Annual Report • Feb 28, 2023
Annual Report
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Bluefield Solar Income Fund Limited
FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Company Registration Number: 56708
| General Information | 3 |
|---|---|
| Highlights | 4 |
| Corporate Summary | 6 |
| Chair's Statement | 7 |
| The Company's Investment Portfolio | 11 |
| Analysis of the Company's Investment Portfolio | 12 |
| Report of the Investment Adviser | 13 |
| Environmental, Social and Governance Report | 33 |
| Statement of Principal and Emerging Risks and Uncertainties for | |
| the Remaining Six Months of the year to 30 June 2023 | 38 |
| Directors' Statement of Responsibilities | 39 |
| Independent Review Report to Bluefield Solar Income Fund Limited | 40 |
| Unaudited Condensed Statement of Financial Position | 42 |
| Unaudited Condensed Statement of Comprehensive Income | 43 |
| Unaudited Condensed Statement of Changes in Equity | 44 |
| Unaudited Condensed Statement of Cash Flows | 45 |
| Notes to the Unaudited Condensed Interim Financial Statements | 46 |
| Glossary of Defined Terms | 60 |
| Alternative Performance Measures (Unaudited) | 65 |
John Scott (Chair and Chair of Nomination Committee) Elizabeth Burne (Chair of Management Engagement and Service Providers Committee) Michael Gibbons CBE (Senior Independent Director) (appointed 7 October 2022) Meriel Lenfestey (Chair of Environmental, Social and Governance Committee) Paul Le Page (Chair of Audit and Risk Committee) John Rennocks (retired 22 February 2023)
PO Box 286 Floor 2, Trafalgar Court Les Banques, St Peter Port Guernsey, GY1 4LY
Ocorian Administration (Guernsey) Limited Floor 2, Trafalgar Court Les Banques, St Peter Port Guernsey, GY1 4LY
KPMG Channel Islands Limited Glategny Court, Glategny Esplanade St Peter Port Guernsey, GY1 1WR
Link Market Services (Guernsey) Limited Mont Crevelt House Bulwer Avenue, St Sampson Guernsey, GY2 4LH
Link Asset Services Limited The Registry 34 Beckenham Road, Beckenham Kent, BR3 4TU
Bluefield Partners LLP 6 New Street Square London, EC4A 3BF
Numis Securities Limited 45 Gresham Street London, EC2V 7BF
(as to English law) Norton Rose Fulbright LLP 3 More London Riverside London, SE1 2AQ
(as to Guernsey law) Carey Olsen PO Box 98, Carey House Les Banques, St Peter Port Guernsey, GY1 4BZ
NatWest International plc 35 High Street St Peter Port Guernsey, GY1 4BE
Net Asset Value (NAV)
£870.7m £858.4m
NAV per share
142.40p 140.39p
Underlying Earnings1 (pre amortisation of debt)
£51.4m £21.4m
Underlying Earnings per share1 (pre amortisation of debt)
Underlying Earnings per share available for
distribution1 (post amortisation of debt) 6.26p 2.57p
Total Shareholder Return2 6.98% 5.68%
Total return to Shareholders since IPO 101.59% 81.69%
Total Return3 4.38% 9.61%
• 649 MW potential capacity
Underlying earnings is an alternative performance measure employed by the Company to provide insight to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company. Further detail is provided on page 23.
Total Shareholder Return is based on share price movement and dividends paid in the period. It is defined in the Alternative Performance Measure appendix.
Total Return is based on the NAV movement and dividends paid in the period. It is defined in the Alternative Performance Measure appendix.
For a year, based on forecasted annual generation.
During the 2022/23 financial year.
| Six months ended | Six months ended | |
|---|---|---|
| 31 December 2022 | 31 December 2021 | |
| Total operating income | £38,845,159 | £54,510,638 |
| Total comprehensive income before tax | £37,642,084 | £53,699,532 |
| Total underlying earnings1 | £51,438,238 | £21,389,077 |
| Earnings per share (per page 56) | 6.16p | 11.05p |
| Underlying EPS available for distribution2 | 6.26p | 2.57p |
| Underlying EPS brought forward3 | 3.39p | 2.67p |
| Total underlying EPS available for distribution | 9.65p | 5.24p |
| 1 st interim dividend for the year ending 30 June 2023 |
2.10p | 2.03p |
| NAV per share | 142.40p | 122.96p |
| Share Price as at 31 December | 136.0p | 124.3p |
| Total Return4 | 4.38% | 9.61% |
| Total Shareholder Return5 | 6.98% | 5.68% |
| Total Shareholder Return since inception6 | 101.59% | 81.69% |
| Dividends per share paid since inception | 65.59p | 57.39p |
1. Underlying earnings is an alternative performance measure employed by the Company to provide insight to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company. Further detail is provided on page 23.
2. Underlying EPS is calculated using underlying earnings available for distribution divided by the weighted average number of shares in issue through the period.
The investment objective of the Company is to provide Shareholders with an attractive return, principally in the form of quarterly income distributions, by being invested primarily in solar energy assets located in the UK. The Company also has the ability to invest a minority of its share capital into wind, hydro and energy storage assets.
The Board seeks to adopt a progressive dividend strategy, although the ability to maintain or grow dividends is dependent upon a number of factors, including future power prices in the UK.
The Company is a non-cellular company limited by shares incorporated in Guernsey under the Law on 29 May 2013. The Company's registration number is 56708, and it is regulated by the GFSC as a registered closed-ended collective investment scheme and it is accredited as a Green Fund after successful application to the GFSC under the Guernsey Green Fund Rules on 16 April 2019. The Company's Ordinary Shares were admitted to the Premium Segment of the Official List and to trading on the Main Market of the LSE following its IPO on 12 July 2013. The issued capital during the year comprises the Company's Ordinary Shares denominated in Sterling.
The Company has the ability to use long term and short term debt at the holding company level as well as having long term, non-recourse debt at the SPV level.
The Investment Adviser to the Company during the period was Bluefield Partners LLP which is authorised and regulated by the UK FCA under the number 507508. In May 2015 Bluefield Services Limited (BSL), a company with the same ownership as the Investment Adviser, commenced providing asset management services to the investment SPVs held by the UK limited company parent, which changed from Bluefield SIF Investments Limited (BSIFIL) to Bluefield Renewables 1 Limited (BR1) in May 2022 to facilitate arrangement of the new RCF. In August 2017 Bluefield Operations Limited (BOL), a company with the same ownership as the Investment Adviser, commenced providing operation and maintenance services to the Company and provides services to 70 sites (585MW) of the investment portfolio held by BR1 as at period end.
In December 2020 Bluefield Renewables Development Limited (BRD), a company with the same ownership as the Investment Adviser, commenced providing BSIF with new build development opportunities in addition to arrangements in place with the Company's other development partners.
Please refer to page 13 for the details of Company's corporate structure.
Following a successful financial year to 30 June 2022, which saw the Company's generating capacity grow by 25%, during the six months to 31 December 2022 ("H1 22/23", or the "Period") we have continued to deliver excellent results, notwithstanding various external challenges. Power prices reached record highs during H1 22/23 and the Company's ability to maximise the value of energy sales through its policy of typically fixing prices 18 months ahead means the Company's near- term earnings projections are very strong.
Allied to this is the excellent progress seen with the Company's development programme, with 865MW under active development and 446MW in pre-construction, providing a platform for significant growth in our business.
The main features of the Period are:
At the time of writing, the Group's total outstanding debt has increased to £531.1 million and its leverage level stands at c.38% of GAV, at the lower end of our preferred range of 35%-45%.
During the Period, the Company completed the acquisition of a 1.4 ROC 46.4MWp solar portfolio located in Lincolnshire (39.3MWp) and Cumbria (7.1MWp). This purchase grows the Company's generating portfolio to 812.6MWp (June 2022: 766.2MWp), and increases the proportion of solar (85%) to onshore wind (15%). The Company's mandate allows for diversification of up to 25% of its GAV into non solar renewables.
The Company has seen continued success with its proprietary development pipeline; consents were achieved on 215MW of solar assets, contributing an uplift over costs of c.£15m (c.2pps) and a small element of capital recycling was achieved through the disposal of an existing development for c.£1.8m.
With construction underway on Yelvertoft, itself a product of the Company's proprietary development programme, and the growth of the wider pipeline to 1.38 GW, the Company is delivering on each of the three tenets of its development strategy; invest, construct, selectively recycle capital.
The Underlying Earnings for the Period, before amortisation of long-term finance, were £51.4m, or 8.41pps, and underlying earnings for distribution, post debt repayments of £13.2m (2.15pps), were £38.2m (December 2021: £12.8m). Including carried forward earnings from June 2022 of 3.39pps, the total funds available for distribution as at 31 December 2022 were 9.65pps (December 2021: 5.24pps).
The Company's portfolio has once again performed well, with solar generation 6.17% above budget, the material factor behind the strong financial performance having been the significant increase in UK wholesale power prices, driven up by the price of natural gas. As a result, the Company has been able to secure significantly higher power price fixes during the Period across 140MWp at an average price of 262.84/MWh. The higher prices on these contracts have been locked in typically for 18 months and in some cases for over 24 months.
The Company faced a number of political challenges during the Period, with Britain seeing three Prime Ministers and four Chancellors in 15 weeks. Unsurprisingly, this fostered a period of considerable confusion over energy policy, including whether and how Government might impose extra taxes on some or all electricity generators. The financial turmoil arising from the short-lived Truss administration rattled the capital markets, but demand for renewable projects, at all stages of their lifecycle, has remained strong. We have benefitted from higher power prices and to an extent from rising inflation, but these effects have been partially offset by the impact of the Levy and by the increased cost of debt.
The Investment Adviser continues to see pricing for secondary market solar portfolios within the range of £1.25m to £1.45m/MWp. Higher interest rates and the inclusion of onshore wind within BSIF's portfolio have caused the Board to increase to 7.25% the portfolio discount rate for the 31 December 2022 Directors' Valuation (30 June 2022: 6.75%). The resultant enterprise value of the Company's operational portfolio is £1,222m (c.£1.38m/MW for the solar assets vs. £1.39m/MW in June 2022). The Directors' Valuation as at 31 December 2022 is in line with recent market transactions and consistent with the Company's valuation methodology of 'willing buyer/willing seller'.
During 2022, inflation reached levels not seen since the 1980s, as higher commodity and energy prices pushed RPI to 13.4% and CPI to 10.5% in December 2022.
Since the turn of the year there have been encouraging signs that inflation has peaked, but expectations remain that inflation will remain well above the Bank of England's 2% target for the foreseeable future. Since our income grows with inflation, resulting from the indexation provisions in our regulated revenues, increases in RPI have the effect of boosting both our earnings and the valuation of our assets.
Reflecting the latest economic forecasts, as well as the transition from RPI to CPIH post 2030, inflation assumptions supporting the valuation are 10.9% in 2022, 5.5% in 2023 (June 2022: 3.4%) and thereafter 3.0% until 2029, before dropping to 2.25%.
Russia's war in Ukraine has had a profound effect on energy markets worldwide. Severe supply disruptions continue to affect Europe and, with the UK still heavily dependent on imported methane for the generation of electricity (over 40% in 2022), record gas prices drove electricity prices to new highs towards the end of the summer. In recent months UK wholesale electricity prices have eased considerably, as natural gas prices have fallen sharply from the highs touched in August 2022 of over £500/MWh, dropping to below £118/MWh in February 2023.
Due to the Company's PPA sales strategy of fixing power for between one and three years ahead, it enters 2023 with more than 80% of its merchant revenue hedged to March 2024, so has limited revenue exposure to the recent declines in the electricity market. Thanks to some well-timed sales contracts agreed during the Period, the Board has a high degree of confidence in achieving dividend cover in excess of 2.0x (including carried forward earnings and post debt amortisation) in the financial years ending June 2023, June 2024 and June 2025.
In November 2022, in response to demands for "windfall tax", the UK government announced the introduction of a temporary 45% tax – the "Levy" — on the extraordinary profits made by electricity generators late last year while European energy prices soared in the wake of Russia's invasion of Ukraine. The Levy will be in place from 1 January 2023 until 31 March 2028, with the benchmark price of £75 per MWh linked to UK Consumer Price Inflation.
Revenues earned from assets under Feed in Tariffs, Renewable Obligation Certificates, or Contracts for Differences with the Low Carbon Contracts Company are exempt. Given that around 53% of BSIF's revenues out to the mid-2030s are derived from such subsidy schemes, the Company is reasonably well positioned to absorb the Levy and is pleased to be part of the solution to the energy crisis, an issue that is affecting every section of the economy and is in danger of causing real hardship to the most vulnerable households in the country.
We continue the process of refreshing the BSIF Board. After nine highly successful years as Chair, John Rennocks decided that it was time for him to relinquish that position and stepped down at the November 2022 AGM, retiring from the Board in February 2023. John had been in the Chair since the formation of the Company in 2013 and was instrumental in its formation and flotation. I know my colleagues join me in recognising the immense contribution which John has made to BSIF's evolution from that of a fledgling participant in an untested area, to that of a major constituent of what has now become the £16 billion renewable power sector. John has led the Company with vision and great distinction; the Board looks forward to extending his legacy.
