Foresight Group Holdings Ltd. · LSE:FSG
Foresight — Foresight Solar Fund — FY2021 Earnings Presentation
26 slides from Foresight's earnings presentation, March 2022
Slide 1: Foresight Solar Fund Limited Results to 31 December 2021
FORESIGHT SOLAR FUND LIMITED RESULTS TO 31 DECEMBER 2021 MARCH 2022 FORESIGHT SOLAR FUND LIMITED Results Presentation 1
Slide 2: Agenda
AGENDA Highlights to 31 December 2021 ESG Highlights and Key Metrics Acquisitions and Assets under Construction Operational and Financial Update Inflation and Discount Rates Power Price Forecasts Market Outlook and Pipeline FORESIGHT SOLAR FUND LIMITED Results Presentation 2
Slide 3: Foresight Group – Investing for a Smarter Future for More Than 35 Years
FORESIGHT GROUP – INVESTING FOR A SMARTER FUTURE FOR MORE THAN 35 YEARS A leading sustainability-driven global infrastructure and private equity manager Ricardo Piñeiro Ross Driver Partner, Co-Head of Infrastructure Director, Infrastructure Mr Piñeiro joined Foresight in 2011 Mr Driver joined Foresi
Slide 4: Highlights to December 2021
HIGHLIGHTS TO 31 December 2021 • 12.9% increase in NAV per share to 108.2p driven by strong UK power prices, above budget inflation and a reduction in discount rates. • Electricity generated by the global portfolio was 5.3% below base case, however, hedging strategy and elevated power prices meant t
Slide 5: ESG Highlights and Key Metrics
ESG HIGHLIGHTS AND KEY METRICS Delivery of positive social and environmental impact alongside financial returns • Whole portfolio assessed as fully aligned with EU Taxonomy compliance after assets in the UK, Australia and Spain independently verified. • The Company reports its findings under the gui
Slide 6: Portfolio Overview as at December 2021
PORTFOLIO OVERVIEW AS AT 31 DECEMBER 2021 Geographically diversified portfolio of 59 assets with a total net peak capacity of 1.043GW UK Spain Australia 748MW1 125MW1 170MW Total generating capacity across 51 Total generating capacity across 4 Total generating capacity across 4 assets assets assets
Slide 7: Acquisitions
ACQUISITIONS First investment in battery storage assets Sandridge Battery Storage asset (50MW, UK) • Construction of the Fund's first BSS project began in Q1 2022. • Scheduled to become operational in the fourth quarter of 2022. • Will support the diversification of portfolio revenue streams. Longre
Slide 8: Assets Under Construction
ASSETS UNDER CONSTRUCTION Project Lorca Project Lorca comprises three solar projects located in the province of Granada, Spain, with a total planned installed capacity of 98.5MW. The project provides: • Increased international diversification in a core market. • Ability to secure further contracted
Slide 9: Operational & Financial Update
OPERATIONAL & FINANCIAL UPDATE FORESIGHT SOLAR FUND LIMITED Results Presentation 9
Slide 10: Portfolio Performance
PORTFOLIO PERFORMANCE Strong operational performance from UK portfolio muted by a challenging year for Australia • Global portfolio generation was 5.3% below budget for 2021, producing approximately 903MWh of clean electricity across the 54 operating assets. • UK portfolio contributed 686MWh of elec
Slide 11: Power Prices
POWER PRICES Strong power prices during the period driven by high commodities prices • Wholesale power prices through 2021 have been the strongest since the inception of the Fund. • UK day ahead auction prices averaged £117/MWh in 2021 (2020: £35/MWh), with the average for H2 2021 at £166/MWh. • Aus
Slide 12: Revenue Analysis and Price Hedging Strategy
REVENUE ANALYSIS AND PRICE HEDGING STRATEGY High proportion of fixed revenues offers cash flow visibility in the short to medium term • For 2021, approximately 51% of revenue was from subsidies, with the remaining 49% from the sale of electricity. • Including fixed contracts secured on UK PPAs, 74%
Slide 13: Dividends
Dividends Strengthening forecast dividend cover supported by high power price environment • Declared total dividends of 6.98p per share for the year. • Robust dividend cover of 1.21x for the period on a cash basis, including the impact of the scrip dividend programme. • Target dividend of 7.12p per
