foresight solar fund limited...2018/08/22 · key financial metrics 3 as at 30 june 2018 as at 31...

Analyst Presentation

22 August 2018

Foresight Solar Fund Limited

Interim Results

30 June 2018

Interim Results Highlights

1 The NAV decreased to £473.1 million over the period, being 105.2 pence per share (31 December 2017:

107.0 pence). The reduction was primarily driven by a continued softening of UK power price forecasts.

2 The Company has declared dividends per share of 3.28 pence. The Company remains on track to deliver its

targeted full year dividend of 6.58 pence for FY2018 (FY2017: 6.32 pence)*.

The portfolio generated 260GWh of clean energy during the period. Production has been above base case

assumptions driven by strong irradiation levels in the UK in the second quarter of 2018. 4

Acquired a 53.3MW portfolio of five operational assets in the UK, continuing the value accretive expansion

of the portfolio.3

5 Post period, the Company completed a significantly oversubscribed placing raising £48.1 million of new

capital. The proceeds were used for the acquisition of a 114MW portfolio of 15 operational UK assets.

2

* Target returns are not a profit forecast.

Key Financial Metrics

3

As at 30 June 2018 As at 31 December 2017 As at 30 June 2017

GAV £749.0 million £680.8 million £625.3 million

NAV £473.1 million £481.3 million £432.8 million

NAV per Share 105.2 pence 107.0 pence 104.6 pence

Profit after Tax for the Year £6.1 million £35.1 million £11.5 million

Total Dividend per Share for the period

3.28 pence 6.32 pence 1.58 pence

Market Capitalisation £489.5 million £486.0 million £465.0 million

Share Price 108.8 pence 108.0 pence 112.4 pence

Annual Total NAV Return since IPO

6.89% 7.48% 6.97%

Annual Total Shareholder Return since IPO

7.03% 7.02% 8.35%

Progress as at 30 June 2018

Dividends

4

Dividend Timetable for FY2018

Dividend Amount Status Payment Date

Interim 1 1.64 pence Approved 24 August 2018

Interim 2 1.64 pence Approved 23 November 2018

Interim 3 1.65 pence Targeted Q1 2019

Interim 4 1.65 pence Targeted Q2 2019

Total 6.58 pence

Declared dividends per share of 3.28 pence during the period

• Total dividends of £27.9 million were paid during the 12 months to 30 June 2018, resulting in a dividend cover of 1.14 times

(excluding new shares issued during the period).

• On track to deliver the FY2018 target dividend of 6.58 pence.

• The Company has paid all target dividends since IPO.

5

Net Asset Value Movements

NAV per share decreased by 1.8 pence primarily driven by a continued softening in power price forecasts

UK Power Prices

6

• The Company continues to take advantage of current attractive short term forward electricity prices and has increased the

proportion of fixed price arrangements from 29% (31 December 2017) to 54% of the electricity sales.

• Downward movement of c.2.9% in the medium to long term power price forecast driven by expected increase in

renewable energy installed capacity and a reduction in commodity prices.

• Forecast assumes a real increase in power prices over the medium to long-term of 1.1% per annum (2017: 1.3%).

Downward revision over period; long term trend remains upwards

Source: Foresight Group

Investment Activity in H1 2018

7

• Acquisition of a 53.3MW portfolio for a consideration of £36.6 million, including £4.2 million of

cash balances, in April 2018.

• All assets are operational and accredited under the RO scheme, with the exception of the

Yardwell asset, accredited under the Feed-in-Tariff scheme.

• Long-term debt facilities with an outstanding balance of £31.8 million were in place at the date

of acquisition.

• Portfolio is performing in line with expectation since acquired.

