REG - Bluefield Solar Inc. - Annual Report for the Year Ended 30 June 2024
30/09/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240930:nRSd1162Ga&default-theme=true
RNS Number : 1162G Bluefield Solar Income Fund Limited 30 September 2024
LEI: 2138004ATNLYEQKY4B30
30 September 2024
Bluefield Solar Income Fund Limited
('Bluefield Solar' or the 'Company')
Annual Report and Financial Statements for the Year Ended 30 June 2024
Bluefield Solar (LON:BSIF), the London listed income fund focused on acquiring
and managing renewable energy and storage assets predominantly in the UK, is
pleased to announce its Annual Results for the Year Ended 30 June 2024.
The Annual Report has been submitted to the National Storage Mechanism and
will shortly be available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Highlights
As at 30 June 2024 / 30 June 2023
Net Asset Value (NAV) Dividend Target per Share
£781.6m £854.2m 8.80pps 8.40pps
NAV per share Actual dividend Declared
129.75p 139.70p 8.80pps 8.60pps
Underlying Earnings(1) Total Shareholder Return in year(2)
(pre amortisation of debt) -4.67% -2.03%
£94.6m £108.4m
Total Return in year(3)
Underlying Earnings per share(1) -0.83% 5.45%
(pre amortisation of debt)
15.51p 17.72p Total return to Shareholders since IPO
84.19% 89.79%
Underlying Earnings per share available for distribution(1)
(post amortisation of debt)
10.57p 14.74p
Environmental, Social and Governance (ESG)
ESG KPIs(4)
Ø Generated 810,602 MWh of renewable energy (June 2023: 836,231 MWh)
Ø Powered the equivalent of 300,000 UK homes(5) (June 2023: 288,000)
Ø Avoided 167,800 tonnes of CO2e emmissions(6) (June 2023: 173,000)
ESG Highlights
*Undertook a second physical scenario analysis to examine the potential
impacts of changing wind speeds on the Company's wind portfolio.
*Developed near-term net zero targets, covering the Company's scope 1, 2 and 3
emissions.
*Developed a nature framework, aligned with the recommendations of the Task
Force on Nature-related Financial Disclosures ("TNFD").
Construction and Development Pipeline
· 93 MW under construction
· 774 MW approved
· 375 MW in planning
· 315 MW potential capacity
1.56 GW
(954 MW Solar, 603 MW battery)
1. Underlying earnings is an alternative performance measure employed by the
Company to provide insight to the Shareholders by linking the underlying
financial performance of the operational projects to the dividends declared
and paid by the Company. It is defined in the Alternative Performance Measure
appendix.
2. Total Shareholder Return is based on share price movement and dividends
paid in the year. It is defined in the Alternative Performance Measure
appendix.
3. Total Return is based on the NAV movement and dividends paid in the year.
It is defined in the Alternative Performance Measure appendix.
4. Performance relates to the Company's 100% owned portfolio.
5. Based on Ofgem's Typical Domestic Consumption Values (TDCV). The TDCV has
reduced, hence this metric has increased despite a decrease in generation
compared with the previous year.
6. Based on generation data aligned with the relevant 2024 Government CO2e
conversion factor. In the current Year, the Company reported avoided emissions
on a gross basis, reflecting its equity share in investments but without
allocating any avoided emissions to debt finance providers
Results Summary:
For the year ended For the year ended
30 June 2024 30 June 2023
Total operating income (£7,410,520) £49,069,809
Total comprehensive income before tax (£9,600,983) £46,793,621
Total underlying earnings (pre amortisation of debt)(1) £94,580,146 £108,367,331
Earnings per share (per below) (1.57p) 7.65p
Total underlying EPS available for distribution(2) 12.00p 18.13p
Total declared dividends per share for year 8.80p 8.60p
Underlying earnings per share carried forward 3.40p 9.53p
(See below)
NAV per share 129.75p 139.70p
Share price at 30 June 105.60p 120.00p
Total return(3) (0.83)% 5.45%
Total Shareholder Return(4) (4.67)% (2.03)%
Total Shareholder Return since inception(5) 84.19% 89.79%
Dividends per share paid since inception 78.59p 69.79p
1. Underlying earnings is an alternative performance measure employed by
the Company to provide insight to the Shareholders by linking the
underlying financial performance of the operational projects to the dividends
declared and paid by the Company. It is defined in the Alternative
Performance Measure appendix.
2. Total underlying EPS is calculated using underlying earnings available
for distribution, including unutilised prior year underlying earnings per
share carried forward, divided by the average number of shares.
3. Total return is based on NAV per share movement and dividends paid in the
year.
4. Total Shareholder Return is based on share price movement and dividends
paid in the year.
5. Total Shareholder Return since inception is based on share price movement
and dividends paid since the IPO.
John Scott, Chair of Bluefield Solar, said:
"The year under review saw the Company and all others in our sector continue
to trade at a discount to NAV, preventing us from raising fresh capital to
diversify the Company's portfolio and aid the progression of our considerable
development pipeline. In response, the Company has sought to deliver the
optimum allocation of capital resources available as well as finding
innovative ways of accessing new sources of capital. Most important of these
new measures is the broad partnership with GLIL Infrastructure announced in
December 2023 which, in addition to providing the Company with fresh capital
to invest in new developments, has also allowed us to prudently reduce our
debt position. Further, between March and the end of June, the Company has
bought back over 9 million of its own shares at a cost of approximately £9.4m
and adding 0.4 pps to the Company's NAV, demonstrating our commitment to
taking a proactive approach to managing the discount to NAV where we can and
adding value for shareholders."
"Two of our largest assets, Mauxhall Farm (44.4MW) and Yelvertoft (48.4MW),
were energised at the end of July and beginning of August, respectively,
demonstrating the continued progression of our development pipeline totalling
nearly 1GW of solar and over 600MW of battery projects. The Company's 900MW
portfolio is now responsible for 5% of UK solar generation, a statistic in
which all shareholders can be justifiably proud. Looking ahead, we will
continue to assess the Company's pipeline to progress the investments which
will demonstrate the fastest accretive returns while continuing the important
role of maximising the operating performance of our substantial portfolio to
continue to provide our shareholders with a rising source of income."
James Armstrong, Managing Partner, Bluefield Partners, Investment Adviser to
Bluefield Solar, said:
"I'm pleased to deliver another strong set of results for Bluefield Solar. We
have focused on managing the company whilst the equity markets have been
closed and we are extremely encouraged by the progress we have made in our
capital recycling programmes and value enhancement activities. With strong
policy support from the new government, supportive power markets and interest
rates gliding down, the macro conditions are materially improving. With our
proprietary pipeline giving us a clear strategic advantage we face the coming
year with optimism. A particular mention should go to the strategic
partnership with GLIL, which has continued to flourish, and we look forward to
growing this partnership."
Analyst presentation
A remote call for analysts will be hosted by James Armstrong and Neil Wood of
Bluefield Partners LLP at 09:30am today, 30 September 2024. For details,
please contact Buchanan on BSIF@buchanan.uk.com.
A copy of the presentation is available via the Company's website and an audio
webcast of the presentation will also be made available at 09:30am today.
https://bluefieldsif.com/ (https://bluefieldsif.com/)
For further information:
Bluefield Partners LLP (Company Investment Adviser) Tel: +44 (0) 20 7078 0020
James Armstrong / Neil Wood / Giovanni Terranova www.bluefieldllp.com (http://www.bluefieldllp.com/)
Deutsche Numis (Company Broker) Tel: +44 (0) 20 7260 1000
Tod Davis / David Benda / Matt Goss www.dbnumis.com (http://www.dbnumis.com)
Ocorian Administration (Guernsey) Limited Tel: +44 (0) 1481 742 742
(Company Secretary & Administrator) www.ocorian.com (http://www.ocorian.com)
Chezi Hanford
Media enquiries: Tel: +44 (0) 20 7466 5000
Burson Buchanan (PR Adviser) www.b (http://www.buchanancomms.co.uk) urson (http://www.buchanancomms.co.uk)
Henry Harrison-Topham / Henry Wilson buchanan (http://www.buchanancomms.co.uk) .com
BSIF@buchanan.uk.com (mailto:BSIF@buchanan.uk.com)
Notes to Editors
About Bluefield Solar
Bluefield Solar is a London listed income fund focused primarily on acquiring
and managing solar energy assets. Not less than 75% of the Company's gross
assets will be invested into UK solar assets. The Company can also invest up
to 25% of its gross assets into other technologies, such as wind and storage.
Bluefield Solar owns and operates a UK portfolio of 883MW, comprising 824.7MW
of solar and 58.3MW of onshore wind.
Further information can be viewed at www.bluefieldsif.com
(http://www.bluefieldsif.com/)
About Bluefield Partners
Bluefield Partners LLP was established in 2009 and is an investment adviser to
companies and funds investing in renewable energy infrastructure. It has a
proven record in the selection, acquisition and supervision of large-scale
energy assets in the UK and Europe. The team has been involved in over £6.7
billion renewable funds and/or transactions in both the UK and Europe,
including over £1.6 billion in the UK since December 2011.
Bluefield Partners LLP has led the acquisitions of, and currently advises on,
over 100 UK based solar photovoltaic assets that are agriculturally,
commercially or industrially situated. Based in its London office, it is
supported by a dedicated and experienced team of investment, legal and
portfolio executives. Bluefield Partners LLP was appointed Investment
Adviser to Bluefield Solar in June 2013.
ANNUAL REPORT
Bluefield Solar Income Fund Limited
Annual Report and
Financial Statements
FOR THE YEAR ENDED 30 JUNE 2024
Company Registration Number: 56708
General Information
Board of Directors (all non-executive)
John Scott (Chair and Chair of Nomination Committee)
Elizabeth Burne (Chair of Audit and Risk Committee)
Michael Gibbons CBE (Senior Independent Director and Chair of Remuneration
Committee)
Meriel Lenfestey (Chair of Environmental, Social and Governance Committee)
Paul Le Page (retired 30 September 2023)
Chris Waldron (appointed 1 December 2023) (Chair of Management Engagement and
Service Providers Committee)
Registered Office
PO Box 286
Floor 2, Trafalgar Court
Les Banques, St Peter Port
Guernsey, GY1 4LY
Administrator, Company Secretary and Designated Manager
Ocorian Administration (Guernsey) Limited
Floor 2, Trafalgar Court
Les Banques, St Peter Port
Guernsey, GY1 4LY
Independent Auditor
KPMG Channel Islands Limited
Glategny Court, Glategny Esplanade
St Peter Port
Guernsey, GY1 1WR
Registrar
Computershare Investor Services (Guernsey) Limited
13 Castle Street
St Helier
Jersey, JE1 1ES
Investment Adviser
Bluefield Partners LLP
6 New Street Square
London, EC4A 3BF
Sponsor, Broker and Financial Adviser
Deutsche Numis
45 Gresham Street
London, EC2V 7BF
Legal Advisers to the Company
(as to English law)
Norton Rose Fulbright LLP
3 More London Riverside
London, SE1 2AQ
Legal Advisers to the Company
(as to Guernsey law)
Carey Olsen
PO Box 98, Carey House
Les Banques, St Peter Port
Guernsey, GY1 4BZ
Principal Bankers
NatWest International plc
35 High Street
St Peter Port
Guernsey, GY1 4BE
Highlights
As at 30 June 2024 / 30 June 2023
Net Asset Value (NAV)
£781.6m/£854.2m
NAV per share
129.75/139.70p
Underlying Earnings(1)
(pre amortisation of debt)
£94.6m/£108.4m
Underlying Earnings per share(1)
(pre amortisation of debt)
15.51p/17.72p
Underlying Earnings per share available for distribution(1)
(post amortisation of debt)
10.57p/14.74p
Dividend Target per Share
8.80pps/8.40pps
Actual Dividend Declared
8.80pps/8.60pps
Total Shareholder Return in year(2)
-4.67%/-2.03%
Total Return in year(3)
-0.83%/5.45%
Total return to Shareholders since IPO
84.19%/89.79%
Environmental, Social and Governance (ESG)
ESG KPIs
· Generated 810,602 MWh of renewable energy(4) (June 2023: 836,231
MWh)
· Powered the equivalent of 300,000 UK homes(5) (June 2023:
288,000)
· Avoided 167,800 tonnes of CO2e emissions(6) (June 2023: 173,000)
ESG Highlights
*Undertook a second physical scenario analysis to examine the potential
impacts of changing wind speeds on the Company's wind portfolio.
*Developed near-term net zero targets, covering the Company's scope 1, 2 and 3
emissions.
*Developed a nature framework, aligned with the recommendations of the Task
Force on Nature-related Financial Disclosures ("TNFD").
Construction and Development Pipeline
· 93 MW under construction
· 774 MW approved 1.56 GW
· 375 MW in planning (954 MW Solar, 603 MW battery)
· 315 MW potential capacity
1. Underlying earnings is an alternative performance measure employed by the
Company to provide insight to the Shareholders by linking the underlying
financial performance of the operational projects to the dividends declared
and paid by the Company. It is defined in the Alternative Performance Measure
appendix.
2. Total Shareholder Return is based on share price movement and dividends
paid in the year. It is defined in the Alternative Performance Measure
appendix.
3. Total Return is based on the NAV movement and dividends paid in the year.
It is defined in the Alternative Performance Measure appendix.
4. Performance relates to of the Company's 100% owned portfolio.
5. Based on Ofgem's Typical Domestic Consumption Values (TDCV). The TDCV has
reduced, hence this metric has increased despite a decrease in generation
compared with the previous year.
6. Based on generation data aligned with the relevant 2024 Government CO2e
conversion factor. In the current Year, the Company reported avoided emissions
on a gross basis, reflecting its equity share in investments but without
allocating any avoided emissions to debt finance providers
Results Summary
For the year ended For the year ended
30 June 2024 30 June 2023
Total operating income (£7,410,520) £49,069,809
Total comprehensive income before tax (£9,600,983) £46,793,621
Total underlying earnings (pre amortisation of debt)1 £94,580,146 £108,367,331
Earnings per share (per below) (1.57p) 7.65p
Total underlying EPS available for distribution(2) 12.00p 18.13p
Total declared dividends per share for year 8.80p 8.60p
Underlying earnings per share carried forward 3.40p 9.53p
(See below)
NAV per share 129.75p 139.70p
Share price at 30 June 105.60p 120.00p
Total return(3) (0.83)% 5.45%
Total Shareholder Return(4) (4.67)% (2.03)%
Total Shareholder Return since inception(5) 84.19% 89.79%
Dividends per share paid since inception 78.59p 69.79p
1. Underlying earnings is an alternative performance measure employed by
the Company to provide insight to the Shareholders by linking the underlying
financial performance of the operational projects to the dividends declared
and paid by the Company. It is defined in the Alternative Performance
Measure appendix.
2. Total underlying EPS is calculated using underlying earnings available
for distribution, including unutilised prior year underlying earnings per
share carried forward, divided by the average number of shares.
3. Total return is based on NAV per share movement and dividends paid in the
year.
4. Total Shareholder Return is based on share price movement and dividends
paid in the year.
5. Total Shareholder Return since inception is based on share price movement
and dividends paid since the IPO.
Corporate Summary
Investment Objective
The investment objective of the Company is to provide Shareholders with an
attractive return, principally in the form of regular income distributions, by
being invested primarily in solar energy assets located in the UK. The Company
also invests a minority of its capital into other renewable assets including
wind and energy storage.
Structure
The Company is a non-cellular company limited by shares incorporated in
Guernsey under the Law on 29 May 2013. The Company's registration number is
56708, and it is regulated by the GFSC as a registered closed-ended collective
investment scheme and as a Green Fund after successful application under the
Guernsey Green Fund Rules to the GFSC on 16 April 2019. The Company's Ordinary
Shares were admitted to the Premium Segment of the Official List and to
trading on the Main Market of the LSE following its IPO on 12 July 2013. On 29
July 2024, the UK Listing Rules were updated and as a result, the Company is
now a member of the Equity Shares in Commercial Companies ("ESCC") category.
The issued capital during the year comprises the Company's Ordinary Shares
denominated in Sterling.
The Company makes its investments via its wholly owned subsidiary (Bluefield
Renewables 1 Limited) and has the ability to use long term and short term debt
at the holding company level, as well as having long term, non-recourse debt
at the SPV level.
Investment Adviser
The Investment Adviser to the Company during the year was Bluefield Partners
LLP which is authorised and regulated by the UK FCA under the number 507508.
In May 2015, Bluefield Services Limited (BSL), a company with the same
ownership as the Investment Adviser, commenced providing asset management
services to the investment SPVs held by the Company's wholly owned UK
subsidiary, Bluefield Renewables 1 Limited (BR1).
In August 2017 Bluefield Operations Limited (BOL), a company with the same
ownership as the Investment Adviser, commenced providing operation and
maintenance services to the Company and provides services to approximately 80%
of the capacity of the investment portfolio held by the Company as at
year-end.
In December 2020, Bluefield Renewable Developments Limited (BRD), a company
with the same ownership as the Investment Adviser, commenced providing BSIF
with new build development opportunities in addition to arrangements in place
with the Company's other development partners.
In October 2023, Bluefield Construction Management Limited (BCM), a company
with the same ownership as the investment adviser, commenced providing BSIF
with construction management services on the new build portfolio.
Chair's Statement
Introduction
The year ended 30 June 2024 (the "Year") has produced many challenges for your
Company and its Investment Adviser. Despite a political environment which is
strongly supportive of renewable electricity, our shares - along with all
others in our sector - have traded at a persistent discount to underlying NAV,
effectively preventing us from raising fresh capital in the stock market, a
strategy which has served us and our Shareholders well for the first ten years
of our existence. This is a problem to which I referred last year, and I am
sorry to report that, with discounts widening across the sector, in the
intervening twelve months the issue has become more acute; at one point,
BSIF's discount exceeded 25%. We have therefore adopted a fresh approach to
the twin questions of: from where do we access the funds needed to finance our
growth; and what is the optimum allocation of the capital resources available
to us?
BSIF's operating performance, which saw generation fall by 3%, was hampered by
two factors. We suffered from a number of planned outages as inverters were
replaced by newer and more reliable designs. The other factor was the weather,
the Year in question seeing irradiation levels which were some 4.3% below
expectations. Those who can remember the water-logged months of July/August
2023 and May/June 2024 will probably be surprised that the shortfall is not
greater.
The most important development for BSIF, announced in December 2023, is our
broad partnership with GLIL Infrastructure ("GLIL"), whereby we agreed under
Phase One to co-invest in the acquisition of a 247MW portfolio of UK solar
assets; and, in Phase Two, to sell to GLIL a 50% stake in one of our existing
portfolios of operating solar assets, a transaction that was concluded in
September 2024. As well as providing the Company with capital to invest in new
developments, it has also allowed us to reduce our floating rate debt.
In light of the discount at which our shares have been trading, in February
2024 we announced a share buyback programme. Between the beginning of March
and 30 June 2024, BSIF bought back over 9 million of its own shares at a cost
of approximately £9.4 million. Buying at a discount to NAV added 0.4 pps to
the Company's net asset value and the shares repurchased are held in treasury.
Since Year end, we have continued to buy back shares and as at 26 September we
have repurchased over 14 million shares and the discount stands at
approximately 18%.
Although we did not complete any new solar projects during the Year, two of
our largest solar investments - Mauxhall Farm (44.4MW) and Yelvertoft (48.4MW)
- were energised at the end of July 2024 and the beginning of August 2024,
respectively. Currently, our total generating capacity (including our 50%
share in the assets which were the subject of Phase Two of our strategic
partnership with GLIL) stands at 883MW, comprising 824.7MW of solar and 58.3MW
of wind.
Highlights of the year
· Total generation of the 100% owned portfolio, at 811GWh, fell by
3% as compared with the 836GWh generated in the year ended 30 June 2023;
· Total declared dividends for the Year increased to 8.80pps, in
line with our previously declared target (30 June 2023: 8.60pps) and with
dividends covered 1.36 times by current earnings;
· Irradiation was 4.3% below expectations and we suffered from
significant plant downtime, largely on account of planned inverter
replacements;
· Our income rose 3.1%, despite spot electricity prices falling -
thanks to contracts struck earlier and to our high proportion of regulated and
inflation-linked revenues;
· On 25 January 2024, the Company announced the completion of Phase
One of its strategic partnership with GLIL, which was an investment of £20
million of equity, alongside £200 million from GLIL, to fund the acquisition
of a 246.6MW portfolio of UK solar assets.
· Subsequent to our Year end, we have completed Phase Two of our
partnership with GLIL, comprising the sale of a 50% stake in a 112.2MW
portfolio of operating solar assets, resulting in a payment to BSIF of circa
£70 million, of which £50.5 million was used to repay the Company's
Revolving Credit Facility ('RCF'). Following completion, the Company's equity
stake in the combined portfolios increased to approximately 25%;
· Work on the Company's development pipeline continued, with
planning consents being secured on 223MW of solar projects and 90MW of battery
projects, while the wider pipeline grew to 954MW of solar and 603MW of battery
storage;
· The NAV per share fell to 129.75pps (30 June 2023: 139.70pps),
the reduction reflecting lower long term electricity prices and lower
inflation expectations;
· BSIF's shares traded at a persistent discount to NAV, the closing
price on 30 June 2024 being 19% below the NAV (30 June 2023: 14% discount);
· Subsequent to 30 June 2024, two major solar plants, with a
combined capacity of 92.8MW, were energised.
At the Year end, the Group's total outstanding debt stood at £607 million,
with leverage at 43% of GAV (30 June 2023: 41% of GAV).
Underlying Earnings and Dividends
The Underlying Earnings for the Year, before amortisation of long-term debt,
were £94.6 million, or 15.5pps, and underlying earnings available for
distribution, post debt repayments of £30.1m (4.9pps), were £64.5. million
(10.6pps). Thus, the Company has earned comfortably in excess of its total
dividend of 8.80pps for the Year.
This has enabled the declaration of a fourth interim dividend of 2.20pps,
bringing the total dividend for the Year to 8.80pps (Prior Year: 8.60pps); the
yield on our shares - based on a share price of 106.40pps on 26 September 2024
- is 8.3%. The Board has set a target dividend for the year ended 30 June 2025
of not less than 8.90pps. This extends our record of progressive increases,
and reflects our intention to repay borrowings and continue a programme of
share buybacks, while also investing in the development of our pipeline to
generate and store electric energy.
Valuation and Discount Rate
There has been considerable activity in the secondary market for renewable
electricity projects; demand for solar portfolios remains strong, providing
ample evidence to validate the asset values adopted by BSIF. Prices seen in
the market over the past two years range between £1.20m/MW and £1.45m/MW and
over 1GW of operational capacity has been brought to market in the Year.
Some of this activity involves BSIF as a seller of operating solar
investments; by entering into its partnership with us, GLIL acquired a 50%
stake in a selection of BSIF's solar assets in Phase Two of the strategic
partnership, for a price which values the 112MW portfolio at circa £140
million. The financial assumptions underlying this transaction are consistent
with those used by the Company in publishing its latest NAV of 129.75pps as at
30 June 2024. The portfolio discount rate is unchanged at 8% for the valuation
and the enterprise value of the Company's operational portfolio is £1,136.5m,
representing £1.24m/MW for the solar assets (30 June 2023: £1.35m/MW).
Inflation
UK inflation has abated in the past year; in June 2023 RPI inflation was
running at 10.7%, whereas this fell to 2.9% for June 2024. On a CPI basis, the
figures were 7.9% and 2.0%, respectively. Sterling interest rates, however,
have been slower to fall. In August 2024 the Bank of England reduced Base Rate
by just 0.25%, to 5.00%, and the UK 5 year gilt rate is now below 4%, down
from approximately 4.5% one year ago.
BSIF is a net beneficiary of inflation, since our regulated income is
index-linked, boosting our revenues from ROCs and FiTs faster than the
increase in our operating costs. The Company also adopts a prudent approach to
leverage, with most of our debt being fixed at the historically low interest
rates which prevailed until 2022; lower interest rates assist BSIF by reducing
the cost of our revolving credit facility.
Power Prices
Spot electricity prices have softened considerably in the Year, but the
Company's PPA strategy of fixing power prices for between one and three years
in advance has allowed the Company to benefit from power contracts which are
insulating the Company from short term price weakness. The average weighted
prices for these contracts were £149/MWh for June 2024 (June 2023:
£230/MWh).
Environmental, Social and Governance ("ESG")
I am pleased to say that our significantly enhanced ESG reporting has been
well received by Shareholders and other commentators. We continue to build on
our approach and once again I express BSIF's appreciation for the work done by
the Investment Adviser to align the Company with best practice in this field.
This year is the Company's second year of implementing and monitoring its ESG
performance against its KPIs and further information is available on page 47.
Capital allocation and gearing
As noted earlier, with BSIF's shares trading at a significant discount, we
continue to buy back our own shares on a regular basis and, since the
commencement of this programme in February, total buybacks now exceed 14
million shares, all held in treasury. At the same time, we are steadily
reducing the balance on our RCF and it is the Board's intention, within the
constraints of the resources available to the Company, to persevere with both
programmes.
The Board
As noted in our Interim Report, in November 2023 Chris Waldron joined the BSIF
Board as a non-executive director.
Having been a member of this Board since the flotation of the Company in 2013,
I intend to retire in 2025. Thus, the forthcoming AGM will be the final time I
shall be seeking re-election to the Board. The Board is at an advanced stage
of an exercise, involving an external search agency, to identify an additional
director to be appointed during our current financial year.
The AGM
The Company's Annual General Meeting will take place at 10.30am on 6 December
2024 at Floor 2, Trafalgar Court, Les Banques, St Peter Port, Guernsey.
Shareholders who are unable to be present in person are encouraged to submit
questions in advance of the meeting.
Conclusion
BSIF is required every five years to give Shareholders the opportunity to vote
for the continuation or otherwise of the Company. Your Board was delighted
when the vote held at the 2023 AGM resulted in a 98.56% vote in support of the
continuation of the Company and we interpret this as a strong vote of
confidence in our business and in our Investment Adviser, Bluefield Partners.
It is clear from their early weeks in office that the incoming Labour
Government regards the expansion of indigenously produced renewable energy as
one of its priorities and recent announcements regarding investment in
significantly increased grid capacity suggest to us that they are entirely
serious about fostering a three-fold increase in solar power by 2030 and that
the opportunities for our business are legion. Our main constraint remains
accessing the capital that is needed to develop the opportunities that exist.
As well as our operating portfolio of nearly 900MW of wind and solar capacity,
BSIF has a significant development pipeline, comprising nearly 1GW of solar
projects and over 600MW of batteries.
Your Company is currently responsible for the generation of some 5% of all
solar power in the UK and it is our intention to participate fully in the
planned expansion of this resource. The recently established publicly owned
energy company, Great British Energy, has been designed to accelerate clean
energy deployment and we welcome this, as well as the other initiatives
announced to date which will support the path to both net zero emissions and
greater energy security and independence. At the same time, the Government
recognises the need to reform electricity market arrangements to deliver the
pace and scale of change required to meet its target of decarbonisation of the
electricity system and continues to assess its options following a second
round of consultations in May 2024. We are active participants in this debate.
Our primary objective for the current year is to progress those investments
which meet our investment return criteria and which can be built and grid
connected soonest, while working forensically on our existing portfolio to
improve and update what is there, all with the objective of maximising the
operating performance. We are fortunate to have a very significant volume of
index-linked regulated revenue which, combined with our Investment Adviser's
successful strategy of fixing medium term power sales contracts, gives us
confidence in the prospects for BSIF and our ability to continue to provide
our Shareholders with a rising dividend.
John Scott
Chair
27 September 2024
Report of the Investment Adviser
Introduction from the Managing Partner of the Investment Adviser
In the year to 30 June 2023, the Company delivered the strongest earnings in
its 10 year history and whilst records cannot be broken every year, the
financial performance for the period to 30 June 2024 has once again been
strong with the dividend target of 8.80pps comfortably covered by in period
earnings (net of debt and taxes).
The Company's highly successful power price strategy has once again delivered
material value to shareholders, but for the first time in its operating
history the portfolio has suffered the twin effects of below budget
irradiation (-4.3%) and below budget operational performance (-5.1%).
Whilst the Board and the Investment Adviser have no control over the amount of
irradiation and wind speed, it is important to note the operational challenges
faced by the portfolio are principally the result of one-off DNO outages and
isolated challenges with particular inverter models.
The Investment Adviser, Bluefield Services and Bluefield Operations, have
addressed this with a targeted inverter replacement programme, investing over
£3.6m to June 2024 and the results of which are already delivering
performance back towards expectations.
Stepping outside of the Company, the equity markets over the past twelve
months have continued to present a challenging year for the listed renewables
sector. Across the sector, Bluefield Solar included, share price discounts to
NAVs have persisted and so the prospect of capital raises from the equity
markets has remained unattainable.
This has presented a multi layered challenge to the Company as it balances the
need to continue progression of its extensive pipeline of development
opportunities, to prevent the risk of loss of value, whilst simultaneously
creating liquidity to reduce drawings under the Company's RCF balance and
provide support to the Company's share buyback programme.
Despite these considerable challenges, it is highly pleasing to be able write
about a series of actions the Company has taken over the past year which have
made material strides in specifically addressing these challenges. These were:
1. Strategic Partnership with GLIL: The announcement in December 2023
of the commencement of a Strategic Partnership with GLIL, the large
infrastructure investor. This innovative arrangement, unique amongst the
actions being taken by other listed peers, was structured to simultaneously
address an attractive acquisition opportunity, provide liquidity for reducing
the Company's RCF and progression of a selected portion of the Company's
development pipeline.
The partnership covers three phases:
a. Phase One of the partnership, completed in January 2024, enabled
Bluefield Solar to acquire a minority stake in a highly attractive operational
portfolio alongside GLIL as the majority investor. The agreement also has the
option for Bluefield to increase its stake, assuming there are available
funds.
b. Phase Two of the partnership, completed in August 2024, was the
sale by Bluefield Solar of a 50% stake in a 112MWp operational portfolio owned
100% by the Company. The sale, completed in line with the Company's prevailing
NAV, realised proceeds of circa £70m and enabled a material initial repayment
(being circa £50m) of the Company's drawn RCF balance (leaving it at circa
£134m at the time of writing)
c. Phase Three of the partnership, which is currently in progress, is
a commitment for GLIL and Bluefield Solar to co-invest into a selected
portfolio of circa 10% of the Company's proprietary development pipeline and
enable construction over the next two to three years.
2. Share buyback Programme: Turning attention to the challenge of the
share price discount relative to the Company's NAV, in February 2024 the Board
announced a share buyback programme of £20m in order to provide direct
support to the share price. As at 30 June 2024, the Company had spent £9.4m
of this allocation.
Whilst there has been considerable success with the various strategic
initiatives deployed over the past twelve months, the steps that are taken
next are just as important in ensuring performance of the Company continues to
match that of the previous decade. What does this mean in practice?
On a direct basis, it means reviewing options for prospective disposals of up
to a third of the Company's development pipeline (in line with the Company's
previous statements on the percentage of retention) to deliver capital
recycling and secure value from development activities as well as
consideration of further sales, on a limited capacity basis, of the Company's
operational assets. Both these initiatives will facilitate further reductions
in the Company's RCF balance, as well as providing funds to progress and
protect the value of the Company's remaining developments. An example of this
is over 300MW of solar and co-located battery developments in the north east
of England that we are looking to sell in part or as a single package. On
completion this will provide additional liquidity to the Fund and should
provide a material return to BSIF, who is the majority shareholder.
Further to this, we are actively looking at whether there are further sales of
operational assets to recycle funds, and support the initiatives of further
paying down of the RCF, and a continued share buyback strategy. And we also
looking at making sure our structural debt is optimised for the long term
benefit of the shareholders.
On a wider basis, it means continuing to operate the Company in keeping with
the five core strengths that have been so successful in driving out
performance for shareholders over the past decade:
1. Capital Structure: continued focus on prudent use of leverage and
in the near term a gradual reduction in RCF drawings, with long term
financings secured at attractive rates on a fixed interest basis (a current
average cost of debt of c.3.4% on £430m of long-term borrowings),
2. Power Sales Strategy: striking Power Price Agreements contracts at
the short end of the power curve (6-30 months), through competitive tender
processes, enabling it to maximise value for shareholders from the most liquid
part of the power market.
3. Active Management: continuing to provide a dedicated workforce of
130 within Bluefield Partners and Bluefield Services, providing an end to end
service, offering from development through construction to operation and long
term management, all with ESG embedded across each function.
4. Proprietary Pipeline: constantly applying the DNA of the business
around accessing primary opportunities (as highlighted by the 1.5GW solar and
storage proprietary pipeline the Investment Adviser has built up exclusively
for BSIF) to provide a platform for continued growth or value accretive
sales.
5. Capital Discipline: Since listing in 2013, a judicious approach to
deployment of capital has been paramount as periods of significant investment
activity have been combined with periods of restraint. This approach was at
the forefront of the structuring of the Strategic Partnership with GLIL.
A lot has been achieved in challenging market conditions and we believe that
the actions taken over the past year are showing real evidence of being able
to address the issues at hand whilst allowing the Company's long term
ambitions to remain undimmed.
James Armstrong
Managing Partner, Bluefield Partners LLP
1. About Bluefield Partners LLP ('Bluefield')
Bluefield was established in 2009 and is an investment adviser to companies
and funds investing in renewable energy infrastructure. Our team has a proven
record in the selection, acquisition and supervision of large scale energy and
infrastructure assets in the UK and Europe. The Bluefield team has been
involved in over £6.7 billion renewable funds and/or transactions in both the
UK and Europe, including over £1.6 billion in the UK since December
2011.
Bluefield was appointed Investment Adviser to the Company in June 2013. Based
in its London office, Bluefield's partners are supported by a dedicated and
highly experienced team of investment, operations, finance, legal and
portfolio executives. As Investment Adviser, Bluefield takes responsibility
for selection, origination and execution of investment opportunities for the
Company, having executed over 200 individual SPV acquisitions on behalf of
BSIF and European vehicles.
2. Portfolio: Acquisitions, Performance and Value Enhancement
Portfolio Overview
As at 30 June 2024, the Company owned 100% of an operational solar portfolio
of 129 photovoltaic ("PV") plants (consisting of 87 large scale sites, 39
micro sites and 3 roof top sites), 6 wind farms and 109 small scale UK onshore
wind turbines, all 100% owned by the Company, with a total capacity of 812.6MW
(30 June 2023: 812.6MW). In addition to this, the Company has a 9% stake in a
246.6MW portfolio of UK solar assets, acquired during the Year in partnership
with GLIL Infrastructure, taking the total portfolio capacity to 834MW,
comprising 776MW of solar and 58MW of onshore wind.
During the Year, the combined solar and wind portfolio, on the 100% owned
assets, generated an aggregated total of 810.6GWh (Prior Year: 836.2GWh),
representing a generation yield of 997.6 MWh/MW (30 June 2023: 1,029 MWh/MW).
Investment Approach, Acquisitions, and Divestments in the year
The Company has taken a disciplined approach to the deployment of capital
since listing, investing only when there are projects of suitable quality at
attractive returns to complement the existing portfolio. Rigorous adherence to
restrained capital deployment inevitably means there can be periods where
acquisition activity falls, even when sector activity appears in contrast, but
this controlled approach is beneficial in driving long term, sustainable
growth for Shareholders, as evidenced by the Company's record of sector
leading returns since listing over a decade ago.
In December 2023, the Company announced a three-phase strategic partnership
with GLIL, which envisages both parties investing together into UK focused
solar assets, from development through to operational plants. The partnership
will also facilitate deleveraging of the Company.
On 25 January 2024, the Company announced the successful completion of Phase
One of the partnership with GLIL, which was an investment by BSIF of £20
million of equity, alongside £200 million from GLIL, to fund the acquisition
of a 246.6MW portfolio of UK solar assets. BSIF's ownership stake in the
portfolio was 9%.
After 30 June 2024, the Company announced the execution of Phase Two of the
strategic partnership with GLIL, which was the sale of a 50% stake in a
112.2MW portfolio of UK solar assets owned by BSIF. Following amalgamation
with the Phase One acquisition, the Company's equity stake across the combined
portfolios has increased to 25%.
Portfolio Performance and Optimisation
Solar PV Performance
In the Year, irradiation levels were 4.3% lower than the Company's forecasts
and 9.9% lower than the Prior Year, whilst generation at 647.9GWh, was 9.5%
lower than forecast.
During the Year, the solar portfolio achieved a Net PR of 75.4% (Prior Year:
76.2%) against a forecast of 79.96%, due to key component downtime driven
primarily by supply chain challenges for key High Voltage ('HV') equipment.
Consequently, generation yield was 859.15MWh per MW of installed capacity,
7.8% lower than recorded in the Prior Year.
Table 1. Summary of Solar Fleet Performance for the Year:(4)
Year Year Delta to Prior Year Delta Year to
Actual
Forecast
Forecast (%
Actual
Prior Year Actual (%
change)
change)
Portfolio Total Installed 754.2 N/A N/A 754.2 0.0%
Capacity (MW)
Weighted Average 1,136.3 1,187.2 -4.3% 1,260.7 -9.9%
Irradiation (Hrs)(1,2)
Total Generation (MWh) 647,920 715,894 -9.5% 702,428 -7.8%
Generation Yield 859.13 949.26 -9.5% 959.90 -10.5%
(MWh/MW)
Average Total Unit Price £247.01 £262.87 -6.0% £223.68 10.4%
(£/MWh)(3)
Notes to Table 1.
