TIDMFTSV
FORESIGHT SOLAR & TECHNOLOGY VCT PLC
Ordinary Shares Total Net Assets as at 31 March 2020: GBP25.8m
Ordinary Shares Net Asset Value per share as at 31 March 2020: 72.7p
Foresight Williams Technology Shares Total Net Assets as at 31 March
2020: GBP1.1m
Ordinary Shares Fund
-- Two interim dividends of 3.0p per Ordinary Share were paid during the
year, on 26 April 2019 and 22 November 2019.
-- After payment of 6.0p in dividends, Net Asset Value per Ordinary Share at
31 March 2020 was 72.7p (31 March 2019: 96.4p). The fall in Net Asset
Value was largely driven by a material reduction in market power prices
forecast by the energy industry's independent, external modelling
agencies.
-- The Company completed a tender offer in March 2020, allowing holders of
Ordinary Shares an opportunity to exit their investment at a price of
81.2p per share, which represents a total return of 125.2p per share, net
of all expenses and performance fees.
-- On 19 September 2019, David Hurst-Brown retired from the Board, with
Ernie Richardson taking over as Chairman.
-- At 31 March 2020, the fund held positions in 12 UK solar assets, with a
total installed capacity of 74.7MW. During the year the portfolio
generated 71.48 gigawatt hours of electricity, sufficient to power
approximately 24,000 UK homes for a year.
-- At 31 March 2020, the fund also held positions in one Italian solar asset
with a total installed capacity of 0.4MW.
-- During the year, our existing portfolio company completed the disposal of
its entire interest in the ForVEI II platform, returning c.GBP6.2m to the
fund, corresponding to a multiple of c.1.08x in less than 18 months.
Foresight Williams Technology Shares Fund
-- On 20 December 2019, the Company launched the Foresight Williams
Technology Shares fund (the "FWT Shares fund"), offering for subscription
up to GBP20 million (with an over-allotment facility for up to an
additional GBP10 million) through the issue of a new share class, the
Foresight Williams Technology Shares (the "FWT Shares").
-- At 31 March 2020, under this offer, the Company had raised GBP1.1m, and
was yet to make an investment.
-- Since the end of the reporting period, a further GBP1.3m has been raised,
bringing the total raised under the December 2019 offer to GBP2.4m.
Chairman's Statement
As your new Chairman and on behalf of the Board, I am pleased to present
the Annual Report and Accounts for Foresight Solar & Technology VCT Plc
(formerly Foresight Solar & Infrastructure VCT Plc) for the year ended
31 March 2020 and to provide you with an update on the exciting
developments affecting the Company, including the rebranding of the
Company and the launch of the new share class, the Foresight Williams
Technology Shares.
On behalf of the Board, I would like to thank the previous Chairman,
David Hurst-Brown, who retired from the Board in September 2019, for his
valuable contributions and stewardship of the Company during his tenure,
and to wish him well for the future.
ORDINARY SHARES
Performance and portfolio activity
The underlying net asset value decreased by 17.7p per Ordinary Share
before deducting the 6.0p per Ordinary Share dividend paid during the
year.
This decrease was driven by a fall in the underlying value of the
portfolio caused by a material reduction in market power prices forecast
by the energy industry's independent, external modelling agencies. As
described further in the Investment Manager's report on page 8 of the
Annual Report and Accounts, changes in the macro environment, including
the COVID-19 pandemic, have caused the long term power price forecasts
to fall significantly.
Total electricity production of the sites operated was 1.9% above
expectations at 71.48 gigawatt hours of electricity, sufficient to power
approximately 24,000 UK homes for a year.
During the year, following the Board's decision to refocus the portfolio,
the Company's existing portfolio companies successfully divested from
the ForVEI II platform returning c.GBP6.2m to the fund, corresponding to
a multiple of c.1.08x in less than 18 months. Telecomponenti, the small
Italian rooftop asset, was also sold post period end, completing in July
2020.
The Board was also pleased that the Investment Manager was able to
complete the refinancing of the investment portfolio in June 2020,
reducing finance costs across the portfolio.
With a portfolio now solely situated in the UK, the Board consider the
Ordinary Shares fund to be optimally invested and well placed to
maximise future returns for Shareholders.
The Ordinary Shares fund ended the year with investments in portfolio
companies with total generating capacity of 75.0MW compared with 78.0MW
at 31 March 2019.
Following the award of the Spanish claim (equivalent to GBP2m-GBP2.5m,
or 5.6-7.1p per Ordinary Share) communicated in the last annual report,
there continues to remain significant challenges with respect to
collectability. The non-binding offer communicated in my Chairman's
Statement in the Half-Yearly Financial Report unfortunately failed to
progress, therefore the Company continues to follow up this claim in the
courts. The Board has not assigned any current value to the claim in the
net asset value reported.
The overall performance of the Ordinary Shares remains robust and the
total return since inception as at 31 March 2020 was 116.7p per Ordinary
Share.
Cash and working capital
The Company had cash and liquid resources of GBP1.8m at 31 March 2020
(excluding cash held in portfolio companies).
The Board acknowledges that at the year end the Company had net current
liabilities primarily due to a loan of GBP15m from the Company's wholly
owned subsidiary, Youtan Limited, which was repayable on demand. Post
year end, in July 2020, Youtan released the Company from this liability,
thereby bringing the Company to a net current asset position.
