Annual Report
and Financial Statements
FOR THE YEAR ENDED
30 JUNE 2023
© 2023. ALL RIGHTS RESERVED
COMPANY REGISTRATION NO: 56708
Table of Contents
02 General Information
03 Highlights
05 Corporate Summary
06 Chair’s Statement
10 Analysis of the Company’s
11 Report of the Investment Adviser
Investment Portfolio
27 Environmental, Social and Governance Report
43 Task Force for Climate-related Financial
50 Strategic Report
Disclosures (TCFD)
64 Report of the Directors
67 Board of Directors
68 Directors’ Statement of Responsibilities
in Respect of the Annual Report
69 Responsibility Statement of the Directors
70 Corporate Governance Report
76 Report of the Audit and Risk Commitee
80 Independent Auditor’s Report
85 Statement of Financial Position
86 Statement of Comprehensive Income
87 Statement of Changes in Equity
88 Statement of Cash Flows
89 Notes to the Financial Statements
102 Glossary of Defined Terms
105 Alternative Performance Measures
107 Annex – SFDR Periodic Disclosures
for the year ended 30 June 2023
01
ANNUAL REPORT AND FINANCIAL STATEMENTS
General Information
Board of Directors (all non-executive)
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)
JAMES ARMSTRONG
GIOVANNI TERRANOVA
NEIL WOOD
Managing Partner
Managing Partner
Partner
Registered Office
PO Box 286,
Floor 2, Trafalgar Court,
Les Banques,
St Peter Port,
Guernsey, GY1 4LY
Investment Adviser
Bluefield Partners LLP
6 New Street Square
London, EC4A 3BF
ANNUAL REPORT AND FINANCIAL STATEMENTS
Administrator, Company Secretary & Designated Manager
Ocorian Administration (Guernsey) Limited
Floor 2, Trafalgar Court, Les Banques,
St Peter Port, Guernsey, GY1 4LY
Independent Auditor
KPMG Channel Islands Limited
Glategny Court, Glategny Esplanade
St Peter Port, Guernsey, GY1 1WR
Registrar
Computershare Investor Services (Guernsey) Limited*
13 Castle Street, St Helier
Jersey, JE1 1ES
Link Market Services (Guernsey) Limited **
Mont Crevelt House, Bulwer Avenue,
St Sampson, Guernsey, GY2 4LH
Sponsor, Broker & Financial Adviser
Numis Securities Limited
45 Gresham Street
London, EC2V 7BF
Legal Advisers to the Company (as to English law)
Norton Rose Fulbright LLP
3 More London Riverside
London, SE1 2AQ
Legal Advisers to the Company (as to Guernsey law)
Carey Olsen
PO Box 98, Carey House, Les Banques,
St Peter Port , Guernsey, GY1 4BZ
Principal Bankers
NatWest International plc
35 High Street, St Peter Port
Guernsey, GY1 4BE
*appointed 10 March 2023
**resigned 10 March 2023
02
Highlights
As at 30 June 2023 / 30 June 2022
Environmental, Social
and Governance (ESG)
ESG KPIs
Net Asset Value (NAV)
£854.2m £858.4m
NAV per Share
139.70p 140.39p
Dividend Target per Share
8.40pps 8.16pps
Actual Dividend Declared
8.60pps 8.20pps
Underlying
Earnings1
(pre amortisation of debt)
Underlying Earnings
per share1
(pre amortisation of debt)
Underlying Earnings
per share1
(post amortisation of debt)
£108.4m £66.8m
17.72p 12.04p
14.74p 9.54p
Total Shareholder
Return in year2
-2.03% 14.55%
Total Return
in year3
5.45% 28.16%
Total return to
Shareholders since IPO
89.79% 92.45%
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. It is defined in the Alternative Performance Measure appendix.
2. Total Shareholder Return is based on share price movement and dividends paid in the year. It is defined in the
Alternative Performance Measure appendix.
3. Total Return is based on the NAV movement and dividends paid in the year. It is defined in the Alternative
Performance Measure appendix.
Over 836,231 MWh
of renewable energy
generated.
Over 173,000 tonnes
of CO2e savings
achieved.
Equivalent of 288,000
homes powered with
renewable energy.
(2022: 624,000 MWh)
(2022: 120,000)
(2022: 215,000)
ESG Highlights
• Enhanced ESG governance though policy adoption, quantitative reporting against a
comprehensive set of ESG commitments and KPIs, and enhanced supply chain practices.
• 25 educational workshops delivered to local schools (2022: 0) and £253,000 paid to
community benefit funds (2022: £154,000).
• 30 Biodiversity Net Gain (BNG) assesments conducted across the operational portfolio
(2022: 0).
Construction and Development Pipeline
• 93 MW under construction
• 595 MW approved
• 364 MW in planning
• 377 MW potential capacity
}
1.43 GW
(956 MW Solar,
473 MW battery)
03
ANNUAL REPORT AND FINANCIAL STATEMENTS Results Summary
For the year ended
30 June 2023
For the year ended
30 June 2022
Total operating income
£49,069,809
£176,141,970
Total comprehensive income before tax
£46,793,621
£174,572,832
Total underlying earnings (pre amortisation of debt)1
£108,367,331
£66,750,110
Earnings per share (per page 54)
Underlying EPS available for distribution2
Total declared dividends per share for year
Earnings per share carried forward (See page 20)
NAV per share
Share price at 30 June
Total return3
Total Shareholder Return4
Total Shareholder Return since inception5
Dividends per share paid since inception
7.65p
18.13p
8.60p
9.53p
139.70p
120.00p
5.45%
(2.03)%
89.79%
69.79p
34.91p
11.92p
8.20p
3.39p
140.39p
131.00p
28.16%
14.55%
92.45%
61.45p
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. It is
defined in the Alternative Performance Measure appendix.
2. Underlying EPS is calculated using underlying earnings available for distribution divided by the average number of shares.
3. Total return is based on NAV per share movement and dividends paid in the year.
4. Total Shareholder Return is based on share price movement and dividends paid in the year.
5. Total Shareholder Return since inception is based on share price movement and dividends paid since the IPO.
04
ANNUAL REPORT AND FINANCIAL STATEMENTS Corporate Summary
Investment objective
Investment Adviser
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 within BSIF’s portfolio. 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 c.80%
of the investment portfolio held by the Company as at
year end.
In December 2020 Bluefield Renewable Developments
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.
The investment objective of the Company is to provide
Shareholders with an attractive return, principally in the
form of regular income distributions, by being invested
primarily in solar energy assets located in the UK. The
Company also invests a minority of its capital into other
renewables assets including wind and energy storage.
Structure
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 as a Green Fund after
successful application under the Guernsey Green Fund
Rules to the GFSC 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 makes its investments via its wholly owned
subsidiary Bluefield Renewables 1 Limited (BR1) and 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.
05
ANNUAL REPORT AND FINANCIAL STATEMENTS Chair’s Statement
Introduction
The Company was founded in the summer of 2013 and the Period under
review therefore covers our tenth year of operations; our first decade has
seen remarkable changes in electricity markets and how they are supplied,
notably the emergence of renewables as a significant contributor to Britain’s
electricity mix, aided by the dramatic reduction in capital costs, particularly
for solar panels. Ten years ago, solar and wind power contributed only 8.5% to
indigenous electricity generation; by 2022, that number had grown to 28.8%.
By most measures, the 2022/23 year was a period of considerable success
for your Company. Irradiation levels were above expectations, wind revenues
outperformed our forecasts (despite low wind speeds), we sold our electricity
at record prices, our regulated revenues increased with inflation and our 129
solar PV plants performed well. Progress was made on a number of fronts,
but the main disappointment for your Board is the softening of the Company’s
share price (down 8.4% for the year under review), despite growing profits, a
raised dividend, excellent operating ratios and a robust Net Asset Value (NAV).
The Period was not without its challenges, the problems deriving in significant
part from the rapidly changing UK political landscape, with the chaotic
Johnson regime giving way to the short-lived Truss administration, whose
“mini Budget” was sufficiently badly received by financial markets for the
Premier’s defenestration to follow in short order. None of these events can
be seen as conducive to enhancing Britain’s reputation for financial prudence
and stability.
The fallout which has affected Bluefield relates not to our operations –
demand for green electricity continues to grow, and together with others in
our sector we play our part in meeting this. The main issue we face is that our
access to equity markets is hampered by the discount to NAV at which our
shares currently trade, making it difficult to raise the fresh equity which would
in other circumstances be the cornerstone of the investment programme
which is required if we are to increase our participation in the UK’s quest to
decarbonise the economy. In short, we are capital constrained at a time when
renewable electricity is in urgent need of capital investment, and there are
attractive opportunities in our pipeline.
06
ANNUAL REPORT AND FINANCIAL STATEMENTS CHAIR’S STATEMENT
ANNUAL REPORT AND FINANCIAL STATEMENTS
AERIAL VIEW AT WEST RAYNHAM
HIGHLIGHTS OF THE YEAR
The main features of the year under review are:
• BSIF generated 836GWh of electricity (2021/22: 688GWh),
an increase of 22%;
• Our installed capacity grew to 754.3MW of solar and
58.3MW of wind power (2021/22: 707.9MW and 58.3MW,
respectively);
• The Company completed the purchase of a 46.4MW
operational solar portfolio for £56.0 million, all accredited
under the ROC regime with approximately 60% of contracted
and regulated revenues, expiring in 2035;
• Ensuring a focus on increasing future renewable generation
and supporting the UK’s transition to Net Zero, 93MW of
new build solar entered construction and c.62MW of solar
Contracts for Difference were secured through the fourth
Allocation Round;
• Momentum on
the Company’s development pipeline
continued apace, with planning consents being secured on
some 350MW of solar projects and 19MW of battery projects,
while the wider pipeline grew to approximately 950MW of
solar and 470MW of battery storage;
• The Net Asset Value per share fell marginally to 139.7pps
(30 June 2022: 140.39pps), reflecting higher interest and
discount rates, which offset the sharply increased electricity
prices that we have been able to capture through our
successful power sales strategy;
• BSIF’s shares moved to a wider discount to NAV, the closing
price on 30 June 2023 being 14% below the Directors’
Valuation (30 June 2022: 7% discount);
• Total declared dividends for the Period increased to 8.60pps
(2022/23: 8.20pps), ahead of our original target of 8.40pps;
• The Company successfully re-financed its £110 million three-
year term loan with NatWest during the year, increasing the
facility to £130 million and extending maturity to December
2039. Hedging on £110 million has been put in place for the
tenor of the loan, at an effective all-in cost of c.2.7%;
• The Company also increased its £100 million revolving credit
facility (RCF) by £110 million, with an uncommitted accordion
feature allowing for a further increase of up to £30 million;
• The term of the facility has been extended to May 2025
with the lender group being diversified further with the
introduction of Lloyds Bank plc, alongside existing lenders
RBS International and Santander UK;
• Post period end one project received planning permission
for 70MW of solar and 40MW of battery storage, and BSIF
achieved allocations of CfDs on all 4 projects submitted
to AR5.
At the time of writing, the Group’s total outstanding debt stands
at c.£597.4 million and its leverage level stands at c.41% of GAV
(June 2022: 35% of GAV).
Underlying Earnings and Dividends
The Underlying Earnings for the Period, before amortisation
of long-term debt, were £108.4 million, or 17.72pps,
and underlying earnings available for distribution, post
debt repayments of £18.3m (3.00pps), were £90.1m
(14.74pps). Thus, the Company has earned comfortably in
excess of its dividend target of 8.40pps for the year to 30
June 2023, thanks to higher power prices and the strong
operational performance of its portfolio.
This has enabled the Board to declare an increased fourth
interim dividend of 2.30pps, bringing the total dividend for
the Period to 8.60pps (30 June 2022: 8.20pps); the yield
on our shares – based on a share price of 118.20pps on
26 September – is 7.3%. The Company remains the LSE
listed solar investment company sector’s highest dividend
payer on a pence per share basis. Notwithstanding its
strong dividend cover, the Company’s established policy is
to increase distributions on a progressive basis, and it has
set a target dividend for the 2023/24 financial year of not
less than 8.80pps. Retained earnings are being deployed
by the Company to finance further projects emerging from
its strong development pipeline.
Valuation and Discount Rate
Secondary market demand for renewable electricity
projects, at all stages of their lifecycle, remains strong;
power prices and inflation have surged, largely cancelling
out the impact of higher interest rates and operating costs.
The Investment Adviser is currently seeing solar portfolios
priced in a range of £1.20m/MW - £1.45m/MW, which is
very similar to previous years (typically £1.20m/MW -
£1.40m/MW). Higher interest rates have caused the Board
to increase the discount rate for the 30 June 2023 Directors’
Valuation to 8.0% (June 2022: 6.75%). By valuing the
Company’s operational portfolio at an enterprise value of
£1,195m (c.£1.35m/MW for the solar assets vs. £1.38m/
MW in June 2022), the Directors’ Valuation as at 30 June
2023 is in line with recent market transactions and is
consistent with the Company’s valuation approach of
‘willing buyer/willing seller’.
07
Inflation
In the past 12 months UK inflation has continued at a high
level, notwithstanding a string of interest rate increases that
have taken the current Base Rate up to 5.25%, from 0.1%
less than two years ago. The UK 5 year gilt rate, which was
below 1% for some 3 years prior to January 2022, now stands
at approximately 4.5%. Current UK inflation, on an RPI basis,
is close to 9%, with CPI at 6.8%. Interest rates may have
further to rise, but for the moment at least inflation has fallen
from its peak, suggesting that the medicine prescribed by the
Bank of England is working, albeit later in the day than many
of us might have wished.
BSIF is a net beneficiary of inflation, since our regulated
income (principally from ROCs) is index-linked, boosting
our regulated revenues faster than the increase in our
operating costs. Our prudent approach to debt, where we
have (predominantly) fixed rate and amortising long term
loans, means that the capital structure has been largely
shielded from the rises in interest rates. The flipside of this,
however, is that as gilt yields adjust upwards in the face of
inflation, bond prices go down; in tandem with others in
our sector, the price of your Company’s shares has likewise
fallen, as investors seek a concomitant increase in yield
from BSIF to preserve the risk premium between our shares
and Government bonds. We therefore find ourselves in the
invidious position of posting excellent operating results
and having built a robust capital structure well suited to
this environment, yet watching our share price fall to a
significant discount to NAV.
Power Prices
Increasing electricity demand and fuel supply concerns
following the onset of Russia’s war against Ukraine saw UK
electricity prices in the autumn of 2022 at record levels, with
day-ahead power prices touching c.£180/MWh in December
2022. They stabilised in the first half of 2023, but power
prices remain significantly higher than those seen prior to
the March 2022 invasion.
The Company’s PPA strategy of fixing power prices for
between one and three years has allowed it to agree power
contracts through the months of rising prices, insulating the
portfolio from short term volatility, and enabling it to create
pricing certainty for up to 36 months ahead. The average
weighted prices for these contracts were £190.1/MWh for
June 2022, £303/MWh for January 2023 and £230/MWh for
June 2023.
WINTER AT CAPELANDS
Environmental, Social and Governance (ESG)
I am delighted to present the Company’s significantly
expanded ESG report and I applaud the commitment shown
by the Investment Adviser in ensuring that the Company
implements best practice policies in this important and
rapidly evolving area.
In addition to the Period being the Company’s first year for
implementing and monitoring its ESG performance against
its KPIs, it was also the first time BSIF reported against
the Level 2 requirements of the EU’s Sustainable Finance
Disclosure Regulation (“SFDR”). The Company also produced
its first Principal Adverse Impact (“PAI”) report.
The Energy Crisis and the Levy
The fuel supply crisis precipitated by the Ukraine war resulted in
energy prices reaching unsustainably high levels and prompted the UK
Government to intervene by introducing caps on domestic electricity
prices to alleviate the widespread hardship being experienced. In
late 2022 the Government introduced the Electricity Generator
Levy (the “Levy”), to operate from January 2023 until March 2028;
the Levy is a 45% charge on revenues from the sales of electricity
in excess of £75 per MWh for generators who have in-scope annual
generation in excess of 50GWh. The Government has also stated that
it recognises the need to reform electricity market arrangements to
deliver the pace and scale of change required to meet its target of
decarbonisation of the electricity system by 2035 and continues to
assess options following a first round of consultations in 2022. We are
active participants in this debate.
The Board
John Rennocks, having stepped down as Chair at the November 2022
AGM, retired from the Board in February. Much has already been said
about John’s contribution to the creation and development of BSIF so
I will simply repeat the deep gratitude we feel to John for what was
achieved during his tenure.
Paul Le Page, another Director who has served from the start and who
has throughout chaired our Audit and Risk Committee with remarkable
skill and diligence, will retire from the Board on 30 September 2023.
On behalf of the Board, I thank Paul most sincerely for what he has
done for BSIF in his decade of service. Libby Burne, whose principal
career has been with PwC and who joined the BSIF Board in 2021, will
succeed Paul as Audit and Risk Committee Chair.
Last October, we welcomed Michael Gibbons to the Board, and he has
assumed the role of Senior Independent Director. Michael has many
years of experience of electricity and other energy markets, which is
already proving to be invaluable to our business.
08
CHAIR’S STATEMENT ANNUAL REPORT AND FINANCIAL STATEMENTS CHAIR’S STATEMENT
ANNUAL REPORT AND FINANCIAL STATEMENTS
The AGM and Continuation Vote
The Company’s Annual General Meeting will take place at
10am on 28 November 2023 at Floor 2, Trafalgar Court, Les
Banques, St Peter Port, Guernsey. Shareholders who are
unable to be present in person are encouraged to submit
questions in advance of the meeting.
Resolution 13 is a continuation vote, seeking the support
of Shareholders for the Company to remain in business for
a further five years. Your Board believes that it has met or
exceeded all of the objectives of its original and subsequent
prospectuses, producing sector-leading returns for investors,
while assisting with the decarbonisation of the economy.
The Board is confident that BSIF is well placed to continue
investing in renewable electricity and thereby delivering value
for Shareholders; it is therefore unanimous in recommending
that Shareholders support this Resolution.
Conclusion
Our business is a relatively straightforward one – we convert
daylight and wind energy into electric power for sale to the
wholesale markets and, in the case of those plants which
were constructed at a time when incentives were required
to compensate for the high cost of equipment, we receive
subsidies, typically for 20 years from the date of plant
commissioning. In the Period, we generated 836GWh
of electricity which, if used to power electric cars, would
replace over 200 million litres of petrol. Another measure
of our output and our contribution to de-carbonising the
economy is that it represents sufficient electricity to meet the
annual needs of 288,000 homes, or a city the size of Leeds.
All of our generation took place in the UK, with 84% coming
from solar PV and 16% from onshore wind. In 2022/23,
we received £107 million from the sale of electricity, £77
million from government subsidies (principally ROCs) and
£5 million from other sources which are set out in more
detail in the Investment Adviser’s report. We believe that
scale is important, and it is our intention to continue to grow
the Company through acquisition and the construction of
new assets, while pursuing our established policy of paying
progressively higher dividends.
Our Investment Adviser, Bluefield Partners, is to be congrat-
ulated for what has been achieved in our first decade. We
raised an initial £128 million in July 2013 and today your
Company has an enterprise value of £1.2 billion, having in
the past 10 years distributed over £270 million in dividends.
There are several important contributors to this result,
including Bluefield Partners’ strong record in constructing
or purchasing the plants we now own, and the record of
both Bluefield Services and Bluefield Operations in running
these facilities at industry-leading levels of performance.
Particularly in the context of the past year, I would also
identify the forward power sales strategy implemented by
the Investment Adviser as one of the significant successes
of the Company, providing a high degree of visibility of our
income for up to 30 months ahead.
If the world is to reduce its dependence on fossil fuels,
we will need more electricity and much of this must come
from renewable sources; there is, for example, little point in
making us abandon the internal combustion engine in favour
of electric cars if the energy for the latter has to come from a
fossil fuelled power plant. In the UK the additional power is
likely to involve substantially more solar and wind generation,
sources which remain the lowest cost generators, while
providing indigenous, clean and secure supplies of energy.
My strong belief is that BSIF has a major role to play in
the future of Britain’s rapidly changing electricity mix and
your Board looks with confidence at the challenges and
opportunities which lie ahead.
John Scott
Chair
27 September 2023
SOLAR PV AT SAXLEY
09
Analysis of the Company’s
Investment Portfolio
As at 30 June 2023
4.0 ROC
0.7%
FiT
7.6%
2.0 ROC
3.4%
0.9 ROC 3.6%
1 ROC 2.1%
1.6 ROC
15.2%
Total Development Pipline of 1,429 MW.
(Please see the Proprietary Pipeline section of
the Investment Adviser report for further detail)
Battery
Storage
473 MW
1.2 ROC
18.0%
SUBSIDY
SCHEME
DEVELOPMENT
PIPELINE (MW)
NI SINGLE WIND
TURBINE PORTFOLIO
WIND
SINGLE TURBINE
WIND FARM
SOLAR PV
MICRO SITES
<5MWp
5 - 10MWp
10 - 45MWp
>45MWp
CONSTRUCTION ASSETS
Solar PV
956 MW
Wind
7.2%
TECHNOLOGY
Leicestershire 1.3%
Sussex 1.4%
Northern Ireland 1.6%
Gloucestershire 1.8%
Derbyshire 2.1%
Cambridgeshire 3.2%
1.3 ROC
8.9%
1.4 ROC
40.5%
Other Counties
11.9%
Wiltshire
14.4%
Solar PV
92.8%
Somerset 4.6%
GEOGRAPHICAL
ANALYSIS
FiT
6.8%
PPA
60.6%
REVENUE
TYPE*
Dorset 4.6%
Devon 5.2%
Lincolnshire 5.4%
ROC Buyout
32.6%
Oxfordshire
7.6%
Cornwall
6.1%
Kent
6.6%
Norfolk
13.1%
Hampshire
9.1%
Note: 1. All graphs, except for Development Pipeline, are based of the operational portfolio of 812.6 MW
2. Revenue Type is based on the Company’s operational portfolio and does not include estimated ROC Recycle revenue
10
ANNUAL REPORT AND FINANCIAL STATEMENTS
Report of the
Investment Adviser
Introduction from the Managing Partner of the
Investment Adviser
The Period to 30 June 2023 has been the most successful period in BSIF’s
decade long history, with the Company delivering record earnings, record
dividend cover, its highest dividend whilst maintaining parity with its highest
recorded NAV. Conversely, it has also been the first time the share price has
been at a significant discount to NAV.
There is a certain irony to this as the financial shocks to the system that
have precipitated the falls – sharp rises in gilt and interest rates – have only
heightened the Company’s five core strengths, summarised below (and
outlined in detail within the Investment Advisers report):
1. Capital Structure: since its 2013 IPO the Company has focused on a simple
and deliberate strategy of ensuring, outside of the Company’s Revolving
Credit Facility, all debt within the structure is secured at portfolio level with
fixed interest rates on fully amortising terms. This is a prudent use of debt
in any environment, but with a current average cost of debt of c.3.5% on all
the Company’s long term borrowings being c.£430m as at 30 June 2023, it
looks particularly prescient in today’s higher interest rate environment.
2. Power Sales Strategy: Bluefield Solar focuses on fixing Power Price
Agreements contracts at the short end of the power curve (6-30 months),
through competitive tender processes, enabling it to maximise value
for shareholders from the most liquid part of the power market. This
strategy has not only underpinned the sector-leading dividends paid
since inception, but crucially has enabled the Company to secure highly
attractive power contracts when power prices reached record highs during
the period to June 2023. The result has been record full year earnings and
a c.2x covered dividend (net of debt amortisation and the EGL). This is
creating retained earnings that can be invested into new opportunities, not
least the proprietary pipeline.
11
ANNUAL REPORT AND FINANCIAL STATEMENTS REPORT OF THE INVESTMENT ADVISER
ANNUAL REPORT AND FINANCIAL STATEMENTS
3. Active Management: Active Management is a much misused term in investment. In the
context of Bluefield Solar’s portfolio it means a dedicated workforce of 115 (and growing) within
Bluefield Partners and Services, split across specialist teams covering primary investment,
secondary investment, ESG, development, engineering, construction management, monitoring
and reporting, debt compliance, technical asset management, operation and maintenance
and commercial with 74 different core responsibilities. These specialist units have been
established in the past decade to deliver an aligned, dedicated and diversely skilled workforce
to an increasingly complex business.
4. Proprietary Pipeline: Bluefield Solar’s ability to control the pipeline has been a major
contributor to its success over the past ten years. Fusing deep rooted relationships across the
UK renewables market with the support of its specialist technical teams, Bluefield has been
able to establish the DNA of the business around developing the primary pipeline. No better
highlight of this is the 1GW solar and storage proprietary pipeline the Investment Adviser has
built up exclusively for Bluefield Solar. These transactions, alongside secondary opportunities
that are being evaluated, provide Bluefield Solar with the platform for a further period of
significant growth.
5. Capital Discipline: Adherence to investment principles is paramount and so despite the fast
paced growth of the solar market in the past decade, uniquely for Bluefield Solar there have still
been periods where the Company elected to cease acquisitions, based on our view that nothing
we saw would provide Shareholder value. To emphasise this, between 2016 to 2020 BSIF did
not go to the market for an equity raise. This capital discipline has benefitted Shareholders and
has contributed to BSIF’s outperformance. This discipline will continue, as it has been a key
pillar in enabling the Company to achieve exceptional growth – not least during and after the
Covid 19 pandemic.
The solace we take from the current situation is that these strengths, applied since the Company
was founded, cannot be easily replicated, and will continue to benefit the Shareholders for many
years to come.
We have visibility over earnings that will support the ongoing progression of our dividend
and retained earnings that can deliver reinvestment into our accretive pipeline, whilst always
focusing on the capital discipline Bluefield Solar is known for. And, thus, as the Chair has said in
his statement, we look forward to the future with great confidence and with the expectation of a
rerating of the shares in the short term.
James Armstrong
Managing Partner, Bluefield Partners LLP
1. About Bluefield Partners LLP
(‘Bluefield’)
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 renewable funds
and/or transactions in both the UK and Europe, including over
£1.4 billion 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 takes responsibility for selection, origination
and execution of investment opportunities for the Company,
having executed over 150 individual SPV acquisitions on behalf
of BSIF and European vehicles.
12
2. Portfolio: Acquisitions, Performance and Value Enhancement
Portfolio Overview
As at 30 June 2023, 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 812.6MW (30 June 2022: 766.2MW).
During the period to 30 June 2023, the combined solar and wind
portfolio generated an aggregated total of 836.2GWh (30 June 2022:
687.5GWh), representing a Generation Yield of 1,029MWh/MW.
Investment Approach and Acquisitions in the Period
The Company has taken a disciplined approach to the deployment of
capital since listing, deploying capital only when there are projects
of suitable quality at attractive returns to complement the existing
portfolio. Rigorous adherence to restrained capital deployment
inevitably means there can be periods where acquisition activity falls,
even when sector activity appears in contrast, but this controlled
approach is beneficial in driving long term, sustainable growth for
Shareholders, as evidenced by Bluefield Solar’s record of sector
leading returns since listing over a decade ago.
In December 2022 the Company completed the acquisition of a
46.4MW operational solar portfolio from Fengate Asset Management.
At the time of the transaction, the enterprise value of the portfolio was
£56.0 million, which included the economic benefit of all cashflows
from May 2022. The portfolio contained £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 39.3MW plant (Ravensthorpe) located in Scunthorpe,
Lincolnshire and a 7.1MW 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 May 2023, the Company completed the purchase of three
recently consented ready to build PV projects, totalling 97MW from
its development partners Lightrock Power and Bluefield Renewable
Developments, for a total of £3.9m. The projects, which are located
in Devon, East Sussex and Shropshire, have grid connection dates
between 2024 and 2026.
£665m
Equity Deployed
£854m
Net Asset Value
£1.438m
Gross Asset Value
813MW
Operational Capacity
£273m
Total Dividends Paid
13
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS Portfolio Performance and Optimisation
Solar PV Performance
In the 12-months to 30 June 2023, irradiation levels were 6.0% higher than
the Company’s forecasts and 3.1% higher than FY 2021/22, whilst generation,
being 702.4GWh, was marginally lower than expectations.
During the year, the solar portfolio achieved a Net PR of 76.16% (FY 2021/22:
79.38%) against a forecast of 80.63%, due to availability issues driven primarily
by supply chain challenges and capital improvement works. Consequently,
generation yield was 959.88MWh per MW of installed capacity, marginally
lower than recorded in the previous year.
Table 1. Summary of Solar Fleet Performance for 2022/23:
FY
2022/23
Actual4
FY
2022/23
Forecast
Delta to
Forecast
(% change)
FY
2021/22
Actual
Delta 22/23
to 21/22
Actual (%
change)
754.2
-
-
642.9
+17.3%
1,260.7
1,189.9
+6.0% 1,222.7
+3.1%
702,428 703,664
-0.2% 624,651 +12.5%
959.9
959.9
0.0%
971.6
-1.2%
£223.7
£187.1
+19.5% £132.4
+68.9%
Portfolio Total
Installed Capacity
(MW)
Weighted Average
Irradiation (Hrs) 1,2
Total Generation
(MWh)
Generation Yield
(MWh/MW)
Average Total Unit
Price (£/MWh) 3
Notes to Table 1.
1. Periods of irradiation where irradiance exceeds the minimum level required for
generation to occur (50W/m2)
2. Excluding grid outages and significant periods of constraint or curtailment that were
outside the Company’s control (for example, DNO-led outages and curtailments)
3. Average Total Unit Price 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
4. Includes 46.4MW of solar assets acquired in December 2022, not included in the
published 2022/23 interim results
Total Revenue for the period was £157.2m, 19% higher
than forecast and 121% higher than the previous FY. PPA
agreements which commenced during the Period were the
principal reason for increased revenue, as the average power
price rose from £57/MWh in the previous FY to £141/MWh,
a 147% increase.
Operational costs for the Period (incorporating all fixed,
contracted costs such as lease payments, O&M fees etc.)
totalled c.£23m, including expenditure associated with the
optimisation & enhancement projects (see below).
Solar PV Optimisation & Enhancement Activity
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 £4m to £5m annually over the next decade) is
irradiation (typically
completed during months of
October to February).
low
A rolling capital investment programme is essential for
optimising the long-term operational performance of the
portfolio. The Investment Adviser has identified that one
of the key causes of lower-than-expected availability is a
long lead time for spare parts for major High Voltage (‘HV’)
components, notably central inverters, due to industry
demand from construction projects and other operators’
repowering works.
