25
March 2024
US SOLAR FUND
PLC
('USF', the
'Company')
FULL YEAR RESULTS TO 31
DECEMBER 2023
NOTICE OF
AGM
US Solar Fund plc (LON: USF
(USD)/USFP (GBP)), the renewable energy fund investing in
utility-scale solar power plants across North America, is pleased
to announce its annual results for the year ended 31 December
2023.
FINANCIAL HIGHLIGHTS
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Audited Net Asset Value (NAV) of
$258.2m or $0.78 per share (31 December 2022: $320.0m or $0.96 per
share), down c.20%, largely driven by:
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Contributions including improvements
in macroeconomic assumptions ($6.4m), changes in the merchant curve
($28.5m) and the new Renewable Energy Certificates (REC) Agreements
($7.9m); offset by
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Reductions including discount rate
widening ($36.7m), updates to operating cost assumptions ($41.9m)
and dividend payments ($18.7m)
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Dividends of 5.66 cents per share
for 2023. Dividend cash cover of 0.95x for 2023 (31 December 2022:
1.20x)
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Adjusting for carried forward
reserves, the gain on sale of MS2 and non-recurring strategic
review payments, the underlying operational dividend cover for the
year was 0.50x (December 2022: 0.74x)
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The decrease in operational dividend
cover was the result of a number of factors including a reduction
in revenues generated by the portfolio following the sale of MS2
and an increase in the operational costs resulting from
inflation
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IFRS loss for the year of $43.1m (31
December 2022: $14.5m profit), primarily driven by the reduction in
overall unrealised fair value of the Company's assets due to
factors including increased discount rates and changes to
underlying asset cash flow forecasts
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Gill Nott, Chair of US Solar Fund, said:
"The last 12 months will be
remembered as a challenging year for financial markets. Higher
inflation and interest rates have weighed on infrastructure
companies generally, particularly impacting discount rates used to
calculate net asset values, and the costs of operating assets. The
end of 2023 sees the Company in a stronger position having secured
a new Investment Manager, Amber.
With USF on a firmer footing
following these events, we continue to be optimistic about the
outlook for performance of the operating portfolio. We are
analysing options available to return capital to shareholders,
including a share buyback, and a debt refinancing to optimise the
Company's capital structure and improve the operational cash flows.
We will report on these by the end of April.
The US states in which the Company's
assets are located continue to provide a supportive backdrop for
renewable generation, which we expect will continue irrespective of
the outcome of the 2024 US federal election."
OPERATIONAL HIGHLIGHTS
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Portfolio of 41 operating solar
assets with a total capacity of 443MWDC, following sale of 50%
share of Mount Signal 2 during 2023 (31 December 2022:
543MWDC)
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Total generation of 816GWh including
MS2, and 715GWh for the Company's current portfolio (excluding
MS2)
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Electricity generated by USF's
portfolio equates to 480,900 tCO2e emissions displaced
(31 December 2022: 618,000 tCO2e) and 104,500 equivalent
US cars removed from the road (31 December 2022:
134,000)
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Overall generation (excluding MS2)
of 7.2% below budget, of which 2.0% attributable to below forecast
solar irradiance, and 5.2% attributable to below forecast plant
availability, unscheduled outages and other non-irradiance related
factors
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Moving forward, the Investment
Manager intends to implement a disciplined approach to asset
management focused on decreasing unplanned outages and using
generation data to inform Operation & Maintenance
priorities
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Portfolio weighted average PPA term
of 11.9 years (31 December 2022: 13.8 years). All PPA
counterparties are investment-grade (Average offtaker credit rating
of BBB+)
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Sale of RECs for Oregon projects
agreed, contributing $7.9m to NAV and additional operational cash
and dividend coverage for 2024 onwards
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Sale of 50% stake in Mount Signal 2
completed, with approximately $29m of remaining proceeds following
revolving credit facility repayment and tax equity buy-out
settlements
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CAPITAL MANAGEMENT AND OUTLOOK
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The Board and Investment Manager are
currently analysing options available to it to return capital to
shareholders (including through a share buyback) and refinancing of
the Company's existing debt as a means to optimise the Company's
capital structure and improve the operational cash flows. A further
update on the outcome of this options analysis will be provided by
the end of April 2024
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The Company's operating solar assets
remain well-located, within host states which remain committed to
renewable energy targets and progressive policies which are
compatible with renewable generation
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The outlook remains positive as
utilities and corporates continue to aim to meet their renewable
energy objectives in line with state mandated targets and corporate
sustainability objectives
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NOTICE OF AGM AND OTHER INFORMATION
USF's 2024 Annual General Meeting
will be held on Tuesday, 21 May 2024 at 3pm at the offices of JTC
(UK) Limited, The Scalpel, 18th Floor, 52 Lime Street, London EC3M
7AF.
