evolution of the investment portfolio as the Company
continues to explore investment opportunities in non-UK and subsidy
free markets. In a scenario where the Company experiences a
decrease in the proportion of its revenues which are linked to UK
inflation it may become prudent to adopt a "progressive" dividend
policy. Under such a policy, the Board would intend to target a
positive progression of dividend levels, but not necessarily linked
to UK inflation.
CORPORATE GOVERNANCE
At the beginning of June 2019, we were pleased to announce the
appointment of Monique O'Keefe to the Board as an Independent
Non-Executive Director. Monique provides additional breadth of
expertise with over 20 years' experience in law and finance which
will be invaluable to the Company in its next phase of growth.
OUTLOOK
Following the various optimisation initiatives we undertook
during the first half of the year, and the post-period refinancing,
we expect our UK portfolio to enter more of a steady state. We are
extremely pleased with the progress made to date by the Investment
Manager and Asset Management team in delivering value-enhancing
initiatives and optimising performance across the portfolio and we
will continue to explore new opportunities and initiatives to
optimise performance further. The fourth Australian asset, which is
currently under construction, is expected to become operational
before year end. We also remain active in exploring opportunities
to further optimise the Company's capital structure.
The Investment Manager continues to review international
investment opportunities in markets that benefit from regulatory
support, however European markets are showing signs of increased
consolidation and inflated asset valuations at present. We maintain
a disciplined approach to acquisitions, only acquiring assets that
meet return requirements on a risk adjusted basis, and, as
previously noted, the subsidised market in the UK remains highly
competitive with limited investment opportunities based on current
market valuations.
We are closely monitoring the development of subsidy-free
markets in Southern Europe and the UK. In Southern Europe, this
market has developed rapidly and a number of relevant transactions
have recently been announced in Spain and Portugal with attractive
PPA structures. In the UK, whilst this market has progressed, we
remain of the view that the current market economics are not yet
in-line with the Company's return requirements. However, we expect
this will present significant opportunity for the Company in the
future.
Alexander Ohlsson
Chairman
22 August 2019
Corporate Summary and Investment Objective
CORPORATE SUMMARY
The Company is a closed-ended company with an indefinite life
and was incorporated in Jersey under the Companies (Jersey) Law
1991, as amended on 13 August 2013, with registration number
113721.
As at 30 June 2019, the Company has 548,941,550 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").
INVESTMENT OBJECTIVE
The Company's objective is to provide investors with a
sustainable, inflation-linked quarterly dividend and enhanced
capital value, through investment in ground-based solar assets
predominantly located in the UK.
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. To date, the Company has
raised a total of GBP569 million through equity issuance and
reached a gross asset value of GBP1,100.6 million as at 30 June
2019. It is the largest UK-listed dedicated solar energy investment
company by installed capacity.
As at 30 June 2019, the Company's portfolio consisted of 54
assets with a net installed capacity of 869MW, including four
Australian assets representing 146MW, one of which remains under
construction.
INVESTMENT POLICY
The Company will pursue its investment objective by acquiring
ground-based, operational solar power plants predominantly located
in the UK. Investments outside the UK and assets which are, when
acquired, still under construction will be limited to 25 per cent
of the GAV 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 the portfolio and
creditworthy offtakers. Under the PPAs, the SPVs will sell solar
generated electricity and green benefits to the designated
offtaker. The Company may retain exposure to power prices through
PPAs that do not include mechanisms such as fixed prices or price
floors.
Investment may be made in equity 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
per cent of the Company's GAV post-acquisition. The GAV of the
Company will be calculated based on the last published gross
investment valuation of the Company's portfolio, including cash,
plus acquisitions made since the date of such valuation at their
cost of acquisition. The Company will 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 project developers, EPC
contractors, O&M contractors, panel manufacturers and PPA
providers.
The Articles provide that gearing, calculated as Group Borrowing
(including any asset level gearing) as a percentage of the
Company's GAV, will not exceed 50 per cent 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 GAV will not exceed 40 per cent 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 2019 are as follows:
Investor % Shareholding in Fund
----------------------
BlackRock Investment Management Ltd 15.27
------------------------------------ ----------------------
Baillie Gifford & Co Ltd 7.73
------------------------------------ ----------------------
Newton Investment Management Ltd 7.32
------------------------------------ ----------------------
Legal & General Investment Mgmt Ltd 7.29
------------------------------------ ----------------------
Schroders Plc 6.76
------------------------------------ ----------------------
Tredje AP Fonden 5.25
------------------------------------ ----------------------
Total 49.62%
------------------------------------ ----------------------
ALTERNATIVE INVESTMENT FUND MANAGEMENT DIRECTIVE ("AIFMD")
The AIFMD, which was implemented across the EU on 22 July 2013
with the transition period ending on 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 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.
PACKAGED RETAIL AND INSURANCE-BASED INVESTMENT PRODUCTS
REGULATION
The EU Packaged Retail and Insurance-based Investment Products
Regulation ("PRIIPs Regulation") took effect on 1 January 2018. The
PRIIPs regulation requires the Company to publish a Key Information
Document ("KID") that must be accurate, fair, clear and not
misleading. It is the Company's policy to review the KID on an
annual basis and every time there is a change that significantly
affects or is likely to significantly affect the information in the
KID. The KID is available on the Company's website under
Publications and can be found at the following website address:
www.fsfl.foresightgroup.eu.
Board of Directors
The Directors, who are Non-Executive and independent of the
Investment Manager, are responsible for the determination of the
investment policy of the Company, have overall responsibility for
the Company including its investment activities and for reviewing
the performance of the Company's portfolio. The Directors are as
follows:
Alex Ohlsson (Chairman)
Mr Ohlsson is Managing Partner of 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 sits on the boards of a
number of companies and is also Chairman of the listed company GCP
Asset Backed Income Fund Limited. He is an Advisory Board member of
Jersey Finance, Jersey's promotional body and Treasurer of the
Jersey Law Society. He has recently retired as the independent
Chairman of the States of Jersey's Audit Committee. 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 and was reappointed on 25 June 2019.
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 and was reappointed on 25 June 2019.
Peter Dicks
Mr Dicks is currently a Director of a number of quoted and
unquoted companies. He is also on the Board of Mercia Fund 1
General Partnership Limited and Miton UK Microcap Trust plc and
Chairman of Unicorn AIM VCT plc and SVM Emerging Fund plc.
Mr Dicks was appointed as a Non-Executive Director on 16 August
2013 and was reappointed on 25 June 2019.
Monique O'Keefe
Mrs O'Keefe is the co-founder of investment consultancy
business, Kairos Wealth Limited. She also serves on a number of
boards, including Phoenix Spree Deutschland Limited which is a
London Stock Exchange listed property fund, a private equity fund,
a European hedge fund and an oil and gas financing fund. Mrs
O'Keefe also sits on the Board of Commissioners at the Jersey
Financial Services Commission.
Mrs O'Keefe was appointed as a Non-Executive Director on 1 June
2019 and was reappointed on 25 June 2019.
Investment Manager
The Company's Investment Manager, Foresight Group CI Limited, is
responsible for the acquisition and management of the Company's
portfolio, including the sourcing and structuring of new
acquisitions and advising on the Company's borrowing strategy. The
Investment Manager is a Guernsey registered company, incorporated
under Guernsey Law with registered number 51471. The Investment
Manager is licensed and regulated by the Guernsey Financial
Services Commission.
The Manager and its adviser, Foresight Group, are together
referred to as "Foresight Group". Foresight Group was founded in
1984 and is a leading independent infrastructure and private equity
investment company managing GBP4.0 billion of assets on behalf of
institutions and retail clients with offices in Australia, Italy,
South Korea, Spain and the UK.
On 5 June 2019, Foresight Group announced the acquisition of the
John Laing Environmental Assets Group Limited ("JLEN") advisory
mandate from John Laing Group, effective from 1 July 2019.
Foresight Group maintains a formal allocation policy for
investments across its funds. Following the acquisition, Foresight
Group's global infrastructure investments increased to GBP3.1
billion, with a cumulative generating capacity of 1.9GW. Currently
Foresight Group's infrastructure team manages 103 solar projects
internationally, representing GBP1.7 billion with a total
generating capacity of 1.3GW. The remaining generation capacity
under management includes bioenergy projects, onshore wind, battery
storage facilities and reserve power generation assets.
Foresight Group's 89 strong infrastructure team includes 39
investment professionals, with an average of 12 years industry
experience.
Foresight Group's Investment Management team is led by three
experienced UK-based managers, supported by a team of seven people
of investment managers located in the UK and internationally. The
Investment Management team based in Australia compromises three
investment professionals, three portfolio managers and one member
of support staff. This team is instrumental in the management of
the Company's four Australian assets.
Foresight Group is overseen by an Executive Committee of which
Gary Fraser is a member. Foresight Group's Executive Committee
provides strategic investment advice to the management team and the
Board.
RICARDO PINEIRO, PARTNER, HEAD OF UK SOLAR
Ricardo has led Foresight Group's UK solar investments team since 2011 and has been part of
the Fund's advisory team since its IPO, remaining primarily focused on identifying and acquiring
new renewable energy transactions across the UK and international markets. Prior to joining
Foresight, Ricardo worked at Espirito Santo Investment where he focused on lending and advisory
for the energy infrastructure and transportation sectors.
Gary Fraser, Partner, Chief Financial Officer
Gary is a Chartered Accountant and Chartered Fellow of the Securities Institute. He worked
with Ernst & Young between 1993 and 1999, predominantly in the audit and risk assurance and
corporate finance areas and joined ISIS Asset Management plc in 1999 where he was responsible
for the provision of similar services to several investment companies. He joined Foresight
Group in 2004 and is a member of the Executive Committee.
MATT HAMMOND, Partner
Matt is a Partner in Foresight Group's infrastructure team having joined Foresight in 2015.
Prior to joining Foresight, Matt was a Managing Director at Macquarie where he worked in various
roles for fifteen years. There he focused on infrastructure and renewable energy advisory,
principal investing and lending. He has also worked at Henderson, BT Alex Brown and the WHEB
Group where he raised and invested two renewable energy funds investing across Europe.
Portfolio Assets
Current Portfolio
Asset Installed Net MW Connection Acquisition Current Fair
Peak Capacity Date Cost(1) (GBPm) Value (2) (GBPm)
(MW)
------------------ -------------- ------ ------------- --------------- -----------------
UK
-------------------------------------------------------------------------------------------------
1 Wymeswold(3) 34 34 March 2013 45.0 49.3
------------------ -------------- ------ ------------- --------------- -----------------
2 Castle Eaton 18 18 March 2014 22.6 21.3
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3 Highfields 12 12 March 2014 15.4 13.5
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4 High Penn 10 10 March 2014 12.7 10.5
------------------ -------------- ------ ------------- --------------- -----------------
5 Pitworthy 16 16 March 2014 19.3 16.7
------------------ -------------- ------ ------------- --------------- -----------------
6 Hunters Race 10 10 July 2014 13.3 13.9
------------------ -------------- ------ ------------- --------------- -----------------
7 Spriggs Farm 12 12 March 2014 14.6 14.3
------------------ -------------- ------ ------------- --------------- -----------------
September
8 Bournemouth 37 37 2014 47.9 52.2
------------------ -------------- ------ ------------- --------------- -----------------
9 Landmead 46 46 December 2014 52.4 49.6
------------------ -------------- ------ ------------- --------------- -----------------
September
10 Kencot 37 37 2014 49.5 45.9
------------------ -------------- ------ ------------- --------------- -----------------
11 Copley 30 30 December 2015 32.7 37.7
------------------ -------------- ------ ------------- --------------- -----------------
12 Atherstone 15 15 March 2015 16.2 15.3
------------------ -------------- ------ ------------- --------------- -----------------
13 Paddock Wood 9 9 March 2015 10.7 10.7
------------------ -------------- ------ ------------- --------------- -----------------
14 Southam 10 10 March 2015 11.1 11.1
------------------ -------------- ------ ------------- --------------- -----------------
15 Port Farm 35 35 March 2015 44.5 45.4
------------------ -------------- ------ ------------- --------------- -----------------
16 Membury 16 16 March 2015 22.2 21.1
------------------ -------------- ------ ------------- --------------- -----------------
17 Shotwick 72 72 March 2016 75.5 84.9
------------------ -------------- ------ ------------- --------------- -----------------
18 Sandridge 50 50 March 2016 57.3 58.1
------------------ -------------- ------ ------------- --------------- -----------------
19 Wally Corner 5 5 March 2017 5.7 5.9
------------------ -------------- ------ ------------- --------------- -----------------
20 Coombeshead 10 10 December 2014 36.6 39.7
------------------ -------------- ------ ------------- --------------- -----------------
21 Park Farm 13 13 March 2015
------------------ -------------- ------ ------------- --------------- -----------------
22 Sawmills 7 7 March 2015
------------------ -------------- ------ -------------
23 Verwood 21 21 February 2015
------------------ -------------- ------ -------------
24 Yardwall 3 3 June 2015
------------------ -------------- ------ ------------- --------------- -----------------
25 Abergelli 8 8 March 2015 3.7 4.9
------------------ -------------- ------ ------------- --------------- -----------------
26 Crow Trees 5 5 February 2016 1.8 2.1
------------------ -------------- ------ ------------- --------------- -----------------
27 Cuckoo Grove 6 6 March 2015 2.5 3.3
------------------ -------------- ------ ------------- --------------- -----------------
28 Field House 6 6 March 2015 3.1 3.7
------------------ -------------- ------ ------------- --------------- -----------------
29 Fields Farm 5 5 March 2016 1.7 2.5
------------------ -------------- ------ ------------- --------------- -----------------
30 Gedling 6 6 March 2015 1.9 2.8
------------------ -------------- ------ ------------- --------------- -----------------
31 Homeland 13 13 March 2014 5.2 7.8
------------------ -------------- ------ ------------- --------------- -----------------
32 Marsh Farm 9 9 March 2015 4.0 4.8
------------------ -------------- ------ ------------- --------------- -----------------
33 Sheepbridge 5 5 December 2015 1.9 2.7
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34 Steventon 10 10 June 2014 4.2 5.4
------------------ -------------- ------ ------------- --------------- -----------------
35 Tengore 4 4 February 2015 1.3 1.8
------------------ -------------- ------ ------------- --------------- -----------------
36 Trehawke 11 11 March 2014 4.7 6.5
------------------ -------------- ------ ------------- --------------- -----------------
37 Upper Huntingford 8 8 October 2015 3.1 4.1
------------------ -------------- ------ ------------- --------------- -----------------
38 Welbeck 11 11 July 2014 4.4 5.5
------------------ -------------- ------ ------------- --------------- -----------------
39 Yarburgh 8 8 November 2015 3.4 4.5
------------------ -------------- ------ ------------- --------------- -----------------
40 Abbey Fields 5 5 March 2016 1.5 3.2
------------------ -------------- ------ ------------- --------------- -----------------
41 SV Ash 8 8 March 2015 3.4 4.2
------------------ -------------- ------ ------------- --------------- -----------------
42 Bilsthorpe 6 6 November 2014 1.9 2.7
------------------ -------------- ------ ------------- --------------- -----------------
September
43 Bulls Head 6 6 2014 2.2 3.0
------------------ -------------- ------ ------------- --------------- -----------------
44 Lindridge 5 5 January 2016 1.7 2.6
------------------ -------------- ------ ------------- --------------- -----------------
49 Manor Farm 14 14 October 2015 6.1 6.8
------------------ -------------- ------ ------------- --------------- -----------------
45 Misson 5 5 March 2016 2.0 2.9
------------------ -------------- ------ ------------- --------------- -----------------
46 Nowhere 8 8 March 2015 3.7 4.5
------------------ -------------- ------ ------------- --------------- -----------------
47 Pen Y Cae 7 7 March 2015 2.9 3.9
------------------ -------------- ------ ------------- --------------- -----------------
48 Playters 9 9 October 2015 4.0 4.9
------------------ -------------- ------ ------------- --------------- -----------------
50 Roskrow 9 9 March 2015 3.7 4.9
------------------ -------------- ------ ------------- --------------- -----------------
UK Subtotal 723 723 685.1 723.1
------------------ -------------- ------ ------------- --------------- -----------------
AUSTRALIA
-------------------------------------------------------------------------------------------------
1 Bannerton 110 53(4) July 2018 22.9 20.0(6)
------------------ -------------- ------ ------------- --------------- -----------------
2 Longreach 17 8(4) March 2018 2.7 2.9
------------------ -------------- ------ ------------- --------------- -----------------
3 Oakey 1 30 15(4) February 2019 4.4 4.8(6)
------------------ -------------- ------ ------------- --------------- -----------------
4 Oakey 2 70 70 Q4 2019(5) 34.0 32.7(6)
------------------ -------------- ------ ------------- --------------- -----------------
Australia Subtotal 227 146 63.9 60.4
------------------ -------------- ------ ------------- --------------- -----------------
Total 950 869 749.0 783.5
------------------ -------------- ------ ------------- --------------- -----------------
1 Original cost at time of acquisition, including transaction costs.
2 UK investments valued using an unlevered discount rate of
6.50% or a levered discount rate between 7.25% and 7.50% depending
on the debt structure. Australian operational assets use a levered
discount rate of 8.5%.
3 Includes the 2MW extension acquired in March 2015.
4 Accounts for the 49% stake the Company holds of this asset
5 Expected connection date.
6 Held at cost incurred to date. This does not represent
expected final cost and assumes an AUD/GBP exchange rate of 0.55 as
at 30 June 2019.
Investment Manager's Report
For the period ended 30 June 2019
KEY INVESTMENT METRICS
30 June 2019 31 December 2018 30 June 2018
------------------ ------------------ ----------------
Market Capitalisation GBP659.8 million GBP592.9 million GBP489.5 million
------------------------------------------- ------------------ ------------------ ----------------
Share Price 120.2 pence 108.0 pence 108.8 pence
------------------------------------------- ------------------ ------------------ ----------------
Dividend Declared per Share for the period 3.38 pence 6.58 pence 3.28 pence
------------------------------------------- ------------------ ------------------ ----------------
GAV GBP1,100.6 million GBP1,114.7 million GBP749.0 million
------------------------------------------- ------------------ ------------------ ----------------
NAV GBP601.5 million GBP610.3 million GBP473.1 million
------------------------------------------- ------------------ ------------------ ----------------
NAV per Share 109.6 pence 111.2 pence 105.2 pence
------------------------------------------- ------------------ ------------------ ----------------
Annual Total Return (NAV) since IPO 7.61% 7.36% 6.89%
------------------------------------------- ------------------ ------------------ ----------------
Annual Total Shareholder Return since IPO 8.78% 6.83% 7.03%
------------------------------------------- ------------------ ------------------ ----------------
Profit after Tax for the Period GBP9.4 million GBP56.0 million GBP6.0 million
------------------------------------------- ------------------ ------------------ ----------------
PORTFOLIO SUMMARY
As at 30 June 2019, the Company's portfolio consisted of 54
assets with a total net peak capacity of 869MW. Of the 54 assets,
50 assets are located in the UK and represent 723MW of total
installed capacity. The remaining four assets are located in
Australia and account for 146MW of total installed capacity.
All of the Company's assets benefit from government-backed
subsidies. The UK assets are accredited under the Renewable
Obligation scheme, except for Yardwall which is a Feed-in Tariff
accredited asset (representing less than 1% of the UK portfolio).
In Australia, the assets benefit from subsidies in the form of
Large-Scale Generation Certificates. During the six-month period,
approximately 60% of total revenue was derived from subsidies and
40% from the sale of electricity.
The ROC buy-out price for the annual compliance period which
commenced in April 2019 increased to GBP48.78 (2018-19 compliance
period: GBP47.22), reflecting the average monthly percentage change
in RPI during 2018. On average, the Company received 1.42 ROC/MWh
during the period across the UK portfolio at an average price of
GBP46.24/ROC (30 June 2018: GBP44.50/ROC).