1. Periods of irradiation where irradiance exceeds the minimum level
required for generation to occur (50W/m(2))
2. Excluding grid outages and significant periods of constraint or
curtailment that were outside the Company's control (for example, DNO-led
outages and curtailments)
3. Average Total Unit Price includes all income associated with the
sale of power, all subsidy payments, liquidated damages and insurance claims
amounts. ROC recycle revenue is included assuming a 10% recycle rate for both
actual and forecast revenue
4. Excludes the strategic partnership with GLIL
Total revenue for the Year was £160.5 million, 13.75% lower than forecast but
1.9% higher than the Prior Year. PPA agreements which commenced during the
Year were the principal reason for the increased revenue, as the average power
price rose 17% to £165/MWh in the Year, up from £141/MWh in the Prior Year.
Operational costs for the Year (incorporating all fixed, contracted costs such
as lease payments, O&M fees etc.) totalled £29.5 million, including
expenditure associated with the optimisation & enhancement projects (see
below).
Solar PV Optimisation & Enhancement Activity
The Investment Adviser is taking proactive steps to mitigate risks to both the
short- and long-term operational performance of the portfolio. This is
achieved through a rolling capital investment programme to proactively address
key risks to operational performance. The Investment Adviser has identified
that one of the key causes of lower than expected availability is a long lead
time for spare parts for major high voltage components, notably central
inverters.
Large central and string inverter revamping projects were completed during the
Year, with many of the projects being completed in the final quarter of the
Year. These projects improved performance during that final quarter, and it is
expected that the performance uplifts from these projects will be fully
realised in FY 2024/25, with further inverter repowering and optimisation
projects planned during that year.
As at 30 June 2024, 494.6 MW of the PV portfolio (being 66% of the solar PV
portfolio) have leases that allow for terms beyond 30 years , of which 362 MW
(100% of applications successful) benefit from planning terms in excess of 30
years. The Investment Adviser continues to pursue lease extensions on the
remaining assets in the portfolio.
GLIL Partnership Portfolio
Further to Phase One of the strategic partnership with GLIL, the acquisition
of a 246.6MW UK Solar portfolio from Lightsource bp was completed on 24
January, with BSIF holding an equity stake of 9%. During the period from
January 2024 to June 2024, this portfolio's generation was 5% below forecast,
primarily driven by the below expected irradiation (-7.2%).
Onshore Wind Performance
As at 30 June 2024, the Company held an operational onshore wind portfolio of
135 installations, comprising 109 small scale turbines (55-250kW) and 26
larger turbines (850kW-2,300kW), with an aggregated capacity 58.4MW.
During the Year, the wind portfolio generated 162.7 GWh, 2% below forecast.
This was largely due to several major component failures, resulting in
extended downtimes across the portfolio. Despite this, generation has improved
significantly compared to the Prior Year, up 21.6% due to a combination of
improved availability and wind speeds.
Table 2. Aggregated Wind Portfolio Performance for the Year
Year Actual Year Forecast Delta to Forecast (% change) Prior Year Actual Delta Year to
Prior Year Actual (%
change)
Portfolio Total Installed Capacity (MW) 58.4 N/A N/A 58.4 0.0%
Total Generation (MWh) 162,682.4 165,930.3 -2.0% 133,804.0 21.6%
Generation Yield (MWh/MW) 2,785.7 2,841.3 -2.0% 2,292.7 21.5%
Average Total Unit Price (£/MWh) 186.0 188.1 -1.1% 208.3 -10.7%
Notes to Table 2.
1. Actual & Forecast Average Total Power Price exclude ROC
recycle estimates
2. Average Total Power Price includes LDs, Insurance &
Mutualisation Rebate
Total revenue for the Year was £30.3 million (Prior Year: £27.9 million),
with an average revenue per MWh of £186. Revenues achieved were 3% below
forecast, though these were 9% higher compared to Prior Year, due to increased
generation.
Onshore Wind Optimisation & Enhancement Activity
In Northern Ireland, 17 of the 29 small-scale turbines were identified for
repowering with replacement EWT 250kW turbines. This will increase both
efficiency and output, whilst maintaining their respective NIRO accreditation
status.
As at 30 June 2024, 13 turbines have been repowered and returned to operation,
with the remaining four turbines having received planning approval for
repowering, with a new 25-year term. One project has received turbine
delivery, with repowering planned by 31 December 2024.
General Portfolio
OFGEM Audits
As part of the industry-wide audits of FiT and RO-accredited generating
assets, the Asset Manager has been working closely with the regulator on
certain assets that have been selected, at random, for audit. All closed OFGEM
audits have had relevant enquiries satisfied, with the respective assets'
accreditation being maintained. The Asset Manager is working closely with
OFGEM to close enquiries on the remaining open audits.
Health & Safety Activities & Cyber Security
Please refer to the Environmental, Social and Governance report for further
information on health & safety activities and cyber security.
3. Power Purchase Agreements
The Company actively monitors power market conditions, ensuring that contract
renewals are spread evenly through any 12-month period, with competitive
tender processes on both fixed and floating price options run for each PPA
renewal in the 3 months prior to the commencement of a new fixing period.
Flexibility within the Company's capital structure enables PPA counterparties
to be selected on a competitive basis and not influenced by lenders requiring
long term contracts with one offtaker. This means the programme of achieving
value and diversification from contracting with multiple counterparties (which
in turn reduces offtaker risk) is executed for the benefit of Shareholders.
By rolling PPA fixes during the Year and targeting the most liquid area of the
power market (one to three years), the Company was able to complete a number
of fixes during periods, with average levels turning out above day-ahead
base-load settlement prices over the same period. Evidence of this is
reflected in the Company's average seasonal weighted power price, which for
the Year was £148.80/MWh (Prior Year: £141.00/MWh), while the average
day-ahead base load settlement price was £72.79/MWh (Prior Year: £169.97).
As at 30 June 2024, the average term of the fixed-price PPAs across the
portfolio is 32.5 months (Prior Year: 26.2 months) and the Company has a price
confidence level of 67% to December 2024 and 48% to June 2025 (on a capacity
basis), representing the percentage of the Company's portfolio that already
has fixed prices in place and thus no exposure to power market fluctuations.
Looking ahead, the strategy has also secured power fixes, and thus revenue
certainty, at levels that are in excess of the latest forecaster expectations.
Table 3. PPA Fixed Power Prices (average for fixes completed vs blended
average forecaster price during the Year)
Price as at six-months ended: Jul-24 Jan-25 Jul-25 Jan-26
BSIF Portfolio Weighted Average Contract Price (£/MWh) 129.2 (625MW) 131.5 (595MW) 135.4 115.1
(313MW) (96MW)
% of BSIF total capacity under PPA Fixed Power Price contract 77% 73% 38% 12%
Blended Average of forecasters nominal terms power prices per 30 June 2024 63.3 67.3 69.1 67.6
valuation (£/MWh)
Footnote: MW stated in the BSIF portfolio weighted average contract price
refers to the total amount of the portfolio fixed for that year; excludes
assets under the Strategic Partnership portfolio.
The Investment Adviser believes its PPA policy is the best strategy for
Shareholders, who are looking for stable revenues and forecastable,
sustainable dividends with high visibility of revenues on a rolling multiyear
basis. It is this approach that has delivered almost a decade of sector
leading dividend cover (covered by current earnings and post debt
amortisation).
4. Proprietary Pipeline
Over the past five years, the Company has continued to implement its new build
strategy across the solar value chain to ensure that the Company continues to
build its market share amongst UK solar power producers, with the Company
signing co-development agreements to fund new sites. The Company also expanded
its strategy to battery storage, which will enable the diversification of the
Company's revenues and allow us to monetise the expected increases in
volatility of power prices in the future.
This focus on development activities has enabled the Company to identify a
significant pipeline of assets which can be built over the next five years. As
these projects progress, the Company is working with selected construction
contractors to ensure that projects are designed and built to a high
specification for long term performance.
The new build strategy has delivered well on its objectives thus far; the
development pipeline now stands at over 1.5 GW and the first two developments
to enter the construction phase (Yelvertoft and Mauxhall Farm) connected to
the electricity network shortly after 30 June 2024. Yelvertoft will receive a
Contract for Difference ("CfD") for its output under AR4.
The following sections provide a more detailed update on both our construction
and development programmes.
Construction Programme
As at 30 June 2024, 93 MW of projects were under construction. These projects
are Yelvertoft Solar Farm (a 49MW solar PV park in Northamptonshire) and
Mauxhall Farm Energy Park (a 44MW solar PV project in North East
Lincolnshire). Mauxhall Farm is planned to be a co-located project and
construction of a 25MW battery energy storage scheme is expected to commence
in the year ending 30 June 2025.
As at the end of the Year, the Company had a pipeline of future solar assets
with a capacity of 541MW and battery storage assets with 233MW capacity that
are fully consented and are in pre-construction. The projects have connection
dates between 2024 and 2030.
Of this, the Company is actively exploring EPC contracts for two projects
(17MW capacity in total), both of which have CfDs under AR4 and it plans to
launch tenders for a selection of its AR5 accredited projects in the year
ending 30 June 2025.
EPC agreements for the Company's new build projects are expected to be fixed
price contracts comparable to Yelvertoft and Mauxhall Farm and will require
contractors to provide full procurement activity and to supply all materials.
The Investment Adviser completes a full assessment of each contractor's
procurement and supply chain management processes to ensure compliance with
the Company's ESG policies and standards.
Development Programme
The Investment Adviser has been pursuing its development strategy since 2019
to enable the Company to continue to be a key player in the UK renewable
energy market. Since this time, a portfolio of 954MW of solar and 603MW of
batteries has been built up across 28 projects. The Company has an
investment limit in pre-construction development stage activities, restricted
to 5% of gross assets; less than 3% is currently committed.
Currently, no value is attributed to projects without planning consent. Once
developments receive planning consent and move from the development stage to
pre-construction, the Investment Adviser believes it is appropriate to reflect
this change in the Company's valuation. At this point in their lifecycle, the
projects will have received all the necessary planning consents, land rights
and valid grid connection offers and so have discernible value beyond the
direct costs of development.
5. Analysis of underlying earnings
The total generation and revenue earned in the Year by the Company's
portfolio, split by subsidy regime, is outlined below:
Subsidy Regime Generation (MWh) PPA Revenue (£m) Regulated Revenue (£m)
FiT 61,611 5.0 12.4
4.0 ROC 17,415 1.4 4.1
2.0 ROC 19,548 1.5 2.4
1.6 ROC 105,055 12.8 10.4
1.4 ROC 281,932 45.9 23.4
1.3 ROC 65,521 8.1 5.2
1.2 ROC 129,664 22.8 10.2
1.0 ROC 46,536 3.9 2.8
0.9 ROC 83,320 7.0 4.5
Total 810,602 108.4 75.4
The Company includes ROC recycle assumptions within its long term forecasts
and applies a market based approach on recognition within any current
financial year, including prudent estimates within its accounts where there is
clear evidence that participants are attaching value to ROC recycle for the
Year.
The key drivers behind the changes in Underlying Earnings between this Year
and the Prior Year are the combined effects of lower PPA pricing, debt
interest and tax (including EGL).
Underlying Portfolio Earnings
Year Prior Year Year to Year to
(£m) (£m) 30 June 22 30 June 21
(£m) (£m)
Portfolio Revenue 183.8 184.4 111.4 73.1
Liquidated damages and Other Revenue(1) 12.6 5.4 1.6 2.0
Net Earnings from Acquisitions in the year 0.0 0.0 0.0 5.1
Portfolio Income 196.4 189.8 113.0 80.2
Portfolio Costs -38.2 -36.3 -27.8 -17.6
Project Finance Interest Costs -12.7 -13.6 -4.7 -1.8
Total Portfolio Income Earned 145.5 139.9 80.5 60.8
Group Operating Costs(2,3) -38.7 -25.4 -8.3 -7.5
Group Debt Costs -12.2 -6.1 -5.4 -4.7
Underlying Earnings 94.6 108.4 66.8 48.6
Group Debt Repayments -30.1 -18.3 -13.8 -9.3
Underlying Earnings available for distribution 64.5 90.1 53.0 39.3
Year Prior Year Full year to Full year to
(£m) (£m) 30 June 22 30 June 21
(£m) (£m)
Brought forward reserves 58.4 20.9 13.4 8.4
Repayment of RCF -10.0 0.0 0.0 0.0
Share Buybacks -9.4 0.0 0.0 0.0
Acquisitions and CapEx -30.1 0.0 0.0 0.0
Total funds available for distribution 73.4 111.0 66.4 47.7
Target distribution(4) 53.1 51.4 45.2 34.3
Actual Distribution 53.1 52.6 45.5 34.3
Underlying Earnings carried forward
20.3 58.4 20.9 13.4
1 Other Revenue includes ROC mutualisation, ROC recycle late payment CP21,
insurance proceeds, O&M settlement agreements and rebates received.
2 Includes the Company, BR1 and any tax charges within the group.
3 Excludes one-off transaction costs and the release of up-front fees related
to the Company's debt facilities
4 Target distribution is based on funds required for total target dividend for
each financial year.
The table below presents the underlying earnings on a 'per share' basis.
Year (£m) Prior Year Year to Year to
(£m) 30 June 22 30 June 21
(£m) (£m)
Actual Distribution 53.1 52.6 45.5 34.3
Total funds available for distribution (including reserves) 73.4 111.0 66.4 47.7
Average Number of shares in year* 609,849,113 611,452,217 554,042,715 429,266,617
Target Dividend (pps) 8.80 8.40 8.16 8.00
Total funds available for distribution (pps) 12.00 18.13 12.22 11.19
Total Dividend Declared & Paid (pps) 8.80 8.60 8.20 8.00
Reserves carried forward 3.40 9.53 3.39 2.67
(pps) **
* Average number of shares is calculated based on shares in issue at the time
each dividend was declared.
** Reserves carried forward are based on the shares in issue at the point of
Annual Accounts publication (being 597m shares for 30 June 2024 and 611m
shares for 30 June 2023).
6. NAV and Valuation of the Portfolio
The Investment Adviser is responsible for advising the Board in determining
the Directors' Valuation and, when required, carrying out the fair market
valuation of the Company's investments.
Valuations are carried out on a quarterly basis at 30 September, 31 December,
31 March and 30 June each year, with the Company committed to conducting
independent reviews as and when the Board believes it benefits Shareholders.
As the portfolio comprises only non-market traded investments, the Investment
Adviser has adopted valuation guidelines based upon the IPEV Valuation
Guidelines published by the BVCA (the British Venture Capital Association).
The application of these guidelines is considered consistent with the
requirements of compliance with IFRS 9 and IFRS 13.
Following consultation with the Investment Adviser, the Directors' Valuation
adopted for the portfolio as at 30 June 2024 was £965.5 million (30 June
2023: £1,018.4 million).
The table below shows a breakdown of the Directors' valuations over the last
three financial years:
Valuation Component (£million) June 2024 June 2023 June 2022
DCF Enterprise Value of Portfolio 1,100.0 1,195.2 1,180.6
DCF Enterprise Value of JV Portfolio 36.5 - -
Consented development/construction and repowering projects 110.3 67.5 13.8
Deduction of Project Co debt -423.2 -430.8 -390.3
Project Net Current Assets 141.9 186.5 135.8
Directors' Valuation 965.5 1,018.4 939.9
Portfolio Size (MW) 834.0 812.6 766.2
Discounting Methodology
The Directors' Valuation is based on the discounting of post-tax, projected
cash flows of each investment, based on the Company's current capital
structure, with the result then benchmarked against comparable market
multiples, if relevant. The discount rate applied on the project cash flows is
the weighted average discount rate. In addition, the Board continues to adopt
the approach under the 'willing buyer/willing seller' methodology, that the
valuation of the Company's portfolio be appropriately benchmarked to pricing
against comparable portfolio transactions.
Key factors behind the valuation
There have been several factors that have been considered in the Investment
Adviser's recommendation to the Directors' Valuation (and which are quantified
in the NAV movement chart on page 28):
(i) Power price forecasts and costs have been inflated
to June 2024 terms using actual inflation data published on the Office for
National Statistics webpage. The Fund's RPI assumption for 2025 remains
unchanged at 3.00% (June 2023: 3.00%). On 1 August 2024, the Bank of England
cut Base Rate for the first time since the beginning of the pandemic in March
2020, reducing Base Rate from 5.25% to 5.00%, the same rate as it was in June
2023.
(ii) The Company's previous inflation assumptions for ROC
revenues had been slightly below the reported number and in utilising actual
inflation for ROC sites, the valuation has increased.
(iii) Renewable Energy Guarantees of Origin for the period
2026-2030 have been included for the first time in the 30 June 2024 valuation.
This adoption follows evidence that reasonable value is now being achieved
through power purchase agreements signed and expectations from forecasters
that some value will continue to be secured for REGOs in the future.
(iv) The portfolio discount rate has been maintained at
8.00% (June 2023: 8.00%).
(v) Inclusion of the latest forecasters' power price
curves as at 30 June 2024 has resulted in a decline in the valuation as prices
have normalised following a prolonged period of higher power prices, driven
largely by increases in commodity prices exacerbated by the impact of the
Russian invasion of Ukraine on wholesale gas prices. Further information
regarding power prices is included in section 3 of this report.
(vi) The value attributed to the Company's development and
construction portfolio has risen during the Year, reflecting sites receiving
planning permission and further progress and investment into construction
projects.
(vii) Working capital has declined in the Year, reflecting the
payment of dividends through the Year, the execution of the Company's share
buyback programme, and performance compared to forecasts.
(viii) Investments into Joint Ventures (JVs) have been included
in the valuation for the first time following the successful completion of
Phase One of the strategic partnership with GLIL. The JV continues to progress
with the post year-end signing of Phase Two of the strategic partnership in
the form of a sale of operational assets from BSIF into the JV, and the
forthcoming Phase Three, whereby the Company and GLIL intend to commit capital
to a selection of the Company's development and construction pipeline.
By reflecting the core factors above within the Directors' Valuation for 30
June 2024, the enterprise value of the operational portfolio is £1,136.5
million (June 2023: £1,195.2 million), representing an effective price for
the solar component of £1.24m/MW (June 2023: £1.35m/MW). These metrics sit
within the pricing range of precedent market transactions and the 'willing
buyer-willing seller' methodology upon which the Directors' Valuation is
based.
Power Prices
A blended forecast of three leading consultants is used within the latest
Directors' Valuation , as shown in the graph below. This is based on forecasts
released in the three months ended 30 June 2024. For illustration purposes,
the graph below also includes the blended curve used in the Company's accounts
for the Prior Year.
The curves used in the 30 June 2024 Directors' Valuation reflect the following
key updates:
1. Short-term European gas prices have fallen amid strong gas storage
levels and an evolving gas supply chain following Russia's invasion of
Ukraine, with Norwegian supply and LNG imports from across the globe providing
substitutes for Russian gas, with a similar trend reflected in the wholesale
power price curve;
2. Higher renewable generation capacity deployment levels in the
medium term (with ambitions for up to 60GW offshore wind and 30GW onshore wind
by 2030) as the UK strives to meet its net zero targets and fully decarbonise
its power system by 2030; and
3. Annual demand for electric power in Great Britain, driven
principally by electrification of heat and transport, is expected to rise from
298TWh in 2024 to 423TWh by 2035.
Directors' Valuation movement (£ million) As % of valuation
30 June 2023 Valuation 1,018.4
New investments 19.6 1.9%
Development uplift 42.8 4.2%
Date change and degradation -42.0 -4.1%
Cash receipts from portfolio -65.4 -6.4%
Power curve updates (incl. PPAs & REGOS) -7.4 -0.7%
Inflation assumption 8.5 0.8%
Balance of portfolio return -9.0 -0.9%
30 June 2024 Valuation 965.5 (5.2)%
There have been no material changes to assumptions regarding the future
performance of the portfolio when compared to the Directors' Valuation of 30
June 2023. A cost optimisation on expiry of subsidies has been introduced for
business rates and insurance. This has been introduced to reflect that these
costs are directly related to the level of income received by the assets,
which will fall once the subsidies expire.
The assumptions set out in this section remain subject to continuous review by
the Investment Adviser and the Board.
Reconciliation of Directors' Valuation to Balance sheet
Balance (£ million)
Category 30 June 2024 30 June 2023 30 June 2022
Directors' Valuation 965.5 1,018.4 939.9
Portfolio Holding Company Working Capital (1.5) (12.5) (13.6)
Portfolio Holding Company Debt (184.0) (153.0) (70.0)
Financial Assets at Fair Value per Balance sheet 780.0 852.9 856.3
Gross Asset Value 1,388.7 1,438.0 1,316.7
Gearing (% GAV*) 43% 41% 35%
*GAV is the Financial Assets, as at 30 June 2024, at NAV of £781.6m plus RCF
of £184.0m and third party portfolio debt of £423.1m (giving total debt of
£607.1m).
Enterprise Valuation sensitivities
Valuation sensitivities are set out in tabular form in Note 8 of the financial
statements. The following diagram reviews the sensitivity of the EV of the
portfolio to the key underlying assumptions within the discounted cash flow
valuation.
7. Financing
Debt Strategy
Since its IPO, the Company has focused on a simple and defensive approach to
debt. This means having debt agreements that have, primarily, fixed interest
rates and are amortising. Debt is split into (1) long-term asset-level debt,
and (2) a revolving credit facility at fund-level for short-term funding. Debt
in the portfolio is generally not subject to stringent lender requirements on
PPAs, allowing the Company to take advantage of more competitive PPA pricing.
The Company's weighted average cost of long-term debt at 30 June 2024 is 3.53%
(30 June 2023: 3.50%) and is largely locked-in via fixed interest rates.
Whilst the Company has some index-linked debt, it also has significant levels
of RPI linked revenues, leaving the Company a net beneficiary of inflation.
The revolving credit facility, detailed below, is the only floating-rate debt
instrument in the portfolio and represents 30% of the total debt balance. 71%
of asset-level debt has a fixed interest rate. 29% of principal for long-term
debt is inflation-linked.
Revolving Credit Facility
The Company's subsidiary BR1 has a revolving credit facility with RBS
International, Santander UK and Lloyds Bank Plc, with a total committed amount
of £210 million and facility margin of 1.9% (the 'RCF'). The RCF also has
an uncommitted accordion feature allowing it to be increased by up to a
further £30 million.
The maturity of the facility is May 2025. The Company is in discussions with
the lenders to extend the RCF by an additional two years. As at 30 June 2024,
£184 million was drawn from the RCF (30 June 2023: £153 million). After the
year-end, following the completion of Phase Two of the strategic partnership
with GLIL, £50.5 million was repaid, reducing the drawn balance to £133.5
million.
External Debt
Excluding the Company's RCF, total outstanding loans from third-party lenders
as at 30 June 2024 total £423 million, with each loan secured against a
portfolio of assets and fully amortising within the life of the respective
asset's subsidies. The average interest cost, excluding the Company's RCF,
across the external debt facilities in the table below is 3.53%.
Debt Principal Outstanding (£m) Maturity % of Interest Fixed((1)) All-in Interest Rate
Syndicate - Fund RCF 184 May-25 0% 7.00%
Bayern LB - Project Finance 6 Sep-29 100% 5.50%
Syndicate - Project Finance 66 Dec-33 100% 3.50%
Aviva (fixed) - Project Finance 82 Sep-34 100% 2.88%
Aviva (index-linked) - Project Finance 65 Sep-34 100% 3.70%
Macquarie (fixed) - Project Finance 7 Mar-35 100% 4.60%
Macquarie (indexed-linked) - Project Finance 20 Mar-35 100% 4.70%
Gravis (index-linked) - Project Finance 36 Jun-35 100% 6.48%
NatWest - Project Finance 121 Dec-39 85% 2.70%
Strategic Partnership Portfolio 19.5 Jun-37 100% 3.40%
Total/Wtd Avg 607 67% 4.59%
Total/Wtd Avg excl. RCF 423 96% 3.53%
Note: Index-linked debt treated as fixed for the purposes of this table as
proportion fixed represents interest rate risk only
GAV Leverage
The Group's total outstanding debt as at 30 June 2024 was £607 million (30
June 2023: £584 million) and its leverage stands at 43% of GAV (30 June 2023:
41%), within the 35% - 45% preferred range the Directors have outlined as
desirable for the Company.
8. Market Developments
UK renewable generation capacity and deployment
At 31 March 2024, Government data shows that UK solar PV capacity stands at
16.7GW across 1.6 million installations. Of this amount, around 7.3GW (46% of
the total solar capacity in the UK) and 5.1GW (32%) is accredited under the RO
and FiT schemes, respectively, 3.4GW (21%) is unaccredited and less than 1% is
under the CfD scheme. Onshore and offshore wind installed capacity stands at
around 15.5GW and 14.7GW, respectively. The UK has 4.4GW of operational
battery storage capacity, according to data from energy association
RenewableUK.
The UK's total renewable generation capacity is projected to continue to grow
over the coming years as the Government strives to meet its net zero targets
and meet power demand from the electrification of the domestic heat, transport
and industrial sectors. Deployment is expected to be supported by several
policy initiatives, including the CfD scheme and various planning and grid
reforms which are described in more detail in the next section of this report.
The incoming Labour Government has set ambitious targets to double onshore
wind, triple solar generation capacity and quadruple offshore wind by 2030. To
support this ambition, several first-of-a-kind initiatives such as a new
Mission Control for Clean Power 2030, headed by the former chief executive of
the Climate Change Committee (Chris Stark), an Onshore Wind Industry Taskforce
and a publicly owned energy company (Great British Energy) have been set up,
all of which should support greater renewable energy roll out over the
upcoming years.
The chart below illustrates the distribution of total installed capacity
across different renewable generation technologies at 31 March 2024 compared
with a year earlier.
Secondary market transactions, development and construction activity
Transactional activity in the UK renewables market has eased to some extent,
with several infrastructure funds completing capital recycling via asset
disposal programmes to demonstrate value and support deleveraging efforts.
Activity in the UK development market has continued to be driven by factors
such as ambitious decarbonisation targets, increasing preferences by customers
for clean energy, demand for ESG investments and the inclusion of solar PV in
upcoming CfD auction rounds.
Development activity has been noticeable in the battery storage area, with
developers seeking to provide solutions to help manage the grid as larger
quantities of intermittent renewables are added to the system. Solar
development activity has been somewhat slower, primarily due to grid
constraints.
Some construction activity has been observed in the UK solar and battery
storage area, although this is against a backdrop of supply chain challenges
and elevated development costs. Converting the UK's significant development
pipeline into operational solar and storage projects over the next five years
will require developers to adopt an innovative approach to overcome challenges
surrounding high construction costs, grid connection lead times and access to
new capital.
With 776MW of operational solar capacity, the Company maintains a strong
position within the UK solar market, owning 5% of the UK's utility-scale solar
PV capacity.
9. Regulatory Environment
The regulatory environment remains under the spotlight as the Government seeks
to support renewable energy deployment under particularly tough macroeconomic
conditions. Key themes are outlined below.
Update on Contracts for Differences (CfD)
In September 2023, the Government awarded support for 3.7GW of new build
renewable generation capacity through its CfD scheme - allocation round 5
(AR5). Solar projects represented the majority share at 52% (1.9GW) and
onshore wind at 40% (1.5GW), while no offshore projects were successful. This
was the lowest overall renewable capacity procurement level since 2017 and
just over a third of the total 10.8GW that was procured in the AR4. The
overall budget for AR5 (across successful pot technologies) was £227 million
per year, down from £295 million per year in AR4.
In September 2024, the AR6 results were published. A total of 9.6GW of
renewable energy projects were successful, of which 3.3GW solar projects won
contracts (or 34% of total awarded capacity), onshore wind at 990MW (10%),
offshore wind at 4.9GW (51%) and floating offshore at 400MW (4%). The
Government revised the overall AR6 budget to £1.6 billion, up by £0.5
billion from the previous level amid calls from industry to help meet
renewable targets. Most of the budget uplift went to offshore wind, while
established technologies including solar and onshore wind rose by £65 million
to £185 million. The AR6 administrative strike prices across all technologies
rose from the previous round, with solar and wind up by 30% and 21%
respectively, at £61/MWh and £64/MWh, respectively.
The Government's consultation on the proposed amendments to AR7 and future
rounds closed in March 2024. Several changes were put forward, such as the
inclusion of onshore wind full repowering as a new eligible technology, the
introduction of hybrid metering to better accommodate co-located projects and
changes to the inflation indexation methodology for allocation rounds further
ahead. The market awaits a formal Government response to this consultation.
Electricity Generator Levy
The Electricity Generator Levy - a 'temporary' 45% tax on income from
electricity sold above the benchmark price - is set to be in place until 31
March 2028. It applies to extraordinary returns made by renewable (solar,
wind, biomass), nuclear and energy from waste generators that are connected to
the UK national transmission or local distribution networks. Revenues from
CfDs are excluded from this levy.
Review of Electricity Market Arrangements
The Government's second consultation on the UK's Review of Electricity Market
Arrangements ("REMA") closed in May 2024. REMA aims to identify necessary
reforms needed to transition to a cost effective, lower carbon and secure
electricity system. The most significant reform options at the time included
the possibility of zonal locational pricing and potential changes to the
Contract-for-Difference scheme. The market awaits a formal response to the
REMA second consultation.
Bluefield Partners LLP
27 September 2024
Environmental, Social and Governance Report
1. Introduction
An introduction from the Chair
I am pleased to present the Company's ESG progress within this report. The
Company remains dedicated to contributing to a cleaner and more resilient
energy system, and its ability to adapt - evidenced through its strategic
partnerships, accretive use of capital, and evolving ESG approach - will
support the Company in delivering long-term value to its Shareholders.
Despite a challenging year for listed renewable funds, we continue to deliver
renewable energy at scale, helping to tackle the global emergencies of climate
change and biodiversity loss. The recent change in Government brings a fresh
perspective on energy policy, with a commitment to deliver zero-carbon
electricity by 2030. To achieve this, the UK needs rapid, large-scale
deployment of renewable technology and the infrastructure to support these
installations. This will not only accelerate the transition to net zero, but
also deliver energy security and affordable energy pricing.
As such, I am proud of the achievements made by the Company during the Year,
particularly the construction of two major new solar assets which have been
energised in recent weeks. On an annual basis, these assets are expected to
generate enough renewable energy to power approximately 33,000 UK homes and
avoid the equivalent of 18,800 tonnes of CO2e annually.
As the sector grows, responsibility must be taken for both the positive and
negative impacts of renewable energy operations, with industry players working
together to drive responsible business practice across global supply chains.
The Company recognises, and works to manage and minimise, the potential
adverse impacts of its business operations, considering them within its
responsible investment approach. At the same time, ESG opportunities, such as
those relating to nature enhancement, present an exciting avenue through which
the Company can create additional value.
John Scott,
Chair
An introduction from the Investment Adviser
This report marks a continuation of the Company's commitment to transparency
and accountability by consistently reporting its ESG performance, maintaining
year-on-year alignment with the Task Force on Climate-related Financial
Disclosures ("TCFD") recommendations, and sustaining its reporting practices
under the EU's Sustainable Finance Disclosure Regulation ("SFDR"). As the
Investment Adviser, we continue to work on the Company's behalf to increase
the availability and quality of ESG data relating to the Company's assets, to
better inform our strategic decision-making.
The Company continues to respond to a dynamic ESG regulatory and reporting
landscape, and work has been undertaken to review the Company's alignment with
new disclosure rules. As part of its horizon scanning, the Investment Adviser
proactively monitors for emerging ESG trends and assesses the
interdependencies of ESG topics material to the Company, such as the linkage
between decarbonisation and biodiversity, or the social impact of a growing
renewable sector. This insight is used to inform the Company's management of
ESG risks and opportunities.
The Investment Adviser's business model, with in-house expertise across
development, investment, construction and operational activities, facilitates
the integration of ESG across the asset lifecycle . The Investment Adviser's
commitment to strengthening its ESG capabilities is reflected in the expansion
of its ESG team, who work to build resilience into the Company's investments.
We look forward to continuing to deliver the Company's ESG aspirations, and
help protect Shareholder value, by further refining our ESG commitments, KPIs,
and strategic approach in the coming years.
James Armstrong,
Managing Partner of Bluefield Partners LLP
2. ESG Highlights
During the Year, the Company:
• Executed a second physical scenario analysis,
which examined the potential impacts of changing wind speeds on the Company's
wind portfolio.
• Developed near-term net zero targets, covering
the Company's scope 1, 2 and 3 emissions.
• The Company's West Raynham Solar Farm was the
first site in the UK to be awarded gold certification from Wild Power®, an
independent certifier, for its biodiversity enhancement efforts.
• Developed a nature framework, aligned with the
recommendations of the Task Force on Nature-related Financial Disclosures
("TNFD").
• Delivered 13 classroom workshops and 16 solar
site visits to schools in the vicinity of the Company's assets .
3. Purpose of this Report
This ESG report summarises the Company's approach to responsible investment
during the Year, including a summary of ESG risks and opportunities material
to the Company, and how these are being managed to help build resilience and
create additional value within the Company's investments. In particular, the
report demonstrates to Shareholders, and other stakeholders, the continued
commitment of the Company to review, assess, and enhance its ESG performance.
The content within this report is supported by additional information
published within the Company's regulatory disclosures, available on its
website.
Please note, the figures presented within this report relate to the Company's
wholly owned investments. Relating to the Company's new strategic partnership,
the Company is in the process of onboarding these assets onto its ESG
reporting regime, whilst at the same time reviewing existing KPIs to ensure
they remain relevant for strategic partnerships as opposed to sole ownership.
As a result, the Company has reported the ESG performance associated with its
9% equity share against a subset of its ESG KPIs, presented in the ESG
Appendix. Please refer to the case-study presented on page 38 for information
on how the Company applied its responsible investment approach to these
investments.
Whilst the Company has significantly enhanced its ESG reporting in recent
years, the reporting landscape continues to evolve. The International
Sustainability Standards Board published its sustainability disclosure
standards (IFRS S1 and S2) in June 2023. The Company has undertaken an
assessment of its ESG and climate-related disclosures against these standards
and will review its reporting approach in light of these requirements over the
coming months.
4. ESG Strategy
ESG Context
As a renewable energy business, the Company is supporting the UK's transition
to a net zero economy through the provision of renewable energy. With
renewables powering a significant portion of the UK grid mix in the past year
, the Company is well-positioned to further support the UK in achieving its
legally binding target to bring all Greenhouse Gas emissions ("GHG") to net
zero by 2050 .
The Company recognises its broader ESG impacts and responsibilities, and its
ESG strategy has identified a range of priority topics across various ESG
areas, which underpin its responsible investment approach. These priorities
have been integrated into a comprehensive framework designed to help deliver
value for stakeholders and support long-term returns for Shareholders.
Regulation & Framework Alignment
EU Sustainable Finance Disclosure Regulation ("SFDR") & EU Taxonomy
The Company is classified as an Article 8 product under the SFDR and published
its second PAI statement in June 2024. Please refer to Periodic Annex IV and
the Company's website for further information regarding its ongoing compliance
with the SFDR and EU Taxonomy.
UK Sustainability Disclosure Requirements & UK Green Taxonomy
As a non-UK AIF, the Company is not currently in scope of the UK
Sustainability Disclosure Requirements ("SDR"). However, the applicability of
the framework to overseas funds is currently pending. The Company is
monitoring the guidance and will be prepared to review its alignment, subject
to any new legislation.
As a UK authorised firm, the Investment Adviser is within scope of the SDR's
anti-greenwashing rule and has implemented processes to support the Investment
Adviser's compliance.
Task Force on Climate-related Financial Disclosures ("TCFD") & Task Force
on Nature-related Financial Disclosures ("TNFD")
The Company has voluntarily adopted the recommendations of the TCFD and its
third TCFD report is presented on page 52. The Company has developed a nature
framework aligned with the recommendations of the TNFD.
Sustainable Development Goals
The United Nations Sustainable Development Goals ("SDGs") have been mapped
against the Company's ESG pillars, following the alignment protocol. In total,
eight goals have been identified where the Company believes it can make a
positive contribution. The Company's largest contributions will be in relation
to Goal 7, 'Affordable and Clean Energy' and Goal 13, 'Climate Action'. The
Company's portfolio generated 810,602 MWh of renewable energy during the Year,
supporting domestic energy security and decarbonisation of the UK energy
market. The Company reports and endeavours to minimise the negative impacts of
its operations, as described throughout its ESG and regulatory disclosures.
Further information on the Company's alignment with the SDGs can be found on
the Company's website (www.bluefieldsif.com (http://www.bluefieldsif.com) ).
Commitments & KPIs
Key commitments for the Year are presented in Table 1. A full breakdown of the
Company's commitments and KPIs, and performance against these, is presented in
the ESG Appendix. Commitments and KPIs are reviewed annually to align with the
Company's evolving ESG strategy, with any changes approved and monitored by
the Board.