Two significant string-inverter repowering projects and the
replacement of 3 transformers at Hall Farm were completed
during the Period to improve both current and future
performance of the assets. Further inverter repowering and
optimisation projects are planned for FY 23/24.
As at 30 June 2023, 494.6 MW (30 June 2022: 401 MW) of
the PV portfolio have leases that allow for terms beyond 30
years (being 66% of the solar PV portfolio), of which 338.2
MW (100% of applications successful) benefit from planning
terms in excess of 30 years, with the Investment Adviser
continuing to pursue lease extensions on the remaining
assets in the portfolio.
14
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS Onshore Wind Performance
As at 30 June 2023, 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 58.4MW.
During the reporting period, the portfolio generated 133.8
GWh, -16.2% below forecasts. This was largely due to
reduced wind resource, combined with lower than forecasted
availability during H1. Availability improved considerably
during H2 following the replacement of the O&M provider
for Delabole Wind Farm in December 2022. Significant
liquidated damages were further recovered from the previous
O&M provider for the underperformance at Delabole.
The average onsite wind speeds recorded were similar to
FY 2021/22, which was a period of historically low wind
resource.
Table 2. Aggregated Wind Portfolio Performance, FY 2022/23
FY
2022/23
Actual
FY
2022/23
Forecast
Delta to
Forecast
(% change)
FY
2021/22
Actual
Delta 22/23 to
21/22 Actual
(% change)
Portfolio Total Installed Capacity (MW)
58.4
-
-
30.0
+94.5%
Total Generation (MWh)
133,804.0
159,586.3
-16.2%
62,795.6
+113.1%
Generation Yield (MWh/MW)
2,292.7
2,734.5
-16.2%
2,092.5
+9.6%
Average Total Unit Price (£/MWh) 1,2
208.3
204.2
+2.0%
216.7
-3.9%
Notes to Table 2.
1. Actual & Forecast Average Total Power Price exclude ROC
Recycle estimates
2. Average Total Power Price
includes LDs, Insurance &
Mutualisation Rebate
The portfolio achieved a Generation Yield of 2,293 MWh per
MW of installed capacity, equivalent to a 9.6% increase from
FY 2021/22, largely due to the improved plant availability.
Despite
lower than forecast generation, the portfolio
provided total revenues of £27.9 m, with an average revenue
per MWh of £208.3, 2% above forecast.
Onshore Wind Optimisation & Enhancement Activity
In Northern Ireland, 17 of the 29 small-scale turbines have
been identified for repowering with replacement EWT 250kW
turbines. This will increase efficiency and output, whilst
maintaining their respective NIRO accreditation status.
As at 30 June 2023, seven turbines have been repowered
and returned to operation, with a further nine having
received planning approval for repowering, with a new 25-
year term. A further two projects have received a turbine
delivery, with repowering planned for FY 2023/24. Planning
applications for the remaining projects have been submitted
to the relevant Local Planning Authorities.
General Portfolio
OFGEM Audits
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
certain assets that have been selected, at random, for audit.
All OFGEM audits completed to date have been classified as
‘satisfactory’, with the respective assets’ accreditation being
fully compliant.
Health & Safety Activities
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,
immediately
following acquisition.
for example) audited
Cyber Security
The Investment Adviser arranged penetration testing of
48.2% of the solar PV portfolio (of those plants above 2MW)
by a specialist external consultant, as part of a periodic cyber
security review. Whilst the security across the portfolio was
satisfactory, the Investment Adviser has arranged for all the
recommendations to further enhance cyber security to be
undertaken, including both hardware and software upgrades,
with works to commence shortly. The remainder of the PV
portfolio and all wind farms will undergo similar penetration
testing in FY 2023/24.
.
15
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS
REPORT OF THE INVESTMENT ADVISER
ANNUAL REPORT AND FINANCIAL STATEMENTS
SOLAR PV AT ELMS
3.Power Purchase Agreements
The Company actively monitors power market
conditions, ensuring that contract renewals are
spread evenly through any 12-month period with
competitive tender processes on both fixed and
floating price options run for each PPA renewal in
the 3 months prior to the commencement of a new
fixing period.
Flexibility within the Company’s capital structure
enables PPA counterparties to be selected on a
competitive basis and not influenced by lenders
requiring long term contracts with one offtaker.
This means the programme of achieving value
and diversification from contracting with multiple
counterparties (which in turn reduces offtaker risk)
is executed for the benefit of shareholders and not
the lenders.
By rolling PPA fixes during the year and targeting
the most liquid area of the power market (one to
three years) the Company was able to complete
a number of fixes during periods when wholesale
power prices were at their peak.
Evidence of this is reflected in the BSIF average
seasonal weighted power price, which for the 12
months ending 30 June 2023 increased by 147%
from the 12 months ending 30 June 2022, rising
from £57/MWh to £141/MWh. The rise in the BSIF
average seasonal weighted power price is a result
of the 156.2MW fixed secured during the reporting
period from January 2023, at an average fixed price
of £118.9/MWh, combined with favourable pricing
from contracts struck in the period preceding the
end of December 2022.
As at 30 June 2023, the average term of the fixed-
price PPAs across the portfolio is 26.2 months
(FY 2021/22: 25.8 months) and the Company
has a price confidence level of 92% to December
2023 and 86% to June 2024 (including subsidy
revenues), representing the % of the BSIF portfolio
that already has a fixed price in place and thus no
exposure to power market uncertainty. Looking
ahead, the strategy has also secured power
fixes and thus revenue certainty, at levels that
are materially in excess of the latest forecaster
expectations.
Table 3. PPA Fixed Power Prices (Average Vs Average for Fixes completed during Reporting Period)
Prices as at:
1 July 23
1 Jan 24
1 July 24
1 Jan 25
BSIF Portfolio Weighted Average
Contract Price (£/MWh)
158.9
(716MW)
173.5
(678MW)
149.2
(473MW)
160.8
(437MW)
Blended Average of forecasters
nominal terms power prices per
30 June 2023 valuation (£/MWh)
109
117
117
104
Footnote: MW stated in the BSIF Portfolio Weighted Average Contract price refers to the total amount of
the portfolio fixed for that period.
The result is the Investment Adviser believes its PPA policy is the best strategy for Shareholders,
who are looking for stable revenues and forecastable, sustainable dividends with high visibility
of revenues on a rolling multiyear basis. It is this approach that has delivered almost a decade of
sector leading dividend cover (covered by current earnings and post debt amortisation).
16
REPORT OF THE INVESTMENT ADVISER
ANNUAL REPORT AND FINANCIAL STATEMENTS
INSPECTIONS AT YELVERTOFT
4. Power Market Summary
Since December 2022, power markets have begun to stabilise after record highs were
seen in August and December 2022, due to Russia’s continuing war against Ukraine
exacerbating concerns surrounding gas supplies to Europe ahead of Winter 2023.
Chart 1. UK Natural Gas & Wholesale Power Prices (1 July 2020 – June 2023)
Source data: Bloomberg
Gas prices fell from their recent historic highs, as
supply increased as more liquefaction facilities
become available, with power prices predominantly
following gas markets. This is demonstrated in
Chart 2, with day-ahead baseload power prices
falling from highs of £180/MWh in mid-December
2022 to lows of £86/MWh at the end of June
2023.
In relation to medium-term market expectations,
the gas market is expected to rebalance by the mid-
2020s, with prices set to fall back to levels seen
prior to COVID. As a result, the baseload wholesale
power prices are forecast to fall by 23% on average
from 2023 to 2030, driven by lower gas prices.
Over the Company’s ten year history, building
a proprietary pipeline and then funding the
construction of new projects has been at the
heart of its success. Entering earlier in the value
chain brings some additional risk but if managed
appropriately, we believe it also allows us to
control the quality of projects far better, which
ultimately brings enhanced risk-adjusted returns to
Shareholders.
5. Proprietary Pipeline
Over the past four years, the Company has
continued to implement its new build strategy
across the solar value chain to ensure that
Bluefield Solar continues to build its market
share amongst UK solar power producers. We
have signed co-development agreements to
fund new sites. We have also expanded our
strategy to battery storage, which will enable
the diversification of the BSIF’s revenues and
allow us to monetise the expected increases in
volatility of power prices in the future.
This focus on development activities has enabled
the Company to build up a significant pipeline
of assets which can be built over the next five
years. As our projects progress, we are working
with selected construction contractors to ensure
that projects are designed and built to a high
specification for long term performance.
We are pleased to report that the new build
strategy has delivered well on its objectives
thus far: the development pipeline now stands
at over 1.4 GW and the first development to be
funded, Yelvertoft, - is progressing well through
construction. This 49MW project is set to be
connected to the grid towards the end of 2023
and it has entered into a Contract for Difference
(“CfD”) for its output.
The following sections provide a more detailed
update on both our construction and development
programmes.
17
Construction Programme
As at the end of the period, BSIF had solar assets
with a capacity of 412MW and battery storage
assets with 183MW capacity
fully
consented and are in pre-construction. The projects
have connection dates between 2023 and 2028.
that are
Of these the first projects to enter the construction
phase are Yelvertoft Solar Farm, a 49MW solar
PV park in Northamptonshire and Mauxhall Farm
Energy Park, a c.44MW solar PV project in North
East Lincolnshire. Yelvertoft signed a fixed price
EPC contract with Bouygues in September 2022
and is targeting operation in Q4 2023, while
Mauxhall Farm signed a fixed price EPC contract
with EQUANS in March 2023 and is expected to be
operational in Q2 2024. Mauxhall Farm is planned
to be a co-located project and construction of a
25MW battery energy storage scheme is expected
to commence shortly after the solar plant has been
commissioned.
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.
Projects with CfDs
In July 2022, the Investment Adviser successfully
secured CfDs on 62.4MW of ready to build PV plants
(Yelvertoft, Romsey extension and Oulton extension).
By securing a CfD contract, the plants will benefit
from index-linked (to CPI) revenues over a 15-year
duration at the AR4 solar PV strike price of £45.99/
MWh (in 2012 equivalent prices) or c.£64/MWh (in
2023 equivalent prices). The contracts commence
from 31 March 2025 and the strike prices will be
adjusted appropriately for CPI.
Current pipeline status and valuation
Development pipeline (MW). Total = 1,429MW
Development pipeline Value (£m)
Construction
Post period BSIF achieved allocations of CfDs on all
4 projects submitted to AR5.
Consented
(pre-construction)
Development Programme
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 950MW of solar and over 470MW
of batteries has been built up across 28 projects.
BSIF has a 5% investment limit in pre-construction
development stage activities, while less than 1% is
currently committed.
to pre-construction,
Currently, no value is attributed to projects without
planning consent. Once developments receive
planning consent, however, and move from the
development stage
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 discernible value beyond the direct costs of
development.
The current pipeline status and valuation
summarised in the graphic adjacent.
is
In planning
Development
(pre-planning
submission)
Project progress by technology
Construction
Consented
Solar
Battery
Development
(pre-planning
submission)
In planning
Consented
(pre-construction)
Construction
18
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS 6. Analysis of underlying earnings
Underlying Portfolio Earnings
The total generation and revenue earned in the Period by the
Company’s portfolio, split by subsidy regime, is outlined below:
Full year to
30 June 23
(£m)
Full year to
30 June 22
(£m)
Full year to
30 June 21
(£m)
Full year to
30 June 20
(£m)
Generation
(MWh)
PPA
Revenue (£m)
Regulated
Revenue (£m)
Subsidy
Regime
FiT
4.0 ROC
2.0 ROC
66,874
12,773
23,524
1.6 ROC
116,884
1.4 ROC
296,183
1.3 ROC
71,800
1.2 ROC
140,384
1.0 ROC
0.9 ROC
32,838
74,972
6.0
1.6
1.6
14.9
39.2
9.8
21.6
3.6
9.1
12.1
3.0
2.9
11.3
25.1
5.7
11.2
1.9
3.8
Portfolio Revenue
184.4
111.4
Liquidated damages and Other Revenue*
Net Earnings from Acquisitions in the period
Portfolio Income
Portfolio Costs
Project Finance Interest Costs
Total Portfolio Income Earned
Group Operating Costs#**
Group Debt Costs
Underlying Earnings
Group Debt Repayments
Underlying Earnings available for distribution
5.4
0.0
189.8
-36.3
-13.6
139.9
-25.4
-6.1
108.4
-18.3
90.1
1.6
0.0
113.0
-27.8
-4.7
80.5
-8.3
-5.4
66.8
-13.8
53.0
73.1
2.0
5.1
80.2
-17.6
-1.8
60.8
-7.5
-4.7
48.6
-9.3
39.3
65.9
3.8
0.0
69.7
-14.1
-0.6
55.0
-5.8
-4.6
44.6
-9.2
35.3
Total
836,232
107.4
77.0
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.
Bought forward reserves
Total funds available for distribution -1
Target distribution***
The key drivers behind the changes in Underlying Earnings between FY
2022/23 and FY 2021/22 are the combined effects of the acquisitions
within the Period and higher PPA pricing.
Actual Distribution -2
Underlying Earnings carried forward (1-2)
Full year to
30 June 23
(£m)
Full year to
30 June 22
(£m)
Full year to
30 June 21
(£m)
Full year to
30 June 20
(£m)
20.9
111.0
51.4
52.6
58.4
13.4
66.4
45.2
45.5
20.9
8.4
47.7
34.3
34.3
13.4
2.3
37.6
29.3
29.3
8.4
* Other Revenue includes ROC mutualisation, ROC recycle late payment CP20, insurance proceeds, O&M settlement agreements and
rebates received.
# Includes the Company, BR1 and BSIFIL (the UK HoldCos) and any tax charges within the UK HoldCos.
** Excludes one-off transaction costs and the release of up-front fees related to the Company’s debt facilities
*** Target distribution is based on funds required for total target dividend for each financial period.
19
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS The table below presents the underlying earnings on a ‘per share’ basis.
Full year to
30 June 23
(£m)
Full year to
30 June 22
(£m)
Full year to
30 June 21
(£m)
Full year to
30 June 20
(£m)
Actual Distribution
Total funds available for distribution
(including reserves)
52.6
111.0
45.5
66.4
34.3
47.7
29.3
37.6
Average Number of shares in year*
611,452,217
554,042,715
429,266,617
370,499,622
Target Dividend (pps)
8.40
8.16
8.00
7.90
Total funds available for distribution (pps)
18.13
12.22
11.19
10.13
Total Dividend Declared & Paid (pps)
Reserves carried forward (pps) **
8.60
9.53
8.20
3.39
8.00
2.67
7.90
2.23
* Average number of shares is calculated based on shares in issue at the time each dividend was declared.
** 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).
WIND TURBINES AT HAMPOLE
7. NAV and Valuation of the Portfolio
The Investment Adviser is responsible for advising the Board in
determining the Directors’ Valuation and, when required, carrying out
the fair market valuation of the Company’s investments.
Valuations are carried out on a quarterly basis at 30 September,
31 December, 31 March and 30 June each year, with the Company
committed to conducting independent reviews as and when the Board
believes it benefits Shareholders.
As the portfolio comprises only non-market traded investments, the
Investment Adviser has adopted valuation guidelines based upon
the IPEV Valuation Guidelines published by the BVCA (the British
Venture Capital Association). The application of these guidelines
is considered consistent with the requirements of compliance with
IFRS 9 and IFRS 13.
Following consultation with the Investment Adviser, the Directors’
Valuation adopted for the portfolio as at 30 June 2023 was £1,018.4m
(30 June 2022, £939.9m).
The table below shows a breakdown of the Directors’ valuations over
the last three financial years:
Valuation Component (£m)
June 2023
June 2022
June 2021
DCF Enterprise Value of
Portfolio (EV)
1,195.2
1,180.6
770.1
Consented Solar and Battery
Storage Development rights
67.5
13.8
1.8
Deduction of Project Co debt
-430.8
-390.3
-119.8
Project Net Current Assets
186.5
135.8
42.4
Directors’ Valuation
1,018.4
939.9
694.5
Portfolio Size (MW)
812.6
766.2
613.0
20
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS Discounting Methodology
The Directors’ Valuation is based on the discounting of post-tax,
projected cash flows of each investment, based on the Company’s
current capital structure, with the result then benchmarked against
comparable market multiples, if relevant. The discount rate applied
on the project cash flows is the weighted average discount rate. In
addition, the Board continues to adopt the approach under the ‘willing
buyer/willing seller’ methodology, that the valuation of the Company’s
portfolio be appropriately benchmarked to pricing against comparable
portfolio transactions.
Key factors behind the valuation
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 page 22):
(i) The RPI inflation forecast for 2023 has been increased to 7%
(5.5% in December 2022 and 3.4% in June 2022), reflecting
expectations that UK inflation will remain higher for longer. As
evidence builds that inflation will fall during H2 2023, a rate of
3.5% has been applied for 2024 (2024 inflation forecast previously
used: 4.0% in December 2022 and 3% in June 22);
(ii) The portfolio discount rate has been increased to 8.00% (7.25%
in December 2022 and 6.75% June 2022). This is a result of
increases over the period in both the Bank of England base rate
(rising to 5.0% as at 30 June 2023 , from 3.5% as at 31 December
2022) and 15 year gilt yields (c. 4.8% as at 30 June 2023, from c.
3.9% as at 31 December 2022);
(iii) Inclusion of the latest forecasters’ curves as at 30 June 2023, and
the corresponding impact of the Electricity Generator Levy (“the
Levy”) - a 45% tax on the extraordinary returns made by electricity
generators, announced late in 2022, following sharp increases
in electricity prices. The Levy will be in place from 1 January
2023 until 31 March 2028 and is applied to returns from sale of
electricity in excess of a benchmark price of £75 per MWh, indexed
to CPI from April 2024;
(iv) The value attributed to BSIF’s development and construction
portfolio has risen during the Period, reflecting sites receiving
planning permission and further progress and investment into
construction projects;
(v) Working capital has grown in the period to June 23 reflecting
higher power prices being captured from the Company’s successful
PPA strategy.
The curves used in the 30 June 2023 Directors’ Valuation reflect the
following key updates:
By reflecting the core factors above within the Directors’ Valuation for
30 June 2023, the EV of the operational portfolio is £1,195.2m (June
2022: £1,180.6m) with the effective price for the solar component of
£1.35m/MW (June 2022: £1.38m/MW). These metrics sit within the
pricing range of precedent market transactions and the ‘willing buyer-
willing seller’ methodology upon which the Directors’ Valuation is based.
Power Prices
A blended forecast of three leading consultants is used within the
latest Directors’ Valuation , as shown in the graph below. This is based
on forecasts released in the quarter to end June 2023. For illustration
purposes, the graph below also includes the blended curve used in the
Company’s accounts for the year ended 30 June 2023.
Change in blended power price forecasts
1. Short-term European fuel prices – gas and coal – have fallen amid
lower gas demand, higher gas storage levels and robust LNG
deliveries, with a similar trend reflected in the wholesale power
price curve;
2. Higher renewable generation capacity deployment levels in the
medium term (with ambitions for up to c.50GW offshore wind
by 2030) as the UK strives to meet its net zero targets and fully
decarbonise its power system by 2035; and
3. Annual demand for power in Great Britain, driven principally by
electrification of heat and transport, is expected to rise from
292TWh in 2023 to 438TWh by 2035.
s
e
c
i
r
p
3
2
0
2
l
a
e
r
-
h
W
M
/
£
Please note, the blended forecast varies depending on whether the asset is a solar or a wind project, reflecting different forecasts for technology
specific capture rates. The solar forecast is shown in the chart on this page.
21
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS
Directors’ Valuation and NAV Movement (£m)
The main contributors to the increase in the Directors’ Valuation from 30 June 2022 to 30 June 2023 were an increase in
power price forecast curves provided by the Company’s three independent advisers, a new acquisition, change in development
portfolio valuation (8.6pps) and updated near-term inflation assumptions.
Directors’ Valuation movement
(£million)
As % of
valuation
30 June 2022 Valuation
939.9
New investments acquired
59.4
Development uplift
52.8
6.3%
5.6%
Cash receipts from portfolio
(52.6)
(5.6%)
Power curve updates
(incl. PPAs)
Inflation updates
76.6
17.1
Discount rate change
(44.9)
Levy tax impact
(39.8)
Balance of portfolio return
9.9
8.1%
1.8%
(4.8%)
(4.2%)
1.1%
30 June 2023 Valuation
1,018.4
8.3%
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.
22
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS Reconciliation of Directors’ Valuation to Balance sheet
BALANCE AT YEAR END
Category
30 June 2023 (£m)
30 June 2022 (£m)
Directors’ Valuation
1,018.4
Portfolio Holding Company Working Capital
(12.5)
939.9
(13.6)
30 June 2021
(£m)
694.5
26.4
Portfolio Holding Company Debt
(153.0)
(70.0)
(250.6)
Financial Assets at Fair Value per
Balance sheet
Gross Asset Value
Gearing (% GAV*)
852.9
856.3
1,438.0
1,316.7
41%
35%
470.3
840.7
44%
* GAV is the Financial Assets, as at 30 June 2023, at Fair Value of £852.9m plus RCF of £153.0m and 3rd party
portfolio debt of £430.8m (giving total debt of £583.8m).
Directors’ Valuation sensitivities
Valuation sensitivities are set out in tabular form in Note 8 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.
8. Financing
Debt Strategy
Since its IPO the Company has focused on a simple and defensive
approach to debt. This means having debt agreements that have,
primarily, fixed interest rates and are amortising. Debt split into (1)
long-term asset-level debt, and (2) revolving credit facility at fund-
level for short-term funding. Debt in the portfolio is generally not
subject to stringent lender requirements on PPAs, allowing BSIF to
take advantage of more competitive PPA pricing.
The Company’s weighted average cost of long-term debt is 3.5%
and is largely locked-in via fixed interest rates. Whilst BSIF has some
index-linked debt, it also has significant levels of RPI linked revenues,
leaving the Company a net beneficiary of inflation.
The fund’s revolving credit facility (RCF) is the only floating-rate debt
instrument in the portfolio and represents 26% of the total debt
balance. 80% of asset-level debt has a fixed interest rate. 20% of
principal for long-term debt is inflation-linked.
Revolving Credit Facility
On 22 June 2023, the Company agreed a £110 million increase to
its existing committed £100 million revolving credit facility (‘RCF’),
bringing the total committed amount to £210 million. The facility also
has an uncommitted accordion feature allowing it to be increased
by up to a further £30 million. As part of the increase, the Company
has sought to broaden the lender group through the introduction of
Lloyds Bank Plc, alongside the existing lenders RBS International and
Santander UK. The term of the facility has been extended to May 2025
and the facility’s margin remains unchanged at 1.9%.
As at 30 June 2023 the Company’s subsidiary BR1 had drawn £153m
from its RCF.
External Debt
Excluding the Company’s RCF, total outstanding loans to third-party
lenders as at 30 June 2023 total £431m, 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 3.54%.
23
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS Debt
Principal Outstanding (£m)
Maturity
% of Interest Fixed(1)
All-in Interest Rate
Syndicate
Fund RCF
Bayern LB
Project Finance
Syndicate
Project Finance
Aviva (fixed)
Project Finance
Aviva (index-linked)
Project Finance
Macquarie (fixed)
Project Finance
Macquarie
(index-linked)
Project Finance
Gravis (index-linked)
Project Finance
NatWest
Project Finance
Total/Wtd Avg
Total/Wtd Avg
excl. RCF
153
May-25
0%
8.00%
8
72
88
67
7
20
38
130
584
431
Sep-29
100%
5.50%
Dec-33
100%
3.50%
Sep-34
100%
2.88%
Sep-34
100%
3.70%
Mar-35
100%
4.60%
Mar-35
100%
4.70%
Jun-35
100%
6.48%
Dec-39
85%
70%
95%
2.70%
4.71%
3.54%
NatWest 3-year term loan maturity and refinancing
On 2 May 2023, the Company announced the re-financing of its £110
million three-year term loan with NatWest.
The original loan, 75% hedged with a swap at circa 0.35% over a
notional 18-year period, had a maturity of September 2023 and has
been increased to £130 million and extended in maturity to December
2039.
Hedging has been put in place for the tenor of the loan on £110 million,
at an effective all-in cost of c.2.7% (being margin and swap rate).
The financing is secured against the UK-based portfolio of 31
operational PV plants with a total installed capacity of 139MW and
benefitting from attractive subsidies; 29 of the assets are accredited
under the ROC regime with tariffs ranging from 1.2 - 2.0 ROCs, while
two are accredited under the FiT scheme.
The additional debt of £20 million is being used to provide financing
for the construction of Yelvertoft, the Company’s 49MW CfD-backed
solar PV project in Northamptonshire. Once construction is complete,
expected in Q4 2023, the Company will review whether to enter
hedging arrangements on this tranche.
GAV Leverage
The Group’s total outstanding debt, as at 30 June 2023, was c.£584
million and its leverage stands at c.41% of GAV (35% as at 30 June
2022) within the 35% - 45% preferred range the Directors have
previously outlined as desirable for the Company.
(1) Index-linked debt treated as fixed for the purposes of this table as proportion fixed represents interest rate risk only
24
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS
9. Market Developments
UK renewable generation capacity and deployment
Latest Government data shows that UK solar photovoltaic
(PV) capacity stands at around 15GW, across c.1.3 million
installations. Of this amount, around 7.3GW (c.48% of the
total solar capacity in the UK) and 5.1GW (34%) is accredited
under the RO and FiT schemes, respectively, and c.2.4GW
(16%) is unaccredited. Onshore and offshore wind installed
capacity stands at around 15.2GW and 13.9GW, respectively.
The UK has 2.8GW of operational battery storage capacity,
according to data from energy association RenewableUK.
The UK’s total renewable generation capacity is projected to
continue to grow over the coming years as the Government
strives to meet its net zero targets and meet power demand
from the electrification of the domestic heat, transport and
industrial sectors. Deployment is expected to be supported
by policies such as the CfD scheme, which is described in
more detail in the next section of this report.
In March 2023, the UK Government stated its ambition to
increase solar capacity up to 70GW by 2035 and signalled
its support for ground and rooftop solar technologies on
brownfield, industrial and low/medium grade agricultural
land. The Government’s newly created Solar Taskforce is
expected to publish a roadmap next year to drive forward its
solar growth ambitions. The Government also aims to develop
up to 50GW of offshore wind by 2030.
The chart below illustrates the distribution of total installed
capacity across different renewable generation technologies
at the end of the first quarter of 2023 (the latest data available
at the time of this report) compared with a year earlier.
Secondary market transactions,
development and construction activity
Transactional activity in the UK renewables market has eased to some
extent, as inflation and higher interest rates have increased investor
uncertainty.
Acquisitions across established technologies have totalled c.150MW
in solar, c.1.5GW in offshore wind and c.140MW onshore wind in the
Period2.
Activity in the UK development market has continued to be 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 in upcoming CfD auction
rounds. Development activity has been particularly noticeable in the
battery storage area as developers seek to provide solutions to help
manage the grid as larger quantities of intermittent renewables are
added to the system. Solar development activity has, however, slowed
recently, primarily due to grid constraints.
Some construction activity has been observed in the UK solar and
battery storage area, although this is against a backdrop of supply
chain challenges and rising interest rates. Converting the UK’s
significant development pipeline into operational solar projects over
the next five years will require developers to adopt an innovative
approach to overcome current macroeconomic challenges as well as
challenges surrounding higher construction costs and grid connection
lead times.
With 754MW of operational solar capacity, the Company maintains a
strong position within the UK solar market, owning about 7.6% of the
country’s utility-scale solar PV capacity.
Source: UK government Department for Business, Energy & Industrial Strategy *Anaerobic Digestion includes sewage sludge digestion,
animal biomass
2. According to Bloomberg New Energy Finance and Bluefield internal data
25
REPORT OF THE INVESTMENT ADVISERANNUAL REPORT AND FINANCIAL STATEMENTS REPORT OF THE INVESTMENT ADVISER
ANNUAL REPORT AND FINANCIAL STATEMENTS
10. Regulatory Environment
The regulatory environment remains under the spotlight
as the Government seeks to support renewable energy
deployment under particularly
tough macroeconomic
conditions, including high inflation and rising interest rates.
Key themes are outlined below.
the Government
is also considering
Further ahead,
introducing non-price factor
legislation for future CfD
allocation rounds (AR7 onwards, 2025-30). This would
encourage bid applicants to balance overall costs with other
including sustainability and enabling
non-price factors,
system flexibility and operability.
Update on Contracts for Differences (CfD)
In July 2022, the UK Government awarded support for
c.10.8GW of new build renewable generation capacity
through its CfD scheme, allocation round 4 (AR4) – with
c.7GW awarded for offshore wind projects, c.2.2GW for solar
and c.0.9MW for onshore wind. The overall budget for AR4 –
across pot 1-3 technologies – was £295m per year.
The UK Government published the CfD allocation round
5 (AR5) results on 8 September 2023. A total of 3.7GW
of renewable energy projects, with expected deliveries in
2025-28, won contracts with strike prices at or close to the
administrative strike price (ASP) caps set by the government.
Almost 2GW of solar projects won contracts at the maximum
ASP of £47/MWh (in 2012 terms), of which almost 1.4GW is
due to come on line in 2027-28 – the final target delivery
year for the auction. Onshore wind – including remote island
wind – won 1.7GW of contracts at £52.29/MWh, while no
bids were successful from offshore wind. This was the first
time since the launch of the CfD scheme in 2015 that no
new offshore wind projects won contracts. In the run-up to
the AR5 auction, many potential offshore wind participants
expressed concerns over the low ASPs particularly given
the high inflationary and cost of capital backdrop. The ASP
for offshore wind was set at £44/MWh (in 2012 prices) in
AR5, down from £46/MWh in AR4. Almost 7GW of offshore
wind technology was successful in AR4 which closed in
July 2022.
UK Carbon Market
In July 2023, the UK Emissions Trading Scheme (UK ETS)
Authority announced several reforms to tighten limits on
power, industrial and aviation sector emissions which are
scheduled to become effective in 2024. The Authority also
plans to extend the sector coverage of the UK ETS from
2026-28 which could incentivise industries to invest in
lower-carbon footprint renewable technologies.
Electricity Generator Levy
Please refer to ‘Key factors behind the valuation’ on page 21.
Review of Electricity Market Arrangements
The Government launched its Review of Electricity Market
Arrangements (REMA) consultation last summer to identify
the necessary reforms needed to transition to a cost
effective, lower carbon and secure electricity system. In
March 2023, a summary of the 225 consultation responses
was published, with several wholesale energy market
reforms still under consideration, including zonal and
nodal market pricing. The Government intends to publish a
second REMA consultation later this year.