During the period the Company sold the 0.5MW onshore wind asset
included in the 53.3MW solar portfolio acquired in April 2018.
Further details on the portfolio as at 30 June 2019 is shown in
the charts on pages 14-15. The analysis provided illustrates the
diversification of the portfolio across inverter and panel
manufacturers and O&M counterparties. The level of
diversification achieved allows for efficiencies of scale through
reducing ongoing operational costs.
Market Developments
UNITED KINGDOM
In June 2019, Prime Minister Theresa May announced the UK's
intention to introduce new legislation which would commit the UK to
eradicating its net contribution to climate change by 2050. This
announcement further strengthens the UK's role in leading climate
change initiatives. The target is expected to be achieved through a
combination of initiatives including balancing carbon emissions
with carbon removal (e.g. carbon capture and storage technologies)
and the adoption of low-carbon technologies. Whilst the
announcement does not address the solar industry directly, it
reinforces the UK's long-term commitment to renewable generation
sources.
There has been no update on the UK's capacity market, which
continues to be in a "standstill" period following its suspension
in November 2018. An update is expected at the end of September
2019 in relation to the potential approval of new state aid. The
Company has no revenues directly linked to the capacity market
mechanism.
In July 2018, Ofgem initiated a consultation into residual
network charging arrangements. Amongst the reforms is a change to
the Balancing Services Use of System ("BSUoS"), BSUoS being the
means through which the cost to National Grid of balancing the
network is recovered. Currently, generators connecting into the
distribution network receive BSUoS as a credit, in light of the
positive effect this capacity had on alleviating constraint on the
transmission network. This was in response to changes in the use of
the network due to growing volumes of renewable and distribution
connected generation. In May 2019, Ofgem published an update on
timing and next steps. Ofgem ruled out making any changes to
embedded benefits before April 2021 and similarly the possibility
of new arrangements for residual charging will not be implemented
before April 2023. The Investment Manager continues to actively
monitor the situation and engage with Ofgem. Embedded benefits
revenue represents less than 2% of lifetime revenues for the
portfolio and any expected impact on valuations is expected to be
limited.
In March 2019, the UK's deadline to exit the European Union was
extended. As Brexit negotiations continue the Investment Manager
remains of the view that Brexit is unlikely to have a significant
impact on the Company's prospects, from both a financial and
operational perspective.
AUSTRALIA
On 18 May 2019, the Federal Government elections took place in
Australia. The incumbent minority Coalition Government, consisting
of the Liberal and National parties, was elected for a third
three-year term. The elected Coalition Government will be led by
Scott Morrison who replaced former Prime Minister Malcolm Turnbull
on 31 August 2018 following an internal leadership vote.
The Coalition Government has confirmed the emissions reduction
target at 26%-28% by 2030 (against 2005 levels) and proposed no
replacement to the existing Renewable Energy Target for which the
target gigawatt hours from renewable generation does not increase
beyond 2020. Support in the form of Large-Scale Generation
Certificates ("LGCs") remained unchanged and is expected to end in
2030. Following the election result, the Investment Manager does
not expect any relevant energy policy updates in the immediate
future.
In May 2019, Marginal Loss Factors ("MLFs") for FY2019 were
published by the Australian Energy Market Operator ("AEMO"). MLFs
reflect the amount of energy assumed to be lost in the transmission
network and are assigned to each individual renewable asset. The
MLFs published indicated a decrease in MLFs of up to 5% which will
have an adverse impact on generators in 2019-20. The change was
based on the expected increase in the number of new generators
coming online and an ageing transmission network. The Bannerton
asset was the most affected asset in our Australian portfolio with
the annual MLF for 2019-20 decreasing by more than 10%.
It is the Investment Manager's view the MLF methodology is not
fit for purpose and it is working alongside other industry
participants to recommend amendments to the existing MLF
methodology to reflect a more accurate transmission loss factor
based on regional local consumption. The Investment Manager will
reflect the results of its assessment relative to the MLF
methodology in due course.
Whilst the country adapts to new technologies and greater demand
and the associated challenges, the market does continue to benefit
from significant electricity demand and an irradiation profile well
suited to solar development.
HISTORIC POWER PRICES
UNITED KINGDOM
Wholesale power prices decreased throughout the reported period
to approximately GBP40/MWh in June 2019 following a period of
relatively high prices during the second half of 2018. This
reduction was driven by declining natural gas prices globally as a
result of new supplies from the US and Australia entering the
market. In addition to this, historically high gas storage levels
in Western Europe following one of the mildest winters on record
had a downward effect on spot and forward prices for natural gas
resulting in further downward pressure on wholesale power
prices.
The average power price achieved across the UK portfolio during
the period, including fixed price arrangements was GBP47.25/MWh,
versus GBP46.54/MWh in the first half of 2018, an increase of 1.5%.
The proportion of current revenues subject to fixed price
arrangements across the UK portfolio as at 30 June 2019 was 45%, at
a weighted average price of GBP53.38/MWh.
The existing fixed price arrangements have differing tenures.
The contract with the longest tenure expires in March 2021. The
percentage of fixed price arrangements will gradually decrease
between 30 June 2019 and March 2021. These arrangements provide
greater visibility over future cash flows and limit potential price
volatility in the short and medium term. The Company will continue
to monitor forward electricity prices and, where appropriate, will
enter into new fixed price arrangements.
The Investment Manager regularly reassesses conditions in the
electricity market and updates its view on likely future movements.
The Company retains the option to fix the PPAs for its assets at
any time. The Investment Manager is satisfied that the current
proportion of fixed price arrangements provides the appropriate
level of price certainty.
PPA tenders
As announced in the 2018 Annual Report, in Q3 2018 the Company
launched a tender for the supply of PPAs to 22 UK sites
representing 179MW. On 1 April 2019, the new PPA contracts were
entered into for a period of 10 years resulting in an average
increase in pass-through rates at which ROCs and power are paid of
1.43% and 0.5%, respectively, against the previous agreements. The
new PPA agreements had a positive impact on the Company's NAV of
GBP3.7m.
AUSTRALIA
Gas peaking power plants remain a key price setter for the
Australian electricity markets.
Wholesale power prices in Victoria increased dramatically during
the Australian summer months. On 25 January 2019, spot prices
reached the maximum level of A$14,500/MWh. This was driven by
extremely high temperatures as well as impacted by three of out six
generation units being offline.
During the period, the weighted average spot price in Queensland
was A$83.50/MWh, versus A$72.00/MWh in the first half of 2018, an
increase of 16%.
Prices were higher in Victoria with a weighted average spot
price of A$157.00/MWh, versus A$103.00/MWh in the first half of
2018, an increase of 52%.
POWER PRICE FORECASTS
The Investment Manager uses forward looking power price
assumptions to assess the likely future income of the portfolio
assets for valuation purposes. The Company's assumptions are formed
from a blended average of the forecasts provided by third party
consultants and are updated on a quarterly basis for each
market.
UNITED KINGDOM
During the period, power price forecasts decreased by 3.8%
mainly due to movements in the short and medium term. The main
driver of this reduction was the stronger pound assumptions
forecast by one of the third-party consultants. In the longer term
the deployment of more low-cost generation, notably onshore wind,
is expected to help offset the upward pressure from an increase in
demand.
The Company's forecasts assume an increase in power prices in
real terms over the medium to long-term of 0.4% per annum (31
December 2018: 0.6%).
Where the assumed asset life extends beyond 2050, the Investment
Manager has assumed no real growth in forecast power prices.
Australia
During the period, Queensland and Victoria power price forecasts
increased by 3.15% and 7.23% respectively,
mainly due to assumptions around the retirement of coal plants
in the medium to long term. This is not only driven by increasing
maintenance costs, but also by future decarbonisation ambitions,
which are expected to require the retirement of coal capacity to
reach current policy targets.
The Company's forecasts assume an increase in Queensland and
Victoria power prices in real terms over the medium to long-term of
1.16% and 0.79% respectively, per annum.
THIRD PARTY DEBT ARRANGEMENTS AND GEARING POSITION
As at 30 June 2019, total outstanding long-term debt was
GBP394.1 million, representing 36% of the GAV (calculated as NAV
plus outstanding debt) of the Company and its Subsidiaries (31
December 2018: GBP399.4 million or 36% of GAV).
At period end, total outstanding debt including RCFs was
GBP499.1 million, representing 45% of GAV (31 December 2018:
GBP504.4 million or 45% of GAV.)
Long-Term Facilities
As at 30 June 2019, GBP394.1 million of long-term debt
facilities were outstanding (including GBP4.8m of nominal
revaluation of the inflation-linked facilities).
Inflation linked debt facilities represented GBP89.1 million of
the total long-term debt outstanding as at 30 June 2019.
At 30 June 2019, the average cost of long-term debt, was 2.9%
per annum (2018: 2.8%), including the cost of the interest
inflation linked facilities of 1.29% per annum.
Revolving Credit Facilities
The Company currently holds two separate RCF facilities
totalling GBP105 million. The RCFs remained fully drawn during the
period.
The GBP40 million RCF facility in place for FS Holdco 1 has been
extended for three years and is now due to expire in March 2022.
The terms of the new facility offer a more favourable margin,
resulting in an ongoing interest expense saving for the
Company.
At 30 June 2019, the total annualised cost of the RCFs was 2.8%
(2018: 1.7%). The increase in costs compared to 2018 is due to the
facilities being fully drawn following the acquisitions completion
in 2018.
The Investment Manager expects to refinance the remaining
balance either through future equity raisings or other long-term
refinancing arrangements.
Debt Facilities
The following table summarises the debt position of the Fund as
at 30 June 2019.
Borrower Holding Provider Facility Amount Maturity Applicable Rate
Vehicle Type Outstanding
(m)
---------- ---------- ------------------------ ------------- --------- ----------------------
FS Holdco Fixed rate,
FS Holdco 1 MIDIS fully-amortising GBP62.3 Mar-24 3.78%
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
MIDIS Inflation GBP62.1 Mar-34 RPI Index1 +
linked, fully-amortising 1.08%
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
Santander Term loan, GBP23.9 Mar-34 LIBOR + 1.70%
fully-amortising
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
Project SPVs FS Holdco RBS Term loan GBP159.2 Sep-19 LIBOR + 1.75%
(25 vehicles) 2
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
Second Generation FS Holdco Fixed rate,
Portfolio 1 3 MIDIS fully-amortising GBP4.2 Aug-34 4.40%
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
Inflation GBP27.0 Aug-34 RPI Index1 +
linked, 1.70%
fully-amortising
------------------------ ------------- -------------------------------------------------- ----------------------
Foresight Solar FS Holdco CEFC Term loan A$62.0 Jun-27 Base rate (2.95%)
Australia Pty 42 + margin (2.55%
Ltd to 2.80%)
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
Longreach Finco CEFC Term loan A$12.0 Mar-22 Base rate + margin
Pty Ltd (2.57%) (constr
Base rate - 1.55%;
(3.28%)3 operation
Base rate - 1.40%)
(2.58%)
Base rate
(3.14%)3
------------------------------ ---------- ------------------------ ------------- -------- ---------- ----------
Longreach Finco MUFG Term loan A$12.0 Mar-22
Pty Ltd
------------------------------ ---------- ------------------------ ------------- -------- ---------- ----------
Oakey 1 Finco CEFC Term loan A$16.1 Mar-22
Pty Ltd
------------------------------ ---------- ------------------------ ------------- --------
Oakey 1 Finco MUFG Term loan A$16.1 Mar-22
Pty Ltd
------------------------------ ---------- ------------------------ ------------- -------- ---------- ----------
Oakey 2 Finco CEFC Term loan A$42.5 Oct-22 Base rate (2.48%)
Pty Ltd + 2.25%
------------------------------ ---------- ------------------------ ------------- -------- ----------------------
TOTAL LONG-TERM GBP427.4
DEBT
-------------------------------------------------------------------- ------------------------ ----------------------
FS Holdco FS Holdco Santander Revolving GBP40.0 Mar-22 LIBOR + 1.75%
1 credit
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
FS Debtco FS Holdco Santander Revolving GBP65.0 Feb-20 LIBOR + 2.00%
2 credit
------------------ ---------- ---------- ------------------------ ------------- --------- ----------------------
TOTAL REVOLVING GBP105.0
DEBT
-------------------------------------------------------------------- ------------------------ ----------------------
TOTAL DEBT GBP532.4
-------------------------------------------------------------------- ------------------------ ----------------------
1 RPI-linked facilities have a long-term inflation assumption of 2.75%
2 Australian debt presented in full and not prorated for Foresight ownership proportion
3 Interest rate swap for 100% of the outstanding debt during the
initial 5 years, 75% from years six to ten and 50% thereafter
During the period the Company repaid total debt of GBP6.3
million.
The Company continues to have limited exposure to benchmark rate
movements in the UK and Australia as a result of the long-term
interest rate swaps in place to protect the Company from underlying
interest rate movements. Sterling denominated debt facilities
priced over LIBOR benefit from interest rate swaps hedging 80% of
the outstanding debt during the terms of the loans. In Australia,
debt facilities entered into with the CEFC have no exposure to the
Bank Bill Swap Bid Rate ("BBSY") as the rate was fixed at financial
close. Debt facilities provided by MUFG have in place interest rate
swaps on a decreasing nominal amount for a notional tenor of 20
years.
Refinancing of UK debt facilities
Post period end, on 2 August 2019, the Investment Manager
successfully completed the refinancing of 28 of the Company's UK
assets (321 MW). The debt refinancing totalled GBP245 million,
compromising a GBP170 million term loan facility, a GBP65 million
RCF and a GBP10 million debt service reserve facility. The
refinancing was secured on attractive terms. Although the
refinancing was not completed until after the end of the period,
due to the material impact of the new terms this has been taken
into consideration for the NAV as at 30 June 2019, resulting in an
increase in the Company's NAV of GBP17.0 million.
The GBP170 million fully amortising term loan facility will
expire in March 2036 and will be provided jointly by Landesbank
Hessen-ThĆ¼ringen Girozentrale ("Helaba") and Sumitomo Mitsui
Banking Corporation ("SMBC"). The term loan facility all-in annual
cost of debt is approximately 230bps and includes interest rate
swaps hedging 100% of the outstanding debt during the term of the
loan. The proceeds of the loan facility will be used partially to
refinance the asset-level debt facilities expiring in September
2019.
The GBP65 million RCF has a three-year term and will be provided
by National Westminster Bank plc ("NatWest"). This facility
replaces the existing GBP65 million RCF entered into in 2017.
Based on the Company's 30 June 2019 GAV and following the
refinancing, the total outstanding long-term debt of GBP404.9
million represents gearing of approximately 37%. The total
outstanding debt including revolving credit facilities of GBP509.9
million represents approximately 46% of GAV.
DIVIDS
The Company is targeting a full year dividend for the year
ending 31 December 2019 of 6.76 pence, representing a 2.70%
increase against the dividend declared for the 2018 financial year.
The Company has met all target dividends since IPO.
DIVID TIMETABLE FOR FY2019
Dividend Amount Status Payment Date
---------- -------- ----------------
Interim 1 1.69 pence Approved 30 August 2019
--------- ---------- -------- ----------------
Interim 2 1.69 pence Approved 29 November 2019
--------- ---------- -------- ----------------
Interim 3 1.69 pence Targeted Q1 2020
--------- ---------- -------- ----------------
Interim 4 1.69 pence Targeted Q2 2020
--------- ---------- -------- ----------------
TOTAL 6.76 pence
--------- ---------- -------- ----------------
The first interim dividend of 1.69 pence for the year ending 31
December 2019 will be paid on 30 August 2019.
On 19 August 2019 the Board approved the second interim dividend
relating to FY2019 of 1.69 pence per share.
Dividend Timetable - Interim 2
----------------
Ex-dividend Date 24 October 2019
------------------------------ ----------------
Record Date 25 October 2019
------------------------------ ----------------
Payment Date 29 November 2019
------------------------------ ----------------
Full details of the scrip dividend alternative that is being
offered in respect of the Dividend (the "Scrip Offer"), its
timetable and the Scrip Dividend Scheme can be found in the Scrip
Dividend Alternative Offer Document (the "Scrip Document")
available on the Company's website to view and/or download at
fsfl.foresightgroup.eu/investor-relations/. The Scrip Document is
also available on the National Storage Mechanism website at
www.morningstar.co.uk/uk/NSM and copies are also available for
inspection at JTC House, 28 Esplanade, St. Helier, Jersey JE2
3QA.
DIVID COVER
Total dividends of GBP18.1 million were paid during the period
to 30 June 2019 with GBP35.2 million paid during the 12 months to
30 June 2019. Compared with the relevant net cash flows of the
Company and underlying investments, these dividends were covered
1.12 times (30 June 2018: 1.14 times).
FOREIGN EXCHANGE
The Company is exposed to foreign exchange movements in respect
of its investments in Australia. As such, the Company continues to
implement a hedging strategy in order to reduce the possible impact
of currency fluctuations and to minimise the volatility of equity
returns and cash flow distributions. The Company has entered into
forward contracts for up to two years for an amount equivalent to
approximately 75% of its expected distributable foreign currency
cash flows at project level. Due to the predictable nature of solar
irradiation in Australia and the known dividend payment dates, the
Investment Manager believes this hedging strategy will protect the
cash yields from the Australian assets.
Foreign exchange hedging will not be applied to the cost of the
equity investments, considering the long-term investment strategy
of the Company.
The Company reviews its foreign exchange strategy on a regular
basis with the objective of limiting the short-term volatility in
sterling distributable cash flows caused by foreign exchange
fluctuations and of optimising the costs of the hedging
instruments.
ONGOING CHARGES
The ongoing charges ratio for the period to 30 June 2019 was
1.18% (31 December 2018: 1.18%). This has been calculated using
methodology as recommended by the Association of Investment
Companies ("AIC"). Asset management fees charged by Foresight Group
LLP on an arm's length basis at project level are excluded from the
ongoing charge ratio.
INVESTMENT PERFORMANCE
The NAV per share as at 30 June 2019 decreased to 109.6 pence
compared to 111.2 pence as at 31 December 2018.
MOVEMENTS IN NAV
A breakdown in the movement of the Company's NAV during the
reporting period is shown in the table below.
NAV NAV per share
----------- -------------
NAV as at December 2018 GBP610.3m 111.2p
------------------------------------------- ----------- -------------
Dividend paid GBP(18.1)m (3.3)p
------------------------------------------- ----------- -------------
Interest earned GBP22.9m 4.2p
------------------------------------------- ----------- -------------
Management fee GBP(3.1)m (0.6)p
------------------------------------------- ----------- -------------
Finance costs GBP(1.3)m (0.2)p
------------------------------------------- ----------- -------------
Other costs (incl. Corporation Tax) GBP(2.2)m (0.4)p
------------------------------------------- ----------- -------------
Inflation* GBP(2.3)m (0.4)p
------------------------------------------- ----------- -------------
Refinancing Terms* GBP17.0m 3.0p
------------------------------------------- ----------- -------------
PPA Terms* GBP3.7m 0.7p
------------------------------------------- ----------- -------------
Discount Rate* GBP14.7m 2.7p
------------------------------------------- ----------- -------------
Valuation Date* GBP(3.0)m (0.5)p
------------------------------------------- ----------- -------------
Power Curve* GBP(32.4)m (5.9)p
------------------------------------------- ----------- -------------
Large-Scale Generation Certificate ("LGC")
Curve* GBP(3.7)m (0.7)p
------------------------------------------- ----------- -------------
Other (incl. FX)* GBP(1.0)m (0.2)p
------------------------------------------- ----------- -------------
NAV as at June 2019 GBP601.5m 109.6p
------------------------------------------- ----------- -------------
* Movement in the valuation of underlying solar assets
VALUATION OF THE PORTFOLIO
The Investment Manager is responsible for providing fair market
valuations of the Company's underlying assets to the Board of
Directors. The Directors review and approve these valuations
following appropriate challenge and examination. Valuations are
undertaken quarterly. A broad range of assumptions are used in the
valuation models. These assumptions are based on long-term
forecasts and are not affected by short-term fluctuations, be it
economic or technical.
