Q1 2024 Net Asset Value and Trading Update
8 May 2024
Foresight Solar Fund Limited
(the "Company", "Foresight Solar" or "FSFL")
Q1 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 £665.0 million at 31 March 2024 (31 December 2023: £697.9 million). This results in a NAV per Ordinary Share of 114.7 pence (31 December 2023: 118.4 pence per share).
Summary of key NAV drivers:
|
Item |
p/share movement |
|
NAV on 31 December 2023 |
118.4p |
|
Power price forecasts |
-2.1p |
|
Revaluation of the UK BESS portfolio |
-0.7p |
|
Project actuals |
-0.6p |
|
Foreign exchange |
-0.4p |
|
Share buyback programme |
+0.4p |
|
Other movements |
-0.3p |
|
NAV on 31 March 2024 |
114.7p |
UK power price forecasts continued to trend down in the first three months of 2024. The fall brings estimates in line with current market forward rates for this year, which hover around £60/MWh. Forecasts for Australia and Spain were marginally lower for the quarter as well. The reductions were mitigated by Foresight Solar's high proportion of fixed price contracts for energy sales through to 2027, although, in aggregate, the moves resulted in a negative impact to NAV of 2.1 pence per share.
To reflect full transparency on the lower revenue outlook for battery storage assets in the UK, confirmed by both actual results and independent forecasts, alongside market-based pricing, the Company has revised down the holding values of its UK BESS portfolio, resulting in a negative impact to NAV of 0.7pps.As previously stated, FSFL will not build its pre-construction BESS assets until such time as this becomes appropriate under its capital allocation policy. The Company is considering all options to progress the projects.
Foresight Solar continued to progress with its accretive share buyback programme, repurchasing a further 9.7 million shares during the quarter to 31 March 2024 and delivering an additional 0.4pps of NAV accretion to shareholders. FSFL has now deployed over £30 million of its £40 million allocation and delivered a cumulative 1.5pps uplift to NAV since the buyback programme started in May 2023.
Trading update
The first quarter of the year was among the wettest on record in the UK. Lower-than-expected irradiation in the country culminated in production 13% below forecast to 31 March 2024, with Australia and Spain similarly impacted by poor weather. Notwithstanding this period of lower generation, the Company continues to be highly cash generative and remains confident of meeting its target dividend cover for the year.
Capital allocation
The board and the investment manager recognise the discount that persists between FSFL's net asset value and its share price. Foresight Solar remains committed to its disciplined capital allocation approach, focusing on a balance between returning capital to shareholders via the buyback programme and repaying debt. The directors will continue to evaluate the allocation to share repurchases whilst also targeting a significant reduction in the balance of the revolving credit facility (RCF) by the end of the year. In line with the capital allocation approach, the Company will continue to assess divestments and new investments selectively and opportunistically.
Post quarter-end, the Company agreed with lenders to voluntarily repay A$6.5 million (£3.4 million) of the joint debt facility for the Oakey 1 and Longreach projects in Australia. The amount is equivalent to 12% of the outstanding balance scheduled to be refinanced in 2027. The repayment and a debt re-sculpting exercise, still subject to final lender consent, will bolster cover ratios so the projects may continue with distributions unhindered.
Power price hedging and dividend cover
The Investment Manager continues to forward-fix electricity sales at attractive rates under power purchase agreements and build on the proportion of contracted revenue for the medium term. Overall, the proportion of contracted revenue for the global portfolio now stands at 90% for 2024, 84% for 2025 and 64% for 2026.
Foresight Solar is on target to pay its full year dividend, and the revenue stability and solid cash distribution provide confidence in the targeted 1.5x net dividend cover for 2024.
Gearing
The Gross Asset Value (GAV) on 31 March 2024 was £1,094.5 million (31 December 2023: £1,140.5 million). The Company's total outstanding debt was £429.5 million, representing 39.2% of GAV (31 December 2023: £442.6 million and 38.8%), comfortably within the 50% limit. The RCF balance remains £75 million drawn (31 December 2023: £75 million).
For more information, follow Foresight Solar on LinkedIn or contact:
|
Foresight Group Matheus Fierro (fsflir@foresightgroup.eu)
|
+44 (0)20 3911 2318 |
|
Jefferies International Limited Gaudi Le Roux Harry Randall
|
+44 (0)20 7029 8000 |
|
Singer Capital Markets Robert Peel Alaina Wong
|
+44 (0)20 7496 3000 |
|
Powerscourt Justin Griffiths Gilly Lock |
+44 (0)20 7250 1446 |
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