12 March 2024
Foresight Solar Fund Limited
("Foresight Solar", "FSFL" or "the Company")
Annual Results to 31 December 2023
Foresight Solar, a sustainability-focused fund investing in solar and battery storage assets in the UK and internationally, announces its results for the year ended 31 December 2023.
Highlights
· Net Asset Value (NAV) of £697.9 million (31 December 2022: £771.5 million). The uplift from the sale of the Lorca portfolio stake at a 21% premium to holding value, alongside an active power price hedging strategy, mitigated the negative impacts from higher discount rates and softening power price forecasts.
· Record electricity generation with 1,094GWh exported to the grid, enough to power over 400,000 UK households for a year - avoiding 390,000 tonnes of carbon dioxide emissions.
· Record cash distribution from the underlying assets of £120 million, the highest in Foresight Solar's 10-year history.
· FSFL delivered on the first phase of its divestment programme with the sale of a 50% stake in the Lorca portfolio. The proceeds from this transaction, alongside free cash, were used to pay down £40 million of variable rate debt on the RCF, bringing the drawn balance down to £75 million.
· Foresight Solar grew its proprietary pipeline with the acquisition of the rights to a 467MWp portfolio of development-stage solar projects in Spain. The move exemplifies the Company's capital allocation strategy, focused on new investments with limited upfront capital requirements to drive long-term growth and total shareholder returns.
· Foresight Solar returned £20 million to shareholders via share buybacks, deploying half of the £40 million allocation in the year and delivering 1.1 pence per share of NAV accretion.
· Total dividend of 7.55 pence per share declared for the full year, in line with the Company's target. Dividend cover for 2023 was 1.61x.
· Target dividend of 8.00 pence per share for 2024, an increase of 6% compared to the previous year. The 2024 target is expected to be 1.50x covered from cash generated in the period, with around 1.35x cover for 2025 - assuming current revenue forecasts.
· The sale of several large ROC-backed solar portfolios in the UK offers reliable market benchmarks for the Company's assets. The price at which the latest deal closed indicates a value per megawatt approximately 15% above Foresight Solar's £1.17m/MW valuation of its UK portfolio.
Key Metrics
|
| As at 31 December 2023 | As at 31 December 2022 |
| Net Asset Value (NAV) | £697.9m | £771.5m |
| NAV per Share | 118.4p | 126.5p |
| Total Dividend per Share for the period | 7.55p | 7.12p |
| Gross Asset Value (GAV) | £1,140.5m | £1,296.3m |
| Gearing (as a % of GAV) | 38.8% | 40.5% |
| Annualised Total NAV Return since IPO | 8.0% | 9.0% |
| Annualised Total Shareholder Return since IPO | 6.2% | 7.8% |
| UK portfolio valuation | £1.17m/MW | £1.29m/MW |
Commenting on the results, Alexander Ohlsson, Chairman of Foresight Solar, said:
"Foresight Solar delivered resilient performance with record electricity production and cash distribution against a challenging market backdrop. Our operational strength, the powerhouse behind our progressive dividend, enabled us to comfortably meet our dividend target of 7.55p per share for 2023 and allows us to propose an above inflation increase of 6.0% for the 2024 target dividend of 8.0p per share.
"During the year, we have remained focused on initiatives to address the discount to NAV at which the Company's shares have traded and to place the fund in the best possible financial position to support shareholders' interests. We paid down £40 million of variable rate RCF debt, reducing financing costs, and returned £20 million to investors via share buybacks. The Board is adhering to its disciplined approach to capital allocation and the only new project investments currently under consideration are modest investments to expand the development stage pipeline.
"In the year Foresight Solar celebrated its 10th anniversary, we successfully completed the Company's first divestment. The partial sale of the Spanish Lorca portfolio at a 21% premium to holding value validates our valuation methodology and supports our investment model. Bringing projects through development to construction and then into operation offers optionality and allows the Company to capture financial upside, a strategy we intend to replicate through our development pipeline.
"The Lorca transaction was also a key driver of NAV uplift, and the Investment Manager continues to make progress on the next phases of the divestment programme. We look forward to providing more details to shareholders in due course.
"By leveraging the Investment Manager's local networks in Spain, Foresight Solar purchased the rights to six development-stage solar projects, totalling over 460MWp. Over the medium-term, we will expand this growing proprietary development pipeline and focus on the huge potential for solar and storage to be unlocked throughout Europe.
"As power price forecasts softened across markets during the year, Foresight Solar's active hedging strategy enabled the fund to lock in higher prices. These favourable terms will help insulate the NAV against market fluctuations in 2024 and beyond, providing greater visibility on dividend cover.
"After a challenging year for markets, we believe there are reasons for optimism. The energy transition is one of the biggest investment themes of our generation. The solar power opportunity alone is immense. Industry fundamentals remain attractive and solar generation continues to be one of the cheapest and most reliable sources of electricity available. This promising outlook, coupled with Foresight Solar's improved financial position and clear strategy to deliver income and growth, positions the fund well to capitalise on the opportunities ahead."
Annual Report
A copy of the Annual Report has been submitted to the National Storage Mechanism and will shortly be available at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The Annual Report can also be seen on Foresight Solar's website (fsfl.foresightgroup.eu), where you can find all the information about the Company.
Results Presentation
Foresight Solar is holding a presentation for analysts at 9:30 today. Analysts wishing to attend should contact fsfl@powerscourt-group.com. The presentation will also be uploaded to the Company's website.
Ross Driver, Managing Director, and Toby Virno, Senior Investment Manager, will present the full-year results to retail investors via Investor Meet Company (IMC) on Wednesday, 20 March 2024, at 10:00.
The meeting is open to all existing and potential shareholders. Questions can be submitted before the event through the IMC dashboard or at any time during the presentation.
Investors can sign up to Investor Meet Company for free, follow Foresight Solar and gain access to the meeting via: www.investormeetcompany.com/foresight-solar-fund-limited/register-investor.
Dividend Declaration
Foresight Solar confirmed total dividends of 7.55 pence per ordinary share for 2023, in line with its target.
The Board is pleased to announce the final interim dividend relating to 2023 of 1.895 pence per ordinary share. The shares will go ex-dividend on 25 April 2024 and the dividend will be paid on 24 May 2024 to shareholders on the register as at the close of business on 26 April 2024.
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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