REG - Foresight Solar Fund - Q4 2025 Trading Update and Net Asset Value

Foresight Solar FundAnnouncement

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RNS Number : 3852V  Foresight Solar Fund Limited  05 March 2026

5 March 2026

 

Foresight Solar Fund Limited

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

Q4 2025 Trading Update and Net Asset Value

 

Foresight Solar, the fund investing in solar and battery storage assets to
build income and growth, announces its unaudited net asset value (NAV) was
£545.9 million at 31 December 2025 (30 September 2025: £564.5 million). This
results in a NAV per Ordinary Share of 99.2 pence (30 September 2025: 102.1
pence).

 

Highlights

·     Strong irradiation in the UK during 2025 contributed to electricity
production 3.4% above budget in Foresight Solar's main market.

·      Independent advisors reviewed the UK portfolio's operational
performance, concluding in a revised energy yield forecast with an increase of
2.8% in expected annual production.

·     Completion of the detailed UK tax review resulted in an additional
5.5pps downside, providing clarity over historical and future tax liabilities.

·     Commissioning of the first battery storage project provided a NAV
uplift and reinforced the Company's capability to bring plants through
construction for the benefit of shareholders.

·      Strong operational performance and robust hedging gave the Board
confidence to declare the final interim dividend relating to 2025 on 13
February, with cover of 1.3x for the year.

 

Summary of key changes to NAV

 

 Item                             p/share movement
 NAV on 30 September 2025         102.1p
 Interim dividends                -2.0p
 Time value                       +1.9p
 Energy yield assessment          +3.9p
 Lifecycle investments            +1.5p
 Asset lives                      +3.3p
 Capture price discounts          -1.9p
 Tax review                       -5.5p
 Sandridge BESS commissioning     +0.4p
 Power price forecasts            -0.3p
 Project actuals                  -0.4p
 Australian curtailment           -1.4p
 ROC/FiT inflation indexation(1)  -1.7p
 Share buybacks                   +0.2p
 Other movements                  -0.9p
 NAV on 31 December 2025          99.2p

(1) Despite being a post-period move, Foresight Solar has decided to include
the adjustment in this update.

 

Portfolio review and valuation

In the second half of 2025, the Company commissioned an independent technical
advisor to undertake a comprehensive review of the UK assets. Given the
portfolio's 12‑year operating history - and the ongoing divestment programme
targeting an additional 75 MW of operational solar - this assessment was both
timely and valuable.

 

The review updated the long‑term energy yield forecast and provided external
validation of key assumptions, including asset availability, lifecycle
investment requirements and useful economic lives. These findings will be
incorporated into future budgets, with future performance monitored against
the revised production targets.

 

This independent review reaffirmed Foresight Solar's longstanding view that
the portfolio operates to a high standard, with expected production increasing
2.8% relative to previous forecasts. The portfolio remains well‑positioned
to deliver reliable, clean power for many years to come.

 

Reflecting this strengthened outlook, the valuation now assumes that most UK
sites will operate for the shorter of their planning expiry or 40 years.
Foresight Solar remains confident in its ability to extend leases to support
this targeted operating life. The remaining UK portfolio useful life is now 26
years.

 

The Company also increased its assumed long-term solar capture discount rates,
reducing expected captured prices in light of higher expected renewable
penetration in the UK in coming years.

 

Together, these valuation and assumption changes contributed 6.8 pence per
share (pps) to NAV in the fourth quarter.

 

Tax review

The Company reported a tax adjustment in the third quarter NAV update,
transparently disclosing the investment manager's and a leading advisor's best
estimate of the impact on NAV at the time, for which the Board sought as much
assurance as was available at the time. As acknowledged then, further analysis
was required. The work is now finished, resulting in higher tax liabilities
and a further downside of 5.5pps.

 

These additional historical tax liabilities will be settled with cash already
reserved within the structure and operational cashflows. Dividends are still
expected to remain fully covered.

 

The investment manager recognises this is an extremely unwelcome outcome.
However, Gary Fraser, CEO of Foresight Group, assured Directors this
adjustment concludes the matters arising from the Company's voluntarily agreed
position with HM Revenue & Customs, and the investment manager is
confident it brings clarity to both past and future tax liabilities.

 

Other valuation movements

Sandridge BESS began commercial operations during the period and is expected
to contribute to distributions in 2026. As the project moved from a
cost‑based valuation to a discounted cash flow methodology, the Company
recorded a positive impact of 0.4pps. The valuation uplift demonstrates FSFL's
capability to deliver projects through construction and capture value for
shareholders. It also highlights the strategic benefits of the allocation to
battery storage, which adds a complementary revenue stream to the generation
portfolio and supports the energy transition.