The Company receives regular interest and loan stock payments and
dividends from its underlying investments enabling it to continue to
fund its dividend policy as well as meeting expenses in the ordinary
course of business as they fall due.
Dividends, share buybacks and tender offer
In its original prospectus, the Board's stated objective was to pay
dividends of 5.0p per Ordinary Share each year throughout the life of
the Company after the first year. The level of dividends was not,
however, guaranteed. During the year, total dividends of 6.0p per
Ordinary Share were paid. This means that total dividends of 44.0p per
Ordinary Share have been paid during the ten years since launch.
In March 2020, the Ordinary Shares fund completed its tender offer,
enabling 246 shareholders to sell 7,435,016 Ordinary Shares
(approximately 17.33% of shares in issue) at NAV less costs generating a
total return (net of all costs, management fees and performance
incentive fees) of 125.2p per Ordinary Share.
In addition to the tender offer, during the year the Ordinary Shares
fund repurchased 351,615 shares for cancellation at a cost of
GBP324,000, at an average discount to NAV of 0.9%. Stamp duty of
GBP29,000 was also paid during the year. No new Ordinary Shares were
issued during the year.
Following the completion of the tender offer, the Board has considered
the future dividend policy of the Ordinary Shares fund. With the
objective of maximising long-term future returns for Ordinary
Shareholders, the Board will endeavour to pay out dividends derived from
the income generated by the underlying portfolio, rather than a fixed
pence per share. The Board and the Investment Manager hope that this may
be enhanced by additional 'special' dividends as and when particularly
successful portfolio exits are made. The impact of COVID-19 will be
taken into consideration when the Board considers dividends in the near
term.
The Board is pleased to announce that the next interim dividend, of 2.0p
per Ordinary Share, will be paid on 25 September 2020 based on an
ex-dividend date of 10 September 2020 and a record date of 11 September
2020. This means that total dividends of 46.0p per Ordinary Share will
have been paid during the ten years since launch.
Management fees
The annual management fee of the Ordinary Shares fund is calculated as
1.5% of Net Assets and equated to GBP586,000 during the year.
In the context of realisations achieved during the year and the
continuing professional management of the portfolio, the Board believe
that the annual management fee represents good value for investors.
Green Mark Economy
The Board is pleased to announce that the Company has been classified as
a Green Economy Issuer by the London Stock Exchange ("LSE"). This is a
new initiative launched by the LSE supporting sustainable finance on its
markets. The Green Economy Mark recognises listed companies with 50% or
more of revenues from environmental solutions.
FWT SHARES
As it is no longer possible to raise new funds for investment in the
Ordinary Shares fund, which is now considered to be fully and optimally
invested, the Board was delighted to launch the new Foresight Williams
Technology share class (the 'FWT Shares'), which was formally approved
by shareholders at the General Meeting on 27 January 2020.
The new share class represents an exciting investment opportunity made
possible by the collaboration between Foresight Group and the Williams
Advanced Engineering business of the Williams F1 Group and provides
investors with the opportunity to invest in a portfolio of early-stage
companies with high growth-potential, developing innovative and
occasionally transformational technologies across a range of different
sectors.
Fundraising and share issues
The Offer, which opened on 20 December 2019, offers for subscription up
to GBP20 million (with an over-allotment facility for up to an
additional GBP10 million) through the issue of FWT Shares. As at the
year end date, 1,145,927 FWT Shares had been allotted, raising GBP1.1m.
Post year end, a further 1,275,452 FWT Shares had been allotted, raising
a further GBP1.3m. The Offer remains open for investment.
Management fees
The annual management fee of the FWT Shares fund is calculated as 2.0%
of Net Assets and equated to GBP1,000 during the year.
Annual General Meeting
The Company's Annual General Meeting will take place on 24 September
2020 at 12.30pm. Due to travel restrictions and social distancing
measures implemented as a result of the COVID-19 Coronavirus pandemic,
the meeting will be held by way of a closed meeting and shareholders
will not be permitted to attend. Shareholders are encouraged to vote
through proxy and send any questions to the Investment Manager's
Investor Relations team. Please refer to the formal notice on page 78 of
the Annual Report and Accounts for further details in relation to the
format of this year's meeting and the request to observe social
distancing and travel restrictions in place.
Outlook
Following the successful refinancing of the underlying portfolio, the
Company will continue to seek to optimise the performance of the
existing Ordinary Shares portfolio including fixing power price
agreements (PPAs) when they are deemed attractive, and pay dividends
through a combination of income earned and realised gains. While the
effects of COVID-19 on the existing investment portfolio appear to be
reasonably limited given the nature of the underlying investments, the
Board and the Investment Manager continue to be carefully monitor the
ongoing impact.
Over the medium to long term, once all Ordinary Shareholders have
reached their minimum 5-year qualifying holding period, the Board and
the Investment Manager will, if appropriate, begin a managed process of
returning the value of the Ordinary Shares fund to its Shareholders.
The Company will also continue to raise new funds in the FWT Shares fund
and seek appropriate qualifying investments for this share class.