I am delighted to welcome Michael Gibbons as our new Senior Independent Director. Michael has a wealth of energy markets experience from his time at ICI and then PowerGen and has spent almost nine years chairing the British Government's independent Regulatory Policy Committee. Michael brings to BSIF a considerable body of knowledge in supporting the Company's further growth in the face of a rapidly evolving regulatory landscape.
During the Period, three new committees were established by the Board: a Nomination Committee, a Management Engagement and Service Providers Committee and an Environmental, Social and Governance Committee. Meanwhile Paul Le Page, who has chaired the Audit and Risk Committee since the foundation of the Company, intends to retire from that role with effect from the 2023 AGM, whereupon that role will be assumed by Elizabeth Burne. A key task for the Audit and Risk Committee during the current year is to conduct an audit tender; KPMG has been our auditor from inception and, in line with best practice, after ten years it is time to assess our options in this area.
The Company continues to make great progress with the implementation of its ESG strategy and has recently satisfied its Level 2 reporting requirements under the Sustainable Finance Disclosure Regulation (SFDR). As part of this, a recent assessment determined that the Company's current portfolio is 100% aligned with the EU Taxonomy, an achievement of which the Board is very proud and one which reflects well on our Investment Adviser, Bluefield Partners.
Despite a very choppy political backdrop, the second half of 2022 saw further progress by your Company, which continued to deliver excellent returns for its shareholders, while at the same time growing its asset base. Dividends increased and your Board is confident of delivering an earnings stream which will continue to grow in the coming years. The Board also has great confidence in its Investment Adviser, Bluefield Partners, who have steered us with skill since our foundation nearly a decade ago.
One of the many lessons which we derive from the continuing and tragic war in Ukraine is the need for greater energy security. Domestically generated solar electricity has an enormous role to play in achieving the shift away from imported hydrocarbons, while simultaneously decarbonising the economy. Although the achievements of the renewable energy sector are remarkable, for example in providing (by some measures) over 40% of the UK's domestically generated electricity in the period January-September 2022, there remains a considerable amount still to do if we are to wean ourselves off our thirst for fossil fuels and play our part in the global efforts to reach net zero.
Your Company is well placed to participate in the enormous programme of investment that is required in the coming years if we are to meet the ambitious goals set by the UK government and the United Nations. As we approach our tenth anniversary, BSIF has shown what can be achieved through a steady programme of investment and astute management of its assets. Your Board looks to the years ahead with great confidence.
John Scott Chair 27 February 2023
Bluefield was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure. Our team has a proven record in the selection, acquisition and supervision of large scale energy and infrastructure assets in the UK and Europe. The Bluefield team has been involved in over £6.5 billion of renewable funds and/or transactions in both the UK and Europe, including over £1 billion for BSIF in the UK since December 2011.
Bluefield was appointed Investment Adviser to the Company in June 2013. Based in its London office, Bluefield's partners are supported by a dedicated and highly experienced team of investment, legal and portfolio executives. As Investment Adviser, Bluefield is responsible for the origination and selection of investment opportunities, which are then proposed to the Board of BSIF. Bluefield has executed over 200 individual SPV acquisitions on behalf of BSIF and other European vehicles through geographically dedicated teams.
The Company's corporate structure is summarised below:
As at 31 December 2022, the Company held an operational solar portfolio of 129 PV plants (consisting of 87 large scale sites, 39 micro sites and 3 roof top sites), 6 wind farms and 109 small scale UK onshore wind turbines with a total capacity of 812.6MWp.
During the period to 31 December 2022, the combined solar and wind portfolio generated an aggregated total of 391.8GWh, representing a Generation Yield of 511.4MWh/MW.
In December 2022 the Company completed the acquisition of a 46.4MWp operational solar portfolio from Fengate Asset Management. The enterprise value of the portfolio is £56.0 million, including the economic benefit of all cashflows from May 2022. The portfolio contains £27.3 million of long-term amortising debt provided by Macquarie Bank Limited.
The portfolio consists of two ground mounted solar photovoltaic ('PV') plants, a 39.3MWp plant (Raventhorpe) located in Scunthorpe, Lincolnshire and a 7.1MWp facility (Roanhead) located in Barrow-in-Furness, Cumbria.
Both solar sites are accredited under the Renewable Obligation Certificate ('ROC') regime with a tariff of 1.4 ROCs.
In the 6-month period to 31 December 2022, irradiation levels were 9.7% higher than the Company's forecast and 13.3% higher than the same period in FY 2021/22.
During the reporting period, the solar portfolio achieved a Net PR of 76.96% (FY 2021/22: 79.5%) against a forecast of 79.5% and generated 327.4GWh of power, 6.2% above expectations. Higher than expected irradiation was the principal driver behind the generation exceeding expectations, however above forecasted irradiation lowers PR due to the increased effects of inter row shading losses and higher component temperatures.
Notwithstanding the lower PR, total generation increased by 26.6% when compared to the six months to 31 December 2021 due to the combined impact of the solar portfolio capacity increasing by 10.1% and the irradiation during the period having been 13.3% higher As a result of these factors, the generation yield (generation per MW of installed capacity) increased by 9.6% to 462.55MWh/MWp when compared to the same period in the 2021/22 reporting year.
Table 1. Summary of Solar Fleet Performance for H1 2022/23:
| H1 | H1 | Delta to Forecast |
H1 | Delta 22/23 to 21/22 Actual |
|
|---|---|---|---|---|---|
| 2022/23 | 2022/23 | (% | 2021/22 | (% | |
| Actual | Forecast | change) | Actual6 | change) | |
| Solar Portfolio Total Installed Capacity (MWp)1 |
707.76 | 707.76 | - | 613.00 | 15.46% |
| Weighted Average Irradiation (Hrs)2,3 |
601.03 | 548.03 | 9.67% | 530.40 | 13.32% |
| Total Generation (MWh) |
327,377 | 308,363 | 6.17% | 258,646 | 26.57% |
| Generation Yield (MWh/MWp) |
462.55 | 435.69 | 3.80% | 421.9 | 9.64% |
| Average Revenue (£/MWh)4 |
£180.96 | £171.80 | 5.33% | £135.405 | 33.65% |
Notes to Table 1.
1. Excludes 2 solar plants acquired in late December 2022 (46.4 MWp)
2. Periods of irradiation where irradiance exceeds the minimum level required for generation to occur (50W/m2)
3. Excluding grid outages and significant periods of constraint or curtailment that were outside the Company's control (for example, DNO-led outages and curtailments)
Total Revenue for the period was £59.24m, 16.39% higher than forecasts and 69.16% higher than the previous FY. Favourable fixed PPA agreements which commenced during the period were the principal reason for increased revenue, as the average power price rose from £135.40/MWh in the previous FY to £180.96/MWh, representing a 33.65% increase.
Operational costs for the period (incorporating all fixed, contracted costs such a lease payments, O&M fees etc.) totalled c.£15.18m, including expenditure associated with the optimisation & enhancement projects (see below).
A core focus of the Investment Adviser's activities is protecting, optimising, and enhancing the value of the Company's operational portfolio.
Principally this is done through in-depth performance monitoring and carefully tailored preventative maintenance programmes, ensuring that capital spend across the Company's portfolio (expected to be £4-5m annually over the next decade) is completed during periods of low irradiation (being October to February).
A rolling capital works programme is essential for optimising the long-term operational performance of the portfolio.
As at 31 December 2022, 494.6 MWp (30 June 2022: 401 MWp) of the PV portfolio have leases that allow for terms beyond 30 years (being 60.87% of the solar PV portfolio), with 338.2 MWp (100% of applications successful) benefitting from planning terms in excess of 30 years with the Investment Adviser continuing to pursue lease extensions on the remaining assets in the portfolio.
As at 31 December 2022, the Company held an operational onshore wind portfolio of 135 installations, comprising 109 small scale turbines (55-250kW) and 26 turbines (850kW-2.3MW), with an aggregated capacity 58.36MW.
During the reporting period, the portfolio generated 64.42GWh, -21.7% below forecasts. This was largely due to continued reduced availability of 3 turbines at Delabole Wind Farm. As a result, the Investment Adviser elected to replace the O&M provider in December 2022; following this, all faulty turbines returned to service within 4 weeks. Significant O&M LDs are expected to be recovered for the underperformance.
Compared to the UK 2o-year mean, national average windspeeds were down 10% during the first three months of the period (July – September 2022), and down 6% during the whole six month reporting period, further impacting generation. The average onsite windspeeds were 6% higher than the previous year (FY 2021/22), a period of historically low wind resource.
Table 2. Aggregated Wind Portfolio Performance, H1 2022/23
| H1 | H1 | Delta to | H1 | Delta 22/23 to 21/22 Actual |
|
|---|---|---|---|---|---|
| 2022/23 | 2022/23 | Forecast (% | 2021/22 Actual2 |
(% | |
| Actual | Forecast | Change | change) | ||
| Portfolio Total Installed Capacity |
58.36 | 58.36 | - | 30.01 | 94.47% |
| (MW) | |||||
| Total Generation (MWh) |
64,392 | 82,182 | -21.65% | 29,888 | 115.45% |
| Generation Yield |
1,103.36 | 1,408.18 | -21.65% | 995.92 | 10.79% |
| (MWh/MW) | |||||
| Average Revenue1 |
£203.59 | £197.78 | 2.93% | £199.84 | 1.87% |
| (£/MWh) |
Notes to Table 2.
1. Average Revenue includes all income associated with the sale of power, all subsidy payments, liquidated damages and insurance claims amounts. ROC recycle revenue is included assuming a 10% recycle rate for both Actual and Forecast Revenue
2. Includes 17.4MW of onshore wind assets acquired in January 2022, not included in the published 2021/22 interim results (performance data now available to 1 July 2022)
The portfolio achieved a Generation Yield of 1,103.36 MWh per MW of installed capacity, equivalent to a 10.8% increase to FY 2021/22, largely due to the improved wind resource.
Despite lower than forecast generation, the portfolio provided a total revenue of £13.1m, with an average revenue per MWh of £203.59, +2.9% above expected levels, due to significantly higher wholesale power prices.
In Northern Ireland, 17 of the 29 small-scale turbines have been identified for repowering with replacement EWT 250kW turbines. These assets will be repowered to increase efficiency and output, whilst maintaining their respective NIRO accreditation status.
As at 31 December 2022, 4 turbines have been repowered and returned to operation, with a further 9 having received planning approval for repowering, with a new 25-year term. By end-February 2023, an additional 2 turbines will be repowered with the EWT model, and further 3 planned for repowering before 30 June 2023. The remaining projects have planning applications submitted to the relevant Local Planning Authority.
As part of the industry-wide audits of FiT and RO-accredited generating assets, the Investment Adviser and Asset Manager have been working closely with the regulator on those assets (randomly) selected for audit. All of the Company's assets to have completed OFGEM audits to date have been classified as 'satisfactory'.
The Investment Adviser continues to ensure H&S awareness, policies, processes and procedures remain at the forefront of every activity around the portfolio. H&S policies and logs are reviewed at least annually. All main contractors (including asset management and O&M providers) are audited annually by a qualified third-party specialist consultant, with new retained contractors (associated with operational projects acquired by BSIF, for example) audited immediately following acquisition.
The Company maintained its strategy of fixing power price contracts for periods between 12 and 36 months, with most contracts continuing to be struck for a minimum of 18 months. As at 31 December 2022, the average term of the fixed-price PPAs across the portfolio is 28.4 months (FY 2021/22: 25.8 months).
Contract renewals are spread evenly throughout any 12-month period, with competitive tender processes involving several offtakers run for each PPA renewal in the 3 month period prior to the commencement of a new fixing period. PPA counterparties are selected on a competitive basis, but with a clear focus on achieving value and diversification of counterparty risk.
The Investment Adviser continues to believe this is the best strategy for shareholders, who are looking for stable revenues and forecastable, sustainable dividends, and provides very high visibility of revenues over the next few years, where other strategies do not. This approach delivered almost a decade of sector leading dividend cover (covered by in year earnings and post debt amortisation).
As at 31 December 2022, the Company has a price confidence level of 92% to June 2023 and c.90% to December 2023 over the pricing of both power and subsidy revenue streams.
The ability of the Company to capture the wholesale power market prices when they are at their highest is reflected in the BSIF average seasonal weighted power price. The average seasonal weighted power price for the 12 months ending 31 December 2022 has increased by 70.75% from the year ended 31 December 2021, from £50.30 per MWh to £85.80 per MWh. These values contain price fixes made from up to two years prior.
The impact of power prices on NAV is set out in the valuations section.
During the period, the wholesale market continued to offer opportunities to fix contracts, up to 36 months in tenure, at historically high prices. As shown below, those contracts fixed during the reporting period (aggregated capacity: 140MWp) were at prices significantly above the portfolio average.