Pillar Key Commitments
Climate Change Mitigation • Report renewable energy generation annually;
• Invest in industry collaborations to support the energy transition;
• Continue to build climate resilience and inform business strategy through
climate risk assessments and scenario analysis; and
• Develop a net zero pathway.
Pioneering Positive Local Impact • Evaluate biodiversity net gain across the operational portfolio and
achieve at least 20% biodiversity net gain on new solar developments;
• Conduct independent biodiversity assessments across at least 10% of sites
annually (relating to assets over 1MW in capacity);
• Continue to promote positive action within the communities the Company
operates within through community benefit funds and educational sessions; and
• Develop a nature framework, building upon existing biodiversity
commitments and encompassing the recommendations of the TNFD.
Generating Energy Responsibly • Ensure 100% of the Company's assets are covered by a Human Rights Policy,
which covers United Nations Global Compact principles and OECD guidelines;
• Require adoption of the Company's Supplier Code of Conduct by priority
Tier 1 and, where possible, Tier 2 suppliers; and
• Continue to develop due diligence mechanisms to identify, prevent and
mitigate human rights impacts across the Company's operations and, where
possible, its supply chain.
Table 1 - Key ESG commitments for the Company
The Investment Adviser engages the Company's key service providers to enable
the monitoring of asset-level sustainability aspects. However, some aspects of
data collection remain challenging. As a result, data gaps still exist, and
estimates continue to be used in certain circumstances. Work will continue to
improve the accuracy and quality of ESG data over time. The Investment Adviser
is currently embedding an ESG system on behalf of the Company, which will
enable enhanced data insights and analytical capabilities.
ESG Oversight
The Board has ultimate responsibility and oversight of ESG risks and
opportunities, and ESG is considered by the Directors as part of Board
meetings, investment decisions and risk management. The Board has an ESG
Committee, chaired by Meriel Lenfestey, which meets at least twice a year.
Operationally, ESG is managed by the Investment Adviser, with regular updates
provided to the Board through investment committee papers, ESG committee
meetings, Board meetings and ad hoc calls or written updates. The Investment
Adviser is responsible for embedding and monitoring ESG initiatives across the
portfolio, working to integrate ESG into all stages of the asset lifecycle.
The Investment Adviser's Head of ESG provides updates to the Board of the
Investment Adviser through quarterly Board reports, and regularly reports ESG
progress to the Investment Director and Managing Partner.
Responsible Investment
The Company recognises the importance of sustainability in all aspects of
investment. The Company is well positioned to consider ESG within its
investments, given the long-term nature of its business model.
ESG is embedded within the Company's investment process, and a standalone ESG
due diligence questionnaire ensures detailed checks are made in relation to
ESG risks and opportunities, as identified by SASB standards. Diligence is
also undertaken in relation to requirements of the SFDR, including PAI
indicators and climate risk screening, and the EU Taxonomy's Do No Significant
Harm (DNSH) criteria. Further information can be found in the Company's
Sustainable Investment Policy, available on its website.
The Company's Investment Adviser has been a signatory of the UN Principles for
Responsible Investment since 2019.
Case Study: Co-investment
On 22 December 2023, the Company announced a long-term strategic partnership
with GLIL Infrastructure, through which both parties committed to acquiring a
portfolio of 58 UK solar assets. This acquisition was completed on 25 January
2024, and the Company acquired a 9% equity share in the portfolio. Although a
minority stakeholder, a priority for the Company was to apply its responsible
investment approach to these investments. The Company:
● Performed comprehensive ESG due diligence on the 246.6MW portfolio
of assets, including checks regarding SFDR and EU Taxonomy requirements;
● Included ESG schedules and obligations with respect to the
Company's ESG policies in agreements with asset management and Operation &
Maintenance (O&M) providers; and
● Created a post-investment ESG plan, to guide follow-up action from
Asset Management and O&M service providers.
The Company continues to work to onboard the assets into its ESG reporting
regime.
5. Climate Change Mitigation
Key Commitments
• Report renewable energy generation annually;
• Invest in industry collaborations to support the energy
transition;
• Continue to build climate resilience and inform business
strategy through climate risk assessments and scenario analysis; and
• Develop a net zero pathway.
Advocating Renewable Energy
As a UK-focused renewable energy business, the Company contributes towards
climate change mitigation and remains committed to supporting the UK's
decarbonisation agenda. Achievements during the Year include:
· Generated 810,602 MWh of renewable energy;
· Powered the equivalent of 300,000 UK homes with renewable
electricity for a year;
· Avoided 167,800 tonnes of CO2e emissions; and
· Had 93MW of solar infrastructure under construction at Year end,
which on completion is estimated to generate an additional 91,000 MWh of
renewable energy annually.
In recognition of its positive environmental contribution, the Company has
been awarded the following accreditations: TISE Sustainable/Guernsey Green
Fund/LSE Green Economy Mark
Political Engagement
During the Year, the Investment Adviser emphasised the cost and speed at which
solar can be deployed and developed through responses to policy consultations,
direct engagement with policymakers (including through briefings and letters),
and appearances at Government-related committees and inquiries. Please refer
to page 77 for a summary of engagement during the Year.
With the change of UK Government in July 2024, and the formation of the
Department of Energy Security and Net Zero, the Company and its Investment
Adviser look forward to re-engaging with the Government to continue these
efforts through meetings, attendance at relevant events, and participating in
appropriate formal Select Committee inquiries and consultations.
Industry Engagement
The Investment Adviser partners with trade industry bodies to engage UK
policymakers across the political spectrum in advocating for renewable energy.
Engaging with industry groups also enables the Investment Adviser to inform
and contribute to best practice, stay abreast of market developments, and
support the UK's energy transition. Bluefield employees are active
participants in trade body working groups. For example, the Head of ESG for
the Investment Adviser contributes to the Solar Energy UK Natural Capital
Steering Group, and representatives of Bluefield Operations are part of the
Solar Energy UK Skills Steering Group.
As the renewable sector grows, industry collaboration will be essential in
addressing emerging social and environmental risks, such as those relating to
supply chain or asset end-of-life. The Company has committed to investing in
industry collaborations supporting the energy transition; please refer to page
72 for further information.
Carbon Emissions
GHG inventory
The Company reviews and reports its GHG emissions every six months. Please
refer to page 59 of the Company's TCFD report for the GHG inventory relating
to the Year.
Carbon targets and the net zero pathway
The Company has developed near-term targets on its journey to align to net
zero by no later than 2050. The targets follow the core principles of the
Science Based Target Initiative ("SBTi") near-term criteria for Financial
Institutions (FI), but are not SBTi validated. The Investment Adviser views
that the current guidance is not well suited to the investments made by the
Company, particularly regarding the criteria relating to scope 3 emissions,
where the majority of the Company's emissions lie.
Therefore, the Company has adopted holistic near-term targets for financed
emissions, including a 50% absolute reduction in project scope 1 and scope 2
emissions by 2030 (from a 2023 calendar base year), and to engage 75% of
project suppliers, by emissions, to set their own scope 1 and scope 2 targets
by 2029. These targets currently apply to the Company's wholly owned
investments; the application of the targets to the Company's strategic
partnership is under review. The Company will review its position on SBTi
validation over coming years if revisions are made to the relevant standards,
or if more applicable standards are released.
Monitoring carbon emissions is a vital step on the pathway to net zero, but
there are challenges, particularly regarding the collaborative action needed
to drive down scope 3 emissions. The Company is aware that its ability to
decarbonise will rely on wide-scale change across the industry and economy,
requiring significant Governmental support. Nevertheless, the Company has
developed this initial set of net zero targets to guide action across its
investments over coming years, and is committed to reviewing and adjusting
these targets over time so that they remain appropriate to the nature of the
Company's investments. Whilst the net zero pathway has been modelled, the
focus over coming months will be to formalise target-specific roadmaps to
support the Company in delivering the required emissions reductions.
Managing climate-related risks & opportunities
The Company is committed to building climate resilience within its portfolio.
During the Year, the Company undertook a second physical scenario analysis,
focused upon the potential impact of changing wind speeds, and developed a
climate adaptation plan. Please refer to the Company's TCFD report for further
information.
6. Pioneering Positive Local Impact
Key Commitments
1. Evaluate biodiversity net gain across the
operational portfolio and achieve at least 20% biodiversity net gain on new
solar developments;
2. Conduct independent biodiversity assessments across
at least 10% of sites annually (relating to assets over 1MW in capacity);
3. Continue to promote positive action within the
communities the Company operates within through community benefit funds and
educational sessions; and
4. Develop a nature framework, building upon existing
biodiversity commitments and encompassing the recommendations of the TNFD.
Land use and land management
Nature is an area of focus and commitment for the Company. The UK has been
assessed as one of the most nature-depleted countries in the world , and the
Company recognises the significant risk that nature loss may present to
businesses and the economy. Nature's intrinsic relationship with climate
requires a unified response, and through its land under management, the
Company seeks to enhance nature across its portfolio and promote environmental
stewardship as part of asset lifecycle management.
The construction and operation of renewable infrastructure assets can impact
the local environment, for example through land use change or disturbance to
habitats and species. The Company endeavours to minimise its negative impacts
where possible, and the collection of asset-level environmental data supports
the Company in monitoring adverse environmental impacts over time.
Solar farms can support agricultural activities while providing an alternative
revenue source for farmers. During the Year, conservation grazing was
introduced to one of the Company's solar assets, to better manage the land for
wildlife. Sheep are typically removed from fields during the wildflower window
between April and early August, allowing plants to set seed and bloom.
Additionally, at Stow Longa solar farm in Cambridgeshire, information gained
from ecological assessments has been used to amend land management activities
to better support farmland bird species. Further information can be found on
the Company's website (www.bluefieldsif.com).
Quantifying Biodiversity
The Company has continued to measure the biodiversity across its portfolio to
establish a baseline from which opportunities to enhance nature, through the
addition of site-specific measures, can be identified. During the reporting
year, the Company conducted an additional 15 biodiversity net gain
assessments across operational assets, bringing the total to 45 since the
introduction of this approach in 2023.
The Company also conducted ecological assessments across 10 operational solar
assets. Following industry best-practice, assessments on botany,
invertebrates, breeding birds and soil were undertaken. For the first time,
environmental DNA (eDNA) was analysed, which focused upon invertebrate and
fungi identification. The results of the biodiversity net gain assessments and
ecological surveys will be used to identify nature enhancement activities for
the coming year.
The Company shares ecological data with the UK trade body Solar Energy UK, for
inclusion within industry-wide datasets and annual solar habitat reports. This
contribution supports the understanding of ecological trends and the
development of industry best practice.
Case study - Wild Power® Gold certification
In May 2024, West Raynham Solar Farm was awarded gold certification from Wild
Power®, an independent certifier providing tools and processes to help
developers and operators measure, manage, monitor and report on their
biodiversity efforts .
Biodiversity and land management specialists from Bluefield Operations and
Wychwood Biodiversity conducted an ecological survey which identified
appropriate management improvements for the site. The existing measures and
new additional features contributed to the site achieving its Wild Power®
gold certification. The site already hosted approximately 40 acres of
wildflower meadow with conservation grazing, and five acres of young tree
plantings. Enhancement work included increasing ecological data monitoring and
availability, conducting an ecosystem services assessment, and installing
additional microhabitats for protected species including birds, reptiles, and
a maternity bat roost box.
Joe Arafa, Director of Wild Power® said: "We are delighted to have issued the
UK's first Wild Power® certification to Bluefield's West Raynham Solar Farm.
We commend Bluefield for their work to enhance the biodiversity measures at
the site and congratulate them for achieving Wild Power's gold standard at
West Raynham."
Nature Framework
The Company has developed a nature framework during the Year, building upon
and bringing together previous nature activity. Its aim is to provide an
overarching strategy through which the Company can identify and manage its
nature-related risks and opportunities; communicate activities associated with
nature in a consistent and clear manner; and align with emerging regulatory
and framework requirements. It will also guide actions to integrate nature
more fully across the asset lifecycle, from development through to
end-of-life.
To inform the framework, workshops were held with representatives from the
Investment Adviser and other service providers, including from O&M, asset
management, investment, commercial, construction and development teams, to
explore nature-related impacts, dependencies, risks and opportunities which
exist across the asset lifecycle. This information was combined with that
obtained from a landscape review, which evaluated broader nature impacts and
dependencies associated with the solar & wind energy sectors, market
analysis, and consideration of the localities of the Company's assets.
Key focus areas within the framework include:
• Land management
• Nature protection & improvement
• Engagement & education
• Materials sourcing & supply chain
Focus over coming months will be to finalise KPIs which can be used by the
Company to monitor and communicate its nature activities.
Community Impact and Initiatives
An increasing number of communities may be impacted by renewable energy
projects as the industry grows. As the owner of infrastructure assets, the
Company recognises the importance of maintaining a social licence to operate
and seeks to build and maintain positive relationships with the communities
close to its investments. Local stakeholders, including landowners, residents,
and parish council members, are engaged as appropriate across the asset
lifecycle, including during project development, construction and operation.
The Company has continued its partnership with Earth Energy Education to
deliver an educational programme to schools close to the Company's assets,
equipping students with knowledge about climate change and the role renewable
energy can play in powering a more sustainable future. Between Sept 23 - July
24, the Company delivered 13 classroom workshops and facilitated 16 site
visits with support from site engineers and other Bluefield employees.
The Company has also paid over £296,000 to community benefit schemes ,
funding local community projects. For example, in connection with Bradenstoke
Solar Farm, a £10,000 grant was used towards the construction of a new,
larger village hall, serving the communities of East Tytherton, Tytherton
Lucas and neighbouring villages and hamlets within the Bremhill civil parish.
Case study: Community engagement during the construction of Yelvertoft Solar
Farm
Since 2022, the Company has proactively engaged with the community surrounding
its new 48.4 MWp Yelvertoft Solar Farm in Northamptonshire, aiming to keep
residents informed about progress on construction and invite feedback. The
Company's development partner, Bluefield Renewable Developments, and EPC
contractor for the site, Equans, have facilitated this process. The Company
has shared updates on its measures to protect biodiversity at the site (in
line with planning requirements) and the drainage management systems installed
to help prevent flooding, which had previously caused issues in the area.
Positive feedback on the impact of the flood mitigation measures has already
been received.
A community benefit fund has also been established, with the Company providing
an annual contribution to the Yelvertoft parish council to support initiatives
benefiting local residents. In addition, the Company has facilitated site
visits and solar energy lessons for children at local primary schools,
providing students with an insight into the construction process and how the
constituent elements of a solar farm work together to produce renewable
energy.
Delivery Partnerships
Engagement with key service providers is the primary method for implementing
sustainable business practices by the Company. During the 2022/2023 Year,
several policies were adopted by the Company, including a Sustainable
Procurement Policy, Human Rights Policy, Waste Management Policy and Supplier
Code of Conduct.
Focus during the Year was on the implementation of these policies across the
Company's operations. For example, an external consultant was engaged to
support the Company in reviewing human rights due diligence processes across
the asset lifecycle. There was continued roll-out of the Company's Supplier
Code of Conduct, with a spend-based approach taken to identify priority
suppliers to engage with. A webinar was held in June 2024 to offer suppliers
the opportunity to learn more about the Code and how it applies. Bluefield
also adopted its own Supplier Code of Conduct, relating to its UK operations ,
enabling the cascade of the Company's ESG expectations onto a subset of its
tier 2 (i.e., not directly engaged by the Company) suppliers. Work will
continue over the coming year to further integrate the policies across the
Company's operations and key service providers.
Case Study: Engaging with Engineering, Procurement, and Construction (EPC)
Contractors
The Company recently engaged a new EPC contractor to deliver construction
works for an upcoming project. The Investment Adviser engaged and supported
the EPC to calculate their carbon footprint for the first time. Such actions
demonstrate the Company's efforts to positively influence contractors and
suppliers in the sector and support them in their responsible business
approach.
Health & Safety
The Investment Adviser continues to ensure health and safety (H&S)
awareness, policies, processes and procedures remain at the forefront of
activity around the Company's portfolio. Asset H&S policies are reviewed
at least annually by a third-party H&S advisor. All main O&M
contractors are audited annually by a qualified third-party specialist
consultant, with any key findings followed up on by the Asset Manager.
EPC contractors, O&M Contractors, and Asset Managers provide updates on
their H&S performance on a regular basis. For the Year, the Company
recorded:
● Lost time incident rate (calculated per 100,000
employees): 1.16
● Number of reportable accidents (RIDDOR) : 3
● Number of near misses: 169
The majority of near misses were reported by Bluefield Operations, where
identifying, investigating, and reporting near miss incidents is culturally
ingrained within the organisation (helping reduce the probability of H&S
incidents occurring). Therefore, the relatively high number of near misses is
reflective of a proactive risk management culture.
7. Generating Energy Responsibly
Key Commitments
• Ensure 100% of the Company's assets are covered
by a Human Rights Policy, which covers United Nations Global Compact
principles and OECD guidelines;
• Require adoption of the Company's Supplier Code
of Conduct by priority Tier 1 and, where possible, Tier 2 suppliers; and
• Continue to develop due diligence mechanisms to
identify, prevent and mitigate human rights impacts across the Company's
operations and, where possible, its supply chain.
Human and Labour Rights
Human and labour rights remain high priorities for the Company. While the
Company recognises that its supply chains are complex and full transparency
has not yet been achieved, it will continue to monitor its processes in
relation to human and labour rights, committing to make improvements as the
approach to conducting due diligence evolves. The Company also recognises that
human rights due diligence is an ongoing process, where stakeholder engagement
is important at each step. Please refer to the Company's website
(www.bluefieldsif.com) for further information on its approach to this area.
In June 2023, the Company adopted a Human Rights Policy aligned to
international standards and guidelines, notably the United Nations Guiding
Principles on Business and Human Rights. Following adoption of this policy,
focus has turned to its implementation, with the Company firstly reviewing its
human rights due diligence processes. Key stages of the project included:
· Identification of key stakeholder groups where human rights due
diligence should be focused;
· High-level assessment of human rights risk for each of these
stakeholder groups, informed by a risk workshop attended by Bluefield
stakeholders (who are involved at different stages of the asset lifecycle).
The result was the identification of high priority risks and the potential
impact of each on rightsholders;
· An environmental & social risk analysis on the Company's top
20 suppliers, following a spend based approach;
· Review of the Company's current human rights KPIs; and
· Review of the Company's human rights communication processes.
This analysis led to recommendations tailored to the asset lifecycle and
identified actions to be taken, where needed, at each lifecycle stage (e.g.
development, construction and ongoing operation). The Company also mapped
mitigations currently taken against identified risks and steps required to
further advance its due diligence approach. The Company will continue to
monitor and update its human rights due diligence processes, where
appropriate, across the portfolio.
Examples of the Company's human rights due diligence and management
mechanisms:
· Human rights considerations embedded within pre-investment due
diligence;
· Comprehensive ESG due diligence undertaken on key third parties
such as EPCs, or O&M service providers as part of transactions;
· Obligation for new key suppliers to adhere to the Company's
Supplier Code of Conduct;
· Human rights considerations built into procurement oversight
processes for key infrastructure, specifically solar PV and battery energy
storage systems;
· Adoption of policies aligned to human rights frameworks;
· Social audits requested for solar PV manufacturing facilities as
part of EPC engagements; and
· External ESG risk analysis undertaken on key solar and battery
manufacturers.
The Company's Modern Slavery Statement is available on its website
(www.bluefieldsif.com).
Responsible and Sustainable Procurement
Since the turn of the century, the renewables industry has scaled rapidly and
achieved significant growth. However, due in part to the long lifespan of
renewable energy infrastructure, which can reach 40 years, there has
historically been a limited focus on end-of-life processes. As the first
generation of solar and wind farms approach the end of their economic
lifetimes, responsible decommissioning of sites and equipment is becoming a
key sustainability topic. Increased scrutiny on ESG credentials has brought
this issue to the attention of the industry, investors, and the media,
highlighting the potential environmental impact and the opportunity to improve
circularity by reusing materials and reducing waste. Addressing this challenge
could unlock emissions reduction opportunities and value in constituent
materials.
During the Year, the Company partnered with Lancaster University to launch a
research programme focused on end-of-life decision-making for renewable
assets. The first stage of the programme, due for completion in September
2024, was a project focused upon the development of a 'materials passport' for
a new build solar farm. The aim of the project was to map the constituent
equipment and components needed to build a solar farm, enabling insight into
opportunities to enhance the recyclability, recycled content, and recovery of
materials.
Materials passports are a concept gaining traction across the construction
industry , and the Company is pleased to have applied this principle to a UK
solar project . This material mapping exercise may also unlock opportunities
or points of leverage from an emissions reduction, climate adaptation, and
natureperspective. This project will enable the Company to better consider
circular economy principles in future construction projects.
Good Governance and Business Ethics
Corporate Governance
Please refer to page 91 for the Company's Corporate Governance Report.
As an FCA-regulated entity, the Investment Adviser maintains high standards of
professional conduct. Key policies, including in relation to anti-bribery,
anti-corruption and anti-money laundering, conflicts of interest, and
compliance are in place, and third-party compliance advisers are used to
ensure regulatory obligations are met through quarterly reviews and the
undertaking of an annual audit of business activities. As part of an
employee's induction process, employees are guided through the Investment
Adviser's position on anti-bribery and corruption. To ensure ongoing
awareness, all employees are required to complete computer-based training on
this topic. In addition, in support of the Investment Adviser's approach
towards appropriate conduct and ethics, employees are required to sit
computer-based training on Bullying and Harassment, and Whistleblowing.
Diversity
Diversity is an important consideration for the effective functioning of the
Company's Board. Please refer to page 92 of the Corporate Governance Report
for further information on the Board's commitment in this area.
Board Training
The Board undertook training sessions to build awareness of climate-related
issues. One session focused upon net zero targets and pathways, including the
different accreditation frameworks available and the Company's proposed
targets up to 2030. The other session, in July 2024, explored the climate risk
work undertaken by the Company to date, with special consideration of topics
such as extreme heat, changing wind patterns, and the Company's climate
adaptation plan.
Cybersecurity
Cyber security risk is managed under the Company's overarching risk management
framework, and the Company looks to continually evolve its approach to cyber
security, including through periodic reviews and engagement with key service
providers. The Investment Adviser has continued to arrange penetration testing
of 74% of the portfolio (excluding small scale sites) by a specialist external
consultant, as part of a cyber security review. Further tests are planned for
the coming financial year.
8. Looking Forward
As the Company looks to 2025, its commitment to sustainability and responsible
investment remains resolute. Recognising the dynamic nature of ESG factors and
the evolving regulatory landscape, the Company is poised to enhance its
approach to align with best practices and emerging standards. With a clear
vision and adaptive strategy, the Company is confident in its ability to
deliver sustainable value for its shareholders in an increasingly changing
world.
ESG Appendix
The following table highlights the Company's ESG performance for the Year.
Performance has been reported separately for wholly owned assets and the
strategic partnership with GLIL Infrastructure. Where referenced, unless
otherwise stated, 'assets' refers to operational and construction assets.
Pillar Commitment Supporting KPIs Prior Year Year Year 1 (strategic partnership)
(wholly owned assets) (wholly owned assets)
Climate Change Mitigation Renewable energy generated (MWh) 836,231 810,602 11,160
Report renewable energy generation annually.
CO2e avoided 2 (tCO2e) 173,000 167,800 2,300
Equivalent houses powered (#) 288,000 300,000 4,100
Additional solar infrastructure under construction (MW) 93 93 -
Estimated additional annual renewable energy generation (MWh) 91,000 91,000 -
Battery assets under construction (MW) - - -
Invest in industry collaborations to support the Revenue targeting industry collaboration (£) £0 3 £25,000 -
energy transition.
Scope 1 GHG Emissions (tCO2e) 19 45 1
Report against the Company's carbon emissions annually. 4
Scope 2 GHG Emissions (tCO2e) 5 1,422 399 0
Scope 3 GHG Emissions (tCO2e) 27,963 18,299 54
Total GHG Emissions (tCO2e) 29,404 18,743 55
Carbon Footprint (tCO2e) Please refer to the Company's PAI statement Please refer to the Company's -
(https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) .
PAI statement
(https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) .
GHG intensity Please refer to the Company's PAI statement Please refer to the Company's PAI statement -
(https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
(tCO2e / EUR Rev)
Develop a net zero pathway. Net zero pathway developed (Y/N) No Yes - targets developed. -
Installed capacity with renewable energy import tariffs (%) 7 85% 80% 100%
Implement renewable energy import tariffs across the portfolio. 6
Share of non-renewable energy consumption and non-renewable energy production Please refer to the Company's PAI statement Please refer to the Company's PAI statement -
of investee companies (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
from non-renewable energy sources compared to renewable energy sources (%)
Continue to build climate resilience and inform business strategy through Scenario analysis undertaken (Y/N) Yes Yes -
climate risk assessments and scenario analysis. 8
Climate adaptation plan developed (Y/N) 9 No Yes -
Pioneering Positive Local Impact Evaluate biodiversity net gain across the operational portfolio and achieve at New developments that have had biodiversity net gain assessment (%) 100% 100% -
least 20% biodiversity net gain on new solar developments 10 .
New solar developments with at least 20% biodiversity net gain achieved (%) 100% 67% 11 -
Existing sites with biodiversity net gain assessment (#) 30 45 -
Operational assets independently assessed (relating to assets over 1MW in 11% 11% -
capacity) (%)
Conduct independent biodiversity assessments across at least 10% of sites
annually (relating to assets over 1MW in capacity).
Notable species identified (e.g., red and amber listed species) (#) Red listed bird species: 12 Red listed bird species: 15 -
Amber listed bird species: 17 Amber listed bird species: 17
Assets without a biodiversity protection policy covering operational sites Please refer to the Company's PAI statement Please refer to the Company's PAI statement -
owned, leased, managed in, or (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
adjacent to, a protected area or an area of high biodiversity value outside
protected areas (%)
Develop a nature framework, building upon existing biodiversity commitments Nature framework developed (Y/N) No Yes -
and encompassing the recommendations of the TNFD.
Minimise potential risks posed to threatened species by the Company's assets Assets that are located in or near to 12 biodiversity-sensitive areas (%) 27% 13 27% 30%
and apply industry best practice to new sites under development.
Assets that negatively affect biodiversity-sensitive areas (%) 0% - Please refer to the Company's PAI statement 0% - Please refer to the Company's PAI statement -
(https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
Assets which are deemed to have operations that affect threatened species (%) 0% - Please refer to the Company's PAI statement 0% - Please refer to the Company's PAI statement -
(https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
Revenue given to partnerships benefiting the local community (£) £20,000 £28,000 -
Continue to promote positive action within the communities the Company
operates within through community benefit funds and educational sessions.
Revenue paid to community benefit schemes (£) >£287,000 14 >£296,000 -
Young people engaged (#) 647 (between May - Jul 23). 501 (between Sep 23 - July 24) -
Educational workshops delivered (including site visits) (#) 25, including 17 school workshops and 8 site visits (between May - Jul 23). 29, including 13 school workshops and 16 site visits (between Sep 23 - July -
24)
Lost time incident rate (per 100,000 employees) - 1.16 -
Insist that Tier 1 suppliers that directly service the portfolio 15 report
H&S
performance on a quarterly basis.
Number of reportable accidents (RIDDOR) (#) 6 3 1
Number of near misses (#) 154 169 32
Bluefield employees who have received H&S training (%) 100% (as at 28 Sept 23) 100% (as at 1 Aug 24) -
Tier 1 suppliers mapped by spend (%) 16 100% 100% -
Map the Company's supply chains, with priority given to Tier 1 suppliers.
Tier 2 suppliers mapped by spend (relating to Bluefield service providers) 100% 100% -
(%) 17
Ensure 100% of the Company's assets are covered by a Human Rights Policy, Assets with Human Rights Policy (%) 100% 100% -
which covers United Nations Global Compact principles and OECD guidelines.
Assets with a due diligence process to identify, prevent, mitigate, and 100% 100% -
address adverse human rights impacts (%)
Continue to develop due diligence mechanisms to identify, prevent and mitigate
human rights impacts across the Company's operations and, where possible, its
supply chain.
Share of investments in assets without policies to monitor compliance with the Please refer to the Company's PAI statement Please refer to the Company's PAI statement -
United Nations Global Compact principles or OECD (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
Guidelines for Multinational Enterprises or grievance /complaints handling
mechanisms to address violations of the United Nations Global Compact
principles or OECD Guidelines for Multinational Enterprises (%)
Implement mechanisms to measure the Company's hazardous waste ratio. Tonnes of hazardous waste and radioactive waste generated by assets per Please refer to the Company's PAI statement Please refer to the Company's PAI statement -
million EUR invested, expressed as a weighted average (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/) . (https://bluefieldsif.com/fund-sustainability/sustainability-disclosures/)
Clearly communicate the ESG governance structure. Clear governance structures in ESG report (Y/N) Yes Yes -
Ratio of female to male board members expressed as a percentage of all board 40% 40% 33%
members (%)
Further diversify the Company's Board.
Number of board positions held by a woman (#) 2 2 1
Number of board members from a non-white ethnic minority background (#) - - -
Ensure 100% of the Company's assets are covered by a sustainable procurement Assets with sustainable procurement policy (%) 100% 100% -
policy.
Require adoption of the Company's Supplier Code of Conduct by priority Tier 1 Tier 1 suppliers signed Supplier Code of Conduct (#) 26 30 -
and, where possible, Tier 2 suppliers
Tier 2 suppliers signed Supplier Code of Conduct (#) - 22 -
Encourage O&M contractors to follow the waste hierarchy principles. Assets with a waste management policy (%) 100% 100% -
Task Force for Climate-raleted Financial Disclosures (TCFD)
1. Introduction
The Company's core objective, to provide attractive returns to Shareholders
through investment in renewable energy infrastructure assets, sets it in an
advantageous position to capitalise upon opportunities that arise from the
transition to a low carbon economy. However, climate change is dynamic and
uncertain, and societal response will be shaped by climate events of varying
severity and impact, depending on the trajectory that global emissions take.
The Company is committed to having a climate resilient strategy in place,
supported by scenario analysis and risk management processes, to strengthen
its ability to deliver shareholder value in a changing world. The following
report explains how the Company is working to comply with all eleven
recommendations of the TCFD.
Please note the impact of the Company's new strategic partnership (namely the
emissions associated with the Company's 9% equity share) has been considered
within the GHG inventory table on page 60.
2. Governance
Board oversight
The Board has ultimate responsibility for and oversight of climate-related
risks and opportunities; please refer to page 37 for how the Board oversees
progress against ESG (including climate) commitments, KPIs and targets. Any
sustainability or climate-specific targets in development (e.g. a net zero
target) are presented to the Board by the Investment Adviser so they can
review, challenge and, if satisfied, approve.
The Board remains well-informed of developing physical and transitional risks
and opportunities associated with climate change, and how these might
materialise in the Company's short-, medium- and long-term future, through
close engagement with the Investment Adviser. In July 2024, the Board was
trained on the use of scenario analysis as a tool to inform risk management
and strategic decision-making and presented with the combined results of
physical scenario analyses undertaken over the last 18 months.
Every investment decision considered by the Board is associated with renewable
energy infrastructure. Therefore, the Board is conversant in assessing
climate-related opportunities. Increased consideration of climate-related
risks, particularly physical risks, has therefore been the main area of focus
for the Company since adopting the TCFD recommendations.
The consideration of trade-offs is inherent to the Board's decision-making
process. For example, the Board recognises that CO2e emissions are incurred
during the construction of new assets, both from the embodied carbon and
installation process. However, the Company quantified these emissions, through
a lifecycle carbon assessment for a new build 50MW solar asset based in the
UK. The results indicated an estimated payback period of between one to three
years, thereby demonstrating a net positive effect on the lifetime avoided
emissions of the asset once operational. Such analyses inform the Board's
decision to build out a development pipeline in order to support the
decarbonisation of the energy sector long-term.
Management
The Investment Adviser is responsible for day-to-day management of ESG,
including climate matters, and progress is communicated to the Board as
described on page 37. ESG is an agenda item for both the Board and the
Investment Adviser, where it is discussed as part of wider strategic
priorities and risk management.
Roles and responsibilities are defined within the Company's ESG structure on
page 38. The Investment Adviser oversees the implementation of the Company's
ESG Strategy, which includes a climate change mitigation pillar, under which
specific climate-related commitments and KPIs have been developed. In line
with this strategy, the Investment Adviser works with the Company's key
service providers to continue to integrate climate considerations across the
asset lifecycle, including pre-investment due diligence, asset management and
reporting. Asset data collected from service providers is collated by the
Investment Adviser and used to inform the ongoing assessment of
climate-related risks and opportunities.
Remuneration of the Investment Adviser is not directly linked to
sustainability metrics and targets (e.g. GHG emissions). However, the nature
of the Company's asset class targets climate change mitigation, and the
successful pursuit of that objective is reflected in remuneration. This
creates alignment between Shareholder interest, climate change mitigation and
the Investment Adviser's commercial interest.
3. Strategy
The Company's strategy is aligned to climate change mitigation, which seeks to
tackle one of the primary root causes of climate-related risk and take
advantage of any feasible opportunities. To inform its strategy, the Company
has continued to employ scenario analysis as a tool to better characterise
its most material climate-related risks, and opportunities, understanding how
those risks and opportunities could materialise over short-, medium- and
long-term time horizons (2030, 2040 and 2050, respectively). Key insights from
these analyses are described in the following section, which is concluded with
an overall assessment of the Company's resilience to climate change in each
emissions scenario.
Approach to Scenario Analyses
Three scenario analyses have been undertaken to date: the first assessed risks
associated with the transition to a low carbon economy, the second focused
upon the impact of extreme heat for solar PV and battery storage assets, and
the third analysed the impact of projected changes in wind speed on wind
assets. These were identified as potentially financially material physical
risks to the Company during climate screening workshops. These workshops were
held with representatives from the Bluefield service provider companies and
steered by consideration of forward-looking climate projections. Flood risk
was also considered to be potentially financially material, but this is
subject to extensive assessment and mitigation as part of the standard
regulatory planning and development process.
Table 1: Scenarios used for transitional and physical scenario analyses, based
on established climate models. Broad alignment exists between each set of
scenarios, despite slight differences in warming implications.
Warming implications
Description of Scenario Physical Transitional
Net Zero by 2050 Global cooperation for effective regulation & mitigation of emissions, <2°C 1.5°C
avoiding the worst impacts of climate change. Shifts occur gradually toward a
more sustainable & inclusive path, meeting Paris Agreement goals.
Delayed Transition Progress is delayed; effective policies are not introduced until 2030 or 2-4°C <2°C
later, and in a more rapid and disruptive manner. Warming exceeds 2°C and a
degree of environmental degradation occurs, but damages are constrained by
improvements in energy and resource use.
Current Policies Continued emphasis on economic growth and technological progress. Effective >4°C >3°C
policies to decarbonise are not introduced globally and there is continued
reliance on fossil fuels, leading to high levels of warming, which could
exceed 4°C.
The scenarios used in the physical analysis were derived from Representative
Concentration Pathways ("RCPs") and Shared Socioeconomic Pathways ("SSPs") ;
the transitional scenarios were derived from global climate models produced by
the Network for Greening the Financial System ("NGFS") . The SSP pathways
denote higher warming potential, which better highlights physical risks,
whilst the NGFS pathways more effectively portray transitional impacts. The
results of these analyses are presented in the 'Strategy' section and continue
to be developed and integrated into business strategy and financial
planning.
Whilst there is some variance in the results of the analyses by scenario up to
2050, it should be noted that the primary divergence in impact between
scenarios is expected to be seen between 2050 and 2100. The remaining weighted
average life of the Company's portfolio of assets means there is limited
exposure to variability in these scenarios. The impact assessment below can
therefore be read across all scenarios and is not specific to certain
variabilities of these scenarios.
Results of Physical Scenario Analysis
The following section summarises the extreme heat and wind-focused physical
scenario analyses, setting out the potential impact on the business model and
value chain. Please refer to the Company's 2023 TCFD report (Table 2, page 44
of the Company's 2023 Annual Report) for a more detailed breakdown of the
impact of extreme heat across the different scenarios referenced above.
Physical Analysis - Impacts of extreme heat on yield
Above a certain temperature threshold (around 25°C), heat can start to affect
multiple components of PV systems, resulting in efficiency losses in PV
modules, accelerated PV cell degradation, and inverter failure. As average
temperatures increase with climate change, the IPCC predicts extreme heat
events will become more frequent and severe , presenting a risk to the
Company's portfolio over the short, medium, and long-term. Heat is expected to
manifest as a risk to solar asset performance in two ways: the chronic effects
of long-term average temperature rise on PV cell efficiency, and acute failure
of key components (i.e., inverters) during heatwaves, both of which can impact
yield.
Acute Risk
Extreme heat events (e.g. heatwaves) are typically short-term spikes that can
lead to failures in constituent components within a PV system. The threshold
at which failures are more commonly observed was agreed by Bluefield to be
33°C, informed by past events on the solar portfolio. The number of days
exceeding this temperature are likely to increase, primarily impacting PV
systems through their ancillary equipment (e.g. inverters). Although there are
associated losses to revenue during downtime, the results of the scenario
analysis imply that this may not be financially material. However, it should
be noted that this analysis does not consider the full suite of risks that
extreme heat events could present to the Company; for instance, the cost of
equipment replacement or repair, or compound risks associated with multiple
climate-related events playing out at once, which were not modelled.
