8 August 2024
Foresight Solar Fund
Limited
(the
"Company", "Foresight Solar" or "FSFL")
Q2 2024 Net Asset Value and
Trading Update
Foresight Solar, a
sustainability-focused fund investing in solar and battery storage
assets in the UK and internationally, announces that its
unaudited net asset value (NAV) was £656.8 million at 30 June 2024
(31 March 2024: £665.0 million). This results in a NAV per Ordinary
Share of 114.9 pence (31 March 2024: 114.7 pence per
share).
Highlights:
·
Near and long-term power price forecasts for the
UK and Spain trended up in the second quarter, leading to a
positive impact on NAV.
·
UK electricity production recovered after the
wettest first quarter on record: irradiation was 2.7% below budget
and generation was 4.3% lower than forecast in the first
half.
·
Active treasury management reduced RCF costs by
80bps, equivalent to potential interest savings of £360,000 to the
end of the year. The RCF was £74.5 million drawn at 30 June
2024.
·
The board increased the buyback programme by up to
£10 million, taking the total to up to £50 million. Repurchases
have added a cumulative 1.9pps of NAV accretion.
Summary of key NAV
drivers:
Item
|
p/share movement
|
NAV on 31
March 2024
|
114.7p
|
Power price forecasts
|
+0.7
|
Project actuals
|
-0.6
|
Share buyback programme
|
+0.4
|
Other movements
|
-0.3
|
NAV on 30 June
2024
|
114.9p
|
As consultants updated their
assumptions, UK power price forecasts reversed a five-quarter
downward trend and increased in the three months to 30 June 2024.
The position was similar in Spain, with higher near and long-term
forecasts, whilst price forecasts for Australia were marginally
down relative to the previous quarter. In aggregate, these moves
resulted in a positive impact to NAV of 0.7 pence per
share.
Foresight Solar continued its
accretive share buyback programme, repurchasing a further 7.9
million shares during the second quarter and delivering an
additional 0.4pps of NAV accretion to
shareholders. FSFL has now deployed over £35 million of its £40
million initial allocation, resulting in a cumulative 1.9pps uplift
to NAV since the Company began buying back its shares in May
2023.
Other movements, totalling a
downside net impact of 0.3pps to NAV, included a small foreign
exchange movement; higher insurance costs; returning the Lorca
portfolio to a DCF valuation following the partial divestment in Q4
2023; and a minor upside from rebalancing discount rates across the
Australian portfolio to reflect current market
conditions.
Trading
update
Improved weather and good availability from
April to June in the UK helped FSFL recover from the wettest first
quarter on record. The better conditions, however, were not enough
to completely mitigate the negative impact of the rainy start to
the year. At the end of June, cumulative irradiation for the six
months was 2.7% below budget and production was 4.3% lower than
expected in FSFL's main market due to unplanned network outages and
a small number of inverter issues.
Spain and Australia also suffered from poor
weather and network outages. Overall, production for the global
portfolio was 7.1% below forecast for the first half of the year -
a considerable improvement from Q1, when it was 15.6% behind
budget.
Notwithstanding the below-budget start of 2024,
Foresight Solar's active power price hedging strategy ensured
another quarter of steady cash flow from operations, with cash
distributions only modestly down against budget. The directors are
confident the Company will meet its target dividend of 8.0pps for
the year with a slightly revised net dividend cover of
1.4x.
The investment manager continued to
forward-fix electricity sales at attractive rates to provide
revenue visibility for the medium term. Overall, the proportion of
contracted revenue for the global portfolio now stands at 89% for
2024, 83% for 2025 and 63% for 2026.
Capital
allocation
The board and the investment manager
recognise the discount that persists between FSFL's net asset value
and its share price. The directors have thus allocated up to a
further £10 million to Foresight Solar's ongoing share buyback
programme, bringing its total to a potential £50 million and
extending the renewables sector's largest initiative relative to
NAV.
Demonstrating the Company's
commitment to a disciplined capital allocation approach, FSFL
didn't make any large capital deployments in the period. The
divestment programme continues to move ahead, and more details will
be provided in the interim report. The board remains focused on
returning capital to shareholders and reducing variable-rate debt
costs.
Gearing
The gross asset value (GAV) on 30 June 2024 was
£1,085.2 million (31 March 2024: £1,094.5
million), with total outstanding debt of £428.4 million,
which represented 39.4% of GAV (31 March
2024: £429.5 million and 39.2%) - comfortably within the 50%
limit.
The RCF balance was £74.5 million drawn (31
March 2024: £75.0 million). In May, the Company substituted a £43
million tranche of its GBP drawing on the multi-currency revolving
credit facility to EUR, better aligning its debt with its
investment exposure. The treasury management initiative lowered the
expected weighted cost of the interest payable on the RCF by 80
basis points and, based on current rates, has the potential to save
at least £360,000 in interest payments by the end of the
year.
For more information, follow Foresight Solar on
LinkedIn
or contact:
Foresight
Group
Matheus Fierro
(fsflir@foresightgroup.eu)
|
+44 (0)20 3911 2318
|
Jefferies
International Limited
Gaudi Le Roux
Harry Randall
|
+44 (0)20 7029 8000
|
Singer Capital
Markets
Robert Peel
Alaina Wong
|
+44 (0)20 7496 3000
|
Sodali &
Co
Justin Griffiths
Gilly Lock
|
+44 (0)20 7250 1446
|