Asset Location Installed Peak Capacity (MW)

Connection Date

Subsidy

Coombeshead Devon 9.8 Aug-15 1.4 ROCs

Park Farm Leicestershire 13.2 Jul-15 1.4 ROCs

Sawmill Devon 6.6 Sep-15 1.4 ROCs

Verwood Dorset 20.7 May-15 1.4 ROCs

Yardwell Somerset 3.0 Sep-15 FiT

53.3MW operational portfolio located in the UK

5 ASSETS

53.3 MW

Portfolio Performance - Overview

8

• Adjusted generation was 0.9% above expectations during the period. Adjustments include insurance proceeds and liquidated

damages.

• Two isolated events at Shotwick and Kencot caused production variance to fall behind irradiation variance. The actions of the

Asset Manager significantly reduced the down time relating to these incidents.

• Increased performance of the four SunEdison-built assets as a result of the 2017 remedial works. Further remedial works

were performed on three of the assets (Pitworthy, High Penn, Highfields – less 6% of the UK portfolio) during the period

resulting in production below expectations. The long-term target performance of these assets remain unaffected.

• Australian assets in construction have shown positive progress

• Longreach is connected to the grid and exporting electricity since March 2018

• Oakey 1 and Oakey 2 on track to connect to the grid in the second half of 2018.

• Bannerton experiencing grid connection delays however the Company is protected contractually for delays

Improved portfolio performance supported by strong irradiation levels

Capital Structure

9

TOTAL GEARING

41%

LONG-TERM GEARING

27%

• The Company has raised £511.0 million of equity to date, including £48.1m raised in July 2018.

• GAV represented £749.0 million at period end.

• Total outstanding debt of £306.0 million as of 30 June 2018, including:

• Long-term debt of £201.0 million, including £90.9m of inflation linked debt;

• Revolving Credit Facilities (“RCFs”) of £105.0 million.

• The average annual cost of long-term debt was 2.47% for the period, including the cost of

inflation linked facilities of 1.35%.

• All-in annualised cost of the RCFs represented 1.71%.

• Limited exposure to benchmark rates by entering interest rate swaps and fixed rate agreements.

• Gearing ratios exclude outstanding debt facilities associated to post-period acquisitions.

• The Company intends to refinance the post-period debt facilities and other portfolio assets

funded by RCFs before the end of June 2019.

Aiming to further optimise the capital structure through refinancing opportunities

Gearing position as of 30 June 2018 (% GAV)

Post Period Acquisition

10

114 MW operational portfolio located in the UK

• Acquisition of a 114MW portfolio for a consideration of £47.0m in August 2018.

• All assets are operational an accredited under the RO scheme, receiving a weighted average of

1.41 ROCs/MWh.

• Portfolio has been in operation for more than two years and managed by Foresight’s asset

management team.

• Diversified number of module manufacturers and O&M contractors across the portfolio.

• Short term debt facilities of £107.2 million provided by RBS on an asset by asset basis,

expected to be refinanced before the end of June 2019.

• Acquisition closed within the expected timetable, representing no cash drag for investors.

• Three additional assets representing 20MW remain under exclusivity and can be acquired

subject to further due diligence.

15 ASSETS

114 MW

Portfolio Overview (incl. post period acquisition)

11

The largest UK-listed dedicated solar energy investment company by installed capacity

UK total: 642MW Australia total: 146MW

Portfolio Geographical Analysis (at 30 June 2018)

12

78%

22%

Installed Capacity

UK Australia

674 MW

63%

37%

Electricity Generation*

UK Australia

791 MWh

Equity Invested**

91%

9%

UK Australia

£560m

* UK is based on actual figures for H1 2018 and projected figures for H2 2018. Australia’s figures are based on the first 12 months of projected operations. ** Includes revolving credit facilities.

Portfolio Revenue Analysis (at 30 June 2018)

13

* UK is based on actual figures for H1 2018 and projected figures for H2 2018. Australia’s figures are based on the first 12 months of projected operations.