]
Bluefield Partners LLP
27 September 2023
NI TURBINE PORTFOLIO
26
Environmental,
Social and
Governance
Report
1. Introduction
An introduction from the Chair
Across the globe, the impacts of climate change are becoming all too
apparent. In July, on the same day that wildfires ravaged Sicily, in Milan planes
were grounded by hailstones the size of tennis balls. This summer, Greece,
Algeria, and Tunisia are amongst the many countries that have experienced
an unprecedented level of wildfires, exacerbated by extreme heat and arid
conditions, with devastating social and economic impacts. Climate change is
often thought of as something which will occur in the future, but it is happening
now, and its effects will amplify as time goes on. As President Biden said on
a recent visit to hurricane-stricken Florida, “Nobody intelligent can deny the
impact of the climate crisis anymore. Just look around.”
As we move towards a Net Zero future, the Company plays a key role in
providing low carbon energy to a decarbonising economy. However, the
transition away from fossil fuels gives rise to challenges regarding energy
security and affordability, heightened but also accelerated by the fallout from
the Russian invasion of Ukraine. The UK needs rapid, large-scale deployment
of renewable infrastructure to reach Net Zero, which will also deliver energy
security and stabilise energy pricing.
27
ANNUAL REPORT AND FINANCIAL STATEMENTS ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
ANNUAL REPORT AND FINANCIAL STATEMENTS
As growth of the renewable energy sector continues
to accelerate, the solar power industry must take
accountability and responsibility for the impacts
of its own operations. We believe consideration
of material environmental, social and governance
(ESG) factors is integral to the long-term success
of any investment fund, contributing to both risk
management and value creation.
the Company developed
its ESG
Last year
strategy, which
included a comprehensive set
of commitments and KPIs. Delivery of these
commitments has enhanced the Company’s ESG
governance, including further developing supply
chain management processes, and putting new
policies in place. During the coming year, we
will enact these policies across the Company’s
operations, as well as continuing to deliver
additional value across our portfolio through our
nature and social initiatives. Building the Company’s
climate change resilience will also remain a priority.
The Company continues to integrate ESG across
the asset
lifecycle, critically evaluating and
improving ESG processes, and with sharp focus
on risks and opportunities most material to the
Company’s operations. As the ESG landscape
evolves, the Company will continue to ensure
compliance with appropriate ESG regulation and
reporting frameworks, ensuring ESG achievements
and challenges are reported transparently to
stakeholders. Doing so will support the Company
in achieving its purpose of delivering renewable
energy responsibly, with the ambition not only to
offer a sustainable product, but also to achieve
sustainability throughout its operations.
An introduction
from the Investment Adviser
The Company has made great progress with its ESG
strategy during the reporting period. In addition to
being the first year implementing, monitoring, and
measuring the Company’s ESG performance against
its KPIs, it was also the first time the Company
reported in line with the Level 2 requirements of
the EU’s Sustainable Finance Disclosure Regulation
(SFDR) and produced its first Principal Adverse
Impact (PAI) report.
In a year of ‘firsts’, the Investment Adviser has
taken a robust approach to both the Company’s
ESG commitments and regulatory requirements,
reporting comprehensively and transparently. The
Investment Adviser supported the Company with
collection of a wide range of sustainability data,
enabling the Company to make its most quantitative
ESG disclosures to date. By continuing to support
and work collaboratively with service providers, we
hope to increase the accuracy and quality of data
over time.
Bluefield’s ESG team has grown and ESG has
continued to be embedded into every aspect of
our operations. The Bluefield group structure, with
four separate but complementary businesses,
facilitates this process, and enables the Company
to benefit from the holistic management of ESG
across the asset lifecycle. Bluefield employees
share a passion towards sustainability and their
dedication is reflected in the Company’s successes
this year.
Having refreshed its ESG commitments, we look
forward to supporting the Company with the second
year of its ESG strategy, ultimately contributing to
its long-term value.
2. 2023 ESG Highlights
Powered the equivalent of over 288,000 UK homes with
renewable electricity.3 (2022: 215,000)
Achieved over 173,000 tonnes of CO2e savings.4
(2022: 120,000)
Undertook physical scenario analysis for the first time
to examine the potential impacts of extreme heat on the
Company’s solar assets.
Adopted a Human Rights Policy, Sustainable Procurement Policy,
Waste Management Policy, and Supplier Code of Conduct.
The Board of the Company established an ESG Committee.
Conducted thirty Biodiversity Net Gain (BNG) assessments
across the operational portfolio.
Undertook ten independent ecological assessments.
Delivered seventeen in-school workshops and eight solar site
visits to schools surrounding the Company’s assets.
John Scott,
Chair
James Armstrong,
Managing Partner of Bluefield Partners LLP
3. Based on Ofgem’s Typical Domestic Consumption Values.
4. Based on generation data aligned with an appropriate Government CO2e conversion factor.
28
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
ANNUAL REPORT AND FINANCIAL STATEMENTS
Covering the reporting period ending 30 June 2023:
3. ESG Landscape
ESG Context
As a renewable energy business, the Company is actively contributing
towards the UK’s Net Zero target, but this does not remove the
Company from its broader ESG impacts and responsibilities. As
such, the Company’s ESG strategy has identified a range of priority
topics across ESG areas, all of which will need to be considered as
part of the Company’s responsible investment approach. These have
been integrated into a comprehensive framework through which the
Company can deliver value for its stakeholders, and which will support
delivery of long-term returns for shareholders.
ESG Regulation & Framework Alignment
SFDR & EU Taxonomy
Please refer to Periodic Annex IV and the Company’s website for
further information regarding its ongoing compliance with the SFDR
and EU Taxonomy.
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
sustainability-related 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.
Task Force on Climate-related Financial Disclosures (TCFD)
The Company has voluntarily adopted the recommendations of the
TCFD and its second TCFD report is presented on p.43.
UK Sustainability Disclosure Requirements & UK Green Taxonomy
The Company is following progress of the UK Sustainability Disclosure
Requirements (SDR) and UK Green Taxonomy, to ensure it is well
positioned to comply with these new rules and guidance as and when
they come into effect.
Sustainability Disclosure Standards
To better integrate ESG considerations alongside financial report-
ing, the ISSB has recently issued two IFRS sustainability disclosure
standards: IFRS S1 and S2. The Company will assess its alignment
with the requirements of the IFRS standards over coming months, in
preparation for the adoption of these standards by the FCA.
How regulatory requirements have been
embedded within the Company’s ESG strategy.
Regulatory requirements were a key consideration
during development of the Company’s ESG strategy.
As a result, regulatory reporting requirements, such as
PAIs, are integrated within the Company’s commitments
and KPIs. For transparency, the Company will signpost
where information can be found if it sits outside its main
ESG report, for example as part of standalone SFDR
disclosures.
The Company is mindful that regulatory reporting time-
frames, which are typically calendar year, do not run in
tandem with the Company’s financial reporting year. As
a result, to prevent duplicate sets of reporting for each
metric (which may become confusing to stakeholders),
the Company will typically not re-report PAI metrics in
line with its financial year. Instead, stakeholders will be
referred to the PAI statement to obtain this information.
The exception is the Company’s GHG inventory, which is
currently being calculated in relation to both its calendar
and financial year.
4. The Company’s ESG Strategy
The Company’s ESG strategy reflects stakeholder
expectations and has been developed to deliver
a positive impact across the Company’s portfolio
of investments5. Material ESG topics are defined
within each of the Company’s key pillars:
5. Please refer to the Company’s 2022 Annual Report
for further information on the strategy development
process.
29
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
OUR PURPOSE:
RENEWABLE ENERGY, DELIVERED RESPONSIBLY
Driving shareholder value whilst promoting positive environmental
and social impact through our work as a pioneering and responsible
renewables fund. As well as supporting the UK’s Net Zero carbon
ambition, we aim to enhance nature across our sites, to support
the UK in mitigating both the climate and ecological crisis.
OUR ESG VISION:
BSIF is helping to mitigate climate change through decarbon-
isation of the energy sector, whilst delivering long-term dividends
to our shareholders. We match our best-in-class shareholder
returns with a best-in-class approach to environmental, social
and governance aspects. We recognise that being a renewables
fund does not mean that we can remove ourselves from wider
environmental, social, and governance topics, and are conscious
of the potentially harmful impacts that come with being part of the
renewables industry. We have committed to further developing our
robust due diligence processes and requirements of our suppliers
and contractors and we believe that the assets within our fund
have a part to play at the local level as much as at the national
level. We aim to enhance nature at our sites and integrate this in
our efforts in the communities in which we operate, recognising
the interconnection between ecological and climate impact.
ICONS
Figure 1 – the Company’s ESG strategy, including key pillars and priority ESG topics
RENEWABLE ENERGY,
DELIVERED RESPONSIBLY
CLIMATE CHANGE
MITIGATION
Supporting the UK in achieving
its Net Zero Carbon ambition
whilst aligning to the TCFD
recommendations.
PIONEERING POSITIVE
LOCAL IMPACT
GENERATING ENERGY
RESPONSIBLY
Enhancing nature and encouraging
community engagement at the
local level throughout the asset
lifecycle.
Driving ethical practices within
our operations and throughout our
supply chain.
ICONS
ICONS
40
ICONS
UNDERPINNED BY ESG BEST PRACTICE DUE DILIGENCE, PROCESSES & PROCEDURES THAT DRIVE STAKEHOLDER VALUE & OPPORTUNITIES
ICONS
40
ICONS
40
17 ICONS: COLOUR VERSION
17 ICONS: COLOUR VERSION
17 ICONS: COLOUR VERSION
ESG STRATEGY:
ICONS
CARBON EMISSIONS
ICONS
ICONS
NATURE
40
ICONS
ICONS
ICONS
HUMAN & LABOUR RIGHTS
ICONS
40
ICONS
40
The Company’s ambitions will be achieved through delivery of
its ESG strategy, which is centred around three key pillars. ESG
topics are arranged under the three pillars and reflect:
ADVOCATING RENEWABLE
ENERGY
17 ICONS: COLOUR VERSION
DELIVERY PARTNERSHIPS
17 ICONS: COLOUR VERSION
17 ICONS: COLOUR VERSION
17 ICONS: COLOUR VERSION
17 ICONS: COLOUR VERSION
GOOD GOVERNANCE &
BUSINESS ETHICS
COMMUNITY IMPACT &
INITIATIVES
RESPONSIBLE & SUSTAINABLE
PROCUREMENT
• Priority focus areas, as identified by stakeholders
• Regulatory requirements, e.g., EU SFDR, EU Taxonomy and
MANAGING CLIMATE-RELATED
RISKS & OPPORTUNITIES
TCFD
• ESG reporting frameworks, e.g., SASB
These underpin what will become the Company’s biggest value
and impact drivers.
Disclaimer: The content of this publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States
background.
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When an icon is on a square, that square must be proportional 1 x 1.
Do not alter the colours of the SDG icons.
Do not alter the colours of the SDG icons.
Do not alter the colours of the SDG icons.
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
30
ANNUAL REPORT AND FINANCIAL STATEMENTS SDG LOGO FOR NON-UN ENTITIES
HORIZONTAL LOGO
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Key commitments for the FY 23-24 are presented in Table 1 and
a full breakdown of the Company’s commitments and KPIs, and
performance against these, is presented within the ESG Appendix7.
Commitments and KPIs are renewed annually to ensure alignment
with the Company’s evolving ESG approach; the Board approves
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any changes made and monitors ongoing progress. As a result,
several new commitments have been adopted this year and minor
amendments made to some existing commitments and KPIs, based
on the Investment Adviser’s experience of implementing the strategy
over the last twelve months.
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
Do not alter the colours of the SDG icons.
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
Do not alter the colours of the SDG icons.
Do not alter the colours of the SDG icons.
When an icon is on a square, that square must be proportional 1 x 1.
When an icon is on a square, that square must be proportional 1 x 1.
When an icon is on a square, that square must be proportional 1 x 1.
When an icon is on a square, that square must be proportional 1 x 1.
When an icon is on a square, that square must be proportional 1 x 1.
The COLOUR VERSION of the Sustainable Development Goals logo
ed on a white or light grey background. See colour
values to the right.
LIGHT GREY
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Table 1 – Key ESG commitments for the 23-24 financial year
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PILLAR
PMS: Cool Gray 1C
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KEY COMMITMENTS
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
In January 2018, the United Nations launched a revised design of Icon 10, as seen on this page
C 4 M 3 Y 3 K 0
Climate Change
Mitigation
• Report our renewable energy generation annually.
• Invest up to £50,000 in industry collaborations annually to support the energy transition.
• Continue to build our climate resilience and inform our business strategy through climate risk
assessments and scenario analysis.
• New commitment: Develop a Net Zero pathway.
Pioneering Positive
Local Impact
• Evaluate Biodiversity Net Gain (BNG) across the operational portfolio and achieve at least 20% BNG on
new solar developments.
• Conduct independent biodiversity assessments across at least 10% of our sites annually (relating to
assets over 1MW in capacity)
• Continue to promote positive action within the communities we operate within through community
benefit funds and educational sessions.
• New commitment: Develop a Nature Strategy, building upon our existing biodiversity commitments and
encompassing the recommendations of the TNFD.
Generating Energy
Responsibly
• Ensure 100% of our assets are covered by a Human Rights Policy, which covers UNGC principles and
OECD guidelines.
• Require adoption of our Supplier Code of Conduct by key Tier 1 and, where possible, Tier 2 suppliers.
• New Commitment: Continue to develop our due diligence mechanisms to identify, prevent and mitigate
human rights impacts across our operations and, where possible, our supply chain.
Sustainable Development Goals6
The most relevant United Nations Sustainable Development
Goals (UN SDGs) have been mapped against the Company’s
ESG pillars, following the alignment protocol. In total, eight
goals have been identified where the Company believes it
can have the greatest positive impact. The Company’s largest
contribution will be in relation to Goal 7, ‘Affordable and Clean
Energy’ and Goal 13, ‘Climate Action’. With over 812 MW of
installed capacity, the Company’s portfolio generated 836,231
MWh of renewable energy during the reporting period,
supporting domestic energy security and decarbonisation
of the UK energy market. The Company also endeavours to
minimise any negative impacts of its operations, as described
throughout this report.
Do not alter the colours of the SDG icons.
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background.
Commitments & KPIs
Focus this year has been the collection of data to enable the
Company to report against its ESG commitments and KPIs.
As this was the first time baseline data had been collected for
most of these KPIs, data collection processes had to be newly
established across a variety of the Company’s operations and
service providers.
Whilst relationships between the Bluefield service provider
companies enabled efficient data collection for a large
portion of the Company’s portfolio, data collection from
external third parties was more challenging, particularly as
many providers across the industry did not have existing data
collection processes in place. Therefore, whilst every effort
has been taken by the Investment Adviser to ensure the
accuracy of the Company’s ESG performance, the Company
will implement further processes to improve the accuracy
and quality of ESG data over time.
6. Disclaimer: The content of this publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States.
7.The FY 23-24 commitments reiterated throughout the ESG report may differ slightly from those presented in the ESG Appendix; this is because some commitments have been updated for the upcoming year. The original commitments
are presented in the ESG Appendix to highlight the Company’s performance against them during the reporting period.
31
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS 5. How ESG is Embedded
ESG Oversight
The Board of the Company has ultimate responsibility and oversight of
ESG risks and opportunities, and ESG is considered by the Directors as
part of Board meetings, investment decisions and risk management.
Daily management of ESG is outsourced to the Investment Adviser,
with the Board regularly updated on ESG activity through investment
committee papers, Board meetings, ad hoc calls, and written updates.
During the reporting period, the Board established an ESG committee,
chaired by Meriel Lenfestey. The Committee provides a forum for
Figure 1 – The Company’s ESG and Climate Governance Structure
mutual discussion, support, and challenge to the Investment Adviser
with respect to ESG matters. ESG committee meetings, of which there
are at least two a year, provide an additional forum through which the
Board engage on ESG activity.
Board meetings and the Investment Adviser’s ESG Manager regularly
reports progress to the Managing Partner and Group General Counsel.
The Company’s ESG Governance Structure illustrates how ESG is
integrated across portfolio-related activities, presented in Figure 1.
The Investment Adviser is responsible for communicating, embedding,
and monitoring ESG initiatives across the portfolio, ensuring ESG is
considered at every stage of the asset lifecycle. ESG is included as a
standing agenda item as part of the Investment Adviser’s quarterly
Responsible Investment
Please refer to p.53 and the Company’s Sustainable Investment
Policy for further information on its responsible investment approach.
Driving shareholder value whilst promoting environmental and social impact through our work as a pioneering and responsible renewables fund
The Board’s role is to ensure the long-term sustainable success of BSIF by setting the strategy through which value can be created or preserved for the benefit of shareholders,
whilst also generating positive impact for the fund’s wider stakeholders. Whilst all Directors share responsibility and oversight of ESG matters (including those relating to climate
risks and opportunities), Meriel Lenfestey has been named Chair of the ESG Committee, which helps to further drive forward the Company’s ESG agenda. The Board delegates
certain ESG oversight matters to its principal Committees and representatives.
THE BSIF BOARD
BSIF ESG COMMITTEE
BSIF AUDIT & RISK COMMITTEE
INVESTMENT ADVISER
BLUEFIELD ESG TEAM
Provides a forum for mutual discussion,
support and challenge to the Investment
Adviser with respect to ESG matters.
Meets at least twice a year and otherwise
as required by the Chair.
Responsible for financial reporting,
investment valuation, auditing,
governance and risk management. Meets
at least three times a year, at appropriate
times in the reporting and audit cycle and
otherwise as required by the Chair.
Bluefield Partners LLP is responsible for
managing the portfolio, fundraising, and
investment strategy and implementation.
ESG is embedded within these activities.
Reports to the BSIF Board quarterly and
anything material ad-hoc.
Responsible for driving ESG matters across key
stakeholders and business areas. Routinely
communicates progress through quarterly
Board reports, ESG Committee meetings
and ad-hoc meetings. ESG is included
within investment committee papers.
G
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The Bluefield ESG Team is responsible for internalising and externalising ESG and climate progress across key business areas including:
INVESTMENT
COMMERCIAL
ASSET MANAGEMENT
O&M
DEVELOPMENT
Responsible for considering
ESG and climate risks and
opportunities within due
diligence.
Responsible for the management
of the portfolio (wind, solar,
battery assets) and supports the
implementation of ESG within
operational activities.
Responsible for operational
management and compliance of
the portfolio. Support with ESG
data collection and analysis.
Responsible for operational
maintenance of solar assets.
Support with ESG data collection
and BSIF’s environmental
objectives.
Responsible for developing
sites for the solar and battery
pipeline. Embed community and
environmental considerations
within the development process.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS
6. CLIMATE CHANGE MITIGATION
Introduction
Critical and ambitious action
is needed to address
climate change. The UK has remained firm on its Net Zero
commitment, aiming to reduce emissions by 78% by 20358.
In their 2023 ‘Powering up Britain’ publication, the UK
government acknowledged the energy trilemma, and the
role renewable deployment will play in achieving interim and
long-term Net Zero targets, increasing energy independence,
and shielding the UK from volatile energy markets, ultimately
reducing energy prices9.
As a UK-focused renewable energy business, the Company is
well positioned to support the UK’s transition to a low carbon
economy and domestic energy security.
40
ICONS
Advocating Renewable Energy
The Company substantially contributes to climate change
mitigation and the UK’s decarbonisation agenda through its
generation of renewable energy. During the reporting period
the Company:
Key Commitments:
• Report our renewable energy generation
annually.
• Develop a Net Zero pathway.
ICONS
• Invest up to £50,000 in industry
collaborations annually to support the energy
transition.
ICONS
40
17 ICONS: COLOUR VERSION
• Continue to build our climate resilience and
inform our business strategy through climate
risk assessments and scenario analysis.
SDG Contribution:
• Generated 836,231 MWh of renewable energy.
• Powered the equivalent of over 288,000 UK homes with
renewable electricity for a year10.
• Achieved over 173,000 tonnes of CO2e savings11.
• Had 93MW of solar infrastructure under construction,
which on completion is estimated to generate an additional
91,000 MWh of renewable energy annually.
Since IPO in 2013, the Company has
saved the equivalent of approximately
1,200,000 tonnes of CO2e from being
released into the atmosphere12
are, that square must be proportional 1 x 1.
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background.
Do not alter the colours of the SDG icons.
In recognition of its positive environmental
impact, the Company has been awarded
the following accreditations:
Whilst the Company’s activities are central to the UK’s Net
Zero agenda, the Company recognises the potential harmful
impacts that come with being part of the renewables
industry, and that as the sector continues to grow, industry
players will need to work together to address emerging
social and environmental risks. End-of-life considerations for
renewable generation assets are an increasingly important
topic, particularly with movement towards a more circular
economy.
During the reporting period, the Company identified a
potential partnership with a UK university, focused upon
end-of-life options for solar and wind assets. The Company
has elected to allocate its first-year research budget of up to
£50,000 to this project, noting that funds will be transferred
once the project is finalised.
8. https://www.gov.uk/government/news/uk-enshrines-
new-target-in-law-to-slash-emissions-by-78-by-2035
9. https://assets.publishing.service.gov.uk/government/
uploads/system/uploads/attachment_data/file/1147340/
powering-up-britain-joint-overview.pdf
10. Based on Ofgem’s Typical Domestic Consumption Values
11. Based on generation data aligned with an appropriate
Government CO2e conversion factor
12. Through the displacement of fossil fuel generated energy
supplying the grid.
33
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
ANNUAL REPORT AND FINANCIAL STATEMENTS
Case
Study
Supporting the Energy
Transition through Industry
Engagement
The Investment Adviser takes a proactive approach
to supporting the energy transition, not only through
its advisory role to the Company, but also by engaging
and supporting the government to create a policy
environment which can enable Net Zero. This includes
responding to government consultations, meeting
with senior political leaders across the House to
discuss renewable energy, and working with partners
in the sector to engage in relevant discussions via
the government’s Solar Energy Taskforce. Bluefield
employees are also members of the industry trade body
Solar Energy UK, and frequently engage in discussions
across the various working groups. Such enables the
Company to benefit from a coherent and broad view on
a range of industry matters, whilst contributing to best
practice for the renewables sector.
Carbon Emissions
GHG Inventory
The Company takes account of its carbon impact and reports
its emissions annually. Last year the Company commissioned
its first Lifecycle Assessment (LCA) to estimate the emissions
associated with a solar PV asset across its lifetime. Depending
on the future energy mix modelled, the study found that the
solar farm “pays back” the total emissions consumed during
production and installation in between one to three years; a
small proportion of its expected forty-year lifespan. The study
emphasised the positive contribution that solar assets can
offer to a decarbonising grid, but also enabled the Company
to have sight of the absolute emissions impact of a solar
asset, highlighting potential opportunities for improvement.
Please refer to the Company’s TCFD Report on p.43 for its
GHG inventory.
The Company’s assets consume a small amount of electricity,
derived from the grid. To reduce Scope 2 emissions, and
ensure that its portfolio consumes energy derived from
renewable sources, the Company has been transferring its
assets onto renewable energy import tariffs, where these
are not already in place. Looking forward, to formalise its
decarbonisation commitment, the Company will develop a
Net Zero pathway, and will analyse different target-setting
frameworks to ensure the decarbonisation strategy most
suitable for its investments is adopted.
Installed capacity on green
energy tariffs:
13% (as at 30 June 2022);
85% (as at 30 June 2023).
Climate-related Risks and Opportunities
The assessment of climate-related risks and opportunities
is a continual process for the Company as part of its risk
management processes and strategy. Please refer to the
Company’s TCFD report on page 43 for further information.
SOLAR PV AT ROVES
34
7. PIONEERING POSITIVE LOCAL IMPACT
Introduction
The topic of nature has been a real area of focus and commitment for
the Company. Its investments have an important role to play at the local
level and the Company seeks to positively impact the communities
and environments it is a part of. The Company has strengthened how
it communicates ESG expectations with its suppliers and contractors,
who manage the Company’s investments on its behalf.
Nature
Climate change and nature are intrinsically linked. The Company aims
to make positive impact in both areas simultaneously, focusing upon
BNG across its portfolio as an additional way to help mitigate climate
change beyond its contribution to Net Zero. The Company has updated
its ESG strategy to reference ‘Nature’, recognising that biodiversity
represents a critical aspect of this and that the Company’s operations
have wider environmental impacts and dependencies.
Focus during the reporting period was delivery of the Company’s
biodiversity implementation plan (adopted alongside its Biodiversity
Policy last year), and the quantification of biodiversity across the
portfolio.
ICONS
40
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ICONS
Delivering the Biodiversity Implementation Plan
The biodiversity implementation plan was created to support the
Company in achieving the commitments made within its Biodiversity
Policy. Initial activities have focused upon how to minimise the
adverse impacts of the Company’s land management activities on
nature. During the reporting period, the Investment Adviser worked
closely with Bluefield Operations Limited, the Company’s principal
O&M contractor, to undertake the following activities:
Key Commitments:
• Evaluate Biodiversity Net Gain (BNG) across
the operational portfolio and achieve at least
20% BNG on new solar developments.
• Conduct independent biodiversity assessments
across at least 10% of our sites annually
(relating to assets over 1MW in capacity)
ICONS
• Develop a Nature Strategy, building upon
17 ICONS: COLOUR VERSION
our existing biodiversity commitments and
encompassing the recommendations of
the Taskforce on Nature-related Financial
Disclosures.
ICONS
ICONS
40
• Continue to promote positive action within
17 ICONS: COLOUR VERSION
the communities we operate within through
community benefit funds and educational
sessions.
SDG Contribution:
When an icon is on a square, that square must be proportional 1 x 1.
background.
Do not alter the colours of the SDG icons.
• Mapping of the Company’s assets to identify sites located within 1km
of a biodiversity-sensitive13 area and within 500m of a water course.
• Creation of systems to record and track threatened and protected
species14 identified at the Company’s assets, using data from
ecological assessments.
• Conduct a comprehensive review of Landscape and Ecological
Management Plans (LEMPs) to support ongoing LEMP compliance,
but also assess their suitability and practicality.
• Development and adoption of hierarchies of control for herbicide
use and rodent control.
• Review of grass and hedgerow management practices.
These activities have enabled the Company to better understand what
fauna and flora are present in the localities of its assets, enabling the
identification of assets which could potentially have greater impacts
on, or opportunities to support, nature. Review of environmental
practices and adoption of hierarchies of control will help ensure
negative environmental impacts are minimised and a best-practice
approach to land management is taken.
Quantifying Biodiversity
Wychwood Biodiversity, a leading ecological consultant, were engaged
to undertake ten ecological assessments across the portfolio to help
build the Company’s biodiversity data set. Their findings identified:
• Twelve red listed bird species, including yellowhammer and skylark.
• Seventeen amber listed bird species, including marsh harrier and
sparrowhawk.
• Fifteen butterfly species, including small heath, and five native bee
species identified from ten pollinator surveys (consisting of 129
transects).
Botany15 and soil16 data were also collected. These assessments,
along with eleven additional assessments conducted as part of
ongoing LEMP requirements, will be used to inform the Company’s
nature-related activities over the coming year.
13. As defined by Annex I of Annex II of the Commission Delegated Regulation
(EU) 2022/1288, in addition to UK statutory land-based designations.
14. As defined in Section 7 of Annex II to Delegated Regulation (EU)
2021/2139), as well as UK Biodiversity Action Plan (UKBAP) threatened
species and UK protected species.
15. Including total species diversity; total grass species; total flowering herb
species; sward height variation; and % bare ground cover.
16. Including soil type; pH; % soil organic matter; carbon content and
phosphorus, potassium, and magnesium level.
35
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Biodiversity Net Gain
The Company has been evaluating BNG across its portfolio.
BNG is calculated using the Defra Biodiversity Metric, which
assesses the change in biodiversity units from a baseline
state (i.e., before the site was built) to its post-construction
condition, when habitats specified within the planning
conditions, including within the LEMP, have been established.
In relation to its development pipeline, the Company has
committed to achieving at least 20% BNG on all new solar
developments, despite the 10% BNG provision of the UK
Environment Act not coming into effect until November 2023.
This commitment will be enacted through the Company’s
development partners and applies to all planning applications
submitted since July 2022. During the reporting period,
several prospective solar applications were submitted into
planning, all of which achieve at least a 20% BNG uplift. The
Company is closely following developments related to the
trade of BNG units, and the opportunities this may present for
the renewables industry as an additional source of revenue.
BNG assessments17 were undertaken across the operational
portfolio by the land management team within Bluefield
Operations Limited, who gained competency
through
CIEEM training courses and engagement with third party
specialists. Thirty assessments were completed, representing
approximately 33% of the Company’s operational portfolio
(relating to sites over 1MW in capacity). A variety of the
Company’s portfolio was sampled, including sites ranging
from 1.8MW to 50MW in capacity, located across England,
Scotland, and Wales. Additional ecological data was collected
where necessary through monitoring and walkover surveys.
Table 2 – Results of retrospective Biodiversity Net Gain
(BNG) assessments undertaken across the Company’s
operational solar assets.
ON-SITE % UPLIFT
Habitat Units
Hedgerow Units
Average of the 30
assessed sites
+41%
+53%
These results demonstrate the potential of solar infra-
structure to support nature and achieve a considerable
uplift in biodiversity compared to a pre-construction state.
The results of the BNG assessments will be used to identify
measures to increase the BNG of lower scoring sites, with the
assessments updated over time as land conditions change.
The Company will continue to work with Earth Energy Education over the
coming year, delivering a sustainability-focused education programme
to even more pupils. Such will support the Company in strengthening
relationships with the local community and upskilling future generations on
the importance of renewables in the climate emergency.
Next steps for Nature
• Develop
aligned with
a Nature Strategy,
the
recommendations of the Task Force on Nature-related
Financial Disclosures (TNFD) and pulling together the
progress the Company has made over the last 18 months
in relation to its biodiversity datasets and enhanced
approach to land management.
• Build a framework through which the Company can
manage its material nature-related risks and opportunities,
and develop nature focused commitments and KPIs to
communicate progress.
• Complement BNG assessments with other forms of
biodiversity assessment (for example industry tools such
as SPIES assessment or Wild Power Scorecard), to ensure
a rounded approach.
Community Impact and Initiatives
Community engagement is key across all stages of the
asset lifecycle. During the reporting period, the Company
engaged Earth Energy Education, an organisation dedicated
to educating pupils on the importance of renewable energy
through engagement both in and outside of the classroom.
On behalf of the Company, Earth Energy Education
delivered 25 educational workshops, including 17 school
workshops and eight solar site visits between May 2023
and July 2023, delivering educational content to 447
different pupils. 23 Bluefield employees also volunteered
as part of the site visits, providing their solar expertise
and experience of working within different functions of the
Bluefield companies, engaging pupils on green careers.