Nevertheless, considerate design, procurement and planning can help mitigate
the impact of heat. For example, inverters can be located away from other
equipment to prevent overheating, and increasingly, technologies with a
greater capacity to dissipate heat (through fans or internal cooling systems)
are becoming available to the market.
In addition to PV systems, the impact of extreme heat on battery storage
systems was evaluated. Analysis of technical specifications revealed that
battery storage systems appear resilient to the UK temperature ranges
predicted across all three scenarios, with in-built cooling systems able to
maintain internal ambient air temperature and therefore optimal asset
performance. Thus, extreme heat should not present a material risk to the
operation of battery storage systems adopted into the Company's portfolio in
the future.
The Company notes that components of wind turbines may also be exposed to risk
of overheating. However, this was not considered likely to become material
during initial climate screening workshops, and thus has not been modelled to
date.
Chronic Risk
Average temperature rise represents a more sustained financial risk to the
solar portfolio. PV systems begin to experience curtailments in output
efficiency due to heat at approximately 25°C. Although technologies vary,
every degree of temperature rise over this threshold is considered to result
in an approximately 0.41% reduction in efficiency. As average temperatures
rise, solar cells will be pushed beyond their optimal operating temperature
more frequently and to a greater extent, in line with the trajectory of global
emissions.
Whilst the impact of extreme heat on yield is not considered to be financially
material at present, the Company notes the unpredictability of climate
projections, and thus is assessing adaptative measures to address these risks.
Technological advancements of PV systems are helping to mitigate this risk in
part; PV panels with improved temperature coefficients are becoming available
to the market. The Company considers the heat resilience of PV technologies
installed within new build projects, capturing this information within
asset-specific adaptation plans . The Investment Adviser will assess the
feasibility of additional mitigation measures, including novel solutions
entering the market.
The Impact of Changing Wind Speed on Yield
Modelling changes to wind speed associated with climate change is a highly
complex and uncertain exercise. The many determinants of storms and high
winds, and non-linear dynamics within the global climate system, make them
difficult to model compared with temperature change. Increasingly severe
storms and high wind speeds have been noted in the UK over the past 40 years ,
and it is acknowledged that this could increase further with climate change.
Moreover, the chronic effect of the 'global stilling' phenomenon, whereby
polar regions have warmed faster than tropical regions, reducing atmospheric
pressure differences and wind speeds as a result, has been detected over
similar timeframes and is expected to continue in some projections . Despite
the uncertainty, it is essential to have a forward-looking view of these
factors and understand how they may be exacerbated by climate change, as both
have the potential to impact wind asset performance.
Acute Risk
High wind speeds present a double-edged sword for wind turbines; up to a
certain threshold, they can drive greater generation yields and create more
revenue. However, when wind speeds exceed approximately 55-65mph, turbines may
shut down to prevent asset damage. This is a key mitigation to acute damage
caused by high winds and storms to protect the turbines.
Acute high wind speed events are expected to increase with climate change. The
analysis indicated that the highest winds will be felt in the extremities of
the UK (i.e., Northern Scotland and Cornwall). Although more frequent turbine
shutdowns in these areas may lead to lost revenue, the benefit of higher wind
speeds across the rest of the UK is likely to outweigh this cost to the
Company. Diversity in the portfolio between geography and asset classes
enables the Company to take advantage of any beneficial weather conditions
that climate change may bring whilst helping mitigate the negative impacts.
Chronic Risk
Despite an increase in extreme wind events, current projections suggest that
overall annual average wind speeds will continue to decline across the UK.
Scientific consensus and model agreement on the probable trajectory of wind
stilling has not yet been reached, and therefore this scenario remains highly
variable. Wind stilling poses a risk to average revenues as generation from
turbines would decline. However, given the minority exposure of the Company's
investments to wind and the relatively slight impact on average speeds, it
is not considered to be financially material at this time. However, given
recent instability in power prices, the extent of possible financial impact is
difficult to determine with a high degree of certainty.
Results of Transitional Scenario Analysis
Transitional opportunities are expected to predominate over transitional risks
due to the nature of the Company and its role in providing low carbon energy
to a decarbonising economy. Risks associated with the low carbon transition
are likely to become more apparent from 2030 onwards, as the realities of
needing to meet net zero goals solidify. However, the accompanying
opportunities are high, with taxes on emissions-intensive industries and
broader regulatory shifts that should encourage further investment into
renewables.
Please refer to the Company's 2023 TCFD report for a detailed summary of the
transitional scenario analysis, conducted in 2022, which qualitatively
assessed the impact of potential policy, regulatory, technology, and market
changes associated with mitigative and adaptative responses to climate change.
Key insights from this analysis are discussed together with physical risks
within the context of resilience in the next section.
Assessment of resilience
Drawing on the results from all three scenario analyses, the Company has
assessed its resilience to climate-related risk in each of the scenarios,
summarised below. Work will continue to integrate findings from the scenario
analyses into the Company's risk management processes, strategic and
investment-related decisions, and financial planning.
Net Zero (1.5°C - 2°C)
Due to the nature of its investments, few transitional risks are expected to
present a high risk to the Company. The greatest risks in this scenario come
from technology change in the long-term. This could quicken the rate of asset
depreciation and require large scale investment to install new technologies
across the portfolio. However, the Company views the accompanying opportunity
as high. Technological progress may lead to greater yielding PV assets as well
as better battery storage solutions, combining to increase revenues. Policy
and legal shifts are also likely to present high opportunities over the
long-term, which the Company is well placed for, as they create conditions
conducive to growth of the portfolio.
Delayed Transition (2-4°C)
In a Delayed Transition, the medium-term is more disruptive than the other
scenarios. This is due to significant shifts required to move to a low-carbon
trajectory, compensating for previous inaction. Again, this creates both risks
and opportunities to the Company. Market shifts are particularly likely:
service providers may face supply chain issues, and revenues may be exposed to
risk from volatility in power prices. However, the opportunity from a
disorderly transition is that there is a sudden shift away from fossil fuels,
which is likely to cause a demand spike for renewable energy. With the
Company's growing portfolio and development pipeline, it has the opportunity
to facilitate this increased demand. Reputational opportunities are also
highest in this scenario in the long-term, as increased value is placed on
sustainability credentials to limit warming. In a 2-4°C scenario, chronic
physical risk increases over time, but to a lesser extent than in the >4°
scenario; greater yield losses are felt for PV, due to rising temperatures,
and for wind turbines, should stilling take effect. Incidences of acute wind
and heat events similarly increases over time but are less impactful in this
scenario, as much of the Company's generation capacity is located away from
the worst affected counties.
Current Policies (>3, >4°C)
The Company is generally exposed to lower transitional risks and opportunities
in this scenario. As a provider of renewable energy, it stands to gain from a
transition to a low carbon economy. If this does not occur, there may be
limited opportunities to grow the portfolio beyond those experienced
currently, across even the longest time horizons. A lack of climate policy and
action will result in the greatest exacerbation of climate hazards, making
physical risk to assets highest in this scenario, though not to the extent
that is expected to cause a material financial impact to the Company. The
value chain impact is potentially significant; climate-related disruption in
the supply chain for new assets could lead to shortages of supply and price
spikes, with polysilicon being a particularly volatile component of a PV
system .
The Company will use the results of the climate modelling to inform investment
decision-making and mitigation measures to enhance the long-term resilience of
its portfolio to evolving physical climate risks.
4. Risk Management
Governance
For information relating the Board's approach to risk management, which is
inclusive of climate risk, please refer to page 67.
Physical risk management
Overall, the physical scenario analyses indicate that extreme heat and
changing wind patterns do not currently pose a financially material risk to
the Company with respect to asset yield and revenue generation.
The Company is, however, aware of the limitations of scenario analysis and the
evolving nature of climate hazards. Of note is the fact that climate-related
risks are unlikely to occur in isolation; compound risks associated with the
assets themselves and the broader supply chain may play out simultaneously,
heightening the risk posed.
To enable a dynamic response to physical climate risk, the Company has
developed a portfolio-wide adaptation plan, which will help the Company
monitor climate-related risks, further inform investment decisions, and
identify opportunities to enhance resilience. The plan is structured around
stages of the asset lifecycle, to support a holistic understanding of physical
climate change impacts to the Company's direct operations and key service
providers, and to map out accountability across key stakeholders. It will also
serve as an evidence base from which data to monitor risk can be refined and
fed into strategic decision-making where necessary.
Transitional risk management
The management of transitional risk is integrated within the responsibilities
of the Investment Adviser. Mitigation measures pertaining to key transitional
risk areas, as identified in the transitional scenario analysis, are presented
in Table 2.
Table 2: Mitigation measures used by the Company to manage transitional
climate-related risks.
Technology advances The Investment Adviser models the operational asset life, taking account of
depreciation and physical degradation, to forecast NAV and portfolio revenue.
Outputs are listed in the Company's risk register and are regularly updated to
inform long-term scenario planning. This enables active risk management,
including the arrangement of appropriate contingency funds for equipment
failure and longer-term decision-making around asset repowering and equipment
upgrades, helping reduce NAV depreciation. Diversification is another
important resilience mechanism, allowing the Company to expand into
alternative technologies. The Company's development pipeline also gives it
greater scope to implement new technologies as they become commercially
viable.
Business reputation The Company's continued transparency regarding the climate actions it is
taking, including voluntary alignment with the TCFD, helps mitigate against
reputational risks. Robust compliance with ESG regulation further supports
this. Within its ESG report, the Company aims to disclose information relating
to both achievements (through a comprehensive set of commitments and KPIs) and
challenges, helping to provide a balanced perspective. These actions stand
to strengthen the Company's reputation and financial benefit could be realised
in the form of increased investment, as investor preferences shift towards low
carbon energy and sustainable investment.
Policy & legal action The Investment Adviser's legal counsel keeps abreast of upcoming policy and
legal changes, and external legal and technical advisers support the Company
in maintaining compliance with applicable policy and regulation. The Company
has developed a robust set of policies to externalise ESG expectations to
third parties, helping cascade responsible business practice across key
service providers. As a FCA regulated entity, the Investment Adviser evidences
high standards of professional conduct.
Market disruption The Company's investment strategy of owning and operating predominantly
subsidised assets provides strong visibility of revenues and helps protect the
Company against future regulatory changes in power markets. The Investment
Adviser supplements this by continuously monitoring new long-term fixed
revenue streams that are becoming available. For example, it secures contracts
for difference, enhancing revenue visibility and security. In the future, the
Company is expected to diversify its revenue streams through investment in
batteries, which benefit from power price volatility. Novel revenue streams
and technologies are continually evaluated for their ability to enhance the
resilience of the Company's long-term investment objective.
Ongoing risk identification & assessment
Climate-related risks and opportunities are identified and assessed on an
ongoing basis at different stages of the asset lifecycle. Climate
considerations are integrated into pre-investment ESG due diligence and are a
key consideration within the Company's ESG strategy, aiding the long-term
management of climate matters post-investment. Development partners, including
Bluefield Renewables Development Limited, ensure that climate factors are
considered during the development process of new assets, for example through
flood risk assessments.
On a daily basis, asset management and O&M service providers identify,
escalate, and respond to climate-related incidents impacting the Company's
assets. Irregularities in generation are flagged in real time by monitoring
teams who diagnose the issue, classify the risk, and communicate it to asset
management and O&M teams through incident reports. Examples of risks
classified as "climate-related" include string-level identification of
inverter failures during heatwaves and downtime of wind turbines due to storm
activity.
The Company is also taking steps to engage its supply chain on climate risk
through its net zero targets. Please refer to the ESG report.
5. Metrics and Targets
Metrics
The financial performance and overall success of the Company is intrinsically
linked to opportunities that result from the transition to a low carbon
economy. The Company monitors this through metrics relating to returns and
dividends paid to Shareholders, which are underpinned by the total generation
yield of the portfolio.
The Company also tracks its ESG performance against a set of commitments and
KPIs, enabling the Company to manage its ESG risks and opportunities alongside
financial objectives (see ESG Appendix). As an infrastructure owner, the
Company's assets are vulnerable to physical and transitional climate risks, a
selection of which have been explored quantitatively through scenario analysis
(see Strategy section). Insights from scenario analyses will be used to inform
metrics used by the Company to assess and monitor climate-related risks and
opportunities, and steer portfolio resilience measures.
GHG Inventory results
The Company's GHG inventory relating to the Year is presented in Table 3 ,
calculated in line with the GHG Protocol Corporate Accounting Standard and the
Partnership for Carbon Accounting Financials. DEFRA GHG reporting conversion
factors, DEFRA conversion factors by SIC, and power provider specific
emissions factor datasets were used in the analysis (corresponding with the
period emissions were incurred). Some aspects of data collection remain
challenging, and as a result, a proportion of data was estimated or
extrapolated.
Table 3: the Company's GHG emission inventory for the period 1 July 2023 - 30
June 2024, highlighting emission results per scope, including a breakdown of
scope 3 categories. These figures are inclusive of the emissions associated
with the Company's investment stake in the strategic partnership with GLIL
Infrastructure as of 30 June 2024.
Location-Based Emissions (tCO2e) % of total Market-Based Emissions (tCO2e) % of total
Scope 1 46 0.24 46 0.24
Scope 2 748 3.91 399 2.12
Scope 3 18,353 95.85 18,353 97.63
Purchased Goods & Services 18,065 18,065
Fuel- and Energy-Related Activities 260 260
Waste Generated in Operations 19 19
Water Consumption 0.1 0.1
Upstream Leased Assets 9 9
Total 19,147 18,798
During the Year, the Company updated the boundaries of its GHG inventory to
align with reporting done under the EU's SFDR. Previously, an organisational
boundary based on the operational control approach was defined; now, an equity
share approach has been adopted. This also aligns with the financial reporting
approach, which was deemed more appropriate given the Company's recent
strategic partnership. The Company has also had regard to guidance from the
Partnership for Carbon Accounting Financials during this process, adjusting
for the impact of debt in the structure.
This change increased the accuracy of the Company's inventory, and the Company
will continue to evaluate and adjust its GHG accounting methodology as it
evolves its approach. The Company will review opportunities to enhance the
accuracy of scope 3 data, particularly in relation to new asset construction,
including the embodied carbon of supplied modules and emissions arising from
installation.
The Company's scope 1 emissions have increased during the Year. This change
pertains to a combination of increased generator usage for planned electricity
network operator outages and essential maintenance and repair activities, as
well as solar and wind asset repowering activities. The Company has observed a
decrease in scope 2 emissions following the transfer of several assets onto
renewable import tariffs. The Company's adjusted scope 3 emissions appear to
have decreased; however, it is noted that this is largely due to the described
methodology changes.
Climate-related targets
The Company takes its role in the transition to net zero seriously and has
developed net zero targets during the Year. The Company has also been
identifying its dependencies to reach net zero; the business model means that
operational assets rely on a number of third-party firms, and engagement with
these providers will be critical to reduce carbon emissions across the supply
chain. Please refer to page 40 for further information.
Strategic Report
1. Company's Objectives and Strategy
The Company seeks to provide Shareholders with an attractive and sustainable
return, principally in the form of quarterly income distributions, by
investing primarily in solar energy assets located in the UK. The Company also
invests a minority of its capital into other renewable assets, including wind
and energy storage.
Subject to maintaining a prudent level of reserves, the Company aims to
achieve quarterly income distributions through optimisation of asset
performance, acquisitions and the use of gearing. The Company's dividend
target for the Year was 8.80pps and by declaring a fourth interim dividend of
2.20pps following three interim dividends of 2.20pps, the Company's total
dividend of the Year was 8.80pps .
The Operational and Financial Review section on page 65 provides further
information relating to performance during the year.
2. Company's Operating Model
Structure
The Company holds and manages its investments through a UK limited company,
Bluefield Renewables 1 Limited (BR1), in which the Company is the sole
shareholder.
Management
Board and Committees
The independent Board is responsible to Shareholders for the overall
management of the Company. The Board has adopted a Schedule of Matters
Reserved for the Board which sets out the particular duties of the Board. Such
reserved powers include decisions relating to the determination of investment
policy, approval of new investments, oversight of the Investment Adviser,
approval of changes in strategy, risk assessment, Board composition, capital
structure, statutory obligations and public disclosure, financial reporting
and entering into any material contracts by the Company.
Through the Committees and the use of external independent advisers, the Board
manages risk and governance of the Company. The Board consists of five
independent non-executive Directors, three of whom are Guernsey residents. See
the Corporate Governance Report for further details.
Investment Adviser
The Investment Adviser's key responsibilities include identifying and
recommending suitable investments for the Company and negotiating the terms on
which such investments will be made.
Under a technical services agreement with BR1, the Investment Adviser is
responsible for supervising and monitoring all existing investments.
Additionally, the Investment Adviser has the same ownership as several key
entities that provide essential services to the Company's portfolio. BSL
delivers asset management services, while BOL and BRD manage the operational
aspects of most investments and oversee the pipeline of development projects,
respectively. BCM, also under the same ownership as the Investment Adviser,
provides construction management services for the new build portfolio.
During the Year, the Investment Adviser received a fee equivalent to 0.8% of
NAV (Prior Year: 0.8%). A summary of the fees paid to the Investment Adviser
is given in Note 16 of the financial statements. The fees paid to BSL, BRD,
BOL and BCM are also detailed in Note 16.
Administrator
The Board delegated administration and company secretarial services to the
Administrator. Further details on the responsibilities assigned to the
Administrator can be found in the Corporate Governance Report.
Employees and Officers of the Company
The Company does not have any employees and therefore policies for employees
are not required. The Directors of the Company are listed on pages 87 to 88.
Investment Process
Through its record of investment in the UK renewable energy market, the
Investment Adviser has developed a rigorous approach to investment selection,
appraisal and commitment.
Repeat transaction experience with specialist advisers
The Investment Adviser has worked with a range of specialist advisers from
multiple disciplines in each of the transactions it has executed in the UK and
European markets and is able to source relevant expertise to address project
issues both during and following a transaction.
Application of standardised terms developed from direct experience
The Investment Adviser has developed standardised terms which have been
specifically tested by reference to real transaction and project operational
experience. Whilst contract terms are specifically negotiated and tailored for
each individual project, the Investment Adviser always includes contractual
protection regarding recovery of revenue losses for underperformance and
obligations for correction of defects.
Rigorous internal approval process
All investment recommendations issued to the Company are made following the
formalised review process described below:
(1) Investment origination and review by the Investment Adviser's managing
partners
Before incurring costs in relation to the preparation of a transaction, a
project is concept reviewed by the Investment Adviser's managing partners,
following which a letter of interest or memorandum of understanding is issued,
and project exclusivity is secured.
(2) Director Concept Approval
In the event that material costs are to be incurred in pursuing a transaction,
a concept paper is issued by the Investment Adviser for review by the Board.
This fixes a project evaluation budget as well as confirming the project
proposal is in line with the Company's investment policy and strategy and
aligned to ESG principles.
(3) Due diligence
In addition to applying its direct commercial experience in executing
renewable energy acquisitions and managing operational projects, the
Investment Adviser engages legal, technical, ESG and, where required,
insurance, tax and accounting advisers from its extensive network to undertake
independent due diligence.
(4) Investment Adviser Investment Committee
Investment recommendations issued by the Investment Adviser are made following
the submission of a detailed investment paper to the Investment Committee. The
Investment Committee operates on the basis of unanimous consent and has a
record of making detailed evaluation of project risks. The investment paper
submitted to the Investment Committee discloses all interests which the
Investment Adviser and any of its affiliates may have in the proposed
transaction.
(5) Board approval
Following approval by the Investment Adviser's Investment Committee,
investment recommendations are issued by the Investment Adviser for review by
the Board of the Company. The Board undertakes detailed review meetings with
the Investment Adviser to assess the recommended projects. If the Board of the
Company approve the relevant transaction, the Investment Adviser is authorised
to execute it in accordance with the Investment Adviser's recommendation and
any condition stipulated in the Board's approvals. The Boards is regularly
updated on the pipeline of potential new investments to help provide context
for capital allocation decisions.
(6) Closing memorandum
Prior to executing the transaction, the Investment Adviser completes a closing
memorandum confirming that the final transaction is in accordance with the
terms presented in the investment paper to the Investment Adviser's Investment
Committee, and the board of the Company; detailing any material variations and
outlining how any conditions to the approval of the Investment Committee
and/or Board approval have been addressed. This closing memorandum is
countersigned by an appointed member of the Investment Adviser's Investment
Committee prior to completing the transaction.
Managing conflicts of interest
The Investment Adviser is regulated by the FCA and is bound by conduct of
business rules relating to management of conflicts of interest. The Board
noted that the Investment Adviser has other clients and has satisfied itself
that the Investment Adviser has procedures in place to address potential
conflicts of interest which, together with any mitigation measures, are
disclosed in the investment recommendation for each investment.
3. Investment Policy
The Company invests in a diversified portfolio of renewable energy assets, all
located within the UK, with a focus on utility scale assets and portfolios on
greenfield, industrial and/or commercial sites. With a focus on solar PV, the
Company has the ability to invest up to 25% of the Company's GAV into
complementary renewable technologies, principally wind and storage. The
Company's responsible investment approach is discussed in Environmental,
Social and Governance Report on page 33.
Individual assets or portfolios of assets are held within SPVs into which the
Company invests through equity and/or debt instruments. The Company typically
seeks legal and operational control through direct or indirect stakes of
normally 100% in such SPVs, but may participate in joint ventures or minority
interests to gain exposure to assets which the Company would not be able to
acquire on a wholly-owned basis. In the situation of joint ventures or
minority interests, the Company would ensure a high degree of influence over
decisions.
The Company may, at a holding company level, make use of both short-term debt
finance and long term structural debt, but such holding company level debt
(when taken together with the SPV finance noted above) will not exceed 50% of
the GAV. It may also make use of non-recourse finance at the SPV level to
provide leverage for specific renewable energy infrastructure assets or new
portfolios provided that at the time of entering into (or acquiring) any new
financing, total non-recourse financing within the portfolio will not exceed
50% of GAV.
While it is not the Company's policy to be a long term holder of non-UK
assets, the Company can invest up to 10% of GAV into assets outside the UK to
enable it to acquire portfolios with a mix of UK and non-UK assets.
Furthermore, up to 5% of the GAV may be invested into pre-construction UK
solar development opportunities. As at 30 June 2024 this is less than 3% (30
June 2023: 2%). The aggregate exposure to other renewable energy assets,
energy storage technologies, UK solar development opportunities and non-UK
assets will be limited to 30% of the Company's GAV.
No single asset (excluding any third-party funding or debt financing in such
asset) will represent, on acquisition, more than 25% of the NAV.
The Company derives its revenues from the sale of ROCs, FiTs and CfDs (or any
such regulatory regimes that may replace them from time to time) alongside the
sale of electricity under power purchase agreements with counterparties such
as co-located industrial energy consumers and wholesale energy purchasers.
The Company may invest up to 5% of GAV into developing further UK solar
development opportunities and purchase assets pre- or post-construction in
order to:
1. Maximise quality and scale of deal flow;
2. Optimise the efficiency of the acquisitions;
3. Minimise risk via appropriate contractual agreements; and
4. Acquire assets using prudent assumptions.
Listing Rule Investment Restrictions
The Company currently complies with the investment restrictions set out below
and will continue to do so for so long as they remain requirements of the FCA:
· neither the Company nor any of its subsidiaries will conduct any
trading activity which is significant in the context of the Group as a whole;
· the Company must, at all times, invest and manage its assets in a
way which is consistent with its objective of spreading investment risk and in
accordance with the published investment policy; and
· not more than 10% of the GAV at the time the investment is made
will be invested in other closed-ended investment funds which are listed on
the Official List.
As required by the Listing Rules, any material change to the investment policy
of the Company will be made only with the prior approval of the FCA and
Shareholders.
4. Operational & Financial Review for the year
Key Performance Indicators
As at 30 June 2024 As at 30 June 2023
Market capitalisation (£m) 636.0 733.7
Total dividends per share declared in relation to the year 8.80p 8.60p
NAV (£m) 781.6 854.2
NAV per share 129.75p 139.70p
Total Shareholder Return (4.67)% (2.03)%
Market capitalisation (1)
The Directors regard the Company's market capitalisation as an important
secondary indicator of the trading liquidity in its shares. The Company's
market capitalisation (the market value of its Ordinary Shares) at 30 June
2024 was £636 million, down from £734 million at 30 June 2023. This
principally reflects a widening in the discount to underlying NAV and the
buyback of 9 million shares.
Total dividends per share declared (1)
The Company generates returns primarily in the form of distributions and the
Company has a progressive dividend target. The dividend grew by 2.3% to
8.80pps in the Year, from 8.60pps in the Prior Year.
NAV
The Company's average NAV forms the denominator of the Total Expense Ratio
calculation and is thereby a determinant of BSIF's total expense ratio. As the
variable costs of running the company tend to reduce with increasing NAV a
larger NAV will reduce the TER. The finite life of renewable asset leases will
ultimately lead to attrition of the Company's NAV. The Directors recognise
this as a significant feature and have expanded the mandate of the Company in
part to mitigate this effect.
NAV Per Share(1)
Whilst the Company's principal goal is to produce income, the NAV per share
movement informs our shareholders and the Board whether this income has been
produced at the expense of capital growth. The NAV per share fell during the
year and produced a negative return to capital, reflecting lower long term
electricity prices and lower inflation expectations.
Total Shareholder Return(1)
This is a measure of the combined return to Shareholders from dividend income
and share price movements and whilst this should be positive in the long-term,
short-term fluctuations in shareholder and market sentiment can cause this
number to be positive or negative. The return of -4.67% for 2024 compared to
the return of -2.03% in 2023 largely reflects the reduction in share price
during the year to 30 June 2024 following a widening of the discount to NAV
that has arisen. In August 2023, the Bank of England increased the Base Rate
to 5.25% and held it at that level until August 2024, when it announced a
25bps reduction.
Acquisitions
See the Investment Adviser's Report in Section 2.
Portfolio Performance
See the Investment Adviser's Report under Sections 2 and 5.
The Company's PPA strategy is to enter into 12 to 36 month electricity sales
contracts, with contracting periods spread quarterly across the portfolio in
order to minimise the portfolio's sensitivity to short term price volatility.
Summary Statement of Comprehensive Income
Year ended Year ended
30 June 2024 30 June 2023
£ million £ million
Total Income (Note 4 of the financial statements) 0.9 0.9
Change in fair value of assets (Note 8 of the financial statements) (8.3) 48.2
Administrative expenses (Note 5 of the financial statements) (2.2) (2.3)
Total comprehensive (loss)/income (9.6) 46.8
Earnings per share (1.57p) 7.65p
(1) please see Alternative Performance Measures on pages 148 to 150 for
further details.
Income for the period is the monitoring fees paid by BR1 to BSIF.
The total comprehensive loss before tax of (£9.6) million reflects the
performance of the Company when valuation movements and operating costs are
included. Further detail on the valuation movements of BSIF's portfolio is
given in the Report of the Investment Adviser.
The Company's ongoing charges ratio for the Period was 1.02% (2023: 1.00%),
calculated in accordance with the AIC recommended methodology, which excludes
non-recurring costs and uses the average NAV in its calculation. See page 150
for a tabular calculation of the Company's ongoing charges ratio.
5. Directors' Valuation* of the Company's portfolio
The Investment Adviser, or an independent external valuer, is responsible for
preparing the fair market valuation recommendations for the Company's
investments for review and approval by the Board. Valuations are carried out
quarterly, as at 30 September, 31 December, 31 March and 30 June, with an
external review as and when the Board deems appropriate.
The fair market value adopted for the portfolio was £965.5m (Note 8 of the
financial statements) and is confirmed by an alternative approach using a
combination of discounted cash flows of income generated from the portfolio of
investments.
The Board reviews the recommendations of the Investment Adviser to form an
opinion of the fair value of the Company's investments. A detailed analysis of
the Directors' Valuation is presented in the Report of the Investment Adviser.
* Directors' Valuation is an alternative performance measure to show the gross
value of the SPV investments held by BR1, including their holding companies. A
reconciliation of the Directors' Valuation to Financial assets at fair value
through profit and loss is shown in Note 8 of the financial statements.
6. Principal Risks and Uncertainties
In line with the FCA's Disclosure Guidance and Transparency Rules, the Board
identifies the material inherent risks to which the Company is exposed and
takes appropriate steps to mitigate and control these risks to a level that is
deemed acceptable by the Board.
The Board is ultimately responsible for defining the level and type of risk
that the Company considers acceptable, ensuring its activities remain in line
with the Company's Investment Policy while pursuing its Investment Objective.
The risk appetite that the Company is willing to accept is dependent on the
potential likelihood and severity of impact caused by the relevant risk events
or circumstances, and the timescale over which they may occur.
The risk framework adopted by the Company ensures clear and transparent
descriptors and parameters of acceptable risk in regard to the operation of
the Company and management of the investment portfolio, designed to prevent
excessive risk taking, whilst maximising shareholder return.
When assessing strategic and external risks, such as wider political or
economic circumstances, that are outside the Board's ability to control, these
are deemed as accepted risks of doing business. Although not fully
controllable by the Company, these risks are monitored closely, mitigated
where possible, and are factored into all decision making.
Without compromise, the Board has zero-tolerance for fraud, bribery,
corruption, money laundering, tax evasion, terrorist financing, proliferation
financing and any other forms of financial crime. In addition, the Board will
seek to follow best practice and remain compliant with all applicable laws,
rules, and regulations.
All inherent risks identified (including those classified as 'emerging') that
could have a material adverse effect on the Company's performance and value of
Ordinary Shares are recorded in the Company's risk matrix (and associated
reporting) which is reviewed by the Board at least twice a year.
The Company's risks are categorised as follows:
· Strategic and external risks
· Investment portfolio management risks
· Fund operation risks
· Regulatory and Compliance risks
· Emerging risks
Those inherent risks that are determined as having the potential to threaten
the Company's business model, future performance, solvency or liquidity and
reputation are classified as 'Principal Risks' and are set out in the table
below. These Principal Risks are a small subset of the comprehensive set of
risks which the Board reviews.
INVESTMENT PORTFOLIO MANAGEMENT
Risk Potential Impact Mitigation
1. Transaction Pricing Risk · A failure to identify and secure opportunities to either acquire · The Company maintains a diverse portfolio of assets across
or divest of certain assets that would be of strategic importance to the various technologies (wind, solar and BESS), ages, and operational stages,
portfolio could lead to the portfolio not having the required mix of reducing the impact of poor transaction outcomes due to concentration on any
technology or mix of age of asset single asset type.
· A failure to transact at appropriate prices could lead to sites
being acquired at too high a value or sites being sold at an undervalue.
· The Company's established presence and reputation in the market
· Both failures could lead to shareholder concern and could impact attract high quality opportunities and afford good negotiation opportunities.
negatively on the Company's finances. Both failures could also lead the Board
to query if the Investment Adviser is acting in accordance with the Investment
Advisory Agreement and if an effective control environment within the
Investment Adviser exists. · The Company's Investment Adviser maintains strong working
relationships with other industry players, including developers, off takers,
land agents, existing landlords on current sites, advisors, etc which ensures
it receives insights and access to quality investment opportunities
potentially ahead of the market.
2. Poor performance of operational sites · Predicted generation and associated revenue may be negatively · The Portfolio consists of a large number of assets therefore
impacted and affect the Company's ability to meet its dividend targets, minimal risk arises from a single operational plant not being managed
leading to shareholder concern and reputational damage. effectively.
· Project companies hold appropriate agreements with experienced
service providers for the effective management of operational plants,
including routine preventative maintenance activity
3. Supply Chain Risks · There is a risk of reputational damage or financial loss if the · The Bluefield Group represents a high proportion of the Company's
supply chain is not adequately managed with appropriate due diligence supply chain spend, over which BSIF has a high degree of influence.
conducted and oversight of key suppliers.
· All industry players share the same risk in relation to forced
labour within the polysilicon supply chain.
FUND OPERATIONS
Risk Potential impact Mitigation
4. Levels of capital available for allocation are constrained · The NAV would decrease over time if the Company does not identify · A diversified capital raising strategy that includes a mix of
and exploit available sources of capital to grow the portfolio. equity, debt, and alternative financing options to reduce reliance on any
single source of capital.
· Strong relationships with a wide range of financial institutions,
investors, and potential joint venture partners ensure layers of redundancy
and consistent access to capital for allocation even where some sources are
unavailable or overdrawn
5. Valuation risk · Valuations of the SPV investments may be over or understated. · Valuations presented by the Investment Adviser are underpinned by
comparisons with other market transactions and confirmed by the use of long
term DCF modelling. The valuations are reviewed and challenged by the Board as
a minimum on a semi-annual basis.
· The Investment Adviser has recently improved the valuation model
to reduce the risk of errors. Detailed controls and internal review procedures
are in place to mitigate the risk of error.
· Given the high level of judgement and subjectivity involved in
setting the assumptions that drive the model, the Board robustly challenges
assumptions made on a semi-annual basis and uses third party data wherever
possible to support inputs.
· For example, to mitigate the impact of future power price
volatility on the Company's portfolio valuation, blended power price curves
from three leading forecasters are used in the portfolio cash flow model. The
portfolio benefits from Government subsidy in the form of FiT and ROC income.
· The Board will consider the frequency of independent reviews of
the financial model in conjunction with the Investment Adviser.
STRATEGIC AND EXTERNAL
Risk Potential impact Mitigation
6. Physical and Transitional Climate Related Risks · Global climate change presents both risks and opportunities to · Climate change presents both risks and opportunities to the
the Company. Whilst the Company is well positioned to benefit from the Company: climate change opportunities are the basis on which the fund's
opportunities arising from a decarbonising economy, physical climate impacts, strategic aims have been founded. Monitoring and managing transitional risks
particularly extreme heat and changing wind patterns, have the potential to (such as technology advances, policy changes etc) forms part of the day today
cause damage to assets and impact generation, ultimately impacting revenues. management of a renewable energy fund.
· Some key equipment and infrastructure (such as inverters and wind
turbines) have inbuilt climate resilience measures, such as cooling systems
prevent overheating or automatic shutdown thresholds to prevent damage caused
by high winds.
7.Volatility in power prices · Without the delivery of an effective power sales strategy, there · Each asset sells generated power (and any associated benefits)
is a risk that the power generated will be unsold, or not sold at an via a separate Power Purchase Agreement (PPA), meaning it is therefore
appropriate level, leading to reduced revenue. unlikely that material amounts of power will be uncontracted at any point.
· If downside risk associated with power market volatility is not
managed via an effective power sales strategy, there is a risk that the
Company becomes unreasonably exposed to sustained periods of low power prices, · Approximately 40% of the Company's revenues arise from subsidy
or even negative prices. payments that are fixed (increasingly annually in line with inflation) and
guaranteed by the UK Government, reducing exposure to power price volatility.
· These factors would adversely influence the Company's ability to
deliver against dividend targets.
8. Loss of Popularity of Renewable Energy Infrastructure Sector · The challenging macro-economic environment (e.g. higher interest · The NAV of BSIF's portfolio is heavily insulated from the
rates, volatile energy prices etc) has led to a fall in popularity of the volatility in energy prices and elevated interest rates as a result of the
whole renewable energy infrastructure sector leading to companies in the Company's power fixing strategy and high weighting to fixed debt which is
sector operating at discounts in excess of 10% to NAV, constraining their fully amortising.
ability to raise new equity. This has had a negative impact on investor
confidence/satisfaction and has made investors more reluctant to invest, · BSIF also benefits from having an extremely experienced
triggering continuation votes in some vehicles, increased the level of M&A investment advisory team who are able to secure innovative strategic
activity in the market and put pressure on Boards to take action. partnerships (such as the one with GLIL) and implement strategies to recycle
capital, ensures optimal deployment of available resources when the ability to
raise new capital from the public markets is constrained.
· Transparent, fair, balanced and timely communications with all
shareholders is a key priority of the BSIF Board, the Investment Adviser and
the Company's broker. Being open to feedback and listening to shareholders
views forms a critical part of the Board's wider decision-making process.
9. Reform of Energy Markets Risk · The UK Government is currently consulting with industry on plans · The Investment Adviser provides regular updates in this regard
to reform the UK Electricity Market (REMA), which may involve controls on within the quarterly Board papers.
future sales prices for renewable generators.
· The Investment Adviser takes a proactive approach to supporting
the energy transition, not only through its advisory role to the Company, but
also by engaging and supporting the Government to create a policy framework
which can enable net zero. This includes responding to government
consultations, meeting with political leaders across the political spectrum to
discuss renewable energy and working with partners in the sector to engage in
relevant discussions via the government's Solar Energy Taskforce.
10. Cyber and Ransomware risk · Cyber and Ransomware attacks could become more frequent and · Separate SCADA platforms used per asset (per site) reduce the
difficult to identify and prevent therefore causing financial loss, business risk of attacks on all sites simultaneously.
disruption, data loss or theft and reputational damage.
· The Investment Adviser (and other key service providers from
within the Bluefield group of companies) have dedicated IT resources focusing
on information security and cyber security.
· Penetration testing at asset level for solar PV portfolio has
been conducted and follow up recommendations are being implemented across the
portfolio to improve security.