Ernie Richardson
Chairman
29 July 2020
Investment Manager's Review
Portfolio summary and performance
The Investment Manager's focus during the year has been on maintaining
and improving portfolio performance, both from an operational
perspective and in respect of the assets' ability to support a
sustainable level of debt to enhance returns to the Ordinary Shares
fund.
Performance of the UK assets was positive during the year with total
electricity production 1.9% above expectations. The assets generated a
total of 71.48GWh, enough clean electricity to power over 24,000 UK
homes. This positive performance reflects higher than average
irradiation levels and good availability of the solar plants. Further
details on performance of the individual assets are included on pages 14
to 22 of the Annual Report and Accounts.
There were no UK acquisitions during the year. Prior to its disposal
(described further below), ForVEI II, in which existing portfolio
companies have invested, acquired three further small ground-mounted
solar assets in Sicily, the Apulia region of southern Italy and Veneto,
with a total capacity of 2.6MW.
In September 2019, an extension of the existing project-level debt
across the UK solar assets was negotiated, allowing time to finalise a
cross-portfolio debt facility next year. This refinancing successfully
concluded at the end of June 2020 and will reduce finance costs across
the portfolio.
Disposals
Following a decision to refocus the portfolio on the UK market and in
order to provide liquidity for the fund, in November 2019 the Investment
Manager agreed the sale of the Italian solar assets held through ForVEI
II to another Foresight managed fund. The sale was based on a
third-party valuation and returned c.GBP6.2m to the fund, corresponding
to a multiple of c.1.08x in less than 18 months.
The Investment Manager also continues to work towards completing the
sale of three small assets. In March 2020, the Board approved the
decision to sell Littlewood, a UK asset. This process is underway and
expected to conclude during Summer 2020. Post-year end in May, final
terms were agreed for the sale of the small Italian rooftop asset,
Telecomponenti, with proceeds also due to be received during Summer
2020. Preparations are also underway to sell Greenersite, the smallest
UK asset.
Market update
The UK remains committed to its ambitious 2050 goal of becoming the
world's first fully carbon-neutral nation. The target will require the
UK to bring all greenhouse gas emissions to net zero by 2050, compared
with the previous target of at least 80% reduction from 1990 levels. The
Office of Gas and Electricity Markets (Ofgem) recently set out its
vision for how gas and electricity markets will contribute towards
meeting the target in its 'Decarbonisation Programme Action Plan' which
was published in February 2020. Continuing to foster the growth of
renewable energy and integrating these new sources of intermittent power
into the network remains a core area of focus. While 2019 saw a number
of milestones in regard to the contribution of renewable energy sources,
including coal-generation hitting a historic low, the period as a whole
recorded relatively modest renewables buildout compared with the growth
rates witnessed over the last decade. Offshore wind capacity continued
to grow during the year, but there were very limited onshore renewable
projects.
The slowdown in new solar construction has been particularly pronounced
as the market continued to adapt to the commercial reality of a
post-subsidy environment. However, the recent announcement that
established onshore technologies such as solar and onshore wind will
once again be able to participate in Contract for Difference ("CfD")
auctions could see a reversal in this trend. In addition to projects
supported by Government subsidies via the CfD regime, the emergence of a
commercially viable subsidy free sector will be vital if the UK is to
continue to make progress towards its decarbonisation goals. Whilst the
number of subsidy-free solar projects completed in 2019 was extremely
limited, there is a pipeline totalling an estimated 6GW expected to come
online in the coming years.
The re-election of the Conservative Party in December and the
comprehensive nature of the result should provide investors with a
degree of clarity on several fronts. The European Union (Withdrawal
Agreement) Act 2020 was passed into law in January 2020 leading to the
UK leaving the European Union (EU) on 31 January 2020. The withdrawal
triggered an expected 11-month transition period during which the UK and
the EU will seek to agree the future terms of their economic and
security partnership. There is a transition period until January 2021
whilst the UK and EU negotiate further arrangements, meaning current
rules on trade and business continue to apply. For example, the EU
Emissions Trading System (EU ETS), which sets a cap on the total amount
of greenhouse gases that can be emitted by installations, will continue
until April 2021 at the latest. Foresight's view has not changed from
that set out previously; the energy market in the UK is closely aligned
with European markets and this is not expected to change over the long
term. The exit from the EU has yet to cause significant volatility in
the energy markets in the short term. Longer term impacts such as weaker
economic demand and the availability of unskilled labour are not deemed
material to the future operations of the portfolio. Foresight remains of
the view that Brexit is unlikely to have a significant impact on the
financial and operational performance of the assets.
COVID-19
Towards the end of the reporting period on 23 March 2020, the Government
imposed lockdown restrictions on the UK population in order to limit the
spread of the COVID-19 pandemic. The Company's solar plants typically
operate with minimal human involvement and have been able to carry on
operating during all stages of the UK lockdown. As electricity
generators, the solar plants provide an essential service and are
therefore classified as a `Critical Sector', with all those responsible
for maintaining them deemed `Key Workers'. Over the last four months,
the solar projects continued to generate electricity and received
payments for the green energy that they produced, which was essential in
keeping the country running during this time. There are no known
significant production issues with the portfolio that would represent a
risk of future production decline.