“My Year 4s really enjoyed
the workshop and it was
an engaging introduction to
their new Science unit for
after half-term on electricity.
The hands-on investigation
into solar panels today
was valuable for our future
learning on solar power.”
Year 4 teacher, Wantage
Primary Academy
Case
Study
STEM Webinar
As part of the Company’s engagement with Earth Energy
Education, a webinar was delivered to 200 pupils in July,
hosted by five Bluefield employees. The webinar provided
insight into their roles, experiences of being a woman in a STEM
career, pathways into the sector and general encouragement
and awareness about STEM careers.
17. Assumptions and limitations: assumptions on baseline environmental
conditions and habitat extents were made where data was lacking; some
data were collected outside of optimal survey seasons. In all cases, a
precautionary approach was taken.
36
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS
The transition to Net Zero will create significant employment
opportunities18, and during the reporting period, the Company’s
portfolio supported the creation of 42 new positions within the
Bluefield companies. Bluefield has a number of initiatives in place to
encourage entry into green careers, and during the reporting period
supported:
• Four internships, including two through the ‘100 Black Interns’
scheme.
• One work experience placement.
• Two apprenticeships.
• Engaged with an environmental consultancy firm to support a
project with Norfolk and Suffolk County Councils on green skills
development in the region, including skills shortages and projected
skills needed in the future.
The Company has community benefit funds in place across its portfolio,
which are usually agreed as part of the development process. During
the reporting period, the Company paid over £253,000 to community
benefit funds, which are used to support a range of community
projects.
St Margaret’s Churchland, West Raynham: Grassland
Conservation Project
In 2017, the local community decided to introduce a new land
management regime to St Margaret’s Churchland, located in West
Raynham, to better support the ecology of the site. The predominant
characteristics of the site included thick, overgrown grass and little
floral diversity. After engaging with Norfolk Wildlife Trust, the grass
cutting regime of the site was altered, native hedgerow planted, and
wildflower seed sown. In Autumn 2021, grazing was also introduced.
Following these changes, wildflower meadow is now well established,
and surveys indicate that a large variety of pollinators, mammal and
birds use the area, including red and amber listed species. The first
orchids have also been identified; likely dormant for several years but
have re-emerged due to the improved land conditions.
Since being initiated five years ago, the project has been supported
with over £5,000 of funds contributed by West Raynham Solar site,
administered through the West Raynham Solar Fund Committee. The
project has been highly successful both in its ecological objectives
and in creating community interest and involvement, with an
enthusiastic group of local volunteers who continue to support the
project.
GRASSLAND CONSERVATION PROJECT
Delivery Partnerships
To help ensure ESG expectations are upheld by suppliers, the
Company has adopted a suite of new policies, including: a Sustainable
Procurement Policy; Human Rights Policy; Waste Management Policy
and Supplier Code of Conduct. Policies were adopted by both SPV
Directors and the Board of the Company, and cover the Company’s
operational and construction assets. Focus over the coming year will
be to ensure the requirements of these policies are appropriately
disseminated and complied with, helping drive ethical practices
across the Company’s operations and supply chain.
Case
Study
Engaging Suppliers Through
Webinars
To support the rollout of the Supplier
Code of Conduct, the Company delivered
two webinars to priority suppliers. The webinars explained
the purpose of the Code, the key principles within it, and
the impact on suppliers. In addition to providing a forum
through which concerns could be raised, suppliers were
encouraged to adopt their own Supplier Code of Conduct if
they had not already, helping cascade best practice across
the Company’s supply chain.
The Supplier Code of Conduct sets out the values and principles the
Company expects its suppliers to follow as a minimum requirement,
and was developed in line with global frameworks, including the United
Nations Guiding Principles on Business and Human Rights (UNGP),
UN Global Compact principles (UNGC), and the OECD Guidelines. It
covers topics including ethics, human and social rights, environmental,
business and supply chain risk, and whistleblowing. The Company
requested that priority suppliers, i.e., those which made up the largest
proportions of the Company’s addressable spend19, acknowledge,
sign, and conform to the Supplier Code of Conduct. During the
reporting period, twenty-six of the Company’s priority suppliers signed
the Supplier Code of Conduct, representing approximately 75% of the
Company’s 2022 addressable spend.
Health & Safety (‘H&S’) is of the highest importance to both the
Company and the Bluefield service provider companies. Every
asset owning SPV holds H&S policies. Main contractors (including
the Bluefield companies) undergo annual H&S audits by the SPVs,
to ensure ongoing compliance. During the reporting period, the
Investment Adviser engaged a H&S adviser to review the H&S
management system across the operating solar portfolio. The review
is ongoing and will ensure each of the SPVs are complying with the
latest H&S guidance and industry standards.
EPC contractors, O&M contractors, and Asset Managers are required
to regularly submit their H&S performance to the Company. Relating
to the reporting period:
Lost time incident rate20: 0
Number of reportable accidents (RIDDOR)21: 6
Number of near misses: 154
The majority of near misses were reported by Bluefield Operations
Limited, where identifying, investigating, and reporting near miss
incidents is culturally ingrained within the organisation (helping
reduce the probability of H&S incidents occurring). Therefore, the
relatively high number of near misses is reflective of a proactive risk
management culture. Four of the RIDDOR incidents related to fire
incidents (where no personnel were injured), and the remaining two
incidents involved subcontractors of the Company’s O&M and EPC
service providers. Bluefield Services Limited, acting as asset manager,
continues to work with service providers to improve data collection
and reporting processes.
18. https://www.theccc.org.uk/2023/05/24/net-zero-offers-real-levelling-
up-but-government-must-get-behind-green-jobs/
19. Addressable spend relates to procurement categories that the Company
can influence, and so excludes categories such as government bodies,
business rates, tax authorities, utilities spend etc.
20. Calculated per 100,000 employees.
21. RIDDOR: Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations 2013. Metric reflects incidents which occurred on the
Company’s sites.
37
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Key Commitments:
• Ensure 100% of our assets are covered
by a Human Rights Policy, which covers
UNGC principles and OECD guidelines.
• Continue to develop our due diligence
mechanisms to identify, prevent and
mitigate human rights impacts across
our operations and, where possible, our
supply chain.
ICONS
ICONS
ICONS
ICONS: COLOUR VERSION
ICONS: COLOUR VERSION
• Require adoption of our Supplier Code
of Conduct by priority Tier 1 and, where
possible, Tier 2 suppliers.
SDG Contribution:
40
ICONS
ICONS
40
40
8. GENERATING ENERGY RESPONSIBLY
Human & Labour Rights
Human and labour rights remains an area of focus
for the Company. The Company’s Human Rights
Policy communicates its commitment to respect
human rights and its ambition to identify, prevent and
mitigate adverse human rights impacts throughout
its value chain. The policy was developed in line with
recognised human rights frameworks.
Whilst human rights due diligence processes are
already in place, these will be reviewed by the
Company over the coming year as commitments made
within the Human Rights Policy are embedded across
the asset lifecycle. The Company will also perform a
deeper analysis of how its operations interact with
the requirements of the UNGC and OECD Guidelines,
enabling the Company to robustly evidence
its
alignment to these frameworks.
The Company acknowledges that supply chains
are complex and full transparency has not yet been
achieved, particularly in relation to solar PV modules
and batteries. The Investment Adviser is continuing
to engage with the industry response led by Solar
Energy UK and Solar Power Europe, which is focused
on developing systems and processes to improve
transparency and sustainability within the PV supply
chain. The UK solar industry’s supply chain statement,
to which the Investment Adviser is a signatory, can be
viewed here.
Examples of existing Human Rights
due diligence & management
mechanisms:
• Comprehensive ESG due diligence
undertaken on key third parties, such as
EPC contractors.
• Human rights considerations embedded
within pre-investment due diligence
processes.
• External ESG risk analysis conducted on
key solar and battery manufacturers.
• Social audits requested for solar
manufacturing facilities as part of EPC
engagements.
• Enhanced contractual protections.
• Adoption of the Company’s Supplier Code
of Conduct.
• Participation in industry supply chain
initiatives.
38
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORT
ANNUAL REPORT AND FINANCIAL STATEMENTS
Responsible and Sustainable Procurement
Though the Company does not yet undertake direct large-
scale procurement, it has due diligence processes in place
to help ensure that the EPC contractors it engages, and the
equipment that they procure on behalf of the Company,
are not associated with material ESG risks. The Company’s
Sustainable Procurement Policy includes principles such as
assessing and managing supply chain risks; upholding human
rights; and where possible reducing the environmental
impacts of procurement activity.
To better understand
its supply chains, the Company
mapped its Tier 1 supplier spend relating to the 2022
calendar year. Once consolidated, the Company identified
its priority suppliers, i.e., those which related to the largest
proportion of addressable spend. Priority suppliers were
analysed via a desktop assessment across a range of social
and environmental topics, to identify upstream risk and
improvement opportunities. Several key supply chains
were identified for further focus. The Company will map its
supply chains annually, and will map Tier 2 suppliers in key
supply chains, focusing on those engaged by the Bluefield
companies in the first instance.
During the reporting period, the Bluefield
companies completed their first supply
chain audit, undertaken by an external
consultant. Supply chain management
processes were assessed in relation
to governance, sourcing, transparency
and risk, and the results will be used to
support the Company in benefiting from
robust supply chain practices.
is
into
increasingly
Good Governance and Business Ethics
ESG
the Company’s
integrated
corporate governance. For example, during the reporting
period, there has been ongoing regulatory compliance
(including monitoring emerging reporting requirements
and frameworks); creation of an ESG sub-committee of
the Board; adoption of new policies; and enhanced climate
risk analysis. Commitments for the coming year will
further embed ESG within the processes and procedures
underpinning the Company’s operations.
As an FCA regulated entity, the Company’s Investment
Adviser evidences the highest standards of professional
conduct. Key policies, including in relation to anti-bribery,
anti-corruption and anti-money laundering, conflicts of
interest, and compliance are in place, and third-party
compliance advisers are used
to ensure regulatory
obligations are met through quarterly reviews and reports
on business activities. The Investment Adviser has recently
implemented new policies and processes relating to
Consumer Duty.
The Board’s commitment to diversity is referenced on p.71,
and the Board actively seeks to ensure that diversity is
considered in the board succession process. The Investment
Adviser and other Bluefield companies continue to enhance
their approach to Diversity, Equity, Inclusion and Belonging
(DEIB). DEIB is embedded through an equal opportunities
policy in the UK and a DEIB committee, which has developed
a strategy focused around culture, talent, and community.
Over the coming year, in addition to launching a ‘‘Women
in Leadership” programme, the Investment Adviser will
partner with GAIN (Girls are Investors) to create a paid
internship, helping increase gender diversity within the
organisation.
9. Looking Forward
This year, the Company has enhanced its approach to material ESG
topics and reported against its KPIs for the first time, evidencing
an improvement in ESG performance across most indicators.
The second year of the strategy will be just as ambitious, as the
Company responds to growing interest around topics such as
climate, nature, and human rights, perpetuated by evolving ESG
regulatory requirements. Though ESG remains fast-evolving, clarity
and standardisation of reporting requirements should provide much
needed guidance to financial markets and investors on what ‘best
practice’ looks like.
The Company looks forward to continuing its sustainability journey,
constantly evaluating, and improving its practice as a renewable
energy investor which aims to truly deliver renewable energy,
responsibly.
CONSTRUCTION AT YELVERTOFT
39
ESG APPENDIX
The following table highlights the Company’s ESG performance relating to the financial year ending 30 June 2023. Where data was available, ESG performance as of 30 June 2022 has been included, to allow comparison to be
made. Where referenced in the below table, unless otherwise stated, ‘assets’ refers to operational and construction assets.
PILLAR
COMMITMENT
SUPPORTING KPI/S
AS AT 30 JUNE 2022
AS AT 30 JUNE 2023
Renewable energy generated (MWh)
CO2e savings achieved (tCO2e)
Equivalent houses powered (#)
Additional solar infrastructure under construction (MW)
Estimated additional annual renewable energy generation (MWh)
Battery assets under construction (MW)
Revenue targeting industry collaboration (£)
> 624,000 MWh
>120,000 tonnes
215,000
0 MW
N/A
0 MW
£0
>836,231 MWh
>173,000 tonnes
288,000
93MW
91,000 MWh
0 MW
£50,000 allocated22
Report our renewable energy generation annually.
Invest up to £50,000 in industry collaborations annually to
support the energy transition.
Report against our carbon emissions annually23.
Scope 1 GHG Emissions (tCO2e)
Scope 2 GHG Emissions (tCO2e)
Scope 3 GHG Emissions (tCO2e)
Total GHG Emissions (tCO2e)
Carbon Footprint (tCO2e) New KPI
GHG intensity (tCO2e / EUR Rev)
N
O
I
T
A
G
I
T
I
M
E
G
N
A
H
C
E
T
A
M
I
L
C
Develop a Net Zero pathway.
Net Zero pathway developed (Y/N)
Implement renewable energy import tariffs across our
portfolio.
Installed capacity with renewable energy import tariffs (%)24
Relative percentage of renewable and non-renewable energy
consumed by BSIF (%)
Share of non-renewable energy consumption and non-renewable
energy production of investee companies from non-renewable energy
sources compared to renewable energy sources (%)
Continue to build our climate resilience and inform our
business strategy through climate risk assessments and
scenario analysis25.
Scenario analysis undertaken (Y/N)
Assets covered by a climate adaptation plan (%) New KPI
Incorporate ESG-related matters into the Company’s risk
register.
ESG-related matters in risk register26 (Y/N)
Undertake a climate change risk and vulnerability
assessment (CRVA) in line with the TCFD recommendations.
Climate change risk and vulnerability assessment undertaken (Y/N)
N/A – methodology change
N/A – methodology change
N/A – methodology change
N/A – methodology change
19
1,422
27,963
29,404
N/A
N/A
N/A
13 %
N/A
N/A
No
N/A
Yes
No
Please refer to the Company’s
PAI statement.
Please refer to the Company’s
PAI statement.
No
85%
Please refer to the Company’s
PAI statement.
Please refer to the Company’s
PAI statement.
Yes
0%
Yes; the number of ESG related
risks within the register was
enhanced this year.
Yes
40
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS
PILLAR
COMMITMENT
SUPPORTING KPI/S
AS AT 30 JUNE 2022
AS AT 30 JUNE 2023
Evaluate BNG across the operational portfolio and achieve at
least 20% BNG on new solar developments27.
New developments that have had BNG assessment (%)
New solar developments with at least 20% BNG achieved (%)
Existing sites with BNG assessment28 (#)
Conduct independent biodiversity assessments across at
least 10% of our sites annually (relating to assets over 1MW
in capacity).
Operational assets independently assessed (relating to assets over
1MW in capacity) (%)29
Notable species identified (e.g., red and amber listed species) (#)
N/A
N/A
0
11%
100%
100%
30
11%
Red listed bird species: 13
Amber listed bird species: 17
Red listed bird species: 12
Amber listed bird species: 17
T
C
A
P
M
I
L
A
C
O
L
E
V
I
T
I
S
O
P
G
N
I
R
E
E
N
O
I
P
Assets without a biodiversity protection policy covering operational
sites owned, leased, managed in, or adjacent to, a protected area or
an area of high biodiversity value outside protected areas (%)30
100%
Please refer to the Company’s
PAI statement.
Develop a Nature Strategy, building upon our existing
biodiversity commitments and encompassing the
recommendations of the TNFD. New Commitment
Nature Strategy Developed (Y/N) New KPI
Minimise potential risks posed to threatened species by our
assets and apply industry best practice to new sites under
development.
Assets that are located in or near to31 biodiversity-sensitive areas (%)
Assets that negatively affect biodiversity-sensitive areas (%)
Assets which are deemed to have operations that affect threatened
species (%)
N/A
N/A
N/A
N/A
Continue to promote positive action within the communities
we operate within through community benefit funds and
educational sessions.32
Revenue given to partnerships benefiting the local community (£)
£0
Revenue paid to community benefit schemes (£)
> £154,000
Insist that our Tier 1 suppliers that directly service the
portfolio33 report H&S performance on a quarterly basis.
Young people engaged (#) New KPI
Educational workshops delivered (including site visits) (#) New KPI
Lost time incident rate (per 100,000 employees)
Number of reportable accidents (RIDDOR) (#)
Number of near misses (#)
Bluefield employees who have received H&S training (%)
0
0
N/A
N/A
N/A
N/A
No
22%
0% - Please refer to the
Company’s PAI statement.
0% - Please refer to the
Company’s PAI statement.
£20,000
>£253,000
647 (between May – Jul 23).
25, including 17 school
workshops and 8 site visits
(between May – Jul 23).
0
6
154
100% (as at 28 Sept 23)
41
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS
PILLAR
COMMITMENT
SUPPORTING KPI/S
AS AT 30 JUNE 2022
AS AT 30 JUNE 2023
Y
L
B
I
S
N
O
P
S
E
R
Y
G
R
E
N
E
G
N
I
T
A
R
E
N
E
G
Map our supply chains, with priority given to Tier 1 suppliers.
Tier 1 supply chains mapped (%)
Ensure 100% of our assets are covered by a Human Rights
Policy by June 2023, which covers UNGC principles and
OECD guidelines.34
Continue to develop our due diligence mechanisms to
identify, prevent and mitigate human rights impacts across
our operations and, where possible, our supply chain. New
Commitment
Tier 2 supply chains mapped (relating to Bluefield service providers)
(%) New KPI
Assets with Human Rights Policy (%)
Assets with a due diligence process to identify, prevent, mitigate, and
address adverse human rights impacts (%)
Share of investments in assets without policies to monitor
compliance with the UNGC principles or OECD Guidelines for
Multinational Enterprises or grievance /complaints handling
mechanisms to address violations of the UNGC principles or OECD
Guidelines for Multinational Enterprises (%)
Implement mechanisms to measure our hazardous waste
ratio by 2023.
Tonnes of hazardous waste and radioactive waste generated by
assets per million EUR invested, expressed as a weighted average
Clearly communicate our ESG governance structure.
Clear governance structures in ESG report (Y/N)
Further diversify our Board.
Ensure 100% of our assets are covered by a Sustainable
Procurement Policy by June 2023.
Average ratio of female to male board members expressed as a
percentage of all board members (%)
Number of board positions held by a woman (#)35
Number of board members from a non-white ethnic minority
background (#)
Assets with Sustainable Procurement Policy (%)
Adopt a Supplier Code of Conduct and require its adoption by
Tier 1 suppliers by the end of June 2023.
Tier 1 suppliers signed Supplier Code of Conduct (#)36
Tier 2 suppliers signed Supplier Code of Conduct (#) New KPI
Encourage our O&M contractors to use the waste hierarchy
principles.
Assets with a Waste Management Policy (%)
0%
N/A
0%
100%
N/A
N/A
Yes
40%
2
0
0%
0
N/A
0%
100%
In progress
100%
100%
Please refer to the Company’s
PAI statement.
Please refer to the Company’s
PAI statement.
Yes
40%
2
0
100%
26
0
100%
22. The Company is currently engaging with a UK University on a potential
27. Relating to planning applications submitted by the Company’s develop-
33. Suppliers relates to EPC, O&M, and Asset Management contractors.
partnership. Once finalised, the funds will be transferred.
ment partners during the reporting period.
23. Market-based emissions are shown.
28. Updated from: Existing sites with evidenced BNG (%)
24. KPI updated to reflect installed capacity instead of AUM.
29. ‘AUM’ replaced with ‘operational assets’.
25. Updated from: We will undertake scenario analysis for material physical
30. ‘AUM’ replaced with ‘assets’; this change has been made throughout the
and transitional climate related risks and opportunities within the next
twelve months.
26. Metric updated from (#) to (Y/N). As this is now complete, this commit-
ment and KPI will be removed from the strategy moving forwards.
table.
31. Defined as within 1KM of a biodiversity-sensitive area.
32. Updated from: We will continue to promote positive action within the
communities we operate within.
34. Combined with the following commitment: ‘we will ensure 100% of our
assets are covered by policies covering UNGC principles and OECD Guide-
lines by June 2023’.
35. The word ‘senior’ has been removed as all Board members are non-exec-
utive directors.
36. Metric changed from (%) to (#)
42
ENVIRONMENTAL, SOCIAL AND GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS
Task Force for
Climate-related
Financial
Disclosures (TCFD)
1. Introduction
The Company’s core objective, to provide attractive returns to shareholders
through investment in renewable energy infrastructure assets, sets it in an
advantageous position to capitalise upon opportunities that arise from the
transition to a low carbon economy. However, climate change is dynamic and
uncertain, and societal response will be shaped by climate events of varying
severity and impact, depending on the trajectory that global emissions take.
With this in mind, the Company is committed to ensuring a climate resilient
strategy is in place, supported by scenario analysis and risk management
processes, to strengthen its ability to deliver shareholder value in a changing
world. The following report explains how the Company is working to comply
with all eleven recommendations of the TCFD.
43
ANNUAL REPORT AND FINANCIAL STATEMENTS 2. Governance
3. Strategy
Board oversight
The Board of the Company has ultimate responsibility for and
oversight of climate-related risks and opportunities; please refer to the
Company’s ESG report (see pages 27 - 39) for how the Board oversee
progress against ESG (including climate) commitments and KPIs. The
Board remains well informed of developing physical and transitional
risks and opportunities associated with climate change, and how
these might materialise in the Company’s short, medium, and long-
term future, through close engagement with the Investment Adviser.
Moreover, the Board receives climate risk training on an annual basis.
Given the nature of the Company, every
investment decision
considered by the Board is associated with renewable energy
infrastructure or supporting technologies. Therefore, the Board is
conversant in assessing climate-related opportunities in this regard.
Increased consideration of climate-related risks, particularly physical
risks, has therefore been the main area of focus for the Company since
adopting the TCFD recommendations.
including climate matters, and progress
Management
The Investment Adviser is responsible for day-to-day management
of ESG,
is regularly
communicated to the Board as described on p.32. ESG is a Board
agenda item for both the Board of the Company and the Investment
Adviser, where it is discussed as part of wider strategic priorities and
risk management.
Roles and responsibilities concerning ESG matters, which include
climate, are defined within the Company’s ESG structure on p.32. The
Investment Adviser oversees the implementation of the Company’s
ESG Strategy, which includes a Climate Change Mitigation pillar
and specific climate-related commitments and KPIs. In line with
this strategy, the Investment Adviser works with the Company’s
key service providers to embed climate considerations across the
investment lifecycle, including pre-investment due diligence, asset
management and reporting. Asset data collected from service
providers is collated by the Investment Adviser and used to inform
the ongoing assessment of climate-related risks and opportunities.
During the reporting period, the Company used scenario
analysis37 to better characterise its most material climate-
related risks and opportunities, and understand how they
could materialise over short, medium, and long-term
time horizons (2030, 2040 and 2050, respectively). Two
scenario analyses were undertaken: the first assessed risks
associated with the transition to a low carbon economy, and
the second focused upon the impacts of “extreme heat”;
identified as a salient physical risk to the Company during
previous climate screening workshops. The scenarios used
for the analyses are outlined in table 1. The methods used to
conduct the analysis are described in the Risk Management
section (see pages 27- 42).
Table 1: Scenarios used for transitional and physical
scenario analyses, based on established climate models.
Broad alignment exists between each set of scenarios,
despite slight differences in warming implications.
Description of Scenario
Net Zero by
2050
Global cooperation for effective regulation & mitigation of emis-
sions, avoiding the worst impacts of climate change. Shifts occur
gradually toward a more sustainable & inclusive path, meeting
Paris Agreement goals.
WARMING IMPLICATIONS
Physical
Transitional
<2°C
1.5°C
Delayed
Transition
Progress is delayed; effective policies are not introduced until
2030 or later, and in a more rapid and disruptive manner.
Warming exceeds 2°C and a degree of environmental
degradation occurs, but damages are constrained by
improvements in energy and resource use.
2-4°C
<2°C
Current
policies
Continued emphasis on economic growth and technological
progress. Effective policies to decarbonise are not introduced
globally and there is continued reliance on fossil fuels, leading to
high levels of warming, which could exceed 4°C.
>4°C
>3°C
37. Assumptions and limitations: The Company acknowledges the uncertainty offered by climate change scenarios, and thus the
results of the scenario analyses will be used as an approximate, rather than definitive, guide.
44
TASK FORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Risk & Opportunities
Extreme Heat
Above a certain temperature threshold (around
25°C), heat can start to affect multiple components
of PV systems, resulting in efficiency losses in PV
modules, accelerated PV cell damage, and inverter
failure. As average temperatures increase with
climate change, the IPCC predicts extreme heat
events will become more frequent and severe38,
presenting a risk to the Company’s portfolio over
the short, medium, and long-term. Extreme heat
on PV systems was therefore the focus of the
Company’s first physical scenario analysis.
During the summer of 2022,
temperatures in the UK
exceeded 40°C for the first time,
deemed by the Met Office as
“virtually impossible”39 without
human-induced climate change
In addition to PV systems, the impact of extreme
heat on battery storage systems was evaluated.
Analysis of technical specifications revealed that
battery storage systems are resilient to the UK
temperature ranges predicted across all three
scenarios, with in-built cooling systems able to
maintain internal ambient air temperature and
therefore optimal asset performance. Therefore,
based on the current analysis, it was concluded that
extreme heat is unlikely to present a material risk to
the operation of battery storage systems adopted
into the Company’s portfolio in the future.
38. Chapter 11: Weather and Climate Extreme Events
in a Changing Climate | Climate Change 2021: The
Physical Science Basis (ipcc.ch)
39. A milestone in UK climate history - Met Office
Table 2: Physical scenario analysis, with focus upon the potential impact of extreme heat on the Company’s current solar PV portfolio.
DRIVER
DESCRIPTION
RISK IMPACT
OPPORTUNITY
TIME HORIZON
Extreme heat
Changing
wind
patterns
Declines in PV
performance occur
above their optimum
operating temperature
(~25°C). Increasing
average annual
temperatures are
set to heighten this
chronic risk, incurring
yield losses of varying
degrees depending on
scenario.
Extreme heat can
induce inverter and
transformer failure,
representing an acute
risk. Portfolio exposure
was modelled per
scenario based
on the number of
days incurred over
an extreme heat
threshold, set at 33°C
based on historic
events experienced by
the portfolio.
Changes in wind
conditions may impact
generation of the Com-
pany’s wind portfolio.
Storms are likely to
become more common
and are more unpre-
dictable compared to
other physical risks.
[L] Impact
grows over
time, reaching
peak in the
long term.
Increased temperatures are unlikely
to present as an opportunity. Extreme
heat can reduce the voltage a PV panel
can generate and lower its efficiency.
However, estimated financial losses
are small compared to projected
revenues, especially with high
energy prices. Potential impact can
also be reduced through proactive
maintenance.
[L] As above.
The Company has an opportunity to
navigate the risk through enhanced
pre-investment due diligence and
targeted resilience measures for assets
within regions at greatest risk. Further,
battery technologies were assessed to
be resilient to extreme heat impacts in
all scenarios; supporting revenues into
the long-term.
Yield reductions, which translate directly
into revenue losses, were forecasted in
all three scenarios modelled, with the
greatest impact felt in the >4°C scenario
in the mid-long term. County-level
generation and temperature scenarios
were mapped and overlain, revealing
the South East to be potentially most
exposed to yield-related financial losses,
although cross-county differences were
small. The extent of financial loss will
also depend on future energy prices,
which have displayed significant volatility
over the past few years.
The analysis revealed much greater
variation in county-level yield losses,
enabling the parts of the portfolio most
exposed to this risk to be identified. In
a 2-4°C scenario, the majority of the
Company’s generation is not located in
the most affected counties. However,
a greater proportion may become
exposed in a >4°C scenario, as more
counties experience frequent and severe
heatwaves. The unpredictable nature of
acute heat events may result in non-
linear financial impact. Further, other
risks associated with extreme heat which
were not modelled, such as equipment
damage and staff safety & productivity,
may compound costs and revenue losses.
Turbines can stop generating at high wind
speeds and there is potential for asset
damage.
TBC – analysis to be
conducted in FY23-24.
TBC – analysis
to be conducted
in FY23-24.
The Company will undertake a second
physical scenario analysis to better
characterise the impact of changing wind
patterns on its wind portfolio.
45
TASK FORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Transition Risk
The transitional scenario analysis qualitatively assessed the impact of potential policy, regulatory, technology, and market changes associated with mitigative and adaptative responses to climate change.
Table 3: Transitional scenario analysis undertaken in relation to the Company’s investments.
DRIVER
DESCRIPTION
RISK IMPACT
OPPORTUNITY
TIME HORIZON
Technology
advances in the
energy sector
Rapid technological advances
stimulated by ambitious climate
policy action in a 1.5°C and <2°C
scenario.
Business reputation
in the low carbon
transition
Policy & legal
action to constrain
polluting activities
Enhanced scrutiny over
the Company’s perceived
contribution to or detraction
from the transition to a low-
carbon economy is both a
risk and opportunity in each
scenario. The degree and timing
are dependent on business
responses to pressure exerted by
stakeholders.
Stringency of climate policy
action is a distinguishing factor
between scenarios; knock-on
impacts could be felt in the
market and on the Company’s
reputation.
Accelerated asset depreciation over the long-term, felt most
strongly in a 1.5°C or <2°C scenario, may result in significant
expenditure to upgrade the portfolio. Service provider costs may
increase to support upskilling around new technologies; existing
risks around technical labour shortages could be exacerbated.
Novel technologies, such as Carbon Capture and Storage (CSS),
could extend the viability of the fossil fuel industry, prolonging
current competition into the long term.
More decisive policy action in the 1.5°C scenario encourages
intensive scrutiny in the short-term, with greater expectations
around value chain oversight. Should this result in the worst
climate damages being avoided, risks diminish as sustainability
becomes “the norm”. Reputational risks are highest in the
mid-term in the <2°C scenario, as timelines to halt warming
contract. Policy inertia could also trigger increasing pressure
on companies from non-government stakeholder groups, as
physical climate impacts heighten.
Advancements in renewable technologies may result in greater
yields and therefore higher revenues. Technology advancements
in the 1.5°C and <2°C scenarios would coincide with asset end
of life for most of the portfolio; repowering assets with new
technologies could be a significant growth opportunity. In the
>3°C scenario, efficiency improvements are likely, but do not
offer the same degree of transformational opportunity.
[M] [L]
The 1.5°C scenario stimulates immediate demand for
sustainable investments and energy in the short-term; the
Company has a great opportunity to fulfil this, demonstrating
climate leadership. Opportunities are highest in the <2°C
scenario over the long-term, as there will be aggressive
decarbonisation to try and reach 2050 milestones. The
Company’s strong reputation will help catalyse further
investment.