Longer-term viability statement
Assessing the Prospects of the Company
The corporate planning process is underpinned by scenarios that encompass a
wide spectrum of potential outcomes. These scenarios are designed to explore
the resilience of the Company to the potential impact of significant risks set
out below.
The scenarios are designed to be severe but plausible and take full account of
the likely effectiveness of the actions to be taken to avoid or reduce the
impact of the underlying risks and which would be open to management. In
considering the likely effectiveness of such actions, the conclusions of the
Board's regular monitoring and review of risk and internal control systems, as
discussed on page 67, is taken into account.
The Board reviewed the impact of stress testing the quantifiable risks to the
Company's cash flows in the previous pages and concluded that the Company,
assuming current and envisaged leverage levels, would be able to continue to
produce distributable income in the event of the following scenarios:
Strategic Report Risk Factor
2. Plant performance degradation of 1.0% per annum versus 0.4% per annum
2. Plant availability reduced to 95%
5. P90 irradiation
7. Power price set to £23/MWh
The Board considers that this stress testing based assessment of the Company's
prospects is reasonable in the circumstances of the inherent uncertainty
involved.
The period over which we confirm longer term viability
Within the context of the corporate planning framework discussed above, the
Board assessed the prospects of the Company over a five-year period ending 30
June 2029, and have determined that the five-year period remains an
appropriate period to provide this viability statement as this period accords
with the Company's planning purposes.
This period is used for our mid-term business plans and has been selected
because it presents the Board with a reasonable degree of confidence whilst
still providing an appropriate longer-term outlook.
Confirmation of longer-term viability
Based upon the robust assessment of the principal and emerging risks facing
the Company and its stress testing-based assessment of the Company's
prospects, the Board confirms that it has a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due over the period to 30 June 2029.
These inherent risks associated with investments in the renewable energy
sector could result in a material adverse effect on the Company's performance
and value of Ordinary Shares.
The Company's risks are mitigated and managed by the Board through continual
review, policy setting and half yearly review of the Company's risk matrix by
the Audit and Risk Committee to ensure that procedures are in place with the
intention of minimising the impact of the above-mentioned risks. The Board
last carried out a review of the risk matrix at the Audit and Risk Committee
meeting held on 20 May 2024. The Board relies on periodic reports provided by
the Investment Adviser and Administrator regarding risks that the Company
faces. When required, external experts, including tax advisers, legal advisers
and ESG advisers, are employed.
7. Stakeholder Engagement
Directors' Responsibilities Pursuant to Section 172 of the Companies Act 2006
The Directors of the Company, by abiding by the AIC Code, aim to achieve high
standards in corporate governance. According to the AIC Code, all member
businesses, regardless of where they are headquartered, are required to report
on the items outlined in Section 172 of the UK Companies Act 2006.
Section 172 recognises that directors are responsible for acting in a way that
they consider, in good faith, is the most likely to promote the success of the
company for the benefit of its shareholders as a whole, with focus on the
consequences of any decision in the long term. In doing so, they are also
required to consider the broader implications of their decisions and
operations on other key stakeholders and their impact on the wider community
and the environment. A key stakeholder is one that either has a direct stake
in the Company or directly impacts the long-term performance of the Company.
Key decisions are those that are either material to the company or are
significant to any of the Company's key stakeholders.
The Board considers that the interests of the Company and its stakeholders
must be balanced for the Company to succeed. As a result, the Board has
summarised below some of the methods by which it develops and maintains
connections with its stakeholders, while also considering the Company's
effects on the environment and broader society.
Stakeholder Group Methods of Engagement
Shareholders and Prospective Investors The Company engages with its Shareholders through the issue of regular
portfolio updates in the form of RNS announcements and quarterly factsheets.
Our Shareholders and prospective investors are integral to every decision made
by the Board. A knowledgeable and supportive shareholder base is vital to the The Company provides in-depth commentary on the investment portfolio
long-term sustainability of our business. Understanding the views and performance, corporate governance and corporate outlook in its annual and
priorities of our Shareholders is, therefore, crucial to retaining their interim reporting.
continued support.
In addition, the Company, through its brokers and Investment Adviser,
undertakes regular meetings with existing and prospective investors to solicit
their feedback, understand any areas of concern, and share forward-looking
investment commentary.
The Company receives quarterly feedback from its brokers in respect of their
investor engagement and investor sentiment.
Bluefield Partners LLP (the Investment Adviser) The Board frequently engages with the Investment Adviser through planned and
ad hoc Board and committee meetings to receive updates on operations of
existing investments and acquisitions.
Our Investment Adviser is fundamental to the Company's investment and business
objectives. Key responsibilities include identifying and
The Board receives quarterly board packs from the Investment Adviser,
recommending suitable investments for the Company to the Board and negotiating delivering the most pertinent and informative data on which the Board can base
the terms on which such investments will be made on behalf of the Board. its decisions.
The Investment Adviser and the Board review the Company's power price fixing
strategy and portfolio valuation on a quarterly basis and detailed cash flow
forecasts are discussed prior to each dividend declaration.
The Board engages in strategic planning with the Investment Adviser with the
aim of aiding the Company in attaining its investment goals and accomplishing
its purpose.
In January 2024, the Company completed Phase One of its long-term strategic
partnership with GLIL, a UK pension fund which invests into core UK
infrastructure with a portfolio value of £3 billion of infrastructure assets.
The strategic partnership with GLIL enables the Company to deliver on a number
of key areas simultaneously: to continue to keep investment momentum in a
difficult time for public market infrastructure funds and judiciously
diversify the portfolios' revenues; to provide an additional external
validation of asset values; to create additional liquidity and lower the
Company's overall debt burden; and to partner with a like-minded investment
group.
Ocorian Administration (Guernsey) Limited (the Administrator, Company The Board interacts with the Administrator for day-to-day administrative, fund
Secretary & Designated Manager) accounting and company secretarial services via emails, calls and formal and
informal meetings.
Our Administrator provides essential services to the Board, ensuring that
Board procedures are followed and that it complies with the Law and applicable The Company monitors ongoing performance at regular board meetings and the
rules and regulations of the GFSC and the LSE. Management Engagement and Service Providers Committee ("MESPC") reviews terms
of engagement and quality of service provision annually.
Regulators Activities of the Audit and Risk Committee ("ARC"), including regular review
of principal and emerging risks, oversight of the Administrator and Investment
Adviser's adherence to internal control systems and procedures, and thorough
review of the interim and annual report and financial statements ensures
Regulators are important stakeholders in maintaining the Company's listing and compliance with required regulation.
ensuring a sufficient and transparent level of disclosure in its
communications and reporting. Because of this, Shareholders obtain accurate,
timely, and relevant details regarding the Company. Regulators include the FCA
in its function as the UK Listing Authority, the FRC in its supervision of UK On 27 September 2023, the board agreed to adopt an Audit Committee and
governance and accounting, as well as the GFSC. Membership of the AIC and External Audit Minimum Standards Checklist which was prepared by the
compliance with the AIC Code is a fundamental part of ensuring the Company Administrator with board review, following guidance from the FRC.
complies with relevant guidance and regulation.
Other Key Stakeholders and Advisers (Legal Advisors, Brokers, Auditors, etc.) The Company has identified its key service providers and on an annual basis
the MESPC undertakes a review of performance based on a questionnaire through
which it seeks feedback. The MESPC also regularly reviews all material
contracts for service quality and value. Conclusions and recommendations
Establishing a productive and collaborative working relationship with our drawn by the MESPC are fed back to the Board for approval.
other key service providers and advisers ensures that we receive high quality
services to help deliver the Company's investment and business objectives.
The Board and its sub-committees engage regularly with its service providers
on a formal and informal basis.
Lenders
The Investment Adviser provides quarterly compliance reporting to lenders in
accordance with the terms of the relevant facility agreements.
It is important to maintain a strong working relationship with our existing
lenders as it is essential for the Company to have funding available, as it is
needed, for investment and development pipeline purposes. We aim to build
strong relationships with existing lenders and potential lenders who may The Company consults with the lenders on matters which may require their
provide debt facilities in the future. consent under the relevant facility agreements.
The Board reviews the Company's re-financing needs on a regular basis and
encourages early engagement with lenders.
The Investment Adviser is currently in discussions with BR1's RCF lenders to
extend the maturity on the RCF.
Government and Policy makers The Board encourages the Investment Adviser to engage with senior political
leaders and their respective staff both directly in face-to-face meetings and
indirectly via membership of industry representative bodies such as the Solar
Industry Association.
The Board believes that as the Company provides a critical element of the
United Kingdom's electricity generation infrastructure and de-carbonisation
plans, that it is important to engage with the Government to help to ensure
that the country's required levels of the supply of renewable energy are During the Year, engagement focused on the impact of the Energy Generator Levy
achieved. on investor confidence. The Investment Adviser called for an investment
allowance that would not incentivise fossil fuels above renewables.
Independent Director Michael Gibbons appeared at the House of Lords Industry
and Regulators Committee. Managing Director of BRD (Jonathan Selwyn) also
Engagement with the Government and policy makers also assists the Company in provided spoken evidence as part of the Energy Security and Net Zero Committee
its strategic planning. inquiry, 'Keeping the power on: our future energy technology mix', following a
written evidence submission
(https://committees.parliament.uk/writtenevidence/123630/pdf/) .
PPA Counterparties The Investment Adviser ensures that when PPAs are put in place, the end dates
of the contracts are phased to ensure a constant flow of revenue. PPA
counterparties are selected on a competitive basis but with a clear focus on
achieving diversification of counterparty risk. A quarterly update on the
These are counterparties who purchase the electricity generated by the contracts is provided by the Investment to the Board.
Company.
The Company currently has one joint venture partner, GLIL.
Joint Venture Partner
The Investment Adviser engages with GLIL as co-investors of a Strategic
Partnership portfolio.
A joint venture partner refers to a business entity that co-invests with the
Company to acquire assets to grow the BSIF portfolio and build out a portion
the Company's development pipeline.
The Investment Adviser provides commercial, and operational oversight services
to the Strategic Partnership portfolio including day to day management of the
PPA counterparty, Lenders, Asset Manager, O&M Contractor, and Network
The Board recognises the opportunity the joint venture partnership provides in Service Provider, including site attendance as required for major works.
enabling the growth of the portfolio and maximising value for our shareholders
over the long term.
The Board receives quarterly updates from the Investment Adviser on the
Strategic Partnership portfolio and progression on executing the agreed three
phases of the relationship.
The Board views the Strategic Partnership as an opportunity for both BSIF and
GLIL to invest in a portion of the sizeable renewable energy pipeline which
our Investment Adviser has identified, while maximising value for our
shareholders over the long term.
Portfolio Level Stakeholders The Company has agreements with O&M providers to provide active operation
and maintenance services for the operational portfolio.
This includes O&M service providers, grid connectors, planning
authorities, landowners and developers. The Investment Adviser engages with developers, for example Light Rock Power
Ltd or BRD, to provide new build development opportunities or run the solar
farms by joint venture. These developers interact with planning authorities,
landowners and local communities and assess the viability of projects.
Community and Environment The Company has adopted a suite of ESG policies to convey ESG expectations to
key suppliers who service its portfolio.
The Company recognises that its investments can have an impact at the local
level. Community perception of renewable technology is important as it feeds 'Pioneering Positive Local Impact' is a central pillar within the Company's
into local decision making, policy development and ultimately planning ESG strategy, and social and environmental risks are considered within the
requirements. Engagement undertaken as part of the planning process helps Company's risk management processes.
develop positive relationships with local stakeholders and obtain community
support. The Company's operations also have environmental impacts and
dependencies, and the Company recognises the opportunity it has to enhance
nature across its portfolio. Community stakeholders are engaged as part of the development process of new
assets, and once operational, engagement is maintained through administration
of community benefit funds (where applicable). During the Year, the Company
delivered an educational programme to local schools; please refer to the ESG
report for further information.
The construction and operation of renewable infrastructure assets can impact
the local environment, for example through land use change or disturbance to
habitats and species. The Company endeavours to minimise negative impacts
where possible, and the collection of asset-level environmental data supports
the Company in monitoring adverse environmental impacts. Nature is also a key
area of focus for the Company; please refer to the ESG report for further
information.
Based on stakeholder interaction mentioned in the previous table, by way of
example, a few key decisions made in the Year to meet investor objectives are
described in the following table:
Key Decision Impact on Long-term Success Stakeholder consideration
The Board announced in December 2023 the signing of a Memorandum of Current capital market conditions make it difficult to raise new capital using The Strategic Partnership is acting on feedback from our shareholders and
Understanding ('MOU') with GLIL regarding the formation of the long-term the instruments which have served the Company and its shareholders well enables BSIF to deliver on a number of key areas simultaneously: to continue
Strategic Partnership which commits both parties to investing together into UK through the past ten years. In response, the Board has been evaluating how to keep investment momentum in a difficult time for public market
focused solar assets, from development through to operational plants. best to continue BSIF's development programme, while maximising value for our infrastructure funds and diversify the portfolios revenues; to provide an
shareholders over the long term. The Strategic Partnership with GLIL creates additional external validation of asset values; to create additional liquidity
the opportunity for both parties to invest in the sizeable renewable energy and lower the Company's overall debt burden; and to partner with a like-minded
pipeline which our Investment Adviser has identified, while responding to investment group.
shareholder feedback in reducing our short-term debt position.
The Board announced in February 2024 the commencement of a share buyback The share buyback programme addresses shareholder concerns on the excessive The Board keeps its capital allocation policy under regular review, evaluating
programme, allocating £20 million for the purchase of its own shares. discount at which the Company's shares currently trade relative to the the relative merits of further investment (into both new and existing assets),
underlying NAV, managing share price volatility. the management of debt and returning value to shareholders via dividends or
through other methods such as share buybacks.
Delivery of educational site visits to its recently completed construction Engagement with communities can support local understanding of how renewable Following engagement with the local community via its development partner,
project, Yelvertoft Solar Farm, for local community members. projects contribute to climate change mitigation, as well as strengthening Bluefield Development, the Company delivered educational site visits to
community relationships. This in turn supports the Company's social license to Yelvertoft Solar Farm for a local primary school and scout group.
operate.
Commitment to adopt net zero targets. As a renewable energy company, the Company is well positioned to support The Investment Adviser relayed to the Board Shareholders' increasing focus on
decarbonisation of the UK energy sector. However, it also takes responsibility net zero alignment. The Company has subsequently adopted decarbonisation
for its own carbon emissions and recognises the importance of reducing these targets during the reporting period.
as part of evidencing its own commitment to the net zero transition.
The Board continues to engage with a PR specialist to assist in taking Educate stakeholders on importance of solar power for energy security, reduced Build pro-solar allies and generate political relationships to aid progress on
proactive steps to influence HM Government on proposed energy policies and emissions and cost-reduction the decarbonisation of the UK energy markets.
gain support for renewable and sustainable energy.
Meriel Lenfestey Elizabeth Burne
Director Director
27 September 2024 27 September 2024
Report of the Directors
The Directors hereby submit the annual report and financial statements of the
Company for the year ended 30 June 2024.
General Information
The Company is a non-cellular company limited by shares incorporated in
Guernsey under the Law on 29 May 2013. The Company's registration number is
56708, and it has been registered and is regulated by the GFSC as a registered
closed-ended collective investment scheme and as a Green Fund after successful
application under the Guernsey Green Fund Rules to the GFSC on 16 April 2019.
The Company's Ordinary Shares were admitted to the Premium Segment of the
Official List and to trading on the Main Market of the London Stock Exchange
following its IPO which completed on 12 July 2013.
Principal Activities
The principal activity of the Company is to invest in a portfolio of large
scale UK based solar, wind and renewable energy infrastructure assets.
The Company has a progressive dividend target. The dividend target for the
financial year ending 30 June 2025 is 8.90pps.
Business Review
A review of the Company's business and its likely future development is
provided in the Chair's Statement, in the Report of the Investment Adviser and
Strategic Report.
Listing Requirements
The Company has complied with the applicable Listing Rules throughout the
year.
Results and Dividends
The results for the year are set out in the financial statements.
The dividends for the year are set out in the financial statements in Note 14.
Share Capital
The Company has one class of Ordinary Shares. The issued nominal value of the
Ordinary Shares represents 100% of the total issued nominal value of all share
capital. Under the Company's Articles, on a show of hands, each shareholder
present in person or by proxy has the right to one vote at general meetings.
On a poll, each shareholder is entitled to one vote for every share held.
Shareholders are entitled to all dividends paid by the Company and, on a
winding up, providing the Company has satisfied all of its liabilities, the
Shareholders are entitled to all of the surplus assets of the Company. The
Ordinary Shares have no right to fixed income.
Shareholdings of the Directors
The Directors of the Company and their beneficial interests in the shares of
the Company as at 30 June 2024 are detailed below:
Director Ordinary Shares of £1 each held 30 June 2024 Ordinary Shares of £1 each held 30 June 2023
% holding at % holding at
30 June 2024 30 June 2023
John Scott* 683,929 0.11 625,619 0.10
Elizabeth Burne 15,000 0.00 15,000 0.00
Michael Gibbons 37,800 0.01 - -
Meriel Lenfestey 7,693 0.00 7,693 0.00
Chris Waldron* 55,000 0.01 N/A N/A
Paul Le Page N/A N/A 35,000 0.01
*Including shares held by PCAs
Directors' Authority to Buy Back Shares
The Board believes that the most effective means of minimising any discount to
NAV which may arise on the Company's share price is to deliver strong,
consistent performance from the Company's investment portfolio in both
absolute and relative terms. However, the Board recognises that wider market
conditions and other considerations will affect the rating of the Ordinary
Shares. During the year, the Company commenced share buybacks as it was
assessed to be an economically attractive investment opportunity. The share
buybacks have been done by means of the the Company repurchasing its Ordinary
Shares. Therefore, subject to the requirements of the Listing Rules, the Law,
the Articles and other applicable legislation, the Company may purchase
Ordinary Shares in the market in order to address any imbalance between the
supply of and demand for Ordinary Shares or to enhance the NAV of Ordinary
Shares.
In deciding whether to make any such purchases the Board will have regard to
what it believes to be in the best interests of Shareholders and to the
applicable Guernsey legal requirements which require the Board to be satisfied
on reasonable grounds that the Company will, immediately after any such
repurchase, satisfy a solvency test prescribed by the Law and any other
requirements in its Articles. The making and timing of any buybacks will be at
the absolute discretion of the Board and not at the option of the
Shareholders. Any such repurchases would only be made through the market for
cash at a discount to NAV.
On incorporation, the Company passed a written resolution granting the Board
general authority to purchase in the market up to 14.99% of the Ordinary
Shares in issue immediately following Admission. A resolution to renew such
authority was passed by Shareholders at the AGM held on 28 November
2023. Therefore, authority was granted to the Board to purchase in the market
up to 14.99% of the Ordinary Shares in issue immediately following the AGM
held on 28 November 2023 at a price not exceeding the higher of (i) 5% above
the average mid-market values of Ordinary Shares for the five Business Days
before the purchase is made or (ii) the higher of the last independent trade
or the highest current independent bid for Ordinary Shares. The Board intends
to seek renewal of this authority from the Shareholders at the AGM scheduled
to be held on 6 December 2024.
Pursuant to this authority, and subject to the Law and the discretion of the
Board, the Company may purchase Ordinary Shares in the market on an ongoing
basis with a view to addressing any imbalance between the supply of and demand
for Ordinary Shares.
Ordinary Shares purchased by the Company may be cancelled or held as treasury
shares. The Company may borrow and/or realise investments in order to finance
such Ordinary Share purchases.
The Company purchased 9,078,000 Ordinary Shares for treasury during the Year.
Directors' and Officers' Liability Insurance
The Company maintains insurance in respect of directors' and officers'
liability in relation to their acts on behalf of the Company. Insurance is in
place, having been renewed on 12 July 2024.
Substantial Shareholdings
As at 30 June 2024, the Company had been notified of the following substantial
voting rights over 3% as Shareholders of the Company.
Shareholder Shareholding % Holding
BlackRock 78,036,722 12.96
Hargreaves Lansdown, stockbrokers (EO) 36,854,524 6.12
Gravis Capital Management 31,949,080 5.30
LGT Wealth Management 30,650,661 5.09
CCLA Investment Management 25,953,700 4.31
Interactive Investor (EO) 22,193,663 3.68
Total 225,638,350 37.46
The Directors confirm that there are no securities in issue that carry special
rights with regard to the control of the Company. The Company also provides
the same information as at 2 September 2024, being the most current
information available.
Shareholder Shareholding % Holding
BlackRock 78,036,722 13.04
Hargreaves Lansdown, stockbrokers (EO) 38,111,215 6.37
Gravis Capital Management 31,094,184 5.19
LGT Wealth Management 29,233,759 4.88
Interactive Investor (EO) 23,294,453 3.89
CCLA Investment Management 21,389,838 3.57
West Yorkshire PF 18,873,092 3.15
AJ Bell, stockbrokers 18,007,124 3.01
Total 258,040,387 43.10
Independent Auditor
KPMG has been the Company's external Auditor since the Company's
incorporation. The Audit and Risk Committee recommends retaining KPMG as
Auditor, subject to Shareholder approval at the forthcoming AGM. A resolution
will be proposed to reappoint them as Auditor and authorise the Directors to
determine the Auditor's remuneration for the ensuing year. The Audit and Risk
Committee will periodically review the appointment of KPMG. Further
information on the work of the Auditor is set out in the Report of the Audit
and Risk Committee.
Articles of Incorporation
The Company's Articles may be amended only by special resolution of the
Shareholders.
Going Concern
The Board, in its consideration of going concern, has reviewed comprehensive
cash flow forecasts prepared by the Investment Adviser, as well as the
performance of the solar and wind plants currently in operation.
The Group has a committed Revolving Credit Facility (RCF) of £210 million,
with an uncommitted accordion feature that allows for an additional £30
million. The facility is set to mature in May 2025. As of 30 June 2024, the
Group had drawn £184 million from the RCF. After the year-end, following the
completion of Phase Two of the strategic partnership with GLIL, £50.5 million
was repaid, reducing the drawn balance to £133.5 million.
The Investment Adviser is currently in discussions with lenders to refinance
and extend the RCF by an additional two years in early 2025. Lenders have
indicated a strong interest in the extension. With robust cash generation, the
Board is confident that all debt repayments will be met and confirms that no
covenant breaches occurred during the year.
UK inflation dropped from 10.7% (RPI) in June 2023 to 2.9% in June 2024. In
August 2024, the Bank of England cut the Base Rate to 5.00%, with 5 year gilt
rates now below 4%. Lower interest rates reduce BSIF's credit costs, while
fixed-rate debt has significantly shielded it from rate hikes.
BSIF has built a robust development pipeline exceeding 1.5 GW, with two major
solar projects, Yelvertoft (48.4MW) and Mauxhall Farm (44.5MW), connected to
electricity network shortly after the Year end. Over 750 MW of the pipeline is
fully consented, ready for construction within five years.
The Investment Adviser, with BSIF Board approval, is actively managing the
large pipeline, and is planning to sell around a third of this based on
funding availability, a strategy which continues to be reviewed on a regular
basis.
BSIF's Investment Adviser focuses on protecting and enhancing the operational
portfolio through proactive risk mitigation. A rolling capital investment
programme addresses key risks, such as long lead times for high voltage spare
parts, particularly central inverters. Significant inverter revamping projects
were completed, boosting performance in late FY2023/24, with full benefits
expected in FY2024/25. Additional optimisation and repowering projects are
planned for the upcoming year.
The Board also notes that at the AGM held on 28 November 2023, the
shareholders of the Company voted overwhelmingly in favour for the
continuation of the Company for a further 5 years.
Taking the above into account, at the time of approving these accounts the
Board has a reasonable expectation that the Company has adequate resources to
continue in operational existence for the 12 months from the date of signing
the financial statements and does not consider there to be any material threat
to the viability of the Company. The Board has therefore concluded that it is
appropriate to adopt the going concern basis of accounting in preparing the
financial statements.
Internal controls review
Taking into account the information on Principal Risks and Uncertainties
provided on pages 67 to 74 of the strategic report and the ongoing work of the
Audit and Risk Committee in monitoring the risk management and internal
control systems on behalf of the Board, the Directors
· are satisfied that they have carried out a robust assessment of
the Principal Risks and Uncertainties facing the Company, including those that
would threaten its business model, future performance, solvency or liquidity;
and
· have reviewed the effectiveness of the risk management and
internal control systems and no significant failings or weaknesses were
identified.
Fair, Balanced and Understandable
The Board has considered whether the Annual Report taken as a whole is fair,
balanced and understandable, taking into account the commentary and tone and
whether it includes the requisite information needed for Shareholders to
assess the Company's business model, performance and strategy. In addition,
the Board also questioned the Investment Adviser on information included and
excluded from the Annual Report, and considered whether the narrative at the
front of the report is consistent with the financial statements. As a result
of this work, each of the Board members considers that the Annual Report is
fair, balanced and understandable and includes the requisite information
needed for Shareholders to assess the Company's business model, performance
and strategy.
Financial Risks Management Policies and Procedures
Financial Risks Management Policies and Procedures are disclosed in Note 15.
Principal Risks and Uncertainties
Principal Risks and Uncertainties are discussed in the Strategic Report on
pages 67 to 74.
Annual General Meeting
The AGM of the Company will be held at 10.30am on 6 December 2024 at Floor 2,
Trafalgar Court, Les Banques, St Peter Port, Guernsey. Details of the
resolutions to be proposed at the AGM, together with explanations, will appear
in the Notice of Meeting to be distributed to Shareholders together with this
Annual Report.
Members of the Board will be in attendance at the AGM and will be available to
answer shareholder questions.
By order of the Board
Director Director
27 September 2024 27 September 2024
Board of Directors
John Scott (Chair and Chair of the Nomination Committee)
John Scott was appointed as a non-executive director of the Company on 12 June
2013 and is a former investment banker who spent 20 years with Lazard and has
served on the boards of several investment trusts. Mr Scott was Chair of
Impax Environmental Markets plc between May 2014 and May 2023. He has been
Chair of JP Morgan Global Core Real Assets since its flotation in 2019. In
June 2017, he retired as Chair of Scottish Mortgage Investment Trust PLC. He
has an MA in Economics from Cambridge University and an MBA from INSEAD.
Elizabeth Burne (Chair of the Audit and Risk Committee)
Elizabeth Burne was appointed as a non-executive director of the Company in
October 2021, is a Fellow of the Association of Chartered Certified
Accountants with a First Class Honours degree in Applied Accounting and over
twenty years' experience within the financial services sector across the
Channel Islands and Australia. Prior to becoming a non-executive director Ms
Burne was an audit director at PwC, working in alternative asset management
and insurance, assisting clients with strategic, financial, risk and corporate
governance matters. Ms Burne holds a portfolio of non-executive directorships
including HarbourVest Global Private Equity Limited (a constituent of the FTSE
250 Index), as well as a number of private companies in the venture capital,
private equity, real estate and insurance sectors.
Michael Gibbons (Senior Independent Director and Chair of Remuneration
Committee)
Michael Gibbons was appointed as a non-executive director of the Company on 7
October 2022, holds an MA from Downing College, Cambridge, is a Fellow of the
Energy Institute, and was awarded an OBE in 2008 and CBE in 2015 for services
to regulatory reform. Mr Gibbons has held a very wide range of senior
appointments in the private and public sectors, including chairing the
government's independent Regulatory Policy Committee from 2009 - 2017. The
main part of his private sector career has been in the energy industry, taking
senior positions in ICI, Powergen and Elexon, who run central systems in the
GB wholesale electricity market, and where he was Chair from 2013-2022. Mr
Gibbons has also worked on carbon capture and storage at Board level for
several developers and became Chair of the Carbon Capture and Storage
Association in 2014-2017. He was also Chair of the British Committee of the
World Energy Council from 2009 to 2014.
Meriel Lenfestey (Chair of the Environmental, Social and Governance Committee)
Meriel Lenfestey was appointed as a non-executive director of the Company in
April 2019. Ms Lenfestey founded Flow Interactive in 1997, a London based
Customer Experience Consultancy assisting clients across many sectors
embracing digital transformation. Since exiting the business in 2016 she has
held a portfolio of non-executive director and advisory roles across Energy,
Telecoms, Transport, Infrastructure, Technology and local charities. She is a
non-executive director at International Public Partnerships (FTSE 250), Boku
(FTSE AIM), and Ikigai Ventures (FTSE All share). She also Chairs Jersey
Telecom (privately owned) as well as acting as a non-executive director at Art
for Guernsey, a local charity. Until February 2023 she was Chair at Gemserv.
She has an MA in Computer Related Design from the Royal College of Art, a
Financial Times Non-Executive Director Diploma, is a Fellow of the RSA and
sits on the Guernsey IoD.
Chris Waldron (Chair of the Management Engagement and Service Providers
Committee)
Chris Waldron was appointed as a non-executive director of the Company on 1
December 2023. Mr Waldron has over 35 years' experience as an investment
manager, specialising in fixed income, hedging strategies and alternative
investment mandates and until 2013 was Chief Executive of the Edmond de
Rothschild Group in the Channel Islands. Prior to joining the Edmond de
Rothschild Group in 1999, Mr Waldron held investment management positions with
Bank of Bermuda, the Jardine Matheson Group and Fortis but he is now primarily
an independent non-executive director of a number of listed funds and
investment companies. He is a Fellow of the Chartered Institute of Securities
and Investment.
Directors' Statement of Responsibilities
The Directors are responsible for preparing the annual report and financial
statements in accordance with applicable law and regulations.
The Law requires the Directors to prepare financial statements for each
financial year. Under the Law, the Directors have elected to prepare the
financial statements in accordance with IFRS as adopted by the EU and
applicable law. The financial statements are required by Law to give a true
and fair view of the state of affairs of the Company and of its profit or loss
for that year. In preparing these financial statements, the Directors are
required to:
· select suitable accounting policies and then apply them
consistently;
· make judgments and estimates that are reasonable, and prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements;
· assess the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
· use the going concern basis of accounting unless they either
intend to liquidate the Company or to cease operations, or have no realistic
alternative but to do so.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time, the financial position of the
Company and enable them to ensure that the financial statements comply with
the Law. They are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error, and have general
responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and detect fraud and other
irregularities.
So far as each Director is aware, there is no relevant audit information of
which the Company's Auditor is unaware, and each Director has taken all the
steps that they ought to have taken as a Director in order to make themself
aware of any relevant audit information and to establish that the Company's
Auditor is aware of that information. This confirmation is given and should be
interpreted in accordance with the provisions of section 249 of the Law.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website, and for
the preparation and dissemination of Financial Statements. Legislation in
Guernsey governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
By order of the Board
Director Director
27 September 2024 27 September 2024
Responsibility Statement of the Directors in Respect of the Annual Report
Each of the Directors, whose names are set out on pages 87 and 88 in the Board
of Directors section of the annual report, confirms that to the best of their
knowledge that:
· the financial statements, prepared in accordance with IFRS, as
adopted by the EU give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company;
· the Management Report (comprising Chair's Statement, Strategic
Report, Report of the Directors and Report of the Investment Adviser) includes
a fair review of the development and performance of the business and the
position of the Company together with a description of the principal risks and
uncertainties on pages 67 to 74; and
Having taken advice from the Audit and Risk Committee, the Directors consider
the annual report and financial statements, taken as a whole, is fair,
balanced and understandable and that it provides the information necessary for
Shareholders to assess the Company's position, performance, business model and
strategy.
By order of the Board
Director Director
27 September 2024 27 September 2024
Corporate Governance Report
The Board recognises the importance of sound corporate governance,
particularly the requirements of the AIC Code. The Company is currently
complying with the latest AIC code effective 1 January 2019.
The Company has been a member of the AIC since 15 July 2013. The Board has
considered the principles and provisions of the AIC Code. The AIC Code
provides a 'comply or explain' code of corporate governance and addresses all
the principles set out in the UK Code as well as setting out additional
principles and recommendations on issues that are of specific relevance to
investment companies such as the Company. The Board considers that reporting
against the principles and recommendations of the AIC Code provides better
information to Shareholders.
The GFSC issued a Guernsey Code which came into effect on 1 January 2012. The
introduction to the Guernsey Code states that "Companies which report against
the UK Code or the AIC Code of Corporate Governance are also deemed to meet
this Code". Therefore, AIC members which are Guernsey-domiciled and which
report against the AIC Code are not required to report separately against the
Guernsey Code.
The AIC Code is available on the AIC's website (www.theaic.co.uk). The UK Code
is available from the FRC's website (www.frc.org.uk (http://www.frc.org.uk) ).
The Guernsey code is available from the GFSC's website (www.gfsc.gg).
Throughout the year ended 30 June 2024, the Company has complied with the
provisions of the AIC Code and the provisions of the UK Code, except to the
extent highlighted below.
Provision A.2.1 of the UK Code requires a chief executive to be appointed; as
an investment company, however, the Company has no employees and therefore has
no requirement for a chief executive. Until its inaugural meeting on 28
November 2023, the Company had not established a remuneration committee which
was not in accordance with provisions B.2.1 and D.2.1 of the UK Code, and
Principle 7 of the AIC Code respectively. The absence of an internal audit
function is discussed in the Report of the Audit and Risk Committee on page
104.
The Board
The Directors' biographies are provided on pages 87 and 88 which set out the
range of investment, financial and business skills and experience represented.
John Scott was appointed on 12 June 2013, Meriel Lenfestey was appointed on 1
April 2019, Elizabeth Burne was appointed on 7 October 2021, Michael Gibbons
was appointed on 7 October 2022 and Chris Waldron was appointed on 1 December
2023. The Board appointed Michael Gibbons as Senior Independent Director
effective from 29 November 2022 to fulfil any function that is deemed
inappropriate for the Chair to perform. Paul Le Page was appointed on 12 June
2013 and he retired as a Director of the Company on 30 September 2023.
The five Directors submit themselves for re-election at the next AGM, which is
due to take place on 6 December 2024.
Any Director who is elected or re-elected at that meeting is treated as
continuing in office throughout. If they are not elected or re-elected, they
shall retain office until the end of the meeting or (if earlier) when a
resolution is passed to appoint someone in their place or when a resolution to
elect or re-elect the Director is put to the meeting and lost.
The Board is of the opinion that members should be re-elected because they
believe that they have the right skills and experience to continue to serve
the Company. As recommended in Principle 7 of the AIC Code, the Board has
considered the need for a policy regarding tenure of service. As at 30 June
2024, one director had been on the Board for approximately eleven years. The
Board is cognisant of the AIC guidance around Board member tenure and has
taken positive action to address this by implementing a carefully thought
through succession plan that manages the transition of corporate knowledge,
recognises the benefits of bringing new perspectives and diversity, all whilst
ensuring independence.
The Company's succession planning includes the engagement of Fletcher Jones, a
UK based Executive Search practice which is independent of the Company.
Fletcher Jones were involved in the processes whereby Michael Gibbons and
Chris Waldron were appointed as Directors on 7 October 2022 and 1 December
2023 respectively. They are also currently assisting the Company in the search
for an additional Director in advance of the planned retirement of John Scott
in 2025, as noted in the Chair's Statement.
The Board meets at least four times a year in Guernsey, with unscheduled
meetings held where required to consider investment related or other issues.
In addition, there is regular contact between the Board, the Investment
Adviser and the Administrator. Furthermore, the Board requires to be supplied
in a timely manner with information by the Investment Adviser, the Company
Secretary and other advisers in a form and of a quality appropriate to enable
it to discharge its duties.
The Company has adopted a share dealing code which applies to the Board and
any persons discharging managerial responsibilities. This is to ensure
compliance by the Board, and relevant personnel of the Investment Adviser,
with the requirements of the UK Market Abuse Regulations.
The Board monitors developments in corporate governance to ensure the Board
remains aligned with best practice, especially with respect to the increased
focus on diversity. The Board acknowledges the importance of diversity,
including gender (as stated in Principle 7 of the AIC Code), for the effective
functioning of the Board and commits to supporting diversity in the boardroom.
It is the Board's aspiration to have well-diversified representation, and it
continues to value directors with diverse skill sets, capabilities and
experience gained from different geographical and professional backgrounds
that enhance the Board by bringing a wide range of perspectives to the
Company. The Board is satisfied with the current composition and functioning
of its members and notes that we have 40% female representation, exceeding the
Hampton-Alexander Review target.
Gender identity Number of Board members Percentage of the Board Number of senior positions on the Board
Men 3 60% 2
Women 2 40% -
Ethnic background
White British or other White (including minority-white groups) 5 100% 2
Other ethnic group - -% -
The above information is based upon an annual self-declaration from the
Directors.
The Company has only two of the senior roles specified by the Listing Rules,
namely the positions of Chair and Senior Independent Director. Both of these
roles are occupied by men. However, the Board considers that the chairs of its
permanent sub-committees are all senior positions. Currently the Audit and
Risk Committee and the ESG Committee are chaired by women. The Board is
cognisant that it does not currently have minority ethnic representation and
this is a key focus of its succession planning.
Directors' Remuneration
The Chair was entitled to an annual remuneration of £81,000 (2023: £68,906).