It is the policy of the Investment Manager to value with
reference to Discounted Cash Flows ("DCF") from the later of
commissioning or transaction completion. This is partly due to the
long periods between agreeing an acquisition price and financial
completion of the acquisition. Occasionally this delay reflects
construction. Revenues accrued do not form part of the DCF
calculation in making a fair valuation.
The current portfolio consists of non-market traded investments
and valuations are based on a DCF methodology or held at cost where
the assets have not yet reached commissioning. This methodology
adheres to both IAS 39 and IFRS 13 accounting standards as well as
the International Private Equity and Venture Capital ("IPEV")
Valuation Guidelines.
The Company's Directors review and challenge the operating and
financial assumptions, including the discount rates, used in the
valuation of the Company's portfolio and approve them based on the
recommendation of the Investment Manager.
METHODOLOGY
During the period, the Investment Manager undertook a review of
the discount rates applied to the valuation of the portfolio. As a
result of this analysis, discount rates for the UK portfolio have
been reduced by 0.25% in order to bring valuations in line with the
expected market pricing for operational assets.
The unlevered discount rate has been reduced from 6.75% to
6.50%. This applies to assets that have been acquired using the RCF
facilities of the Company, being Shotwick, Sandridge and Wally
Corner.
Assets that have debt in place at portfolio level continue to be
valued using a premium to the unlevered rate of 0.75%, at a
discount rate of 7.25%. Assets that have debt at SPV level, and are
therefore not cross-collateralised, are considered to carry a
higher premium of 1.00% and as such are valued using a discount
rate of 7.50%.
The discount rate used for UK asset cashflows which have
received lease extensions beyond the initial investment period of
25 years is 8.50% for years subsequent, reflecting the merchant
risk of the expected cash flows beyond the initial 25-year
period.
For the Australian portfolio, operational assets with PPAs in
place are valued using an 8.50% discount rate. Assets under
construction are valued at cost and will continue to be held at
cost until the assets are connected to the grid and fully
operational. These asset valuations are updated quarterly to
reflect movements related to exchange rates.
The weighted average discount rate across the portfolio is 7.15%
compared to 7.30% as at 31 December 2018.
Asset life
The weighted life of the UK portfolio as at 30 June 2019 is 28.4
years (31 December 2018: 28.4 years) from the date of
commissioning.
The average useful economic life across 37 of the 50 UK assets
goes beyond 25 years, averaging 30.5 years from the date of
commissioning. Additional conservative operational and lifecycle
costs are incorporated into the extended useful life period.
Assets located in Australia currently assume a useful economic
life of 25 years. This assumption is currently under review by the
Investment Manager.
DIVIDS PAID
The Company paid dividends of GBP18.1m during the six-month
period to 30 June 2019 or 3.38p per share.
INTEREST EARNED
The Company and its subsidiaries accrued GBP22.9 million of
investment income during the period. This is the interest accrued
on shareholder loans.
COSTS
Total costs of GBP6.6 million, which include corporation tax,
management fees, finance and other costs, were incurred by the
Company and its subsidiaries on a consolidated basis during the
period.
INFLATION
The Company continues to use 2.75% as its medium/long-term
inflation assumption. As at 30 June 2019, the valuation models
reflect Office for Budget Responsibility ("OBR") RPI forecasts for
the periods 2019, 2020 and 2021 of 2.95%, 2.77% and 3.02%
respectively. The Company's RPI assumption adopted for subsequent
years has remained unchanged at 2.75%.
REFINANCING TERMS
This movement reflects the updated debt terms secured in the
post-period refinancing of UK debt facilities. The positive
movement results from the margins and LIBOR swap rates of the new
facilities being lower than the refinancing assumptions made at the
time of acquisition.
PPA TERMS
On 1 April 2019, new PPA contracts across 22 assets representing
179MW were entered for a period of 10 years. The new contracts
resulted in an average increase in pass-through rates at which ROCs
and power are sold of 1.43% and 0.5%, respectively, against the
previous PPAs.
DISCOUNT RATE
As reported above, the Company's UK discount rates have been
reduced by 0.25% for unlevered and levered assets.
During the period, Oakey 1 and Bannerton have reached full
export and have been revalued using a discount rate methodology,
applying an 8.5.% discount rate for operational assets with PPA
arrangements in place.
The Investment Manager regularly reviews the discount rate to
ensure it remains in line with any changes to the market and risk
profile of the Company.
VALUATION DATE
This movement represents the impact of moving from one valuation
date to another. Over the life of an asset this movement will
reduce the valuation to nil. Short-term increases arise from moving
towards higher cash yields (and therefore discounting them
less).
POWER CURVE
The Company uses forward looking power price assumptions to
assess the likely future income of the portfolio assets for
valuation purposes. The Company's assumptions are formed from a
blended average of the forecasts provided by third party
consultants and are updated on a quarterly basis.
During the period there was a downward movement of 3.8% in the
medium to long-term power price forecast for the UK market. The
Company's forecasts continue to assume an increase in power prices
in real terms over the medium to long-term of 0.4% per annum (31
December 2018: 0.6%).
Movements during the period also include the impact of revaluing
Bannerton using a discount rate methodology and consequent update
of the Victoria power price curve against the assumption made at
the time of acquisition, resulting in a negative impact on the
asset valuation. The impact for Oakey 1 was negligible.
Large-scale Generation Certificates ("LGC") CURVE
The Company uses forward looking LGC price assumptions to assess
the likely future income of the certificates generated by the
Australian 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.
OTHER MOVEMENTS
This includes other factors behind the valuation movements,
including long term O&M cost assumptions, insurance premiums
and changes in exchange rate assumptions.
VALUATION SENSITIVITIES
Where possible, assumptions are based on observable market and
technical data. In many cases, such as forward power prices,
independent advisors are used to provide evidenced information
enabling the Investment Manager to adopt a prudent approach. The
Investment Manager has set out the inputs which it has ascertained
would have a material effect upon the NAV in note 17 of the
Financial Statements. All sensitivities are calculated
independently of each other.
OUTLOOK
The UK has more than 13GW of solar PV installed capacity however
the market has demonstrated only marginal growth since the closure
of the RO Scheme in 2016. As a result, investment opportunities in
the UK subsidised market continue to be limited as the ongoing
consolidation in the secondary market is compressing returns to
levels that do not meet the minimum requirements of the
Company.
We continue to review international investment opportunities in
markets that benefit from regulatory support. However, European
markets are also showing signs of increased consolidation and
inflated asset valuations at present. This trend is expected to
continue in European markets as competition for assets increase as
a result of new entrants with lower target yield requirements and
as the introduction of new subsidies is expected to be limited over
time.
The announcement of the UK's intention to commit to a net zero
emissions target by 2050 was a positive development for the
renewable industry and although it did not address the solar
industry directly it is expected to create a supportive environment
for the future growth of installed capacity, at a time when the
solar levelised cost of energy continues on a downwards trajectory.
This is expected to act as a catalyst for subsidy-free investment
opportunities.
We continue to review the Australian market and are closely
monitoring the development of subsidy-free markets in Southern
Europe and the UK. In Southern Europe, this market has developed
rapidly and a number of relevant transactions have recently been
announced in Spain and Portugal with attractive PPA structures. In
the UK, whilst this market has progressed, we remain of the view
that the current market economics are not yet in-line with the
Company's return requirements. However, we expect this market to
develop rapidly and it therefore could present significant
opportunity in the future.
Foresight Group's experience in the aforementioned markets
provides the Investment Manager with a solid understanding of the
value-accretive potential of these investment opportunities.
In recent periods we have identified and delivered on a
significant number of optimisation initiatives that have created
additional value for the Company, including the post-period
completion of the GBP245 million refinancing and the PPA re-tender
finalised in April 2019. We will continue to explore value
enhancement initiatives across the portfolio, including the
Australian assets, as the consolidation of the existing portfolio
progresses and new technical, commercial and financial solutions
are identified.
Asset Manager's Report
The Asset Management services provided ensure the day to day
operation of the sites is robust with sound operational and
commercial decisions. The comprehensive list of services
includes:
-- Technical and financial performance monitoring
-- Contractual compliance of all operational agreements
-- Portfolio optimisation including renegotiation of project
contracts, spare parts management and equipment replacement
strategy and technology improvements
-- Liaising with and oversight of O&M counterparties
-- Debt reporting and other debt compliance services
-- Accounting, bookkeeping, tax compliance and statutory
reporting of all SPVs
-- Corporate governance activities including health and
safety compliance.
Portfolio Performance
The operational performance during the period has been robust
with electricity generation 2.9% above base case, when adjusted for
compensation received. Performance has been driven by irradiation
3.1% above base case.
The portfolio has benefited from previous remedial works to
specific sites and optimisation initiatives to improve the
reliability of the assets in general. In addition, the Asset
Manager has continued to pro-actively engage with service providers
including Distribution Network Operators ("DNOs") and Operation and
Maintenance ("O&M") contractors and sub-contractors. The Asset
Manager believes this will result in improved optimisation of
'planned' outages and a reduction in unplanned outages.
The use of real-time data at asset level, together with closely
working with O&M providers, is expected to reduce downtime,
improve efficiency in the short term and build a greater
understanding of the replacement of key components. It is also
expected to help with warranty management down to string, solar
panel level or inverter performance level thereby optimising output
while minimising the total operating cost base.
Incidents affecting the UK portfolio during the period were
mainly caused by grid outages (Fields Farm, Welbeck) and equipment
failures that have been promptly rectified during the period, as
was the case with Wymeswold which was affected by faults on string
cables and inverter issues.
During the period, in Australia, two additional assets reached
full export capacity, Bannerton and Oakey 1. The projects have
previously experienced construction and commissioning delays due to
the new grid commissioning requirements introduced by AEMO in 2018
and as a result of EPC contractor RCR Tomlinson ("RCR") going into
administration in November 2018, particularly in the case of Oakey
1. The delays in commissioning are not expected to have a material
impact on overall financial performance as the Company is
contractually and financially protected and the Company will
continue to enforce all its contractual rights.
Longreach continues to experience some limited levels of grid
curtailment caused by export constraints at one of the local
substations. A solution to the curtailment issue is being discussed
with the local DNO and is expected to be implemented in 2020.
ASSETS UNDER CONSTRUCTION
Oakey 2 achieved initial export in April 2019 as part of staged
commissioning process in the Australian market. The project is
expected to begin full commissioning in the second half of
2019.
PRODUCTION
The production figures below have been adjusted, where relevant,
for events where compensation has been, or will be, received.
MW Total Production Production Irradiation
(kWh) Variance Variance
----- ---------------- ---------- -----------
Abbey Fields 4.9 2,858,791 5.5% 5.3%
------------------ ----- ---------------- ---------- -----------
Abergelli 7.7 3,958,282 -1.6% -2.2%
------------------ ----- ---------------- ---------- -----------
Atherstone 14.8 7,665,666 5.9% 6.6%
------------------ ----- ---------------- ---------- -----------
Bilsthorpe 5.7 3,051,355 6.0% 8.8%
------------------ ----- ---------------- ---------- -----------
Bournemouth 37.3 21,618,620 3.2% -2.4%
------------------ ----- ---------------- ---------- -----------
Bulls Head 5.5 2,972,019 8.5% 7.7%
------------------ ----- ---------------- ---------- -----------
Castle Eaton 17.8 9,474,475 9.7% 4.4%
------------------ ----- ---------------- ---------- -----------
Coombeshead 9.8 5,470,793 0.3% 1.0%
------------------ ----- ---------------- ---------- -----------
Copley 30.0 16,345,528 9.4% 5.8%
------------------ ----- ---------------- ---------- -----------
Crow Trees 4.7 2,517,206 9.6% 8.6%
------------------ ----- ---------------- ---------- -----------
Cuckoo Grove 6.1 3,395,399 -9.7% -5.7%
------------------ ----- ---------------- ---------- -----------
Field House 6.4 3,467,484 1.0% 0.7%
------------------ ----- ---------------- ---------- -----------
Fields Farm 5.0 2,005,628 -20.1% 5.1%
------------------ ----- ---------------- ---------- -----------
Gedling 5.7 3,038,120 8.0% 8.6%
------------------ ----- ---------------- ---------- -----------
High Penn 9.6 5,094,344 4.0% -4.2%
------------------ ----- ---------------- ---------- -----------
Highfields 12.2 5,991,541 0.2% 3.6%
------------------ ----- ---------------- ---------- -----------
Homeland 13.2 7,225,856 -4.3% -4.9%
------------------ ----- ---------------- ---------- -----------
Hunters Race 10.3 5,917,826 4.0% 1.9%
------------------ ----- ---------------- ---------- -----------
Kencot Hill 37.2 20,204,496 6.3% 4.7%
------------------ ----- ---------------- ---------- -----------
Landmead 45.9 23,869,171 5.1% 8.2%
------------------ ----- ---------------- ---------- -----------
Lindridge 4.9 2,694,682 7.1% 3.2%
------------------ ----- ---------------- ---------- -----------
Longreach 17.3 16,810,431 -7.1% 3.4%
------------------ ----- ---------------- ---------- -----------
Manor Farm 14.2 7,275,845 9.7% 7.3%
------------------ ----- ---------------- ---------- -----------
Marsh Farm 9.1 4,964,413 -0.1% 0.9%
------------------ ----- ---------------- ---------- -----------
Membury 16.5 8,690,608 2.8% 1.0%
------------------ ----- ---------------- ---------- -----------
Misson 5.0 2,724,775 6.8% 3.2%
------------------ ----- ---------------- ---------- -----------
Nowhere 8.1 4,685,693 10.3% 10.1%
------------------ ----- ---------------- ---------- -----------
Paddock Wood 9.2 5,115,386 5.0% 1.8%
------------------ ----- ---------------- ---------- -----------
Park Farm 13.2 7,116,383 12.4% 6.1%
------------------ ----- ---------------- ---------- -----------
Pen Y Cae 6.8 3,417,142 -2.7% -1.6%
------------------ ----- ---------------- ---------- -----------
Pitworthy 15.6 7,736,037 -0.4% -0.9%
------------------ ----- ---------------- ---------- -----------
Playters 8.6 4,711,475 1.6% 4.4%
------------------ ----- ---------------- ---------- -----------
Port Farm 34.7 18,838,830 6.1% 2.6%
------------------ ----- ---------------- ---------- -----------
Roskrow 8.9 4,672,968 -5.7% -2.6%
------------------ ----- ---------------- ---------- -----------
Sandridge 49.6 25,691,297 -0.4% 1.5%
------------------ ----- ---------------- ---------- -----------
Sawmills 6.6 3,548,373 -1.3% -2.0%
------------------ ----- ---------------- ---------- -----------
Sheepbridge 5.0 2,755,980 11.1% 11.2%
------------------ ----- ---------------- ---------- -----------
Shotwick 72.2 36,378,464 3.1% 2.8%
------------------ ----- ---------------- ---------- -----------
Southam 10.3 5,433,151 5.3% 4.1%
------------------ ----- ---------------- ---------- -----------
Spriggs 12.0 6,596,490 6.8% 0.5%
------------------ ----- ---------------- ---------- -----------
Steventon 10.0 5,380,741 1.5% 5.5%
------------------ ----- ---------------- ---------- -----------
SV Ash 8.4 4,464,156 7.1% 4.0%
------------------ ----- ---------------- ---------- -----------
Tengore 3.6 1,931,979 2.0% 0.7%
------------------ ----- ---------------- ---------- -----------
Trehawke 10.6 5,997,694 2.4% 2.4%
------------------ ----- ---------------- ---------- -----------
Upper Huntingford 7.7 3,929,512 -0.1% 0.3%
------------------ ----- ---------------- ---------- -----------
Verwood 20.7 11,351,409 1.8% 0.8%
------------------ ----- ---------------- ---------- -----------
Wally Corner 5.0 2,819,692 6.9% 5.0%
------------------ ----- ---------------- ---------- -----------
Welbeck 11.3 5,653,498 -1.1% 8.8%
------------------ ----- ---------------- ---------- -----------
Wymeswold 34.5 16,852,756 0.6% 7.9%
------------------ ----- ---------------- ---------- -----------
Yarburgh 8.1 4,524,994 6.3% 8.0%
------------------ ----- ---------------- ---------- -----------
Yardwall 3.0 1,718,255 0.9% 0.1%
------------------ ----- ---------------- ---------- -----------
Total 740.4 400,625,711
------------------ ----- ---------------- ---------- -----------
Weighted Total 2.9% 3.1%
------------------ ----- ---------------- ---------- -----------
Sustainability and ESG
Sustainability and Environmental, Social and Governance ("ESG")
considerations are at the core of the Company's strategy, helping
to inform its investment process and its asset management
operations. The following is a review of recent activities
undertaken by the Company in terms of environmental stewardship,
social engagement and good governance.
As mentioned in the Company's 2018 Annual Report, Foresight
Group's Infrastructure team has refined its sustainability tracking
and reporting to further improve its investment processes, enhance
the sustainability performance of existing assets and demonstrate
more comprehensively the environmental benefits and social
contribution of the Group's activities. This resulted in the
implementation of its Sustainable Investing in Infrastructure
strategy, which focuses on ensuring all assets are evaluated prior
to acquisition and throughout their ownership, in accordance with
Foresight Group's Sustainability Evaluation Criteria. Based on the
key metrics this exercise provides, the Company is able to report
against the United Nations Sustainable Development Goals ("SDGs").
The SDGs represent a call to action for all UN member states to
promote prosperity while protecting the environment. Of the SDGs,
the Company contributes most significantly to the following:
CONTRIBUTION TO SUSTAINABLE DEVELOPMENT GOALS
---------------------------------------------------------------------------
Goal 3: "Good Health and Well-Being. Ensure healthy lives and
promote well-being for all at all ages." Achieved through the
reduction of pollution and emitted greenhouse gases ("GHGs")
by the installation and management of clean, low-carbon energy
generation assets.
---------------------------------------------------------------------------
Goal 7: "Affordable and Clean Energy. Ensure access to affordable,
reliable, sustainable and modern energy." Achieved by driving
a reduced reliance on fossil fuels by investment in utility-scale,
renewable energy generation assets.
---------------------------------------------------------------------------
Goal 9: "Industry, Innovation and Infrastructure. Build resilient
infrastructure, promote inclusive and sustainable industrialization
and foster innovation." Achieved by future-proofing energy systems
through investment in de-centralised, interconnected generation
assets, using the latest technologies to maximise electrical
output.
---------------------------------------------------------------------------
Goal 13: "Climate Action. Take urgent action to combat climate
change and its impacts." Achieved by demonstrating commitment
to the 2015 Paris Agreement and contributing to the globally
supported decarbonisation agenda through investment in low-carbon,
renewable energy assets.
---------------------------------------------------------------------------
Goal 15: "Life on Land. Sustainably manage forests, combat desertification,
halt and reverse land degradation, halt biodiversity loss."
Achieved by preserving the integrity of land through investment
in low-impact and low-polluting technologies and introducing
environmental initiatives through active asset management, supporting
biodiversity and the ecosystem.
There are five central themes to Foresight Group's
Sustainability Evaluation Criteria. The Company's adherence, and
contribution, to these themes is assessed below.