Chart 1. PPA Fixed Power Prices (Average Vs Average for Fixes completed during Reporting Period)
| Price as at: | 1 Jan 23 | 1 July 23 | 1 Jan 24 | 1 Jul 24 |
|---|---|---|---|---|
| BSIF Portfolio Weighted Average Contract Price (£/MWh) |
189.14 | 169.72 | 183.51 | 167.39 |
| Weighted Average for Contract Prices fixed during the reporting period (£/MWh) |
523.16 | 293.56 | 311.98 | 210.23 |
The Investment Adviser notes that the majority of the gains from these high PPA fixes will be offset by the impact of the Electricity Generator Levy ("the Levy"), a temporary 45% tax on the extraordinary returns made by electricity generators late last year while European energy prices soared in the wake of Russia's invasion of Ukraine. The Levy will be in place from 1 January 2023 until 31 March 2028, with the benchmark price linked to UK Consumer Price Inflation.
Power markets reached record highs in August 2022, as Russia's continuing war against Ukraine exacerbated concerns surrounding gas supplies to Europe ahead of Winter 2023.
Chart 2. UK Natural Gas & Wholesale Power Prices (1 July 2020 – 31 December 2022)
Source data: Bloomberg
As a result, power prices within the UK remained extremely volatile throughout the period, predominantly following the same patterns as the gas market, as shown in Chart 2, with day-ahead baseload power prices reaching extreme highs on 25 August and 9 December, at £565/MWh and £654.65/MWh, respectively.
However, high gas prices during the 2022 summer attracted strong LNG deliveries to Europe amid periods of reduced consumption which allowed EU countries to enter the winter season with gas stocks at 89% of capacity, above the EU target for 1 November 2022. This in turn eased concerns about shortages for winter, putting downward pressure on both European gas prices.
Whilst season ahead pricing has fallen from the highs of H1 22/23, in the absence of hydrocarbons from Russia both gas and coal markets remain tight, and expectations remain that energy prices will be considerably higher than historic long term averages.
As at the end of the Period, BSIF had 340 MW solar and 125 MW battery storage assets that are fully consented and are in pre-construction. The projects have connection dates between 2023 and 2028. In addition, the first development to enter the construction phase is the Yelvertoft 49MW Solar PV project, which signed a fixed price EPC contract with Bouygues in September 2022 and is targeting operation in Q4 2023.
As the EPC agreements require contractors to provide full procurement activity and to supply all materials, the Investment Adviser completes a full assessment of each contractor's procurement and supply chain management processes to ensure compliance with the Company's ESG policies and standards. For further information relating to the Company's wider ESG activity, please refer to the ESG section on page 33.
In July 2022, the Investment Adviser successfully secured CfDs on 62.4MW of ready to build PV plants (Yelvertoft 49.9MW, Romsey 6.5MW and Oulton 6.0MW). By securing a CfD contract, the plants will benefit from index linked revenues (to CPI) over a 15 year duration at the AR4 solar PV strike price of £45.99/MWh (in 2012 equivalent prices), or £57.48/MWh in 2022. The contracts commence from 31 March 2025, at which point the strike price referenced above will include inflation from 2023 and 2024.
The Investment Adviser is monitoring the upcoming allocation round (AR5).
The Investment Adviser has been pursuing its development strategy since 2019 to enable BSIF to continue to be a key player in the UK renewable energy market. Since this time, a portfolio of approximately 950 MW of solar and over 400 MW of batteries has been built up across 28 projects. At any one time, outstanding commitments to fund development projects are less than 1% of GAV.
Currently, no value is attributed to projects without planning consent. However, once developments receive planning consent, and move from the development stage to pre-construction, the Investment Adviser believes it is appropriate to reflect this change in the Company valuation.
At this point in their lifecycle, the projects will have received all the necessary planning consents, land rights and valid grid connection offers and so have discernable value beyond the direct costs of development.
The current pipeline status and valuation is summarised in the graphic below.
The total generation and revenue earned (including ROC recycle estimate) in the 6 months to 31 December 2022 by the Company's portfolio, split by subsidy regime, is outlined below.
| Subsidy Regime | Generation (MWh) |
PPA Revenue (£m) |
Regulated Revenue (£m) |
|---|---|---|---|
| FiT | 32,021 | 2.7 | 5.7 |
| 4.0 ROC | 6,269 | 0.9 | 1.5 |
| 2.0 ROC | 12,366 | 0.7 | 1.3 |
| 1.6 ROC | 55,835 | 6.6 | 5.4 |
| 1.4 ROC | 134,474 | 11.3 | 14.0 |
| 1.3 ROC | 33,482 | 4.6 | 2.7 |
| 1.2 ROC | 65,816 | 6.7 | 5.2 |
| 1.0 ROC | 14,953 | 1.5 | 0.9 |
| 0.9 ROC | 36,611 | 5.0 | 1.9 |
| Total | 391,827 | 40.0 | 38.6 |
The Company includes ROC Recycle assumptions within its long term forecasts and applies a market based approach on recognition within any current financial period, including prudent estimates within its accounts where there is clear evidence that participants are attaching value to ROC Recycle for the current accounting period.
In October 2022, Ofgem announced the value for ROC Recycle for the period April 2021 to March 2022 (CP20) was £7.04/ROC (equivalent to 13.9% of CP20 ROC buyout prices). This was slightly ahead of the 12.5% ROC Recycle estimate the Company had recognised in its 30 June 2022 Financial Statements.
The key drivers behind the changes in Underlying Earnings between H1 2021/22 and H1 2022/23 are the combined effects of the acquisitions within the period and higher PPA pricing.
| Half year | Half year | Full year to | Full year to | |
|---|---|---|---|---|
| period to | period to | 30 June 22 | 30 June 21 | |
| 31 Dec 22 | 31 Dec 21 | (£m) | (£m) | |
| (£m) | (£m) | |||
| Portfolio Revenue | 78.6 | 40.0 | 111.4 | 73.1 |
| Liquidated damages and Other Revenue* |
0.8 | 0.3 | 1.6 | 2.0 |
| Net Earnings from Acquisitions in the period |
0.0 | 0.0 | 0.0 | 5.1 |
| Portfolio Income | 79.4 | 40.3 | 113.0 | 80.2 |
| Portfolio Costs | -16.1 | -11.0 | -27.8 | -17.6 |
| Project Finance Interest Costs | -5.5 | -1.0 | -4.7 | -1.8 |
| Total Portfolio Income Earned |
57.8 | 28.3 | 80.5 | 60.8 |
| Group Operating Costs#** | -4.6 | -4.5 | -8.3 | -7.5 |
| Group Debt Costs | -1.8 | -2.4 | -5.4 | -4.7 |
| Underlying Earnings | 51.4 | 21.4 | 66.8 | 48.6 |
| Group Debt Repayments | -13.2 | -8.6 | -13.8 | -9.3 |
| Underlying Earnings available for distribution |
38.2 | 12.8 | 53.0 | 39.3 |
| Half year to 31 Dec 22 |
Half year to 31 Dec 21 |
Full year to 30 June 22 |
Full year to 30 June 21 |
|
|---|---|---|---|---|
| (£m) | (£m) | (£m) | (£m) | |
| Brought forward reserves | 20.9 | 13.4 | 13.4 | 8.4 |
| Total funds available for distribution -1 |
59.1 | 26.2 | 66.4 | 47.7 |
| Target distribution*** | N/A | N/A | 45.2 | 34.3 |
| Actual Distribution -2 | 12.8 | 10.1 | 45.5 | 34.3 |
| Underlying Earnings carried forward (1-2) |
N/A | N/A | 20.9 | 13.4 |
*Other Revenue includes insurance proceeds, ROC Recycle late payment and Mutualisation, O&M settlement agreements and rebates received
***Target distribution is based on funds required for total target dividend for each financial period.
The table below presents the underlying earnings on a per share basis.
| Half year | Half year | Full year to | Full year to | |
|---|---|---|---|---|
| period to | period to | 30 June 22 | 30 June 21 | |
| 31 Dec 22 | 31 Dec 21 | |||
| Target Distribution - £m | N/A | N/A | 45.2 | 34.3 |
| Total funds available | ||||
| for distribution (inc. | 59.1 | 26.2 | 66.4 | 47.7 |
| reserves) - £m | ||||
| Average number of shares in the period* |
611,452,217 | 496,067,602 | 554,042,715 | 429,266,617 |
| Target Dividend (pps) | N/A | N/A | 8.16 | 8.00 |
| Total funds available for distribution (pps) – 1 |
9.65 | 5.24 | 12.22 | 11.19 |
| Total Dividend Declared for the period (pps)** - 2 |
2.10 | 2.03 | 8.20 | 8.00 |
| Reserves carried forward (pps) *** - 1-2 |
N/A | N/A | 3.39 | 2.67 |
*Average number of shares is calculated based on shares in issue at the time each dividend was declared.
**Half year period to 31 Dec 2022 dividend of 2.10pps declared 23 Jan 2023, with a payment date on or around 3 March 2023.
***Reserves carried forward are based on the shares in issue at the point of Annual Accounts publication (being c.611m shares for 30 June 2022 and c.496m shares for 30 June 2021).
The Investment Adviser is responsible for advising the Board in determining the Directors' Valuation.
Formal valuations are carried out on a six-monthly basis at 31 December and 30 June each year, with the Company committed to commissioning an independent review as and when the Board believes it benefits Shareholders.
Following consultation with the Investment Adviser, the Directors' Valuation adopted for the portfolio as at 31 December 2022 was £987.6m (30 June 2022, £939.9m).
The table below shows a breakdown of the Directors' valuations over the last four reporting periods:
| Valuation Component |
Dec 2022 | June 2022 | Dec 2021 | June 2021 |
|---|---|---|---|---|
| (£m) | ||||
| Enterprise Portfolio DCF value (EV) |
1,222.2 | 1,180.6 | 861.2 | 770.1 |
| Consented Solar and Battery Storage Development rights |
30.4 | 13.8 | 7.3 | 1.8 |
| Deduction of Project Co debt | -410.1 | -390.3 | -119.3 | -119.8 |
| Project Net Current Assets | 145.1 | 135.8 | 36.5 | 42.4 |
| Directors' Valuation | 987.6 | 939.9 | 785.7 | 694.5 |
| Portfolio Size (MWp) | 812.6 | 766.2 | 625.6 | 613.0 |
Competition for operational assets remains high and so multiples for subsidised solar assets have not materially changed from those in June 2022 (being between c.£1.25m/MW and c.£1.45m/MW) for comparable portfolios to the Company's.
The Directors' valuation is benchmarked against precedent market transactions and compiled using Discounted Cash Flow methodology, under IPEV Valuation guidelines and using a levered equity discount rate based on the Company's capital structure.
Refer to Note 7 of the unaudited interim financial statements for further details.
There have been a number of key factors that have been considered in the Investment Adviser's recommendation to the Directors' Valuation (and which are quantified in the NAV movement chart on page 27):
By reflecting the core factors above within the Directors' Valuation for 31 December 2022, the EV of the portfolio is £1,222.2m (June 2022: £1,180.6m) with the effective price for the solar component holding steady at £1.38m/MW (June 2022: £1.38m/MW).
These metrics sit within the pricing range of precedent market transactions and the 'willing buyerwilling seller' methodology upon which the Directors' Valuation is based.
Refer to note 7 of the unaudited interim financial statements.
Further details of the third-party debt can be found on page 29 in the Financing section.
The blended forecast of three leading consultants used within the latest Directors' Valuation, as shown in the graph below, is based on forecasts released in the quarter to December 2022. For illustration purposes, the graph below also includes the blended curve used in the Company's June 2022 Annual accounts.
The curves used in the 31 December 2022 Directors' Valuation reflect the following key updates:
The main contributors to the increase in the Directors Valuation from 30 June 2022 to 31 December 2022 were an increase in power price forecast curves provided by the Company's three independent advisers (18.1pps), a new acquisition (9.3pps), change in development portfolio valuation (2.5pps) and updated near-term inflation assumptions (0.8pps).
| (£million) | As % of valuation |
||
|---|---|---|---|
| 30 June 2022 Valuation | 939.9 | ||
| New investments acquired | 59.4 | ||
| Rebased Valuation | 999.3 | ||
| Development uplift | 17.9 | 1.8% | |
| Cash receipts from portfolio | (25.7) | (2.6)% | |
| Date change, degradation, O&M updates | (34.0) | (3.4)% | |
| Power curve updates (incl. PPAs) | 122.7 | 12.3% | |
| Inflation updates | 4.1 | 0.4% | |
| Discount rate change | (23.4) | (2.3)% | |
| Levy tax impact | (87.2) | (8.7)% | |
| Balance of portfolio return | 13.9 | 1.4% | |
| 31 December 2022 Valuation | 987.6 | (1.1)% |
There have been no material changes to assumptions regarding the future performance or cost optimisation of the portfolio when compared to the Directors' Valuation of 30 June 2022.
On the basis of these key assumptions, the Board believes there remains further scope for NAV enhancement from the potential extensions of asset life for further projects in the portfolio, as well as cost optimisation on long term O&M fees.
The assumptions set out in this section remain subject to continuous review by the Investment Adviser and the Board.
| Balance at Period End | ||||
|---|---|---|---|---|
| Category | 31 December | 30 June | 31 December | 30 June |
| 2022 (£m) | 2022 (£m) | 2021 (£m) | 2021 (£m) | |
| Directors' Valuation | 987.6 | 939.9 | 785.7 | 694.5 |
| Portfolio Holding Company |
2.9 | (13.6) | 37.8 | 26.4 |
| Working Capital | ||||
| Portfolio Holding Company |
(121.0) | (70.0) | (214.7) | (250.6) |
| Debt | ||||
| Financial Assets at Fair | 869.5 | 856.3 | 608.8 | 470.3 |
| Value per Balance sheet | ||||
| Gross Asset Value | 1,400.6 | 1,316.7 | 942.7 | 840.7 |
| Gearing (% GAV*) | 38% | 35% | 35% | 44% |
*GAV is the Financial Assets, as at 31 December 2022, at Fair Value of £869.5m plus RCF of £121m and third party portfolio debt of £410.1m (giving total debt of £531.1m).