46%

7%1%

17%

9%

15%

5%

Portfolio Projected Revenue Split*

UK Subsidy - Fixed

AUS Subsidy - Merchant

AUS Subsidy - Fixed

UK Electricity Sales - Merchant

AUS Electricity Sales - Merchant

UK Electricity Sales - Fixed

AUS Electricity Sales - Fixed

674MWof installed capacity

Revenue from Subsidies - 53%Revenue from Electricity Sales - 47%

Key takeaways

1 Production has been above base case assumptions driven by strong irradiation levels in the UK in the

second quarter of 2018. Improved performance compared to FY2017

2 The Company remains on track to deliver its targeted full year dividend of 6.58 pence for FY2018 (FY2017:

6.32 pence)*, having paid all target dividends since IPO.

Opportunity to further optimise the capital structure by refinancing the debt facilities associated to the

post-period 114MW portfolio acquisition and the existing RCFs.4

Acquisition of two UK portfolios totalling 167.3MW in 2018 to date, continuing the value accretive

expansion of the portfolio.3

5 Attractive pipeline of potential investments, including 72MW UK operational portfolio under exclusivity

14

* Target returns are not a profit forecast.

Appendices

15

Portfolio Overview - As at 30 June 2018

16

1. Includes the 2MW extension acquired in March 2015. 2. Expected connection dates.

Asset Country StatusInstalled Capacity

(MW)Ownership Net MW Connection Date Subsidy

1 Wymeswold1 UK Operational 34 100% 34 March 2013 2.0 ROCs, 1.4ROCs

2 Castle Eaton UK Operational 18 100% 18 March 2014 1.6 ROCs

3 Highfields UK Operational 12 100% 12 March 2014 1.6 ROCs

4 High Penn UK Operational 10 100% 10 March 2014 1.6 ROCs

5 Pitworthy UK Operational 16 100% 16 March 2014 1.4 ROCs

6 Hunters Race UK Operational 10 100% 10 July 2014 1.4 ROCs

7 Spriggs Farm UK Operational 12 100% 12 March 2014 1.6 ROCs

8 Bournemouth UK Operational 37 100% 37 September 2014 1.4 ROCs

9 Landmead UK Operational 46 100% 46 December 2014 1.4 ROCs

10 Kencot UK Operational 37 100% 37 September 2014 1.4 ROCs

11 Copley UK Operational 30 100% 30 December 2015 1.3 ROCs

12 Atherstone UK Operational 15 100% 15 March 2015 1.4 ROCs

13 Paddock Wood UK Operational 9 100% 9 March 2015 1.4 ROCs

14 Southam UK Operational 10 100% 10 March 2015 1.4 ROCs

15 Port Farm UK Operational 35 100% 35 March 2015 1.4 ROCs

16 Membury UK Operational 16 100% 16 March 2015 1.4 ROCs

17 Shotwick UK Operational 72 100% 72 March 2016 1.3 ROCs

18 Sandridge UK Operational 50 100% 50 March 2016 1.3 ROCs

19 Wally Corner UK Operational 5 100% 5 March 2016 1.2 ROCs

20 Coombeshead UK Operational 10 100% 10 February 2015 1.4 ROCs

21 Park Farm UK Operational 13 100% 13 March 2015 1.4 ROCs

22 Sawmill UK Operational 7 100% 7 March 2015 1.4 ROCs

23 Verwood UK Operational 21 100% 21 February 2015 1.4 ROCs

24 Yardwell UK Operational 3 100% 3 June 2015 FiT

UK Subtotal 528 528

1 Bannerton Australia Construction 110 48.5% 53 September 20182 LGCs

2 Longreach Australia Operational 17 49% 8 March 2018 LGCs

3 Oakey 1 Australia Construction 30 49% 15 September 20182 LGCs

4 Oakey 2 Australia Construction 70 100% 70 October 20182 LGCs

Australia Subtotal 227 146

Total (as at 30 June) 755 674

Portfolio Acquired Post Period End