1. SUSTAINABLE DEVELOPMENT CONTRIBUTION
This theme supports reporting on the development of affordable
and clean energy, improved resource and energy efficiency and
contributions to the fight against climate change. In H1 2019, the
Company's 740MW operational portfolio produced over 400GWh of
renewable energy. Furthermore, using Ofgem's assessment that the
average UK household consumes 3.1 MWh per year, it can be inferred
that the Company's portfolio generated enough clean electricity to
power c. 130,000 UK homes during the period.
2. ENVIRONMENTAL FOOTPRINT
Each asset is closely monitored for its localised environmental
impact. As such, this criterion assesses potential environmental
impacts such as emissions to air, land and water, effects on
biodiversity and noise and light pollution. The Asset Manager
ensures that solar power plants are managed in a manner that
maximises the agricultural, landscape, biodiversity and wildlife
potential, which can also contribute to lowering maintenance costs
and enhancing security.
As a working partner of the Solar Trade Association, the Asset
Manager recently helped to co-author the organisation's report, The
Natural Capital Value of Solar (June 2019), which is available to
download at:
https://www.solar-trade.org.uk/wp-content/uploads/2019/06/The-Natural-Capital-Value-of-Solar.pdf.
In this report, Foresight Group highlights the importance of
wetlands, drainage and on-site water management at solar sites, and
the associated benefits such as the reduction of both nitrogen
loads and intermittent pesticide fluxes on surrounding land, with
the added positive effect of enhanced ease of access for O&M
contractors and a resultant lower susceptibility to long-term land
damage.
Furthermore, the Asset Manager's Environment and Sustainability
Manager, James Jenkison, has continued to pursue a number of
initiatives to ensure the solar power plants are being effectively
managed for biodiversity. Such schemes include:
-- Hedgerow and tree planting - To date, more than 35km
of hedgerows have been planted across the portfolio.
With the majority of hedgerow planting now complete,
the hedgerows are managed to ensure they develop into
dense species-rich habitats. Hedgerows help to promote
biodiversity, absorb carbon, improve both drainage and
soil quality and reduce site exposure to extreme weather
conditions.
-- Hedgerows are managed in the winter months every second
year to ensure that hedges and trees can flower and produce
berries as forage for insects, birds and other wildlife,
whilst also being managed to maintain good structure
and diversity in accordance with best practice guidance.
-- Building of animal refuges - Hibernacula and log piles
are built at most sites to provide natural shelter as
well as to help improve natural drainage.
-- Bat and bird boxes - The Asset Manager regularly installs
bird and bat boxes to attract local species to the sites.
-- Sheep grazing - Numerous sites have been either built
or adapted through the installation of barriers and the
protection of cabling, to ensure their suitability for
continued sheep grazing.
-- Beehive installation - The Asset Manager continues to
work with local bee keepers to install hives as a means
of helping to restore the native bee population and support
crop pollination and honey production. The Asset Manager
also encourages the productivity of these hives through
the planting of nectar rich wildflower species.
-- Climate change risk - Flood risk assessments have been
carried out for all sites. Panels are installed above
the 'worst-case scenario' water level and land drains,
swales and ponds are also maintained to ensure safe working
conditions and good soil condition which further promotes
diverse grass and wildflower growth.
-- Grassland management - A grassland cutting timetable
is being implemented to limit cutting in the Summer so
as to promote the growth, flowering and seed spreading
of wildflowers to encourage biodiversity and forage for
insects and birds.
3. SOCIAL ENGAGEMENT
During the acquisition process, and throughout an asset's
lifecycle, the Company engages with contractors, local residents,
community organisations, landowners and local authorities to
promote public support for the project, maximise the local benefit
and minimise any actual or perceived negative effects. This has
been achieved through a number of initiatives:
-- Community engagement - The Asset Manager regularly attends
parish council and local community meetings, conducts
visits with O&M providers, landowners and construction
companies to encourage community engagement and ensure
that local stakeholders understand the Asset Manager's
expectations of site management and to discuss areas
of improvement in management techniques. To date, over
67 site visits have been conducted by the Environment
and Sustainability Manager.
-- Community investment - The Company supports community
benefit schemes which assist local authorities in developing
and maintaining community assets and organisations. In
the six-month period to 30 June 2019, over GBP80k worth
of grants were provided to local communities throughout
the UK, bringing the total grants provided to date to
GBP225k. Further details of the community projects that
have benefitted from these funds will be provided in
the 2019 Annual Report.
-- Educational initiatives - A large part of generating
public support comes as a result of educational initiatives,
which help to promote an understanding, and appreciation
of, the benefit of solar power generation. To date in
2019, college tours have been undertaken at Gedling,
Southam and Wymeswold where students and staff were able
to witness first-hand the operational aspects of a solar
farm and the steps taken to maximise operational efficiency
and environmental stewardship.
-- Health and well-being - The management and monitoring
of Health and Safety ("H&S") onsite is a top priority
for the O&M contractor, which is responsible for recording
and reporting all H&S related incidents to the Asset
Manager on an ongoing basis. In addition to this, to
improve the management of SHEQ (Safety, Health, Environmental
and Quality), reinforce best practice and ensure regulatory
compliance, the Asset Manager appoints independent professionally
accredited H&S consultants. Consultants ensure that contractors
are appointed on the basis of their health and safety
competence and regularly visit the sites to ensure they
are meeting industry and legal standards.
4. GOVERNANCE
The Asset Manager actively reviews the regulatory and property
consents of every solar asset to ensure compliance with the
permissions and conditions attached and actively engages with local
government organisations to ensure ongoing compliance. In addition
to ensuring the Company is protected from potential legal action,
this promotes trust with the sites' local communities.
Compliance
Integral to the maintenance of the Company's reputation is its
regulatory compliance and adherence to relevant laws. The Company
is committed to carrying out business fairly, honestly and openly
and the Investment Manager has established policies and procedures
to prevent bribery within its organisation. The Company has also
committed to a policy to conduct all its business in an honest and
ethical manner, taking a zero-tolerance approach to facilitation of
tax evasion, whether under UK law or under the law of any foreign
country.
As a means of ensuring that sustainability considerations are at
the forefront of the investment process, the Investment Manager
delivers Best Practice sessions to its staff. These sessions focus
on how the sustainability performance of a given asset can be
assessed, measured and improved, whilst also demonstrating how good
ESG management can result in a financial upside.
5. Third Party Interactions
Counterparty due diligence forms an essential part of ensuring
that key counterparties are reputable, that they have a robust and
sustainable supply chain and have a similarly aligned approach to
governance, compliance and ESG as the Company, which must be
evidenced by appropriate policies. Consequently, two initiatives
are being undertaken by the Company to further enhance these
processes with a view to improving overall asset performance and
protecting the Company against reputational risk.
-- Enhanced supplier and counterparty checks - The Company
now contracts out due diligence to an expert third party.
Using this highly specialised legal advisory and consultancy
firm allows for a greater depth of analysis to be conducted
in a shorter space of time, thus speeding up the acquisition
process and giving a higher degree of assurance that
the counterparties involved are both legally and financially
sound.
-- Active Supplier Engagement - A more formalised approach
to supplier engagement on the topic of ESG is being
developed, with the aim of encouraging more sustainable
practices in the operation and maintenance of the solar
sites.
While the Company actively tracks data pertaining to the above
criteria on an internal basis, it also seeks external validation of
its performance through third party organisations:
-- GRESB (Global Real Estate Sustainability Benchmark)
- The Company submitted the Southam Solar Farm to the
GRESB Infrastructure ESG Assessment in 2018, believing
this particular asset was representative of the portfolio
as a whole. For consistency it has also been resubmitted
for the 2019 assessment year. As a means of further
demonstrating our commitment to external validation,
the Investment Manager is currently reviewing options
for assessing the Company as a whole, one of which is
the GRESB Infrastructure ESG Fund Assessment. The results
of our 2018 GRESB Infrastructure ESG Assessment are
below. The results of the 2019 submission are due to
be released in September 2019 and will be published
in the 2019 Annual report:
Module 2018 Score Peer Average
---------- ------------
Environment 61/100 52/100
------------ ---------- ------------
Social 71/100 60/100
------------ ---------- ------------
Governance 47/100 46/100
------------ ---------- ------------
-- PRI (Principles for Responsible Investment) - The Investment
Manager has been a signatory to the United Nations-backed
PRI since 2013. The PRI is a globally recognised voluntary
framework concerned with the incorporation of ESG considerations
into the investment decision making process. As a signatory,
the Investment Manager reports annually on its responsible
investment activities by responding to asset-specific
modules in the PRI's Reporting Framework. In its recent
2019 assessment, the Investment Manager achieved an
A+ level rating for 'Strategy and Governance', the highest
possible rating, surpassing the peer average (A). An
A rating was achieved in the 'Infrastructure' module,
with scoring improving by four points to 27 out of 30,
up from 23 points awarded in 2018. The Investment Manager's
approach to post-investment monitoring and active ownership
of ESG within the asset class contributed to the higher
score.
-- PRI (Principles for Responsible Investment) - The Investment
Manager has been a signatory to the United Nations-backed
PRI since 2013. The PRI is a globally recognised voluntary
framework concerned with the incorporation of ESG considerations
into the investment decision making process. As a signatory,
the Investment Manager reports annually on its responsible
investment activities by responding to asset-specific
modules in the PRI's Reporting Framework. In its recent
2019 assessment, the Investment Manager achieved an
A+ level rating for 'Strategy and Governance', the highest
possible rating, surpassing the peer average (A). An
A rating was achieved in the 'Infrastructure' module,
with scoring improving by four points to 27 out of 30,
up from 23 points awarded in 2018. The Investment Manager's
approach to post-investment monitoring and active ownership
of ESG within the asset class contributed to the higher
score.
Module 2019 Score Peer Average
---------- ------------
Strategy and Governance 29/30 (A+) A
----------------------- ---------- ------------
Infrastructure 27/30 (A) A
----------------------- ---------- ------------
Principal Risks
Reliance is placed on the internal systems and controls of the
Investment Manager and external service providers such as the
Administrator to effectively manage risk across the portfolio.
Foresight Group has a comprehensive Risk Management Framework in
place which is reviewed on a regular basis by the Company's
Directors.
The Directors consider the following as the principal risks and
uncertainties to the Company at this time:
-- Risks relating to the sale of electricity
-- Risks relating to regulatory changes to subsidy schemes
-- Risks relating to gearing
-- Risks relating to RPI
-- Risks relating to marginal loss factors applicable to
the Australian assets
-- Risks relating to the construction of solar PV assets
-- Risks relating to exchange rate
More detailed information on the risks and uncertainties
affecting the Company can be found on pages 19-37 of the Company's
most recent Prospectus issued on 3 March 2017 and the Risk
Management section in the Company's latest Full Year Results Report
for the year ended 31 December 2018.
Statement of Directors' Responsibilities
For the period 1 January 2019 to 30 June 2019
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 2019.
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 2019 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).
Alexander Ohlsson
Chairman
For and on behalf of Foresight Solar Fund Limited
22 August 2019
Asset Summaries
UNITED KINGDOM
Wymeswold, Leicestershire Castle Eaton, Wiltshire
ROCs 2.0/1.4 ROCs 1.6
Acquisition Date Acquisition Date
November '13 / March '15 June '14
Highfields, Essex High Penn, Wiltshire
ROCs 1.6 ROCs 1.6
Acquisition Date Acquisition Date
June '14 June '14
Pitworthy, North Devon Hunters Race, West Sussex
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
June '14 September '14
Spriggs Farm, Essex Bournemouth, Dorset
ROCs 1.6 ROCs 1.4
Acquisition Date Acquisition Date
November '14 December '14
Landmead, Oxfordshire Kencot, Oxfordshire
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
December '14 March '15
Copley, Lincolnshire Atherstone, Warwickshire
ROCs 1.3 ROCs 1.4
Acquisition Date Acquisition Date
June '15 July '15
Paddock Wood, Kent Southam, Warwickshire
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
July '15 July '15
Port Farm, Wiltshire Membury, Berkshire
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
August '15 September '15
Shotwick, Flintshire Sandridge, Wiltshire
ROCs 1.3 ROCs 1.3
Acquisition Date Acquisition Date
February '17 February '17
Wally Corner, South Oxfordshire Coombeshead, Devon
ROCs 1.2 ROCs 1.4
Acquisition Date Acquisition Date
July '17 April '18
Park Farm, Leicestershire Sawmills, Devon
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
April '18 April '18
Verwood, Dorset Yardwall, Somerset
ROCs 1.4 FiT
Acquisition Date Acquisition Date
April '18 April '18
Abergelli, Swansea Crow Trees, Nottinghamshire
ROCs 1.4 ROCs 1.3
Acquisition Date Acquisition Date
August '18 August '18
Cuckoo Grove, Pembrokeshire Field House, Hampshire
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
August '18 August '18
Fields Farm, Warwickshire Gedling, Nottinghamshire
ROCs 1.3 ROCs 1.4
Acquisition Date Acquisition Date
August '18 August '18
Homeland, Dorset Marsh Farm, Wiltshire
ROCs 1.6 ROCs 1.4
Acquisition Date Acquisition Date
August '18 August '18
Sheepbridge, Berkshire Steventon, Oxfordshire
ROCs 1.3 ROCs 1.4
Acquisition Date Acquisition Date
August '18 August '18
Tengore, Somerset Trehawke, Cornwall
ROCs 1.4 ROCs 1.6
Acquisition Date Acquisition Date
August '18 August '18
Upper Huntingford, Gloucestershire Welbeck, Nottinghamshire
ROCs 1.3 ROCs 1.4
Acquisition Date Acquisition Date
August '18 August '18
Yarburgh, Lincolnshire Abbey Fields, Kent
ROCs 1.3 ROCs 1.3
Acquisition Date Acquisition Date
August '18 November '18
SV Ash, Shropshire Bilsthorpe, Nottinghamshire
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
November '18 November '18
Bulls Head, Buckinghamshire Lindridge, Leicestershire
ROCs 1.4 ROCs 1.3
Acquisition Date Acquisition Date
November '18 November '18
Manor Farm, Bedfordshire Misson, Nottinghamshire
ROCs 1.3 ROCs 1.3
Acquisition Date Acquisition Date
November '18 November '18
Nowhere, Lincolnshire Pen Y Cae, Camarthenshire
ROCs 1.4 ROCs 1.4
Acquisition Date Acquisition Date
November '18 November '18
Playters, Suffolk Roskrow, Cornwall
ROCs 1.3 ROCs 1.4
Acquisition Date Acquisition Date
November '18 November '18
AUSTRALIA
Bannerton, Victoria Longreach, Queenstand
LGC accredited LGC accredited
Acquisition Date Acquisition Date
September '17 October '17
Oakey 1, Queensland Oakey 2, Queensland
LGC eligible LGC eligible
Acquisition Date Acquisition Date
October '17 October '17
Statement of Comprehensive Income
For the period 1 January 2019 to 30 June 2019
Unaudited Unaudited
Period Period
1 January 2019 1 January 2018 Audited year 1 January 2018 to 31
to 30 June 2019 to 30 June 2018 December 2018
Notes GBP'000 GBP'000 GBP'000
Revenue
Interest income 4 19,698 18,322 36,817
(Loss) / Gain on investments at fair
value through profit or loss 14 (6,972) (9,542) 25,311
---------------- ---------------- -----------------------------------
12,726 8,780 62,128
---------------- ---------------- -----------------------------------
Expenditure
Management fees 5 (2,972) (2,299) (5,106)
Administration and accountancy
expenses 6 (83) (84) (203)
Directors' fees 7 (85) (85) (170)
Other expenses 8 (189) (267) (643)
---------------- ---------------- -----------------------------------
Total expenditure (3,329) (2,735) (6,122)
---------------- ---------------- -----------------------------------
Profit before tax for the
period/year 9,397 6,045 56,006
Taxation - - -
---------------- ---------------- -----------------------------------
Profit for the period/year 9,397 6,045 56,006
Other comprehensive income - - -
---------------- ---------------- -----------------------------------
Profit and total comprehensive
income for the period/year 9,397 6,045 56,006
---------------- ---------------- -----------------------------------
Earnings per Ordinary Share (pence
per Share) 9 1.71 1.34 11.60
All items above arise from continuing operations, there have
been no discontinued operations during the period.
The accompanying notes on pages 46 to 80 form an integral part
of these Financial Statements.
Statement of Financial Position
As at 30 June 2019
Unaudited Unaudited Audited
30 June 30 June 31 December
2019 2018 2018
Notes GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investments held at fair
value through profit or
loss 14 523,215 403,422 530,187
--------- --------- ------------
Total non-current assets 523,215 403,422 530,187
Current assets
Interest receivable 10 74,190 68,948 69,338
Trade and other receivables 11 258 1,926 265
Cash and cash equivalents 12 5,710 180 12,282
--------- --------- ------------
Total current assets 80,158 71,054 81,885
--------- --------- ------------
Total assets 603,373 474,476 612,072
--------- --------- ------------
Equity
Retained earnings 42,742 18,619 51,460
Stated capital 18 558,798 454,515 558,798
--------- --------- ------------
Total equity 601,540 473,134 610,258
--------- --------- ------------
Liabilities
Current liabilities
Trade and other payables 13 1,833 1,342 1,814
--------- --------- ------------
Total current liabilities 1,833 1,342 1,814
Total liabilities 1,833 1,342 1,814
--------- --------- ------------
Total equity and liabilities 603,373 474,476 612,072
--------- --------- ------------
Net Asset Value per Ordinary
Share 19 109.6 105.2 111.2
The Financial Statements on pages 42 to 80 were approved by the
Board of Directors and signed on its behalf on 21 August 2019
by:
Chairman
The accompanying notes on pages 46 to 80 form an integral part
of these Financial Statements.
Statement of Changes in Equity
For the period 1 January 2019 to 30 June 2019
Stated Capital Retained Earnings Total
Notes GBP'000 GBP'000 GBP'000
Balance as at 1 January
2019 (unaudited) 558,798 51,460 610,258
Total comprehensive income for the
period:
Profit for the period - 9,397 9,397
Transactions with owners,
recognised directly in
equity:
Dividends paid in the
period 22 - (18,115) (18,115)
-------------- ----------------- --------
Balance as at 30 June
2019 558,798 42,742 601,540
-------------- ----------------- --------
For the period 1 January 2018 to 30 June 2018 (unaudited)
Stated Capital Retained Earnings Total
Notes GBP'000 GBP'000 GBP'000
Balance as at 1 January 2018: 454,515 26,793 481,308
Total comprehensive income for the
period:
Profit for the period - 6,045 6,045
Transactions with owners, recognised
directly in equity:
Dividends paid in the period 22 - (14,219) (14,219)
-------------- ----------------- --------
Balance as at 30 June 2018 454,515 18,619 473,134
-------------- ----------------- --------
For the period 1 January 2018 to 31 December 2018 (audited)
Stated Capital Retained Earnings Total
Notes GBP'000 GBP'000 GBP'000
Balance as at 1 January 2018: 454,515 26,793 481,308
Total comprehensive income for
the year:
Profit for the year - 56,006 56,006
Transactions with owners, recognised
directly in equity:
Dividends paid in the year 22 - (31,339) (31,339)
Issue of Ordinary Shares 18 106,189 - 106,189
Issue costs 18 (1,906) - (1,906)
-------------- ----------------- --------
Balance as at 31 December 2018 558,798 51,460 610,258
-------------- ----------------- --------
The accompanying notes on pages 46 to 80 form an integral part
of these Financial Statements.