Despite fossil-fuelled power plant shutdowns seen in the UK since March
2020, the Investment Manager does not consider there is a material risk
of reduced production in the solar energy market. While shutdowns of
fossil fuel plants are a result of declining energy demand throughout
lockdowns in the UK, due to current UK government targets toward
renewable energy sources, the Investment Manager considers that the
solar energy market is sufficiently insulated from the impacts of future
reductions in productions, with solar energy now comprising a greater
percentage of the energy produced in the UK since March 2020.
As discussed in further detail below, the power purchase agreements
(PPA) entered into between the solar sites and offtakers in the UK
electricity supply market guarantee a substantial portion of the site
revenue for the life of these contracts. The ongoing demand for solar
energy throughout the pandemic, and the limited risk of contractual
default, as a government backed body, has been considered by the
Investment Manager in assessing the impact of COVID-19 on the Company.
The Investment Manager has conducted a full review of all key service
providers for the solar sites' operations. We are confident in the
resilience of the business continuity plans in place. Daily
conversations are ongoing to monitor the situation and to understand any
risks within the supply chain for spare parts.
Regulatory
Targeted Charging Review
Following a period of consultation over potential reforms to network
charging, Ofgem published an update in May 2019 on the timing and next
steps of Future Charging and Access reforms. Amongst the reforms is a
change to Balancing Use of System ("BSUoS"), being the means through
which the cost to National Grid of balancing the network is recovered.
Currently, generators connecting to the distribution network receive
BSUoS as a credit, recognising the positive effect this capacity has on
alleviating constraint on the transmission network. In recent years the
volume of embedded generation has increased significantly and this,
together with the impact on consumers, has caused Ofgem to consider
removing the credit and applying a charge.
On 21 November 2019 Ofgem released its decision on the Targeted Charging
Review. For generators, the embedded benefits received for Balancing Use
of System ("BSUoS") will be removed from April 2021 as anticipated. The
decision on whether to impose the BSUoS as a charge has been deferred to
a new Task Force. The value of BSUoS does vary but at its worst, it is
expected that the removal of BSUoS and charging of it could adversely
impact some generators by GBP4 /MWh. Foresight continues to engage with
Ofgem and industry more widely as a member of the Solar Trade
Association to ensure the adverse impact and potential consequences are
understood. It should be noted that embedded benefits revenue represents
just 3.3% of revenues for the portfolio during the year.
Corporation Tax
Boris Johnson was elected as Prime Minister on 13 December 2019. Despite
the Conservative Party's previous pledge to cut corporation tax from 19%
to 17%, the planned cuts have been put on hold and the Government
confirmed that the rate will be held at 19% for the financial year
2020/2021. As the project valuations are derived from expected future
cash flows, this policy change resulted in a GBP0.6m reduction to the
Net Asset Value of the Company.
Revenues
During the year, 59.8% of revenue for underlying UK portfolio
investments came from subsidies (predominantly under the ROC scheme) and
other green benefits to an offtaker. These revenues are directly and
explicitly linked to inflation for 20 years from the accreditation date
under the ROC regime and subject to Retail Price Index ("RPI")
inflationary increases applied by Ofgem in April of each year. The
remaining 40.2% of revenues derive from electricity sales by our UK
portfolio companies, which are subject to wholesale electricity price
movements.
The average power price achieved during the current year was GBP44.45
per MWh, representing a decrease on the price achieved in the nine
months to 31 March 2019 (GBP54.20 per MWh.). This reduction continues to
be driven by declining natural gas prices globally as a result of new
supplies from the US and Australia entering the market. Recent
developments in the oil market added further downward pressure on
wholesale power prices. A slight increase in the deployment of onshore
wind in the UK and the build out of renewables in interconnected
countries has also contributed to downward pressure on electricity
prices.
During the year there was a 14% decrease in long term power price
forecasts. The reduction in the forecast period 2020-2025 was 21% down
from April 2019. This is driven by a major reduction in forecast
electricity demand as a result of COVID-19 induced economic
restrictions. The Investment Manager uses these forward-looking power
price assumptions to assess the likely future income of the portfolio
investments for valuation purposes. The Company's assumptions are formed
from a blended average of the forecasts provided by third party
consultants and are updated on a quarterly basis. The Investment
Manager's forecasts continue to assume an increase in power prices in
real terms of 0.97% per annum (31 March 2019: 0.27%). However, this
increase from the March 2019 figure is largely driven by lower prices in
the short term as mentioned above, the real growth from 2026-2050 is
forecast as 0.15% per annum (31 March 2019: 0.04%).
Power Purchase Agreements ("PPAs") are entered into between each
portfolio company and offtakers in the UK electricity supply market.
Under the PPAs, each portfolio company will sell the energy generated
and ROCs to the designated offtaker. Under the terms of a PPA,
electricity can be supplied at a fixed price for an agreed duration, or
at a variable rate.
The PPA strategy adopted by our portfolio companies seeks to optimise
their revenues from the power generated, while keeping the flexibility
to manage their solar assets appropriately. The Boards of our portfolio
companies, with assistance from Foresight, constantly assess conditions
in the electricity market and set their pricing strategy on the basis of
likely future movements. Seven of the UK solar sites have 10-year PPAs,
in place since 1 April 2019 with lower fees than previously. Under the
terms of these PPAs the electricity generated is sold at a variable
market rate.