As required by the Company's
Articles of Association, because the Company has traded at an
average discount to NAV in excess of 10% during 2023, a special
resolution will be proposed at the Company's forthcoming AGM, for
shareholders to vote to wind up or otherwise reconstruct the
Company. If such a discontinuation resolution is passed, the
Company's Articles provide the Board with four months to put
forward a proposal. The strategic review conducted throughout 2023
demonstrated that prevailing market conditions are not conducive to
the Company realising the value of its assets. For these reasons,
the Board recommends that shareholders vote against the
discontinuation of the Company at the Company's forthcoming
AGM.
The Company's Annual Report and
Financial Statements for the year ended 31 December 2023 and the
formal Notice of the Annual General Meeting will be posted to
shareholders. In accordance with Listing Rule 9.6.1, copies of the
documents have been submitted to the UK Listing Authority and will
shortly be available to view on the Company's corporate website
at http://www.ussolarfund.co.uk
and for inspection from the National Storage
Mechanism at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
For
further information, please contact:
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US
Solar Fund
Meredith Frost (Amber)
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+44 20 7939 0550
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Cavendish Capital Markets Limited
Tunga Chigovanyika
James King
Will Talkington
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+44 20 7397 8900
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JTC
(UK) Limited
Ruth Wright
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USSolarFund-CompanySecretary@jtcgroup.com
+44 207 409 0181
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KL
Communications
Charles Gorman
Charlotte Francis
Patrick Lodge
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+44 20 3995 6673
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About US Solar Fund plc
US Solar Fund plc, established in
2019, listed on the premium segment of the London Stock Exchange in
April 2019. The Company's investment objective is to provide
investors with attractive and sustainable dividends with an element
of capital growth by owning and operating solar power assets in
North America and other OECD countries in the Americas.
The solar power assets that the
Company acquires or constructs are expected to have an asset life
of at least 30 years and generate stable and uncorrelated cashflows
by selling electricity to creditworthy offtakers under long-term
power purchase agreements (or PPAs). The Company's portfolio
currently consists of 41 operational solar projects with a total
capacity of 443MWDC, all located in the United States.
Further information on the Company
can be found on its website at http://www.ussolarfund.co.uk.
About Amber Infrastructure Group
Amber Infrastructure (Amber) is an
international infrastructure specialist, focused on investment
origination, development, asset management and in Europe, fund
management. Amber's core business focuses on infrastructure assets
across the public, transport, energy, digital and demographic
infrastructure sectors that support the lives of people, homes and
businesses internationally.
Among other funds, Amber
Infrastructure advises International Public Partnerships, a FTSE
250-listed Company with a market cap of approximately £2.5 billion
and 15-year track record of long-term investment in infrastructure
assets globally. Amber is headquartered in London with offices in
Europe, North America and Australia and employs c.180
infrastructure professionals. Amber has had a strategic partnership
with the Hunt Group of Companies in the US since 2015. Learn more
at www.amberinfrastructure.com.
LEI: 2138007BIUWE7AHS5Y90