The other Directors were entitled to an annual remuneration of £54,000 (2023:
£43,050). The Chair of the Nomination Committee receives an additional annual
fee of £3,000 (2023: N/A). The Chair of the Remuneration Committee receives
an additional annual fee of £3,000 (2023: N/A). The Chair of the
Environmental, Social and Governance Committee receives an additional annual
fee of £7,000 (2023: £5,250). The Chair of the Audit and Risk Committee
receives an additional annual fee of £11,000 (2023: £8,768). The Chair of
the Management Engagement and Service Providers Committee receives an
additional annual fee of £4,000 (2023: £3,150).
The remuneration earned by each Director in the past two financial years was
as follows:
Director Year ended 30 June 2024 Year ended 30 June
£ 2023
£
John Scott (appointed Chair on 29 November 2022) 75,960 58,326
Elizabeth Burne 57,943 45,389
Michael Gibbons (appointed 7 October 2022) 49,802 31,267
Meriel Lenfestey 54,650 46,965
Chris Waldron (appointed 1 December 2023) 32,839 N/A
Paul Le Page (retired 30 September 2023) 12,972 51,759
John Rennocks (retired 22 February 2023) N/A 37,928
The total Directors' fees expense for the year amounted to £284,166 (2023:
£271,634). As disclosed in Note 16, John Scott and Michael Gibbons are
directors of BR1, and have received remuneration in respect of BR1.
All of the Directors are non-executive and each is considered independent for
the purposes of Chapter 15 of the Listing Rules.
In accordance with Article 22 of AIFMD, the Company shall disclose the total
amount of remuneration for the financial year, split into fixed and variable
remuneration, paid by the AIFM to its staff, and number of beneficiaries, and,
where relevant, carried interest paid by the AIF. As the Company is
categorised as an internally managed Non-EU AIFM for the purposes of AIFMD,
Directors' remuneration reflects this amount.
Duties and Responsibilities
The Board has overall responsibility for optimising the Company's success by
directing and supervising the affairs of the business and meeting the
appropriate interests of shareholders and relevant stakeholders, while
enhancing the value of the Company and also ensuring the protection of
investors. A summary of the Board's responsibilities is as follows:
· statutory obligations and public disclosure;
· strategic matters and financial reporting;
· investment strategy and management;
· risk assessment and management including reporting, compliance,
governance, monitoring and control; and
· other matters having a material effect on the Company.
The Directors have access to the advice and services of the Administrator, who
is responsible to the Board for ensuring that Board procedures are followed
and that it complies with the Law and applicable rules and regulations of the
GFSC and the LSE. Where necessary, in carrying out their duties, the Directors
may seek independent professional advice and services at the expense of the
Company.
The Company maintains appropriate directors' and officers' liability insurance
in respect of legal action against its Directors.
The Board's responsibilities for the annual report are set out in the
Directors' Responsibilities Statement on page 89. The Board is also
responsible for issuing appropriate half-yearly financial reports and other
price-sensitive public reports.
The attendance record of the Directors for the year to 30 June 2024 is set out
below:
John Scott Elizabeth Burne Michael Gibbons Meriel Lenfestey Chris Waldron* Paul Le Page**
Director
Scheduled Board Meetings (max 4) 4 4 4 4 2 (max 2) 1 (max 1)
Ad-hoc Board Meetings (max 20) 15 20 18 18 10 (max 12) 5 (max 5)
Audit and Risk Committee Meetings (max 9) 9 9 9 7 5 (max 5) 3 (max 3)
Management Engagement and Service Providers Committee Meetings (max 3) 3 3 3 3 1 (max 1) N/A
ESG Committee Meetings (max 3) 3 3 3 3 2 (max 2) 1 (max 1)
Nomination Committee Meetings (max 2) 2 2 2 2 1 (max 1) N/A
RemCo Committee Meetings (max 4) 4 4 4 4 2 (max 3) N/A
20 ad-hoc Board Meetings were held during the year to formally review and
authorise each investment made by the Company and to consider interim
dividends, amongst other items.
The Board believes that, as a whole, it comprises an appropriate balance of
skills, experience, age, knowledge and length of service. The Board also
believes that diversity of experience and approach, including gender
diversity, amongst Board members is of great importance and it is the
Company's policy to give careful consideration to issues of Board balance when
making new appointments. Any new Director appointed to the Board will be
provided with a bespoke induction programme tailored to the individual needs
of the Director.
Performance Evaluation
In accordance with Principle 7 of the AIC Code, the Board is required to
undertake a formal and rigorous evaluation of its performance on an annual
basis. A formal evaluation of the performance of the Board as a whole,
including the Chair, is scheduled for completion in Q1 2025. The evaluation is
undertaken utilising self-appraisal questionnaires and is followed by a
detailed discussion of the outcomes which includes an assessment of the
Directors' continued independence.
*Appointed 1 December 2023
**Retired 30 September 2023
Committees of the Board
Audit and Risk Committee
The Board established an Audit and Risk Committee in 2013. It is chaired by
Elizabeth Burne. At the date of this report the committee comprised all of the
Directors set out on page 3. The role and activities of this committee and its
relationship with the Auditor is contained in the Report of the Audit and Risk
Committee on pages 101 to 106. The Committee operates within clearly defined
terms of reference which are available on the Company's website
(www.bluefieldsif.com).
Nomination Committee
The Board established a Nomination Committee in 2022. It is chaired by John
Scott and at the date of this report comprised all of the Directors set out on
page 3. The principal functions of the Committee are to assist the Board in
filling vacancies on the Board and its committees and to review and make
recommendations regarding Board structure, size and composition. The Committee
shall meet at least once a year.
The primary matters discussed and activities undertaken by the Committee
during the year were:
· undertaking a Board evaluation review following completion of a
questionnaire by each individual Director;
· conducting a review of the Committee's own performance;
· instigating a recruitment and appointment process for the
appointment of a sixth director which was ongoing at the year end; and
· planning for an external board evaluation.
Management Engagement and Service Providers Committee
The Board established a Management Engagement and Service Providers Committee
in 2022. It is chaired by Chris Waldron and at the date of this report
comprised all of the Directors set out on page 3. The principal function of
the Committee is to review annually the contractual relationships with, and
scrutinise and hold to account the performance of, the Investment Adviser.
Additionally, the Committee shall review annually the performance and terms of
engagement of any other key service providers to the Company as considered
appropriate. The Committee shall meet at least once a year.
The primary matters discussed and activities undertaken by the Committee
during the year were:
· receiving a presentation from the Investment Adviser summarising
their performance and key differentiating factors;
· carrying out a formal review of the Investment Advisory
Agreement, resulting in a change to the Investment Advisory Fee;
· conducting a review of the Committee's own performance;
· Board members performed on-site visits to the Investment
Adviser's offices in London as well as a local solar farm site, with members
from GLIL, the Company's strategic partner; and
· conducting a detailed review of the performance of the Company's
key service providers.
ESG Committee
The Board established an ESG Committee in 2022. It is chaired by Meriel
Lenfestey and at the date of this report comprised all of the Directors set
out on page 3. The principal function of the Committee is to provide a forum
for mutual discussion, support and challenge of the Investment Adviser with
respect to ESG including, with respect to the policies adopted by the Company,
in respect to investment and divestment and by the Investment Adviser with
respect to asset management activities and their reporting on ESG matters to
the Committee and Board. The Committee will also assist on such other matters
related to ESG as may be referred to it by the Board. The Committee shall meet
at least once a year.
The primary matters discussed and activities undertaken by the Committee from
the beginning of the financial year to date were:
· receiving a presentation, and subsequently adopting, net zero
Targets for the Company;
· receiving a presentation to upskill the Committee on climate risk
activities undertaken for the Company, including development of a climate
adaptation plan; and
· conducting a review of the Committee's own performance.
Please refer to the ESG report for further information on these activities.
Remuneration Committee
The Board established a Remuneration Committee in 2023. It is chaired by
Michael Gibbons and at the date of this report comprised all of the Directors
set out on page 3. The principal duties of the Committee include regular
reviews of the levels of remuneration of the Directors of the Company and of
BR1 and consideration of the need to appoint external remuneration consultants
and the terms of reference for any such consultants. The Committee shall also
ensure that all provisions and requirements regarding the disclosure and
reporting of remuneration arrangements are fulfilled.
The primary matters discussed and activities undertaken by the Committee
during the year were as follows:
· establishing the terms of reference of the committee with the
Board;
· a Remuneration Review was undertaken with input from Trust
Associates, resulting in a Director fee uplift with effect from 1 January 2024
and a further increase in line with inflation with effect from 1 July 2024 in
order to align the fees with the Company's financial year;
· a Remuneration Policy was adopted;
· conducting a review of the Committee's own performance;
· an increase in BR1 fees was recommended to the BR1 Board of
Directors; and
· a resolution will be proposed at this year's AGM to increase the
Directors' Fee Cap in the Articles to allow for the appointment of an
additional Director to facilitate the Board succession plan.
Internal Control and Financial Reporting
The Board acknowledges that it is responsible for establishing and maintaining
the Company's system of internal control and reviewing its effectiveness.
Internal control systems are designed to manage rather than eliminate the
failure to achieve business objectives and can only provide reasonable but not
absolute assurance against material misstatements or loss. The Audit and Risk
Committee reviews all controls including operations, compliance and risk
management. The key procedures which have been established to provide internal
control are:
· the Board has delegated the day-to-day operations of the Company
to the Administrator and the Investment Adviser; however, it remains
accountable for all of the functions it delegates;
· the Board clearly defines the duties and responsibilities of the
Company's agents and advisers and appointments are made by the Board after due
and careful consideration. The Board monitors the ongoing performance of such
agents and advisers;
· the Board monitors the actions of the Investment Adviser at
regular Board meetings and is also given frequent updates on developments
arising from the operations and strategic direction of the underlying investee
companies; and
· the Administrator provides administration and company secretarial
services to the Company.
The Administrator maintains a system of internal control on which it reports
to the Board.
The Board has reviewed the need for an internal audit function and has decided
that the systems and procedures employed by the Administrator and Investment
Adviser, including their own internal controls
and procedures, provide sufficient assurance that a sound system of risk
management and internal control, which safeguards shareholders' investment and
the Company's assets, is maintained. An internal audit function specific to
the Company is therefore considered unnecessary.
The systems of control referred to above are designed to ensure effectiveness
and efficient operation, internal control and compliance with laws and
regulations. In establishing the systems of internal control, regard is paid
to the materiality of relevant risks, the likelihood of costs being incurred
and costs of control.
It follows therefore that the systems of internal control can only provide
reasonable but not absolute assurance against the risk of material
misstatement or loss.
The Company has delegated the provision of all services to external service
providers whose work is overseen by the Board at its quarterly meetings. Each
year a detailed review of performance pursuant to their terms of engagement is
completed by the Management Engagement and Service Providers Committee and
recommendations made to the Board.
Investment Advisory Agreement
In accordance with Listing Rule 15.6.2(2)R, the Directors formally appraise
the performance and resources of the Investment Adviser.
The Investment Adviser, Bluefield Partners, is led by its managing partners,
James Armstrong and Giovanni Terranova, who founded the Bluefield business in
2009 following their prior work together in European solar energy. Neil Wood,
who joined in 2013, was appointed partner in 2020 and runs the Investment
Adviser alongside the two founders. The Investment Adviser's team has a
combined record, prior to and including Bluefield Partners LLP, of investing
more than £1.6 billion in renewable projects. The Investment Adviser's
non-executive team includes Mike Rand, Bluefield Partners founder and former
Managing Partner, William Doughty, the founding CEO of Semperian; Dr. Anthony
Williams, the former chair of the Risk Committee for the Fixed Income,
Currencies & Commodities Division, and Partner at Goldman Sachs & Co;
and Jon Moulton, former managing partner and founder of Alchemy Partners.
The MESPC meets formally twice a year to review the performance of key service
providers and dedicates one meeting to a detailed review of the Investment
Adviser. At that meeting in May 2024, the MESPC considered the resources and
experience of the Investment Adviser, its long term record of investment and
its operational performance. No material issues were identified and the
MESPC's recommendation to the Board was that the continuing appointment of the
Investment Adviser was in the best interests of shareholders.
Dealings with Shareholders
The Board welcomes Shareholders' views and places great importance on
communication with its shareholders. The Company's AGM will provide a forum
for shareholders to meet and discuss issues with the Directors of the Company.
Members of the Board will also be available to meet with shareholders at other
times, if required. In addition, the Company maintains a website which
contains comprehensive information, including regulatory announcements, share
price information, financial reports, investment objectives and strategy and
information on the Board.
Principal and Emerging Risks
Each Director is aware of the risks inherent in the Company's business and
understands the importance of identifying, evaluating, controlling and
monitoring these risks. The Board has adopted procedures and controls that
enable it to manage these risks within acceptable limits and to meet all of
its legal and regulatory obligations.
The Board considers the process for identifying, evaluating, controlling and
monitoring any significant risks faced by the Company on an ongoing basis and
these risks are reported and discussed at Board meetings. It ensures that
effective controls are in place to mitigate these risks and that a
satisfactory compliance regime exists to ensure all applicable local and
international laws and regulations are upheld.
The Company's Principal and Emerging Risks are discussed in detail on pages 67
to 74 of the Strategic Report. The Company's financial instrument risks are
discussed in Note 15 to the financial statements.
Changes in Regulation
The Board monitors and responds to changes in regulation as they affect the
Company and its policies.
AIFMD
The EU Alternative Investment Fund Managers Directive ("EU AIFMD") was
introduced in 2014 in order to harmonise the regulation of alternative
investment fund managers ("AIFMs") and imposed obligations on AIFMs who manage
or distribute alternative investment funds ("AIFs"), such as the Company, in
the EU (which at that time also included the UK) or who wished to market
shares in such funds to professional investors in the EU (including the UK).
Since Brexit, EU AIFMD has been transposed into UK domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended, ("UK AIFMD" and together
with EU AIFMD, "AIFMD"), with EU AIFMD continuing to regulate AIFMs'
activities in the EU and the marketing of an AIF's shares to professional
investors in the EU, and UK AIFMD similarly applying to such activities in the
UK and the marketing of an AIF's shares to UK professional investors.
The Company was established in Guernsey in 2013 as a self-managed
Non-EU/Non-UK AIF. Additionally, upon the implementation of EU AIFMD, the
Company took advice on and implemented sufficient and appropriate policies and
procedures that enable the Board to fulfil its role in relation to the
functions of both portfolio management and risk management. The Company is
therefore categorised as an internally managed Non-EU/Non-UK AIFM for the
purposes of AIFMD and as such neither it nor the Investment Adviser is
required to seek authorisation under AIFMD.
The marketing of shares in AIFs that are established outside the UK and the EU
(such as the Company) to UK professional investors or to professional
investors in any EU member state is prohibited unless certain conditions are
met. Certain of these conditions are outside the Company's control as they are
dependent on the regulators of the relevant third country (in this case
Guernsey) and the UK (or relevant EU member state, as applicable) entering
into regulatory co-operation agreements with one another.
Currently, the Company is only able to market its shares to professional
investors in the UK and the EU to the extent that it complies with the
applicable National Private Placing Regime ("NPPR"), if any.
The Board is currently permitted to market the Company's shares to
professional investors in the UK pursuant to Regulation 59 of the UK
Alternative Investment Fund Managers Regulations 2013 (as amended). In
addition, the Company is also permitted to market its shares to professional
investors in The Republic of Ireland, the Netherlands and Luxembourg pursuant
to their respective NPPRs. The Board works with the Company's professional
advisers to ensure the necessary conditions are met, and all required notices
and disclosures are made under each applicable NPPR to enable the Company to
continue marketing its shares to professional investors in the UK and the
other relevant EU member states. In conjunction with the Company's
professional advisers, the Board also monitors any developments in AIFMD which
might impact the Company in the future.
Any regulatory changes arising under AIFMD, the applicable NPPRs or otherwise
that limit the Company's ability to market future issues of its shares to
professional investors in the UK and/or the EU may materially adversely
affect the Company's ability to carry out its investment policy successfully
and to achieve its investment objectives, which in turn may adversely affect
the Company's business, financial condition, results of operations, NAV and/or
the market price of its shares.
FATCA and CRS
The Company is registered under FATCA and continues to comply with FATCA and
the Common Reporting Standard's requirements to the extent relevant to the
Company.
PRIIPs
The Company is in compliance with the requirement to publish a key information
document ("KID") under both the EU and UK PRIIPs Regulations. The current KIDs
(one prepared in accordance with the EU PRIIPs Regulation and the other
prepared in accordance with the UK PRIIPs Regulation) are available on the
Company's website.
Consumer Duty
On 31 July 2023 the FCA introduced a new Principle for Businesses (Principle
12) applicable to authorised firms in the UK which carry on 'retail market
business' and who can determine, or materially influence retail customer
outcomes. This new Principle 12 was accompanied by a package of rules and
guidance, which are collectively known as the Consumer Duty.
The Company is not subject to the Consumer Duty as it is not an FCA authorised
firm. However, the Company is aware that its shares may be held by or on
behalf of retail customers, and that other firms within the distribution chain
of its shares are within scope of the Consumer Duty requirements. Accordingly,
it is the Board's intention that the Company will respond to information and
other requests from UK authorised firms in the distribution chain of the
Company's shares in such a way as to support their compliance with the
Consumer Duty.
NMPI
The UK Financial Conduct Authority's rules (the "FCA Rules") restrict the
marketing within the UK of certain pooled investments or funds referred to in
the FCA Rules as "non mainstream pooled investments" ("NMPIs") to ordinary
retail clients. These rules took effect on 1 January 2014. The Company
conducts its affairs such that its shares are excluded from the FCA's
restrictions which apply to NMPI products because its shares are shares in an
investment company which, if it were domiciled in the UK, would currently
qualify as an "investment trust". It is the Board's intention that the Company
will make all reasonable efforts to continue to conduct its affairs in such a
manner that its shares can continue to be recommended by independent financial
advisers to UK retail investors in accordance with the FCA Rules relating to
NMPIs.
Guernsey Green Fund Status
The Guernsey Green Fund aims to provide a platform for investments into
various green initiatives and gives investors a trusted and transparent
product that contributes to the internationally agreed objectives of
mitigating environmental damage and climate change. The Company successfully
obtained Guernsey Green Fund Status on 16 April 2019.
Following an application to the GFSC, the Company was deemed to have met the
following investment criteria outlined in the Guernsey Green Fund Rules, 2021:
· The Property of a Guernsey Green Fund shall be invested with the
aim of spreading risk and with the ultimate objective of mitigating
environmental damage resulting in a net positive outcome for the environment;
· A Guernsey Green Fund shall comprise 75% assets by value that
meet the Guernsey Green Fund Rules criteria. The remaining 25% must not
lessen or reduce the Guernsey Green Fund's overall objective of mitigating
environmental damage nor comprise an investment of a type specified within
schedule 3 of the Guernsey Green Fund Rules, 2021;
· A Guernsey Green Fund shall only comprise assets permitted to be
held under its principal documents or prospectus and of a nature described in
its prospectus; and
· A Guernsey Green Fund shall not be invested in contravention of
limits or restrictions imposed under its principal documents or prospectus.
The Company fulfils the above investment criteria by investing in a
diversified portfolio of renewable energy assets, each located within the UK,
with a focus on utility scale assets and portfolios on greenfield sites. The
Group targets long life renewable energy infrastructure, expected to generate
energy output over asset lives of at least 25 years. The Company incorporates
Environmental Social & Governance policies into its investment processes
and is actively monitoring and working to improve its environmental and social
impact. The production of renewable energy equates to a significant amount of
CO2 emissions saved, representing a sustainable and ethical investment.
By order of the Board
Director Director
27 September 2024 27 September 2024
Report of Audit and Risk Committee
The Audit and Risk Committee, chaired by Elizabeth Burne and comprising all of
the Directors set out on page 3, operates within clearly defined terms of
reference (which are available from the Company's website,
www.bluefieldsif.com) and includes all matters indicated by Rule 7.1 of the UK
FCA's DTRs and the AIC Code. It is also the formal forum through which the
Auditor will report to the Board of Directors.
The Audit and Risk Committee meets no less than three times a year, and at
such other times as the Audit and Risk Committee shall require, and meets the
Auditor at least twice a year. Any member of the Audit and Risk Committee may
request that a meeting be convened by the company secretary. The Auditor may
request that a meeting be convened if they deem it necessary. Any Director who
is not a member of the Audit and Risk Committee, the Administrator and
representatives of the Investment Adviser shall be invited to attend the
meetings as the Directors deem appropriate.
The Board has taken note of the requirement that at least one member of the
Committee should have recent and relevant financial experience and is
satisfied that the Committee is properly constituted in that respect, with one
of its members who is a qualified accountant and three members with an
investment background.
Responsibilities
The main duties of the Audit and Risk Committee are:
· monitoring the integrity of the interim and annual financial
statements of the Company and any formal announcements relating to the
Company's financial performance and reviewing significant financial reporting
judgements contained in them;
· reporting to the Board on the appropriateness of the Board's
accounting policies and practices including critical judgement areas;
· reviewing the valuation of the Company's investments prepared by
the Investment Adviser, and making a recommendation to the Board on the
valuation of the Company's investments;
· reviewing the going concern assumption and any statements
regarding the future prospects or longer-term viability of the Company;
· meeting regularly with the Auditor to review their proposed audit
plan (including the audit approach) and the subsequent audit report and assess
the effectiveness of the audit process and the levels of fees paid in respect
of both audit and non-audit work;
· making recommendations to the Board in relation to the
appointment, reappointment or removal of the Auditor and approving their
remuneration and the terms of their engagement;
· monitoring and reviewing annually the Auditor's independence,
objectivity, expertise, resources, qualification and non-audit work;
· considering annually whether there is a need for the Company to
have its own internal audit function;
· keeping under review the effectiveness of the accounting and
internal control systems of the Company;
· reviewing compliance with the Listing Rules, Disclosure Guidance
and Transparency Rules, the provisions of the UK Corporate Governance Code,
AIC Code of Corporate Governance and associated guidance and other legal and
regulatory requirements; and
· overseeing and assessing the effectiveness of the Company's risk
framework to ensure appropriate risk management and regulatory compliance
processes are operating.
The Audit and Risk Committee is required to report formally to the Board on
its findings after each meeting on all matters within its duties and
responsibilities.
The Auditor is invited to attend the Audit and Risk Committee meetings as the
Committee deems appropriate and at which they have the opportunity to meet
with the Committee without representatives of the Investment Adviser or the
Administrator being present at least once per year.
Financial Reporting
In relation to the financial reporting, the Audit and Risk Committee, with the
Administrator, Investment Adviser and the Auditor, reviewed the
appropriateness of the interim and annual financial statements, concentrating
on, amongst other matters:
· the quality and acceptability of accounting policies and
practices;
· the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
· material areas in which significant judgements were applied or
there had been discussion with the Auditor;
· that the annual report and financial statements, taken as a
whole, are fair, balanced and understandable and provide the information
necessary for Shareholders to assess the Company's performance, business model
and strategy; and
· addressing any correspondence from regulators in relation to the
Company's financial reporting.
To aid its review, the Audit and Risk Committee considered reports from the
Administrator and Investment Adviser and also reports from the Auditor on the
outcomes of their half year review and annual audit. Like the Auditor, the
Audit and Risk Committee displayed the necessary professional scepticism their
role requires.
Meetings
The Committee has met formally on 10 occasions in the year covered by this
report. The matters discussed and challenged at those meetings were:
· consideration and agreement of the terms of reference of the
Audit and Risk Committee for approval by the Board;
· review of the Company's risk framework, including the Company's
risk appetite, business objectives, risk cards and risk matrix;
· determination of the Company's Principal Risks and Uncertainties;
· review of the internal controls systems;
· review of the accounting policies and format of the interim and
annual financial statements;
· review and approval of the terms of engagement, audit/non-audit
fees and the audit plan of the Auditor and timetable for the interim and
annual financial statements;
· review of the valuation policy and methodology of the Company's
investments applied in the interim and annual financial statements;
· detailed review of the interim and annual report and financial
statements;
· assessment of the audit tenure, independence and effectiveness of
the external audit process as described below; and
· assessment of the Committee's performance.
Primary Area of Judgement
The Audit and Risk Committee determined that the key risk of misstatement of
the Company's financial statements is the fair value of the investments held
by the Company in the context of the high degree of judgement involved in the
assumptions and estimates underlying the discounted cash flow calculations.
As outlined in Note 8 of the financial statements, the fair value of the BR1's
investments (Directors' Valuation) as at 30 June 2024 was £965,549,054 (2023:
£1,018,350,175). Market quotations are not available for these investments so
their valuation is undertaken using a discounted cash flow methodology. The
Directors have also considered transactions in similar assets and used these
to infer the discount rate. Significant inputs such as the discount rate, rate
of inflation, power price forecast and the amount of electricity the renewable
energy infrastructure assets are expected to produce are subjective and
include certain assumptions. As a result, this requires a series of judgements
to be made as explained in Note 8 in the financial statements.
The valuation of BR1's portfolio of renewable energy infrastructure assets
(Directors' Valuation) as at 30 June 2024 has been determined by the Board
based on information provided by the Investment Adviser.
The Audit and Risk Committee also reviewed and suggested factors that could
impact BR1's portfolio valuation and its related sensitivities to the carrying
value of the investments as required in accordance with IPEV Valuation
Guidelines.
The Audit and Risk Committee remains satisfied that the valuation techniques
used are appropriate for the Company's investments and consistent with the
requirements of IFRS. The Audit and Risk Committee, informed by the Company's
Administrator, Investment Adviser and Auditor, ensures that the Board is kept
regularly informed of relevant updates or changes to IFRS that may impact the
Company, including but not limited to valuation principles.
Risk Management and Internal Controls
The Audit and Risk Committee is responsible for the Company's system of
internal controls and overall risk framework, it considers the potential
impact and likelihood of each of the Company's material risks occurring and
monitors the effectiveness of the material controls/mitigants in operation. As
part of this process the Committee also takes time to consider emerging risks
at least twice a year as well as whether there is a need for the Company to
engage third party experts to perform separate assurance engagements over
specific risk areas.
The risk management framework used by the Company ensures that all decisions
taken in pursuit of the Company's business objectives are within the Company's
risk appetite parameters. However, the Board acknowledges that internal
controls can only be designed to manage rather than irradicate risks that
could threaten the Company's business objectives being achieved. They provide
reasonable, but not absolute assurance against material misstatement or loss
and rely on the internal control environments at its key service providers
operating effectively.
A full review of the Company's risk framework, including the way in which
material risks are identified/assessed, how effectively they are
controlled/mitigated and how they are reported was conducted during the year
enhancing the relevancy and quality of information delivered to the Committee
for consideration. A key outcome of the Committee's work is the assessment of
the Principal Risks and Uncertainties as set out on pages 67 to 74 of the
Strategic Report.
Internal Audit
The Audit and Risk Committee considers at least once a year whether there is a
need for an internal audit function. Currently it does not consider there to
be a need for an internal audit function, given that there are no employees in
the Company and all outsourced functions are with parties who have their own
internal controls and procedures.
FRC Reviews
The Audit Quality Review Team of the Financial Reporting Council ("FRC")
performed a review of the audit of the Company for the year ended 30 June 2023
with no major findings arising from their review. In the opinion of the Audit
and Risk Committee the outcome was satisfactory, which provides further
comfort on the effectiveness of KPMG.
The FRC also reviewed the Company's Annual Report and Financial Statements for
the year ended 30 June 2023. Based on their review, the FRC wrote to the
Company on 29 February 2024 stating there were no questions or queries that
the FRC wished to raise with the Company at that time. However, the FRC noted
some matters where they believed that users of the financial statements would
benefit from improvements to the existing reporting.
The Company has endeavoured to address these matters in the financial
statements. This included additional disclosure on the significant judgements
involved in determining that the Company is an investment entity (see note 2
(c) on page 119) and providing more clarity on the amount of gains or losses
on financial assets attributable to changes in unrealised gains or losses (see
note 8 on page 126).
The FRC notes that its review does not provide assurance that the Annual
Report and Financial Statements are correct in all material respects and that
its role is not to verify the information provided but to consider compliance
with reporting requirements.
External Audit
KPMG was initially appointed as the Company's external auditor at inception of
the Company and retained appointment following an extensive, robust and
competitive audit tender process being conducted in the prior year. The
conclusion from this process was that, of those firms who participated in the
tender, KPMG offered the most compelling case for the provision of a high
quality audit at good value for Shareholders. The resolution to reappoint KPMG
was passed at the Company's AGM in November 2023.
The Auditor is required to rotate the audit partner every five years. The
current Audit Partner, Barry Ryan, is in his third year of tenure. There are
no contractual obligations restricting the choice of external auditor.
The objectivity of the Auditor is reviewed by the Audit and Risk Committee
which also reviews the terms under which the external Auditor may be appointed
to perform non-audit services. The Audit and Risk Committee reviews the scope
and results of the audit, its cost effectiveness and the independence and
objectivity of the Auditor, with particular regard to any non-audit work that
the Auditor may undertake.
In order to safeguard Auditor independence and objectivity, the Audit and Risk
Committee ensures that any advisory and/or consulting services provided by the
external Auditor do not conflict with its statutory audit responsibilities.
Advisory and/or consulting services will generally cover only reviews of
interim financial statements and capital raising work. Any non-audit services
conducted by the Auditor outside of these areas will require the consent of
the Audit and Risk Committee before being initiated.
During the year, KPMG was engaged to provide a review of the Company's interim
financial statements. Total fees paid by the Company and its subsidiaries
amounted to £873,285 (30 June 2023: £864,174), fees for the Company itself
amounted to £171,315 for the year ended 30 June 2024 (30 June 2023:
£157,325) of which £123,815 related to audit and audit related services to
the Company (30 June 2023: £112,325) and £47,500 in respect of non-audit
services (30 June 2023: £45,000).
The Audit and Risk Committee considers KPMG to be independent of the Company
and that the provision of services relating to the review of the interim
financial statements (being considered a non-audit service) is not a threat to
the objectivity and independence of the conduct of the audit as appropriate
safeguards are in place.
In line with the Company's policy on the provision of non-audit services, the
external Auditor may not undertake any work for the Company in respect of the
following matters: preparation of the financial statements; provision of
investment advice; taking management decisions; advocacy work in adversarial
situations; provision of tax and tax compliance services; promotion of,
dealing in, or underwriting the Company's shares; provision of payroll
services; design or implementation of internal control or risk management or
financial information technology systems, provision of valuation services,
provision of services related to internal audit; and provision of certain
human resources functions.
To fulfil its responsibility regarding the independence of the Auditor, the
Audit and Risk Committee has considered:
· the discussions with, and reports from the Auditor describing how
they safeguard and maintain their independence and the arrangements in place
to identify, report and manage any actual or perceived conflicts of interest;
· the extent of non-audit services provided by the Auditor; and
· arrangements in place to ensure the Auditor's objectivity,
robustness and perceptiveness when handling key accounting and audit
judgements.
To assess the effectiveness of the Auditor, the Committee sought feedback from
the Company's Auditor, Investment Adviser and Company Administrator/Secretary
on the conduct and quality of the previous year's audit. The feedback
received, via the use of a detailed questionnaire and follow-up discussion
session, focused on:
· the Auditor's fulfilment of the agreed audit plan (including the
audit approach) and variations from it;
· the quality, objectivity, robustness (level of challenge and
professional scepticism) and independence of the audit;
· the robustness of the Auditor in handling key accounting and
audit judgements;
· the audit team structure and culture;
· the quality and timeliness of reporting and communication; and
· any issues that arose during the course of the audit.
Based on the findings of the review, the Audit and Risk Committee concluded it
was satisfied with KPMG's effectiveness, robustness and independence as
Auditor, having considered the degree of diligence and professional scepticism
demonstrated by them, and therefore concluded that KPMG's appointment as the
Company's auditor should be continued.
Other matters
In line with the Committee's terms of reference, a review of the performance
of the Committee was conducted during the year which concluded that all
responsibilities of the Committee had been sufficiently undertaken.
If any shareholders would like further information about the Audit and Risk
Committee's activities and operations the Chair of the Audit and Risk
Committee, or any of the other members of the Committee, would be pleased to
discuss, otherwise will be available at the AGM to answer any questions.
On behalf of the Audit and Risk Committee
Elizabeth Burne
Chair of the Audit and Risk Committee
27 September 2024
Independent Auditor's Report to the Members of Bluefield Solar Income Fund
Limited
Our opinion is unmodified
We have audited the financial statements of Bluefield Solar Income Fund
Limited (the "Company"), which comprise the statement of financial position as
at 30 June 2024, the statements of comprehensive income, changes in equity
and cash flows for the year then ended, and notes, comprising material
accounting policies and other explanatory information.
In our opinion, the accompanying financial statements:
· give a true and fair view of the financial position of the Company as
at 30 June 2024, and of the Company's financial performance and cash
flows for the year then ended;
· are prepared in accordance with International Financial Reporting
Standards as adopted by the EU; and
· comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below. We have fulfilled our ethical responsibilities under, and are
independent of the Company in accordance with, UK ethical requirements
including the FRC Ethical Standard as required by the Crown Dependencies'
Audit Rules and Guidance. We believe that the audit evidence we have obtained
is a sufficient and appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matter was as
follows (unchanged from 2023):
The risk Our response
Valuation of financial assets held at fair value through profit or loss Basis: Our audit procedures included, but were not limited to:
£780,043,000 (2023: £852,844,000) The Company's investment in its immediate subsidiary is carried at fair value Control evaluation:
through profit or loss and represents a significant proportion of the
Refer to Report of the Audit and Risk Committee on pages 101 to 106, note 2(j) Company's net assets (2024: 99.8%; 2023: 99.8%). The fair value of the We assessed the design and implementation of the control over the Valuation of
accounting policy and note 8 disclosures. immediate subsidiary, which reflects its net asset value, predominantly financial assets held at fair value through profit or loss.
comprises of the fair value (£965,549,000) of underlying special purpose
vehicle renewable project investments ("SPVs") and the immediate subsidiary Valuation model integrity and model inputs:
level debt (see note 8).
· We tested the valuation model for mathematical accuracy including,
The fair value of the SPVs has been determined using the income approach, but not limited to, material formulae errors;
discounting the future cash flows of underlying renewable projects (the
"Valuations"), for which there is no liquid market. The Valuations incorporate · We agreed a risk based selection of key inputs used in the valuation
certain assumptions including discount rate, power price forecasts, inflation, model, such as power price forecasts, contracted revenue and operating costs
energy yield, and other macro-economic assumptions. The non-operational to supporting documentation;
renewable asset SPVs are valued at their costs as an approximation of their
fair value. · We agreed a value driven sample of balances within the residual net
asset amounts at subsidiary and SPV levels to supporting documentation, such
The Valuations are adjusted for other specific assets and liabilities of the as independent bank confirmations and other source documentation;
SPVs.
· We obtained and vouched significant additions to non-operational
Risk: renewable assets during the year to supporting documentation; and
The Valuations represent both a risk of fraud and error associated with · In order to assess the reliability of management's forecasts, for a
estimating the timing and amounts of long term forecast cash flows alongside risk based selection, we assessed the historical accuracy of the cash flow
the significant judgement involved in the selection, and application, of forecasts against actual results.
appropriate assumptions. Changes to long term forecast cash flows and/or the
selection and application of different assumptions may result in a materially
different valuation of financial assets held at fair value through profit or
loss. Benchmarking the valuation assumptions:
We therefore determined that the Valuations have a high degree of estimation With support from our KPMG valuation specialist, we challenged the
uncertainty giving rise to a potential range of reasonable outcomes greater appropriateness of the Company's valuation methodology and key assumptions
than our materiality for the financial statements as a whole. The financial including discount rate, power price forecasts, inflation, energy yield and
statements disclose in note 8 the sensitivities estimated by the Company. other macro-economic assumptions applied, by:
· assessing the appropriateness of the valuation methodology applied by
the Investment Adviser;
· benchmarking against independent market data and relevant peer group
companies;
· challenging the energy yield assumptions in the valuation model, by
reference to due diligence reports prepared by third-party engineers or
historical performance;
· comparing, where appropriate, the valuation of underlying renewable
projects to market transactions in close proximity to year end; and
· using our KPMG valuation specialist's experience in valuing similar
investments.
Assessing transparency:
We considered the appropriateness and adequacy of the disclosures made in the
financial statements (see notes 2(j), 3 and 8) in relation to the use of
estimates and judgements regarding the fair value of investments, the
valuation estimation techniques inherent therein and fair value disclosures
for compliance with International Financial Reporting Standards as adopted by
the EU.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at £16,600,000,
determined with reference to a benchmark of net assets of £781,557,000, of
which it represents approximately 2% (2023: 2%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that individually
immaterial misstatements in individual account balances add up to a material
amount across the financial statements as a whole. Performance materiality for
the Company was set at 75% (2023: 75%) of materiality for the financial
statements as a whole, which equates to £12,400,000. We applied this
percentage in our determination of performance materiality because we did not
identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £830,000, in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Our application of materiality and an overview of the scope of our audit
(continued)
Our audit of the Company was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
Going concern
The directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Company or to cease its
operations, and as they have concluded that the Company's financial position
means that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over its ability
to continue as a going concern for at least a year from the date of approval
of the financial statements (the "going concern period").