Valuation sensitivities are set out in tabular form in note 7 of the financial statements. The following diagram reviews the sensitivity of the EV of the portfolio to the key underlying assumptions within the discounted cash flow valuation.
On 11 May 2022, the Company agreed a new and enlarged £100 million revolving credit facility ("RCF"), provided equally by RBSI and Santander UK, maturing in May 2024 (with an option to extend to May 2025). On 22 December 2022 an accordion loan facility of £70 million was agreed with the lenders, with a maturity of September 2023.
As at 31 December 2022 the Company's subsidiary had drawn £121m from its RCF.
Excluding the Company's RCF, total outstanding loans to 3rd party lenders as at 31 December 2022 is £410.1m, with each loan secured against a portfolio of assets and fully amortising within the life of the respective asset's subsidies.
The average interest cost, excluding the Company's RCF, across the external debt facilities in the table below is 2.9%. For completeness, this excludes the Macquarie debt as the acquisition of the 46.4MWp solar portfolio only occurred at the end of the period.
The table below outlines core details of all debt facilities within the Company, excluding the RCF, which is detailed above.
| Lender | Outstanding Amount (December 2022) |
Maturity | Secured against |
|---|---|---|---|
| NatWest – 3yr term loan | £110m | Sep 2023 (75% hedged at a swap rate of 0.31% until 2038) |
141.7MW solar portfolio |
| Project finance loan with BayernLB |
£8.2m | Sep 2029 | 5MW solar asset |
| BayernLB, Clydesdale, KfW – 15yr amortising loans |
£55.6m (BayernLB), £10.1m (KfW), £8.1m (Clydesdale) |
Dec 2033 to Jun 2034 |
93.2MW solar and wind portfolio |
| Aviva – 18yr amortising loan | £88.8m fixed, £64.5m index linked |
Sep 2034 | 401.2MW solar portfolio |
| Macquarie – 15yr amortising loan |
£7.5m fixed, £20.0m index linked |
Mar 2035 | 46.4MW solar portfolio |
| Gravis – 15yr amortising loan | £37.3m | Jun 2035 | 47.5MW solar and wind portfolio |
| Total | £410.1m |
NatWest 3yr term loan maturity
The Company is in the process of refinancing the 3 year term loan which is due to mature in September 2023. It is expected that the loan will be refinanced into longer term debt and will additionally support the construction of the Yelvertoft project.
The Group's total outstanding debt, as at 31 December 2022, is c.£531.1 million and its leverage stands at c.38% of GAV (35% as at 30 June 22), within the 35% - 45% preferred range the Directors have previously outlined as desirable for the Company.
Latest government data shows that UK solar photovoltaic (PV) capacity stands at around 14.1GWp, across c.1.2 million installations. Of this amount, around 7.3GWp (c.52% of the total solar capacity in the UK) and 5.1GWp (37%) is accredited under the RO and FiT schemes, respectively, and c.1.7GWp (12%) is unaccredited. Onshore and offshore wind installed capacity stands at around 14.7GW and 13.9GW, respectively.
The UK has just under 2.1GW of operational battery storage capacity, according to data from energy association RenewableUK.
The UK's total renewable generation capacity is projected to continue to rise over the coming years as the government strives to meet its net zero targets. In July 2022, the UK government awarded support for c.10.8GW of new build renewable generation capacity through its Contracts for Difference renewable subsidy scheme – with c.7GW awarded for offshore wind projects, c.2.2GW for solar and c.888MW for onshore wind.
The chart below illustrates the distribution of total installed capacity across different renewable generation technologies at the end of the third quarter (the latest data available at the time of this report) compared with a year earlier.
Source: UK government Department for Business, Energy & Industrial Strategy *Anaerobic Digestion includes sewage sludge digestion, animal biomass
Transactional activity in the UK renewables market has remained high, with acquisitions continuing to take place across the established technologies of solar (c.83MW of transactions in the period) and wind (c.1.8GW offshore wind across several shares of sites and c.69MW onshore wind).
Activity in the UK subsidy-free market has also continued at pace, with development activity being driven by factors such as ambitious decarbonisation targets, increasing preferences by customers for clean energy, demand for ESG investments and the inclusion of solar PV and onshore wind in the most recent CfD auction round.
Estimates from Solar Power Media indicate that there is now over 79GWp of large-scale solar projects in the development/ready-to-build phase (June 2022: 41GWp) and c.11.6GWp awaiting or under construction as at mid- January 2023.
Converting this significant pipeline into operational solar projects over the next five years is dependent on mitigation of construction costs and supply chain challenges – both of which have been features in the aftermath of the Covid pandemic.
With 708MWp of operational solar capacity, the Company maintains a strong position within the UK solar market, owning about 7.4% of the country's utility-scale solar PV capacity. As an established and experienced market participant, this predominantly regulated revenue base provides a strong foundation for continued growth of the Company through both primary and secondary investment in solar, storage and wind.
The regulatory environment remains under the spotlight as the government looks to manage soaring energy costs and increase energy security. Key themes are outlined below.
The UK Chancellor announced at the Autumn Statement in November 2022 the introduction of a new temporary 45% tax – the Levy – is on the high revenues earned by electricity generators following sharp rises in commodity markets, driven by conflict and geopolitical events.
The Levy will be effective from 1 January 2023 until 31 March 2028. It replaces the proposal for the Cost Plus Revenue Limit which was announced in October 2022, and will apply to extraordinary returns made by renewable (solar, wind, biomass), nuclear and energy from waste generators that are connected to the UK national transmission or local distribution networks.
Extraordinary returns will be calculated in relation to a CPI linked benchmark price, with the initial benchmark set at £75/MWh until April 2024.
The Levy will not apply to revenue sources from renewable obligation certificates or renewable energy guarantees of origin, CfDs with the Low Carbon Contracts Company, feed-in tariff generation and export tariff payments. Revenues from storage – including battery technologies, pumped hydroelectric storage, and innovative storage technologies such as hydrogen – and grid stabilisation will also not be subject to the Levy either, except for hybrid assets where generators will need to identify revenues from generation.
In mid-December 2022, the UK government published its draft allocation framework for the next CfD allocation round 5 (AR5).
Details on the technology pot structures, delivery years and administrative strike prices were released. AR5 will contain two technology pots, compared with three from allocation round 4 (AR4). The pot reshuffle means that offshore wind and remote island wind technologies will now compete with other established technologies in pot 1, which include solar photovoltaic (above 5MW) and onshore wind. The implications of this scope change are likely to be clearer once further details on the auction parameters, including capacity caps per technology, are released in March 2023 prior to the opening of the AR5 application window in the same month.
Future CfD allocation rounds are still on track to run annually, rather the previous format of every two years, as per the Government's announcement in February 2022.
The Government has also opened a consultation on potential changes for allocation round 6 (due to open in 2024) and beyond. Consultation topics include possible changes to the definition of floating offshore wind, inclusion of multipurpose interconnectors and including CfDs for repowering projects. The consultation closed on 7 February 2023.
In the Autumn Budget, the UK government confirmed the Carbon Price Floor (CPS) would be frozen for a further year at £18/tonne of CO2 equivalent for 2024/25. It also promised to engage with industry and conduct a review of the CPS beyond the announced rates. Separately, an initial review of the UK Emissions Trading System (UK ETS) is planned to commence this year to assess the whole system performance during the first half of the first phase of the scheme, which runs from 2021 – 2025. Any necessary changes will be implemented by 2026.
The carbon price — comprising the UK ETS and CPS combined — makes up a small portion of the total variable costs incurred by marginal plant generators in the UK's wholesale power market.
The government launched its Review of Electricity Market Arrangements (REMA) consultation in July 2022. REMA is considering a range of potential market reforms including nodal pricing along with a wide range of additional options covering changes to low carbon investment, flexibility, operability, and capacity adequacy. The initial stage of the consultation closed in October 2022. The government is expected to provide a REMA update to the market by March 2023.
Bluefield Partners LLP 27 February 2023
ESG stands firmly at the forefront of the investor agenda. In response to growing appetite amongst the investment community to identify and integrate ESG considerations into decision-making, regulators around the world have hastened efforts to introduce mandatory non-financial disclosure. As such, we saw Level 2 disclosure requirements of the Sustainable Finance Disclosure Regulation (SFDR) come into effect in January 2023. On this, I am pleased to say that following a recent assessment, the Company's current portfolio is deemed 100% aligned with the EU Taxonomy and is classified as an Article 8 Fund. There has also been increased focus on biodiversity and its consideration within investment, including milestone agreements made at COP15. The Company will continue to follow the progress of biodiversity frameworks, such as the Task Force on Nature-related Financial Disclosures (TNFD), over the coming year.
Following the launch of the Company's ESG strategy, work is underway to fulfil its first-year commitments. ESG provides a framework through which the Company can deliver environmental and social gain whilst also taking account of its own adverse impacts. The Board looks forward to continuing to make progress to achieve our ESG ambition and our desire both to deliver renewable energy and to do so responsibly.
John Scott, Chair
Estimated annual figures based on forecasted generation data for the period 1 July 2022 – 30 June 2023
Interim Achievements
1 Based on generation data aligned with the appropriate Government CO2e conversion factor
2 Based on Ofgem's Typical Domestic Consumption Values
3 Please refer to the Company's sustainability disclosures for further information, available on its website: bluefieldsif.com
The Company published its first ESG strategy within its 2022 Annual Report. The Company is proud to have developed its approach and embraced a critically self-reflective practice to discover, define and articulate an ESG strategy that reflects stakeholder expectations, and which will deliver a positive impact across its portfolio of investments.
Commitments and KPIs have been developed to enable the Company to monitor and evidence its ESG performance. These were adopted by the Board in August 2022 and will be reviewed by the Board annually, to ensure they remain aligned to the evolving ESG landscape. Data collection is ongoing to enable the Company to first report against its KPIs later in 2023. Please refer to the Company's 2022 Annual Report for a full breakdown of commitments and KPIs.
ESG is considered by the Board as part of every Board meeting and in all investment decisions, and the Board are responsible for oversight of ESG risks and opportunities, including in relation to climate. Figure 1 presents the Company's ESG and climate governance structure:
Figure 1 – the Company's ESG and Climate Governance Structure
In recognition of the increased scrutiny applied to ESG, the Board has recently established an ESG committee, chaired by Meriel Lenfestey. The principal function of the Committee is to provide a forum for mutual discussion, support and challenge to the Investment Adviser with respect to ESG and climate matters. The first Committee meeting took place in November 2022 and the Committee will meet at least once a year moving forward. Establishment of the Committee will support the delivery of the Company's ESG strategy and wider ESG ambitions.
During the reporting period, the Company adopted and published a Sustainable Investment Policy, available on its website: bluefieldsif.com. The Company will develop additional policies, including a Sustainable Procurement Policy and Supplier Code of Conduct, over coming months.
In recognition of its positive environmental impact, the Company has been awarded the following accreditations: 4,5,6
On behalf of the Company, the Investment Adviser undertakes detailed due diligence on each investment opportunity, including in relation to ESG and climate risks and opportunities. Please refer to the Company's Sustainable Investment Policy, available on its website, for a full breakdown of how sustainability risks are integrated into the Company's investment process: bluefieldsif.com.
The Principles for Responsible Investment (PRI) are a set of voluntary investment principles which promote the integration of ESG considerations into investment practice. The Investment Adviser has been signatory to the PRI since 2019.
The Company has elected to adopt an Article 8 classification under the Sustainable Finance Disclosure Regulation (SFDR). Given the nature of the Company's investments, Article 9 classification has been considered. However, there is currently insufficient detail on the level of regulatory scrutiny Article 9 funds will be subject to compared to Article 8. As the requirements and expectations of the SFDR become clearer, the Company will review whether Article 8 classification remains appropriate.
For the purposes of Article 8, the environmental characteristics promoted by the Company are to reduce reliance on fossil fuels and facilitate the UK transition to renewable and sustainable methods of energy generation. Please refer to the 'Climate Change Mitigation' section of the Company's 2022 Annual Report and the Company's Article 23 pre-contractual disclosure, available on its website, to see how the Company has met its environmental characteristics over the reporting period: bluefieldsif.com/esg/sustainable-finance-disclosure-regulation/.
The Company is currently undertaking an analysis of its portfolio of assets to understand the Principal Adverse Impacts (PAIs) of its investment decisions on sustainability factors, by reference to the relevant sustainability indicators set out in the SFDR Regulatory Technical Standards (RTS). The Company will publish its first PAI statement before the deadline of 30 June 2023, which will be available in the section titled 'Sustainability-related disclosures' on the Company's website.