Statement of Cash Flows
For the period 1 January 2019 to 30 June 2019
Unaudited
Period Unaudited Audited
1 January Period year
2019 1 January 2018 1 January 2018
to 30 June to 30 June to 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Profit for the period after tax
from continuing operations 9,397 6,045 56,006
Adjustments for:
Unrealised loss/(gain) on investments 6,972 9,542 (25,311)
Investment income (19,698) (18,322) (36,817)
Finance costs - - 1
----------- --------------- ---------------
Operating cash flows (3,329) (2,735) (6,121)
Decrease in trade and other receivables 7 7 1,668
(Decrease)/Increase in trade and
other payables 19 (42) 430
----------- --------------- ---------------
Net cash outflow from operating
activities (3,303) (2,770) (4,023)
----------- --------------- ---------------
Investing activities
Increase in shareholder loan to/from
subsidiary - (4,500) (95,206)
Investment income received 14,846 7,000 23,898
----------- --------------- ---------------
Net cash inflow/(outflow) from investing
activities 14,846 2,500 (71,308)
----------- --------------- ---------------
Financing activities
Dividends paid (18,115) (14,219) (31,339)
Issue costs paid - - (1,906)
Proceeds from issue of shares - - 106,189
----------- --------------- ---------------
Net cash (outflow)/inflow from financing
activities (18,115) (14,219) 72,944
----------- --------------- ---------------
Net decrease in cash and cash equivalents (6,572) (14,489) (2,387)
Cash and cash equivalents at the
beginning of the period 12,282 14,669 14,669
----------- --------------- ---------------
Cash and cash equivalents at the
end of the period 5,710 180 12,282
----------- --------------- ---------------
The accompanying notes on pages 46 to 80 form an integral part
of these Financial Statements.
Notes to the Financial Statements
For the year ended 30 June 2019
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, JE4 2QP.
The Company has one investment, Foresight Solar (UK Hold Co)
Limited ("UK Hold Co"). UK Holdco has investments in four
subsidiaries: FS Holdco Limited ("FS Holdco"), FS Holdco 2 Limited
("FS Holdco 2"), FS Holdco 3 Limited ("FS Holdco 3") and FS Holdco
4 Limited ("FS Holdco 4") and FS Holdco 2 also has an investment in
a subsidiary, FS Debtco Limited ("FS Debtco"). FS Holdco, FS Holdco
2, FS Debtco, FS Holdco 3 and FS Holdco 4 invest in further holding
companies (the "SPVs") which then invest in the underlying solar
investments.
The principal activity of the Company, UK Hold Co, FS Holdco, FS
Holdco 2, FS Debtco, FS Holdco 3, FS Holdco 4 and the SPVs
(together "the Group") is investing in operational UK and
Australian ground based solar power plants.
2. Summary of significant accounting policies
2.1 Basis of presentation
The Unaudited Interim Financial Statements (the "Interim
Financial Statements") for the period 1 January 2019 to 30 June
2019 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 2018.
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 2019 and 30 June 2018 has
been neither audited nor formally reviewed. Statutory accounts in
respect of the period to 31 December 2018 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 2018
have been reported on by the Company's auditors or delivered to the
Registrar of Companies.
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 Interim 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 Interim Financial
Statements on a going concern basis.
2.3 Changes in accounting policies and disclosures
New and revised IFRSs adopted by the Company
Management have assessed all new standards and amendments to
standards and interpretations are effective for annual periods
after 1 January 2019 and have deemed none of them to be applicable
to the Fund.
New and revised IFRSs in issue but not yet effective
There are no standards, amendments or interpretations in issue
at the reporting date which are effective after 1 January 2019 that
are deemed to be material to the Fund.
2.4 Consolidation
Associates
Associates are entities over which the Company has significant
influence, being the power to participate in the financial and
operating policy decisions of the investee (but not control or
joint control).
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.
Investment Entity
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 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.
As discussed in note 1, the Company has one direct subsidiary, a
100% controlling interest in UK Hold Co and a number of indirect
subsidiaries and associates.
Under IFRS 10 "Consolidated Financial Statements", the directors
deem that the Company is an investment entity and therefore the
Company does not consolidate its subsidiary but carries it at fair
value through profit or loss. 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
have been met and, through the Group, there is a diverse investment
portfolio which will fill the criteria of having more than one
investment. Therefore, the Company qualifies as an 'investment
entity'.
As UK Hold Co is not consolidated, its subsidiaries (plus their
underlying investments) are not separately presented at fair value
through profit or loss in the Company's accounts. 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
unconsolidated subsidiaries. These disclosures are set out in notes
16 and 17.
3. Critical accounting estimates and judgements
The preparation of Financial Statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Company's accounting policies.
The Board considers that the only areas where management make
critical estimates and judgements that may have a significant
effect on the financial statements are in relation to the valuation
of investments at fair value through profit and loss, significant
judgements and key sources of estimation uncertainty related to the
determination that the Company meets the definition of an
investment entity.
The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates and underlying
assumptions are reviewed on an ongoing basis.
The Board considers that the determination that the Company
meets the definition of an investment entity involves significant
judgement because the entity does not possess all the typical
characteristics of an investment entity. While the absence of one
or more of the typical characteristics of an investment entity
described in IFRS 10 Consolidated Financial Statements does not
immediately disqualify an entity from being classified as an
investment entity. The entity is required to disclose its reasons
for concluding that it is nevertheless an investment entity if one
or more of these characteristics are not met. In order to reach
that conclusion of whether the Company meets the definition of an
investment entity the Board had to make significant judgements.
The Board considers that the fair value of Investments not
quoted in an active market involves critical accounting estimates
and judgements because it is determined by the Directors using
their own models, which are usually based on valuation methods and
techniques generally recognised as standard within the industry.
Models use observable data, to the extent practicable. However,
they also rely on significant unobservable inputs about the output
of the asset (including assumptions such as solar irradiation and
technological performance of the asset), power prices, operating
costs, discount and inflation rates applied to the cash flows, and
the duration of the useful economic life of the asset. Furthermore,
changes in these inputs and assumptions could affect the reported
fair value of financial instruments. The determination of what
constitutes 'observable' requires significant judgement by the
Company. The Company considers observable data to be market data
that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by
independent sources that are actively involved in the relevant
market.
4. Interest income
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Bank interest income - - 1
Interest on loan notes 17,203 16,751 33,172
Interest on shareholder
loans 2,495 1,571 3,644
-------- -------- -----------
19,698 18,322 36,817
-------- -------- -----------
Loan notes were issued by the Company to UK Hold Co for the
purchase of investments. Interest is payable at 9% per annum in
arrears on each Interest Payment Date (28 / 29 February and 31
August each year). Where interest is not paid on the payment date,
it will compound and future interest shall accrue at 11% per annum
from the due date up to the date of actual payment, compounding on
each Interest Payment Date. The loan notes balance at period end on
which interest is charged is GBP250,000,000 (30 June 2018:
GBP250,000,000, 31 December 2018: GBP250,000,000). These loans form
part of the fair value of the investments as per note 14.
A Shareholder loan is created when the total amount paid by the
Company on behalf of UK Hold Co to acquire the underlying
investments is more than the total loan notes issued by the Company
to UK Hold Co. Interest is accrued at 2% per annum and is repayable
in full on demand. The shareholder loan balance at period end is
GBP158,609,725 (30 June 2018: GBP158,609,725, 31 December 2018:
GBP158,609,725). These loans form part of the fair value of the
investments as per note 14.
During the prior year, four additional shareholder loans were
issued to UK Holdco - GBP45,000,000 on 2 August 2018, GBP9,106,725
on 27 November 2018, GBP33,100,000 on 28 November 2018 and
GBP3,500,000 on 18 December 2018. Loan interest on all four new
shareholder loans is charged at a fixed rate of 2% per annum. These
loans form part of the fair value of the investments as per note
14.
5. 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 up to GBP500m - NAV in excess to this is
charged at 0.9% per annum. This is payable quarterly in arrears and
is calculated based on the published quarterly NAV. For the period
ended 30 June 2019, the Investment Manager was entitled to a
management fee of GBP2,971,549 (1 January 2018 to 30 June 2018:
GBP2,299,044, 1 January 2018 to 31 December 2018: GBP5,106,080) of
which GBP1,506,292 was outstanding as at 30 June 2019 (30 June
2018: GBP1,341,858, 31 December 2018: GBP1,537,638).
6. Administration and Accountancy fees
Under an Administration Agreement, the Administrator of the
Company, JTC (Jersey) Limited, is entitled to receive minimum
annual administration and accountancy fees of GBP156,000 (2018:
GBP156,000) payable quarterly in arrears. For the period ended 30
June 2018, total administration and accountancy fees were GBP82,557
(1 January 2018 to 30 June 2018: GBP84,105, 1 January 2018 to 31
December 2018: GBP203,220) of which GBP39,000 was outstanding as at
30 June 2019 (1 January 2018 to 30 June 2018: GBP39,000, 1 January
2018 to 31 December 2018: GBP39,000).
7. Directors' fees
No members of staff were employed during the period (period
ended 30 June 2018: nil, year ended 31 December 2018: nil).
Total directors' fees were GBP85,000 (1 January 2018 to 30 June
2018: GBP85,000, 1 January 2018 to 31 December 2018:
GBP170,000).
8. Other Expenses
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Legal and professional
fees 187 120 607
Other expenses 2 147 36
-------- -------- -----------
189 267 643
-------- -------- -----------
Included within legal and professional fees is GBP11,250 (1
January 2018 to 30 June 2018: GBP19,750, 1 January 2018 to 31
December 2018: GBP22,500) relating to the accrual of the 2019 audit
fees. There were no other fees paid to the auditors for non-audit
services (1 January 2018 to 30 June 2018: GBPnil, 1 January 2018 to
31 December 2018: GBPnil).
9. Earnings per Ordinary share - basic and diluted
The basic and diluted loss per Ordinary Share for the Company is
1.71 pence per share (period ended 30 June 2018: 1.34 profit, year
ended 31 December 2018: 11.60 profit). This is based on the profit
for the period of GBP9,397,313 (1 January 2018 to 30 June 2018:
GBP6,044,557, 1 January 2018 to 31 December 2018: GBP56,005,471)
and on 548,941,550 (1 January 2018 to 30 June 2018: 449,952,091, 1
January 2018 to 31 December 2018: 482,619,846) Ordinary Shares,
being the weighted average number of shares in issue during the
period.
There is no difference between the weighted average ordinary or
diluted number of shares.
10. Interest receivable
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Interest receivable on
loan notes 61,017 65,497 56,814
Interest receivable on
shareholder loan 13,173 3,451 12,524
-------- -------- -----------
74,190 68,948 69,338
-------- -------- -----------
Information about the Company's exposure to credit and market
risk and impairment losses for interest receivable is included in
note 20.
Interest receivable at 31 December 2018 has been updated for the
reclassification (GBP1,206,000) as explained in note 14.
11. Trade and other receivables
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Prepaid expenses 8 4 17
Amounts due from subsidiaries* - 1,146 -
Other receivables 250 776 248
-------- -------- -----------
258 1,926 265
-------- -------- -----------
*Amounts due from subsidiaries are unsecured, interest free and
repayable on demand.
Information about the Company's exposure to credit and market
risk and impairment losses for trade and other receivables is
included in note 20.
12. Cash and cash equivalents
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Cash at bank 5,710 180 12,282
-------- -------- -----------
5,710 180 12,282
-------- -------- -----------
Information about the Company's exposure to credit and market
risk and impairment losses for cash and cash equivalents is
included in note 20.
13. Trade and other payables
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Accrued expenses 1,646 1,342 1,630
Amounts due to subsidiaries* 187 - 184
-------- -------- -----------
1,833 1,342 1,814
-------- -------- -----------
*Amounts due to subsidiaries are unsecured, interest free and
repayable on demand.
14. Investments at fair value through profit or loss
The following table presents the Company's investments at fair
value through profit or loss:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Investment in UK
Hold Co Equity - - -
Loans 523,215 403,422 530,187
-------- -------- -----------
523,215 403,422 530,187
-------- -------- -----------
Book cost as at
1 January 499,315 404,109 404,109
Opening investment
holding gains 30,872 4,355 4,355
-------- -------- -----------
Valuation as at
1 January 530,187 408,464 408,464
Movements during
the period
Purchase at cost - 4,500 95,206
Reclassification
- see below - - 1,206
Investment holding
(losses)/gains (6,972) (9,542) 25,311
-------- -------- -----------
Valuation as at
30 June/ 31 December 523,215 403,422 530,187
-------- -------- -----------
Book cost as at
30 June/ 31 December 499,315 408,609 499,315
Closing investment
holding gains 23,900 (5,187) 30,872
-------- -------- -----------
523,215 403,422 530,187
-------- -------- -----------
The Company has one investment in Foresight Solar (UK Hold Co)
Limited ("UK Hold Co"). This investment consists of both debt and
equity (Share Capital of GBP100) and is not quoted in an active
market. Accordingly, the investment in UK Hold Co has been valued
using its net assets.
These investments also consist of both debt and equity and are
not quoted in an active market. FS Holdco is fair valued using its
net asset value as reported at year end, with adjustments to its
long term external debt to reflect the fact that the carrying value
at amortised cost is not considered to be the best approximation of
its fair value. FS Holdco 2, FS Debtco, FS Holdco 3 and FS Holdco 4
are fair valued using their net asset value as reported at period
end.
In turn, FS Holdco, FS Holdco 2, FS Debtco, FS Holdco 3 and FS
Holdco 4's investment portfolios consist of unquoted investments in
solar projects, the valuations of which are based on a discounted
cash flow methodology (as set out in note 17) for solar projects
that are operational. One investment held by FS Holdco 4 is not yet
operational at period end and is therefore valued at cost.
In turn, UK Hold Co has four investments in FS Holdco Limited
("FS Holdco"), FS Holdco 2 Limited ("FS Holdco 2"), FS Holdco 3
Limited ("FS Holdco 3") and FS Holdco 4 Limited ("FS Holdco 4"),
and FS Holdco 2 has one investment in FS Debtco Limited ("FS
Debtco").
During the prior year the Company identified a historical
misallocation between the fair value of investments and the
interest receivable on loan notes to the subsidiary. This has been
reclassified in the prior year.
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
period.
As at 30 June 2019:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Unquoted investment - - 523,215 523,215
-------- -------- -------- --------
- - 523,215 523,215
-------- -------- -------- --------
As at 30 June 2018:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Unquoted investment - - 403,422 403,422
-------- -------- -------- --------
- - 403,422 403,422
-------- -------- -------- --------
As at 31 December 2018:
Level 1 Level 2 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000
Unquoted investment - - 530,187 530,187
-------- -------- -------- --------
- - 530,187 530,187
-------- -------- -------- --------
Sensitivity Analysis
Due to the nature of the Group structure and the underlying
valuation basis of UK Hold Co, FS Holdco, FS Holdco 2, FS Debtco,
FS Holdco 3, FS Holdco 4 and the underlying solar project
investments, the valuation of the Company's investment at fair
value through profit or loss is directly linked to the valuation of
the underlying solar investments. Therefore, the unobservable
inputs driving the valuation of the Company's investments in UK
Hold Co are directly attributable to the valuation of the unquoted
investments in FS Holdco, FS Holdco 2, FS Debtco, FS Holdco 3 and
FS Holdco 4 which are discussed further in note 17.