Slide 14: Key Financial Metrics as at December 2021
KEY FINANCIAL METRICS AS AT 31 DECEMBER 2021 Delivery of attractive returns to investors since inception Net Asset Value (“NAV”) NAV per share Gross Asset Value (“GAV”) 1 £660.0m 108.2p £1,172.0m (31 Dec 2020: £582.2m) (31 Dec 2020: 95.8p) (31 Dec 2020: £1,054.6m) Total NAV return2 NAV per share inc
Slide 15: Net Asset Value Movements
NET ASSET VALUE MOVEMENTS NAV increase driven by strong power price recovery, active power price management and above budget inflation Movements in Net Asset Value (£m and Pence Per Share) FORESIGHT SOLAR FUND LIMITED Results Presentation 15
Slide 16: Inflation uplift to NAV
Inflation uplift to NAV The Company is positively correlated to inflation movements • FSFL's positive correlation to inflation means it benefits from periods of high inflation. • Greatest impact of inflation on NAV is on forecast power prices. • Results from the compounding effect of applying inflat
Slide 17: Uplift to NAV from changes in discount rates
Uplift to NAV from changes in discount rates Discount rates updated to reflect market transactions The Investment Manager closely monitors transactions to assess the fair UK Discount rate for solar value of assets in the portfolio. As such: • The Board elected to decrease the UK discount rate by 50
Slide 18: Power Price Forecasts
POWER PRICE FORECASTS Increase in short term UK power price forecasts from independent advisers during the period • Increase in short term power prices driven by high commodity prices • Increase in long-term average power price forecasts used at December 2021 of 3.8% vs June 2021 across duration of
Slide 19: Power Price Forecasts continued
POWER PRICE FORECASTS continued Decrease in forecasts against previous periods, long term trend remains positive • The wholesale power price is expected to increase steadily in the 2020s driven by the increase in supply of state backed renewables and a recovery from low gas prices. • Post 2030 stabi
Slide 20: NAV Sensitivities
NAV SENSITIVITIES FORESIGHT SOLAR FUND LIMITED Results Presentation 20
Slide 21: Consolidated Profit and Loss of Underlying Investments
CONSOLIDATED PROFIT AND LOSS OF UNDERLYING INVESTMENTS Ongoing delivery of increasingly strong operational margins UK Australia Consolidation For the period ended 31 December 2021 (£m) ($m) actual (£m) Revenue Wholesale revenue 46.6 14.7 54.5 Subsidised revenue 54.3 0.2 54.4 Other income 0.5 1.2 1.2
Slide 22: Gearing Position at December 2021
GEARING POSITION AT 31 DECEMBER 2021 Revolving credit facilities ("RCFs") offer flexibility to support future acquisitions at competitive cost • Total outstanding debt of the Company including RCFs amounted to £512.0 million, with long-term debt representing £388.6 million. • New RCF of up to £150m
Slide 23: Market Outlook and Pipeline
MARKET OUTLOOK AND PIPELINE • Government's net-zero and decarbonisation targets alongside the need to reduce reliance on fossil fuels support significant growth of the renewable energy markets. • Subsidy-free market in the UK and Europe expected to grow, aided by the recovery in power prices and the
Slide 24: Summary
SUMMARY • NAV growth driven by strong UK power prices, above budget inflation and a reduction in discount rates. • Strong UK operational performance; Australian portfolio performance expected to improve for 2022 • All portfolio assets under construction scheduled to become operational during 2022. •
Slide 25: Contact Details
CONTACT DETAILS Investment Manager Foresight Group +44 (0)20 3911 2318 Nish Sivarajan NSivarajan@ForesightGroup.eu PR Citigate Dewe Rogerson +44 (0)20 7638 9571 Toby Moore Lucy Eyles Lucy Gibbs Corporate Broker Jefferies International Limited +44 (0)20 7029 8140 FORESIGHT SOLAR FUND LIMITED Results
Slide 26: Important Notice
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) acknowledg