REG - Foresight Solar Fund - Q1 2024 Net Asset Value and Trading Update

Foresight Solar FundAnnouncement

08/05/2024 07:00

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RNS Number : 5087N  Foresight Solar Fund Limited  08 May 2024

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
(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

 Powerscourt                      +44 (0)20 7250 1446

 Justin Griffiths

 Gilly Lock

 

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