15. Subsidiaries and associates
Investments in subsidiaries
Proportion
Direct or indirect Country of of shares and voting
Name holding incorporation Principal activity rights held
Foresight Solar (UK
Hold Co) Limited ("UK
Hold Co") Direct UK Holding Company 100%
FS Holdco Limited ("FS
Holdco") Indirect UK Holding Company 100%
FS Holdco 2 Limited
("FS Holdco 2") Indirect UK Holding Company 100%
FS Debtco Limited ("FS
Debtco") Indirect UK Holding Company 100%
FS Holdco 3 Limited
("FS Holdco 3") Indirect UK Holding Company 100%
FS Holdco 4 Limited
("FS Holdco 4") Indirect UK Holding Company 100%
FS Wymeswold Limited Indirect UK SPV Holding Company 100%
FS Castle Eaton
Limited Indirect UK SPV Holding Company 100%
FS Pitworthy Limited Indirect UK SPV Holding Company 100%
FS Highfields Limited Indirect UK SPV Holding Company 100%
FS High Penn Limited Indirect UK SPV Holding Company 100%
FS Hunter's Race
Limited Indirect UK SPV Holding Company 100%
FS Spriggs Limited Indirect UK SPV Holding Company 100%
FS Bournemouth Limited Indirect UK SPV Holding Company 100%
FS Landmead Limited Indirect UK SPV Holding Company 100%
FS Kencot Limited Indirect UK SPV Holding Company 100%
FS Copley Limited Indirect UK SPV Holding Company 100%
FS Port Farms Solar
Limited Indirect UK SPV Holding Company 100%
FS Membury Limited Indirect UK SPV Holding Company 100%
FS Southam Solar
Limited Indirect UK SPV Holding Company 100%
FS Atherstone Solar
Limited Indirect UK SPV Holding Company 100%
FS Paddock Wood Solar
Farm Limited Indirect UK SPV Holding Company 100%
Atherstone Hold Co
Limited Indirect UK SPV Holding Company 100%
Southam Hold Co
Limited Indirect UK SPV Holding Company 100%
Paddock Wood Hold Co
Limited Indirect UK SPV Holding Company 100%
FS Shotwick Limited Indirect UK SPV Holding Company 100%
FS Sandridge Limited Indirect UK SPV Holding Company 100%
FS Wally Corner
Limited Indirect UK SPV Holding Company 100%
Acquisition Co 4
Limited Indirect UK SPV Holding Company 100%
FS Welbeck Limited Indirect UK SPV Holding Company 100%
FS Trehawke Limited Indirect UK SPV Holding Company 100%
FS Homeland Limited Indirect UK SPV Holding Company 100%
FS Marsh Farm Limited Indirect UK SPV Holding Company 100%
FS Steventon Limited Indirect UK SPV Holding Company 100%
FS Fields Farm Limited Indirect UK SPV Holding Company 100%
FS Gedling Limited Indirect UK SPV Holding Company 100%
FS Sheepbridge Limited Indirect UK SPV Holding Company 100%
FS Tengore Limited Indirect UK SPV Holding Company 100%
FS Cuckoo Limited Indirect UK SPV Holding Company 100%
FS Field House Limited Indirect UK SPV Holding Company 100%
FS Upper Huntingford
Limited Indirect UK SPV Holding Company 100%
FS Abergelli Limited Indirect UK SPV Holding Company 100%
FS Crow Trees Limited Indirect UK SPV Holding Company 100%
FS Yarburgh Limited Indirect UK SPV Holding Company 100%
FS Nowhere Solar
Limited Indirect UK SPV Holding Company 100%
FS Bilsthorpe Solar
Limited Indirect UK SPV Holding Company 100%
FS Bulls Head Solar
Limited Indirect UK SPV Holding Company 100%
FS Roskrow Solar
Limited Indirect UK SPV Holding Company 100%
FS Abbeyfields Solar
Limited Indirect UK SPV Holding Company 100%
FS Lindridge Solar
Limited Indirect UK SPV Holding Company 100%
FS Misson Solar
Limited Indirect UK SPV Holding Company 100%
FS Pentre Solar
Limited Indirect UK SPV Holding Company 100%
FS Playters Solar
Limited Indirect UK SPV Holding Company 100%
FS PS Manor Farm Solar
Limited Indirect UK SPV Holding Company 100%
FS SV Ash Solar Park
Limited Indirect UK SPV Holding Company 100%
FS Pen Y Cae Solar
Limited Indirect UK SPV Holding Company 100%
Second Generation
Portfolio Holdings 1 Indirect UK SPV Holding Company 100%
Second Generation
Portfolio 1 Indirect UK SPV Holding Company 100%
Oakey 2 Asset Company
Pty Limited Indirect Australia SPV Holding Company 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
("Shotwick Solar") Indirect UK Investment 100%
Sandridge Solar Power
Limited ("Sandridge") Indirect UK Investment 100%
SSR Wally Corner
Limited ("SSR Wally") Indirect UK Investment 100%
Foresight Solar
Australia Pty Limited Indirect Australia Investment 100%
RE Oakey Pty Limited Indirect Australia Investment 100%
Oakey Network Pty
Limited Indirect Australia Investment 100%
Longreach Asset
Company Pty Limited Indirect Australia Investment 100%
Second Generation
Yardwall Limited
("Yardwall") Indirect UK Investment 100%
Second Generation
Verwood Limited
("Verwood") Indirect UK Investment 100%
Second Generation Park
Farm Limited ("Park
Farm") Indirect UK Investment 100%
Second Generation
Coombeshead Limited
("Coombeshead") Indirect UK Investment 100%
Second Generation
Sawmills Limited
("Sawmills") Indirect UK Investment 100%
Welbeck Limited
("Welbeck") Indirect UK Investment 100%
Trehawke Limited
("Trehawke") Indirect UK Investment 100%
Homeland Limited
"(Homeland") Indirect UK Investment 100%
Marsh Farm Limited
("Marsh Farm") Indirect UK Investment 100%
Steventon Limited
("Steventon") Indirect UK Investment 100%
Fields Farm Limited
("Fields Farm") Indirect UK Investment 100%
Gedling Limited
("Gedling") Indirect UK Investment 100%
Sheepbridge Limited
("Sheepbridge") Indirect UK Investment 100%
Tengore Limited
("Tengore") Indirect UK Investment 100%
Cuckoo Limited
("Cuckoo") Indirect UK Investment 100%
Field House Limited
("Field House") Indirect UK Investment 100%
Upper Huntingford
Limited ("Upper
Huntingford") Indirect UK Investment 100%
Abergelli Limited
("Abergelli") Indirect UK Investment 100%
Crow Trees Limited
("Crow Trees") Indirect UK Investment 100%
Yarburgh Limited
("Yarburgh") Indirect UK Investment 100%
Nowhere Solar Limited
("Nowhere Solar") Indirect UK Investment 100%
Bilsthorpe Solar
Limited ("Bilsthorpe
Solar") Indirect UK Investment 100%
Bulls Head Solar
Limited ("Bulls Head
Solar") Indirect UK Investment 100%
Roskrow Solar Limited
("Roskrow Solar") Indirect UK Investment 100%
Abbeyfields Solar
Limited ("Abbeyfields
Solar") Indirect UK Investment 100%
Lindridge Solar
Limited ("Lindridge
Solar") Indirect UK Investment 100%
Misson Solar Limited
("Misson Solar") Indirect UK Investment 100%
Pentre Solar Limited
("Pentre Solar) Indirect UK Investment 100%
Playters Solar Limited
("Playters Solar") Indirect UK Investment 100%
PS Manor Farm Solar
Limited ("PS Manor
Farm Solar") Indirect UK Investment 100%
SV Ash Solar Park
Limited ("SV Ash
Solar Park") Indirect UK Investment 100%
Pen Y Cae Solar
Limited ("Pen Y Cae
Solar") Indirect UK Investment 100%
Investments in associates
Proportion
of shares
Direct and voting
or indirect Country Principal rights
Name holding of incorporation activity held
Kiamco Hanwha Foresight Bannerton SPV Holding
Pty Limited Indirect UK Company 48.50%
Longreach New Holdco Pty Limited Indirect Australia Investment 49%
Oakey 1 New Holdco Pty Limited Indirect Australia Investment 49%
16. Interests in unconsolidated structured entities
Period ended 30 June 2019
Unrealised Unrealised Fair value
Cost as at gain/(loss) Movement on gain/(loss) as as at
Cost at Additions / 30 June as at 1 unrealised at 30 June 30 June
1 January 2019 (Disposals) 2019 January 2019 gain/(loss) 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Wymeswold
Limited 48,590 - 48,590 1,230 (564) 666 49,256
FS Castle Eaton
Limited 21,630 - 21,630 (160) (199) (359) 21,271
FS Pitworthy
Limited 18,210 - 18,210 (1,087) (445) (1,532) 16,678
FS Highfields
Limited 14,300 - 14,300 (457) (356) (813) 13,487
FS High Penn
Limited 11,310 - 11,310 (681) (151) (832) 10,478
FS Hunter's
Race Limited 13,160 - 13,160 1,132 (399) 733 13,893
FS Spriggs
Limited 14,580 - 14,580 129 (393) (264) 14,316
FS Bournemouth
Limited 50,060 - 50,060 2,363 (240) 2,123 52,183
FS Landmead
Limited 51,580 - 51,580 (1,026) (960) (1,986) 49,594
FS Kencot
Limited 47,210 - 47,210 (1,329) 47 (1,282) 45,928
FS Copley
Limited 35,670 - 35,670 2,678 (654) 2,024 37,694
FS Paddock Wood
Limited
Limited 11,145 - 11,145 406 (422) (16) 11,129
FS Atherstone
Limited 16,004 - 16,004 (404) (268) (672) 15,332
FS Southam
Limited 10,621 - 10,621 102 (39) 63 10,684
FS Port Farms
Limited 44,215 - 44,215 1,534 (390) 1,144 45,359
FS Membury
Limited 21,160 - 21,160 154 (250) (96) 21,064
-------------- -------------- ---------- ------------- -------------- -------------- ----------
429,445 - 429,445 4,584 (5,683) (1,099) 428,346
-------------- -------------- ---------- ------------- -------------- -------------- ----------
The cost and valuation of the indirect investments in solar
farms directly correlate to the cost and valuation of the direct
SPV investments as presented in the table above.
Period ended 30 June 2018
The following table represents the fair values of the
investments held by FS Holdco Limited as required by IFRS12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Wymeswold
Limited 48,590 - 48,590 (272) 433 161 48,751
FS Castle Eaton
Limited 21,630 - 21,630 (835) 28 (807) 20,823
FS Pitworthy
Limited 18,210 - 18,210 (1,582) (117) (1,699) 16,511
FS Highfields
Limited 14,300 - 14,300 (726) (91) (817) 13,483
FS High Penn
Limited 11,310 - 11,310 (804) (145) (949) 10,361
FS Hunter's
Race Limited 13,160 - 13,160 389 135 524 13,684
FS Spriggs Limited 14,580 - 14,580 (699) 52 (647) 13,933
FS Bournemouth
Limited 50,060 - 50,060 364 112 476 50,536
FS Landmead
Limited 51,580 - 51,580 (3,096) (77) (3,173) 48,407
FS Kencot Limited 47,210 - 47,210 (2,151) 74 (2,077) 45,133
FS Copley Limited 35,670 - 35,670 1,390 92 1,482 37,152
FS Paddock Wood
Limited 10,621 - 10,621 553 (71) 482 11,103
FS Atherstone
Limited 16,004 - 16,004 (321) (113) (434) 15,570
FS Southam Limited 11,145 - 11,145 115 (63) 52 11,197
FS Port Farms
Limited 44,215 - 44,215 92 (14) 78 44,293
FS Membury Limited 21,160 - 21,160 (460) (9) (469) 20,691
---------- -------------- -------- ------------ -------------- ------------ ----------
429,445 - 429,445 (8,043) 226 (7,817) 421,628
---------- -------------- -------- ------------ -------------- ------------ ----------
The above individual project valuations do not include a
(GBP6,200,517) adjustment relating to future tax payments which
will be settled at the Fund level.
Year ended 31 December 2018
The following table represents the fair values of the
investments held by FS Holdco Limited as required by IFRS 12.
Unrealised Unrealised
gain/(loss) gain/(loss) Fair value
Cost at Cost as as at 1 Movement as at as at
1 January Additions at 31 December January on unrealised 31 December 31 December
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Wymeswold
Limited 48,590 - 48,590 (272) 1,502 1,230 49,820
FS Castle Eaton
Limited 21,630 - 21,630 (835) 675 (160) 21,470
FS Pitworthy
Limited 18,210 - 18,210 (1,582) 495 (1,087) 17,123
FS Highfields
Limited 14,300 - 14,300 (726) 269 (457) 13,843
FS High Penn
Limited 11,310 - 11,310 (804) 123 (681) 10,629
FS Hunter's
Race Limited 13,160 - 13,160 389 743 1,132 14,292
FS Spriggs
Limited 14,580 - 14,580 (699) 828 129 14,709
FS Bournemouth
Limited 50,060 - 50,060 364 1,999 2,363 52,423
FS Landmead
Limited 51,580 - 51,580 (3,096) 2,070 (1,026) 50,554
FS Kencot
Limited 47,210 - 47,210 (2,151) 822 (1,329) 45,881
FS Copley
Limited 35,670 - 35,670 1,390 1,288 2,678 38,348
FS Paddock Wood
Limited
Limited 10,621 - 10,621 553 (147) 406 11,027
FS Atherstone
Limited 16,004 - 16,004 (321) (83) (404) 15,600
FS Southam
Limited 11,145 - 11,145 115 (13) 102 11,247
FS Port Farms
Limited 44,215 - 44,215 92 1,442 1,534 45,749
FS Membury
Limited 21,160 - 21,160 (460) 614 154 21,314
---------- -------------- -------------- ------------- -------------- ------------ ------------
429,445 - 429,445 (8,043) 12,627 4,584 434,029
---------- -------------- -------------- ------------- -------------- ------------ ------------
The cost and valuation of the indirect investments in solar
farms directly correlate to the cost and valuation of the direct
SPV investments as presented in the table above.
Period ended 30 June 2019
The following table represents the fair values of the
investments held by FS Holdco 2 Limited as required by IFRS 12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2019 / (Disposals) 2019 2019 gain/(loss) 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Debtco Limited
- Equity - - - 14,911 (486) 14,425 14,425
FS Debtco Limited
- Loan 74,894 - 74,894 - - - 74,894
FS Welbeck Limited 4,350 - 4,350 561 584 1,145 5,495
FS Trehawke
Limited 4,670 - 4,670 1,069 809 1,878 6,548
FS Homeland
Limited 5,190 - 5,190 1,686 954 2,640 7,830
FS Marsh Farm
Limited 3,960 - 3,960 267 571 838 4,798
FS Steventon
Limited 4,210 - 4,210 579 570 1,149 5,359
FS Fields Farm
Limited 1,670 - 1,670 589 276 865 2,535
FS Gedling Limited 1,930 - 1,930 557 353 910 2,840
FS Sheepbridge
Limited 1,890 - 1,890 492 305 797 2,687
FS Tengore Limited 1,330 - 1,330 267 222 489 1,819
FS Cuckoo Limited 2,500 - 2,500 248 542 790 3,290
FS Field House
Limited 3,120 - 3,120 96 495 591 3,711
FS Upper Huntingford
Limited 3,110 - 3,110 362 627 989 4,099
FS Abergelli
Limited 3,650 - 3,650 772 455 1,227 4,877
FS Crow Trees
Limited 1,810 - 1,810 93 166 259 2,069
FS Yarburgh
Limited 3,420 - 3,420 579 538 1,117 4,537
FS Nowhere Solar
Limited 3,672 - 3,672 211 613 824 4,496
FS Bilsthorpe
Solar Limited 1,893 - 1,893 437 402 839 2,732
FS Bulls Head
Solar Limited - - 2,203 371 475 846 3,049
FS Roskrow Solar
Limited - - 3,674 748 470 1,218 4,892
FS Abbeyfields
Solar Limited - - 1,526 743 978 1,721 3,247
FS Lindridge
Solar Limited - - 1,721 561 296 857 2,578
FS Misson Solar
Limited - - 2,012 550 309 859 2,871
FS Playters
Solar Limited - - 3,963 428 536 964 4,927
FS PS Manor
Farm Solar Limited - - 6,116 558 99 657 6,773
FS SV Ash Solar
Park Limited - - 3,387 317 496 813 4,200
FS Pen Y Cae
Solar Limited - - 2,927 599 356 955 3,882
---------- -------------- -------- ------------ --------------- ------------ ----------
127,269 - 154,798 28,651 12,011 40,662 195,460
---------- -------------- -------- ------------ --------------- ------------ ----------
Period ended 30 June 2018
The following table represents the fair values of the
investments held by FS Holdco 2 Limited as required by IFRS 12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Debtco Limited
- Equity - - - 10,269 (873) 9,756 9,756
FS Debtco Limited
- Loan 74,894 74,894 74,894 - - - 74,894
---------- -------------- -------- ------------- --------------- ------------ ----------
74,894 74,894 74,894 10,269 (873) 9,756 84,650
---------- -------------- -------- ------------- --------------- ------------ ----------
Year ended 31 December 2018
The following table represents the fair values of the
investments held by FS Holdco 2 Limited as required by IFRS 12.
Unrealised Unrealised
gain/(loss) gain/(loss) Fair value
Cost at Cost as as at 1 Movement as at as at
1 January Additions at 31 December January on unrealised 31 December 31 December
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Debtco
Limited
- Equity - - - 10,269 4,642 14,911 14,911
FS Debtco
Limited
- Loan 74,894 - 74,894 - - - 74,894
FS Welbeck
Limited - 4,350 4,350 - 561 561 4,911
FS Trehawke
Limited - 4,670 4,670 - 1,069 1,069 5,739
FS Homeland
Limited - 5,190 5,190 - 1,686 1,686 6,876
FS Marsh Farm
Limited - 3,960 3,960 - 267 267 4,227
FS Steventon
Limited - 4,210 4,210 - 579 579 4,789
FS Fields Farm
Limited - 1,670 1,670 - 589 589 2,259
FS Gedling
Limited - 1,930 1,930 - 557 557 2,487
FS Sheepbridge
Limited - 1,890 1,890 - 492 492 2,382
FS Tengore
Limited - 1,330 1,330 - 267 267 1,597
FS Cuckoo
Limited - 2,500 2,500 - 248 248 2,748
FS Field House
Limited - 3,120 3,120 - 96 96 3,216
FS Upper
Huntingford
Limited - 3,110 3,110 - 362 362 3,472
FS Abergelli
Limited - 3,650 3,650 - 772 772 4,422
FS Crow Trees
Limited - 1,810 1,810 - 93 93 1,903
FS Yarburgh
Limited - 3,420 3,420 - 579 579 3,999
FS Nowhere
Solar
Limited - 3,672 3,672 - 211 211 3,883
FS Bilsthorpe
Solar Limited - 1,893 1,893 - 437 437 2,330
---------- -------------- -------------- ------------- -------------- ------------ ------------
Sub-total
carried
forward 74,894 52,375 127,269 10,269 13,507 23,776 151,045
---------- -------------- -------------- ------------- -------------- ------------ ------------
Year ended 31 December 2018
The following table represents the fair values of the
investments held by FS Holdco 2 Limited as required by IFRS 12
(continued).
Unrealised Unrealised
Cost as gain/(loss) Movement gain/(loss) Fair value
Cost at at 31 as at 1 on as at as at
1 January Additions December January unrealised 31 December 31 December
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Sub-total brought
forward 74,894 52,375 127,269 10,269 13,507 23,776 151,045
FS Bulls Head
Solar Limited - 2,203 2,203 - 371 371 2,574
FS Roskrow Solar
Limited - 3,674 3,674 - 748 748 4,422
FS Abbeyfields
Solar Limited - 1,526 1,526 - 743 743 2,269
FS Lindridge
Solar Limited - 1,721 1,721 - 561 561 2,282
FS Misson Solar
Limited - 2,012 2,012 - 550 550 2,562
FS Playters
Solar Limited - 3,963 3,963 - 428 428 4,391
FS PS Manor
Farm Solar
Limited - 6,116 6,116 - 558 558 6,674
FS SV Ash Solar
Park Limited - 3,387 3,387 - 317 317 3,704
FS Pen Y Cae
Solar Limited - 2,927 2,927 - 599 599 3,526
---------- ------------- ------------ ------------- ------------- ------------ -------------
74,894 79,904 154,798 10,269 18,382 28,651 183,449
---------- ------------- ------------ ------------- ------------- ------------ -------------
Period ended 30 June 2019
The following table represents the fair values of the
investments held by FS Debtco Limited as required by IFRS 12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2019 / (Disposals) 2019 2019 gain/(loss) 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Shotwick
Solar Limited 74,894 - 74,894 11,889 (1,844) 10,045 84,939
FS Sandridge
Solar Power
Limited 57,046 - 57,046 2,322 (1,306) 1,016 58,062
FS SSR Wally
Corner Limited 5,718 - 5,718 236 (57) 179 5,897
---------- -------------- -------- ------------- --------------- ------------ ------------
137,658 - 137,658 14,447 (3,207) 11,240 148,898
---------- -------------- -------- ------------- --------------- ------------ ------------
Period ended 30 June 2018
The following table represents the fair values of the
investments held by FS Debtco Limited as required by IFRS12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Shotwick
Solar Limited 74,894 - 74,894 9,696 (429) 9,267 84,161
FS Sandridge
Solar Power
Limited 57,046 - 57,046 959 (415) 544 57,590
FS SSR Wally
Corner Limited 5,718 - 5,718 41 (26) 15 5,733
---------- -------------- -------- ------------- --------------- ------------ ------------
137,658 - 137,658 10,696 (870) 9,826 147,484
---------- -------------- -------- ------------- --------------- ------------ ------------
Year ended 31 December 2018
The following table represents the fair values of the
investments held by FS Debtco Limited as required by IFRS 12.
Unrealised Unrealised
gain/(loss) gain/(loss) Fair value
Cost at Cost as as at 1 Movement as at as at
1 January Additions at 31 December January on unrealised 31 December 31 December
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Shotwick
Solar Limited 74,894 - 74,894 9,696 2,193 11,889 86,783
FS Sandridge
Solar Power
Limited 57,046 - 57,046 959 1,363 2,322 59,368
FS SSR Wally
Corner
Limited 5,718 - 5,718 41 195 236 5,954
---------- -------------- -------------- ------------- -------------- ------------ -------------
137,658 - 137,658 10,696 3,751 14,447 152,105
---------- -------------- -------------- ------------- -------------- ------------ -------------
Period ended 30 June 2019
The following table represents the fair values of the
investments held by FS Holdco 3 Limited as required by IFRS 12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2019 / (Disposals) 2019 2019 gain/(loss) 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Yardwall
Limited 2,474 - 2,474 165 (70) 95 2,569
FS Verwood Limited 13,955 - 13,955 1,933 (424) 1,509 15,464
FS Park Farm
Limited 8,116 - 8,116 995 (243) 752 8,868
FS Coombeshead
Limited 7,126 - 7,126 904 (214) 690 7,816
FS Sawmills
Limited 4,453 - 4,453 637 (136) 501 4,954
---------- -------------- -------- ------------- --------------- ------------ ------------
36,124 - 36,124 4,634 (1,087) 3,547 39,671
---------- -------------- -------- ------------- --------------- ------------ ------------
Period ended 30 June 2018
The following table represents the fair values of the
investments held by FS Holdco 3 Limited as required by IFRS12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Yardwall
Limited - 2,530 2,530 - 35 35 2,565
FS Verwood Limited - 14,110 14,110 - (122) (122) 13,988
FS Park Farm
Limited - 8,180 8,180 - (111) (111) 8,069
FS Coombeshead
Limited - 7,240 7,240 - (98) (98) 7,142
FS Sawmills
Limited - 4,530 4,530 - (61) (61) 4,469
---------- -------------- -------- ------------- --------------- ------------ ------------
- 36,590 36,590 - (357) (357) 36,233
---------- -------------- -------- ------------- --------------- ------------ ------------
Year ended 31 December 2018
The following table represents the fair values of the
investments held by FS Holdco 3 Limited as required by IFRS 12.
