Q3 2022 Net Asset Value and Trading Update
7 November 2022
Foresight Solar Fund Limited ("Foresight Solar" or the "Company")
Q3 2022 Net Asset Value ("NAV") and Trading Update
Foresight Solar Fund Limited, a fund investing in a diversified portfolio of ground-based solar PV and battery storage assets in the UK and internationally, announces that as at 30 September 2022 its unaudited NAV was £771.2 million (30 June 2022: £754.9 million), resulting in a NAV per Ordinary Share of 126.4 pence (30 June 2022: 123.8 pence per share).
Summary of NAV key drivers for Q3 2022:
|
Item |
p/share movement |
|
NAV at 30 June 2022 |
123.8 |
|
Power forecasts |
+7.1 |
|
Discount rates |
-7.0 |
|
Inflation |
+1.5 |
|
Lorca portfolio revaluation |
+1.1 |
|
Other movements |
-0.1 |
|
NAV at 30 September 2022 |
126.4 |
Highlights
|
● |
Discount rate for the UK levered solar portfolio increased by 100bps. |
|
● |
Update for Q3 blended power curves with reductions applied to UK and Spain forecasts. |
|
● |
Inflation assumptions prudently unchanged. UK at 5% annualised (FY 2022) and 3% (FY 2023). |
|
● |
Uplift from 99MWp Lorca portfolio moving to operations of 1.1 pence per share. |
The third quarter NAV is presented at a time of significant uncertainty for the renewable generation sector. Given the current lack of clear Government policy around the UK energy markets, additional prudence in relation to the power price forecasts has been included within the underlying valuation.
The portfolio valuation has been updated for the blended Q3 2022 power curves across all geographies and specific adjustments have subsequently been made. For the UK, a discount has been applied to baseload power price forecasts of 50% for FY 2023, reducing by 10% p.a. to a final discount of 10% applied in FY 2027. For the operational Spanish assets, it is assumed that a combination of both a price cap and a clawback tax are in place until the end of 2024 at an effective overall cap of €120/MWh. No adjustments have been made to the power forecasts for the Australian portfolio.
The resulting uplift from power forecasts is 7.1 pence per share. If the discount applied to the UK power curves was removed, the total uplift would have been 15.0 pence per share.
Discount rates for the UK levered solar portfolio have increased by 100 basis points to 7.00%, reflecting both a significant increase in the underlying gilt yields since H1 2022 and evidence that this is starting to feed through to transaction costs. This resulted in a NAV reduction of 7.0 pence per share.
The balance of the net uplift in NAV has been driven by two factors. Firstly, actual inflation figures to August added 1.5 pence per share to the NAV. Forecasts for UK inflation for the remainder of 2022 and FY 2023 remain unchanged at 5% (annualised) and 3% respectively, which the Investment Manager and the Board believe is prudent given the Company is positively correlated to inflation.
The second factor was an uplift from the revaluation of the 99MW Lorca portfolio in Spain for the first time on a discounted cash flow basis since it became fully operational last quarter. Valuing the portfolio at a discount rate of 7.50% added a further 1.1 pence per share to the NAV.
Trading Update
Electricity generated by the Global portfolio was 3.3% above base case for the nine-month period to date, driven by continued strong operational performance. UK production remained well ahead of budget due to strong irradiation and availability. Production in Australia remained below budget because of lower than forecast irradiation, although revenues remained ahead of budget due to higher than forecast power prices.
Gearing Update
The Gross Asset Value ("GAV"), including Company and subsidiaries, as at 30 September 2022, was £1,299.7 million (30 June 2022: £1,294.9 million). The Company's total outstanding debt is approximately £528.5 million, representing 40.7% of GAV (30 June 2022: 41.7%), and is well within the 50% limit on total gearing of the Company's GAV.
The total outstanding long-term debt of £408.5 million represents approximately 31.4% of GAV of the Company and subsidiaries as at 30 September 2022.
Dividend
The Company remains on target to deliver an annual dividend of 7.12 pence per share for the year ending 31 December 2022.
Based on current performance and prevailing market conditions the Investment Manager continues to forecast dividend cover above 1.5x for FY 2022.
For further information, please contact:
|
Foresight Group |
|
|
Sophie Sutherland |
|
|
(InstitutionalIR@ForesightGroup.eu) |
|
|
Jefferies International Limited |
+44(0)20 7029 8000 |
|
Neil Winward |
|
|
Gaudi Le Roux |
|
|
Citigate Dewe Rogerson |
+44(0)20 7638 9571 |
|
Toby Moore |
|
|
Lucy Gibbs |
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