4 https://www.londonstockexchange.com/raise-finance/equity/green-economy-mark
5 https://tisegroup.com/sustainable
6 https://www.gfsc.gg/industry-sectors/investment/guernsey-green-fund
Please note that, as part of the Company's implementation of the SFDR Regulatory Technical Standards, the Company's Article 23 pre-contractual disclosure was updated on 22 December 2022. This involved the deletion of the sections titled 'Promotion of environmental and social characteristics' and 'Taxonomy-alignment', and the addition of the SFDR annex to provide the relevant sustainabilityrelated information in the format of the mandated template. A section titled 'Consideration of principal adverse impacts of investment decisions on sustainability factors' was also added to inform investors of the Company's approach to implementing the PAI requirements. These changes are intended to comply with the Company's regulatory obligations and provide greater information to investors about the Company's sustainability profile and attributes.
The most recent versions of the Company's sustainability-related disclosures are available on its website: bluefieldsif.com/esg/sustainable-finance-disclosure-regulation/
The Company considers that its investments substantially contribute to the environmental objective of Climate Change Mitigation. During the reporting period, the Company aimed to achieve this objective through its production of clean, renewable energy, and by investing in new renewable energy infrastructure and energy storage facilities.
The Company engaged an external consultant to undertake a review to determine the portfolio's alignment to the EU Taxonomy. The results of the assessment concluded that 100% of the current portfolio is taxonomy-aligned. The assessment was conducted in relation to the 2022 calendar year and included the following economic activities:
It should be noted that the economic activity of 'Storage of electricity' was excluded from this assessment as the only constructed battery projects currently within the Company's portfolio are offline and not yet in use (and, if operational, would not represent a material proportion of revenues). This economic activity will therefore form part of the Company's future pipeline of work.
The Company acknowledges that work will be required to maintain this level of alignment and is committed to continual improvement in its ESG approach, in line with the commitments made as part of its ESG strategy. For further information on the methodology used to conduct the EU Taxonomy assessment, or how the Company is meeting and monitoring its environmental characteristics, please refer to the Company's website: bluefieldsif.com/esg/sustainable-finance-disclosure-regulation/.
As a renewable energy fund, climate change poses both opportunities and risks to the Company. Climate-related considerations form a key element of the Company's ESG strategy, helping ensure that climate is considered across the investment lifecycle, including pre-investment due diligence, asset management and reporting.
Although the Company does not currently fall within the scope of the FCA's mandatory reporting requirement, it has chosen to undertake TCFD reporting on a voluntary basis. The Company's first TCFD disclosure was presented within the 2022 Annual Accounts.
During summer 2022, the Company undertook a climate screening exercise to identify potential climate-related risks and opportunities. This considered solar, wind and battery storage assets, in addition to construction activities. Identified potential climate-related risks included extreme heat, flooding and storms.
Building on these findings, during the interim period the Company undertook a Climate Risk and Vulnerability Assessment (CRVA), to assess the materiality of these physical climate risks on each of the Company's economic activities. The assessment included data from the Intergovernmental Panel on Climate Change (IPCC) reports (CMIP5) and representative concentration pathways (RCP2.6, RCP4.5, RCP8.5), and included at least 10-to-30-year climate projection scenarios.
The results of the assessment will be used as part of the scenario analysis exercise that the Company is currently undertaking, helping increase the resilience of the Company's climate strategy over time.
Bluefield Partners LLP 27 February 2023
As described in the Company's annual financial statements as at 30 June 2022 (with the exception of portfolio construction risk), the Company's principal and emerging risks and uncertainties include the following:
During the period since 30 June 2022, the Board added portfolio construction risk and elevated supply chain risk to principal risks. The addition of these risks to the Company's principal risks is driven by the commencement of construction of the Yelvertoft project.
The Board has considered the potential impact of portfolio construction risk to be poorly managed construction leading to environmental damage and the use of components that have not been responsibly sourced. These risks are being mitigated by the development of responsible procurement and construction policies.
The potential impact of supply chain risk has been considered as the availability and affordability of equipment and spare parts due to global supply chain issues that could reduce plant availability and delay construction projects. The Board considers the risk is mitigated by global trade agreements, however certain tariffs and fees may apply on goods from the EU. The Investment Adviser should monitor accordingly and advise of any issues or changes to financial forecasts in this regard. Equipment has been stock piled over the winter for planned refurbishments.
The Board believes that these risks are unchanged in respect of the remaining six months of the year to 30 June 2023.
Further information in relation to these principal risks and uncertainties may be found on pages 15 to 19 of the Company's annual financial statements as at 30 June 2022.
These inherent risks associated with investments in the renewable energy sector could result in a material adverse effect on the Company's performance and value of Ordinary Shares.
Risks including emerging risks are mitigated and managed by the Board through continual review, policy setting and regular reviews of the Company's risk matrix by the Audit and Risk Committee to ensure that procedures are in place with the intention of minimising the impact of the above mentioned risks. The Board carried out a formal review of the risk matrix at the Audit and Risk Committee meeting held on 28 November 2022. The Board relies on periodic reports provided by the Investment Adviser and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including tax advisers, legal advisers, and environmental advisers.
The Directors are responsible for preparing the Interim Report and Unaudited Condensed Interim Financial Statements in accordance with applicable regulations. The Directors confirm that to the best of their knowledge:
The Board is responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, and for the preparation and dissemination of financial statements. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
Director Director 27 February 2023 27 February 2023
Paul Le Page Meriel Lenfestey
We have been engaged by Bluefield Solar Income Fund Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2022 of the Company, which comprises the unaudited condensed statements of financial position, comprehensive income, changes in equity, cash flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2022 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the Financial Reporting Council for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review procedures, which are less extensive than those performed in an audit as described in the Scope of review section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However future events or conditions may cause the Company to cease to continue as a going concern, and the above conclusions are not a guarantee that the Company will continue in operation.
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
In preparing the half-yearly financial report, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Our conclusion, including our conclusions relating to going concern, are based on procedures that are less extensive than audit procedures, as described in the scope of review paragraph of this report.
This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Barry Ryan for and on behalf of KPMG Channel Islands Limited Chartered Accountants, Guernsey 27 February 2023
As at 31 December 2022
| Note | 31 December 2022 Unaudited £'000 |
30 June 2022 Audited £'000 |
|
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Financial assets held at fair value through | |||
| profit or loss | 7 | 869,488 | 856,380 |
| Total non-current assets | 869,488 | 856,380 | |
| Current assets | |||
| Trade and other receivables | 8 | 1,275 | 882 |
| Cash and cash equivalents | 9 | 631 | 1,619 |
| Total current assets | 1,906 | 2,501 | |
| TOTAL ASSETS | 871,394 | 858,881 | |
| LIABILITIES Current liabilities |
|||
| Other payables and accrued expenses | 10 | 675 | 490 |
| Total current liabilities | 675 | 490 | |
| TOTAL LIABILITIES | 675 | 490 | |
| NET ASSETS | 870,719 | 858,391 | |
| EQUITY | |||
| Share capital | 663,809 | 663,809 | |
| Retained earnings | 206,910 | 194,582 | |
| TOTAL EQUITY | 12 | 870,719 | 858,391 |
| Number of Ordinary Shares in issue at period/year end |
12 | 611,452,217 | 611,452,217 |
| Net Asset Value per Ordinary Share (pence) |
6 | 142.40 | 140.39 |
These unaudited condensed interim financial statements were approved and authorised for issue by the Board of Directors on 27 February 2023 and signed on their behalf by:
Director Director
Paul Le Page Meriel Lenfestey 27 February 2023 27 February 2023
The accompanying notes form an integral part of these unaudited condensed interim financial statements.
For the six months ended 31 December 2022
| Six months ended 31 December 2022 |
Six months ended 31 December 2021 |
||
|---|---|---|---|
| Unaudited | Unaudited | ||
| Note | £'000 | £'000 | |
| Income | |||
| Income from investments | 4 | 437 | 408 |
| 437 | 408 | ||
| Net gains on financial assets held at fair | |||
| value through profit or loss | 7 | 38,408 | 54,103 |
| Operating income | 38,845 | 54,511 | |
| Expenses | |||
| Administrative expenses | 5 | 1,203 | 812 |
| Operating expenses | 1,203 | 812 | |
| Operating profit | 37,642 | 53,699 | |
| Total comprehensive income for the period |
37,642 | 53,699 | |
| Attributable to: | |||
| Owners of the Company | 37,642 | 53,699 | |
| Earnings per share: | |||
| Basic and diluted (pence) | 11 | 6.16 | 11.05 |
All items within the above statement have been derived from continuing activities.
The accompanying notes form an integral part of these unaudited condensed interim financial statements.
For the six months ended 31 December 2022
| Note | Number of Ordinary Shares |
Share capital £'000 |
Retained earnings £'000 |
Total equity £'000 |
|
|---|---|---|---|---|---|
| Shareholders' equity at 1 July 2022 |
611,452,217 | 663,809 | 194,582 | 858,391 | |
| Dividends paid | 12,13 | - | - | (25,314) | (25,314) |
| Total comprehensive income for the period |
- | - | 37,642 | 37,642 | |
| Shareholders' equity at 31 December 2022 |
611,452,217 | 663,809 | 206,910 | 870,719 |
For the six months ended 31 December 2021
| Note | Number of Ordinary Shares |
Share capital £'000 |
Retained earnings £'000 |
Total equity £'000 |
|
|---|---|---|---|---|---|
| Shareholders' equity at 1 July 2021 |
406,999,622 | 413,215 | 58,210 | 471,425 | |
| Shares issued during the period | 12 | 89,067,980 | 105,100 | - | 105,100 |
| Share issue costs | 12 | - | (2,188) | - | (2,188) |
| Dividends paid | 12,13 | - | - | (18,061) | (18,061) |
| Total comprehensive income for the period |
- | - | 53,699 | 53,699 | |
| Shareholders' equity at 31 December 2021 |
496,067,602 | 516,127 | 93,848 | 609,975 |
The accompanying notes form an integral part of these unaudited condensed interim financial statements.
For the six months ended 31 December 2022
| Six months ended 31 December 2022 Unaudited |
Six months ended 31 December 2021 Unaudited |
||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Cash flows from operating activities | |||
| Total comprehensive income for the period | 37,642 | 53,699 | |
| Adjustments: | |||
| Increase in trade and other receivables | (393) | (427) | |
| Increase in other payables and accrued | |||
| expenses | 185 | 40 | |
| Net gains on financial assets held at fair | |||
| value through profit or loss | 7 | (38,408) | (54,103) |
| Net cash used in operating activities* | (974) | (791) | |
| Cash flows from investing activities | |||
| Purchase of financial assets held at fair | |||
| value through profit or loss | - | (102,600) | |
| Receipts from unconsolidated subsidiary** | 7 | 25,300 | 18,262 |
| Net cash generated from/ (used in) | |||
| investing activities | 25,300 | (84,338) | |
| Cash flows from financing activities | |||
| Proceeds from issue of Ordinary Shares | 12 | - | 103,450 |
| Issue costs paid | 12 | - | (538) |
| Dividends paid | 12,13 | (25,314) | (18,061) |
| Net cash (used in)/generated from | |||
| financing activities | (25,314) | 84,851 | |
| Net decrease in cash and cash equivalents | (988) | (278) | |
| Cash and cash equivalents at the start of the | |||
| period | 1,619 | 775 | |
| Cash and cash equivalents at the end | |||
| of the period | 9 | 631 | 497 |
The accompanying notes form an integral part of these unaudited condensed interim financial statements.
*Net cash used in operating activities includes £437,500 (31 December 2021: £407,517) of investment income.
**Receipts from unconsolidated subsidiary includes £6.2 million (31 December 2021: £5.3 million) of interest.
For the six months ended 31 December 2022
The Company is a non-cellular company limited by shares, incorporated in Guernsey under the Law on 29 May 2013. The Company's registration number is 56708, and it is regulated by the GFSC as a registered closed-ended collective investment scheme.
The investment objective of the Company is to provide Shareholders with an attractive return, principally in the form of quarterly income distributions, by being invested primarily in solar energy assets located in the UK. The Company also has the ability to invest a minority of its share capital into wind, hydro and energy storage assets.
The Company has appointed Bluefield Partners LLP as its Investment Adviser.
The financial statements, included in this interim report, have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the EU and the DTR. These financial statements comprise only the results of the Company as all of its subsidiaries are measured at fair value as explained in Note 2.c. The financial statements have been prepared on a basis that is consistent with accounting policies applied in the preparation of the Company's annual financial statements for the year ended 30 June 2022, approved for issue on 29 September 2022.
These financial statements have been prepared under the historical cost convention with the exception of financial assets held at fair value through profit or loss and in accordance with the provisions of the DTR.
These financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Company's audited financial statements for the year ended 30 June 2022, which were prepared under full IFRS requirements and the DTRs of the UK FCA.
Although the bulk of the Company's electricity generation occurs during the summer months when the days are longer, the Company's results do not vary significantly during reporting periods as a result of seasonal activity.
The Directors, in their consideration of going concern, have reviewed cash flow forecasts prepared by the Investment Adviser, future projects in the pipeline and the performances of the current solar and wind plants in operation. The conflict in Ukraine continues to have a significant impact on the macroeconomic environment in which the Company operates. The Board and Investment Adviser take account of the consequences of the confilct as part of the going concern assessment.