The remaining four larger assets have fixed price arrangements in place.
The Company's strategy is to maintain c.30% of the portfolio under fixed
pricing agreements. The assets with fixed arrangements account for 41%
of capacity. These will maintain the hedging strategy throughout 2020
whilst contributing a positive net impact to valuations.
Sustainable Investing
Sustainability lies at the heart of the Manager's approach, and the
Manager believes that investing responsibly, seeking to make a positive
social and environmental impact, is critical to its long-term success.
These factors have been integrated into the investment process, and are
actively supported by all involved, regardless of seniority. Foresight
continues to refine its sustainability tracking to further improve its
investment processes, enhance the sustainability performance of existing
assets and demonstrate more comprehensively the environmental benefits
and social contribution of the Company's activities, implementing
Foresight Group's Sustainable Investing in Infrastructure Strategy. This
strategy focuses on ensuring all assets are evaluated prior to
acquisition and throughout their ownership, in accordance with Foresight
Group's Sustainability Evaluation Criteria. There are five central
themes to the Criteria, which cover the key areas of sustainability.
The five criteria are:
1. Sustainable Development Contribution: The development of affordable and
clean energy and improved resource and energy efficiency.
2. Environmental Footprint: Assessing potential environmental impact such as
emissions to air, land and water, effects on biodiversity and noise and
light pollution
3. Social Engagement: Engagement and consultation with local stakeholders.
Ensuring a positive local economic and social impact, community
engagement and the health and wellbeing of stakeholders.
4. Governance: Compliance with relevant laws and regulations and ensuring
best practice is followed.
5. Third Party Interactions: Third party due diligence is conducted on key
counterparties to ensure adherence to the aforementioned criteria where
relevant.
Land Management
Compliance audits have been carried out on all UK sites held by
portfolio companies, confirming that they are in line with government
permits and conditions.
Foresight Group remains a working partner of the Solar Trade
Association's Large Scale Asset Management Working Group. Foresight is a
signatory to the Solar Farm Land Management Charter and seeks to ensure
that the solar farms operated by all of our portfolio companies are
managed in a manner that maximises the agricultural, landscaping,
biodiversity and wildlife potential, which can also contribute to
lowering maintenance costs and enhancing security. As such, Foresight
Group regularly inspects sites and advises portfolio companies to
develop site specific land management and biodiversity enhancement plans
to secure long term gains for wildlife and ensure that the land and
environment are maintained to a high standard. This includes:
-- Management of grassland areas within the security fencing to promote
wildflower meadows and sustainable sheep grazing;
-- Planting and management of hedgerows and associated hedge banks;
-- Management of field boundaries between security fencing and hedgerows;
-- Sustainable land drainage and pond restoration;
-- Installation of insect hotels and reptile hibernacula;
-- Installation of boxes for bats, owls and kestrels; and
-- Installation of beehives by local beekeepers.
Most solar parks are designed to enable sheep grazing and the remaining
plants are investigated for alterations to ensure that the farmland on
which the solar assets are located can remain useful in agricultural
production, which is a frequent desire of local communities.
Examples of recent land management activities across the portfolio
include the addition of a flock of free range chickens grazing
throughout the New Kaine site. The grounds of Turweston and Littlewood
solar farms are being managed as wildflower meadow. Further
environmental improvements have been implemented at Turweston including
the installation of beehives. During the reporting period bird and bat
boxes were installed at Basin Bridge and at Turweston additional gates
with sufficient gaps at the lower edge were installed to allow for safe
wildlife passage across the site. New trees and hedgerows were planted,
and hedge infill work undertaken at Dove View, Hurcott and Littlewood.
Social and Community Engagement
Foresight Group actively seeks to engage with the local communities
around the solar assets operated by our portfolio companies and
regularly attends parish meetings to encourage community engagement and
promote the benefits of their solar assets. During the year, the Manager
has continued to make annual community payments for Marchington, which
have been extended to reflect the site's 40-year consent.
Health and Safety
There were no reportable health and safety incidents during the year.
A transformer at the Laurel Hill site experienced an oil leak in
February 2020, causing the substation to shut down. All oil was
contained within the site, which does not include any watercourses, and
a specialist contractor hired to remove and dispose of the oil safely.
Safety, Health, Environment and Quality ("SHEQ") performance and risk
management are a top priority at all levels for Foresight Group. To
further improve the management of SHEQ risks, reinforce best practice
and ensure non-compliance with regulations is avoided, Foresight Group
has appointed an independent health and safety consultant who regularly
visits the portfolio assets operated by our portfolio companies to
ensure they not only meet, but exceed, industry and legal standards. The
consultants have confirmed that all sites are in compliance with
applicable regulations.
Recommendations have been implemented to help raise standards further.
During the year improvements to method statements have been made
relating to weed management and hygiene practices. Further upgrades have
been completed to control works in the vicinity; namely overhead cables
and pressurised gas mains. Additional recommendations to manage the
deterioration of safety warning signage is being administrated by
operation and maintenance companies.