17

Asset Country StatusInstalled

Capacity (MW)Connection Date Subsidy

25 Abergelli UK Operational 8 March 2015 1.3 ROCs

26 Crow Trees UK Operational 5 February 2016 1.3 ROCs

27 Cuckoo Grove UK Operational 6 March 2015 1.4 ROCs

28 Field House UK Operational 6 March 2015 1.3 ROCs

29 Fields Farm UK Operational 5 March 2016 1.4 ROCs

30 Gedling UK Operational 6 March 2015 1.4 ROCs

31 Homeland UK Operational 13 March 2014 1.4 ROCs

32 Marsh Farm UK Operational 9 March 2015 1.4 ROCs

33 Sheepbridge UK Operational 5 December 2015 1.4 ROCs

34 Steventon UK Operational 10 June 2014 1.4 ROCs

35 Tengore Lane UK Operational 4 February 2015 1.4 ROCs

36 Trehawke UK Operational 11 March 2014 1.6 ROCs

37 Upper Huntingford UK Operational 8 October 2015 1.3 ROCs

38 Welbeck UK Operational 11 July 2014 1.6 ROCs

39 Yarburgh UK Operational 8 November 2015 1.3 ROCs

UK Acquisition Subtotal 114

Portfolio (as at 30 June) 674

TOTAL 788

FSFL Portfolio post August acquisition

43 ASSETS

788 MW

Portfolio Performance - By Asset

18

Site MW Production (MW hours) Production Variance Irradiation Variance

Atherstone 14.8 7,807,744 7.3% 8.1%

Bournemouth 37.3 21,621,975 2.7% 0.1%

Castle Eaton 17.8 9,050,875 4.2% 4.9%

Coombeshead 9.8 3,972,193 1.6% 0.9%

Copley 30.0 15,854,259 5.6% 2.2%

High Penn 9.6 4,727,977 -3.9% 0.5%

Highfields 12.2 5,695,798 -5.2% 0.9%

Hunters Race 10.3 5,849,319 2.3% -0.2%

Kencot 37.2 19,877,033 4.2% 2.9%

Landmead 45.9 23,445,713 2.7% 5.4%

Membury 16.5 8,445,573 -0.6% -1.7%

Paddock Wood 9.2 5,149,779 5.2% 2.9%

Park Farm 13.2 4,958,108 9.4% 4.8%

Pitworthy 15.6 6,629,973 -15.0% 6.6%

Port Farms 34.7 17,883,078 0.2% 1.9%

Sandridge 49.6 25,913,246 0.1% 0.7%

Sawmills 6.6 2,511,730 -2.6% -1.1%

Shotwick 72.2 34,835,960 -3.6% 7.6%

Southam 10.3 5,469,607 5.5% 3.0%

Spriggs 12.0 6,405,888 3.1% -1.1%

Verwood 20.7 8,068,795 2.2% 3.6%

Wally Corner 5.0 2,793,598 5.5% 2.7%

Wymeswold 34.5 16,986,165 0.9% 5.1%

Yardwall 3.0 1,203,412 -2.2% -0.2%

Total 527.9 265,157,796 0.9%Weighted Total 3.2%

Debt structure

19

Project Investments

Foresight Solar Fund Limited

(Jersey)

Foresight Solar (UK Holdco) Ltd

FS Holdco 1 FS Holdco 3FS Holdco 2

Project Investments

Project Investments

Note: Simplified for illustrative purposes

FS Holdco 4

Project Investments

Includes first 16 UK asset acquisitions. It

also includes long term debt facilities of

£152.4m and £40.0m RCF loan

Includes Shotwick, Sandridge and Wally

Corner. It also includes the £55.0m RCF loan

Includes Coombeshead, Park

Farm, Sawmills, Verwood and Yardwall. Also includes long term

debt facilities of £31.8m

Includes Bannerton, Longreach, Oakey 1

and Oakey 2 in Australia and

respective debt facilities entered at

project level

Historic Electricity Prices at Portfolio Level

Source: Foresight Group

20

Average power price achieved across the portfolio in H1 2018 was £46.54/MWh (H1 2017:£40.61/MWh)

Fund Sensitivities

21

▪ The weighted average discount rate used is 7.60%. The Directors do not expect to see a significant change in the discount ratesapplied within the Solar Infrastructure sector. Therefore a variance of +/- 0.5% is considered reasonable.