[S] [M] [L]
Risks are most apparent in the 1.5°C and <2°C scenarios, in the
long-term, by virtue of decisive policy action. The most extensive
policy & legal action is needed for <2°C, as prior government
inaction forces accelerated timescales to reach decarbonisation
goals. An attractive policy environment may encourage
renewables market entry by large players, including those in the
oil & gas industry, resulting in market saturation and increased
competitivity.
Opportunities associated with policy changes match or exceed
the level of risk predicted across all scenarios and time horizons.
A policy environment which favours renewables is expected to
cause carbon price spikes and channel greater investment into
renewables, both from ethical investors and due to government
incentives supporting the clean energy transition.
[L]
The level & timing
of government
market intervention
Shifts in supply and demand
for certain commodities are
expected as they are repriced in
a low-carbon economy. Resultant
impact on financial markets
could create market uncertainty
and disruption.
Disruptive market interventions are anticipated in the medium-
term in the <2°C scenario, as governments steer the economy
to limit warming. Market volatility and supply chain shocks may
impact the Company’s key service providers and suppliers into
the long-term, due to shortages and inflated costs in spares.
Stranded assets and wider economic slowdown are possible as
disjointed policy action curtails economic growth.
A turbulent market environment could generate ample
opportunities for the Company; a sudden rush to transition
may cause spikes in the demand for renewables. Aggressive
decarbonisation in the <2°C scenario is expected to offer the
greatest opportunity. Opportunities in the >3°C scenario remain
static over the short- to long-term, as less incentive exists for
markets to shift to low carbon energy sources.
[M] [L]
46
TASK FORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Resilience
Drawing on the results from both analyses, the
Company has assessed its resilience to climate-
related risk in each of the scenarios, summarised
below. Work will continue to integrate findings
from the scenario analyses into the Company’s risk
management processes, strategic and investment-
related decisions, and financial planning.
its
investments,
Net Zero (1.5°C – 2°C)
Due to the nature of
few
transitional risks are expected to present a high
risk to the Company. The greatest risks in this
scenario come from technology change in the
long-term. This could quicken the rate of asset
depreciation and require large scale investment
to install new technologies across the portfolio.
However, the Company views the accompanying
opportunity as high. Technological progress may
lead to greater yielding PV assets as well as better
battery storage solutions, combining to increase
revenues. Policy and legal shifts are also likely to
present high opportunities over the long-term,
which the Company is well placed for, as they
create conditions conducive to growth of the
portfolio.
Delayed Transition (2-4°C)
In a Delayed Transition, the medium-term is more
disruptive than the other scenarios. This is due to
significant shifts required to move to a low-carbon
trajectory, compensating for previous inaction.
Again, this creates both risks and opportunities
to the Company. Market shifts are particularly
likely: service providers may face supply chain
issues, and revenues may be exposed to risk from
volatility in power prices. However, the opportunity
from a delayed transition is that there is a sudden
shift away from fossil fuels which is likely to cause
a demand spike for renewable energy. With the
Company’s growing portfolio and development
pipeline, it can facilitate this increased demand.
Reputational opportunities are also highest in
this scenario in the long-term, as increased value
is placed on sustainability credentials to limit
warming. In a 2-4°C scenario, chronic physical
risk increases over time as PV cells incur greater
yield losses with rising temperatures, but to a
lesser extent than in the >4° scenario. Similarly,
incidences of acute heat events are likely to
increase over time but are less impactful in this
scenario, as much of the Company’s generation
capacity is located away from the anticipated worst
affected counties.
is generally exposed to
Current Policies (>3, >4°C)
The Company
lower
transitional risks and opportunities in this scenario.
As a provider of renewable energy, it stands to gain
from a transition to a low carbon economy. If this
does not occur, there may be reduced opportunities
to grow the portfolio, especially compared with
other scenarios. A lack of climate policy and action
will result in the greatest increase in both average
and extreme temperature, making the physical
risk to assets most severe in this scenario. It is
anticipated that battery assets will be resilient to
these effects, therefore, the Company’s focus will
be on using the results of the climate modelling
to inform mitigation measures to enhance the
resilience of its solar portfolio to growing heat-
related risk.
4. Risk Management
Risk identification and assessment
Risks, including those relating to climate, are identified, assessed, and discussed by the
Audit and Risk Committee and included as part of the Company’s risk matrix. The Board
currently uses a 1-3 rating to assess the potential likelihood and impact of any particular
risk occurring. The risks are assessed in a pre- and post- mitigated setting, to map risks
into a composite score ranging from 1-9.
During the reporting period, the Board adopted risk time horizons; these have been
applied against all risks within the Company’s risk register. Principal and emerging risks
are disclosed annually within the Company’s Financial Accounts.
Last year, the Company undertook a climate materiality assessment to identify physical
and transitional climate-related risks considered to have the greatest potential to impact
its investments, revenues, and organisational expenditure. This year, through the means
of scenario analysis, the Investment Adviser sought to better characterise the impacts of
identified material risks.
Extreme heat was prioritised for the physical analysis, examining the impacts on solar PV
(being the dominant asset class in the Company’s portfolio) and battery storage (an asset
class it intends to grow over coming years). The scenarios used in the physical analysis
were derived from Shared Socioeconomic Pathways (SSPs)40; the transitional scenarios
were derived from global climate models produced by the Network for Greening the
Financial System (NGFS)41. The SSP pathways denote higher warming potential, which
better highlights physical risks, whilst the NGFS pathways more effectively portray
transitional impacts. The results of this analysis are presented in the ‘Strategy’ section of
this report and will continue to be developed and integrated into business strategy and
financial planning.
On a daily basis, asset management and O&M service providers identify, escalate, and
respond to climate-related incidents impacting the Company’s assets. Irregularities
in generation are flagged in real time by monitoring teams who diagnose the issue,
classify the risk, and communicate it to asset management and O&M teams through
incident reports. Examples of risks classified as “climate-related” include string-level
identification of inverter failures during heatwaves and downtime of wind turbines due
to storm activity.
40. The SSPs are a range of new “pathways” built by an international team of climate scientists,
economists and energy systems modellers that examine how global society, demographics
and economics might change over the next century with climate change.
41. The NGFS, established at the Paris “One Planet Summit” in 2017 by eight central banks and
supervisors, has developed global climate models to provide granular data on transition
pathways and climate impacts, to understand how climate change, climate policy and tech-
nology trends could evolve in different futures.
47
TASK FORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Climate considerations are integrated into pre-
investment ESG due diligence and are a key
consideration within the Company’s ESG strategy,
ensuring the long-term management of climate
matters post-investment. Development partners,
including Bluefield Renewables Development
Limited, ensure that climate factors are considered
during the development process of new assets, for
example through flood risk assessments.
The Company is also taking steps to build a more
resilient supply chain. For instance, the Company
has developed a Supplier Code of Conduct to
communicate its ESG expectations, including the
measurement and reduction of greenhouse gas
emissions.
Mitigation measures relating to transitional risks
are presented in Table 4; those relating to physical
risks are presented within the Company’s 2022
TCFD Report.
STORM CLOUDS AT GRANGE
Table 4: Mitigation measures used by the Company to manage transitional climate-related risks.
TECHNOLOGY
ADVANCES
BUSINESS
REPUTATION
POLICY & LEGAL
ACTION
MARKET
DISRUPTION
The Investment Adviser models the operational asset life, taking account of depreciation and physical degradation,
to forecast NAV and portfolio revenue. Outputs feed into the Company’s risk register and are regularly updated to
inform long-term scenario planning. This enables active risk management, including the arrangement of appropriate
contingency funds for equipment failure and longer-term decision-making around asset repowering and equipment
upgrades, helping reduce NAV depreciation. Diversification is another important resilience mechanism, allowing the
Company to expand into alternative technologies; it has recently upscaled battery storage funding in its development
pipeline. The Company’s expanding development capacity also gives it greater scope to implement new technologies
as they become commercially viable.
The Company’s continued transparency regarding the climate actions it is taking, including voluntary alignment with
the TCFD, will help mitigate against reputational risks. Robust compliance with ESG regulation will further support
this. Within its ESG report, the Company reports both its achievements (through a comprehensive set of commitments
and KPIs) and challenges, ensuring a balanced perspective. These actions stand to strengthen the Company’s
reputation and financial benefit could be realised in the form of increased investment, as investor preferences shift
towards low carbon energy.
The Investment Adviser’s legal counsel keeps abreast of upcoming policy and legal changes, and external legal
and technical advisers support the Company in maintaining compliance with applicable policy and regulation. The
Company has developed a robust set of policies and procedures to externalise ESG expectations to third parties,
helping cascade best practice across the wider supply chain. As a FCA regulated entity, the Investment Adviser
evidences the highest standards of professional conduct.
The Company’s investment strategy of owning and operating predominantly subsidised assets provides strong
visibility of revenues and helps protect the Company against future regulatory changes in power markets. The
Investment Adviser supplements this by continuously monitoring new long-term fixed revenue streams that are
becoming available. For example, it has secured contracts for difference (CfD) as part of the UK Government’s fourth
allocation round, enhancing revenue visibility and security. In the future, the Company is expected to diversify its
revenue streams through investment in batteries, which benefit from power price volatility. Novel revenue streams
and technologies are continually evaluated for their ability to enhance the resilience of the Company’s long-term
investment objective.
48
TASK FORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORTANNUAL REPORT AND FINANCIAL STATEMENTS 5. Metrics and Targets
Metrics
The financial performance and overall success of the Company is intrinsically linked to
opportunities that result from the transition to a low carbon economy. The Company
monitors this through metrics relating to returns and dividends paid to shareholders,
which are underpinned by the total generation yield of the portfolio.
The Company also tracks its ESG performance against a set of commitments and KPIs,
enabling the Company to manage its ESG risks and opportunities alongside financial
objectives. Insights from scenarios analyses will be used to inform metrics used by the
Company to assess and monitor climate-related risks and opportunities.
GHG Inventory results
The Company’s GHG inventory relating to the reporting period is presented in Table 542,
calculated in line with the GHG Protocol Corporate Accounting Standard. DEFRA GHG
reporting conversion factors, DEFRA conversion factors by SIC, and AIB residual mix
emissions factor datasets were used in the analysis (corresponding with the period
emissions were incurred).
Table 5. The Company’s GHG emission inventory for the period 1 July 2022 – 30 June
2023, highlighting emission results per category.
Emissions Location-
Based (tCO2e)
19
1,244
%
0%
4%
Emissions
Market-Based
(tCO2e)
19
1,422
%
0%
5%
27,963
96%
27,963
95%
27,535
27,535
427
1
427
1
Scope 1
Scope 2
Scope 3
Purchased Goods &
Services
Fuel and Energy
Related Activities
Waste Generated in
Operations
The Company defines its organisational boundaries
using the Operational Control approach as per
the GHG Protocol Corporate Standard. Under this
approach, the Company will account for 100% of
the GHG emissions from sources over which it has
operational control.
Table 5 presents the results of the Company’s
GHG inventory for the financial year ended 30
June 2023. The Company has enhanced its GHG
accounting methodology since its first inventory
(published in its previous annual report for the
financial year ended 30 June 2022), expanding the
scope 3: Purchased Goods and Services category
boundary to include spend data from every SPV,
holding company and parent company within the
Company structure. For this reason, the results
previously published are not comparable with the
data presented in Table 5.
it evolves
increased
the accuracy of
These changes
the Company’s
inventory, and the Company
will continue to evaluate and adjust its GHG
accounting methodology as
its
approach. The Company will review opportunities
to enhance the accuracy of scope 3 data, given
that this represents the majority of the footprint.
The Company is working to continually improve
its GHG inventory; however, some aspects of
data collection remained challenging, and as a
result, a small proportion of data was estimated
or extrapolated.
The Company engages an external consultant
to calculate its GHG inventory. The Company
published emissions data relating to the year
ended 31 December 2022 as part of its SFDR
PAI statement. During the calculation of the
inventory covering year ended 30 June 2023, an
error was identified within the Purchased Goods
& Services category of scope 3, which resulted
in an overstatement of the Company’s scope 3
emissions. As a result, a revised methodology
was applied to both inventories. This also involved
a review and update of the emissions factors
used within the calculations to further increase
accuracy. The Company has since updated its SFDR
PAI statement to reflect any changes concerning
the reference period ending 31 December 2022.
Climate-related targets
The Company’s refreshed ESG commitments and
KPIs are presented on p.40. Most notably, during
the coming year the Company has committed to
developing a Net Zero pathway, which will involve
the creation of decarbonisation targets, further
enhancing the metrics used by the Company to
manage climate-related risks and opportunities.
The Company will also undertake a second
physical scenario analysis, this time focused
upon the impact of changing wind patterns on the
Company’s wind assets, to provide a more holistic
view of the potential impacts of climate change on
its portfolio. The results will feed into the creation
of a climate adaptation plan for the portfolio.
Total
29,226
29,404
42. Calculation of the carbon footprint was supported by a third party consultant, but it has not been externally verified.
49
TASK FORCE FOR CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Strategic Report
1. Company’s Objectives and Strategy
The Company seeks to provide Shareholders with an attractive and
sustainable return, principally in the form of quarterly income distributions,
by investing primarily in solar energy assets located in the UK. The Company
also invests a minority of its capital into other renewable assets, including
wind and energy storage.
Subject to maintaining a prudent level of reserves, the Company aims to
achieve the quarterly income distributions through optimisation of asset
performance, acquisitions and the use of gearing. The Company’s original
dividend target for the financial year ended 30 June 2023 was 8.40pps.
Having now declared four interim dividends totalling 8.60pps, the Company
is pleased to have exceeded this target.
The Operational and Financial Review section on page 54 provides further
information relating to performance during the year.
50
ANNUAL REPORT AND FINANCIAL STATEMENTS 2. STRUCTURE
The Company holds and manages its investments through a UK limited company,
Bluefield Renewables 1 Limited (BR1), in which it is the sole shareholder.
Shareholders
Independent Board
INDEPENDENT DIRECTORS
Strategy, Governance and
Oversight
COMPANY MANAGEMENT
Parent
Bluefield Solar
Income Fund Limited
(Guernsey: LSE Listed,
July 2013)
Company Advisers &
Service Providers
(Company Secretary, Legal,
Corporate Broking, Public
Relations)
SERVICE
PROVIDERS
INVESTMENT
ADVISORY
AGREEMENT
Investment Adviser
BLUEFIELD PARTNERS LLP
EQUITY OWNERSHIP
SERVICES
Asset Manager
BLUEFIELD SERVICES
LIMITED
O&M Contractor
BLUEFIELD OPERATIONS
LIMITED
Portfolio
Holding Company
Bluefield Renewables
1 Limited
(UK)
RCF AGREEMENT
Revolving
Credit Facility
RBSI / SANTANDER
LTF AGREEMENT
Long Term
Finance Provider
AVIVA
Portfolio
Sub Holding
Companies
ASSET MANAGEMENT AGREEMENT
SPVs
(Portfolio
Investments held
in SPVs ultimately
owned by the
holding
company)
Development Partners
O&M SERVICES
PROJECT DEVELOPMENT AGREEMENT
Management
Board and Committees
The independent Board is responsible to Shareholders for the overall
management of the Company. The Board has adopted a Schedule of Matters
Reserved for the Board which sets out the particular duties of the Board. Such
reserved powers include decisions relating to the determination of investment
policy, approval of new investments, oversight of the Investment Adviser,
approval of changes in strategy, risk assessment, Board composition, capital
structure, statutory obligations and public disclosure, financial reporting and
entering into any material contracts by the Company.
Through the Committees and the use of external independent advisers, the
Board manages risk and governance of the Company. The Board consists of five
independent non-executive Directors, three of whom are Guernsey residents.
See the Corporate Governance Report for further details.
Investment Adviser
The Investment Adviser’s key responsibilities
identifying and
recommending suitable investments for the Company and negotiating the
terms on which such investments will be made.
include
Through a Technical Services Agreement with BR1 the Investment Adviser is
also responsible for all issues relating to the supervision and monitoring of
existing investments. The Company has appointed BSL, a company with the
same ownership as the Investment Adviser, to provide asset management
services for the Company’s portfolio. BOL and BRD also have the same
ownership as the Investment Adviser and provide operational management
for the majority of the Company’s investments and a pipeline of development
projects for the Company, respectively.
During the Period the Investment Adviser was paid a fee equivalent to 0.8% of
NAV at 30 June 2023 (0.6% at 30 June 2022), reflecting the increase in the
Company’s assets. A summary of the fees paid to the Investment Adviser is
given in Note 16 of the financial statements. The fees paid to BSL, BRD and
BOL, the Solar Asset Management, New Build Development and Operations
and Maintenance businesses under common ownership with the Investment
Adviser, are also detailed in Note 16.
Administrator
The Board has delegated administration and company secretarial services
to the Administrator. Further details on the responsibilities assigned to the
Investment Adviser and the Administrator can be found in the Corporate
Governance Report.
51
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS
Employees and Officers of the Company
The Company does not have any employees and therefore policies
for employees are not required. The Directors of the Company are
listed on page 67.
Investment Process
Through its record of investment in the UK renewable energy market,
the Investment Adviser has developed a rigorous approach to
investment selection, appraisal and commitment.
Repeat transaction experience with specialist advisers
The Investment Adviser has worked with a range of specialist advisers
from multiple disciplines in each of the transactions it has executed in
the UK and European markets and is able to source relevant expertise
to address project issues both during and following a transaction.
Application of standardised terms developed from direct
experience
The Investment Adviser has developed standardised terms which have
been specifically tested by reference to real transaction and project
operational experience. Whilst contract terms are specifically negotiated
and tailored for each individual project, the Investment Adviser always
includes contractual protection regarding recovery of revenue losses for
underperformance and obligations for correction of defects.
Rigorous internal approval process
All investment recommendations issued to the Company are made
following the formalised review process described below:
(1) Investment origination and review by Managing Partners
Before incurring costs in relation to the preparation of a transaction,
a project is concept reviewed by the Investment Adviser’s Managing
Partners, following which a letter of interest or memorandum of
understanding is issued, and project exclusivity is secured.
(2) Director Concept Approval
In the event that material costs are to be incurred in pursuing a
transaction, a concept paper is issued by the Investment Adviser
for review by the Board. This fixes a project evaluation budget as
well as confirming the project proposal is in line with the Company’s
investment policy and strategy and aligned to ESG principles.
(3) Due diligence
In addition to applying its direct commercial experience in executing
renewable energy acquisitions and managing operational projects,
the Investment Adviser engages legal, technical, ESG and, where
required, insurance and accounting advisers from its extensive
network to undertake independent due diligence.
AERIAL VIEW AT YELVERTOFT
(4) Bluefield Partners LLP Investment Committee
Investment recommendations issued by the Investment Adviser
are made following the submission of a detailed investment
paper to the Investment Committee. The Investment Committee
operates on the basis of unanimous consent and has a record of
making detailed evaluation of project risks. The investment paper
submitted to the Investment Committee discloses all interests
which the Investment Adviser and any of its affiliates may have in
the proposed transaction.
(5) Board approval
Following approval by the Investment Adviser Investment
Committee, investment recommendations are issued by the
Investment Adviser for review by the boards of the Company
and BR1. The boards undertake detailed review meetings with
the Investment Adviser to assess the recommended projects. If
the boards of both the Company and BR1 approve the relevant
transaction, the Investment Adviser is authorised to execute it in
accordance with the Investment Adviser’s recommendation and
any condition stipulated in the boards’ approvals. The boards are
regularly updated on the pipeline of potential new investments to
help provide context for capital allocation decisions.
(6) Closing memorandum
Prior to executing the transaction, the Investment Adviser completes
a closing memorandum confirming that the final transaction is in
accordance with the terms presented in the investment paper to
the Investment Committee; detailing any material variations and
outlining how any conditions to the approval of the Investment
Committee and/or Board approval have been addressed. This
closing memorandum is countersigned by an appointed member of
the Investment Committee prior to completing the transaction.
Managing conflicts of interest
The Investment Adviser is regulated by the FCA and is bound by
conduct of business rules relating to management of conflicts of
interest. The Board has noted that the Investment Adviser has
other clients and has satisfied itself that the Investment Adviser
has procedures in place to address potential conflicts of interest
which, together with any mitigation measures, are disclosed in the
investment recommendation for each investment.
52
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS
STRATEGIC REPORT
ANNUAL REPORT AND FINANCIAL STATEMENTS
3. Investment Policy
The Company invests in a diversified portfolio of renewable
energy assets, all located within the UK, with a focus on
utility scale assets and portfolios on greenfield, industrial
and/or commercial sites. With a focus on solar the Company
has the ability to invest up to 25% of the Company’s GAV
into complementary renewable technologies, principally
wind and storage. The Company’s responsible investment
approach is discussed in section 4 of the Strategic Report.
Individual assets or portfolios of assets are held within
SPVs into which the Company invests through equity and/
or debt instruments. The Company typically seeks legal
and operational control through direct or indirect stakes of
normally 100% in such SPVs, but may participate in joint
ventures or minority interests to gain exposure to assets
which the Company would not be able to acquire on a
wholly-owned basis. In the situation of joint ventures or
minority interests, the Company would ensure a high degree
of influence over decisions.
The Company may, at holding company level, make use of
both short term debt finance and long term structural debt,
but such holding company level debt (when taken together
with the SPV finance noted above) will not exceed 50% of
the GAV. It may also make use of non-recourse finance at the
SPV level to provide leverage for specific renewable energy
infrastructure assets or new portfolios provided that at the
time of entering into (or acquiring) any new financing, total
non-recourse financing within the portfolio will not exceed
50% of GAV.
While it is not the Company’s policy to be a long term holder
of non-UK assets, the Company can invest up to 10% of GAV
into assets outside the UK to enable it to acquire portfolios
with a mix of UK and non-UK assets. Furthermore, up to 5%
of the GAV may be invested into pre-construction UK solar
development opportunities. As at 30 June 2023 this is less
than 2%. The aggregate exposure to other renewable energy
assets, energy storage technologies, UK solar development
opportunities and non-UK assets will be limited to 30% of
the Company’s GAV.
No single asset (excluding any third-party funding or debt
financing in such asset) will represent, on acquisition, more
than 25% of the NAV.
The Company derives its revenues from the sale of ROCs, FiTs
and CfDs (or any such regulatory regimes that may replace
them from time to time) alongside the sale of electricity
under power purchase agreements with counterparties such
as co-located industrial energy consumers and wholesale
energy purchasers.
The Company may invest up to 5% of GAV into developing
further UK solar development opportunities and purchase
assets pre- or post- construction in order to:
1. Maximise quality and scale of deal flow;
2. Optimise the efficiency of the acquisitions;
3. Minimise risk via appropriate contractual agreements; and
4. Acquire assets using prudent assumptions.
Listing Rule Investment Restrictions
The Company currently complies with the
investment
restrictions set out below and will continue to do so for so
long as they remain requirements of the FCA:
• neither the Company nor any of its subsidiaries will conduct
any trading activity which is significant in the context of the
Group as a whole;
• the Company must, at all times, invest and manage its
assets in a way which is consistent with its objective of
spreading investment risk and in accordance with the
published investment policy; and
• not more than 10% of the GAV at the time the investment
is made will be invested in other closed-ended investment
funds which are listed on the Official List.
As required by the Listing Rules, any material change to the
investment policy of the Company will be made only with the
prior approval of the FCA and Shareholders.
4. Responsible Investment
As an investment company with a long-term horizon, the Company
is well positioned to integrate ESG considerations and evaluate
environmental and social impacts over time. ESG is embedded
within the Company’s investment process, and a standalone ESG
questionnaire ensures detailed checks are made in relation to ESG
risks and opportunities, as identified by SASB standards. Diligence
is also undertaken in relation to requirements of the EU SFDR,
including in relation to PAI indicators and climate risk screening, and
the EU Taxonomy’s Do No Significant Harm (DNSH) criteria. ESG due
diligence may be outsourced to a competent third party, with the
resulting reports reviewed by both the Investment and ESG teams.
ESG due diligence is also undertaken on any Operations &
Maintenance (O&M) arrangements which may form part of the
investment opportunity, including in relation to topics such as
human rights, business ethics, and Health and Safety (H&S). ESG
continues to be integrated into the vetting and monitoring of third-
party service providers, including use of a comprehensive ESG due
diligence process in association with engineering, procurement, and
construction (“EPC”) site contractors. Further information on the
Company’s approach to supply chain management can be found on
p.37.
Post-acquisition, there is active management of sustainability
issues over the operational lifetime of the assets. Each asset will be
subject to routine ESG data reporting to allow the remote monitoring
of ESG performance and fulfilment of ESG reporting requirements.
For a full breakdown of the Company’s responsible investment
approach, please refer to the Company’s Sustainable Investment
Policy, available on its website.
Principles for Responsible Investment;
The Investment Adviser has been signatory to
the PRI since 2019
53
5. Operational & Financial Review for the period
Key Performance Indicators
As at 30 June
2023
As at 30 June
2022
Market Capitalisation (£’000s)
733,743
801,002
Total dividends per share
declared in relation to the year
8.60p
8.20p
NAV (£’000s)
854,189
858,391
NAV per share
139.70p
140.39p
Total Shareholder Return
(2.03)%
14.55%
Market Capitalisation(1)
The Directors regard the Company’s market capitalisation as an
important secondary indicator of the trading liquidity in its shares.
The Company’s market capitalisation – the market value of its
Ordinary Shares at the end of the Period – fell to £734m, from
£801m 12 months earlier. This reflects an increase in the discount
to underlying NAV.
Total Dividends Per Share Declared(1)
BSIF generates returns primarily in the form of distributions and the
Company has a progressive dividend target, so it is important that the
dividend increases each year. During the year the dividend grew by
4.9% from 8.20pps to 8.60pps.
(1) please see Alternative Performance Measures on pages 105 to 106 for
further details.
NAV
The Company’s average NAV forms the denominator of the Total
Expense Ratio calculation and is thereby a determinant of BSIF’s total
expense ratio. As the variable costs of running the company tend to
reduce with increasing NAV a larger NAV will reduce the TER. The finite
life of renewable asset leases will ultimately lead to attrition of the
Company’s NAV. The Directors recognise this as a significant feature
and have expanded the mandate of the Company in part to mitigate
this effect.
NAV Per Share(1)
Whilst the Company’s principal goal is to produce income, the NAV per
share movement informs our shareholders and the Board whether this
income has been produced at the expense of capital growth. The NAV
per share fell modestly during the year and produced a negative return
to capital, largely as result of valuation uplifts deriving from strong
demand for electricity and renewable generation assets being offset
by the impact of a higher cost of capital in the sector.
Total Shareholder Return(1)
This is measure of the combined return to Shareholders from dividend
income and share price movements and whilst this should be positive
in the long-term, short term fluctuations in shareholder and market
sentiment can cause this number to be positive or negative. The return
of -2.03% for 2023 compared to the return of 14.55% in 2022 reflects
the significant reduction in share price during the year to 30 June 2023
following a substantial increase in UK interest rates..
Acquisitions
See the Investment Adviser’s Report in Section 2.
Portfolio Performance
See the Investment Adviser’s Report under Sections 2 and 4.
The Company’s PPA strategy is to enter into 18 to 36 month electricity
sales contracts, with contracting periods spread quarterly across the
portfolio in order to minimise the portfolio’s sensitivity to short term
price volatility.
Summary Statement of Comprehensive Income
Year ended 30
June 2023
£ million
Year ended 30
June 2022
£ million
Total Income
(Note 4 of the financial statements)
0.9
0.8
Change in fair value of assets
(Note 8 of the financial statements)
48.2
175.4
Administrative expenses
(Note 5 of the financial statements)
(2.3)
(1.6)
Total comprehensive income
46.8
174.6
Earnings per share
7.65p
34.91p
Income for the period includes interest income and monitoring fees
paid by BR1 to BSIF.
The total comprehensive income before tax of £46.8 million reflects
the performance of the Company when valuation movements and
operating costs are included. Further detail on valuation movements
of BSIF’s portfolio is given in the Report of the Investment Adviser.
The Company’s ongoing charges ratio for the Period was 1.00%
(2022: 1.02%), calculated in accordance with the AIC recommended
methodology, which excludes non-recurring costs and uses the
average NAV in its calculation. See page 106 for a tabular calculation
of the Company’s ongoing charges ratio.
54
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS
6. Directors’ Valuation* of Company’s portfolio
7. Principal and Emerging Risks
The Investment Adviser, or an independent external valuer, is
responsible for preparing the fair market valuation recommendations
for the Company’s investments for review and approval by the Board.
Valuations are carried out quarterly, as at 30 September, 31 December,
31 March and 30 June, with an external review as and when the Board
deems appropriate.
The fair market value adopted for the portfolio was £1,018.4m (Note
8 of the financial statements), and is confirmed by an alternative
approach using a combination of discounted cash flows of income
generated from the portfolio of investments.
The Board reviews the recommendations of the Investment Adviser
to form an opinion of the fair value of the Company’s investments. A
detailed analysis of the Directors’ Valuation is presented in the Report
of the Investment Adviser.
SOLAR PV AT FREATHY
* Directors’ Valuation is an alternative performance measure to show the
gross value of the SPV investments held by BR1, including their holding
companies. A reconciliation of the Directors’ Valuation to Financial assets
at fair value through profit and loss is shown in Note 8 of the financial
statements.
Under the FCA’s Disclosure Guidance and Transparency
Rules, the Board is required to identify those material risks to
which the Company is exposed and to take appropriate steps
to mitigate those risks.
These inherent risks associated with investments in the renew-
able energy sector could result in a material adverse effect
on the Company’s performance and value of Ordinary Shares.
The Company’s risk register covers five main areas of risk:
• Portfolio Management;
• Fund Operations;
• Regulation and Compliance;
• External;
• Emerging.
PORTFOLIO MANAGEMENT
Each of these areas, together with the principal risks
associated with that category, is summarised in the table
below and includes commentary on the mitigating factors.
The list is a subset of a much larger set of risks which
the Board reviews on a regular basis. Emerging risks are
identified in the course of Board discussions and meetings
and are recorded in a separate area of the risk register.
During the Period, whilst the principal risks for the business
have not changed, there have been significant changes in key
assumptions as a result primarily of the continuing progress
around ESG and TCFD reporting, a bottom up review of the
risk matrix has been completed. This has led to the refreshed
summary of principal and emerging risks included in the
table below..
Risk
Potential Impact
Mitigation
1. Portfolio
Acquisition Risk
Poor investment decisions or
missed investment opportunities.