Outlook
Despite a fall in the external power prices negatively impacting the
portfolio valuation, it has otherwise been another positive year for the
Company with good performance from the assets. The Company will continue
to focus on delivering strong operational performance across the
portfolio. Post year end, the Investment Manager successfully concluded
the negotiation of new debt terms with the existing lender to refinance
the majority of the UK solar assets, with pricing materially less than
the previous arrangements.
Long-term renewable energy projects typically have inflation-linked
income streams, often with a high degree of Government backing through
subsidies, which will be unaffected by a slowdown in economic growth. We
believe this offers a degree of protection for investors from the
inevitable economic impact of the coronavirus pandemic.
Foresight Group LLP
Investment Manager
29 July 2020
Unaudited Non-Statutory Analysis of the Share Classes
Income Statement
for the year ended
31 March 2020
Ordinary Shares Fund FWT Shares Fund
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment holding
losses -- (7,881) (7,881) -- -- --
Realised losses on
investments -- (941) (941) -- -- --
Income 3,385 -- 3,385 -- -- --
Investment management
fees (147) (439) (586) -- (1) (1)
Interest payable (397) -- (397) -- -- --
Other expenses (441) -- (441) (8) -- (8)
Profit/(loss) before
taxation 2,400 (9,261) (6,861) (8) (1) (9)
Taxation -- -- -- -- -- --
Profit/(loss) after
taxation 2,400 (9,261) (6,861) (8) (1) (9)
Profit/(loss) per share 5.6p (21.6)p (16.0)p (0.7)p (0.1)p (0.8)p
Balance Sheet
at 31 March 2020
Ordinary FWT Shares
Shares Fund Fund
GBP'000 GBP'000
Fixed assets
Investments held at fair value
through profit or loss 42,170 --
Current assets
Debtors 233 61
Cash and cash equivalents 640 1,162
873 1,223
Creditors
Amounts falling due within one
year (17,256) (87)
Net current (liabilities)/assets (16,383) 1,136
Net assets 25,787 1,136
------------------------------------ ------------ ----------
Capital and reserves
Called-up share capital 354 11
Share premium 6,967 1,134
Capital redemption reserve 200 --
Distributable reserve 12,853 (8)
Capital reserve (12,226) (1)
Revaluation reserve 17,639 --
Equity shareholders' funds 25,787 1,136
------------------------------------ ------------ ----------
Number of shares in issue 35,460,961 1,145,927
Net asset value per share 72.7p 99.1p
At 31 March 2020 there was an inter-share debtor/creditor of GBP1,000
which has been eliminated on aggregation.
Unaudited Non-Statutory Analysis of the Share Classes
Reconciliations of Movements in Shareholders' Funds
for the year ended 31 March 2020
Share Capital
Called-up premium redemption Distributable Capital Revaluation
Ordinary Shares Fund share capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2019 432 7,032 122 19,426 (10,846) 25,520 41,686
Expenses in relation
to prior year share
issues -- (26) -- -- -- -- (26)
Repurchase of shares (78) -- 78 (6,390) -- -- (6,390)
Expenses in relation
to tender offer -- (39) -- -- -- -- (39)
Realised losses on
disposal of investments -- -- -- -- (941) -- (941)
Investment holding
losses -- -- -- -- -- (7,881) (7,881)
Dividends paid -- -- -- (2,583) -- -- (2,583)
Management fees charged
to capital -- -- -- -- (439) -- (439)
Revenue profit for
the year -- -- -- 2,400 -- -- 2,400
As at 31 March 2020 354 6,967 200 12,853 (12,226) 17,639 25,787
Share Capital
Called-up premium redemption Distributable Capital Revaluation
FWT Shares Fund share capital account reserve reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2019 -- -- -- -- -- -- --
Share issues in the
year 11 1,162 -- -- -- -- 1,173
Expenses in relation
to share issues -- (28) -- -- -- -- (28)
Investment holding
gains -- -- -- -- -- -- --
Dividends paid -- -- -- -- -- -- --
Management fees charged
to capital -- -- -- -- (1) -- (1)
Revenue loss for
the year -- -- -- (8) -- -- (8)
As at 31 March 2020 11 1,134 -- (8) (1) -- 1,136
------------------------- -------------- -------- ----------- ------------- -------- ----------- -------
Income Statement for the year ended 31 March 2020
Year ended 31 March Nine months ended 31 March
2020 2019
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment holding
(losses)/gains -- (7,881) (7,881) -- 3,612 3,612
Realised losses on
investments -- (941) (941) -- (197) (197)
Income 3,385 -- 3,385 546 -- 546
Investment management
fees (147) (440) (587) (117) (350) (467)
Interest payable (397) -- (397) (311) -- (311)
Other expenses (449) -- (449) (374) -- (374)
Profit/(loss) before
taxation 2,392 (9,262) (6,870) (256) 3,065 2,809
Taxation -- -- -- -- -- --
Profit/(loss) after
taxation 2,392 (9,262) (6,870) (256) 3,065 2,809
Profit/(loss) per
share:
Ordinary Share 5.6p (21.6)p (16.0)p (0.6)p 7.1p 6.5p
FWT Share (0.7)p (0.1)p (0.8)p n/a n/a n/a
The total column of this statement is the profit and loss account of the
Company and the revenue and capital columns
represent supplementary information.