In our evaluation of the directors' conclusions, we considered the inherent
risks to the Company's business model and analysed how those risks might
affect the Company's financial resources or ability to continue operations
over the going concern period. The risks that we considered most likely to
affect the Company's financial resources or ability to continue operations
over this period were:
· Availability of capital to meet operating costs and other financial
commitments; and
· Ability of the Company's subsidiaries to refinance or repay debt and
to comply with debt covenants
We considered whether these risks could plausibly affect the liquidity in the
going concern period by comparing severe, but plausible downside scenarios
that could arise from these risks individually and collectively against the
level of available financial resources indicated by the Company's financial
forecasts.
We considered whether the going concern disclosure in note 2(b) to the
financial statements gives a full and accurate description of the directors'
assessment of going concern.
Our conclusions based on this work:
· we consider that the directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate;
· we have not identified, and concur with the directors' assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the the
Company's ability to continue as a going concern for the going concern period;
and
· we have nothing material to add or draw attention to in relation to
the directors' statement in the notes to the financial statements on the use
of the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Company's use of that basis for the going
concern period, and that statement is materially consistent with the financial
statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Company's policies and procedures
to prevent and detect fraud as well as enquiring whether management have
knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, and taking into account possible incentives
or pressures to misstate performance and our overall knowledge of the control
environment, we perform procedures to address the risk of management
Fraud and breaches of laws and regulations - ability to detect (continued)
Identifying and responding to risks of material misstatement due to fraud
(continued)
override of controls, in particular the risk that management may be in a
position to make inappropriate accounting entries, and the risk of bias in
accounting estimates such as the valuation of unquoted investments. On this
audit we do not believe there is a fraud risk related to revenue recognition
because the Company's revenue streams are simple in nature with respect to
accounting policy choice, and are easily verifiable to external data sources
or agreements with little or no requirement for estimation from management. We
did not identify any additional fraud risks.
We performed procedures including:
· identifying journal entries and other adjustments to test based on
risk criteria and comparing any identified entries to supporting
documentation;
· incorporating an element of unpredictability in our audit procedures;
and
assessing significant accounting estimates for bias.
Further detail in respect of valuation of unquoted investments is set out in
the key audit matter section of this report.
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience and through discussion with management (as required by auditing
standards), and from inspection of the Company's regulatory and legal
correspondence, if any, and discussed with management the policies and
procedures regarding compliance with laws and regulations. As the Company is
regulated, our assessment of risks involved gaining an understanding of the
control environment including the entity's procedures for complying with
regulatory requirements.
The Company is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation and taxation
legislation and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement
items.
The Company is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of fines or
litigation or impacts on the Company's ability to operate. We identified
financial services regulation as being the area most likely to have such an
effect, recognising the regulated nature of the Company's activities and its
legal form. Auditing standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry of management and
inspection of regulatory and legal correspondence, if any. Therefore if a
breach of operational regulations is not disclosed to us or evident from
relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or
regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The other
information comprises the information included in the annual report but does
not include the financial statements and our auditor's report thereon. Our
opinion on the financial statements does not cover the other information and
we do not express an audit opinion or any form of assurance conclusion
thereon.
Other information (continued)
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' disclosures in respect of emerging and
principal risks and the viability statement, and the financial statements
and our audit knowledge. we have nothing material to add or draw attention to
in relation to:
· the directors' confirmation within the Longer-term viability
statement (pages 73 and 74) that they have carried out a robust assessment of
the emerging and principal risks facing the Company, including those that
would threaten its business model, future performance, solvency or liquidity;
· the emerging and principal risks disclosures describing these risks
and explaining how they are being managed or mitigated;
· the directors' explanation in the Longer-term viability statement
(pages 73 and 74) as to how they have assessed the prospects of the Company,
over what period they have done so and why they consider that period to be
appropriate, and their statement as to whether they have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment,
including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We are also required to review the Longer-term viability statement, set out on
pages 73 and 74 under the Listing Rules. Based on the above procedures, we
have concluded that the above disclosures are materially consistent with the
financial statements and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the directors' corporate governance disclosures and the
financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is
materially consistent with the financial statements and our audit
knowledge:
· the directors' statement that they consider that the annual report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy;
· the section of the annual report describing the work of the Audit
Committee, including the significant issues that the audit committee
considered in relation to the financial statements, and how these issues were
addressed; and
· the section of the annual report that describes the review of the
effectiveness of the Company's risk management and internal control systems.
We are required to review the part of Corporate Governance Statement
relating to the Company's compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review. We have nothing
to report in this respect.
We have nothing to report on other matters on which we are required to report
by exception
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
· the Company has not kept proper accounting records; or
· the financial statements are not in agreement with the accounting
records; or
· we have not received all the information and explanations, which to
the best of our knowledge and belief are necessary for the purpose of our
audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 89, the directors
are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as
they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error;
assessing the Company's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern; and using the going concern
basis of accounting unless they either intend to liquidate the Company or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities) .
The purpose of this report and restrictions on its use by persons other than
the Company's members as a body
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Barry Ryan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
27 September 2024
Statement of Financial Position
As at 30 June 2024
30 June 2024 30 June 2023
Note £'000 £'000
ASSETS
Non-current assets
Financial assets held at fair value through profit or loss 8 780,043 852,844
Total non-current assets 780,043 852,844
Current assets
Trade and other receivables 9 924 910
Cash and cash equivalents 10 1,253 969
Total current assets 2,177 1,879
TOTAL ASSETS 782,220 854,723
LIABILITIES
Current liabilities
Other payables and accrued expenses 11 663 534
Total current liabilities 663 534
TOTAL LIABILITIES 663 534
NET ASSETS 781,557 854,189
EQUITY
Share capital 654,441 663,809
Retained earnings 127,116 190,380
TOTAL EQUITY 13 781,557 854,189
Ordinary Shares in issue at year end 13 602,374,217 611,452,217
Net asset value per Ordinary Share (pence) 7 129.75 139.70
These financial statements were approved and authorised for issue by the Board
of Directors on 27 September 2024 and signed on their behalf by:
Meriel Lenfestey Elizabeth Burne
Director Director
27 September 2024 27 September 2024
The accompanying notes form an integral part of these financial statements.
Statement of Comprehensive Income
For the year ended 30 June 2024
Year ended Year ended
30 June 2024 30 June 2023
Note £'000 £'000
Income
Income from investments 4 900 900
Bank interest 25 6
925 906
Net (losses)/gains on financial assets held at fair value through profit or 8 (8,336) 48,164
loss
Operating income (7,411) 49,070
Expenses
Administrative expenses 5 2,190 2,277
Operating expenses 2,190 2,277
Operating (loss)/profit (9,601) 46,793
(Loss)/profit and total comprehensive (loss)/income for the year (9,601) 46,793
Earnings per share:
Basic and diluted (pence) 12 (1.57) 7.65
All items within the above statement have been derived from continuing
activities.
The accompanying notes form an integral part of these financial statements.
Statement of Changes in Equity
For the year ended 30 June 2024
Number of
Ordinary Shares
Note Share capital Retained earnings Total equity
£'000 £'000 £'000
Shareholders' equity at 611,452,217 663,809 190,380 854,189
1 July 2023
Purchase of Ordinary shares into Treasury 13 (9,078,000) (9,368) - (9,368)
Dividends paid 13,14 - - (53,663) (53,663)
Total comprehensive loss for the year - - (9,601) (9,601)
Shareholders' equity at 602,374,217 654,441 127,116 781,557
30 June 2024
For the year ended 30 June 2023
Number of
Ordinary Shares
Note Share capital Retained earnings Total equity
£'000 £'000 £'000
Shareholders' equity at 611,452,217 663,809 194,582 858,391
1 July 2022
Dividends paid 13,14 - - (50,995) (50,995)
Total comprehensive income for the year - - 46,793 46,793
Shareholders' equity at 611,452,217 663,809 190,380 854,189
30 June 2023
The accompanying notes form an integral part of these financial statements.
Statement of Cash Flows
For the year ended 30 June 2024
Year Year ended
ended
30 June 2024 30 June 2023
Note £'000 £'000
Cash flows from operating activities
Total comprehensive (loss)/income for the year (9,601) 46,793
Adjustments:
Increase in trade and other receivables (14) (28)
Increase in other payables and accrued expenses 23 44
Net losses/(gains) on financial assets held at fair value through profit or 8 8,336 (48,164)
loss
Net cash used in operating activities* (1,256) (1,355)
Cash flows from investing activities
Receipts from investments held at fair value through 8 64,465 51,700
profit or loss**
Net cash generated from investing activities 64,465 51,700
Cash flow from financing activities
Purchase of Ordinary shares into Treasury 13 (9,262) -
Dividends paid 14 (53,663) (50,995)
Net cash used in financing activities (62,925) (50,995)
Net increase/(decrease) in cash and cash equivalents 284 (650)
Cash and cash equivalents at the start of the year 969 1,619
Cash and cash equivalents at the end of the year 10 1,253 969
The accompanying notes form an integral part of these financial statements.
*Net cash used in operating activities includes £900,000 (2023: £900,000) of
investment income.
**Receipts from investments held at fair value through profit or loss
comprises loan principal of £31.3 million (2023: £29.9 million) repaid by
BR1 and £33.2 million (2023: £21.8 million) of interest received from BR1.
Investment acquisition costs at project level as referred to in the Investment
Advisors report do not appear in the Statement of Cash Flows as the financial
statements are not consolidated.
Notes to the Financial Statements for the year ended 30 June 2024
1. General information
The Company is a non-cellular company limited by shares and was incorporated
in Guernsey under the Law on 29 May 2013 with registered number 56708 as a
closed-ended investment company. It is regulated by the GFSC.
The financial statements for the year ended 30 June 2024 comprise the
financial statements of the Company only (see Note 2 (c)).
The investment objective of the Company is to provide Shareholders with an
attractive return, principally in the form of quarterly income distributions,
by being invested primarily in solar energy assets located in the UK. It also
has the ability to invest a minority of its capital into wind and energy
storage assets.
The Company has appointed Bluefield Partners LLP as its Investment Adviser.
2. Summary of material accounting policies
a) Basis of preparation
The financial statements included in this annual report have been presented on
a true and fair basis and prepared in accordance with IFRS as adopted by the
EU and the DTR of the UK FCA.
These financial statements have been prepared under the historical cost
convention with the exception of financial assets measured at fair value
through profit or loss, and in compliance with the provisions of the Law.
Standards, interpretations and amendments to published standards adopted in
the period
New and Revised Standards
The Company adopted Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2) from 1 July 2023. Although the amendments did not
result in any changes to the accounting policies themselves, they impacted the
accounting policy information disclosed in the financial statements. The
amendments require the disclosure of 'material', rather than 'significant',
accounting policies. The amendments also provide guidance on the application
of materiality to disclosure of accounting policies, assisting entities to
provide useful, entity-specific accounting policy information that users need
to understand other information in the financial statements.
The Company has not adopted early any standards, amendments or interpretations
to existing standards that have been published and will be mandatory for the
Company's accounting periods beginning after 1 July 2024 or later periods.
At the date of authorisation of these financial statements, certain new
standards, and amendments to existing standards have been published by the
IASB that are not yet effective and have not been adopted early by the
Company.
The Board expects that all relevant pronouncements will be adopted in the
Company's accounting policies for the first period beginning after the
effective date of the pronouncement. New standards, interpretations and
amendments are not expected to have a material impact on the Company's
financial statements.
b) Going concern
The Board, in its consideration of going concern, has reviewed comprehensive
cash flow forecasts prepared by the Investment Adviser, as well as the
performance of the solar and wind plants currently in operation.
The Group has a committed Revolving Credit Facility (RCF) of £210 million,
with an uncommitted accordion feature that allows for an additional £30
million. The facility is set to mature in May 2025. As of 30 June 2024, the
Group had drawn £184 million from the RCF. After the year-end, following the
completion of Phase Two of the strategic partnership with GLIL, £50.5 million
was repaid, reducing the drawn balance to £133.5 million.
The Investment Adviser is currently in discussions with lenders to refinance
and extend the RCF by an additional two years in early 2025. Lenders have
indicated a strong interest in the extension. With robust cash generation, the
Board is confident that all debt repayments will be met and confirms that no
covenant breaches occurred during the year.
UK inflation dropped from 10.7% (RPI) in June 2023 to 2.9% in June 2024. In
August 2024, the Bank of England cut the Base Rate to 5.00%, with 5 year gilt
rates now below 4%. Lower interest rates reduce BSIF's credit costs, while
fixed-rate debt has significantly shielded it from rate hikes.
BSIF has built a robust development pipeline exceeding 1.5 GW, with two major
solar projects, Yelvertoft (48.4MW) and Mauxhall Farm (44.5MW), connected to
electricity network shortly after the Year end. Over 750 MW of the pipeline is
fully consented, ready for construction within five years.
The Investment Adviser, with BSIF Board approval, is actively managing the
large pipeline, and is planning to sell around a third of this based on
funding availability, a strategy which continues to be reviewed on a regular
basis.
BSIF's Investment Adviser focuses on protecting and enhancing the operational
portfolio through proactive risk mitigation. A rolling capital investment
programme addresses key risks, such as long lead times for high voltage spare
parts, particularly central inverters. Significant inverter revamping projects
were completed, boosting performance in late FY2023/24, with full benefits
expected in FY2024/25. Additional optimisation and repowering projects are
planned for the upcoming year.
The Board also notes that at the AGM held on 28 November 2023, the
shareholders of the Company voted overwhelmingly in favour for the
continuation of the Company for a further 5 years.
Taking the above into account, at the time of approving these accounts the
Board has a reasonable expectation that the Company has adequate resources to
continue in operational existence for the 12 months from the date of signing
the financial statements and does not consider there to be any material threat
to the viability of the Company. The Board has therefore concluded that it is
appropriate to adopt the going concern basis of accounting in preparing the
financial statements.
c) Basis of Non-Consolidation
The Company makes its investments in the SPVs through its wholly owned
subsidiary, BR1. The Company meets the definition of an investment entity as
described by IFRS 10. Under IFRS 10 investment entities are required to hold
subsidiaries at fair value through profit or loss rather than consolidate
them.
Under the definition of an investment entity, the entity should satisfy all
three of the following tests:
· obtains funds from one or more investors for the purpose of
providing these investors with investment management services;
· commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment income, or both
(including having an exit strategy for investments); and
· measures and evaluates the performance of substantially all of
its investments on a fair value basis.
In assessing whether the Company meets the definition of an investment entity
set out in IFRS 10, the Directors note that:
· the Company is an investment company that invests funds obtained
from multiple investors in a diversified portfolio of renewable energy
infrastructure assets and has appointed the Investment Adviser to advise on
the Company's investments;
· the Company's purpose is to invest funds for investment income
and potential capital appreciation and will exit its investments at the end of
their economic lives or when their planning permissions expire and may also
exit investments earlier for reasons of portfolio balance or profit; and
· the Board evaluates the performance of the Company's investments
on a fair value basis with the fair value of operational SPVs being calculated
on a discounted cash flow basis in accordance with the IPEV Valuation
Guidelines. The Investment Adviser recommends the fair value on a quarterly
basis, which includes a complete review of all valuation assumptions on a
semi-annual basis, subject to the Board's approval as at 30 June and 31
December each year.
Taking these factors into account, the Directors are of the opinion that the
Company has all the typical characteristics of an investment entity and meets
the definition set out in IFRS 10.
The Board considered the investment entity status of BR1 and concluded that it
is, like the Company, an investment entity based on the same factors as listed
above. As such the Company is not permitted to consolidate BR1 in the
preparation of its financial statements and all subsidiaries are recognised at
fair value through profit or loss.
d) Functional and presentation currency
These financial statements are presented in Sterling, which is the functional
currency of the Company as well as the presentation currency. All amounts are
stated to the nearest thousand unless otherwise stated. The Company's funding,
investments and transactions are all denominated in Sterling.
e) Income
Monitoring fee income is recognised on an accruals basis.
Interest income on cash and cash equivalents is recognised on an accruals
basis using the effective interest rate method.
f) Expenses
Operating expenses are the Company's costs incurred in connection with the
ongoing administrative costs and management of the Company's investments.
Operating expenses are accounted for on an accruals basis.
g) Finance costs
Finance costs are recognised in the Statement of Comprehensive Income in the
period to which they relate on an accruals basis using the effective interest
rate method. Arrangement fees for finance facilities are amortised over the
expected life of the facility.
h) Dividends
Dividends declared and approved are charged against equity. A corresponding
liability is recognised for any unpaid dividends prior to year end. Dividends
approved but not declared will be disclosed in the notes to the financial
statements.
i) Segmental reporting
IFRS 8 'Operating Segments' requires a 'management approach', under which
segment information is presented on the same basis as that used for internal
reporting purposes.
The Board has considered the requirements of IFRS 8 'Operating Segments', and
is of the view that the Company is engaged in a single segment of business,
being investment in UK renewable energy infrastructure assets via its holding
company and SPVs, and therefore the Company has only a single operating
segment.
The Board, as a whole, has been determined as constituting the chief operating
decision maker of the Company. The key measure of performance used by the
Board to assess the Company's performance and to allocate resources is the
total return on the Company's NAV, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss used by the
Board and that contained in these financial statements.
The Board has overall management and control of the Company and will always
act in accordance with the investment policy and investment restrictions set
out in the Company's latest Prospectus, which cannot be radically changed
without the approval of Shareholders. The Board has delegated the day-to-day
implementation of the investment strategy to its Investment Adviser but
retains responsibility to ensure that adequate resources of the Company are
directed in accordance with their decisions. Although the Board
obtains advice from the Investment Adviser, it remains responsible for making
final decisions in line with the Company's policies and the Board's legal
responsibilities.
j) Financial instruments
Classification and measurement of financial assets and financial liabilities
Financial assets and financial liabilities are recognised in the Company's
Statement of Financial Position when the Company becomes a party to the
contractual provisions of the instrument.
i) Financial assets held at fair value through profit or loss
Classification
The Company's investment in BR1 is accounted for as a financial asset rather
than consolidated as the Company qualifies as an investment entity under IFRS
10, therefore the Company's investment is held at fair value through profit or
loss in accordance with the requirements of IFRS 9.
Recognition and de-recognition
Purchases and sales of investments are recognised on the trade date - the date
on which the Company commits to purchase or sell the investment. A financial
asset is de-recognised either when the Company has transferred all the risks
and rewards of ownership; or it has neither transferred nor retained
substantially all the risks and rewards and when it no longer has control over
the assets or a portion of the asset; or the contractual right to receive cash
flow has expired.
Measurement
Subsequent to initial recognition, investment in BR1 is measured at each
subsequent reporting date at fair value. The Company holds all of the shares
in the subsidiary, BR1, which is a holding vehicle used to hold the Company's
SPV investments. The Directors believe it is appropriate to value this entity
based on the fair value of its portfolio of SPV investment assets held plus
its other assets and liabilities. The SPV investment assets held by the
subsidiary are valued semi-annually as described in Note 8 on a discounted
cash flow basis which is benchmarked against market transactions.
Gains or losses, through profit or loss, are made up of BR1's profit or loss,
which comprises mainly cash receipts from its SPVs, the fair value movement of
BR1's SPV portfolio and cash received in respect of Eurobond instrument
interest. Furthermore, cash receipts made to the Company by BR1 are accounted
for as a repayment of loans and not reflected in the Company's income, apart
from monitoring fees (see Note 4).
ii) Cash and cash equivalents and trade and other receivables
Cash and cash equivalents comprise cash on hand and short term deposits with
an original maturity of three months or less that are readily convertible to a
known amount of cash and are subject to an insignificant risk of changes in
value. Other receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. These financial
assets are included in current assets, except for maturities greater than
twelve months after the reporting date, which are classified as non-current
assets. They are initially recognised at fair value plus transaction costs
that are directly attributable to the acquisition, and subsequently carried at
amortised cost using the effective interest rate method, less provision for
impairment.
iii) Financial liabilities
The classification of financial liabilities at initial recognition depends on
the purpose for which the financial liability was issued and its
characteristics.
All financial liabilities are initially recognised at fair value net of
transaction costs incurred. All purchases of financial liabilities are
recorded on the trade date, being the date on which the Company becomes party
to the contractual requirements of the financial liability.
The Company's financial liabilities consist of only financial liabilities
measured at amortised cost.
Financial liabilities measured at amortised cost
These include trade payables and other short term monetary liabilities, which
are initially recognised at fair value and subsequently carried at amortised
cost using the effective interest rate method.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the Company
has extinguished its contractual obligations, it expires, or is cancelled.
Any gain or loss on derecognition is taken to profit and loss.
k) Equity instruments
An equity instrument is any contract that evidences a residual interest in the
assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Company are recognised as the proceeds received, net of direct
issue costs. Direct issue costs include those incurred in connection with the
placing and admission which include fees payable under the Placing Agreement,
legal costs and any other applicable expenses.
Treasury shares are recognised at acquisition cost and are presented as a
deduction from shareholders' equity.
3. Critical accounting judgements, estimates and assumptions in applying the
Company's accounting policies
The preparation of these financial statements under IFRS requires management
to make judgements, estimates and assumptions that affect the application of
policies and reported amounts of assets and liabilities, income and expenses.
The estimates and associated assumptions are based on historical experience
and other factors that are believed to be reasonable under the circumstances,
the results of which form the basis of making judgements about carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates.
The area involving a high degree of judgement and/or complexity and/or area
where assumptions and estimates are significant to the financial statements
has been identified as the valuation of the Company's investment in BR1 which
is estimated predominantly on the valuation of the portfolio of investments
held by BR1 (see Note 8).
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future period if the revision affects both current and
future periods.
As disclosed in Note 8, the Board believes it is appropriate for the Company's
portfolio to be benchmarked on a £m/MW basis against comparable portfolio
transactions and on this basis a weighted average discount rate of 8.00%
(8.00% as at 30 June 2023) has been utilised.
Use of a blended power forecast is unchanged. The inflation assumption also
remains unchanged at 3.5% in 2024, and 3% from 2025 to 2029 as a medium-term
rate (June 2023: 3%), before reducing to a long term assumption of 2.25% (June
2023: 2.25%) thereafter.
The Directors' Valuation as at 30 June 2024 is based on a weighted average
life of the portfolio of 27 years (vs. 28 years in June 2023), reflecting both
new acquisitions and asset life extensions.
4. Income from investments
Year ended Year ended
30 June 2024 30 June 2023
£'000 £'000
Monitoring fee in relation to loans supplied (Note 16) 900 900
900 900
The Company provides monitoring and loan administration services to BR1 for
which an annual fee is charged, payable in arrears.
5. Administrative expenses
Year ended Year ended
30 June 2024 30 June 2023
£'000 £'000
Investment advisory base fee * (see Note 16) 663 729
Legal and professional fees 322 300
Administration fees 504 542
Directors' remuneration 284 272
Audit fees 124 112
Non-audit fees 48 45
Broker fees 50 50
Regulatory Fees 66 58
Registrar fees 35 88
Insurance 14 12
Listing fees 43 45
Other expenses 37 24
2,190 2,277
*The Investment advisory base fee is paid by both the Company (10%) and BR1
(90%). The amount shown above reflects the amount paid by the Company only.
Note 16 shows the full fee paid to the Investment Adviser.
Investment Advisory Agreement
The Company, BR1 and the Investment Adviser have entered into an Investment
Advisory Agreement, under which the Investment Adviser has overall
responsibility for the non-discretionary management of the Company's assets
and any of BR1's SPVs (including uninvested cash) in accordance with the
Company's investment policies, restrictions and guidelines.
The Investment Adviser is entitled to a base fee, which is payable quarterly
in arrears, on the following scale:
· NAV up to and including £750,000,000,
0.8% per annum
· NAV above £750,000,000> £900,000,000, 0.75% per annum
· NAV above £900,000,000, 0.65% per
annum.
The fee is based on the NAV reported in the most recent quarterly NAV
calculation. The above fee scale is effective from 21 December 2023 following
the approval of an updated Investment Advisory Agreement during the year.
Previously, the fee was calculated at a rate of 0.8% per annum of the NAV up
to and including £750,000,000, 0.75% per annum of the NAV above £750,000,000
and up to and including £1,000,000,000 and 0.65 per annum of the NAV above
£1,000,000,000.
Under the amended and restated Investment Advisory agreement dated 21 December
2023, the Investment Adviser is also entitled, subject to exceptional
circumstances, to receive a 20% Development Profit Margin Commission on the
disposal of development projects to third parties.
In the event that the Company terminates the Investment Advisory Agreement
prior to the expiry of the lease on the Investment Adviser's office in London,
the Company has agreed to meet 80% of the rent and other charges until the
expiry of the current lease.
Investment Advisory Agreement (continued
On 11 June 2014, BSIFIL (as the previous holding company) entered into a
Technical Services Agreement with the Investment Adviser, with a retrospective
effective date of 25 June 2013, in order to delegate the provision of the
consultancy services to the Investment Adviser in its capacity as technical
adviser to the SPVs. On the same date the Group entered into a base fee offset
arrangement agreement, whereby the aggregate technical services fee and base
fee payable (under the Investment Advisory Agreement) shall not exceed the
base fee that would otherwise have been payable to the Investment Adviser in
accordance with the Investment Advisory Agreement had no fees been payable
under the Technical Services Agreement.
The fees incurred for the year and the amount outstanding at the year end are
shown in Note 16.
Administration Agreement
The Administrator has been appointed to provide day-to-day administration and
company secretarial services to the Company, as set out in the Administration
Agreement dated 24 June 2013.
Under the terms of the Administration Agreement, the Administrator is entitled
to an annual fee, at a rate equivalent to 10 basis points of NAV up to and
including £100,000,000, 7.5 basis points of NAV above £100,000,000 and up to
and including £200,000,000 and 5 basis points of the NAV above £200,000,000,
subject to a minimum fee of £100,000 per annum. The fees are for the
administration, accounting, corporate secretarial services, corporate
governance, regulatory compliance and stock exchange continuing obligations
provided to the Company. In addition, the Administrator will receive an annual
fee of £7,500 and £3,000 for the provision of a compliance officer and money
laundering reporting officer, respectively.
The Administrator is entitled to an investment related transaction fee charged
on a time spent basis, which is capped at a total of £5,000 per investment
related transaction. All reasonable costs and expenses incurred by the
Administrator in accordance with this agreement are reimbursed to the
Administrator quarterly in arrears.
The Administrator also receives a fee of £5,000 per annum in relation to the
administration of the Company's Guernsey Green Fund Status.
For the year ended 30 June 2024, the Company incurred fees to the
Administrator of £503,977 (2023: £542,176), of which £129,908 (2023:
£135,992) was outstanding at the year end.
6. Taxation
The Company has obtained exempt status under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance 1989 for which it paid an annual fee of £1,600 (2023:
£1,200) (included within regulatory fees).
The income from the Company's investments is not subject to any further tax in
Guernsey although the subsidiary and underlying SPVs, as UK based entities,
are subject to the current prevailing UK corporation tax rate. The standard
rate of UK corporation tax is 25% (2023: 25%).
7. Net asset value per Ordinary Share
The calculation of NAV per Ordinary Share is based on NAV of £781,557,386
(2023: £854,189,487) and the number of shares in issue at 30 June 2024 of
602,374,217 (2023: 611,452,217) Ordinary Shares.
8. Financial assets held at fair value through profit or loss
The Company's accounting policy on the measurement of these financial assets
is discussed in Note 2(j)(i) and below.
30 June 2024 30 June 2023
Total Total
£'000 £'000
Opening balance (Level 3) 852,844 856,380
Cash receipts from non-consolidated subsidiary* (64,465) (51,700)
Realised gains on investment in non-consolidated subsidiary** 33,167 21,838
Unrealised change in fair value of financial assets held at fair value through (41,503) 26,326
profit or loss***
Closing balance (Level 3) 780,043 852,844
Analysis of net (losses)/gains on financial assets held at fair value through
profit or loss (per statement of comprehensive income)
Year ended Year ended
30 June 2024 30 June 2023
£'000 £'000
Unrealised change in fair value of financial assets held at fair value through (41,503) 26,326
profit or loss***
Realised gains on investment in non-consolidated subsidiary** 33,167 21,838
Net (losses)/gains on financial assets held at fair value through profit or (8,336) 48,164
loss
*Comprising of repayment of Eurobond loans issued by BR1 and Eurobond interest
received
**Interest received on Eurobond loans issued by BR1
***The movement in unrealised losses for the year ended 30 June 2023 of
(£3,536,000) as stated in the prior year's financial statements has been
amended to reflect the amended presentation of the principal repayments in the
table above.
Investments at fair value through profit or loss comprise the fair value of
the investment portfolio, which the Investment Adviser recommends on a
quarterly basis, including a complete review of all valuation assumptions on a
semi-annual basis, subject to the Board's approval, and the fair value of BR1,
the Company's single, direct subsidiary being its cash, working capital and
debt balances. A reconciliation of the investment portfolio value to financial
assets at fair value through profit or loss in the Statement of Financial
Position is shown on page 127.
The above tables as presented in the prior year's financial statements have
been revised to show more clearly the impact on realised and unrealised gains
of cash receipts from non-consolidated subsidiary. These receipts totalling
£51,700,000 in the prior year comprised repayments of Eurobond loan principal
of £29,862,000 and Eurobond interest received of £21,838,000.
30 June 2024 30 June 2023
Total Total
£'000 £'000
SPV investment portfolio, Directors' Valuation 965,549 1,018,350
Immediate Holding Company
Cash 28,671 26,407
Working capital (30,177) (38,913)
Debt (184,000) (153,000)
(185,506) (165,506)
Financial assets at fair value through profit or loss 780,043 852,844
Fair value measurements
IFRS 13 'Fair Value Measurement' requires disclosure of fair value measurement
by level. The level of fair value hierarchy within the financial assets or
financial liabilities is determined on the basis of the lowest level input
that is significant to the fair value measurement. Financial assets and
financial liabilities are classified in their entirety into only one of the
three levels.
The fair value hierarchy has the following levels:
· Level 1 - quoted prices (unadjusted) in active markets for
identical assets or liabilities;
· Level 2 - inputs other than quoted prices included within Level 1
that are observable for the assets or liabilities, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
· Level 3 - inputs for assets or liabilities that are not based on
observable market data (unobservable inputs).
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to be market
data that is readily available, regularly distributed or updated, reliable and
verifiable, not proprietary, and provided by independent sources that are
actively involved in the relevant market.
The only financial instrument carried at fair value is the investment held by
the Company, BR1, which is fair valued at each reporting date. The Company's
investment has been classified within Level 3 as BR1's investments are not
traded and contain unobservable inputs.
Transfers during the year
There have been no transfers between levels during the year ended 30 June
2024. Any transfers between the levels will be accounted for on the last day
of each financial year. Due to the nature of the investments, these are always
expected to be classified as Level 3.
Directors' Valuation methodology and process
The same valuation methodology and process for operational assets is followed
in these financial statements as was applied in the preparation of the
Company's financial statements for the year ended 30 June 2023.
Before planning has been achieved, no value is attributed (beyond costs
incurred), to the Company's development pipeline.
However, once the projects receive planning permission they are then valued
according to the following criteria:
· Projects purchased by the Company from developers are valued at
investment cost (deemed to approximate fair value).
· Other projects in the Company's pipeline are valued on an
asset-by-asset basis and benchmarked against values from wider market
processes.
During the construction stages assets continue to be valued at investment cost
(deemed to be approximate fair value). The Investment Adviser intends for
newly built projects to be valued on a DCF basis shortly after they become
operational.
Investments that are operational are valued on a DCF basis over the life of
the asset (typically more than 25 years) and, under the 'willing buyer-willing
seller' methodology, prudently benchmarked on a £/MW basis against comparable
transactions for large scale portfolios.
Each investment is subject to full UK corporate taxation at the prevailing
rate with the tax shield being limited to the applicable capital allowances
from the Company's SPV investments.
The Investment Adviser recommends the fair value on a quarterly basis, which
includes a complete review of all valuation assumptions on a semi-annual
basis, subject to the Board's approval. The key inputs, as listed below, are
derived from various internal and external sources. The key inputs to a DCF
based approach are: the equity discount rate, the cost of debt (influenced by
interest rate, gearing level and length of debt), power price forecasts, long
term inflation rates, asset life, irradiation forecasts, average wind speeds,
operational costs and taxation. Given discount rates are a product of not only
the factors listed previously but also regulatory support, perceived sector
risk and competitive tensions, it is not unusual for discount rates to change
over time. Evidence of this is shown by way of the revisions to the original
discount rates applied between the first renewable acquisitions and those
witnessed in the past twelve months.
Both the current and prior year valuations saw the inclusion of the
Electricity Generator Levy ("the Levy") on excess profits produced by
electricity generators as announced by the Chancellor of the Exchequer in the
Autumn Statement in November 2022. The Levy is a temporary 45% tax on the
extraordinary returns made by electricity generators towards the end of 2022
while European energy prices soared in the wake of Russia's invasion of
Ukraine. The Levy will be in place from 1 January 2023 until 31 March 2028,
with the benchmark price linked to UK Consumer Price Inflation. The Investment
Adviser previously sought external advice from its legal and tax advisers on
how to model the Levy within the valuation methodology.
Given discount rates are subjective, there is sensitivity within these to the
interpretation of factors outlined above.
The weighted average discount rate has been maintained at 8.00% as at 30 June
2024 (2023: 8.00%). The Board have determined that an effective price of
£1.24m/MW (2023: £1.35m/MW) is an appropriate basis for the valuation of the
BSIF portfolio as at 30 June 2024. The reduction compared to 30 June 2023 is
mainly due to a decline in working capital levels due to debt repayments,
dividends and investment into construction assets and declines in power
forecasts.
In order to smooth the sensitivity of the valuation to forecast timing or
opinion taken by a single forecast, the Board continues to adopt the
application of blended power curves from three leading forecasters.
The fair values of operational SPVs are calculated on a discounted cash flow
basis in accordance with the IPEV Valuation Guidelines. The Investment Adviser
recommends the fair value on a quarterly basis, which includes a complete
review of all valuation assumptions on a semi-annual basis, subject to the
Board's approval as at 30 June and 31 December each year.
Sensitivity analysis
The table below analyses the sensitivity of the fair value of the Directors'
Valuation to an individual input, while all other variables remain constant.
The Directors consider the changes in inputs to be within a reasonable range
based on their understanding of market transactions. This is not intended to
imply that the likelihood of change or that possible changes in value would be
restricted to this range.
30 June 2024 30 June 2023
Input Change in input Change in fair value Change in NAV Change in fair value Change in NAV
of Directors' Valuation per share of Directors' Valuation per share
£m (pence) £m (pence)
Discount rate + 0.5% (20.6) (3.43) (18.8) (3.07)
- 0.5% 16.4 2.73 19.4 3.17
Power prices +10% 58.1 9.65 54.2 8.86
-10% (62.9) (10.45) (56.9) (9.31)
Inflation rate + 0.5% 44.5 7.39 31.7 5.19
- 0.5% (46.5) (7.73) (30.2) (4.94)
Energy yield 10-year P90 (102.8) (17.07) (105.0) (17.17)
10-year P10 104.7 17.37 111.9 18.30
O&M +10% (11.6) (1.93) (9.1) (1.49)
-10% 6.9 1.14 9.1 1.49
Subsidiaries and Associates
The Company holds investments through subsidiary companies which have not been
consolidated as a result of the adoption of IFRS 10: Investment entities
exemption to consolidation. Below is the legal entity name and ownership
percentage for the SPVs which are all incorporated in the UK except for
Bluefield Durrants GmBH which is incorporated in Germany.