2. Portfolio
Operational
Risk
Underperformance of wind,
solar or storage plant versus
expectations at acquisition.
The Board reviews the Company's investment pipeline with
the Investment Adviser, who have substantial experience in
the sector, on a regular basis. Technical, legal, financial and
ESG due diligence is carried out prior to acquisition of both
secondary market and development market assets, and the
Board review market pricing comparisons where relevant
prior to transaction approval. Where large acquisitions are
planned, appropriate sensitivity scenario analysis is carried
out to properly assess the potential business risks.
The Investment Adviser presents quarterly operational
summaries, prepared by BSL and BOL, respectively the
Company’s Asset Manager and Operations and Maintenance
contractor, covering key performance indicators of each
(including PR, availability and
project performance
generation) with updates on remediation programmes
as undertaken
in order to maintain forecasted plant
performance.
55
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS FUND OPERATIONS
Risk
Potential Impact
Mitigation
3. Supply Chain
Risks
Projects in the Company’s development pipeline are becoming
more costly to develop and may be subject to delays due to
supply chain risks. High dependency on Chinese components
could impact availability of components and present potential
reputational risk.
The Company is aware of human rights risks associated with its
component supply chains, and also that these supply chains
are complex; it recognises that full traceability of components
is not currently possible.
4. Valuation error
Valuations of the SPV investments may be over or understated.
BOL the Company’s O&M contractor has made strategic purchases of long-lead time critical components such as inverters
and transformers.
The Company has a Modern Slavery Statement and Human Rights Policy, and ‘Human & Labour Rights’ and ‘Responsible
& Sustainable Procurement’ are priority topics within the Company’s ESG strategy. The Company has placed great focus
on enhancing its supply chain management practices, including adoption and roll-out of a Supplier Code of Conduct during
the reporting period. The Investment Adviser is part of the Solar Energy UK Supply Chain Taskforce, which is focused upon
developing systems and processes to improve transparency and sustainability within the PV supply chain.
Valuations presented by the Investment Adviser are underpinned by comparisons with other market transactions and
confirmed by the use of long term DCF modelling. The valuations are reviewed and challenged by the Board as a minimum
on a semi-annual basis.
The Investment Adviser has recently improved the valuation model to reduce the risk of errors. Detailed controls and internal
review procedures are in place to mitigate the risk of error.
Given the high level of judgement and subjectivity involved in setting the assumptions that drive the model, the Board robustly
challenges assumptions made on a semi-annual basis and uses third party data wherever possible to support inputs.
For example, to mitigate the impact of future power price volatility on the Company’s portfolio valuation, blended power price
curves from three leading forecasters are used in the portfolio cash flow model. The portfolio benefits from Government
subsidy in the form of FiT and ROC income.
The Board will consider the frequency of independent reviews of the financial model in conjunction with the Investment Adviser.
EXTERNAL
Risk
Potential Impact
Mitigation
5. Physical and
Transitional
Climate
Related Risks
Global climate change presents both risks and opportunities to
the Company. Whilst the Company is well positioned to benefit
from the opportunities arising from a decarbonising economy,
physical climate
impacts, particularly extreme heat and
changing wind patterns, have the potential to cause damage to
assets and impact generation, ultimately impacting revenues.
The Company continues to improve its climate resilience. The Company has embedded climate considerations firmly within
its ESG strategy, including adopting climate-related commitments and KPIs, and voluntarily reports in line with the TCFD.
Building upon its 2022 climate materiality assessment, in 2023 the Company undertook its first transitional and physical
scenario analyses, and this year will develop a Net Zero Pathway, in addition to a Climate Adaptation Plan for the portfolio.
The results of these activities will be used to inform the Company’s strategy and financial planning, helping build the climate
resilience of the portfolio over time.
56
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS STRATEGIC REPORT
ANNUAL REPORT AND FINANCIAL STATEMENTS
Risk
Potential Impact
Mitigation
6. Changing
Electricity
Market
Conditions
Annual income generation of the Company is sensitive to future
power market pricing.
Excessive movement in power prices could destabilise the
energy markets.
The Investment Adviser regularly updates the portfolio cash flow model to reflect future power market forecasts and other
relevant assumptions including the discount rate. Potential acquisitions are assessed using the most recent power market
forecast data available as well as how the revenue generated from the sale of electricity and subsidies supports the Company’s
existing portfolio. This is to ensure the Company continues to benefit from material levels of regulated revenues (currently c.60%
to 2035-37) which are directly correlated to inflation. A rolling programme of PPA contract expiries is maintained, ensuring that
the Company in any rolling 12 month period has limited exposure to significant movements in near term power prices.
A major structural shift in power demand or supply may impact
the Company’s ability to meet its dividend target.
7. Changes in tax
regime
There may be unfavourable tax related changes including
restrictions on renewables, or no relief on debt structuring.
Measures to protect UK consumers from power price increases
have been implemented and energy generators impacted
following the introduction of the Levy.
8. Changes to
Government
Plans
The UK Government is currently consulting with industry on
plans to reform the UK Electricity Market (REMA), which may
involve controls on future sales prices for renewable generators.
The Board has introduced a new policy of fixing 10% of the portfolio on floating PPAs, which track the N2EX Day Ahead market
(as opposed to a fixed price for the term of the PPA). The limited exposure to the Day Ahead market prices may allow the
capture of price spikes during the period of volatility in the wholesale power market.
The Company is developing new projects and has, for Yelvertoft, committed to a long term CfD. Following a review of the
benefits of integrating storage technologies within its portfolio, the Company is currently developing battery storage projects
to benefit from power price volatility.
An independent taxation review of the Company was carried out as part of the long-term debt financing procurement process. The
Company engages tax advisers to provide advice for all taxes across the portfolio but also to ensure compliance with regulatory
requirements. This advice has recently included the EGL implementation.
The Investment Adviser provides regular updates in this regard within the quarterly Board papers.
The Investment Adviser takes a proactive approach to supporting the energy transition, not only through its advisory role to
the Company, but also by engaging and supporting the Government to create a policy framework which can enable Net Zero.
This includes responding to government consultations, meeting with political leaders across the political spectrum to discuss
renewable energy and working with partners in the sector to engage in relevant discussions via the government’s Solar Energy
Taskforce.
9. Cyber risk
Key stakeholders could exchange corrupt or virus infected files
with key BSIF counterparties. Malicious software or firmware
may cause damage to hardware resulting in a loss of generation
or damage to the grid.
A group head of IT has been appointed by our Investment Adviser with specific responsibility for cyber security. Security
protocols have been strengthened and all staff made aware of emerging cyber risks with mandatory training being carried out.
BSL arranged penetration testing of 48.2% of the solar PV portfolio. Recommendations are being implemented across the
portfolio, where appropriate, to improve security.
A cyber-attack at the grid or one of the plants could lead to the
loss of generation. The grid is susceptible to cyber attacks due
to its national infrastructure importance.
10. Reputational
risk
Adverse publicity within the Renewable Energy sector could
damage the Company’s ability to raise additional finance and/
or acquire new capacity.
Market responses have been considered and agreed at all levels. The Board and the Investment Adviser ensure the Company’s
activities are fairly and accurately presented including through the Broker, Stock Exchange announcements, press releases
and the Company’s website. Any incidences of adverse publicity are monitored via the Company’s PR adviser.
Reputational risk could also arise from the Company’s
perceived contribution/detraction from the transition to a low
carbon economy. This could also lead to an adverse impact on
the share price and the inability to secure planning permission
on new developments.
The Company’s continued transparency regarding its climate actions, including voluntary alignment with the TCFD and
commitments made within its ESG strategy, will help mitigate against reputational risks associated with the energy transition.
A community engagement programme is in place to strengthen local relationships.
57
EMERGING RISKS
Risk
Potential Impact
Mitigation
11. Access to
capital
Equity markets remain challenging.
Access
to additional equity being
hampered by the discount to NAV at
which the Company’s shares currently
trade. Excessive inflation is likely to
increase the Company’s cost of capital
and cost of operations.
12. Evolving ESG
Reporting
of ESG
to
reporting
The number
increase,
frameworks continues
with
little standardisation, resulting
in increased costs and pressure on
resources.
Inadequate ESG reporting and/or non-
compliance could lead to shareholder
dissatisfaction and reduced demand for
the Company’s shares.
INSTALLED SOLAR PV AT YELVERTOFT
The Company considers all finance options available
to ensure future deals are constructed in the most cost
effective way. The current level of gearing, together
with a cash generative portfolio, will enable future
growth should appropriate acquisitions be identified.
Whilst the Company is a net beneficiary of inflation
it is not clear how quickly the Government’s actions
will reduce inflation; these could lead to a weaker
currency and a higher cost of capital. The Company has
increased the tenor of its interest rate hedges providing
protection in the event of inflation not subsiding, and
the possibility of more aggressive action by the Bank
of England.
The Company’s Investment Adviser works closely
with legal and technical experts to remain on top
of the evolving ESG landscape and prepare for new
frameworks as they emerge. The Company’s ESG
commitments are refreshed annually, to capture
new regulatory and reporting requirements. Over the
coming months, the Company will assess its alignment
with the IFRS sustainability disclosure standards.
Longer term viability statement
Assessing the prospects of the Company
The corporate planning process is underpinned by scenarios that encompass a
wide spectrum of potential outcomes. These scenarios are designed to explore the
resilience of the Company to the potential impact of significant risks set out below.
The scenarios are designed to be severe but plausible and take full account of
the likely effectiveness of the actions to be taken to avoid or reduce the impact
of the underlying risks and which would be open to management. In considering
the likely effectiveness of such actions, the conclusions of the Board’s regular
monitoring and review of risk and internal control systems, as discussed on
page 55, is taken into account.
The Board reviewed the impact of stress testing the quantifiable risks to the
Company’s cash flows in the previous pages and concluded that the Company,
assuming current and envisaged leverage levels, would be able to continue to
produce distributable income in the event of the following scenarios:
Strategic Report Risk Factor
2.
Plant performance degradation of 1.0% per annum versus
0.4% per annum
2.
Plant availability reduced to 95%
5.
P90 irradiation
6.
Power price set to £20/MWh
The Board considers that this stress testing based assessment of the
Company’s prospects is reasonable in the circumstances of the inherent
uncertainty involved. In accordance with the Articles, every five years the
Board is required to propose an ordinary resolution that the Company should
continue in business for a further five years. At the 2018 AGM a shareholder
vote resulted in a 99.46% vote to allow the Company to continue in business.
The next continuation vote is due to be held at the 2023 AGM and the Directors
have no reason to believe that shareholders will vote against continuation.
58
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS The period over which we confirm longer term viability
Within the context of the corporate planning framework
discussed above, the Board has assessed the prospects of
the Company over a five year period ending 30 June 2028.
The Directors last year increased the viability period from
three to five years, reflecting the maturity of the Company
and the industry, and have determined that the five year
period remains an appropriate period to provide this viability
statement as this period accords with the Group’s planning
purposes.
This period is used for our mid-term business plans and
has been selected because it presents the Board with a
reasonable degree of confidence whilst still providing an
appropriate longer term outlook.
Confirmation of longer term viability
Based upon the robust assessment of the principal and
emerging risks facing the Company and its stress testing
based assessment of the Company’s prospects, the Board
confirms that it has a reasonable expectation that the
Company will be able to continue in operation and meet its
liabilities as they fall due over the period to 30 June 2028.
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.
The Company’s risks are mitigated and managed by the Board
through continual review, policy setting and half yearly review
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 last carried out a review of the risk matrix at the Audit
and Risk Committee meeting held on 29 August 2023. The
Board relies on periodic reports provided by the Investment
Adviser and Administrator regarding risks that the Company
faces. When required, external experts, including tax advisers,
legal advisers and ESG advisers, are employed.
8. Stakeholder Engagement
Directors’ Responsibilities Pursuant to Section 172 of the Companies Act 2006
The Directors of the Company, by abiding by the AIC Code, aim to achieve high standards in corporate
governance. According to the AIC Code, all member businesses, regardless of where they are headquartered,
are required to report on the items outlined in Section 172 of the UK Companies Act 2006.
Section 172 recognises that directors are responsible for acting in a way that they consider, in good faith, is
the most likely to promote the success of the company for the benefit of its shareholders as a whole, with
focus on the consequences of any decision in the long term. In doing so, they are also required to consider
the broader implications of their decisions and operations on other key stakeholders and their impact on
the wider community and the environment. A key stakeholder is one that either has a direct stake in the
Company or directly impacts the long-term performance of the Company. Key decisions are those that are
either material to the company or are significant to any of the company’s key stakeholders.
The Board considers that the interests of the Company and its stakeholders must be balanced for the
Company to succeed. As a result, the Board has summarised below some of the methods by which it
develops and maintains connections with its stakeholders, while also considering the Company’s effects on
the environment and broader society.
STAKEHOLDER GROUP
METHODS OF ENGAGEMENT
Shareholders and Prospective
Investors
Our Shareholders and prospective
investors are integral to every
decision made by the Board. A
knowledgeable and supportive
shareholder base is vital to the
long-term sustainability of our
business. Understanding the views
and priorities of our Shareholders is,
therefore, crucial to retaining their
continued support.
The Company engages with its Shareholders through
the issue of regular portfolio updates in the form of RNS
announcements and quarterly factsheets.
The Company provides in-depth commentary on the
investment portfolio performance, corporate governance
and corporate outlook in its annual and interim reporting.
In addition, the Company, through its brokers and
Investment Adviser, undertakes regular meetings with
existing and prospective investors to solicit their feedback,
understand any areas of concern, and share forward-
looking investment commentary.
The Company receives quarterly feedback from its brokers
in respect of their investor engagement and investor
sentiment.
59
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS STAKEHOLDER GROUP
METHODS OF ENGAGEMENT
Bluefield Partners LLP
(the Investment Adviser)
Our Investment Adviser is fundamental to the Company’s investment and business
objectives. Key responsibilities include identifying and recommending suitable
investments for the Company to the Board and negotiating the terms on which such
investments will be made on behalf of the Board.
The Board frequently engages with the Investment Adviser through planned and ad hoc board and committee meetings
for receiving updates on operations of existing investments and acquisitions.
The Board receives quarterly Board Packs from the Investment Adviser, delivering the most pertinent and informative data
on which the Board can base its decisions.
Ocorian Administration (Guernsey) Limited
(the Administrator, Company Secretary & Designated Manager)
Our Administrator provides essential services to the Board, ensuring that Board
procedures are followed and that it complies with the Law and applicable rules and
regulations of the GFSC and the LSE.
Regulators
Regulators are important stakeholders in maintaining the Company’s listing and
ensuring a sufficient and transparent level of disclosure in its communications and
reporting. Because of this, Shareholders obtain accurate, timely, and relevant details
regarding the Company. Regulators include the FCA in its function as the UK Listing
Authority, the FRC in its supervision of UK governance and accounting, as well as the
GFSC. Membership of the AIC and compliance with the AIC Code is a fundamental
part of ensuring the Company complies with relevant guidance and regulation.
Other Key Stakeholders and Advisers
(Legal Advisors, Brokers, Auditors, etc.)
Establishing a productive and collaborative working relationship with our other key
service providers and advisers ensures that we receive high quality services to help
deliver the Company’s investment and business objectives.
The Investment Adviser and the Board review the Company’s power price fixing strategy and portfolio valuation on a
quarterly basis and detailed cash flow forecasts are discussed prior to each dividend declaration.
The Board engages in strategic planning with the Investment Adviser with the aim of aiding the Company in attaining its
investment goals and accomplishing its purpose.
The Board engages with team members from the Investment Adviser’s subsidiaries and involved senior members of
the asset management team at BSL in the recent audit tender which enhanced the audit committee’s decision-making
process.
The Board interacts with the Administrator for day-to-day administrative, fund accounting and company secretarial
services via emails, calls and formal and informal meetings.
The Company monitors ongoing performance at regular board meetings and the Management Engagement and Service
Providers Committee (‘MESPC’) reviews terms of engagement and quality of service provision annually.
The Board worked with Ocorian to complete a detailed review of its governance and committee structure as part of its
succession planning strategy, which resulted in the formation of an improved committee structure.
Activities of the Audit and Risk Committee (‘ARC’), including regular review of principal and emerging risks, oversight of
the Administrator and Investment Adviser’s adherence to internal control systems and procedures, and thorough review
of the interim and annual report and financial statements ensures compliance with required regulation.
The ARC considered and applied the FRC draft Minimum Standard in the design of its audit tender process which resulted
in a more competitive, fair, and transparent process.
The Company has identified its key service providers and on an annual basis the MESPC undertakes a review of
performance based on a questionnaire through which it seeks feedback. The MESPC also regularly reviews all material
contracts for service quality and value. Conclusions and recommendations drawn by the MESPC are fed back to the Board
for approval.
The MESPC recommended the appointment of a new Registrar to enhance service levels as a result of this process.
The Board and its sub-committees engage regularly with its service providers on a formal and informal basis.
60
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS
STAKEHOLDER GROUP
Lenders
It is important to maintain a strong working relationship with our existing lenders
as it is essential for the Company to have funding available, as it is needed,
for investment and development pipeline purposes. We aim to build strong
relationships with existing lenders and potential lenders who may provide debt
facilities in the future.
Government and Policy makers
The Board believes that as the Company provides a critical element of the United
Kingdom’s electricity generation infrastructure and de-carbonisation plans that it is
important to engage with both current and prospective members of HM Government
and their departments to help to ensure that the country’s required levels of the
supply of renewable energy are achieved.
PPA Counterparties
These are counterparties who purchase the electricity generated by BSIF.
METHODS OF ENGAGEMENT
The Investment Adviser provides quarterly compliance reporting to lenders in accordance with the terms of the relevant
facility agreements.
The Company consults with the lenders on matters which may require their consent under the relevant facility
agreements.
The Board reviews the Company’s re-financing needs on a regular basis and encourages early engagement with lenders.
The recent re-financing of the NatWest facility involved the novation of a 15-year residual tenor 0.35% interest rate swap
which the Board had originally encouraged the Adviser to secure following engagement with this lender.
The Board encourages the Investment Adviser to engage with senior political leaders and their respective staff both
directly in face-to-face meetings and indirectly via membership of industry representative bodies such as the Solar
Industry Association.
As a result of this process the Investment Adviser has been invited to attend high-level government briefings to industry
members which have assisted the Company in its strategic planning.
The Investment Adviser ensures that when the PPAs are put in place, the end dates of the contracts are phased to ensure
a constant flow of revenue. PPA counterparties are selected on a competitive basis but with a clear focus on achieving
diversification of counterparty risk. A quarterly update on the contracts is provided in the Investment Adviser’s Report
presented to the Board
Portfolio Level Stakeholders
This includes O&M service providers, grid connectors, planning authorities,
landowners, developers, O&M and other service providers.
The Company has agreements with O&M providers to provide active operation and maintenance services for the
operational portfolio.
Community and Environment
The Company recognises that its investments can have an impact at the local
level. Community perception of renewable technology is important as it feeds into
local decision making, policy development and ultimately planning requirements.
Engagement undertaken as part of the planning process helps develop positive
relationships with local stakeholders and obtain community support. Ecological
improvements, such as enhanced biodiversity, can bring about community gain, for
example through visual accessibility to nature, education, and conservation.
The Investment Adviser engages with developers, for example Light Rock Power Ltd or Bluefield Renewable
Developments, to provide new build development opportunities or run the solar farms by joint venture. These developers
interact with planning authorities, landowners and local communities and assess the viability of projects.
The Company has worked with external consultants to develop robust ESG policies and procedures.
‘Pioneering Positive Local Impact’ is a central pillar within the Company’s ESG strategy and social and environmental risks
are considered within the Company’s risk management processes.
Community stakeholders are engaged as part of the development process of new assets, and once operational,
engagement is maintained through administration of community benefit funds. During the reporting period, the Company
delivered an educational programme to local schools; please refer to the ESG report for further information.
The Company’s commitment to minimising its adverse environmental impacts and, where possible, enhancing nature
across its portfolio is communicated via its publicly available Biodiversity Policy. The Company’s Sustainable Investment
Policy also describes the Company’s approach to social and environmental considerations.
61
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS
Based on stakeholder interaction mentioned in the previous table, by way of example, a few key decisions made in the Period to meet investor objectives are described in the
following table:
KEY DECISION
IMPACT ON LONG-TERM SUCCESS
STAKEHOLDER CONSIDERATION
The Board has approved an annual investment cycle
to facilitate a rolling programme of capital works to
optimise and enhance performance of selected assets.
The optimisation and enhancement of the operational
portfolio will increase longevity of the assets.
The Board has introduced a new policy of fixing 10%
of the portfolio on floating PPAs, which track the N2EX
Day Ahead market (as opposed to a fixed price for the
term of the PPA) to capture high prices during periods
of volatility in the wholesale power market.
The Board has approved investment to increase the
capacity of two existing operational assets.
The limited exposure to the Day Ahead market prices
may allow the capture of price spikes during the period
of volatility in the wholesale power market.
Increase of portfolio capacity through doubling installed
capacity at each site. With planning permits and grid
capacity available from the original development phase,
investment costs to extend the plants are low.
The Board approved a £110 million increase to its
existing committed £100 million revolving credit facility
(‘RCF’), bringing the total committed amount to £210
million. The facility also has an uncommitted accordion
feature allowing it to be increased in size by up to a
further £30 million.
Enhancement of the Company’s Modern Slavery
Statement.
Funding is available, as needed, for investment and
development pipeline purposes.
Human and labour rights are a key consideration for the
Company, particularly in relation to supply chains of key
infrastructure (such as solar PV panels). Association
with human rights risks may lead to lack of demand in
Company shares and reputational damage. To mitigate
risks in this area and to help ensure it is benefitting
from ethical supply chains, the Company is committed
to building robust management and due diligence
practices relating to human rights, aligned with global
frameworks.
The Company engaged with asset managers and O&M
service providers to identify potential projects and
appropriate works programmes, then to scope, cost
and deliver agreed works. The Board believes that
proactive optimisation of the portfolio will benefit the
performance of the portfolio, and in turn, Shareholder
returns.
The Company engaged external advisers to assist with
the drafting of a suitable PPA template, then further
negotiated with several licensed suppliers including
EDF, Smartest and Engie. PPAs were then executed
following competitive tenders.
The Company, asset managers and O&M providers
maintain strong relationships with landowners which
result
in further development opportunities being
offered to BSIF. Legal advisers have been engaged to
structure new lease agreements and negotiations with
EPC and ICP providers are in progress.
The Company has further diversified the lender group
through the engagement of Lloyds Bank Plc, alongside
the existing lenders RBS International and Santander
UK.
The suggestion to further enhance the Company’s
Modern Slavery Statement was made by a shareholder
during an ESG meeting with the Investment Adviser.
62
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS
KEY DECISION
IMPACT ON LONG-TERM SUCCESS
STAKEHOLDER CONSIDERATION
Commitment to develop a Net Zero strategy.
The Board has approved the re-appointment of KPMG
Channel Islands Limited as its external auditor for
the financial year ending 30 June 2024, subject to
shareholder approval at its 2023 Annual General
Meeting
As a renewable energy company, the Company is well
positioned to support decarbonisation of the UK energy
sector. However, it also takes responsibility for its own
carbon emissions, and recognises the importance of
reducing these as part of evidencing its own commitment
to the Net Zero transition.
The Company’s Audit and Risk Committee made this
recommendation because KPMG offered a compelling
case for the provision of a high-quality audit, while
offering good value to Shareholders.
Investment Adviser
The
the Board
shareholders’ increasing focus on Net Zero alignment.
This was considered when the Company’s Year 2 ESG
commitments were developed and adopted.
relayed
to
Following an extensive, robust, and competitive tender
process that was overseen by the Company’s Audit
and Risk Committee, it is the Company’s intention to
re-appoint KPMG. The selection to re-appoint KPMG
was unanimously recommended by the Audit and Risk
Committee to the Board.
The Company notes that it received some votes against
KPMG’s appointment and remuneration at the AGM
held on 29 November 2022 and confirms that it has
consulted with the majority of these shareholders and
determined that the issues raised related to a limited
list of approved auditors preferred by one proxy agency
and the ratio of non-audit to audit fees in 2022 when the
Company incurred corporate finance fees for its most
recent capital raises.
The Board has engaged with a PR specialist to assist
in taking proactive steps to influence HM Government
on proposed energy policies and gain support for
renewable and sustainable energy.
Educate stakeholders on importance of solar power for
energy security, reduced emissions and cost-reduction
Build pro-solar allies and generate political relationships
to aid progress on the decarbonisation of the UK energy
markets.
Paul Le Page
Director
27 September 2023
Elizabeth Burne
Director
27 September 2023
63
STRATEGIC REPORT ANNUAL REPORT AND FINANCIAL STATEMENTS Report of the Directors
The Directors hereby submit the annual report
and financial statements of the Company for the
year ended 30 June 2023.
General Information
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 has been registered and
is regulated by the GFSC as a registered closed-
ended collective investment scheme and as a
Green Fund after successful application under the
Guernsey Green Fund Rules to the GFSC 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
London Stock Exchange following its IPO which
completed on 12 July 2013.
Principal Activities
The principal activity of the Company is to invest in
a portfolio of large scale UK based solar, wind and
renewable energy infrastructure assets.
The Company has a progressive dividend target.
The dividend target for the financial year ended 30
June 2023 was 8.40pps. Total declared dividends
for the Period have increased to 8.60pps.
Business Review
A review of the Company’s business and its
likely future development is provided in the
Chair’s Statement on pages 6 to 9, Report of the
Investment Adviser on pages 11 to 26 and in the
Strategic Report on pages 50 to 63.
Listing Requirements
The Company has complied with the applicable
Listing Rules throughout the year.
Results and Dividends
The results for the year are set out in the financial
statements on pages 85 to 101.
The dividends for the year are set out in the
financial statements in Note 14 on page 98.
Share Capital
The Company has one class of Ordinary Shares.
The issued nominal value of the Ordinary Shares
represents 100% of the total issued nominal value
of all share capital. Under the Company’s Articles,
on a show of hands, each shareholder present in
person or by proxy has the right to one vote at
general meetings. On a poll, each shareholder is
entitled to one vote for every share held.
Shareholders are entitled to all dividends paid
by the Company and, on a winding up, providing
the Company has satisfied all of its liabilities, the
Shareholders are entitled to all of the surplus
assets of the Company. The Ordinary Shares have
no right to fixed income.
Shareholdings of the Directors
64
ANNUAL REPORT AND FINANCIAL STATEMENTS The Directors of the Company and their beneficial interests in the
shares of the Company as at 30 June 2023 are detailed below:
Ordinary
Shares of
£1 each
held 30
June 2023
Ordinary
Shares of
£1 each
held 30
June 2022
% holding
at 30 June
2023
% holding
at 30 June
2022
Director
John Scott*
625,619
0.10
543,312
0.09
Elizabeth Burne
15,000
0.00
15,000
0.00
Michael Gibbons
-
-
N/A
N/A
Meriel Lenfestey
7,693
0.00
7,693
0.00
Paul Le Page
35,000
0.01
35,000
0.01
John Rennocks*
N/A
N/A
290,388
0.05
* Including shares held by PCAs
The making and timing of any buybacks will be at the absolute
discretion of the Board and not at the option of the Shareholders. Any
such repurchases would only be made through the market for cash at
a discount to NAV.
On incorporation, the Company passed a written resolution granting
the Board general authority to purchase in the market up to 14.99%
of the Ordinary Shares in issue immediately following Admission.
A resolution to renew such authority was passed by Shareholders
at the AGM held on 29 November 2022. Therefore, authority was
granted to the Board to purchase in the market up to 14.99% of
the Ordinary Shares in issue immediately following the AGM held
on 29 November 2022 at a price not exceeding the higher of (i) 5%
above the average mid-market values of Ordinary Shares for the five
Business Days before the purchase is made or (ii) the higher of the
last independent trade or the highest current independent bid for
Ordinary Shares. The Board intends to seek renewal of this authority
from the Shareholders at the next AGM scheduled to be held on 28
November 2023.
Shareholder
BlackRock
Shareholding
% Holding
93,066,301
15.22
Gravis Capital Management
38,053,279
Newton Investment Management
37,902,512
6.22
6.20
Hargreaves Lansdown,
stockbrokers (EO)
32,187,797
5.26
abrdn Capital
30,194,736
CCLA Investment Management
22,337,701
4.94
3.65
Legal & General Investment
Management
20,791,253
3.40
Interactive Investor (EO)
19,833,929
3.24
Total
294,367,508
48.13
Pursuant to this authority, and subject to the Law and the discretion of
the Board, the Company may purchase Ordinary Shares in the market
on an ongoing basis with a view to addressing any imbalance between
the supply of and demand for Ordinary Shares.
The Directors confirm that there are no securities in issue that carry
special rights with regards to the control of the Company. The Company
also provides the same information as at 4 September 2023, being the
most current information available.
Ordinary Shares purchased by the Company may be cancelled or
held as treasury shares. The Company may borrow and/or realise
investments in order to finance such Ordinary Share purchases.
Shareholder
BlackRock
Shareholding
% Holding
91,683,914
14.99
Directors’ Authority to Buy Back Shares
The Board believes that the most effective means of minimising any
discount to NAV which may arise on the Company’s share price is to
deliver strong, consistent performance from the Company’s investment
portfolio in both absolute and relative terms. However, the Board
recognises that wider market conditions and other considerations will
affect the rating of the Ordinary Shares in the short term would consider
share buy backs if it was assessed to be an economically attractive
investment opportunity. The means by which this might be done could
include the Company repurchasing its Ordinary Shares. Therefore,
subject to the requirements of the Listing Rules, the Law, the Articles
and other applicable legislation, the Company may purchase Ordinary
Shares in the market in order to address any imbalance between the
supply of and demand for Ordinary Shares or to enhance the NAV of
Ordinary Shares.
The Company did not purchase any Ordinary Shares for treasury or
cancellation during the Period.
Directors’ and Officers’ Liability Insurance
The Company maintains insurance in respect of directors’ and officers’
liability in relation to their acts on behalf of the Company. Insurance is
in place, having been renewed on 12 July 2023.
In deciding whether to make any such purchases the Board will have
regard to what it believes to be in the best interests of Shareholders
and to the applicable Guernsey legal requirements which require
the Board to be satisfied on reasonable grounds that the Company
will, immediately after any such repurchase, satisfy a solvency test
prescribed by the Law and any other requirements in its Articles.
Substantial Shareholdings
As at 30 June 2023, the Company had been notified, in accordance
with chapter 5 of the Disclosure Guidance and Transparency Rules of
the following substantial voting rights over 3% as Shareholders of the
Company.