All revenue and capital items in the above Income Statement are derived
from continuing operations. No operations were
acquired or discontinued in the year.
The Company has no recognised gains or losses other than those shown
above, therefore no separate statement of
comprehensive income has been presented.
Reconciliation of Movements in Shareholders' Funds
Share Capital
Year ended 31 March Called-up premium redemption Distributable Capital Revaluation
2020 share capital account reserve reserve* reserve* reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 April 2019 432 7,032 122 19,426 (10,846) 25,520 41,686
Share issues in the
year 11 1,162 -- -- -- -- 1,173
Expenses in relation
to share issues -- (28) -- -- -- -- (28)
Expenses in relation
to prior year share
issues -- (26) -- -- -- -- (26)
Repurchase of shares (78) -- 78 (6,390) -- -- (6,390)
Expenses in relation
to
tender offer -- (39) -- -- -- -- (39)
Realised losses on
disposal of investments -- -- -- -- (941) -- (941)
Investment holding
losses -- -- -- -- -- (7,881) (7,881)
Dividends paid -- -- -- (2,583) -- -- (2,583)
Management fees charged
to capital -- -- -- -- (440) -- (440)
Revenue profit for
the year -- -- -- 2,392 -- -- 2,392
As at 31 March 2020 365 8,101 200 12,845 (12,227) 17,639 26,923
Share Capital
Nine months ended Called-up premium redemption Distributable Capital Revaluation
31 March 2019 share capital account reserve reserve* reserve* reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 July 2018 439 7,050 115 21,605 (10,299) 21,908 40,818
Expenses in relation
to prior year share
issues -- (18) -- -- -- -- (18)
Repurchase of shares (7) -- 7 (619) -- -- (619)
Realised losses on
disposal of investments -- -- -- -- (197) -- (197)
Investment holding
gains -- -- -- -- -- 3,612 3,612
Dividends paid -- -- -- (1,304) -- -- (1,304)
Management fees charged
to capital -- -- -- -- (350) -- (350)
Revenue loss for
the period -- -- -- (256) -- -- (256)
As at 31 March 2019 432 7,032 122 19,426 (10,846) 25,520 41,686
------------------------- -------------- -------- ----------- ------------- --------- ----------- -------
* Total distributable reserves at 31 March 2020 were GBP618,000 (2019:
GBP8,580,000).
Balance Sheet at 31 March 2020 Registered
Number: 07289280
As at 31 As at 31
March 2020 March 2019
GBP'000 GBP'000
Fixed assets
Investments held at fair value
through profit or loss 42,170 56,767
Current assets
Debtors 293 405
Cash and cash equivalents 1,802 2,334
2,095 2,739
Creditors
Amounts falling due within one
year (17,342) (17,820)
Net current liabilities (15,247) (15,081)
Net assets 26,923 41,686
Capital and reserves
Called-up share capital 365 432
Share premium 8,101 7,032
Capital redemption reserve 200 122
Distributable reserve 12,845 19,426
Capital reserve (12,227) (10,846)
Revaluation reserve 17,639 25,520
Equity shareholders' funds 26,923 41,686
------------------------------- ----------- -----------
Net asset value per share:
Ordinary Share 72.7p 96.4p
FWT Share 99.1p n/a
Cash Flow Statement for the year ended 31 March 2020
Year ended 31 Nine months ended
March 2020 31 March 2019
GBP'000 GBP'000
Cash flow from operating activities
Deposit and similar interest received 11 8
Investment management fees paid (600) (466)
Performance incentive fee paid -- (130)
Secretarial fees paid (128) (99)
Other cash payments (387) (441)
Net cash outflow from operating activities (1,104) (1,128)
Cash flow from investing activities
Net proceeds on sale of investments 5,280 --
Investment income received 3,129 550
Net cash inflow from investing activities 8,409 550
-------------------------------------------- ------------- -----------------
Cash flow from financing activities
Proceeds of fund raising 1,162 --
Expenses of fund raising (26) (18)
Repurchase of own shares (6,390) (619)
Equity dividends paid (2,583) (1,304)
Net cash outflow from financing activities (7,837) (1,941)
Net outflow of cash in the period (532) (2,519)
Reconciliation of net cash flow to movement
in net funds
Decrease in cash for the period (532) (2,519)
Net cash at start of period 2,334 4,853
Net cash at end of period 1,802 2,334
Analysis of changes in net debt
Other non cash
At 1 April 2019 Cash Flows changes At 31 March 2020
GBP'000 GBP'000 GBP'000 GBP'000
Cash and cash
equivalents
Cash 2,334 (532) -- 1,802
Borrowings
Loan with Youtan
due within one year 15,811 -- -- 15,811
Notes to the accounts
1. The audited Annual Financial Report has been prepared on the
basis of accounting policies set out in the statutory accounts of the
Company for the year ended 31 March 2020. All investments held by the
Company are classified as 'fair value through the profit and loss'.
Unquoted investments have been valued in accordance with IPEVC
guidelines, as updated in December 2018 with further COVID-19 guidance
issued in March 2020.