 

Moderately lower power price forecasts in the UK and Spain, especially in the
near term - when Foresight Solar is largely hedged - resulted in a 0.3pps
reduction in NAV.

 

Between October and December, network outages in the UK and
higher‑than‑expected curtailment in Spain and Australia limited
electricity production. This resulted in a modest negative impact of 0.4pps
from actual performance in the quarter.

 

Reflecting the challenging market conditions, the Company has adopted more
conservative curtailment expectations in Australia, reducing NAV by 1.4pps.

 

The proposed change to Renewables Obligation and Feed‑in Tariff inflation
indexation, shifting from RPI to CPI from April 2026, remains subject to
legislation. Once implemented, it will lead to a downside of 1.7pps and is,
therefore, reflected in this valuation despite being a post-period decision.
The move is consistent with the estimate issued last November.

 

The Company continued with share buybacks, delivering 0.2pps of NAV accretion
in the last quarter of 2025. FSFL has now deployed almost £55 million of its
£60 million allocation, resulting in a cumulative uplift of 3.1pps since the
start of repurchases.

 

Other movements include macro factors, such as realised 2025 inflation,
foreign exchange movements and updated business rates, as well as working
capital adjustments and mark-to-market of financial hedges.

 

UK portfolio valuation

The Board remains confident that Foresight Solar's realistic assumptions are
supported by transactional evidence and market data, resulting in a balanced
valuation for the UK portfolio.

 

 UK portfolio valuation  31 December 2025  30 June 2025
 £m/MWp                  0.97              1.09

 

Trading update

A sunny year in the UK drove electricity production 3.4% above budget. Output
would have been higher without network outages in the Company's main market.
This outperformance partially offset below-budget generation in Spain and
Australia, where curtailment exceeded expectations.

 

Overall, global generation was 1.3% below base case with irradiation 4.9%
higher than forecast for 2025.

 

The investment manager continued to implement the Company's active hedging
strategy to secure advantageous prices, ensure revenue visibility and support
dividend cover. Foresight Solar has capitalised on recent market moves to
secure additional hedges, taking the total contracted revenues in the UK to
84% for 2026 and 65% for 2027, at an average price of 76/MWh for both years,
and enhancing dividend cover. As elevated pandemic-era fixes roll off, FSFL
has processes in place to maintain an attractive revenue profile and covered
income for shareholders.

 

Strong operational performance and robust hedging gave the Board confidence to
declare the final interim dividend relating to 2025, with cover of 1.3x for
the year.

 

The dividend target for 2026 will be confirmed alongside FSFL's full‑year
results. The Board recognises the importance of cash yield to shareholders and
remains committed to a progressive income strategy. It will consider whether
an increase is appropriate and aligned with shareholders' interests.
Maintaining the dividend at its current level may help build cover for future
periods. At the latest price, FSFL shares yield close to 13%.

 

Gearing

The gross asset value (GAV) on 31 December 2025 was £928.2 million (30
September 2025: £969.4 million), with total outstanding debt of £382.3
million. This represented 41.2% of GAV (30 September 2025: £404.9 million and
41.8%), comfortably within the 50% limit.

 

The RCF balance was £72.7 million drawn (30 September 2025: £91.7 million).

 

Commenting on the update, Tony Roper, chair of Foresight Solar, said:

"Today's results underline Foresight Solar's operational resilience in a
challenging year for the renewable energy investment trust sector, with a
difficult macro environment, a volatile regulatory landscape and frustrating
share price performance.

 

"Our underlying operations remain strong and that reliable track record,
combined with our active power price hedging strategy, allowed us to close the
year with a dividend cover of 1.3x.

 

"Sandridge BESS, our first operational battery storage asset, entering
operations at the end of 2025 was another landmark. It exemplifies the
Company's expertise in bringing assets from construction into operations and
creating upside for investors.

 

"The investment manager and a leading tax advisor finalised the UK tax review.
They have presented their detailed analyses, and the Board has sought
assurances from them. While we are clearly disappointed with the outcome, this
update concludes the work to provide clarity on past and future tax
liabilities.

 

"We were frustrated by the government's decision to change the inflation
indexation standard for RO projects. Even as the least disruptive of the two
options originally set out, the move still reneges on previous commitments and
represents a short-sighted step backwards.

 

"As previously announced, addressing the share price discount to NAV remains a
key priority for the Directors and me. We look forward to updating you in due
course."

 

2025 annual results date

Foresight Solar expects to publish its annual results for the full year to 31
December 2025 on 24 March 2026. A Notice of Results with more details has been
published today.

 

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

 Mark Bloomfield

 Sodali & Co                      +44 (0)20 7100 6451

 Gilly Lock

 Madeleine Gordon-Foxwell

 JTC                              +44 (0)15 3470 0000

 Claire Brazenall

 

LEI: 213800VO4O83JVSSOX33

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