Gravis Capital Management
33,904,080
5.54
Hargreaves Lansdown,
stockbrokers (EO)
33,765,605
5.52
Newton Investment Management
32,848,618
abrdn Capital
29,402,398
CCLA Investment Management
26,183,389
Interactive Investor (EO)
20,784,520
5.37
4.81
4.28
3.40
Legal & General Investment
Management
20,337,280
3.33
Total Shares in Issue
288,909,804
47.24
65
REPORT OF THE DIRECTORSANNUAL REPORT AND FINANCIAL STATEMENTS Independent Auditor
KPMG has been the Company’s external Auditor since the
Company’s incorporation. An audit tender process was
undertaken during the year and after an extensive, robust
and competitive process, the Audit and Risk Committee
to
recommends retaining KPMG as Auditor, subject
Shareholder approval at the forthcoming AGM. A resolution
will be proposed to reappoint them as Auditor and authorise
the Directors to determine the Auditor’s remuneration for the
ensuing year. The Audit and Risk Committee will periodically
review the appointment of KPMG. Further information on the
work of the Auditor is set out in the Report of the Audit and
Risk Committee on pages 76 to 79.
Articles of Incorporation
The Company’s Articles may be amended only by special
resolution of the Shareholders.
Going Concern
At 30 June 2023, the Company had invested in 129 solar
plants, 6 wind farms and 109 single stick wind turbines,
investments. The
committing £992.3 million to SPV
Company, through its direct subsidiary, BR1, has access to
an RCF which, together with the net income generated by
the acquired projects, is expected to allow the Company
to meet its liquidity needs for the payment of operational
expenses, dividends and acquisition of new renewable
energy infrastructure assets. The Company, through BR1,
expects to comply with the covenants of its long term loans
and RCF.
The Board, in its consideration of going concern, has
reviewed comprehensive cash flow forecasts prepared by
the Investment Adviser, as well as the performance of the
solar and wind plants currently in operation. The conflict in
Ukraine continues to have a significant impact on the macro-
economic environment in which the Company operates and
has served so far to increase the price of electricity. The
Board and Investment Adviser have been closely monitoring
this and it has been considered as part of the going concern
assessment.
The Board has also considered the potential outcome of
the Company’s mandatory five year continuation vote that
is due at the 2023 AGM and considers it highly likely that
shareholders will vote in favour of continuation, given the
strong performance of the Company and the support which
it has received from its major shareholders.
In the light of these enquiries, at the time of approving these
accounts the Board has a reasonable expectation that the
Company has adequate resources to continue in operational
existence for the 12 months from the date of signing the
financial statements and does not consider there to be any
material threat to the viability of the Company. The Board
has therefore concluded that it is appropriate to adopt the
going concern basis of accounting in preparing the financial
statements.
into account the
Internal controls review
Taking
information on Principal and
Emerging Risks provided on pages 55 to 59 of the strategic
report and the ongoing work of the Audit and Risk Committee
in monitoring the risk management and internal control
systems on behalf of the Board, the Directors
• are satisfied that they have carried out a robust assessment
of the principal and emerging risks facing the Company,
including those that would threaten its business model,
future performance, solvency or liquidity; and
• have reviewed the effectiveness of the risk management
and internal control systems and no significant failings or
weaknesses were identified.
Fair, Balanced and Understandable
The Board has considered whether the Annual Report taken
as a whole is fair, balanced and understandable, taking into
account the commentary and tone and whether it includes
the requisite information needed for Shareholders to assess
the Company’s business model, performance and strategy. In
addition, the Board also questioned the Investment Adviser
on information included and excluded from the Annual
Report, and considered whether the narrative at the front of
the report is consistent with the financial statements. As a
result of this work, each of the Board members considers that
the Annual Report is fair, balanced and understandable and
includes the requisite information needed for Shareholders
to assess the Company’s business model, performance and
strategy.
Financial Risks Management Policies and
Procedures
Financial Risks Management Policies and Procedures are
disclosed in Note 15.
Principal and Emerging Risks
Principal and Emerging Risks are discussed in the Strategic
Report on pages 55 to 59.
Annual General Meeting
The AGM of the Company will be held at 10am on 28
November 2023 at Floor 2, Trafalgar Court, Les Banques,
St Peter Port, Guernsey. Details of the resolutions to be
proposed at the AGM, together with explanations, will appear
in the Notice of Meeting to be distributed to Shareholders
together with this Annual Report.
Members of the Board will be in attendance at the AGM and
will be available to answer shareholder questions.
By order of the Board
Paul Le Page
Director
27 September 2023
Elizabeth Burne
Director
27 September 2023
66
REPORT OF THE DIRECTORSANNUAL REPORT AND FINANCIAL STATEMENTS Board of Directors
John Scott
(Chair and Chair of the Nomination Committee)
John Scott was appointed as a non-executive director of the Company on 12 June 2013
and is a former investment banker who spent 20 years with Lazard and has served on the
boards of several investment trusts. Mr Scott was Chair of Impax Environmental Markets
plc between May 2014 and May 2023. He has been Chair of JP Morgan Global Core Real
Assets since its flotation in 2019. In June 2017, he retired as Chair of Scottish Mortgage
Investment Trust PLC. He has an MA in Economics from Cambridge University and an MBA
from INSEAD.
Elizabeth Burne
(Chair of the Management Engagement and Service Providers Committee)
Elizabeth Burne was appointed as a non-executive director of the Company in October
2021, is a Fellow of the Association of Chartered Certified Accountants with a First Class
Honours degree in Applied Accounting and over twenty years’ experience within the financial
services sector across the Channel Islands and Australia. Prior to becoming a non-executive
director Ms Burne was an audit director at PwC, working in alternative asset management and
insurance, assisting clients with strategic, financial, risk and corporate governance matters.
Ms Burne holds a portfolio of non-executive directorships including HarbourVest Global
Private Equity Limited (a constituent of the FTSE 250 Index), as well as a number of private
companies in the venture capital, private equity, real estate and insurance sectors.
Michael Gibbons
(Senior Independent Director)
Michael Gibbons was appointed as a non-executive director of the Company on 7 October
2022, holds an MA from Downing College, Cambridge, is a Fellow of the Energy Institute,
and was awarded an OBE in 2008 and CBE in 2015 for services to regulatory reform.
Mr Gibbons has held a very wide range of senior appointments in the private and public
sectors, including chairing the government’s independent Regulatory Policy Committee
from 2009 – 2017. The main part of his private sector career has been in the energy
industry, taking senior positions in ICI, Powergen and Elexon, who run central systems in
the GB wholesale electricity market, and where he was Chair from 2013-2022. Mr Gibbons
has also worked on carbon capture and storage at Board level for several developers and
became Chair of the Carbon Capture and Storage Association in 2014-2017. He was also
Chair of the British Committee of the World Energy Council from 2009 to 2014.
Meriel Lenfestey
(Chair of the Environmental, Social and
Governance Committee)
Meriel Lenfestey was appointed as a non-
executive director of the Company in April 2019.
Ms Lenfestey founded Flow Interactive in 1997, a
London based Customer Experience Consultancy
assisting clients across many sectors embracing
digital transformation. Since exiting the business
in 2016 she has held a portfolio of non-executive
director and advisory
roles across Energy,
Telecoms, Transport, Infrastructure, Technology
and local charities. She is a non-executive director
at International Public Partnerships (FTSE 250),
Boku (FTSE AIM), and Ikigai Ventures (FTSE All
share). She also Chairs Jersey Telecom (privately
owned) as well as acting as a non-executive
director at Art for Guernsey, a local charity. Until
February 2023 she was Chair at Gemserv. She has
an MA in Computer Related Design from the Royal
College of Art, a Financial Times Non-Executive
Director Diploma, is a Fellow of the RSA and sits
on the Guernsey IoD themselves.
Paul Le Page
(Chair of the Audit and Risk Committee)
Paul Le Page was appointed as a non-executive
director of the Company on 12 June 2013 and is
a former executive Director and Senior Portfolio
Manager of FRM Investment Management Limited,
a subsidiary of Man Group, and holds non-executive
directorships of a number of investment funds. Mr.
Le Page is Audit Committee Chair of RTW Biotech
Opportunity Fund Limited and was previously Audit
Committee Chair of UK Mortgages Limited, Thames
River Multi Hedge PCC Limited and Cazenove
Absolute Equity Limited. Mr. Le Page has 19 years’
Audit & Risk Committee experience within the
closed end investment fund sector and has a broad-
based knowledge of the global investment industry,
fund governance, reporting and product structures.
Mr Le Page graduated from University College
London in Electrical and Electronic Engineering and
qualified as a Chartered Electrical Engineer whilst
leading the development of robotic immunoassay
equipment. He obtained an MBA from Heriot Watt
University in 1999 which he used to switch from
industrial R&D to investment fund research with a
specialisation in alternative assets.
JOHN SCOTT
ELIZABETH BURNE
MICHEAL GIBBONS
MERIEL LENFESTEY
PAUL LE PAGE
67
ANNUAL REPORT AND FINANCIAL STATEMENTS Directors’ Statement of
Responsibilities
The Directors are responsible for preparing the annual
report and financial statements
in accordance with
applicable law and regulations.
The Law requires the Directors to prepare financial
statements for each financial year. Under the Law, the
Directors have elected to prepare the financial statements
in accordance with IFRS as adopted by the EU and
applicable law. The financial statements are required by
Law to give a true and fair view of the state of affairs of
the Company and of its profit or loss for that period. In
preparing these financial statements, the Directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and estimates that are reasonable, and
prudent;
• state whether applicable accounting standards have been
followed, subject to any material departures disclosed
and explained in the financial statements;
• assess the Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to
going concern; and
• use 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.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time,
the financial position of the Company and enable them
to ensure that the financial statements comply with the
Law. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error, and have general responsibility
for taking such steps as are reasonably open to them to
safeguard the assets of the Company and to prevent and
detect fraud and other irregularities.
So far as each Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware,
and each Director has taken all the steps that they ought
to have taken as a Director in order to make themself
aware of any relevant audit information and to establish
that the Company’s Auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of section 249 of the Law.
The Directors are 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.
By order of the Board
Paul Le Page
Director
27 September 2023
Elizabeth Burne
Director
27 September 2023
68
ANNUAL REPORT AND FINANCIAL STATEMENTS Responsibility
Statement of the
Directors in Respect of
the Annual Report
Each of the Directors, whose names are set out on
page 67 in the Board of Directors section of the
annual report, confirms that to the best of their
knowledge that:
• the financial statements, prepared in accordance
with IFRS, as adopted by the EU give a true
and fair view of the assets, liabilities, financial
position and profit or loss of the Company;
• the Management Report (comprising Chair’s
Statement, Strategic Report, Report of the
Directors and Report of the Investment Adviser)
includes a fair review of the development
and performance of the business and the
position of the Company together with a
description of the principal and emerging risks
on pages 55 to 59; and
Having taken advice from the Audit and Risk
Committee, the Directors consider the annual
report and financial statements, taken as a
whole, is fair, balanced and understandable and
that it provides the information necessary for
Shareholders to assess the Company’s position,
performance, business model and strategy.
By order of the Board
Paul Le Page
Director
27 September 2023
Elizabeth Burne
Director
27 September 2023
69
ANNUAL REPORT AND FINANCIAL STATEMENTS Corporate
Governance
Report
The Board recognises the importance of sound corporate governance,
particularly the requirements of the AIC Code. The Company is currently
complying with the latest AIC code effective 1 January 2019.
The Company has been a member of the AIC since 15 July 2013. The Board
has considered the principles and provisions of the AIC Code. The AIC Code
provides a ‘comply or explain’ code of corporate governance and addresses
all the principles set out in the UK Code as well as setting out additional
principles and recommendations on issues that are of specific relevance
to investment companies such as the Company. The Board considers that
reporting against the principles and recommendations of the AIC Code
provides better information to Shareholders.
The GFSC issued a Guernsey Code which came into effect on 1 January
2012. The introduction to the Guernsey Code states that “Companies which
report against the UK Code or the AIC Code of Corporate Governance are also
deemed to meet this Code”. Therefore, AIC members which are Guernsey-
domiciled and which report against the AIC Code are not required to report
separately against the Guernsey Code.
The AIC Code is available on the AIC’s website (www.theaic.co.uk). The UK
Code is available from the FRC’s website (www.frc.org.uk). The Guernsey
code is available from the GFSC’s website (www.gfsc.gg).
Throughout the year ended 30 June 2023, the Company has complied with
the provisions of the AIC Code and the provisions of the UK Code, except to
the extent highlighted below.
70
ANNUAL REPORT AND FINANCIAL STATEMENTS Provision A.2.1 of the UK Code requires a chief executive
to be appointed; as an investment company, however,
the Company has no employees and therefore has no
requirement for a chief executive. As all the Directors,
including the Chair, are non-executive and independent of
the Investment Adviser, the Company has not established
a remuneration committee which is not in accordance with
provisions B.2.1 and D.2.1 of the UK Code, and Principle 7
of the AIC Code respectively. The Board is satisfied that as a
whole, any relevant issues can be properly considered by the
Board. The absence of an internal audit function is discussed
in the Report of the Audit and Risk Committee on page 78.
The Board
The Directors’ biographies are provided on pages 67 which
set out the range of investment, financial and business skills
and experience represented.
John Scott and Paul Le Page were appointed on 12 June
2013, Meriel Lenfestey was appointed on 1 April 2019,
Elizabeth Burne was appointed on 7 October 2021 and
Michael Gibbons was appointed on 7 October 2022. The
Board appointed Michael Gibbons as Senior Independent
Director effective from 29 November 2022 to fulfil any
function that is deemed inappropriate for the Chair to
perform.
Paul le Page will retire from the Board on 30 September
2023 and his position as Chair of the Audit & Risk Committee
will be assumed by Elizabeth Burne. The other four Directors
submit themselves for re-election at the next AGM, which is
due to take place on 28 November 2023.
Any Director who is elected or re-elected at that meeting
is treated as continuing in office throughout. If they are not
elected or re-elected, they shall retain office until the end
of the meeting or (if earlier) when a resolution is passed to
appoint someone in their place or when a resolution to elect
or re-elect the Director is put to the meeting and lost.
The Board is of the opinion that members should be re-
elected because they believe that they have the right skills
and experience to continue to serve the Company. As
recommended in Principle 7 of the AIC Code, the Board has
considered the need for a policy regarding tenure of service.
As at 30 June 2023, two of the directors had been on the
Board for approximately ten years; of these Paul le Page
is not seeking re-election and will retire on 30 September
The Board is cognisant of the AIC guidance around Board
member tenure and has taken positive action to address
this by implementing a carefully thought through succession
plan that manages the transition of corporate knowledge,
recognises the benefits of bringing new perspectives and
diversity, all whilst ensuring independence.
The Board meets at least four times a year in Guernsey, with
unscheduled meetings held where required to consider
investment related or other issues. In addition, there is
regular contact between the Board, the Investment Adviser
and the Administrator. Furthermore, the Board requires
to be supplied in a timely manner with information by the
Investment Adviser, the Company Secretary and other
advisers in a form and of a quality appropriate to enable it to
discharge its duties.
The Company has adopted a share dealing code which
applies to the Board and any persons discharging managerial
responsibilities. This is to ensure compliance by the Board,
and relevant personnel of the Investment Adviser, with the
requirements of the UK Market Abuse Regulations.
The Board monitors developments in corporate governance
to ensure the Board remains aligned with best practice,
especially with respect to the increased focus on diversity.
The Board acknowledges the
importance of diversity,
including gender (as stated in Principle 7 of the AIC Code),
for the effective functioning of the Board and commits to
supporting diversity in the boardroom. It is the Board’s
ongoing aspiration to have well-diversified representation
and
it continues to value directors with diverse skill
sets, capabilities and experience gained from different
geographical and professional backgrounds that enhance
the Board by bringing a wide range of perspectives to the
Company. The Board is satisfied with the current composition
and functioning of its members and notes that we have 40%
female representation, exceeding the Hampton-Alexander
Review target.
Gender identity
Men
Women
Ethnic background
White British or other White
(including minority-white groups)
Other ethnic group
Number
of Board
members
Percentage
of the
Board
Number of
senior positions
on the Board
3
2
5
-
60%
40%
100%
-%
2
-
2
-
The Company has only two of the senior roles specified by the Listing Rules,
that is the position of Chair and Senior Independent Director. Both of these
roles are occupied by men. However, the Board considers that the chairs of its
permanent sub-committees are all senior positions. Currently the Management
Engagement and Service Providers Committee and the ESG Committee are
both chaired by women. It is intended that Elizabeth Burne has been appointed
as Chair of the Audit and Risk Committee in succession to Mr Le Page, who
retires on 30 September. The Board is cognisant that it does not currently have
minority ethnic representation and this is a key focus of its succession planning.
Directors’ Remuneration
The Chair was entitled to an annual remuneration of £68,906 (2022: £62,500).
The other Directors were entitled to an annual remuneration of £43,050 (2022:
£39,000). Paul Le Page received an additional annual fee of £8,768 (2022:
£8,000) for acting as Chair of the Audit and Risk Committee. Meriel Lenfestey
received an additional annual fee of £5,250 (2022: N/A) for acting as Chair
of the Environmental, Social and Governance Committee. Elizabeth Burne
received an additional annual fee of £3,150 (2022: N/A) for acting as Chair of the
Management Engagement and Service Providers Committee.
71
CORPORATE GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS
The remuneration earned by each Director in the past two financial
years was as follows:
Director
2023
£
2022
£
John Scott
(appointed Chair on 29 November 2022)
58,326
40,000
45,389
29,689
Elizabeth Burne
(appointed 7 October 2021)
Michael Gibbons
(appointed 7 October 2022)
Duties and Responsibilities
The Board has overall responsibility for optimising the
Company’s success by directing and supervising the affairs
of the business and meeting the appropriate interests of
shareholders and relevant stakeholders, while enhancing
the value of the Company and also ensuring the protection
of investors. A summary of the Board’s responsibilities is as
follows:
• statutory obligations and public disclosure;
• strategic matters and financial reporting;
31,267
N/A
• investment strategy and management;
Meriel Lenfestey
46,965
40,000
• risk assessment and management including reporting,
compliance, governance, monitoring and control; and
Paul Le Page
51,759
48,175
• other matters having a material effect on the Company.
The Directors have access to the advice and services of the
Administrator, who is responsible to the Board for ensuring
that Board procedures are followed and that it complies with
the Law and applicable rules and regulations of the GFSC
and the LSE. Where necessary, in carrying out their duties,
the Directors may seek independent professional advice and
services at the expense of the Company.
The Company maintains appropriate directors’ and officers’
liability insurance in respect of legal action against its Directors.
The Board’s responsibilities for the annual report are set out
in the Directors’ Responsibilities Statement on page 68. The
Board is also responsible for issuing appropriate half-yearly
financial reports and other price-sensitive public reports.
The attendance record of the Directors for the year to 30
June 2023 is set out below:
Laurence McNairn
(retired 17 February 2022)
John Rennocks
(retired 22 February 2023)
N/A
24,892
37,928
64,062
The total Directors’ fees expense for the year amounted to £271,634
(2022: £240,818). As disclosed in Note 16, John Scott and Michael
Gibbons are directors of BR1, and have received remuneration in
respect of BR1.
All of the Directors are non-executive and each is considered
independent for the purposes of Chapter 15 of the Listing Rules.
In accordance with Article 22 of AIFMD, the Company shall disclose
the total amount of remuneration for the financial year, split into fixed
and variable remuneration, paid by the AIFM to its staff, and number
of beneficiaries, and, where relevant, carried interest paid by the AIF.
As the Company is categorised as an internally managed Non-EU
AIFM for the purposes of AIFMD, Directors’ remuneration reflects this
amount.
Scheduled
Board Meetings
(max 4)
Ad-hoc
Board Meetings
(max 15)
Audit and Risk
Committee
Meetings
(max 9)
Management
Engagement and
Service Providers
Committee
Meetings (max 4)
ESG Committee
Meetings
(max 2)
Nomination
Committee
Meetings
(max 1)
4
4
13
15
9
9
4
4
2
2
1
1
3 (max 3)
9 (max 11)
5 (max 5)
4 (max 4)
2 (max 2)
1 (max 1)
4
4
13
15
9
9
4
4
2
2
1
1
3 (max 3)
7 (max 9)
6 (max 7)
1 (max 1)
1 (max 1)
1 (max 1)
Director
John Scott
Elizabeth Burne
Michael Gibbons
(appointed 7 October 2022)
Meriel Lenfestey
Paul Le Page
John Rennocks
(retired 22 February 2023)
15 ad-hoc Board Meetings were held during the period to formally review and authorise each investment made by the Company
and to consider interim dividends, amongst other items.
72
CORPORATE GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS The Board believes that, as a whole, it comprises an appropriate
balance of skills, experience, age, knowledge and length of service.
The Board also believes that diversity of experience and approach,
including gender diversity, amongst Board members is of great
importance and it is the Company’s policy to give careful consideration
to issues of Board balance when making new appointments. Any new
Director appointed to the Board will be provided with a bespoke
induction programme tailored to the individual needs of the Director.
Performance Evaluation
In accordance with Principle 7 of the AIC Code, the Board is required
to undertake a formal and rigorous evaluation of its performance on
an annual basis. A formal evaluation of the performance of the Board
as a whole, and the Chair, is scheduled for completion by the end of
this calendar year. The evaluation is undertaken utilising self-appraisal
questionnaires and is followed by a detailed discussion of the
outcomes which includes an assessment of the Directors’ continued
independence.
WILD FLOWERS AT FREATHY
Committees of the Board
Audit and Risk Committee
The Board established an Audit and Risk Committee in 2013. It is
chaired by Paul Le Page and following his retirement it will be chaired
by Elizabeth Burne. At the date of this report the committee comprised
all of the Directors set out on page 3. The report of the role and activities
of this committee and its relationship with the Auditor is contained in
the Report of the Audit and Risk Committee on pages 76 to 79. The
Committee operates within clearly defined terms of reference which
are available on the Company’s website (www.bluefieldsif.com).
Nomination Committee
The Board established a Nomination Committee in 2022. It is
chaired by John Scott and at the date of this report comprised all
of the Directors set out on page 3. The principal functions of the
Committee are to assist the Board in filling vacancies on the Board and
its committees and to review and make recommendations regarding
Board structure, size and composition. The Committee shall meet at
least once a year.
Management Engagement and Service Providers Committee
The Board established a Management Engagement and Service
Providers Committee in 2022. It is chaired by Elizabeth Burne and at
the date of this report comprised all of the Directors set out on page
3. The principal function of the Committee is to review annually the
contractual relationships with, and scrutinise and hold to account the
performance of, the Investment Adviser. Additionally, the Committee
shall review annually the performance and terms of engagement
of any other key service providers to the Company as considered
appropriate. The Committee shall meet at least once a year.
The primary matters discussed and activities undertaken by the
Committee during the year were:
• received a presentation from the Investment Adviser summarising
their performance and key differentiating factors;
ESG Committee
The Board established an ESG Committee in 2022. It is chaired by
Meriel Lenfestey and at the date of this report comprised all of the
Directors set out on page 3. The principal function of the Committee
is to provide a forum for mutual discussion, support and challenge of
the Investment Adviser with respect to ESG including, with respect
to the policies adopted by the Company, in respect to investment
and divestment and by the Investment Adviser with respect to asset
management activities and their reporting on ESG matters to the
Committee and Board. The Committee will also assist on such other
matters related to ESG as may be referred to it by the Board. The
Committee shall meet at least once a year.
Internal Control and Financial Reporting
The Board acknowledges that it is responsible for establishing and
maintaining the Company’s system of internal control and reviewing
its effectiveness. Internal control systems are designed to manage
rather than eliminate the failure to achieve business objectives and
can only provide reasonable but not absolute assurance against
material misstatements or loss. The Audit and Risk Committee
reviews all controls including operations, compliance and risk
management. The key procedures which have been established to
provide internal control are:
• carried out a formal review of the Investment Advisory Agreement,
with the key outcomes of review to be finalised;
• the Board has delegated the day–to-day operations of the Company
to the Administrator and Investment Adviser; however, it remains
accountable for all of the functions it delegates;
• Board members performed on-site visits to the Investment
Adviser’s offices in Bristol as well as a local solar farm site;
• conducted a detailed review of the performance of the Company’s
key service providers; and
• recommended to the Board the change of registrar from Link Market
Services (Guernsey) Limited to Computershare Investor Services
(Guernsey) Limited; and
• reviewed its terms of reference.
• the Board clearly defines the duties and responsibilities of the
Company’s agents and advisers and appointments are made by the
Board after due and careful consideration. The Board monitors the
ongoing performance of such agents and advisers;
• the Board monitors the actions of the Investment Adviser at regular
Board meetings and is also given frequent updates on developments
arising from the operations and strategic direction of the underlying
investee companies; and
• the Administrator provides administration and company secretarial
services to the Company. The Administrator maintains a system of
internal control on which it reports to the Board.
73
CORPORATE GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS The Board has reviewed the need for an internal audit function and
has decided that the systems and procedures employed by the
Administrator and Investment Adviser, including their own internal
controls and procedures, provide sufficient assurance that a sound
system of risk management and internal control, which safeguards
shareholders’ investment and the Company’s assets, is maintained.
An internal audit function specific to the Company is therefore
considered unnecessary.
The systems of control referred to above are designed to ensure
effectiveness and efficient operation, internal control and compliance
with laws and regulations. In establishing the systems of internal
control, regard is paid to the materiality of relevant risks, the likelihood
of costs being incurred and costs of control. It follows therefore that
the systems of internal control can only provide reasonable but not
absolute assurance against the risk of material misstatement or loss.
The Company has delegated the provision of all services to external
service providers whose work is overseen by the Board at its quarterly
meetings. Each year a detailed review of performance pursuant to their
terms of engagement is completed by the Management Engagement
and Service Providers Committee and recommendations made to the
Board.
Investment Advisory Agreement
In accordance with Listing Rule 15.6.2(2)R, the Directors formally
appraise the performance and resources of the Investment Adviser.
The Investment Adviser, Bluefield Partners, is led by its managing
partners, James Armstrong and Giovanni Terranova, who founded
the Bluefield business in 2009 following their prior work together in
European solar energy. Neil Wood, who joined in 2013, was appointed
partner in 2020 and runs the Investment Adviser alongside the two
founders. The Investment Adviser’s team has a combined record, prior
to and including Bluefield Partners LLP, of investing more than £1.4
billion in renewable projects. The Investment Adviser’s non-executive
team includes Mike Rand, Bluefield Partners founder and former
Managing Partner, William Doughty, the founding CEO of Semperian;
Dr. Anthony Williams, the former chair of the Risk Committee for the
Fixed Income, Currencies & Commodities Division, and Partner at
Goldman Sachs & Co; and Jon Moulton, former managing partner and
founder of Alchemy Partners.
The Board of BSIF has considered the substantial level of resource
at the disposal of the Investment Adviser and thereby available to
the Company. The Board has also looked at the extensive record of
investment and operational performance delivered by the Company,
both during the Period and in the ten years since the launch of
BSIF, and the sector-leading distributions to Shareholders. Having
considered this record, in the opinion of the Directors the continuing
appointment of the Investment Adviser is in the interests of the
Shareholders as a whole.
Dealings with Shareholders
The Board welcomes Shareholders’ views and places great
importance on communication with its shareholders. The Company’s
AGM will provide a forum for shareholders to meet and discuss
issues with the Directors of the Company. Members of the Board will
also be available to meet with shareholders at other times, if required.
In addition, the Company maintains a website which contains
comprehensive information, including regulatory announcements,
share price information, financial reports, investment objectives and
strategy and information on the Board.
Principal and Emerging Risks
Each Director is aware of the risks inherent in the Company’s
business and understands the importance of identifying, evaluating
and monitoring these risks. The Board has adopted procedures and
controls that enable it to manage these risks within acceptable limits
and to meet all of its legal and regulatory obligations.
The Board considers the process for identifying, evaluating and
managing any significant risks faced by the Company on an ongoing
basis and these risks are reported and discussed at Board meetings.
It ensures that effective controls are in place to mitigate these
risks and that a satisfactory compliance regime exists to ensure all
applicable local and international laws and regulations are upheld.
The Company’s Principal and Emerging Risks are discussed in
detail on pages 55 to 59 of the Strategic Report. The Company’s
financial instrument risks are discussed in Note 15 to the financial
statements.
Changes in Regulation
The Board monitors and responds to changes in regulation as they
affect the Company and its policies.
AIFMD
The EU Alternative Investment Fund Managers Directive (“EU
AIFMD”) was introduced in 2014 in order to harmonise the regulation
of alternative investment fund managers (“AIFMs”) and imposed
obligations on AIFMs who manage or distribute alternative investment
funds (“AIFs”), such as the Company, in the EU (which at that time
also included the UK) or who wished to market shares in such funds
to professional investors in the EU (including the UK). Since Brexit,
EU AIFMD has been transposed into UK domestic law by virtue of the
European Union (Withdrawal) Act 2018, as amended, (“UK AIFMD”
and together with EU AIFMD, “AIFMD”), with EU AIFMD continuing
to regulate AIFMs’ activities in the EU and the marketing of an AIF’s
shares to professional investors in the EU, and UK AIFMD similarly
applying to such activities in the UK and the marketing of an AIF’s
shares to UK professional investors.
The Company was established in Guernsey in 2013 as a self-managed
Non-EU/Non-UK AIF. Additionally, upon the implementation of EU
AIFMD, the Company took advice on and implemented sufficient
and appropriate policies and procedures that enable the Board to
fulfil its role in relation to the functions of both portfolio management
and risk management. The Company is therefore categorised as an
internally managed Non-EU/Non-UK AIFM for the purposes of AIFMD
and as such neither it nor the Investment Adviser is required to seek
authorisation under AIFMD.
The marketing of shares in AIFs that are established outside the UK
and the EU (such as the Company) to UK professional investors or to
professional investors in any EU member state is prohibited unless
certain conditions are met. Certain of these conditions are outside
the Company’s control as they are dependent on the regulators of the
relevant third country (in this case Guernsey) and the UK (or relevant
EU member state, as applicable) entering into regulatory co-operation
agreements with one another.
Currently, the Company is only able to market its shares to professional
investors in the UK and the EU to the extent that it complies with the
applicable National Private Placing Regime (“NPPR”), if any.