Unrealised Unrealised
gain/(loss) gain/(loss) Fair value
Cost at Cost as as at 1 Movement as at as at
1 January Additions at 31 December January on unrealised 31 December 31 December
2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
FS Yardwall
Limited - 2,474 2,474 - 165 165 2,639
FS Verwood
Limited - 13,955 13,955 - 1,933 1,933 15,888
FS Park Farm
Limited - 8,116 8,116 - 995 995 9,111
FS Coombeshead
Limited - 7,126 7,126 - 904 904 8,030
FS Sawmills
Limited - 4,453 4,453 - 637 637 5,090
---------- -------------- -------------- ------------- -------------- ------------ -------------
- 36,124 36,124 - 4,634 4,634 40,758
---------- -------------- -------------- ------------- -------------- ------------ -------------
Perid ended 30 June 2019
The following table represents the fair values of the
investments held by FS Holdco 4 Limited as required by IFRS 12.
Unrealised Unrealised
Cost as gain/(loss) gain/(loss) Fair value
Cost at at as at 1 Movement as at as at
1 January Additions 30 June January on unrealised 30 June 30 June
2019 / (Disposals) 2019 2019 gain/(loss) 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Bannerton Solar
Farm 22,882 - 22,882 (450)* (2,472) (2,922) 19,960
Longreach New
Holdco Pty Limited 2,650 295 2,945 431 (524) (93) 2,852
Oakey 1 New
Holdco Pty Limited 4,367 479 4,846 (85)* 37 (48) 4,798
FS Oakey 2 Pty
Limited 33,988 - 33,988 (681)* (625)* (1,306)* 32,682
----------- -------------- -------- ------------ --------------- ------------ ------------
63,887 774 64,661 (785) (3,584) (4,369) 60,292
----------- -------------- -------- ------------ --------------- ------------ ------------
*This relates to FX gain on translation from AUD to GBP at 30
June 2019 and 31 December 2018.
Period ended 30 June 2018
The following table represents the fair values of the
investments held by FS Holdco 4 Limited as required by IFRS12.
Unrealised Unrealised
Adjusted Cost as gain/(loss) Movement gain/(loss) Fair value
Cost at Cost at at as at on as at as at
1 January 1 January Additions 30 June 1 January unrealised 30 June 30 June
2018 2018 / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Bannerton
Solar
Farm 12,482 12,482 10,400 22,882 - - - 22,882
Longreach New
Holdco Pty
Limited 5,218 2,613 37 2,650 - 370 370 3,020
Oakey 1 New
Holdco Pty
Limited 7,842 4,306 61 4,367 80* (80) - 4,367
FS Oakey 2
Pty Limited 15,910 22,051 3,552 25,603 120* (120) - 25,603
---------- ---------- ------------- -------- ------------ ------------- ------------ ----------
41,452 41,452 14,050 55,502 200 170 370 55,872
---------- ---------- ------------- -------- ------------ ------------- ------------ ----------
Year ended 31 December 2018
The following table represents the fair values of the
investments held by FS Holdco 4 Limited as required by IFRS 12.
Unrealised Unrealised
Adjusted Cost as gain/(loss) Movement gain/(loss) Fair value
Cost at at 31 as at 1 on as at as at
1 January Additions December January unrealised 31 December 31 December
2018** / (Disposals) 2018 2018 gain/(loss) 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Bannerton
Solar
Farm 12,482 10,400 22,882 - (450)* (450)* 22,432
Longreach New
Holdco Pty
Limited 2,650 - 2,650 - 431 431 3,081
Oakey 1 New
Holdco Pty
Limited 4,367 - 4,367 - (85)* (85)* 4,282
FS Oakey 2 Pty
Limited 22,153 11,835 33,988 200* (881)* (681)* 33,307
----------- -------------- ------------- ------------- ------------- ------------- -------------
41,652 22,235 63,887 200 (985) (785) 63,102
----------- -------------- ------------- ------------- ------------- ------------- -------------
*This relates to FX gain on translation from AUD to GBP at 31
December 2018 and 31 December 2017.
** In the prior year the cost was reflected as per the Share
Purchase Agreement. In the current year it is split per the
production outpout of each investment.
17. 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 ("IPEV") Valuation Guidelines, using levered and unlevered
Discounted Cash Flow principles. The Investment Manager and
Directors consider that the discounted cash flow methodology used
in deriving a fair value is in accordance with the fair value
requirements of IFRS 13. Certain investments held by FS Holdco 4
were valued at cost as at 30 June 2019, 30 June 2018 and 31
December 2018 as these projects were not yet operational, and are
therefore not included in the sensitivity analysis on the following
pages.
Useful economic lives ("UELs")
The valuation of the Company's investments is determined based
on the discounted value of future cash flows of those investments
over their UELs.
The UEL of individual assets is determined by reference to a
fixed contractual lease term, and therefore, the Board and Manager
do not consider that the UEL can have a significant impact on the
valuation of the investments.
However, the Board notes that if extended contractual lease
terms were negotiated for individual assets, this would increase
the value of those assets. Similarly, if the assets did not operate
for the duration of the fixed contractual period, this would reduce
the value of those assets.
Sensitivity analysis of significant changes in unobservable
inputs within Level hierarchy of underlying Investments
The majority of the Company's underlying investments (indirectly
held through its unconsolidated subsidiaries FS Holdco, FS Holdco
2, FS Debtco, FS Holdco 3 and FS Holdco 4) are valued with
reference to the discounted value of future cash flows. The
Directors consider the valuation methodology used, including the
key assumptions and discount rate applied, to be appropriate. The
Board 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 to be significant inputs to
the discounted cash flows ("DCF") calculation.
Discount rate
The weighted average discount rate used is 7.15% (2018: 7.30%).
The Directors do not expect to see a significant change in the
discount rates applied within the Solar Infrastructure sector.
Therefore a variance of +/- 0.5% is considered reasonable.
-0.50% -0.25% Base +0.25% +0.50%
------ ------ ----- ------ ------
Directors'
valuation
(GBPm) 835.8 819.8 804.3 789.3 774.7
-------------- ------ ------ ----- ------ ------
NAV per share
(pence) 115.3 112.4 109.6 106.8 104.2
-------------- ------ ------ ----- ------ ------
Change vs
Base Case
(%) 3.92 1.93 0.00 (1.87) (3.68)
-------------- ------ ------ ----- ------ ------
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) 694.7 804.3 913.2
---------------------------- ------- ----- -----
NAV per share (pence) 89.6 109.6 129.4
---------------------------- ------- ----- -----
Change vs Base Case (%) (13.62) 0.00 13.54
---------------------------- ------- ----- -----
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 1.3%.
During the year, c.60% of the Company's operational performance
came from the sale of renewable obligation certificates ("ROCs").
These revenues are directly and explicitly linked to inflation for
20 years from the accreditation date under the ROC regime and
therefore are not considered for sensitivity analysis. The
remaining c.40% of revenue is derived from electricity sales which
are subject to power price movements.
-20.0% -10.0% Base +10.0% +20.0%
------- ------ ----- ------ ------
Directors'
valuation
(GBPm) 697.3 751.0 804.3 857.4 910.4
-------------- ------- ------ ----- ------ ------
NAV per share
(pence) 90.1 99.9 109.6 119.3 128.9
-------------- ------- ------ ----- ------ ------
Change vs
Base Case
(%) (13.30) (6.63) 0.00 6.60 13.19
-------------- ------- ------ ----- ------ ------
Inflation
A variable of 1.5% is considered reasonable given historic
fluctuations. A long term inflation rate of 2.75% (2018: 2.75%) has
been used.
-1.50% -0.75% Base +0.75% +1.50%
------- ------ ----- ------ ------
Directors'
valuation
(GBPm) 710.4 755.6 804.3 856.9 913.9
-------------- ------- ------ ----- ------ ------
NAV per share
(pence) 92.5 100.7 109.6 119.2 129.5
-------------- ------- ------ ----- ------ ------
Change vs
Base Case
(%) (11.67) (6.06) 0.00 6.54 13.62
-------------- ------- ------ ----- ------ ------
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) 820.1 812.2 804.3 796.4 788.4
-------------- ------ ----- ----- ------ ------
NAV per share
(pence) 112.5 111.0 109.6 108.1 106.7
-------------- ------ ----- ----- ------ ------
Change vs
Base Case
(%) 1.97 0.98 0.00 (0.99) (1.97)
-------------- ------ ----- ----- ------ ------
17. Fair value of the investments in unconsolidated entities (continued)
AUD/GBP Exchange Rate
The Fund is directly exposed to fluctuations in foreign currency
due to its investments in Australian dollar denominated assets.
Whilst the Group mitigates its exposure to fluctuations in AUD
through the use of forward contracts, the valuations of these
assets will be directly impacted. Whilst we would not expect to see
fluctuations quite this large, a variable of 20% is considered
appropriate.
-20.0% -10.0% Base +10.0% +20.0%
------ ------ ----- ------ ------
Directors'
valuation
(GBPm) 792.0 798.2 804.3 810.4 816.5
-------------- ------ ------ ----- ------ ------
NAV per share
(pence) 107.3 108.5 109.6 110.7 111.8
-------------- ------ ------ ----- ------ ------
Change vs
Base Case
(%) (1.52) (0.76) 0.00 0.76 1.52
-------------- ------ ------ ----- ------ ------
18. Stated Capital and Share Premium
The share capital and share premium of the Company consists
solely of Ordinary Shares of nil par value and therefore the value
of the stated capital relates only to share premium. At any General
Meeting of the Company each Shareholder will have, on a show of
hands, one vote and on a poll one vote in respect of each Ordinary
Share held. Stated capital is the net proceeds received from the
issue of Ordinary Shares (net of issue costs capitalised). The
holders of the Ordinary Shares are entitled to receive dividends
from time to time.
Ordinary Shares
30 June 30 June 31 December
2019 2018 2018
Shares Shares Shares
Opening balance 548,941,550 449,952,091 449,952,091
Issued during the period - - 98,989,459
----------- ----------- -----------
Closing balance 548,941,550 449,952,091 548,941,550
----------- ----------- -----------
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
Opening balance 588,798 454,515 454,515
Proceeds from share issue - - 106,189
Less: issue costs - - (1,906)
-------- -------- -----------
Closing balance 588,798 454,515 558,798
-------- -------- -----------
19. NAV per Ordinary Share
The Net Asset Value ("NAV") per redeemable Ordinary Share for
the Company 109.6 pence per ordinary share (period ended 30 June
2018: 105.2, year ended 31 December 2018: 111.2) This is based on
the Net Asset Value at the reporting date of GBP601,540,008 (30
June 2018: GBP473,133,573, 31 December 2018: GBP610,257,766) and on
548,941,550 (30 June 2018: 449,952,091, 31 December 2018:
548,941,550) redeemable Ordinary Shares, being the number of
Ordinary Shares in issue at the end of the period.
20. Financial instruments and risk profile
The Company holds cash and liquid resources as well as having
receivables and payables that arise directly from its operations.
The underlying investments of the Company's investment activities
indirectly expose it to various types of risk associated with solar
power. The main risks arising from the Company's financial
instruments are market risk, liquidity risk, credit risk and
interest rate risk. The Directors regulatory review and agree
policies for managing each of these risks and these are summarised
below:
20.1 Market risk
(a) Foreign exchange risk
Foreign currency risk, as defined in IFRS 7, arises as the
values of recognised monetary assets and monetary liabilities
denominated in other currencies fluctuate due to changes in foreign
exchange rates. Transactions in foreign currency are translated at
the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are translated to pounds sterling at the
foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in income.
The Company has no direct exposure to foreign currency risk,
however through its underlying investment in FS Holdco 4 it has
indirect exposure. FS Holdco 4 is directly exposed to fluctuations
in foreign currency due to its investments in Australian dollar
denominated assets. The Group mitigates its exposure to
fluctuations in foreign currency through the use of forward
exchange contracts.
The carrying amount of FS Holdco 4's foreign currency exposure
at the reporting date is as follows:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
AUD 60,292 55,872 63,102
-------- -------- -----------
The FX rate applied at 30 June 2019 0.55 (30 June 2018: 0.56, 31
December 2018: 0.55). A 10% weakening or strengthening of the FX
rate would have a GBP6,028,200 impact on the valuation of assets
denominated in AUD.
(b) Price risk
The Company's investments are susceptible to market price risk
arising from uncertainties about future values of the instruments.
The Board's Investment Manager provides the Company with investment
recommendations. The Board'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 Board'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 2019, the Company's only investment was valued
at net assets excluding the outstanding loans issued by the
Company. Were this value to increase by 10%, the increase in net
assets attributable to shareholders for the period would have been
GBP52,321,494 (30 June 2018: GBP40,342,170, 31 December 2018:
GBP53,018,750). The impact of changes in unobservable inputs to the
underlying investments is considered in note 17.
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future
cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company's exposure to the
risk of changes in market interest rates relates primarily to the
Company's long-term borrowing to its subsidiary. At period end the
Company had no long term borrowings with third parties (1 January
2018 to 30 June 2018: GBPNil, 1 January 2018 to 31 December 2018:
GBPNil).
Weighted average
Weighted average
time for which
Total portfolio interest rate rate is fixed
30 June 30 June 30 June
2019 2019 2019
GBP'000 % Days
Loan notes 250,000 11.00% 961
Shareholder loans 249,316 2.00% 1,652
Cash 5,710 0.05% -
---------------
505,026
---------------
Weighted average
Weighted average
time for which
Total portfolio interest rate rate is fixed
30 June 30 June 30 June
2018 2018 2018
GBP'000 % Days
Loan notes 250,000 11.00% 234
Shareholder loans 158,610 2.00% 741
Cash 180 - -
---------------
408,790
---------------
Weighted average
Weighted average time for which
Total portfolio interest rate rate is fixed
31 December 31 December 31 December
2018 2018 2018
GBP'000 % Days
Loan notes 250,000 11.00% 780
Shareholder loans 249,316 2.00% 1,287
Cash 12,282 0.05% -
---------------
511,598
---------------
20.2 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 2019
Carrying Contractual Less than 6 to 12 Greater than
amount Total 6 months Months 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial Assets
Investments 523,215 523,215 - - 523,215
Trade and other
Receivables 258 258 258 - -
Interest receivable 74,190 74,190 74,190 - -
Cash and cash
equivalents 5,710 5,710 5,710 - -
-------- ----------- --------- -------- ------------
Total Financial
assets 603,373 603,373 80,158 - 523,215
Trade and other
payables (1,833) (1,833) (1,833) - -
-------- ----------- --------- -------- ------------
Total financial
liabilities (1,833) (1,833) (1,833) - -
-------- ----------- --------- -------- ------------
Net position 601,540 601,540 78,325 - 523,215
-------- ----------- --------- -------- ------------
30 June 2018
Carrying Contractual Less than 6 to Greater than
amount Total 6 months 12 Months 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial Assets
Investments 403,422 403,422 - - 403,422
Trade and other
Receivables 1,926 1,926 1,926 - -
Interest receivable 68,948 68,948 68,948 - -
Cash and cash
equivalents 180 180 180 - -
-------- ----------- --------- ---------- ------------
Total Financial
assets 474,476 474,476 71,054 - 403,422
Trade and other
payables (1,342) (1,342) (1,342) - -
-------- ----------- --------- ---------- ------------
Total financial
liabilities (1,342) (1,342) (1,342) - -
-------- ----------- --------- ---------- ------------
Net position 473,134 473,134 69,712 - 403,422
-------- ----------- --------- ---------- ------------
31 December 2018
Carrying Contractual Less than 6 to Greater than
amount Total 6 months 12 Months 12 months
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial Assets
Investments 530,187 530,187 - - 530,187
Trade and other
Receivables 265 265 265 - -
Interest receivable 69,338 69,338 69,338 - -
Cash and cash
equivalents 12,282 12,282 12,282 - -
-------- ----------- --------- ---------- ------------
Total Financial
assets 612,072 612,072 81,885 - 530,187
Trade and other
payables (1,814) (1,814) (1,814) - -
-------- ----------- --------- ---------- ------------
Total financial
liabilities (1,814) (1,814) (1,814) - -
-------- ----------- --------- ---------- ------------
Net position 610,258 610,258 80,071 - 530,187
-------- ----------- --------- ---------- ------------
20.3 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 period and at the reporting date, the Company maintained
relationships with the following financial institutions:
Moody's Credit 30 June 2019
Rating GBP'000
Cash in hand:
Royal Bank of Scotland International
Limited P2 5,708
Lloyds Bank International Limited P1 2
------------
Total cash balances held by banks 5,710
------------
Moody's 30 June 2018
Credit Rating GBP'000
Cash in hand:
Royal Bank of Scotland International
Limited P2 10
Lloyds Bank International Limited P1 170
------------
Total cash balances held by banks 180
------------
Moody's Credit 31 December 2018
Rating GBP'000
Cash in hand:
Royal Bank of Scotland International
Limited P2 12,280
Lloyds Bank International Limited P1 2
----------------
Total cash balances held by banks 12,282
----------------
The Company is also indirectly exposed to credit risk through
its investment in UK Hold Co. The Board of UK Hold Co has
determined that the maximum exposure to credit risk in relation to
investments is GBP610,239,946, being the portion of UK Hold Co
investments that are made up of loans as at 30 June 2019 (30 June
2018: GBP582,019,152, 31 December 2018: GBP610,239,946). Included
within this are the related party loans as disclosed within note 23
as well as an external long term debt facility entered into by FS
Holdco and FS Debtco and Santander. The balance of the external
debt facility as at period end amounted to GBP251,057,609 (30 June
2018: GBP251,057,609, 31 December 2018: GBP251,057,609).
b) Expected credit loss assessment
Investments held at fair value through profit or loss are not
subject to IFRS 9 impairment requirements.
The Company applies the simplified approach to measuring
expected credit losses, as permitted by IFRS 9, which uses a 12
month expected loss allowance for all trade receivables. The
expected credit loss on trade receivables and the balance at year
end was deemed by management to be not material and therefore no
impairment adjustments were accounted for.
20.4 Other risks
Political and economic risk
The value of Ordinary Shares may be affected by uncertainties
such as political or diplomatic developments, social and religious
instability, changes in government policies, taxation or interest
rates, currency repatriation and other political and economic
developments in law or regulations and, in particular, the risk of
expropriation, nationalisation, and confiscation of assets and
changes in legislation relating to the level of foreign
ownership.
Governmental authorities at all levels are actively involved in
the promulgation and enforcement of regulations relating to
taxation, land use and zoning and planning restrictions,
environmental protection, safety and other matters. The
introduction and enforcement of such regulations could have the
effect of increasing the expense and lowering the income or rate of
return from, as well as adversely affecting the value of, the
Company's assets.
For the Company's UK solar sites the main risks from Brexit that
the Company is currently considering are the stability of the
operating and maintenance (O&M) companies that are employed
across the portfolio and the supply chain of components as part of
either corrective or preventative maintenance work.
In relation to the O&M companies themselves, all of the
primary O&M companies across a majority of the UK portfolio are
UK based operations who are wholly owned by UK entities.
The supply chain for spare parts is the other main risk that
Management foresees due to Brexit in terms of getting spare parts
to sites promptly from other parts of the EU, especially in the
event of a no deal Brexit.
Whilst Brexit presents certain risks in relation to the
operation of the UK solar portfolio the Asset Manager shall be
working to ensure that there are robust spare parts provision in
the UK and continue to work with the O&M providers and their
downstream suppliers to ensure down time is minimised across the
portfolio as much as possible.
21. 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.
22. Dividends
30 June 2019 Pence/ 30 June 2018 Pence/ 31 December 2018 Pence/
2019 Ordinary 2018 Ordinary 2018 Ordinary
GBP'000 share GBP'000 share GBP'000 share
Quarter
1 9,057 1.64 7,110 1.58 7,109 1.58
Quarter
2 9,058 1.64 7,109 1.58 7,109 1.58
Quarter
3 N/A N/A N/A N/A 8,118 1.64
Quarter
4 N/A N/A N/A N/A 9,003 1.64
-------- -------- -----------
18,115 14,219 31,339
-------- -------- -----------
23. Related party disclosures
For the purposes of these Financial Statements, a related party
is an entity or entities who are able to exercise significant
influence directly or indirectly on the Company's operations.