The Board has also considered the likelihood of the Company being asked to discontinue operations in its mandatory five year continuation vote that is due at the 2023 AGM and regards this as very unlikely, given the strong performance of the Company and the support which it has received from its major shareholders. In assessing the going concern status of the Company, the Board has also considered the re-financing of the NatWest term loan, maturing in September 2023, and the interest rate swaps for 75% of the balance (being £82.5m) in place until 2037. The Investment Adviser is currently in the process of refinancing into longer term debt, which will additionally support the construction of the Yelvertoft project.
For the six months ended 31 December 2022
The Board has considered the Directors' Valuation, which uses a blend of power price forecasts from leading industry consultants. These forecasts are based on updated analysis on European fuels and carbon forward prices as well as the expected evolution of the UK's overall power supply and demand position in the longer term. Electricity prices continued to be at elevated levels during the period, with UK day-ahead base-load price rising to around £232/MWh on average in the six months to 31 December 2022, up from c.£176/MWh in the six months from 1 January to 30 June 2022 and c.£166/MWh in the six months from 1 July to 31 December 2021.
The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in preparing these financial statements.
The Board considers that the Company is an investment entity. In accordance with IFRS 10, all subsidiaries are recognised at fair value through profit and loss.
IFRS 8 'Operating Segments' requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes.
The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance and to allocate resources is the total return on the Company's NAV, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in these financial statements.
For management purposes, the Company is engaged in a single segment of business, being investment in renewable energy infrastructure assets via SPVs, and in one geographical area, the UK.
The Company holds all of the shares in the subsidiary, BR1, which is a holding vehicle used to hold the Company's investments. The Directors believe it is appropriate to value this entity based on the fair value of its portfolio of SPV investment assets held plus its other assets and liabilities. The SPV investment assets held by the subsidiary, inclusive of their intermediary holding companies, are valued semi-annually as described in Note 7 based on referencing comparable transactions supported by discounted cash flow analysis and are referred to as the Directors' Valuation.
The preparation of these financial statements under IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
For the six months ended 31 December 2022
The area involving a high degree of judgement or complexity or area where assumptions and estimates are significant to the financial statements has been identified as the valuation of the portfolio of investments held by BR1 (see Note 7).
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future period if the revision affects both current and future periods.
As disclosed in Note 7, the Board believes it is appropriate for the Company's portfolio to be benchmarked on a £m / MW basis against comparable portfolio transactions and on this basis the weighted average discount rate increased to 7.25% (6.75% in June 2022), which reflects the return hurdles in the market for lowly levered assets with high levels of regulated income.
| Six months ended 31 December 2022 |
Six months ended 31 December 2021 |
|---|---|
| £'000 | £'000 |
| 437 | 408 |
| 437 | 408 |
The Company provides monitoring and loan administration services to BR1 for which an annual fee is charged and is payable in arrears.
| Six months ended 31 December 2022 |
Six months ended 31 December 2021 |
|
|---|---|---|
| £'000 | £'000 | |
| Investment advisory base fee (see Note 14) | 397 | 236 |
| Administration fees | 289 | 168 |
| Legal and professional fees | 140 | 87 |
| Directors' remuneration (see Note 14) | 137 | 123 |
| Audit fees | 53 | 47 |
| Regulatory Fees | 50 | 27 |
| Non-audit fees (interim review) | 45 | 40 |
| Registrar fees | 35 | 25 |
| Broker fees | 25 | 25 |
| Insurance | 12 | 11 |
| Listing fees | 3 | 12 |
| Other expenses | 17 | 11 |
| 1,203 | 812 |
For the six months ended 31 December 2022
The calculation of NAV per Ordinary Share is arrived at by dividing the total net assets of the Company as at the unaudited condensed statement of financial position date by the number of Ordinary Shares of the Company at that date.
| Six months ended | Twelve months ended | |
|---|---|---|
| 31 December 2022 | 30 June 2022 | |
| Total | Total | |
| £'000 | £'000 | |
| Opening balance (Level 3) | 856,380 | 470,282 |
| Additions | - | 250,282 |
| Change in fair value | 13,108 | 135,816 |
| Closing balance (Level 3) | 869,488 | 856,380 |
Investments at fair value through profit or loss comprise the fair value of the investment portfolio, which is valued semi-annually by the Directors, and the fair value of BR1, the Company's single, direct subsidiary being its cash, working capital and debt balances. A reconciliation of the investment portfolio value to financial assets at fair value through profit and loss in the Unaudited Condensed Statement of Financial Position is shown below.
| 31 December 2022 Total |
30 June 2022 Total |
|
|---|---|---|
| £'000 | £'000 | |
| Investment portfolio, Directors' Valuation | 987,630 | 939,948 |
| Immediate Holding Company | ||
| Cash | 25,321 | 13,102 |
| Working capital | (22,463) | (26,670) |
| Debt | (121,000) | (70,000) |
| (118,142) | (83,568) | |
| Financial assets at fair value through profit | ||
| or loss | 869,488 | 856,380 |
Analysis of net gains on financial assets held at fair value through profit or loss (per unaudited condensed statement of comprehensive income)
| Six months ended 31 December 2022 |
Six months ended 31 December 2021 |
|
|---|---|---|
| £'000 | £'000 | |
| Unrealised change in fair value of financial assets held at fair value through profit or loss |
13,108 | 35,841 |
| Cash receipts from unconsolidated subsidiary* |
25,300 | 18,262 |
| Net gains on financial assets held at fair value through profit and loss |
38,408 | 54,103 |
*Comprising of repayment of loans and Eurobond interest
For the six months ended 31 December 2022
Financial assets and financial liabilities are classified in their entirety into only one of the following three levels:
The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The only financial instruments carried at fair value are the investments held by the Company, through BR1, which are fair valued at each reporting date. The Company's investments have been classified within Level 3 as BR1's investments are not traded and are valued using unobservable inputs.
There have been no transfers between levels during the six month period ended 31 December 2022. Any transfers between the levels will be accounted for on the last day of each financial period. Due to the nature of investments, these are always expected to be classified as Level 3.
The same valuation methodology and process for operational assets is followed in these financial statements as was applied in the preparation of the Company's financial statements for the year ended 30 June 2022.
Before planning has been achieved, no value is attributed (beyond costs incurred), to the Company's development pipeline.
However, once the projects receive planning permission they are then valued according to the following criteria:
During the construction stages assets continue to be valued at investment cost (deemed to be approximate fair value). The Investment Adviser intends for newly built projects to be valued on a DCF basis shortly after they become operational.
Investments that are operational are valued on a DCF basis over the life of the asset (typically more than 25 years) and, under the 'willing buyer-willing seller' methodology, prudently benchmarked on a £/MW basis against comparable transactions for large scale portfolios.
Each investment is subject to full UK corporate taxation at the prevailing rate with the tax shield being limited to the applicable capital allowances from the Company's SPV investments.
For the six months ended 31 December 2022
The key inputs to a DCF based approach are: the equity discount rate, the cost of debt (influenced by interest rate, gearing level and length of debt), power price forecasts, long term inflation rates, irradiation forecasts, average wind speeds, operational costs, asset life and taxation. Given discount rates are a product of not only the factors listed previously but also regulatory support, perceived sector risk and competitive tensions, it is not unusual for discount rates to change over time. Evidence of this is shown by way of the revisions to the original discount rates applied between the first renewable acquisitions and those witnessed in recent years.
This period sees the inclusion of the new Electricity Generator Levy ("the Levy") on excess profits produced by electricity generators as announced by the Chancellor of the Exchequer in the Autumn Statement in November 2022. The Levy is a temporary 45% tax on the extraordinary returns made by electricity generators late last year while European energy prices soared in the wake of Russia's invasion of Ukraine. The Levy will be in place from 1 January 2023 until 31 March 2028, with the benchmark price linked to UK Consumer Price Inflation. The Investment Adviser has sought external advice from its legal and tax advisers on how to model the Levy within the valuation methodology.
Given the fact discount rates are subjective, there is sensitivity within these to the interpretation of factors outlined above.
Judgement is used by the Board in determining the weighted average discount rate of 7.25% (6.75% as at 30 June 2022), with three key factors that have impacted the adoption of this rate outlined below:
The debt assumptions within the valuation reflect all third-party loans within the Group's capital structure as at the valuation date. Interest rates and repayment profiles are matched to the terms of each loan. In the case of any short-term financing, conservative assumptions are applied with respect to interest rates and repayment profiles post maturity. As at 31 December 2022, the Group's short term debt consisted of a £110m term loan with NatWest, maturing in September 2023, and the conversion assumption within the valuation is aligned to the percentage of the loan that has been hedged (being 75% with 17-year swaps at a rate of 0.31% until 2037). The interest rate applied to the converted balance (being £82.5m) is 3.0%. In addition, the Company has a small project finance loan of £8.2m, provided by BayernLB and fully amortising until maturity in 2029, secured against Durrants, a 5 MW FiT plant located on the Isle of Wight.
In order to smooth the sensitivity of the valuation to forecast timing or the opinion taken by a single forecast, the Board continues to adopt the application of a blended power curve from three leading forecasters.
The fair value of operational SPVs is calculated on a discounted cash flow basis in accordance with the IPEV Valuation Guidelines. The Investment Adviser produces fair value calculations on a semi-annual basis as at 30 June and 31 December each year.
For the six months ended 31 December 2022
The table below analyses the sensitivity of the fair value of the Directors' Valuation to an individual input, while all other variables remain constant.
The Board considers the changes in inputs to be within a reasonable expected range based on its understanding of market transactions. This is not intended to imply that the likelihood of change or that possible changes in value would be restricted to this range.
| 31 December 2022 | 30 June 2022 | |||||
|---|---|---|---|---|---|---|
| Input | Change in input |
Change in fair value of Directors' Valuation £m |
Change in NAV per share (pence) |
Change in fair value of Directors' Valuation £m |
Change in NAV per share (pence) |
|
| Discount rate | + 0.5% | (20.9) | (3.41) | (21.8) | (3.57) | |
| - 0.5% | 18.8 | 3.08 | 23.1 | 3.77 | ||
| Power prices | +10% | 53.7 | 8.78 | 62.2 | 10.17 | |
| -10% | (53.7) | (8.78) | (63.8) | (10.43) | ||
| Inflation rate | + 0.50% | 23.5 | 3.85 | 25.0 | 4.09 | |
| - 0.50% | (23.5) | (3.85) | (26.1) | (4.28) | ||
| Energy yield | 10 year P90 | (104.9) | (17.15) | (100.2) | (16.39) | |
| 10 year P10 | 105.6 | 17.27 | 100.5 | 16.43 | ||
| Operational costs | +10% | (10.9) | (1.78) | (10.5) | (1.72) | |
| -10% | 10.9 | 1.78 | 10.5 | 1.72 |
The Company holds investments through subsidiary companies which have not been consolidated as a result of the adoption of IFRS 10: Investment entities exemption to consolidation. Below is the legal entity name and ownership percentage for the SPVs which are all incorporated in the UK except for Bluefield Durrants GmBH which is incorporated in Germany.