2. These are not statutory accounts in accordance with S436 of the
Companies Act 2006. The full audited accounts for the year ended 31
March 2020, which were unqualified and did not contain any statements
under S498(2) or S498(3) of Companies Act 2006, will be lodged with the
Registrar of Companies. Statutory accounts for the year ended 31 March
2020 including an unqualified audit report and containing no statements
under the Companies Act 2006 will be delivered to the Registrar of
Companies in due course.
3. Copies of the Annual Report will be sent to shareholders and will
be available for inspection at the Registered Office of the Company at
The Shard, 32 London Bridge Street, London, SE1 9SG and can be accessed
on the following website:
https://www.globenewswire.com/Tracker?data=SVDnO59j2vyfdFYdJ1wi7HW7gpQ7O_FjaVjJaqpvFMkts1RMIXZHYrMMabaqjP5hL5lXsxXp2iiqlGDg0o0CmvkGycvn3DVMgSI2Ju2YXWc=
www.foresightgroup.eu
4. Net asset value per share
Net asset value per Ordinary Share is based on net assets at the year
end of GBP25,787,000 (2019: GBP41,686,000) and on 35,460,961 Ordinary
Shares (2019: 43,247,592), being the number of Ordinary Shares in issue
at that date.
Net asset value per FWT Share is based on net assets at the year end of
GBP1,136,000 (2019: GBPnil) and on 1,145,927 FWT Shares (2019: nil),
being the number of FWT Shares in issue at that date.
5. Return per share
Year ended 31 March Nine months ended
2020 31 March 2019
Ordinary Ordinary
Shares FWT Shares Shares
GBP'000 GBP'000 GBP'000
Total (loss)/profit after taxation (6,861) (9) 2,809
Total (loss)/profit per share
(note a) (16.0)p (0.8)p 6.5p
Revenue profit/(loss) from ordinary
activities after taxation 2,400 (8) (256)
Revenue profit/(loss) per share
(note b) 5.6p (0.7)p (0.6)p
Capital (loss)/profit from ordinary
activities after taxation (9,261) (1) 3,065
Capital (loss)/profit per share
(note c) (21.6)p (0.1)p 7.1p
Weighted average number of shares
in issue during the period (note
d) 42,897,610 1,145,927 43,399,944
Notes:
a) Total (loss)/profit per share is total (loss)/profit after taxation
divided by the weighted average number of shares in issue during the
period.
b) Revenue profit/(loss) per share is revenue profit/(loss) after
taxation divided by the weighted average number of shares in issue
during the period.
c) Capital (loss)/profit per share is capital (loss)/profit after
taxation divided by the weighted average number of shares in issue
during the period.
d) The weighted average number of shares in issue for the FWT shares
reflect the weighted average number of shares in issue following the
first allotment of shares.
6. The Annual General Meeting will be held at 12.30pm on 24 September
2020. In light of the continuing Covid-19 situation, the meeting will be
held by way of a closed virtual meeting and shareholders will not be
permitted to attend. Shareholders are encouraged to vote by way of proxy
and send any questions to the Investment Manager's Investor Relations
team as further set out in the notice. Please refer to the formal notice
on page 78 of the Annual Report and Accounts for further details in
relation to the format of this year's meeting and the request to observe
social distancing and travel restrictions in place.
7. Income
Year ended Nine months ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Loan stock interest 609 538
Dividends received 2,765 --
Bank interest 11 8
3,385 546
-------------------- ---------- -----------------
8. Investments held at fair value through profit or loss
Ordinary FWT
Shares Fund Shares Fund Company
GBP'000 GBP'000 GBP'000
Book cost at 1 April 2019 31,247 -- 31,247
Investment holding gains 25,520 -- 25,520
Valuation at 1 April 2019 56,767 -- 56,767
Movements in the year:
Purchases at cost -- -- --
Disposal proceeds (5,775) -- (5,775)
Realised losses (941) -- (941)
Investment holding losses (7,881) -- (7,881)
Valuation at 31 March 2020 42,170 -- 42,170
--------------------------- ------------ ------------ --------
Book cost at 31 March 2020 24,531 -- 24,531
Investment holding gains 17,639 -- 17,639
Valuation at 31 March 2020 42,170 -- 42,170
9. Transactions with the manager
Details of arrangements with Foresight Group LLP and Foresight Group CI
Limited are given in the Directors' Report and Notes 3 and 13. All
arrangements and transactions were on an arms length basis.
Foresight Group CI Limited, which acted as investment manager to the
Company until 27 January 2020 when Foresight Group LLP was appointed as
Investment Manager, earned fees of GBP491,000 (2019: GBP467,000).
Foresight Group LLP, who was appointed as Investment Manager on 27
January 2020 earned fees of GBP96,000 up to 31 March 2020 (2019: nil).
No performance fee was paid or accrued for the year (2019: nil).
Foresight Group LLP, to whom the Manager delegated the function of
Company Secretary from November 2017, earned fees of GBP131,000 (2019:
GBP97,000), during the year.
At the balance sheet date there was GBP112,000 (2019: GBP1,000) due from
Foresight Group CI Limited and GBP86,000 (2019: GBPnil) due from
Foresight Group LLP. No amounts have been written off in the year in
respect of debts due to or from related parties.
END
(END) Dow Jones Newswires
July 29, 2020 14:18 ET (18:18 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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