▪ Base case production is a function of a number of separate assumptions including irradiation levels, availability of the sites andtechnical performance of the equipment. A sensitivity of +/- 10% is considered reasonable given stable levels of irradiation,contractual availability guarantees and understanding of future performance levels of the equipment.

-0.50% -0.25% Base +0.25% +0.50%

Directors’ valuation (£m) 662.3 648.8 635.7 623.1 610.8

NAV per share (pence) 111.1 108.1 105.2 102.3 99.6

Change vs Base Case (%) 4.18 2.06 - (1.99) (3.92)

-10.0% Base +10.0%

Directors’ valuation (£m) 558.6 635.7 711.9

NAV per share (pence) 88.0 105.2 122.1

Change vs Base Case (%) (12.13) - 11.98

Discount Rate

Production/Energy Yield

Fund Sensitivities – cont.

22

▪ A variable of 1.5% is considered reasonable given historic fluctuations. A long term inflation rate of 2.75% has been used.

▪ Operating costs include operating and maintenance (“O&M”), insurance and lease costs. Other costs are fixed and are therefore notconsidered to be sensitive to changes in unobservable inputs. Base case costs are based on current commercial agreements. Wewould not expect these costs to fluctuate widely over the life of the assets and are comfortable that the base case is prudent.

▪ A variance of +/- 5.0% is considered reasonable, a variable of 10.0% is shown for information purposes.

-1.50% -0.75% Base +0.75% +1.50%



Change vs Base Case (%) (11.04) (5.72) - 6.23 13.04

-10.00% -5.00% Base +5.00% +10.00%



Change vs Base Case (%) 1.65 0.82 - (0.82) (1.65)

Inflation

Operating Costs

Fund Sensitivities – cont.

23

▪ DCF models assume power prices that are consistent with the Power Purchase Agreements (“PPA”) currently in place. At the PPAend date, the model reverts to the power price forecast.

▪ During the period c. 47% of revenue derived from electricity sales which are subject to power price movements. The remaining c53% of the Company’s operational performance came from subsidies.

▪ The power price forecasts are updated quarterly and based on power price forecasts from leading independent sources. TheInvestment Manager applies expected PPA sales discounts to the applicable forecast The forecast assumes an average annualincrease in power prices in real terms of approximately 1.1%.

-20.00% -10.00% Base +10.00% +20.00%




Power Price

▪ Due to level of investment in Australia and exposure to AUD, the NAV may be sensitive to changes in the sterling exchange rate. Avariance of +/- 20% is considered reasonable and illustrates potential impact below:

-20.00% -10.00% Base +10.00% +20.00%




AUD/GBP Exchange Rate

FSFL: Managed by Foresight Group

A leading independent Global Infrastructure & Private Equity manager

24

33 year

investment track record

£2.2bn

Invested in energy infrastructure

10 offices200 staff globally

14

Institutional funds

£2.5bn

assets under management

1.6 GW

Installed generation capacity under management

Note: Information as at 30 June 2018.

Foresight Solar

25

Global Solar Portfolio as at 30 June 2018

• £1.3bn Solar AUM globally

• Over 80 solar assets under management

• Portfolio of over 1.1GW capacity

• 78 strong global energy infrastructure team

Portugal1 Asset7MW

Spain3 Asset14MW

UK73 Assets857MW

Australia5 Assets 252MW

Important Notice

General

This document and the presentation have been prepared by Foresight Group LLP for information purposes only.