For the six months ended 31 December 2022
| Name | Ownership percentage |
Name | Ownership percentage |
|---|---|---|---|
| Bluefield Renewables 1 Limited | 100 | Gypsum Solar Farm Limited | 100 |
| Bluefield Renewables 2 Limited | 100 | Holly Farm Solar Park Limited | 100 |
| Bluefield SIF Investments Limited | 100 | Kellingley Solar Farm Limited | 100 |
| Bunns Hill Solar Limited | 100 | Little Bear Solar Limited | 100 |
| HF Solar Limited | 100 | Place Barton Farm Solar Park Limited | 100 |
| Hoback Solar Limited | 100 | Willows Farm Solar Limited | 100 |
| Littlebourne Solar Farm Limited | 100 | Southwick Solar Farm Limited | 100 |
| Molehill PV Farm Limited | 100 | Butteriss Down Solar Farm Limited | 100 |
| Pashley Solar Farm Limited | 100 | Goshawk Solar Limited | 100 |
| ISP (UK) 1 Limited | 100 | Kite Solar Limited | 100 |
| Solar Power Surge Limited | 100 | Peregrine Solar Limited | 100 |
| West Raynham Solar Limited | 100 | Promothames 1 Ltd | 100 |
| Sheppey Solar Limited | 100 | Rookery Solar Limited | 100 |
| Capelands Solar Farm Limited | 100 | Mikado Solar Projects (2) Limited | 100 |
| North Beer Solar Limited | 100 | Mikado Solar Projects (1) Limited | 100 |
| WEL Solar Park 2 Limited | 100 | KS SPV 5 Limited | 100 |
| Hardingham Solar Limited | 100 | Eagle Solar Limited | 100 |
| Redlands Solar Farm Limited | 100 | Kislingbury M1 Solar Limited | 100 |
| WEL Solar Park 1 Limited | 100 | Thornton Lane Solar Farm Limited | 100 |
| Saxley Solar Limited | 100 | Gretton Solar Farm Limited | 100 |
| Frogs Lake Solar Limited | 100 | Wormit Solar Farm Limited | 100 |
| Old Stone Farm Solar Park Limited | 100 | Langlands Solar Limited | 100 |
| Bradenstoke Solar Park Limited | 100 | Bluefield Merlin Ltd | 100 |
| GPP Langstone LLP | 100 | Harrier Solar Limited | 100 |
| Ashlawn Solar Limited | 100 | Rhydy Pandy Solar Limited | 100 |
| Betingau Solar Limited | 100 | New Energy Business Solar Ltd | 100 |
| Grange Solar Limited | 100 | Corby Solar Limited | 100 |
| Hall Farm Solar Limited | 100 | Falcon Solar Farm Limited | 100 |
| Oulton Solar Limited | 100 | Folly Lane Solar Limited | 100 |
| Romsey Solar Limited | 100 | New Road Solar Limited | 100 |
| Salhouse Solar Limited | 100 | Blossom 1 Solar Limited | 100 |
| Tollgate Solar Limited | 100 | Blossom 2 Solar Limited | 100 |
| Trethosa Solar Limited | 100 | New Road 2 Solar Limited | 100 |
| Welbourne Energy LLP | 100 | GPP Eastcott LLP | 100 |
| Barvills Solar Limited | 100 | GPP Blackbush LLP | 100 |
| Clapton Farm Solar Park Limited | 100 | GPP Big Field LLP | 100 |
| Court Farm Solar Limited | 100 | KS SPV 5 Limited | 100 |
| East Farm Solar Park Limited | 100 | WSE Hartford Wood Limited | 100 |
| Galton Manor Solar Park Limited | 100 | Mauxhall Farm Energy Park Limited | 100 |
For the six months ended 31 December 2022
| Good Energy Creathorne Farm Solar 100 Wind Energy Holdings Limited 100 Park (003) Limited Good Energy Lower End Farm Solar 100 Wind Energy Scotland (Fourteen Arce 100 Park (026) Limited Fields) Limited Good Energy Woolbridge Solar Park 100 Wind Energy Scotland (Birkwood 100 (010) Limited Mains) Limited Good Energy Rook Wood Solar Park 100 Wind Energy Scotland (Holmhead) 100 (057) Limited Limited Good Energy Carloggas Solar Park 100 100 (009) Limited Arena Capital MP Limited Good Energy Cross Road Plantation 100 100 Solar Park (028) Limited Moscliff Power 5 Limited Good Energy Delabole Windfarm 100 100 Limited Mosscliff Power 10 Limited Good Energy Hampole Windfarm 100 100 Limited Mosscliff Power 2 Limited Good Energy Generating Assets No.1 100 100 Limited Mosscliff Power 3 Limited Good Energy Holding Company No.1 100 100 Limited Mosscliff Power 4 Limited 100 100 Aisling Renewables Ltd Mosscliff Power 6 Limited 100 100 Arena Wind Beragh Limited Mosscliff Power 7 Limited 100 100 Arena Wind Camlough Limited Mosscliff Power Limited 100 100 Arena Wind Cullybackey Limited E2 Energy PLC 100 100 Arena Wind Dungorman Limited Wind Energy One Limited 100 100 Arena Wind Holdings Limited Wind Energy Two Limited 100 100 Arena Wind Killeenan Limited New Road Wind Limited 100 Yelvertoft Solar Farm Limited 100 Arena Wind Mowhan Limited 100 Peradon Solar Farm Limited 60 Arena Wind Mullanmore Limited 100 Lower Tean Leys Solar Farm Limited 60 Arena Wind (NI) Limited 100 Lower Mays Solar Farm Limited 60 Ash Renewables No 3 Limited 100 Leeming Solar Farm Limited 60 Ash Renewables No 4 Limited 100 Wallace Wood Solar Farm Limited 60 Ash Renewables No 5 Limited 100 Sweet Briar Solar Farm Limited 60 Ash Renewables No 6 Limited 100 BF31 WHF Solar Limited 100 Carmoney Energy Limited 100 BF27 BF Solar Limited 100 Errigal Energy Limited 100 BF13A TF Solar Limited 100 Galley Energy Limited 100 HW Solar Farm Limited 100 Oak Renewables 2 Limited 100 AR108 Bolt Solar Farm Limited 100 Oak Renewables Limited 100 BF33C LHF Solar Limited 100 S&E Wind Energy Limited 100 AR006 GF Solar Limited 100 Arena Capital Partners Limited 100 Whitton Solar Limited 100 Boston RE Ltd 100 BF16D BHF Solar Limited 100 DC21 Earth SPV Limited 100 BF33E BHF Solar Limited 100 E5 Energy Limited 100 Twineham Energy Limited 60 E6 Energy Limited 100 Sheepwash Lane Energy Barn Limited 100 E7 Energy Limited Whitehouse Farm Energy Barn 100 Hallmark Powergen 3 Limited 100 Limited |
Name | Ownership percentage |
Name | Ownership percentage |
|
|---|---|---|---|---|---|
| Warren Wind Limited 100 Bluefield Durrants GmBH 100 |
|||||
| 100 Trickey Warren Solar Limited Wind Energy Three Limited |
100 |
For the six months ended 31 December 2022
| Name | Ownership percentage |
Name | Ownership percentage |
|---|---|---|---|
| Lightning 1 Energy Park Limited | 100 | LPF UK Equityco Limited | 100 |
| Abbots Ann Farm Solar Park Limited | 100 | LPF UK Solar Limited | 100 |
| Canada Farm Solar Park Limited | 100 | LPF Kinetica UK Limited | 100 |
| Crockbaravally Wind Holdco Limited | 100 | Kinetica 846 Limited | 100 |
| Crockbaravally Wind Farm Limited | 100 | Kinetica 868 Limited | 100 |
| Dayfields Solar Limited | 100 | ||
| Farm Power Apollo Limited | 100 | ||
| Freathy Solar Park Limited | 100 | ||
| IREEL FIT TopCo Limited | 100 | ||
| IREEL FIT HoldCo Limited | 100 | ||
| IREEL Wind TopCo Limited | 100 | ||
| IREEL Solar HoldCo Limited | 100 | ||
| IREL Solar HoldCo Limited | 100 | ||
| Ladyhole Solar Limited | 100 | ||
| Morton Wood Solar Limited | 100 | ||
| Nanteague Solar Limited | 100 | ||
| Newton Down Wind HoldCo Limited | 100 | ||
| Newton Down Windfarm Limited | 100 | ||
| Padley Wood Solar Limited | 100 | ||
| Peel Wind Farm (Sheerness) Limited | 100 | ||
| Port of Sheerness Wind Farm Limited | 100 | ||
| Sandys Moor Solar Limited | 100 | ||
| St Johns Hill Wind Holdco Limited | 100 | ||
| St Johns Hill Wind Limited | 100 |
| 31 December 2022 £'000 |
30 June 2022 £'000 |
|
|---|---|---|
| Current assets | ||
| Monitoring fees receivable (see Note 4) | 1,272 | 834 |
| Other receivables | 3 | 43 |
| Prepayments | - | 5 |
| 1,275 | 882 |
There are no material past due or impaired receivable balances outstanding at the period end, the probability of default of BSIFIL and BR1 was considered low and so no allowance has been recognised based on 12-month expected credit loss as any impairment would be insignificant.
The Board considers that the carrying amount of all receivables approximates to their fair value.
For the six months ended 31 December 2022
Cash and cash equivalents comprise cash held by the Company and short term bank deposits held with maturities of up to three months. The carrying amounts of these assets approximate their fair value.
| 31 December 2022 £'000 |
30 June 2022 £'000 |
|
|---|---|---|
| Current liabilities | ||
| Investment advisory fees (see Note 14) | 349 | 121 |
| Administration fees | 146 | 204 |
| Directors' Fees (see Note 14) | 75 | 60 |
| Audit fees | 50 | 95 |
| Other payables | 55 | 10 |
| 675 | 490 |
The Company has financial risk management policies in place to ensure that all payables are paid within the agreed credit period. The Board considers that the carrying amount of all payables approximates to their fair value.
| Six months ended 31 December 2022 |
Six months ended 31 December 2021 |
|
|---|---|---|
| Profit attributable to Shareholders of the Company Weighted average number of Ordinary Shares in |
£37,642,084 | £53,699,532 |
| issue | 611,452,217 | 485,902,235 |
| Basic and diluted earnings from continuing operations and profit for the period (pence |
||
| per share) | 6.16 | 11.05 |
For the six months ended 31 December 2022
The authorised share capital of the Company is represented by an unlimited number of Ordinary Shares of no par value which, upon issue, the Directors may designate into such classes and denominate in such currencies as they may determine.
| Share capital | Six months ended 31 December 2022 Number of Ordinary Shares |
Year ended 30 June 2022 Number of Ordinary Shares |
|---|---|---|
| Opening balance | 611,452,217 | 406,999,622 |
| Shares issued for cash | - | 204,452,595 |
| Closing balance | 611,452,217 | 611,452,217 |
| Shareholders' equity | Six months ended 31 December 2022 £'000 |
Year ended 30 June 2022 £'000 |
| Opening balance | 858,391 | 471,425 |
| Ordinary Shares issued for cash | - | 255,100 |
| Share issue costs | - | (4,506) |
| Dividends paid | (25,314) | (38,201) |
| Total comprehensive income | 37,642 | 174,573 |
| Closing balance | 870,719 | 858,391 |
Dividends declared and paid in the period are disclosed in Note 13.
The Company has a single class of Ordinary Shares which are entitled to dividends declared by the Company. At any General Meeting of the Company each ordinary Shareholder is entitled to have one vote for each share held. The Ordinary Shares also have the right to receive all income attributable to those shares and participate in dividends made and such income shall be divided pari passu among the holders of Ordinary Shares in proportion to the number of Ordinary Shares held by them.
Retained earnings comprise of accumulated retained earnings as detailed in the unaudited condensed statement of changes in equity.
On 2 August 2022, the Board declared a third interim dividend of £12,534,770, in respect of the year ended 30 June 2022, equating to 2.05pps (third interim dividend in respect of the year ended 30 June 2021: 2.00pps), which was paid on 31 August 2022 to Shareholders on the register on 12 August 2022.
On 30 September 2022, the Board approved a fourth interim dividend of £12,779,351 in respect of the year ended 30 June 2022, equating to 2.09pps (fourth interim dividend in respect of the year ended 30 June 2021: 2.00pps), which was paid on 4 November 2022 to Shareholders on the register on 14 October 2022.
Post period end, on 23 January 2023, the Board declared its first interim dividend of £12,840,497, in respect of year ending 30 June 2023, equating to 2.10pps (first interim dividend in respect of the year ended 30 June 2022: 2.03pps), which will be paid on 3 March 2023 to Shareholders on the register on 3 February 2023.
For the six months ended 31 December 2022
In the opinion of the Directors, the Company has no immediate or ultimate controlling party.
The total Directors' fees expense for the period amounted to £136,965 (31 December 2021: £122,439) of which £74,760 was outstanding at 31 December 2022 (30 June 2022: £59,750).
Remuneration paid to each Director is as follows:
| 31 December 2022 £'000 |
31 December 2021 £'000 |
|
|---|---|---|
| John Scott | 24 | 20 |
| Michael Gibbons | 10 | N/A |
| Paul Le Page | 26 | 23 |
| John Rennocks | 32 | 31 |
| Meriel Lenfestey | 23 | 20 |
| Elizabeth Burne | 22 | 9 |
| Laurence McNairn | N/A | 20 |
| 137 | 123 |
The number of Ordinary Shares held by each Director is as follows:
| 31 December 2022 | 31 December 2021 | |
|---|---|---|
| John Scott* | 625,619 | 512,436 |
| Michael Gibbons | - | N/A |
| Paul Le Page | 35,000 | 35,000 |
| John Rennocks* | 320,388 | 316,011 |
| Meriel Lenfestey | 7,693 | - |
| Elizabeth Burne | 15,000 | - |
| Laurence McNairn | N/A | 441,764 |
| 1,003,700 | 1,305,211 |
*Includes shares held by PCAs.
John Scott and John Rennocks are Directors of BR1. Neil Wood and James Armstrong, who are partners of the Investment Adviser, are also Directors of BSIFIL and BR1.
Fees paid during the period by SPVs to BSL, a company which has the same ownership as that of the Investment Adviser totalled £1,971,264 (31 December 2021: £1,489,243).
Fees paid during the period by SPVs to BOL, a company which has the same ownership as that of the Investment Adviser totalled £3,706,826 (31 December 2021: £2,168,452).
Fees paid during the period by SPVs to BRD, a company which has the same ownership as that of the Investment Adviser, totalled £379,295 (31 December 2021: £200,396).
For the six months ended 31 December 2022
Under the terms of the Investment Advisory Agreement, the Investment Adviser is entitled to a base fee. The base fee is payable quarterly in arrears in cash, at a rate equivalent to 0.80% per annum of the NAV up to and including £750,000,000, 0.75% per annum of the NAV above £750,000,000 and up to and including £1,000,000,000 and 0.65% per annum of the NAV above £1,000,000,000. The base fee will be calculated on the NAV reported in the most recent quarterly NAV calculation as at the date of payment.