Name Ownership percentage Name Ownership percentage
Bluefield Renewables 1 Limited 100 Gypsum Solar Farm Limited 100
Bluefield Renewables 2 Limited 100 Holly Farm Solar Park Limited 100
Bluefield SIF Investments Limited 100 Kellingley Solar Farm Limited 100
Bunns Hill Solar Limited 100 Little Bear Solar Limited 100
HF Solar Limited 100 Place Barton Farm Solar Park Limited 100
Hoback Solar Limited 100 Willows Farm Solar Limited 100
Littlebourne Solar Farm Limited 100 Southwick Solar Limited 100
Molehill PV Farm Limited 100 Butteriss Down Solar Farm Limited 100
Pashley Solar Farm Limited 100 Goshawk Solar Limited 100
ISP (UK) 1 Limited 100 Kite Solar Limited 100
Solar Power Surge Limited 100 Peregrine Solar Limited 100
West Raynham Solar Limited 100 Promothames 1 Limited 100
Sheppey Solar Limited 100 Rookery Solar Limited 100
Capelands Solar Farm Limited 100 Mikado Solar Projects (2) Limited 100
North Beer Solar Limited 100 Mikado Solar Projects (1) Limited 100
WEL Solar Park 2 Limited 100 KS SPV 5 Limited 100
Hardingham Solar Limited 100 Eagle Solar Limited 100
Redlands Solar Farm Limited 100 Kislingbury M1 Solar Limited 100
WEL Solar Park 1 Limited 100 Thornton Lane Solar Farm Limited 100
Saxley Solar Limited 100 Gretton Solar Farm Limited 100
Frogs Loke Solar Limited 100 Wormit Solar Farm Limited 100
Old Stone Farm Solar Park Limited 100 Langlands Solar Limited 100
Bradenstoke Solar Park Limited 100 Bluefield Merlin LTD 100
GPP Langstone LLP 100 Harrier Solar Limited 100
Ashlawn Solar Limited 100 Rhydy Pandy Solar Limited 100
Betingau Solar Limited 100 New Energy Business Solar Limited 100
Grange Solar Limited 100 Corby Solar Limited 100
Hall Solar Limited 100 Falcon Solar Farm Limited 100
Oulton Solar Limited 100 Folly Lane Solar Limited 100
Romsey Solar Limited 100 New Road Solar Limited 100
Salhouse Solar Limited 100 Blossom 1 Solar Limited 100
Tollgate Solar Limited 100 Blossom 2 Solar Limited 100
Trethosa Solar Limited 100 New Road 2 Solar Limited 100
Welbourne Energy LLP 100 GPP Eastcott LLP 100
Barvills Solar Limited 100 GPP Blackbush LLP 100
Clapton Farm Solar Park Limited 100 GPP Big Field LLP 100
Court Farm Solar Farm Limited 100 WSE Hartford Wood Limited 60
East Farm Solar Park Limited 100 Oak Renewables 2 Limited 100
Galton Manor Solar Park Limited 100 Oak Renewables Limited 100
Creathorne Farm Solar Park Limited (formerly Good Energy Creathorne Farm Solar 100 Wind Energy Scotland (Fourteen Arce Fields) Limited 100
Park (003) Limited)
Lower End Farm Solar Park Limited (formerly Good Energy Lower End Farm Solar 100 Wind Energy Scotland (Birkwood Mains) Limited 100
Park (026) Limited)
Woolbridge Solar Park Limited (formerly Good Energy Woolbridge Solar Park 100 Wind Energy Scotland (Holmhead) Limited 100
(010) Limited)
Rook Wood Solar Park Limited (formerly Good Energy Rook Wood Solar Park (057) 100 Mosscliff Power 5 Limited 100
Limited)
Carloggas Solar Park Limited (formerly Good Energy Carloggas Solar Park (009) 100 Mosscliff Power 10 Limited 100
Limited)
Cross Road Plantation Solar Park Limited (formerly Good Energy Cross Road 100 Mosscliff Power 2 Limited 100
Plantation Solar Park (028) Limited)
Delabole Windfarm Limited (formerly Good Energy Delabole Windfarm Limited 100 Mosscliff Power 3 Limited 100
Hampole Windfarm Limited (formerly Good Energy Hampole Windfarm Limited) 100 Mosscliff Power 4 Limited 100
Renewable Energy Assets Limited (formerly Wind Energy Generation Assets No.1 100 Mosscliff Power 6 Limited 100
Limited and Good Energy Generation Assets No.1 Limited)
Wind Energy 1 Hold Co Limited 100 Mosscliff Power 7 Limited 100
Aisling Renewables Limited 100 Mosscliff Power Limited 100
Wind Energy 3 Hold Co 100 E2 Energy PLC 100
Wind Energy (NI) Limited 100 Wind Energy One Limited 100
Ash Renewables No 3 Limited 100 Wind Energy Two Limited 100
Ash Renewables No 4 Limited 100 New Road Wind Limited 100
Ash Renewables No 5 Limited 100 Yelvertoft Solar Farm Limited 100
Ash Renewables No 6 Limited 100 Paytherden Solar Farm Limited (formerly Peradon Solar Farm Limited) 100
Wind Beragh Limited 100 Lower Tean Leys Solar Farm Limited 60
Wind Camlough Limited 100 Lower Mays Solar Farm Limited 100
Wind Cullybackey Limited 100 Longpasture Solar Farm Limited 60
Wind Dungorman Limited 100 Leeming Solar Farm Limited 60
Wind Killeenan Limited 100 Wallace Wood Solar Farm Limited 60
Wind Mowhan Limited 100 LEO1B Energy Park Limited 60
Wind Mullanmore Limited 100 LH DNO Grid Services Limited 60
Carmoney Energy Limited 100 Sweet Briar Solar Farm Limited 60
Errigal Energy Limited 100 BF31 WHF Solar Limited 60
Galley Energy Limited 100 BF27 BF Solar Limited 60
S&E Wind Energy Limited 100 BF13A TF Solar Limited 60
Wind Energy 2 Hold Co Limited 100 HW Solar Farm Limited 100
Boston RE Ltd 100 AR108 Bolt Solar Farm Limited 100
DC21 Earth SPV Limited 100 BF33C LHF Solar Limited 60
E5 Energy Limited 100 AR006 GF Solar Limited 100
E6 Energy Limited 100 Mauxhall Farm Energy Park Limited 100
E7 Energy Limited 100 BF16D BHF Solar Limited 100
Hallmark Powergen 3 Limited 100 BF33E BHF Solar Limited 60
Warren Wind Limited 100 BF58 Hunts Airfield Solar Ltd 60
Wind Energy Three Limited 100 Lightning 1 Energy Park Limited 100
Wind Energy Holdings Limited 100 Abbots Ann Farm Solar Park Limited 100
Crockbaravally Wind Holdco Limited 100 Canada Farm Solar Park Limited 100
Crockbaravally Wind Farm Limited 100 Kinetica 846 Limited 100
Dayfields Solar Limited 100 Kinetica 868 Limited 100
Farm Power Apollo Limited 100 Twineham Energy Limited 60
Freathy Solar Park Limited 100 Sheepwash Lane Energy Barn Limited 100
IREEL FIT TopCo Limited 100 Whitehouse Farm Energy Barn Limited 100
IREEL FIT HoldCo Limited 100 Bluefield Durrants GmBH 100
IREEL Wind TopCo Limited 100 New Road Solar 3 Limited 100
IREEL Solar HoldCo Limited 100 New Road Solar 4 Limited 100
IREL Solar HoldCo Limited 100 Renewable Energy Hold Co Limited (formerly Wind Energy Holding Company No.1 100
Limited and Good Energy Holding Company No.1 Limited)
Ladyhole Solar Limited 100 Westover Gridco Limited 50
Morton Wood Solar Limited 100 Lyceum Solar Limited 9
Nanteague Solar Limited 100 Wind Energy 4 Hold Co Limited 100
Newton Down Wind HoldCo Limited 100 West Raynham X Energy Park Limited 60
Newton Down Windfarm Limited 100
Padley Wood Solar Limited 100
Peel Wind Farm (Sheerness) Limited 100
Port of Sheerness Wind Farm Limited 100
Sandys Moor Solar Limited 100
St Johns Hill Wind Holdco Limited 100
St Johns Hill Wind Limited 100
Trickey Warren Solar Limited 100
Whitton Solar Limited 100
LPF UK Equityco Limited 100
LPF UK Solar Limited 100
LPF Kinetica UK Limited 100
9. Trade and other receivables
30 June 2024 30 June 2023
£'000 £'000
Current assets
Income from investments 900 900
Other receivables 24 10
924 910
There are no material past due or impaired receivable balances outstanding at
the year end.
The Directors consider that the carrying amount of all receivables
approximates to their fair value.
10. Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Company and short term
bank deposits held with maturities of up to three months. The carrying amount
of these assets as at 30 June 2024 was £1,253,168 (2023: £968,878) and
approximated their fair value. Cash held by BR1, the Company's immediate
wholly owned subsidiary, as at 30 June 2024 is shown in Note 8.
11. Other payables and accrued expenses
30 June 2024 30 June 2023
£'000 £'000
Current liabilities
Investment advisory fees 162 164
Administration fees 130 136
Audit fees 120 109
Payable for Treasury shares purchased 106 -
Directors' fees 85 72
Other payables 60 53
663 534
The Company has financial risk management policies in place to ensure that all
payables are paid within the agreed credit period. The Directors consider that
the carrying amounts of all payables approximate to their fair value.
12. Earnings per share
Year ended Year ended
30 June 2024 30 June 2023
(Loss)/profit attributable to Shareholders of the Company (£9,600,983) £46,793,621
Weighted average number of Ordinary shares 609,849,113 611,452,217
Basic and diluted earnings from continuing operations and (loss)/profit for (1.57) 7.65
the year (pence per share)
13. Share capital
The authorised share capital of the Company is represented by an unlimited
number of Ordinary Shares of no par value which, upon issue, the Directors may
designate into such classes and denominate in such currencies as they may
determine.
Number of Ordinary Shares Year ended Year ended
30 June 2024 30 June 2023
Number Number
Opening balance 611,452,217 611,452,217
Purchase of Ordinary shares into Treasury (9,078,000) -
Closing balance 602,374,217 611,452,217
Treasury Shares
On 15 February 2024, the Company announced a share buyback programme in which
it had allocated £20 million to purchase its own shares post closed period.
During the year ended 30 June 2024, 9,078,000 Treasury shares were purchased
at an average price of 103.19 pence per share. The total amount spent on the
buyback was £9,368,038.
The Company held 9,078,000 Treasury shares at the year end (2023: nil).
Shareholders' Equity
Year ended Year ended
30 June 2024 30 June 2023
£'000 £'000
Opening balance 854,189 858,391
Purchase of Ordinary shares into Treasury (9,368) -
Dividends paid (53,663) (50,995)
Total comprehensive (loss)/income (9,601) 46,793
Closing balance 781,557 854,189
Rights attaching to shares
The Company has a single class of Ordinary Shares, which are entitled to
dividends declared by the Company. At any general meeting of the Company, each
ordinary Shareholder is entitled to have one vote for each share held. The
Ordinary Shareholders also have the right to receive all income attributable
to those shares and participate in distributions made and such income shall be
divided pari passu among the holders of Ordinary Shares in proportion to the
number of Ordinary Shares held by them.
14. Dividends
On 7 August 2023, the Board declared a third interim dividend of £12,840,497,
in respect of the year ended 30 June 2023, equating to 2.10pps (third interim
dividend in respect of the year ended 30 June 2022: 2.05pps), which was paid
on 1 September 2023 to Shareholders on the register on 18 August 2023.
On 28 September 2023, the Board declared a fourth interim dividend of
£14,063,401 in respect of the year ended 30 June 2023, equating to 2.30pps
(fourth interim dividend in respect of the year ended 30 June 2022: 2.09pps),
which was paid on 6 November 2023 to Shareholders on the register on 6 October
2023.
On 26 January 2024, the Board declared its first interim dividend of
£13,451,949, in respect of the year ending 30 June 2024, equating to 2.20pps
(first interim dividend in respect of the year ended 30 June 2023: 2.10pps),
which was paid on 9 March 2024 to Shareholders on the register on 9 February
2024.
On 14 May 2024, the Board declared a second interim dividend of £13,307,233,
in respect of the year ended 30 June 2024, equating to 2.20pps (second interim
dividend in respect of the year ended 30 June 2023: 2.10pps), which was paid
on 24 June 2024 to Shareholders on the register on 24 May 2024.
15. Risk management policies and procedures
The Company is exposed to a variety of financial risks, including market risk
(including price risk, currency risk and interest rate risk), credit risk,
liquidity risk and portfolio operational risk. The Investment Adviser and the
Administrator report to the Board on a quarterly basis and provide information
to the Company which allows it to monitor and manage financial risks relating
to its operations.
The Company's overall risk management programme focuses on the
unpredictability of financial markets and government energy policy and seeks
to minimise potential adverse effects on the Company's financial performance,
as referenced in the Principal Risks and Uncertainties section in the
Strategic Report.
The Board is ultimately responsible for the overall risk management approach
within the Company. The Board has established procedures for monitoring and
controlling risk. The Company has investment guidelines that set out its
overall business strategies, its tolerance for risk and its general risk
management philosophy.
In addition, the Investment Adviser monitors and measures the overall risk
bearing capacity in relation to the aggregate risk exposure across all risk
types and activities. Further details regarding these policies are set out
below:
Market price risk
Market price risk is defined as the risk that the fair value of future cash
flows of a financial instrument held by the Company, in particular through the
Company's subsidiary, BR1, will fluctuate because of changes in market prices.
Market price risk will arise from changes in electricity prices whenever PPAs
expire and are renewed. The timing of these is staggered to minimise risk.
BR1's future SPV investments are subject to fluctuations in the price of
secondary assets which could have a material adverse effect on the BR1's
ability to source projects that meet its investment criteria and consequently
its business, financial position, results of operations and business
prospects.
The Company's overall market position is monitored by the Investment Adviser
and is reviewed by the Board of Directors on an ongoing basis.
Currency risk
The Company does not have any direct currency risk exposure as all its
investments, borrowings and other transactions are in Sterling. The Company is
however indirectly exposed to currency risk on future equipment purchases,
made through BR1's SPVs, where equipment is imported.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments and
related income from the cash and cash equivalents will fluctuate due to
changes in market interest rates.
The Company is also exposed, through BR1, to interest rate risk on drawings
under its RCF. Please see page 29 in the Investment Adviser's report for
details of the third party debt within the Company's subsidiaries.
The Company's interest bearing financial assets consist of cash and cash
equivalents. The interest rates on the short term bank deposits are fixed and
do not fluctuate significantly with changes in market interest rates.
The following table shows the portfolio profile of the financial assets at
year end:
Interest rate Total as at
30 June 2024
£'000
Floating rate
RBSI 1.83% 976
Fixed rate
Lloyds 0.00% 277
1,253
Interest rate Total as at
30 June 2023
£'000
Floating rate
RBSI 1.70% 753
Fixed rate
Lloyds 0.00% 216
969
The valuation of BR1's SPV investments is subject to variation in the discount
rate, which are themselves subject to changes in interest rate risk due to the
discount rates applied to the discounted cash flow technique when valuing the
investments. The Investment Adviser reviews the discount rates semi-annually
and takes into consideration market activity to ensure appropriate discount
rates are recommended to the Board. The Group is exposed to interest rate risk
on the Directors' Valuation of £965.6m (2023: £1,018.4m).
Credit risk
Credit risk is the risk that a counterparty will be unable to pay amounts in
full when due.
The underlying SPVs are contracted only with investment grade counter parties,
mitigating PPA counterparty risk. The Directors do not have any concerns
around the continuing purchasing of power through its current PPAs.
The Company's credit risk exposure is due to a portion of the Company's assets
being held as cash and cash equivalents and accrued interest. The Company
maintains its cash and cash equivalents and borrowings across two different
banking groups to diversify credit risk. The total exposure to credit risk
arises from default of the counterparty and the carrying amounts of financial
assets best represent the maximum credit risk exposure at the year end date.
As at 30 June 2024, the maximum credit risk exposure in relation to cash and
cash equivalents held by the Company was £1,253,168 (2023: £968,878). If the
cash and cash equivalents held by BR1 are included, this increases to
£29,923,873 (2023: £27,375,878). All cash and cash equivalents held by the
Company and BR1 is with banks that have a credit rating which is of investment
grade.
Cash Fixed deposit Total as at
30 June 2024
£'000 £'000 £'000
RBSI 976 - 976
Lloyds - 277 277
976 277 1,253
Cash Fixed deposit Total as at
30 June 2023
£'000 £'000 £'000
RBSI 753 - 753
Lloyds - 216 216
753 216 969
The carrying amount of these assets approximates their fair value.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its
liabilities as they fall due. The Investment Adviser and the Board
continuously monitor forecasted and actual cash flows from operating,
financing and investing activities.
As the Company's investments, through BR1, are in the SPVs, which are private
companies that are not publicly listed, the return from these investments is
dependent on the income generated or the disposal of renewable energy
infrastructure assets by the SPVs and will take time to realise.
The Company, through BR1, expects to comply with the covenants of its
revolving credit facility.
The following table details the Company's expected maturity for its financial
assets and liabilities. These are undiscounted contractual cash flows:
Less than one year Between one and five years After five years Total as at
30 June 2024
£'000 £'000 £'000 £'000
Assets
Financial assets held at fair value through profit or loss* - - 423,162 423,162
924 - - 924
Trade and other receivables**
Cash and cash equivalents 1,253 - - 1,253
Liabilities
Other payables and accrued expenses (663) - - (663)
1,514 - 423,162 424,676
* the Company passes debt to BR1 under loan agreements; as at the year end
there is an additional amount of non-contractual cash which is not reflected
above in addition to the interest income
**excluding prepayments
As part of the financing terms provided by all third party leaders to
companies within the Group, lenders have security packages which include
charges over the shares of the borrower entity and any wholly owned
subsidiaries.
Less than one year Between one and five years After five years Total as at
30 June 2023
£'000 £'000 £'000 £'000
Assets
Financial assets held at fair value through profit or loss* - - 454,460 454,460
Trade and other receivables** 910 - - 910
Cash and cash equivalents 969 - - 969
Liabilities
Other payables and accrued expenses (534) - - (534)
1,345 - 454,460 455,805
* the Company passes debt to BR1 under loan agreements; as at the year end
there is an additional amount of non-contractual cash which is not reflected
above
**excluding prepayments
Portfolio operational risk
Portfolio operational risk is defined as the risk that renewable energy
infrastructure assets perform below expectation after acquisition and revenue
received from the sale of electricity is reduced. This risk is mitigated by
BSL ensuring that operation and maintenance contractors are compliant with
their contractual obligations including reaction times, maintenance plans and
service levels.
Concentrations of risk
Concentrations of risk arise from financial instruments that have similar
characteristics and are affected similarly by changes in economic or other
conditions. All assets are located in the UK and consist of solar, wind and
energy storage assets.
Capital management policies and procedures
The Company's capital management objectives are to ensure that the Company
will be able to continue as a going concern while maximising the capital
return to equity Shareholders.
In accordance with the Company's investment policy, the Company's principal
use of cash (including the proceeds of any share issuance and loan facilities)
is to fund BR1's projects, as well as expenses related to fundraising, the
share issues, ongoing operational expenses and payment of dividends and other
distributions to Shareholders in accordance with the Company's dividend
policy.
The Board, with the assistance of the Investment Adviser, monitors and reviews
the broad structure of the Company's capital on an ongoing basis.
The Company has no imposed capital requirements.
The capital structure of the Company consists of issued share capital and
retained earnings.
16. Related party transactions and Directors' remuneration
In the opinion of the Directors, the Company has no immediate or ultimate
controlling party.
The Chair was entitled to an annual remuneration of £81,000 (2023: £68,906).
The other Directors were entitled to an annual remuneration of £54,000 (2023:
£43,050). The Chair of the Nomination Committee receives an additional annual
fee of £3,000 (2023: N/A). The Chair of the Remuneration Committee receives
an additional annual fee of £3,000 (2023: N/A). The Chair of the
Environmental, Social and Governance Committee receives an additional annual
fee of £7,000 (2023: £5,250). The Chair of the Audit and Risk Committee
receives an additional annual fee of £11,000 (2023: £8,768). The Chair of
the Management Engagement and Service Providers Committee receives an
additional annual fee of £4,000 (2023: £3,150).
The total Directors' fees expense for the year amounted to £284,166 (2023:
£271,634) of which £85,414 was outstanding at 30 June 2024 (2023: £71,517).
At 30 June 2024, the number of Ordinary Shares held by each Director is as
follows:
2024 2023
Number of Number of
Ordinary Shares Ordinary Shares
John Scott* 683,929 625,619
Elizabeth Burne 15,000 15,000
Michael Gibbons 37,800 -
Meriel Lenfestey 7,693 7,693
Chris Waldron* 55,000 N/A
Paul Le Page N/A 35,000
799,422 683,312
*Including shares held by PCAs
John Scott and Michael Gibbons are Directors of BR1. They received an annual
fee of £6,828 (2023: £6,565) each for their services to this company. Neil
Wood and James Armstrong, who are partners of the Investment Adviser, are also
Directors of BSIFIL and BR1.
The Company and BR1's investment advisory fees for the year amounted to
£6,510,644 (2023: £7,052,064) of which £512,618 (2023: £554,919) was
outstanding at the year end. James Armstrong, Giovanni Terranova and Neil
Wood, who are partners of the Investment Adviser, hold a 0.03%, 0.07% and
0.01% interest in the Company as at 30 June 2024, respectively.
Fees paid during the year by SPVs to BSL, a company which has the same
ownership as that of the Investment Adviser totalled £5,795,140 (2023:
£4,456,173). BSL provides asset management and other services relating to the
operation of daily management activities of the renewable energy project
companies.
Fees paid during the year by SPVs to BOL, a company which has the same
ownership as that of the Investment Adviser totalled £15,819,315 (2023:
£10,156,959). BOL provides O&M and other services relating to the
operation of daily management activities of the renewable energy project
companies.
Fees paid during the year by SPVs to BRD, a company which has the same
ownership as that of the Investment Adviser, totalled £808,168 (2023:
£1,624,024). BRD locates and manages a pipeline of development projects for
the Company and the amount includes £Nil (2023: £966,681) for BRD's share of
development projects sold.
Fees paid during the year by SPVs to BCM, a company which has the same
ownership as that of the Investment Adviser totalled £335,223 (2023: £Nil).
BCM provides construction management services on the new build portfolio.
The Company's monitoring fee income received from BR1 amounted to £900,000
(2023: £900,000) of which £900,257 was outstanding at the year end (2023:
£900,257).
17. Subsequent events
The following events happened after the end of the Company's reporting period
on 30 June 2024
On 22 July 2024, the Company announced the signing of Phase Two of its long
term strategic partnership with GLIL, being the sale of a 50% stake in a
112.2MW portfolio of UK solar assets which had been 100% owned by the Company.
On 5 September 2024, the Company announced completion of the sale for c.£70
million, of which £50.5 million was used to partially repay the RCF. The
remaining proceeds will be used to provide funding for the Company's
construction pipeline. After completion of Phase Two, the Company's equity
stake in the combined portfolios increased to approximately 25%. This includes
the acquisition of the Lightsource BP Portfolio, in which Bluefield Solar
secured a 9% equity interest alongside GLIL during Phase One of the Strategic
Partnership in December 2023.
Post year end, on 19 August 2024, the Board declared a third interim dividend
of £13,171,273 in respect of the year ended 30 June 2024, equating to 2.20pps
(third interim dividend in respect of the year ended 30 June 2023: 2.10pps),
which will be paid on or around 30 September 2024 to Shareholders on the
register on 30 August 2024.
Post year end, Meriel Lenfestey bought an additional 12,307 Ordinary Shares
and Chris Waldron bought an additional 35,000 Ordinary Shares of the Company.
Post year end, on 27 September 2024, the Board approved a fourth interim
dividend in respect of the year ended 30 June 2024 of 2.20pps (fourth interim
dividend in respect of the year ended 30 June 2023: 2.30pps), which will be
declared on 30 September 2024 and will be paid on or around 15 November 2024
to Shareholders on the register on 11 October 2024.
During the period from 1 July 2024 up to and including 26 September 2024, the
Company purchased 5,505,000 Treasury shares at a total cost of £5,930,527.
Glossary of Defined Terms
Administrator means Ocorian Administration (Guernsey) Limited
AGM means the Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the Association of Investment Companies Code of Corporate
Governance
AIF means Alternative Investment Fund
AIFM means Alternative Investment Fund Management
AIFMD means the Alternative Investment Fund Management Directive
Articles means the Memorandum of 29 May 2013 as amended and Articles of
Incorporation as adopted by special resolution on 7 November 2016
Auditor means KPMG Channel Islands Limited (see KPMG)
Aviva Investors means Aviva Investors Limited
BCM means Bluefield Construction Management Limited
BEIS means The Department for Business, Energy and Industrial Strategy
BEPS means Base erosion and profit shifting
BESS means battery energy storage systems
Bluefield means Bluefield Partners LLP
Bluefield Group means Bluefield Partners LLP and Bluefield Companies
BOL means Bluefield Operations Limited
Board means the Directors of the Company
BR1 means Bluefield Renewables 1 Limited being the only direct subsidiary of
the Company
BRD means Bluefield Renewable Developments Limited
Brexit means departure of the UK from the EU
BSIF means Bluefield Solar Income Fund Limited
BSL means Bluefield Asset Management Services Limited
BSUoS means Balancing Services Use of System charges: costs set to ensure that
network companies can recover their allowed revenue under Ofgem price controls
Business days means every official working day of the week, generally Monday
to Friday excluding public holidays
CAGR means compound annual growth rate
Calculation Time means The Calculation Time as set out in the Articles of
Incorporation
CCC means Committee on Climate Change
CfD means Contract for Difference
Company means Bluefield Solar Income Fund Limited
Companies Law means the Companies (Guernsey) Law 2008, as amended (see Law)
Cost of debt means the blended cost of debt reflecting fixed and index-linked
elements
CO2e means Carbon Dioxide emissions
CRS means Common Reporting Standard
CSR means Corporate Social Responsibility
DCF means Discounted Cash Flow
DEFRA means the Department for Environment, Food and Rural Affairs
DESNZ means the Department for Energy Security and Net Zero
Defect Risk means that there is an over-reliance on limited equipment
manufacturers which could lead to large proportions of the portfolio suffering
similar defects
Directors' Valuation means gross value of the SPV investments held by BR1,
including their holding companies.
DNO means Distribution Network Operator
DNSH means Do No Significant Harm
DSCR means debt service cover ratio
DTR means the Disclosure Guidance and Transparency Rules of the UK's FCA
EBITDA means Earnings before interest, tax, depreciation and amortisation
EGL means Electricity Generator Levy
EGM means Extraordinary General Meeting
EIS means Enterprise Investment Scheme
EPC means Engineering, Procurement & Construction
EPS means Earning per share
ESCC means Equity Shares in Commercial Companies category
ESG means Environmental, Social & Governance
EU means the European Union
EV means enterprise valuation
FAC means Final Acceptance Certificate
FATCA means the Foreign Account Tax Compliance Act
FI means Financial Institution
Financial Statements means the audited annual financial statements
FiT means Feed-in Tariff
FRC means Financial Reporting Council
GAV means Gross Asset Value
GDPR means General Data Protection Regulation
GFSC means the Guernsey Financial Services Commission
GHG means greenhouse gas
GHG Protocol supplies the world's most widely used greenhouse gas accounting
standards
GLIL means GLIL Infrastructure LLP
Group means Bluefield Solar Income Fund Limited, its subsidiaries and
associates
Guernsey Code means the Guernsey Financial Services Commission Finance Sector
Code of Corporate Governance
GWh means Gigawatt hour
GW means Gigawatt peak
IAS means International Accounting Standard
IASB means the International Accounting Standards Board
IFRS means International Financial Reporting Standards as adopted by the EU
Investment Adviser means Bluefield Partners LLP
IPCC means Intergovernmental Panel on Climate Change
IPEV Valuation Guidelines means the International Private Equity and Venture
Capital Valuation Guidelines
IPO means initial public offering
IRR means Internal Rate of Return
IVSC The International Valuation Standards Council
KID means Key Information Document
KPI means Key Performance Indicators
KPMG means KPMG Channel Islands Limited (see Auditor)
kWh means Kilowatt hour
kW means Kilowatt
Law means Companies (Guernsey) Law, 2008 as amended (see Companies Law)
LD means liquidated damages
Listing Rules means the set of FCA rules which must be followed by all
companies listed in the UK
Lloyds means Lloyds Bank Group plc
LSE means London Stock Exchange plc
LTF means long term facility provided by Aviva Investors Limited
Macquarie means Macquarie Bank Limited
Main Market means the main securities market of the LSE
MESPC means Management Engagement and Service Providers Committee
MW means Megawatt (a unit of power equal to one million watts)
MWh means Megawatt hour
NatWest means NatWest International plc
NAV means Net Asset Value as defined in the prospectus
NGFS means Network for Greening the Financial System
NIRO means Northern Ireland Renewables Obligation
NMPI means Non-mainstream Pooled Investments and Special Purpose Vehicles and
the rules around their financial promotion
NPPR means the AIFMD National Private Placement Regime
O&M means Operation and Maintenance
OECD means The Organisation for Economic Cooperation and Development
Official List means the Premium Segment of the UK Listing Authority's Official
List
Ofgem means Office of Gas and Electricity Markets
Ordinary Shares means the issued ordinary share capital of the Company, of
which there is only one class
Outage Risk means that a higher proportion of large capacity assets hold
increased exposure to material losses due to curtailments and periods of
outage
P10 means Irradiation estimate exceeded with 10% probability
P90 means Irradiation estimate exceeded with 90% probability
PAI means Principle Adverse Indicators
PCA means Persons Closely Associated
PCAF means Partnership for Carbon Accounting Financials
PPA means Power Purchase Agreement
pps means pence per share
PR means Performance Ratio (the ratio of the actual and theoretically possible
energy outputs)
PRIIPS means Packaged Retail and Insurance-Based Investment Products
PV means Photovoltaic
RBSI means Royal Bank of Scotland International Limited
RCF means Revolving Credit Facility
RCP means Representative Concentration Pathway
REGO means Renewable Energy Guarantees of Origin
REMA means Review of Electricity Market Arrangements
RIDDOR means Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations
RO Scheme means the Renewable Obligation Scheme which is the financial
mechanism by which the UK Government incentivises the deployment of
large-scale renewable electricity generation by placing a mandatory
requirement on licensed UK electricity suppliers to source a specified and
annually increasing proportion of the electricity they supply to customers
from eligible renewable sources, or pay a penalty
ROC means Renewable Obligation Certificates
ROC recycle means the payment received by generators from the redistribution
of the buy-out fund. Payments are made into the buy-out fund when suppliers do
not have sufficient ROCs to cover their obligation.
RPI means the Retail Price Index
Santander UK means Santander UK plc
SASB means Sustainability Accounting Standards Board
SBTI means Science Based Targets Initiative
SCADA means Supervisory Control and Data Acquisition
SDG means the United Nations Sustainable Development Goals
SDR means Sustainability Disclosure Requirements
SFDR means the Sustainable Finance Disclosure Regulation
SIC means Standard Industrial Classification
SONIA means Sterling Overnight Index Average
SPA means Share Purchase Agreement
SPVs means the Special Purpose Vehicles which hold the Company's investment
portfolio of underlying operating assets
SSP means Shared Socioeconomic Pathways
Sterling means the Great British pound currency
TCFD means Task Force for Climate-related Financial Disclosures
TNFD means Taskforce on Nature-related Financial Disclosures
TISE means The International Stock Exchange (formerly CISE, Channel Islands
Securities Exchange)
UK means the United Kingdom of Great Britain and Northern Ireland
UK Code means the United Kingdom Corporate Governance Code
UK FCA means the UK Financial Conduct Authority
UNGC means the United Nations Global Compact
United Nations Principles for Responsible Investment means an approach to
investing that aims to incorporate environmental, social and governance
factors into investment decisions, to better manage risk and generate
sustainable, long-term returns
Alternative Performance Measures (Unaudited)
APM Definition Purpose Calculation
Total return The percentage increase/(decrease) in NAV, inclusive of dividends paid, in the A key measure of the success of the Investment Adviser's investment strategy. The change in NAV for the period plus any dividends paid divided by the
reporting period. initial NAV. (129.75-139.70+2.10+2.30+2.20+2.20)/139.70=(0.83)%
Total Shareholder Return The percentage increase/(decrease) in share price, inclusive of dividends A measure of the return that could have been obtained by holding a share over The change in share price for the period plus any dividends paid divided by
paid, in the reporting period. the reporting period. the initial share price. (105.60-120.00+2.10+2.30+2.20+2.20)/120.00=(4.67)%.
The measure excludes transaction costs.
Total Dividends Declared in Period This is the sum of the dividends that the Board has declared relating to the A measure of the income that the company has paid to shareholders that can be The linear sum of each dividend declared in the reporting period.
reporting period. compared to the Company's target dividend.
Underlying Earnings Total net income of the Company's investment portfolio. A measure to link the underlying financial performance of the operational Total income of the Company's portfolio minus Group operating costs minus
projects to the dividends declared and paid by the Company. Group debt costs.
Market Capitalisation The total value of the Company's issued share capital. This is a key indicator of the Company's liquidity. The price per share multiplied by the number of shares in issue.
NAV per Ordinary Share The Company's closing NAV per share at the year end. A measure of the value of one Ordinary Share. The net assets attributable to Ordinary Shares on the statement of financial
position (£781.6m) divided by the number of ordinary shares in issue
(602,374,217) as at the calculation date.
Sale of Electricity The total proportion of revenue generated by the Company's portfolio that is A measure to understand the proportion of revenue attributable to sales of The amount of revenue attributable to electricity sales divided by the total
attributable to electricity sales. electricity. revenue generated by the Company's portfolio, expressed as a percentage.
Total Revenue Total net income of the Company's investment portfolio. A measure to outline the Total revenue of the portfolio on per MW basis. Total income of the Company's portfolio owned for a full 12 months.
PPA Revenue Revenue generated through PPAs. A measure to outline the revenue earned by the portfolio from power sales. Total revenue from all power price sales during the period from the Company's
portfolio.
Regulated Revenue Revenue generated from the sale of FiTs and ROCs. A measure to outline the revenue earned by the portfolio from government Total revenue from all subsidy income earned during the year from the
subsidies. Company's portfolio.
Ongoing charges ratio The recurring costs that the Company and its Immediate Holding Company has A measure of the minimum gross profit that the Company needs to produce to Calculated in accordance with the AIC methodology detailed in the table below.
incurred during the year excluding performance fees and one off legal and make a positive return for Shareholders.
professional fees expressed as a percentage of the Company's average NAV for
the year.
Weighted Average ROC A relative indicator of the regulatory revenues within a renewable portfolio. A measure of the Company's portfolio earnings as a proportion of its assets. Total Regulated Revenue received by the portfolio divided by the product of
the current market value of a ROC and the annual generation capacity of the
portfolio.
Weighted Average Life The average operational life of the Company's portfolio. A measure of the Company's progress in extending the life of its portfolio The sum of the product of each plant's operational capacity in MW and the
beyond the end of the subsidy regime in 2036. plant's expected life divided by the total portfolio capacity in MW.
Directors' Valuation The gross value of the SPV Investments held by BR1, including their holding An estimate of the sum that would be realised if the Company's portfolio was A reconciliation of the Directors' Valuation to Financial assets at fair value
companies minus Project level debt. sold on a willing buyer, willing seller basis. through profit and loss is shown in Note 8 of the financial statements.
Gross Asset Value The Market Value of all Assets within the Company. A measure of the total value of the Company's Assets. The total assets attributable to Ordinary Shares on the Statement of Financial
Position.
Total Outstanding Debt The total outstanding balances of all debt held within the Company and its A measure that is used to establish the Company's level of gearing. The sum of the Sterling equivalent values of all loans held within the
subsidiaries. Company.
Regulated Revenue Revenue generated from the sale of FiTs and ROCs. A measure to outline the revenue earned by the portfolio from government Total revenue from all subsidy income earned during the year from the
subsidies. Company's portfolio.
Ongoing Charges Year to 30 June 2024
The Company Immediate Holding Company Total
£'000s £'000s £'000s
Fees to Investment Adviser 662,531 5,909,672 6,572,203
Legal and professional fees 190,897 309,739 500,636
Administration fees 503,977 - 503,977
Directors' remuneration 284,166 14,035 298,201
Audit fees 123,815 18,060 141,875
Other ongoing expenses 246,273 165,090 411,363
Total ongoing expenses 2,011,659 6,416,596 8,428,255
Average NAV 824,192,892
Ongoing Charges (using AIC methodology) 1.02%
1 ESG performance relating to the period 1 Jan 2024 - 30 Jun 2024 and
apportioned according to the Company's 9% equity stake (where appropriate).
2 KPI updated from 'savings' to 'avoided'.
3 £50,000 was allocated but the project was not finalised until the current
Year.
4 Please note that the emissions stated for the current Year are not
comparable with the prior Year due to a change in methodology. Further details
are provided within the TCFD disclosure, on p.60.
5 Market-based emissions are stated.
6 The KPI of 'Relative percentage of renewable and non-renewable energy
consumed by the Company (%)' has been removed. Renewable energy consumption
will continue to be tracked via the KPI of 'Installed capacity with renewable
energy import tariffs'.
7 Relates to assets where the Company has control over the procurement of
imported electricity.
8 The KPI of 'climate change risk and vulnerability assessment undertaken
(Y/N)' has been removed as this has been completed.
9 Updated from 'Assets covered by a climate adaptation plan (%)'
10 Relating to planning applications submitted by the Company together with
its development partners during the Year.
11 One planning application submitted during the Year did not reach a 20%
uplift on hedgerow units (but did achieve >55% uplift on habitat units).
12 Defined as within 1 kilometre of a biodiversity-sensitive area.
13 KPI has been updated from 22% (as presented in the 2023 Annual Report
& Financial Statements).
14 Note that the figure of >£253,000 published within the 2023 Annual
Report & Financial Statements was restated.
15 Suppliers relates to EPC, O&M, and asset management contractors.
16 Updated from 'Tier 1 supply chains mapped (%)'.
17 Updated from 'Tier 2 supply chains mapped (relating to Bluefield service
providers) (%)'.
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 (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR KDLFLZKLBBBQRecent news on Bluefield Solar Income Fund
See all newsREG - Bluefield Solar Inc. - Interim Results to 31 December 2024
AnnouncementREG - Bluefield Solar Inc. - Completion of circa £300 million refinancing
AnnouncementREG - Bluefield Solar Inc. - Change to Director Roles and Responsibilities
AnnouncementREG - Bluefield Solar Inc. - Total Voting Rights
AnnouncementREG - Bluefield Solar Inc. - Notice of Interim Results
Announcement