Chair’s Statement

Introduction

The six months to 31 December 2023 (“H1 23/24”, or the “Period”) have seen a further half year of strong results for your Company. Although spot power prices have softened recently, BSIF was the beneficiary of our Investment Adviser’s strategy of fixing prices up to 36 months in advance, with the result that, despite irradiation levels some 13% below those experienced in the second half of calendar 2022, our revenues for the Period grew as compared with the previous year.  West Raynham (at 50MW our second largest generating asset) was unavailable for the first three months of the Period, resulting in an additional constraint on power production.

The Company continues to work on its extensive development programme; as at 31 December 2023 we had 660MW under active development and 778MW in pre-construction, comprising a mixture of solar PV and battery storage projects, as well as some wind projects. Our ability to convert this pipeline into electricity generating assets is significantly restricted by current conditions in the capital markets, which make it difficult for us – and most participants in the renewable energy sector – to raise additional equity. In response to this constraint, the Company has entered into a Strategic Partnership with GLIL Infrastructure (“GLIL”), covered in more detail below.

After the Period end, we saw a significant widening in the discount to Net Asset Value (“NAV”) at which BSIF’s shares trade and this prompted the Board to announce a share buyback programme, to which an initial £20 million has been allocated. This will commence once the Company is outside the current closed period, which ends with the publication of this Interim Report.

The main features of the Period under review are:

·      The Company announced signing a Memorandum of Understanding (‘MOU’) with GLIL Infrastructure;

·      Work on the Company’s development pipeline continued apace, with planning consents being secured on 137MW of solar projects and 90MW of battery projects, while the wider pipeline grew to approximately 968MW of solar and 563MW of battery storage;

·      The Group reduced the outstanding balance on its revolving credit facility (RCF) by £10 million, resulting in a loan balance of £167 million as at 31 December 2023;

·      At the November AGM, BSIF’s shareholders voted overwhelmingly in favour of the continuation of the Company for a further five years;

·      The NAV per share decreased modestly, to 135.95pps as at 31 December 2023 (30 June 2023: 139.70pps);

·      BSIF’s closing share price on 31 December 2023 was 13% below the Directors’ Valuation, resulting in a discount to NAV consistent with FY22/23. (30 June 2023: 14%);

·      The dividend target for FY23/24 has been set at not less than 8.80pps, up from the 8.60pps dividends paid in respect of FY 22/23;

·      Consistent with that target, a first interim dividend for FY23/24 of 2.20pps was declared on 26 January 2024;

·      Following the end of the Period, the first phase of the GLIL Strategic Partnership was successfully completed, with an equity investment by BSIF of £20 million and £200 million from GLIL to fund the acquisition of a 247MW portfolio from Lightsource bp;

·    Post Period end one solar project of 50MW received planning permission.

At the end of 2023, the Group’s total outstanding debt stood at £577 million, and its leverage was 41% (31 December 2022: £531.1 million and leverage was 38%).