As noted in Note 2, the Company does not consolidate its
subsidiary. However, the Company and its subsidiaries (direct and
indirect) are a Group and therefore, are considered to be related
parties.
Transactions with UK Hold Co
For the period ended 30 June 2019:
Opening Balance Increase Repayment
as at in of Closing Balance
1 January loan/Interest loan/Interest as at
2019 charged repaid 30 June 2019
GBP'000 GBP'000 GBP'000 GBP'000
Loan Notes 250,000 - - 250,000
Interest on Loan Notes 56,814 17,203 (13,000) 61,017
Shareholder Loan 1 249,316 - - 249,316
Interest on Shareholder
Loan 1 12,524 2,495 (1,846) 13,173
Non interest bearing
loan included in trade
and other payables 183 4 - 187
For the period ended 30 June 2018:
Opening Balance Increase Repayment
as at in of Closing Balance
1 January loan/Interest loan/Interest as at
2018 charged repaid 30 June 2018
GBP'000 GBP'000 GBP'000 GBP'000
Loan Notes 250,000 - - 250,000
Interest on Loan Notes 48,746 16,751 - 65,497
Shareholder Loan 1 154,110 4,500 - 158,610
Interest on Shareholder
Loan 1 8,880 1,571 (6,920) 3,531
Non interest bearing
loan included in trade
and other receivables 1,116 - - 1,116
For the period ended 31 December 2018:
Increase Repayment
Opening Balance in of Closing Balance
as at loan/Interest loan/Interest as at 31 December
1 January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Loan Notes 250,000 - - 250,000
Interest on Loan
Notes 48,746 33,172 (25,104) 56,814
Shareholder Loan
1 154,110 95,206 - 249,316
Interest on Shareholder
Loan 1 8,880 3,644 - 12,524
Non interest bearing
loan included in
trade and other
receivables 1,116 - (1,116) -
Non interest bearing
loan included in
trade and other
payables - 183 - 183
The increases in the shareholder loan of GBP95,206,725 were
funded through 2 separate placing proceeds during 2018.
Transactions between UK Hold Co and its underlying
subsidiaries
Transactions with FS Holdco
For the period ended 30 June 2019:
Opening Balance
as at Increase Repayment Closing Balance
1 January in loan/Interest of loan/Interest as at
2019 charged repaid 30 June 2019
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 343,731 - - 343,731
Interest on investment
loan 1 47,053 13,636 (10,532) 50,157
Interest bearing Investment
loan 2 (40,000) - - (40,000)
Interest on investment
loan 2 (1,253) (992) - (2,245)
Non interest bearing
loan (143,504) - - (143,504)
Non interest bearing
loan included in trade
and other receivables 875 - - 875
For the period ended 30 June 2018:
Opening Balance
as at Increase Repayment Closing Balance
1 January in loan/Interest of loan/Interest as at
2018 charged repaid 30 June 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 343,731 - - 343,731
Interest on investment
loan 1 37,711 13,636 - 51,347
Interest bearing Investment
loan 2 - (40,000) - (40,000)
Interest on investment
loan 2 - (395) - (395)
Non interest bearing
loan (143,504) - - (143,504)
Non interest bearing
loan included in trade
and other receivables 715 160 - 875
For the period ended 31 December 2018:
Opening Balance Closing Balance
as at Increase Repayment as at
1 January in loan/Interest of loan/Interest 31 December
2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 343,731 - - 343,731
Interest on investment
loan 1 37,711 27,499 (18,157) 47,053
Interest bearing Investment
loan 2 - (40,000) - (40,000)
Interest on investment
loan 2 - (1,403) 150 (1,253)
Non interest bearing
loan (143,504) - - (143,504)
Non interest bearing
loan included in trade
and other receivables 715 160 - 875
Transactions with FS Holdco 2
For the period ended 30 June 2019:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 30 June
January 2019 charged repaid 2019
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 74,894 - - 79,894
Interest on investment
loan 1 3,745 1,857 - 5,602
Interest bearing Investment
loan 2 9,107 - - 9,107
Interest on investment
loan 2 42 226 - 268
Interest bearing Investment
loan 3 33,094 - - 33,094
Interest on investment
loan 3 150 820 - 970
Interest bearing Investment
loan 4 3,432 - - 3,432
Interest on investment
loan 4 6 85 - 91
Interest bearing Investment
loan 5 46,500 - - 46,500
Interest on investment
loan 5 962 1,153 - 2,115
Interest bearing loan
payable 1 (28,970) - - (28,970)
Interest on loan payable
1 (1,449) (718) - (2,167)
Interest bearing loan
payable 2 (13,000) - - (13,000)
Interest on interest bearing
loan payable 2 (819) (322) - (1,141)
Interest bearing loan
payable 3 (7,082) - - (7,082)
Interest on loan payable
3 (263) (176) - (439)
Interest bearing loan
payable 4 (8,386) - - (8,386)
Interest on loan payable
4 (208) (208) - (416)
Non interest bearing loan
1 (2,604) (63) - (2,667)
Non interest bearing loan
2 (875) - - (875)
For the period ended 30 June 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 30 June
January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 74,894 - - 74,894
Interest on investment
loan 1 - 1,857 - 1,857
Interest bearing loan
payable 1 (28,970) - - (28,970)
Interest on loan payable
1 - (718) - (718)
Interest bearing loan
payable 2 (13,000) - - (13,000)
Interest on interest bearing
loan payable 2 (169) (322) - (491)
Interest bearing loan
payable 3 - (7,082) - (7,082)
Interest on loan payable
3 - - - -
Non interest bearing loan
1 (3,734) - 102 (3,632)
Non interest bearing loan
2 (715) (160) - (875)
For the year ended 31 December 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 31 December
January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 74,894 - - 74,894
Interest on investment
loan 1 - 3,745 - 3,745
Interest bearing Investment
loan 2 - 9,107 - 9,107
Interest on investment
loan 2 - 42 - 42
Interest bearing Investment
loan 3 - 33,094 - 33,094
Interest on investment
loan 3 - 150 - 150
Interest bearing Investment
loan 4 - 3,432 - 3,432
Interest on investment
loan 4 - 6 - 6
Interest bearing Investment
loan 5 - 46,500 - 46,500
Interest on investment
loan 5 - 962 - 962
Interest bearing loan
payable 1 (28,970) - - (28,970)
Interest on loan payable
1 - (1,449) - (1,449)
Interest bearing loan
payable 2 (13,000) - - (13,000)
Interest on interest bearing
loan payable 2 (169) (650) - (819)
Interest bearing loan
payable 3 - (7,082) - (7,082)
Interest on loan payable
3 - (263) - (263)
Interest bearing loan
payable 4 - (8,386) - (8,386)
Interest on loan payable
4 - (208) - (208)
Non interest bearing loan
1 (3,734) - 1,130 (2,604)
Non interest bearing loan
2 (715) (160) - (875)
Transactions with FS Debtco
For the period ended 30 June 2019:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 30 June
January 2019 charged repaid 2019
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loan
1 55,000 - - 55,000
Interest on loan 1 4,769 1,364 - 6,133
Non interest bearing loan 140 - - 140
For the period ended 30 June 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 30
January 2018 charged repaid June 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loan
1 55,000 - - 55,000
Interest on loan 1 2,019 1,364 - 3,383
Non interest bearing loan - 140 - 140
For the year ended 31 December 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 31
January 2018 charged repaid December 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loan
1 55,000 - - 55,000
Interest on loan 1 2,019 2,750 - 4,769
Non interest bearing loan - 140 - 140
Transactions with FS Holdco 3
For the period ended 30 June 2019:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 30
January 2019 charged repaid June 2019
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 36,124 - - 36,124
Interest on investment
loan 1 - 450 (450) -
Non interest bearing loan
payable 317 3,259 (981) 2,595
For the period ended 30 June 2018:
Closing Balance
Opening Balance Increase Repayment as at
as at 1 in loan/Interest of loan/Interest 31 December
January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 - 36,124 - 36,124
Interest on investment
loan 1 - 144 (500) (356)
For the period year 31 December 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 31 December
January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 - 36,124 - 36,124
Interest on investment
loan 1 - 1,267 (1,267) -
Non interest bearing loan
payable - 317 - 317
Transactions with FS Holdco 4
For the period ended 30 June 2019:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 31 December
January 2019 charged repaid 2019
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 28,970 - - 28,970
Interest on investment
loan 1 1,449 718 - 2,167
Interest bearing Investment
loan 2 12,482 - - 12,482
Interest on investment
loan 2 786 310 - 1,096
Interest bearing Investment
loan 3 10,380 - - 10,380
Interest on investment
loan 3 385 258 - 643
Interest bearing Investment
loan 4 8,386 - - 8,386
Interest on investment
loan 4 208 208 - 416
Interest bearing Investment
loan 5 3,141 - - 3,141
Interest on investment
loan 5 107 78 - 185
Non interest bearing loan 353 788 - 1,141
For the period ended 30 June 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 30 June
January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 28,970 - - 28,970
Interest on investment
loan 1 - 718 - 718
Interest bearing Investment
loan 2 12,482 - - 12,482
Interest on investment
loan 2 162 310 - 472
Interest bearing Investment
loan 3 - 10,380 - 10,380
Interest on investment
loan 3 - 124 - 124
Interest bearing Investment
loan 5 - 3,141 - 3,141
Interest on investment
loan 5 - - - -
Non interest bearing loan - 353 - 353
For the year ended 31 December 2018:
Opening Balance Increase Repayment Closing Balance
as at 1 in loan/Interest of loan/Interest as at 31 December
January 2018 charged repaid 2018
GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing Investment
loan 1 28,970 - - 28,970
Interest on investment
loan 1 - 1,449 - 1,449
Interest bearing Investment
loan 2 12,482 - - 12,482
Interest on investment
loan 2 162 624 - 786
Interest bearing Investment
loan 3 - 10,380 - 10,380
Interest on investment
loan 3 - 385 - 385
Interest bearing Investment
loan 4 - 8,386 - 8,386
Interest on investment
loan 4 - 208 - 208
Interest bearing Investment
loan 5 - 3,141 - 3,141
Interest on investment
loan 5 - 107 - 107
Non interest bearing loan - 353 - 353
Transactions between FS Holdco, FS Debtco, FS Holdco 3, FS
Holdco 4 and their SPVs
All of the SPVs are cash generating solar farms (except for the
non-operational Australian investments). On occasion revenues
received and expenses are paid on their behalf by FS Holdco, FS
Holdco 2, FS Debtco, FS Holdco 3 and FS Holdco 4. All of these
transactions are related party transactions.
For the period ended 30 June 2019:
Opening Balance
receivable/ Amounts paid Net amount
(payable) on behalf Amounts received (payable)/
as at of from receivable
1 January SPV SPV as at 30 June
2019 2019 2019 2019
GBP'000 GBP'000 GBP'000 GBP'000
FS Holdco and its SPVs (15,594) 11,225 (8,888) (13,257)
FS Holdco 2 and its SPVs (2,689) 1,819 (689) (1,559)
FS Debtco and its SPVs (2,763) 4,799 (3,353) (1,317)
For the period ended 30 June 2018:
Opening Balance
receivable/ Amounts paid Net amount
(payable) on behalf Amounts received (payable)/
as at of from receivable
1 January SPV SPV as at 30 June
2018 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
FS Holdco and its SPVs (11,437) 15,154 (13,749) (10,032)
FS Holdco 2 and its SPVs - 3,054 (621) 2,433
FS Debtco and its SPVs (6,968) 7,885 (1,697) (780)
For the year ended 31 December 2018:
Opening Balance
receivable/ Amounts paid Net amount
(payable) on behalf Amounts received (payable)/
as at of from receivable
1 January SPV SPV as at 31 December
2018 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
FS Holdco and its SPVs (11,437) 33,009 (37,166) (15,594)
FS Holdco 2 and its SPVs - 1,501 (4,190) (2,689)
FS Debtco and its SPVs (6,968) 12,231 (8,026) (2,763)
Transactions with the manager
Foresight Group LLP, a related party of Foresight Group CI,
charged asset management fees to the underlying projects of
GBP792,182 during the period (1 January 2018 to 30 June 2018:
GBP304,000, 1 January 2018 to 31 December 2018: GBP1,002,002).
24. Commitments and contingent liabilities
There are no commitments nor contingent liabilities.
25. 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.
26. Post balance sheet events
Post period end, on 2 August 2019, the Investment Manager
successfully completed the refinancing of 28 of its UK assets
(321MW) under FS Holdco 2, an indirect subsidiary of the
Company.
AIFMD Disclosures (unaudited)
Alternative Investments Fund Manager Directive Report
In accordance with the Alternative Investments Fund Manager
Directive Report (the "Directive"), the Company is required in its
capacity as the Alternative Investment Fund Manager ("AIFM") and
the Alternative Investment Fund ("AIF") to disclose specific
information in relation to the following aspects of the Company's
management:
OVERVIEW OF INVESTMENT ACTIVITIES
The Company's investment activities during the year is disclosed
in full in the Investment Manager's Report on page 20 of the Annual
Report.
The Company's portfolio's performance during the year is
disclosed in full in the Asset Manager's Report on page 36 of the
Annual Report.
A list of the Company's portfolio holdings is included on page
16 of the Annual Report.
LEVERAGE AND BORROWING
Leverage is defined as any method by which the Company increases
its exposure through debt, borrowed capital or the use of
derivatives.
The Company and its subsidiaries' leverage position and
third-party debt arrangements are disclosed in full in the
Investment Manager's Report on page 20 of the Annual Report.
'Exposure' is defined in two ways - 'Gross method' and
'Commitment method' - and the Company must not exceed maximum
exposures under both methods.
The Directors are required to calculate and monitor the level of
leverage of the Company, expressed as a ratio between the exposure
of the Company and its Net Asset Value (Exposure/NAV), under both
the Gross method and the Commitment method.
'Gross method' exposure is calculated as the sum of all
positions of the Company (both positive and negative), that is, all
eligible assets, liabilities and derivatives, including derivatives
held for risk reduction purposes.
'Commitment method' exposure is also calculated as the sum of
all positions of the Company (both positive and negative), but
after netting off derivative and security positions as specified by
the Directive.
For the "Gross method", the following has been excluded:
- the value of any cash and cash equivalents which are highly
liquid investments held in the local currency of the Company that
are readily convertible to a known amount of cash, subject to an
insignificant risk of changes in value and which provide a return
no greater than the rate of the 3-month high quality government
bond;
- cash borrowings that remain in cash or cash equivalents as
defined above and where the amounts of that payable are known.
The total amount of leverage calculated as at 30 June 2019 is as
follows:
Gross method: 24%
Commitment method: 30%
LIQUIDITY
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.
The financial position of the Company, its cash flows, liquidity
position and borrowing facilities are referred to in the Chairman's
Statement, Strategic Report and Notes to the Accounts. In addition,
the financial statements include the Company's objectives, policies
and processes for managing its capital; its financial risk
management objectives; and its exposures to credit risk and
liquidity risk.
The Company has sufficient financial resources together with
investments and income generated. As a consequence, the Directors
believe that the Company is able to manage its business risks.
RISK MANAGEMENT POLICY NOTE
Please refer to Principal Risks report on page 43 of the Annual
Report.
REMUNERATION
As an AIFM, the Company is subject to a remuneration code which
is consistent with the requirements of the FCA that apply to the
AIFM. The remuneration policy is designed to ensure that any
relevant conflicts of interest can be managed appropriately at all
times and that the remuneration of the Directors and senior
management is in line with the risk policies and objectives of the
funds managed by the AIFM.
The Company does not directly employ any staff members. The
Investment Management services in this regard are provided by staff
members of Foresight Group LLPCI Limited with the support of staff
members of Foresight Group LLP.
In accordance with the AIFMD, information in relation to the
remuneration of the Company's AIFM is required to be made available
to investors. In accordance with the Directive, the AIFM's
remuneration policy and the numerical remuneration disclosures in
respect of the AIFM's relevant reporting period (year ending
December 20178) are available from the AIFM on request.
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
CORPORATE BROKER
Stifel Nicolaus Europe Limited (formerly Oriel Securities)
150 Cheapside
London
EC2V 6ET
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
INDEPENDENT AUDITOR
KPMG LLP
15 Canada Square
London
E14 5GL
Glossary of Terms
AEMO Australian Energy Market Operator
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
AIFs Alternative Investment Funds
AIFMs Alternative Investment Fund Managers
AIFMD The Alternative Investment Fund Management Directive
Asset Manager The Company's underlying investments have appointed
Foresight Group LLP, a subsidiary of Foresight Group
CI, to act as Asset Manager
BSUoS Balancing Services Use of System
BBSY Bank Bill Swap Bid Rate
Company Foresight Solar Fund Limited
CEFC The Clean Energy Finance Corporation
DCF Discounted Cash Flow
DNO Distribution Network Operator
EEA European Economic Area
EPC Engineering, Procurement & Construction
ESG Environmental, Social and Governance
EUA European Emission Allowances
FiT Feed-in Tariff. The Feed-in-Tariff scheme is the
financial mechanism introduced on 1 April 2010 by
which the UK Government incentivises the deployment
of renewable and low-carbon electricity generation
of up to 5MW of installed capacity.
GAV Gross Asset Value on Investment Basis including debt
held at SPV level
GFSC Guernsey Financial Services Commission
Group Borrowing Group Borrowing refers to all third-party debt by
the Company and its subsidiaries.
GRESB Global Real Estate Sustainability Benchmark
GWh Gigawatt hour
Hibernacula A shelter occupied during the winter by a dormant
animal
IAS International Accounting Standard
IFRS International Financial Reporting Standards as adopted
by the EU
Investment Manager Foresight Group CI Limited
IPEV Valuation Guidelines International Private Equity and Venture Capital
Valuation Guidelines
IPO Initial Public Offering
KID Key Information Document
KPMG LLP KPMG is the Company's Auditor
LGC Large-Scale Generation Certificate
LIBOR London Interbank Offered Rate
Listing Rules The set of FCA rules which must be followed by all
companies listed in the UK
LRET Large-Scale Renewable Energy Target. The LRET creates
a financial incentive in Australia for the establishment
and growth of renewable energy power stations, such
as wind and solar farms, or hydroelectric power stations
Main Market The main securities market of the London Stock Exchange
MIDIS Macquarie Infrastructure Debt Investment Solutions
MLF Marginal Loss Factor
MUFG Bank of Tokyo-Mitsubishi UFJ
MWh Megawatt hour
NAV Net Asset Value
NEG National Energy Guarantee
OBR Office for Budget Responsibility
Official List The Premium Segment of the UK Listing Authority's
Official List
Ofgem Office of Gas and Electricity Markets (UK Government
regulator)
O&M Operation and Maintenance contractors
PPA Power Purchase Agreements
PR Performance Ratio
PRI Principles for Responsible Investment
PRIIPS Packaged Retail and Insurance-Based Investment Products
PV Photovoltaic
RET Renewable Energy Target
RO Scheme The financial mechanism by which the UK Government
incentivises the deployment of large-scale renewable
electricity generation by placing a mandatory requirement
on licensed UK electricity suppliers to source a
specified and annually increasing proportion of electricity
they supply to customers from eligible renewable
sources or pay a penalty.
ROC Renewable Obligation Certificates
RPI The Retail Price Index
SCR Significant Code Review
SDG United Nations Sustainable Development Goal
SPV The Special Purpose Vehicles which hold the Company's
investment portfolio of underlying operating assets
TCR Targeted Charging Review
UK The United Kingdom of Great Britain and Northern
Ireland
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UARORKSAWUUR
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