By being in receipt of this document, you will be deemed to have (a) agreed to all of the following restrictions and made the following undertakings and (b) acknowledged that you understandthe legal and regulatory sanctions attached to the misuse, disclosure or improper circulation of this document.

Non-reliance

Foresight Group LLP, is authorised and regulated by the UK Financial Conduct Authority. Foresight Group LLP is not acting as adviser to any recipient of this document or will be responsible to anyrecipient of the document for providing the protections afforded to clients of any of them or for providing advice in connection with this document or matters referred to herein.

This document is an advertisement and does not constitute a prospectus or offering memorandum or an offer in respect of any securities and is not intended to provide the basis for any decisionand should not be considered as a recommendation that any investor should subscribe for or purchase any securities. Investors must only subscribe for or purchase securities referred to in thisdocument on the basis of information contained in a prospectus and not in reliance on this document. A prospectus may or may not be published by the Foresight Solar Fund Limited (“TheCompany”) in relation to any proposed offering. If published, and upon such publication, that prospectus would supersede this document in its entirety and that prospectus would be available,subject to applicable law, free of charge to eligible persons from the Company's registered office.

This document does not constitute and may not be construed as, an offer to sell or an invitation to purchase, investments of any description, a recommendation regarding the issue or theprovision of investment advice by any party. No reliance may be placed for any purposes whatsoever on this document (including, without limitation, any illustrative modelling informationcontained herein), or its completeness.

No liability whatsoever (whether in negligence or otherwise) arising directly or indirectly from the use of this document is accepted, and no representation, warranty or undertaking, express orimplied, is or will be made by the Company or Foresight Group LLP, or their respective officers, partners, employees, agents, advisers or affiliates with respect to the information or opinionscontained in this document or for any errors, omissions or misstatements and none of them accepts any responsibility or liability as to its accuracy or completeness or as to the suitability of anyparticular investment for any particular investor or for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connectiontherewith. In addition, no duty of care or otherwise is owed for any loss, cost or damage suffered or incurred as a result of the reliance on such information or opinions or otherwise arising inconnection with this document. In all cases, each recipient should conduct its own investigations and analysis of the Company and Foresight Group LLP and such recipient will be solelyresponsible for forming its own views as to the potential future performance of the Company and Foresight Group LLP.

The information set out in this document is subject to updating, completion, revision, verification and amendment, and such information may change materially and none of ForesightGroup LLP or the Company is under any obligation to update or keep current the information contained in this document. Except where otherwise indicated in this document, the informationprovided herein is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information thatsubsequently becomes available, or circumstances existing or changes occurring after the date hereof.

Certain information contained in this document, including the values given for some assets, is non-public, proprietary and highly confidential information. Accordingly, by accepting and usingthis document you will be deemed to agree not to disclose any information contained in this document except as may be required by law.

This document includes information regarding funds managed by Foresight Group LLP or its associates. Such information is not necessarily comprehensive and potential investorsshould not consider such information to be indicative of the possible future performance of the Company or any investment opportunity to which this document relates. Past performance isnot a reliable indicator or guide to future performance. Recipients of this document should not base any behaviour in relation to qualifying investments or relevant products (as defined in theFinancial Services and Markets Act 2000 (FSMA) and the Code of Market Conduct made pursuant to FSMA) which would amount to market abuse for the purposes of FSMA on the information inthis document until after the information has been made generally available. Nor should the recipient use the information in this document in any way which would constitute "market abuse.“

Potential investors should be aware that any investment in the Company is speculative, involves a high degree of risk, and could result in the loss of all or substantially all of their investment.Results can be positively or negatively affected by market conditions beyond the control of the Company or any other person. There is no guarantee that any returns set out in thisdocument can be achieved or can be continued if achieved. There may be other additional risks, uncertainties and factors that could cause the returns generated by the Company to bematerially lower than the returns set out in this document.

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foresight solar fund limited...2018/08/22 · key financial metrics 3 as at 30 june 2018 as at 31...

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