The Company, BSIFIL's and BR1's investment advisory fees for the period amounted to £3,650,104 (31 December 2021: £2,420,685) of which £774,179 (30 June 2022: £494,485) was outstanding at the period end and is to be settled in cash. The investment advisory fees for the period attributable to the Company amounted to £397,329 (31 December 2021: £235,817) of which £349,022 (30 June 2022: £121,549) was outstanding at the period end.
The Company's loan monitoring fee income for the period, due from its subsidiary BR1, amounted to £437,500 (31 December 2021: £407,517) of which £1,271,387 was outstanding at the period end (30 June 2022: £833,887).
As at 31 December 2022 there has been no change to financial instruments risk to those described in the financial statements of 30 June 2022.
On 23 January 2023, the Board declared its first interim dividend of £12,840,497, in respect of the year ending 30 June 2023, equating to 2.10pps (first interim dividend in respect of the year ended 30 June 2022: 2.03pps), which will be paid on 3 March 2023 to Shareholders on the register on 3 February 2023.
On 22 February 2023, John Rennocks, who since the Company's launch in 2013 served as Chair until 29 November 2022 and then served as non-executive director, retired from the Board. The Company extends its thanks to Mr Rennocks for his hard work and dedication during his time in office. His input has been invaluable and the Company wishes him well in his retirement.
Administrator means Ocorian Administration (Guernsey) Limited
AGM means the Annual General Meeting
AIC means the Association of Investment Companies
AIC Code means the Association of Investment Companies Code of Corporate Governance
AIF means Alternative Investment Fund
AIFM means Alternative Investment Fund Manager
AIFMD means the Alternative Investment Fund Management Directive
Articles means the Memorandum of 29 May 2013 as amended and the Articles of Incorporation as adopted by special resolution on 7 November 2016.
Auditor means KPMG Channel Islands Limited (see KPMG)
Aviva Investors means Aviva Investors Limited
BEIS means the Department for Business, Energy & Industrial Strategy
BEPS means Base erosion and profit shifting
Bluefield means Bluefield Partners LLP
Bluefield Group means Bluefield Partners LLP and Bluefield Companies
BOL means Bluefield Operations Limited
Board means the Directors of the Company
BR1 means Bluefield Renewables 1 Ltd being the only direct subsidiary of the Company
BRD means Bluefield Renewable Developments Limited
Brexit means departure of the UK from the EU
BSIF means Bluefield Solar Income Fund Limited
BSIFIL means Bluefield SIF Investments Limited
BSL means Bluefield Asset Management Services Limited
BSUoS means Balancing Services Use of System charges: costs set to ensure that network companies can recover their allowed revenue under Ofgem price controls
Business days means every official working day of the week, generally Monday to Friday excluding public holidays
CAGR means compound annual growth rate
Calculation Time means the Calculation Time as set out in the Articles of Incorporation
CCC means Committee on Climate Change
CfD means Contract for Difference
Company means Bluefield Solar Income Fund Limited (see BSIF)
Companies Law means the Companies (Guernsey) Law 2008, as amended (see Law)
Cost of debt means the blended cost of debt reflecting fixed and index-linked elements
CO2e means Carbon Dioxide emissions
C Shares means Ordinary Shares approved for issue at no par value in the Company
CSR means Corporate Social Responsibility
CP means Compliance Period
CPIH means Consumer Price Index including owner occupiers' housing costs
DCF means Discounted Cash Flow
DECC means the Department of Energy and Climate Change
Defect Risk means that there is an over-reliance on limited equipment manufacturers which could lead to large proportions of the portfolio suffering similar defects
Directors' Valuation means the gross value of the SPV investments held by BSIFIL, including their holding companies
DNO means Distribution Network Operator
DSCR means Long Term Debt Service Cover Ratio calculated as net operating income as a multiple of debt obligations due within one year
DTR means the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority
EBITDA means earnings before interest, tax, depreciation and amortisation
EGM means Extraordinary General Meeting
EIS means Enterprise Investment Scheme
EPC means Engineering, Procurement & Construction
EPS means Earning per share
ESG means Environmental, Social and Governance
EU means the European Union
EV means enterprise valuation
FAC means Final Acceptance Certificate
FATCA means the Foreign Account Tax Compliance Act
Financial Statements means the unaudited condensed interim financial statements
FiT means Feed-in Tariff
GAV means Gross Asset Value on investment basis including debt held at SPV level
GDPR means General Data Protection Regulation
GFSC means the Guernsey Financial Services Commission
GHG means greenhouse gas
GHG Protocol supplies the world's most widely used greenhouse gas accounting standards
Group means Bluefield Solar Income Fund Limited, Bluefield Renewables 1 Limited and its subsidiaries
Guernsey Code means the Guernsey Financial Services Commission Finance Sector Code of Corporate Governance
GWh means Gigawatt hour
GWp means Gigawatt peak
IAS means International Accounting Standard
IASB means the International Accounting Standards Board
IFRS means International Financial Reporting Standards as adopted by the EU
Investment Adviser means Bluefield Partners LLP
IPEV Valuation Guidelines means the International Private Equity and Venture Capital Valuation Guidelines
IPO means initial public offering
IRR means Internal Rate of Return
IVSC means The International Valuation Standards Council
KPI means Key Performance Indicators
KPMG means KPMG Channel Islands Limited (see Auditor)
kW means Kilowatt (a unit of power equal to one thousand watts)
kWh means Kilowatt hour
kWp means Kilowatt peak
Law means Companies (Guernsey) Law, 2008 as amended (see Companies Law)
LCOE means Levelised Cost of Electricity: average unit cost of electricity over the lifetime of a generating asset expressed on a net present cost basis
LD means liquidated damages
LIBOR means London Interbank Offered Rate
Listing Rules means the set of FCA rules which must be followed by all companies listed in the UK
LSE means London Stock Exchange plc
LTF agreement means Long Term Financing agreement with Aviva Investors
Macquarie means Macquarie Bank Limited
Main Market means the main securities market of the London Stock Exchange
Mutualisation Rebate means the additional payments made when a shortfall occurs if a supplier is unable to meet its obligation under the RO Buy-Out Scheme
MW means Megawatt (a unit of power equal to one million watts)
MWh means Megawatt hour
MWp means Megawatt peak
NatWest means NatWest International plc
NAV means Net Asset Value as defined in the prospectus
NMPI means Non-mainstream Pooled Investments and Special Purpose Vehicles and the rules around their financial promotion
NPPR means the AIFMD National Private Placement Regime
O&M means Operation and Maintenance
Official List means the Premium Segment of the UK Listing Authority's Official List
Ofgem means Office of Gas and Electricity Markets
Ordinary Shares means the issued ordinary share capital of the Company, of which there is only one class
Outage Risk means that a higher proportion of large capacity assets hold increased exposure to material losses due to curtailments and periods of outage
P10 means Irradiation estimate exceeded with 10% probability
P90 means Irradiation estimate exceeded with 90% probability
PCA means Persons Closely Associated
PPA means Power Purchase Agreement
pps means pence per Ordinary Share
PR means Performance Ratio (the ratio of the actual and theoretically possible energy outputs)
PV means Photovoltaic
RBSI means Royal Bank of Scotland International plc
RCF means Revolving Credit Facility
RO Scheme means the Renewable Obligation Scheme which is the financial mechanism by which the UK government incentivises the deployment of large-scale renewable electricity generation by placing a mandatory requirement on licensed UK electricity suppliers to source a specified and annually increasing proportion of electricity they supply to customers from eligible renewable sources or pay a penalty
ROC means Renewable Obligation Certificates
ROC recycle means the payment received by generators from the redistribution of the buy-out fund. Payments are made into the buy-out fund when suppliers do not have sufficient ROCs to cover their obligation
RPI means the Retail Price Index
Santander UK means Santander UK plc
SASB means Sustainability Accounting Standards Board
SDG means the United Nations Sustainable Development Goals
SFDR means Sustainable Finance Disclosure Regulation
SONIA means Sterling Over Night Indexed Average
SPA means Share Purchase Agreement
SPV means a Special Purpose Vehicle which hold the Company's investment portfolio of underlying operating assets
Sterling means the Great British pound currency
TISE means The International Stock Exchange (based in the Channel Islands)
TWh means Terawatt hour
UK means the United Kingdom of Great Britain and Northern Ireland
UK Code means the UK Corporate Governance Code
UK FCA means the UK Financial Conduct Authority
UNGC means the United Nations Global Compact
United Nations Principles for Responsible Investment means an approach to investing that aims to incorporate environmental, social and governance factors into investment decisions, to better manage risk and generate sustainable, long term returns.
| APM | Definition | Purpose | Calculation |
|---|---|---|---|
| Total return | The percentage increase/(decrease) in NAV, inclusive of dividends paid, in the reporting period. |
A key measure of the success of the Investment Adviser's investment strategy. |
The change in NAV for the period plus any dividends paid divided by the initial NAV. (142.40- 140.39+2.05+2.09)/140.39 =4.4% |
| Total Shareholder Return |
The percentage increase/(decrease) in share price, inclusive of dividends paid, in the reporting period. |
A measure of the return that could have been obtained by holding a share over the reporting period. |
The change in share price for the period plus any dividends paid divided by the initial share price. (136.0- 131.0+2.05+2.09)/131.0=7. 0% The measure excludes transaction costs. |
| Total Dividends Declared in Period |
This is the sum of the dividends that the Board has declared relating to the reporting period. |
A measure of the income that the company has paid to shareholders that can be compared to the Company's target dividend. |
The linear sum of each dividend declared in the reporting period. |
| Underlying Earnings |
Total net income of the Company's investment portfolio. |
A measure to link the underlying financial performance of the operational projects to the dividends declared and paid by the Company. |
Total income of the Company's portfolio minus Group operating costs minus Group debt costs. |
| Market Capitalisation |
The total value of the Company's issued share capital. |
This is a key indicator of the Company's liquidity. |
The price per share multiplied by the number of shares in issue. |
| NAV per Ordinary Share |
The Company's closing NAV per share at the period end. |
A measure of the value of one Ordinary Share. |
The net assets attributable to Ordinary Shares on the statement of financial position (£870.7m) divided by the number of ordinary shares in issue (611,452,217) as at the calculation date. |
| Sale of Electricity |
The total proportion of revenue generated by the Company's portfolio that is attributable to electricity sales. |
A measure to understand the proportion of revenue attributable to sales of electricity. |
The amount of revenue attributable to electricity sales divided by the total revenue generated by the Company's portfolio, expressed as a percentage. |
| Total Revenue | Total net income of the Company's investment portfolio. |
A measure to outline the total revenue of the portfolio on per MW basis. |
Total income of the Company's portfolio owned for the period. |
| PPA Revenue | Revenue generated through PPAs. |
A measure to outline the revenue earned by the portfolio from power sales. |
Total revenue from all power price sales during the period from the Company's portfolio. |
| Regulated Revenue |
Revenue generated from the sale of FiTs and ROCs. |
A measure to outline the revenue earned by the portfolio from government subsidies. |
Total revenue from all subsidy income earned during the period from the Company's portfolio. |
| Ongoing charges ratio |
The recurring costs that the Company and BR1 has incurred during the period excluding performance fees and one off legal and professional fees expressed as a percentage of the Company's average NAV for the period. |
A measure of the minimum gross profit that the Company needs to produce to make a positive return for Shareholders. |
Calculated in accordance with the AIC methodology detailed in the table below. |
|---|---|---|---|
| Weighted Average ROC |
A relative indicator of the regulatory revenues within a renewable portfolio. |
A measure of the Company's portfolio earnings as a proportion of its assets. |
Total Regulated Revenue received by the portfolio divided by the product of the current market value of a ROC and the annual generation capacity of the portfolio. |
| Weighted Average Life |
The average operational life of the Company's portfolio. |
A measure of the Company's progress in extending the life of its portfolio beyond the end of the subsidy regime in 2036. |
The sum of the product of each plant's operational capacity in MW and the plant's expected life divided by the total portfolio capacity in MW. |
| Directors' Valuation |
The gross value of the SPV Investments held by BR1, including their holding companies minus Project level debt. |
An estimate of the sum that would be realised if the Company's portfolio was sold on a willing buyer, willing seller basis. |
A reconciliation of the Directors' Valuation to Financial assets at fair value through profit and loss is shown in Note 7 of the financial statements. |
| Gross Asset Value |
The Market Value of all Assets within the Company. |
A measure of the total value of the Company's Assets. |
The total assets attributable to Ordinary Shares on the Statement of Financial Position. |
| Total Outstanding Debt |
The total outstanding balances of all debt held within the Company and its subsidiaries. |
A measure that is used to establish the Company's level of gearing. |
The sum of the Sterling equivalent values of all loans held within the Company. |
| The Company £'000 |
BR1 £'000 |
Total £'000 |
|
|---|---|---|---|
| Fees to Investment Adviser | 397 | 3,253 | 3,650 |
| Legal and professional fees* | 160 | 47 | 207 |
| Administration fees | 289 | - | 289 |
| Directors' remuneration | 137 | 7 | 144 |
| Audit fees | 53 | 10 | 63 |
| Other ongoing expenses | 142 | 13 | 155 |
| Total ongoing expenses | 1,178 | 3,330 | 4,508 |
| Average NAV | 871,051 | ||
| Annualised Ongoing Charges (using AIC methodology) | 1.04% | ||
* Includes non-audit fee (interim review)
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