REG - Foresight Solar Fund - Q2 2024 Net Asset Value and Trading Update

Foresight Solar FundAnnouncement

08/08/2024 07:00

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RNS Number : 6119Z  Foresight Solar Fund Limited  08 August 2024

8 August 2024

 

Foresight Solar Fund Limited

(the "Company", "Foresight Solar" or "FSFL")

 

Q2 2024 Net Asset Value and Trading Update

 

Foresight Solar, a sustainability-focused fund investing in solar and battery
storage assets in the UK and internationally, announces that its unaudited
net asset value (NAV) was £656.8 million at 30 June 2024 (31 March 2024:
£665.0 million). This results in a NAV per Ordinary Share of 114.9 pence (31
March 2024: 114.7 pence per share).

 

Highlights:

·    Near and long-term power price forecasts for the UK and Spain trended
up in the second quarter, leading to a positive impact on NAV.

·    UK electricity production recovered after the wettest first quarter
on record: irradiation was 2.7% below budget and generation was 4.3% lower
than forecast in the first half.

·    Active treasury management reduced RCF costs by 80bps, equivalent to
potential interest savings of £360,000 to the end of the year. The RCF was
£74.5 million drawn at 30 June 2024.

·    The board increased the buyback programme by up to £10 million,
taking the total to up to £50 million. Repurchases have added a cumulative
1.9pps of NAV accretion.

 

Summary of key NAV drivers:

 

 Item                     p/share movement
 NAV on 31 March 2024     114.7p
 Power price forecasts    +0.7
 Project actuals          -0.6
 Share buyback programme  +0.4
 Other movements          -0.3
 NAV on 30 June 2024      114.9p

 

As consultants updated their assumptions, UK power price forecasts reversed a
five-quarter downward trend and increased in the three months to 30 June 2024.
The position was similar in Spain, with higher near and long-term forecasts,
whilst price forecasts for Australia were marginally down relative to the
previous quarter. In aggregate, these moves resulted in a positive impact to
NAV of 0.7 pence per share.

 

Foresight Solar continued its accretive share buyback programme, repurchasing
a further 7.9 million shares during the second quarter and delivering an
additional 0.4pps of NAV accretion to shareholders. FSFL has now deployed over
£35 million of its £40 million initial allocation, resulting in a cumulative
1.9pps uplift to NAV since the Company began buying back its shares in May
2023.

 

Other movements, totalling a downside net impact of 0.3pps to NAV, included a
small foreign exchange movement; higher insurance costs; returning the Lorca
portfolio to a DCF valuation following the partial divestment in Q4 2023; and
a minor upside from rebalancing discount rates across the Australian portfolio
to reflect current market conditions.

 

Trading update

Improved weather and good availability from April to June in the UK helped
FSFL recover from the wettest first quarter on record. The better conditions,
however, were not enough to completely mitigate the negative impact of the
rainy start to the year. At the end of June, cumulative irradiation for the
six months was 2.7% below budget and production was 4.3% lower than expected
in FSFL's main market due to unplanned network outages and a small number of
inverter issues.

 

Spain and Australia also suffered from poor weather and network outages.
Overall, production for the global portfolio was 7.1% below forecast for the
first half of the year - a considerable improvement from Q1, when it was 15.6%
behind budget.

 

Notwithstanding the below-budget start of 2024, Foresight Solar's active power
price hedging strategy ensured another quarter of steady cash flow from
operations, with cash distributions only modestly down against budget. The
directors are confident the Company will meet its target dividend of 8.0pps
for the year with a slightly revised net dividend cover of 1.4x.

 

The investment manager continued to forward-fix electricity sales at
attractive rates to provide revenue visibility for the medium term. Overall,
the proportion of contracted revenue for the global portfolio now stands at
89% for 2024, 83% for 2025 and 63% for 2026.

 

Capital allocation

The board and the investment manager recognise the discount that persists
between FSFL's net asset value and its share price. The directors have thus
allocated up to a further £10 million to Foresight Solar's ongoing share
buyback programme, bringing its total to a potential £50 million and
extending the renewables sector's largest initiative relative to NAV.

 

Demonstrating the Company's commitment to a disciplined capital allocation
approach, FSFL didn't make any large capital deployments in the period. The
divestment programme continues to move ahead, and more details will be
provided in the interim report. The board remains focused on returning capital
to shareholders and reducing variable-rate debt costs.

 

Gearing

The gross asset value (GAV) on 30 June 2024 was £1,085.2 million (31 March
2024: £1,094.5 million), with total outstanding debt of £428.4 million,
which represented 39.4% of GAV (31 March 2024: £429.5 million and 39.2%) -
comfortably within the 50% limit.

 

The RCF balance was £74.5 million drawn (31 March 2024: £75.0 million). In
May, the Company substituted a £43 million tranche of its GBP drawing on the
multi-currency revolving credit facility to EUR, better aligning its debt with
its investment exposure. The treasury management initiative lowered the
expected weighted cost of the interest payable on the RCF by 80 basis points
and, based on current rates, has the potential to save at least £360,000 in
interest payments by the end of the year.

 

For more information, follow Foresight Solar on LinkedIn
(https://www.linkedin.com/showcase/foresight-solar/) or contact:

 

 Foresight Group                  +44 (0)20 3911 2318

 Matheus Fierro

 (fsflir@foresightgroup.eu)

 Jefferies International Limited  +44 (0)20 7029 8000

 Gaudi Le Roux

 Harry Randall

 Singer Capital Markets           +44 (0)20 7496 3000

 Robert Peel

 Alaina Wong

 Sodali & Co                      +44 (0)20 7250 1446

 Justin Griffiths

 Gilly Lock

 

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