74
CORPORATE GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS The Board is currently permitted to market the Company’s shares
to professional investors in the UK pursuant to Regulation 59 of the
UK Alternative Investment Fund Managers Regulations 2013 (as
amended). In addition, the Company is also permitted to market
its shares to professional investors in The Republic of Ireland, the
Netherlands and Luxembourg pursuant to their respective NPPRs. The
Board works with the Company’s professional advisers to ensure the
necessary conditions are met, and all required notices and disclosures
are made under each applicable NPPR to enable the Company to
continue marketing its shares to professional investors in the UK and the
other relevant EU member states. In conjunction with the Company’s
professional advisers, the Board also monitors any developments in
AIFMD which might impact the Company in the future.
Any regulatory changes arising under AIFMD, the applicable NPPRs or
otherwise that limit the Company’s ability to market future issues of its
shares to professional investors in the UK and/or the EU may materially
adversely affect the Company’s ability to carry out its investment
policy successfully and to achieve its investment objectives, which in
turn may adversely affect the Company’s business, financial condition,
results of operations, NAV and/or the market price of its shares.
FATCA and CRS
The Company is registered under FATCA and continues to comply with
FATCA and the Common Reporting Standard’s requirements to the
extent relevant to the Company.
PRIIPs
The Company is in compliance with the requirement to publish a
key information document (“KID”) under both the EU and UK PRIIPs
Regulations. The most current KIDs (one prepared in accordance with
the EU PRIIPs Regulation and the other prepared in accordance with
the UK PRIIPs Regulation) are available on the Company’s website.
Consumer Duty
On 31 July 2023 the FCA introduced a new Principle for Businesses
(Principle 12) applicable to authorised firms in the UK which carry on
‘retail market business’ and who can determine, or materially influence
retail customer outcomes. This new Principle 12 was accompanied by
a package of rules and guidance, which are collectively known as the
Consumer Duty.
The Company is not subject to the Consumer Duty as it is not an
FCA authorised firm. However, the Company is aware that its shares
may be held by or on behalf of retail customers, and that other firms
within the distribution chain of its shares are within scope of the
Consumer Duty requirements. Accordingly, it is the Board’s intention
that the Company will respond to information and other requests
from UK authorised firms in the distribution chain of the Company’s
shares in such a way as to support their compliance with the
Consumer Duty.
NMPI
The UK Financial Conduct Authority’s rules (the “FCA Rules”) restrict
the marketing within the UK of certain pooled investments or funds
referred to in the FCA Rules as “non mainstream pooled investments”
(“NMPIs”) to ordinary retail clients. These rules took effect on 1
January 2014. The Company conducts its affairs such that its shares
are excluded from the FCA’s restrictions which apply to NMPI products
because its shares are shares in an investment company which, if it
were domiciled in the UK, would currently qualify as an “investment
trust”. It is the Board’s intention that the Company will make all
reasonable efforts to continue to conduct its affairs in such a manner
that its shares can continue to be recommended by independent
financial advisers to UK retail investors in accordance with the FCA
Rules relating to NMPIs.
• A Guernsey Green Fund shall comprise 75% assets by value that
meet the Guernsey Green Fund Rules criteria. The remaining 25%
must not lessen or reduce the Guernsey Green Fund’s overall
objective of mitigating environmental damage nor comprise an
investment of a type specified within schedule 3 of the Guernsey
Green Fund Rules, 2021;
• A Guernsey Green Fund shall only comprise assets permitted
to be held under its principal documents or prospectus and of a
nature described in its prospectus; and
• A Guernsey Green Fund shall not be invested in contravention of
limits or restrictions imposed under its principal documents or
prospectus.
The Company fulfils the above investment criteria by investing in
a diversified portfolio of renewable energy assets, each located
within the UK, with a focus on utility scale assets and portfolios
on greenfield sites. The Group targets long life renewable energy
infrastructure, expected to generate energy output over asset lives
of at least 25 years. The Company incorporates Environmental
Social & Governance policies into its investment processes and
is actively monitoring and working to improve its environmental
and social impact. The production of renewable energy equates
to a significant amount of CO2 emissions saved, representing a
sustainable and ethical investment.
Guernsey Green Fund Status
The Guernsey Green Fund aims to provide a platform for investments
into various green initiatives and gives investors a trusted and
transparent product that contributes to the internationally agreed
objectives of mitigating environmental damage and climate change.
The Company successfully obtained Guernsey Green Fund Status on
16 April 2019.
Following an application to the GFSC, the Company was deemed to
have met the following investment criteria outlined in the Guernsey
Green Fund Rules, 2021:
By order of the Board
Paul Le Page
Director
27 September 2023
• The Property of a Guernsey Green Fund shall be invested with the
aim of spreading risk and with the ultimate objective of mitigating
environmental damage resulting in a net positive outcome for the
environment;
Elizabeth Burne
Director
27 September 2023
75
CORPORATE GOVERNANCE REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Report of the
Audit and Risk
Committee
The Audit and Risk Committee, chaired by Paul Le Page and comprising all
of the Directors set out on page 3, operates within clearly defined terms of
reference (which are available from the Company’s website, www.bluefieldsif.
com) and includes all matters indicated by Rule 7.1 of the UK FCA’s DTRs and
the AIC Code. It is also the formal forum through which the Auditor will report
to the Board of Directors.
The Audit and Risk Committee meets no less than three times a year, and at
such other times as the Audit and Risk Committee shall require, and meets
the Auditor at least twice a year. Any member of the Audit and Risk Committee
may request that a meeting be convened by the company secretary. The
Auditor may request that a meeting be convened if they deem it necessary.
Any Director who is not a member of the Audit and Risk Committee, the
Administrator and representatives of the Investment Adviser shall be invited
to attend the meetings as the Directors deem appropriate.
The Board has taken note of the requirement that at least one member of
the Committee should have recent and relevant financial experience and is
satisfied that the Committee is properly constituted in that respect, with one
of its members who is a qualified accountant and three members with an
investment background.
76
ANNUAL REPORT AND FINANCIAL STATEMENTS BLUEFIELD OPERATIONS AT ELMS
Responsibilities
The main duties of the Audit Committee are:
• monitoring the integrity of the financial statements of the
Company and any formal announcements relating to the
Company’s financial performance and reviewing significant
financial reporting judgements contained in them;
• monitoring and reviewing annually the Auditor’s indepen-
dence, objectivity, expertise, resources, qualification and
non-audit work;
• considering annually whether there is a need for the
Company to have its own internal audit function;
• reporting to the Board on the appropriateness of the
Board’s accounting policies and practices including critical
judgement areas;
• keeping under review the effectiveness of the accounting
and internal control systems of the Company;
• reviewing the valuation of the Company’s investments
prepared by the Investment Adviser, and making a
recommendation to the Board on the valuation of the
Company’s investments;
• meeting regularly with the Auditor to review their proposed
audit plan and the subsequent audit report and assess the
effectiveness of the audit process and the levels of fees
paid in respect of both audit and non-audit work;
• making recommendations to the Board in relation to the
appointment, reappointment or removal of the Auditor
and approving their remuneration and the terms of their
engagement;
• reviewing and considering the UK Code, the AIC Code,
the FRC Guidance on Audit and Risk Committees and the
Company’s institutional investors’ commitment to the UK
Stewardship code; and
• reviewing the risks facing the Company and monitoring the
risk matrix.
The Audit and Risk Committee is required to report formally
to the Board on its findings after each meeting on all matters
within its duties and responsibilities.
The Auditor is invited to attend the Audit and Risk Committee
meetings as the Board deems appropriate and at which
they have the opportunity to meet with the Committee
without representatives of the Investment Adviser or the
Administrator being present at least once per year.
Financial Reporting
The primary role of the Audit and Risk Committee in relation to the
financial reporting is to review with the Administrator, Investment
Adviser and the Auditor the appropriateness of the interim and annual
financial statements, concentrating on, amongst other matters:
• the quality and acceptability of accounting policies and practices;
• the clarity of the disclosures and compliance with financial
reporting standards and relevant financial and governance reporting
requirements;
• material areas in which significant judgements have been applied or
there has been discussion with the Auditor;
• whether the annual report and financial statements, taken as
a whole, is fair, balanced and understandable and provides the
information necessary for Shareholders to assess the Company’s
performance, business model and strategy; and
• any correspondence from regulators in relation to the Company’s
financial reporting.
To aid its review, the Audit and Risk Committee considers reports from
the Administrator and Investment Adviser and also reports from the
Auditor on the outcomes of their half year review and annual audit.
Like the Auditor, the Audit and Risk Committee seeks to display the
necessary professional scepticism their role requires.
Meetings
The Committee has met formally on 9 occasions in the year covered by
this report. The matters discussed and challenged at those meetings
were:
• consideration and agreement of the terms of reference of the Audit
and Risk Committee for approval by the Board;
• review of the Company’s risk matrix;
• review of the accounting policies and format of the financial
statements;
• review and approval of the audit plan of the Auditor and timetable for
the interim and annual financial statements;
77
REPORT OF THE AUDIT AND RISK COMMITTEE ANNUAL REPORT AND FINANCIAL STATEMENTS
• review of the valuation policy and methodology of
the Company’s investments applied in the interim
and annual financial statements;
• detailed review of the interim and annual report
and financial statements;
• assessment of the effectiveness of the external
audit process as described below;
• a review of the process used to determine the
viability of the Company; and
• detailed discussions and recommendation to the
Board of the audit tender process.
The Audit and Risk Committee chair or other
members of the Audit and Risk Committee
appointed for the purpose, shall attend each
AGM of the Company, prepared to respond to
any shareholder questions on the Audit and Risk
Committee’s activities.
Primary Area of Judgement
The Audit and Risk Committee determined that the
key risk of misstatement of the Company’s financial
statements is the fair value of the investments held
by the Company in the context of the high degree
of judgement involved in the assumptions and
estimates underlying the discounted cash flow
calculations.
the BR1’s
fair value of
As outlined in Note 8 of the financial statements,
the
investments
(Directors’ Valuation) as at 30 June 2023 was
£1,018,350,175 (2022: £939,947,842). Market
quotations are not available for these investments
so their valuation is undertaken using a discounted
cash flow methodology. The Directors have also
considered transactions in similar assets and
used these to infer the discount rate. Significant
inputs such as the discount rate, rate of inflation,
power price forecast and the amount of electricity
the renewable energy infrastructure assets are
expected to produce are subjective and include
certain assumptions. As a result, this requires a
series of judgements to be made as explained in
Note 8 in the financial statements.
The valuation of the BR1’s portfolio of renewable
energy infrastructure assets (Directors’ Valuation)
as at 30 June 2023 has been determined by the
Board based on
information provided by the
Investment Adviser.
The Audit and Risk Committee also reviewed and
suggested factors that could impact BR1’s portfolio
valuation and its related sensitivities to the carrying
value of the investments as required in accordance
with IPEV Valuation Guidelines.
Risk Management
The Company’s risk assessment process and the
way in which significant business risks are managed
is a key area of focus for the Committee. The work
of the Audit and Risk Committee is driven primarily
by the Company’s assessment of its Principal and
Emerging Risks as set out on pages 55 to 59 of
the Strategic Report, and it receives reports from
the Investment Adviser and Administrator on the
Company’s risk evaluation process and reviews
changes to significant risks identified.
Internal Audit
The Audit and Risk Committee considers at least
once a year whether there is a need for an internal
audit function. Currently it does not consider there
to be a need for an internal audit function, given
that there are no employees in the Company and
all outsourced functions are with parties who have
their own internal controls and procedures.
External Audit
KPMG has been the Company’s external Auditor since the Company’s
inception.
The Auditor is required to rotate the audit partner every five years.
The current Audit Partner is in his second year of tenure. There are
no contractual obligations restricting the choice of external auditor.
An extensive, robust and competitive audit tender process was
undertaken during the Period and the Audit and Risk Committee
agreed that, of those firms who participated in the tender, KPMG
offered the most compelling case for the provision of a high quality
audit at good value for Shareholders and is therefore recommending
that they are re-appointed at the upcoming AGM.
The objectivity of the Auditor is reviewed by the Audit and Risk
Committee which also reviews the terms under which the external
Auditor may be appointed to perform non-audit services. The Audit
and Risk Committee reviews the scope and results of the audit,
its cost effectiveness and the independence and objectivity of
the Auditor, with particular regard to any non-audit work that the
Auditor may undertake. In order to safeguard Auditor independence
and objectivity, the Audit and Risk Committee ensures that any
other advisory and/or consulting services provided by the external
Auditor do not conflict with its statutory audit responsibilities.
Advisory and/or consulting services will generally cover only reviews
of interim financial statements and capital raising work. Any non-audit
services conducted by the Auditor outside of these areas will require
the consent of the Audit and Risk Committee before being initiated.
The external Auditor may not undertake any work for the Company
in respect of the following matters: preparation of the financial
statements; provision of investment advice; taking management
decisions; advocacy work in adversarial situations; provision of tax
and tax compliance services; promotion of, dealing in, or underwriting
the Company’s shares; provision of payroll services; design or
implementation of internal control or risk management or financial
information technology systems, provision of valuation services,
provision of services related to internal audit; and provision of certain
human resources functions.
The Committee reviews the scope and results of the audit, its cost
effectiveness and the independence and objectivity of the Auditor,
with particular regard to the level of non-audit fees. During the Period,
78
REPORT OF THE AUDIT AND RISK COMMITTEE ANNUAL REPORT AND FINANCIAL STATEMENTS KPMG was also engaged to provide a review of the Company’s
interim information for Shareholders. Total fees paid by
the Company and its subsidiaries amounted to £864,174
(2022: £611,400), fees for the Company itself amounted to
£157,325 for the year ended 30 June 2023 (30 June 2022:
£230,608) of which £112,325 related to audit and audit
related services to the Company (30 June 2022: £97,975)
and £45,000 in respect of non-audit services (30 June
2022: £132,633). The increase in fees paid by subsidiaries
to KPMG is due to the completion of the phased two-year
programme transitioning the audit work to KPMG in order to
further enhance audit efficiency, this saw an increased scope
from 92 subsidiary entities to 174 subsidiary entities audited
by KPMG.
Notwithstanding such services, which have arisen
in
connection with review of the interim financial statements,
the Audit and Risk Committee considers KPMG to be
independent of the Company and that the provision of such
non-audit services is not a threat to the objectivity and
independence of the conduct of the audit as appropriate
safeguards are in place.
To fulfil its responsibility regarding the independence of the
Auditor, the Audit and Risk Committee has considered:
• discussions with or reports from the Auditor describing its
arrangements to identify, report and manage any conflicts
of interest; and
• the extent of non-audit services provided by the Auditor
and arrangements for ensuring the independence and
objectivity and robustness and perceptiveness of the
Auditor and their handling of key accounting and audit
judgements.
To assess the effectiveness of the Auditor, the Committee
has reviewed and challenged:
• the Auditor’s fulfilment of the agreed audit plan and
variations from it;
• feedback from other service providers evaluating the
performance of the audit team;
• arrangements for ensuring independence and objectivity;
and
also given equal amounts of exclusive time with the current
and future Audit and Risk Committee chair (Paul Le Page and
Elizabeth Burne, respectively) as well as representatives of
the Investment Adviser and Administrator to aid them in
their submissions.
• robustness of the Auditor in handling key accounting and
audit judgements.
The Audit and Risk Committee is satisfied with KPMG’s
independence as Auditor, having
effectiveness and
considered the degree of diligence and professional
scepticism demonstrated by them.
In line with the FRCs recommendations on audit tendering
and in particular the requirement to put the external audit
out to tender at least every ten years, the Audit and Risk
Committee sought to conduct a tender exercise for the
external audit of the Company, as previously communicated.
This is the tenth year of KPMG’s appointment as the
Company’s auditor. The competitive audit tender exercise
actioned by the Audit and Risk Committee concluded within
the year. The tender exercise allowed sufficient time such
that any potential new audit firm appointed could benefit
from a cooling-off period before their appointment (should
they already be providing services to the Company and/or
Group that require such a cooling-off period).
The tender process took into consideration best practice
in line with the AIC Code and the FRC Minimum Standard
for Audit Committees. This ensured a fair, robust and
independent tender process could be commenced to ensure
the Company appointed the most suitable firm. The Audit and
Risk Committee issued a request for an introductory meeting
to five firms in December 2022, which included two smaller
firms. The two smaller firms did not wish to tender and one
big four firm that has historically provided tax advice to the
group declined to tender. Following a review by the Audit and
Risk Committee, a request for proposal was issued to two of
those firms and the current auditors KPMG in March 2023 to
invite them to tender for the external audit of the Company.
Following this, members of the Audit and Risk Committee,
together with representatives of the Investment Adviser and
Administrator, who were key stakeholders in the process,
reviewed the tender submissions. The Audit and Risk
Committee invited KPMG and a challenger firm to present
their submissions in person in May 2023. After the Audit
and Risk Committee review of submissions, the Committee
members resolved to recommend the continuing appointment
of KPMG as auditors because KPMG offered the best case for
the provision of a high-quality audit, while representing best
value to Shareholders. Having satisfied itself that the Auditor
remains independent and effective, and having concluded a
full audit tender process, the Audit and Risk Committee has
recommended to the Board that KPMG be reappointed as
Auditor for the year ending 30 June 2024.
The Company notes that it received some votes against
KPMG’s appointment and remuneration at the AGM held on
29 November 2022 and confirms that it has consulted with
the majority of these shareholders and determined that the
issues raised related to a limited list of approved auditors
preferred by one proxy agency and the ratio of non-audit to
audit fees in 2022 when the Company incurred corporate
finance fees for its most recent capital raises.
The incoming Chair of the Audit and Risk Committee will be
available at the AGM to answer any questions about the work
of the Committee.
On behalf of the Audit and Risk Committee
Paul Le Page
Chair of the Audit and Risk Committee
27 September 2023
79
• discussions or reports highlighting the major issues that
arose during the course of the audit;
The two challenger firms were given access to a shared data
room containing information about the Company and were
REPORT OF THE AUDIT AND RISK COMMITTEE ANNUAL REPORT AND FINANCIAL STATEMENTS ANNUAL REPORT AND FINANCIAL STATEMENTS
Independent
Auditor’s Report
Independent Auditor’s Report to the Members of Bluefield Solar Income
Fund Limited
Our opinion is unmodified
We have audited
the financial statements
of Bluefield Solar Income Fund Limited (the
“Company”), which comprise the statement
of financial position as at 30 June 2023, the
statements of comprehensive income, changes
in equity and cash flows for the year then ended,
and notes, comprising significant accounting
policies and other explanatory information.
In our opinion, the accompanying financial
statements:
• give a true and fair view of the financial position
of the Company as at 30 June 2023, and of the
Company’s financial performance and cash
flows for the year then ended;
• are prepared in accordance with International
Financial Reporting Standards as adopted by
the EU; and
• comply with the Companies (Guernsey) Law,
2008.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (“ISAs
(UK)”) and applicable law. Our responsibilities
are described below. We have fulfilled our ethical
responsibilities under, and are independent of
the Company in accordance with, UK ethical
requirements including the FRC Ethical Standard
as required by the Crown Dependencies’ Audit
Rules and Guidance. We believe that the audit
evidence we have obtained is a sufficient and
appropriate basis for our opinion.
Key audit matters: our assessment of the
risks of material misstatement
Key audit matters are those matters that, in our
professional judgment, were of most significance
in the audit of the financial statements and
include the most significant assessed risks of
material misstatement (whether or not due to
fraud) identified by us, including those which
had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit;
and directing the efforts of the engagement
team. These matters were addressed in the
context of our audit of the financial statements as
a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these
matters. In arriving at our audit opinion above,
the key audit matter was as follows (unchanged
from 2022):
80
INDEPENDENT AUDITOR’S REPORT
Valuation of financial assets held at fair value through profit or loss £852,844,000 (2022: £856,380,000)
Refer to Report of the Audit Committee on pages 76 to 79, note 2(j) accounting policy and note 8 disclosures.
THE RISK
OUR RESPONSE
Basis:
The Company’s investment in its immediate subsidiary is carried at fair value through profit or loss
and represents a significant proportion of the Company’s net assets (2023: 99.8%; 2022: 99.8%).
The fair value of the immediate subsidiary, which reflects its net asset value, predominantly
comprises of the fair value (£1,018,350,000) of underlying special purpose vehicle renewable
project investments (“SPVs”) and the immediate subsidiary level debt (see note 8).
The fair value of the SPVs has been determined using the income approach, discounting the future
cash flows of underlying renewable projects (the “Valuations”), for which there is no liquid market.
The Valuations incorporate certain assumptions including discount rate, power price forecasts,
inflation, useful economic life and other macro-economic assumptions. The non-operational
renewable asset SPVs are valued at their costs as an approximation of their fair value.
In determining the discount rate used in the Valuations, the relevant long term government bond
yields, cost of debt, specific asset risk and evidence of recent market transactions are considered.
The Valuations are adjusted for other specific assets and liabilities of the SPVs.
Risk:
The Valuations represent both a risk of fraud and error associated with estimating the timing and
amounts of long term forecast cash flows alongside the significant judgement involved in the
selection, and application, of appropriate assumptions. Changes to long term forecast cash flows
and/or the selection and application of different assumptions may result in a materially different
valuation of financial assets held at fair value through profit or loss.
We therefore determined that the Valuations have a high degree of estimation uncertainty giving
rise to a potential range of reasonable outcomes greater than our materiality for the financial
statements as a whole. The financial statements disclose in note 8 the sensitivities estimated by
the Company.
Our audit procedures included, but were not limited to:
Control evaluation:
We assessed the design and implementation of the control over the Valuation of financial assets held at
fair value through profit or loss.
Valuation model integrity and model inputs:
• We tested the valuation model for mathematical accuracy including, but not limited to, material
formulae errors;
• We verified key inputs into the valuation model, such as power price forecasts, contracted revenue and
operating costs to supporting documentation;
• We agreed a value driven sample of balances within the residual net asset amounts at subsidiary
level to supporting documentation, such as independent bank confirmations and other source
documentation;
• We obtained and vouched significant additions to non operational renewable assets during the year to
supporting documentation; and
• In order to assess the reliability of management’s forecasts, for a risk based selection, we assessed the
historical accuracy of the cash flow forecasts against actual results.
Benchmarking the valuation assumptions:
With support from our KPMG valuation specialist, we challenged the appropriateness of the Company’s
valuation methodology and key assumptions including discount rate, power price forecasts, inflation,
and other macro-economic assumptions applied, by:
• assessing the appropriateness of the valuation methodology applied by the Investment Adviser;
• benchmarking against independent market data and relevant peer group companies; and
• using our KPMG valuation specialist’s experience in valuing similar investments.
Assessing transparency:
We considered the appropriateness of the Company’s investment valuation policies and the
adequacy of the Company’s disclosures in relation to the use of estimates and judgements in
arriving at fair value (see note 3).
We assessed whether the disclosures around the sensitivities to changes in key assumptions
reflect the risks inherent in the valuation of the underlying investment portfolio (see note 8).
81
ANNUAL REPORT AND FINANCIAL STATEMENTS Our application of materiality and an overview of
the scope of our audit
Materiality for the financial statements as a whole was set
at £17,400,000, determined with reference to a benchmark
of net assets of £854,189,000, of which it represents
approximately 2.0% (2022: 2.0%).
In line with our audit methodology, our procedures on
individual account balances and disclosures were performed
to a lower threshold, performance materiality, so as to reduce
to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a
material amount across the financial statements as a whole.
Performance materiality for the Company was set at 75%
(2022: 75%) of materiality for the financial statements as
a whole, which equates to £13,000,000. We applied this
percentage in our determination of performance materiality
because we did not identify any factors indicating an elevated
level of risk.
We reported to the Audit Committee any corrected or
uncorrected identified misstatements exceeding £870,000,
in addition to other identified misstatements that warranted
reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality
level specified above, which has informed our identification of
significant risks of material misstatement and the associated
audit procedures performed in those areas as detailed above.
Going concern
The directors have prepared the financial statements on
the going concern basis as they do not intend to liquidate
the Company or to cease its operations, and as they have
concluded that the Company’s financial position means that
this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt
over its ability to continue as a going concern for at least a
year from the date of approval of the financial statements
(the “going concern period”).
In our evaluation of the directors’ conclusions, we considered
the inherent risks to the Company’s business model and
analysed how those risks might affect the Company’s
financial resources or ability to continue operations over the
going concern period. The risks that we considered most
likely to affect the Company’s financial resources or ability to
continue operations over this period were:
• Availability of capital to meet operating costs and other
financial commitments; and
• The outcome of the upcoming continuation vote.
We considered whether these risks could plausibly affect the
liquidity in the going concern period by comparing severe,
but plausible downside scenarios that could arise from
these risks individually and collectively against the level of
available financial resources indicated by the Company’s
financial forecasts.
We also considered the risk that the outcome of the
continuation vote could affect the Company over the going
concern period, by considering outcomes of previous votes
held by the Company, inspecting summaries of discussions
held with the broker, and considering key financial metrics
including discount of the Company’s share price against its
reported net asset value per share, over the past 12 months.
We considered whether the going concern disclosure in note
2(b) to the financial statements gives a full and accurate
description of the directors’ assessment of going concern.
Our conclusions based on this work:
• we have nothing material to add or draw attention to in
relation to the directors’ statement in the notes to the
financial statements on the use of the going concern basis
of accounting with no material uncertainties that may cast
significant doubt over the Company’s use of that basis for
the going concern period, and that statement is materially
consistent with the financial statements and our audit
knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that
are inconsistent with judgements that were reasonable at
the time they were made, the above conclusions are not a
guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations – ability
to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud
(“fraud risks”) we assessed events or conditions that could
indicate an incentive or pressure to commit fraud or provide
an opportunity to commit fraud. Our risk assessment
procedures included:
• enquiring of management as to the Company’s policies and
procedures to prevent and detect fraud as well as enquiring
whether management have knowledge of any actual,
suspected or alleged fraud;
• reading minutes of meetings of those charged with
governance; and
• we consider that the directors’ use of the going concern
basis of accounting in the preparation of the financial
statements is appropriate;
• using analytical procedures to identify any unusual or
unexpected relationships.
• we have not identified, and concur with the directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively,
may cast significant doubt on the the Company’s ability to
continue as a going concern for the going concern period;
and
As required by auditing standards, and taking into account
possible incentives or pressures to misstate performance
and our overall knowledge of the control environment, we
perform procedures to address the risk of management
override of controls, in particular the risk that management
82
INDEPENDENT AUDITOR’S REPORTANNUAL REPORT AND FINANCIAL STATEMENTS may be in a position to make inappropriate accounting
entries, and the risk of bias in accounting estimates such as
the valuation of unquoted investments. On this audit we do
not believe there is a fraud risk related to revenue recognition
because the Company’s revenue streams are simple in
nature with respect to accounting policy choice, and are
easily verifiable to external data sources or agreements with
little or no requirement for estimation from management. We
did not identify any additional fraud risks.
We performed procedures including:
• identifying journal entries and other adjustments to test
based on risk criteria and comparing any identified entries
to supporting documentation;
• incorporating an element of unpredictability in our audit
procedures; and
• assessing significant accounting estimates for bias.
• Further detail
in respect of valuation of unquoted
investments is set out in the key audit matter section of
this report.
Identifying and responding to risks of material
misstatement due to non-compliance with laws and
regulations
We identified areas of laws and regulations that could
reasonably be expected to have a material effect on the financial
statements from our sector experience and through discussion
with management (as required by auditing standards),
and from inspection of the Company’s regulatory and legal
correspondence, if any, and discussed with management the
policies and procedures regarding compliance with laws and
regulations. As the Company is regulated, our assessment
of risks involved gaining an understanding of the control
environment including the entity’s procedures for complying
with regulatory requirements.
The Company is subject to laws and regulations that directly
affect the financial statements including financial reporting
legislation and taxation legislation and we assessed the
extent of compliance with these laws and regulations as part
of our procedures on the related financial statement items.
The Company is subject to other laws and regulations where
the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements,
for instance through the imposition of fines or litigation or
impacts on the Company’s ability to operate. We identified
financial services regulation as being the area most likely
to have such an effect, recognising the regulated nature
of the Company’s activities and its legal form. Auditing
standards limit the required audit procedures to identify
non-compliance with these laws and regulations to enquiry
of management and inspection of regulatory and legal
correspondence, if any. Therefore if a breach of operational
regulations is not disclosed to us or evident from relevant
correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some
material misstatements in the financial statements, even
though we have properly planned and performed our audit
in accordance with auditing standards. For example, the
further removed non-compliance with laws and regulations
is from the events and transactions reflected in the financial
statements, the less likely the inherently limited procedures
required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of
non-detection of fraud, as this may involve collusion, forgery,
intentional omissions, misrepresentations, or the override
of internal controls. Our audit procedures are designed to
detect material misstatement. We are not responsible for
preventing non-compliance or fraud and cannot be expected
to detect non-compliance with all laws and regulations.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the
annual report but does not include the financial statements
and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and we
do not express an audit opinion or any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report in this regard.
Disclosures of emerging and principal risks and
longer term viability
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
disclosures in respect of emerging and principal risks and
the viability statement, and the financial statements and our
audit knowledge. we have nothing material to add or draw
attention to in relation to:
• the directors’ confirmation within the viability statement
(page 58 and 59) that they have carried out a robust
assessment of the emerging and principal risks facing the
Company, including those that would threaten its business
model, future performance, solvency or liquidity;
• the emerging and principal risks disclosures describing
these risks and explaining how they are being managed or
mitigated;
83
INDEPENDENT AUDITOR’S REPORTANNUAL REPORT AND FINANCIAL STATEMENTS • the directors’ explanation in the viability statement (page
58 and 59) as to how they have assessed the prospects
of the Company, over what period they have done so and
why they consider that period to be appropriate, and
their statement as to whether they have a reasonable
expectation that the Company will be able to continue
in operation and meet its liabilities as they fall due
over the period of their assessment,
including any
related disclosures drawing attention to any necessary
qualifications or assumptions.
• the section of the annual report that describes the
review of the effectiveness of the Company’s risk
management and internal control systems.
We are required to review the part of Corporate Governance
Statement relating to the Company’s compliance with the
provisions of the UK Corporate Governance Code specified
by the Listing Rules for our review. We have nothing to report
in this respect.
We are also required to review the viability statement, set
out on page 58 and 59 under the Listing Rules. Based on
the above procedures, we have concluded that the above
disclosures are materially consistent with the financial
statements and our audit knowledge.
We have nothing to report on other matters on
which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies (Guernsey) Law, 2008 requires us to
report to you if, in our opinion:
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the directors’
corporate governance disclosures and
the financial
statements and our audit knowledge.
Based on those procedures, we have concluded that each
of the following is materially consistent with the financial
statements and our audit knowledge:
• the directors’ statement that they consider that the
annual report and financial statements taken as a whole
is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the
Company’s position and performance, business model
and strategy;
• the section of the annual report describing the work of
the Audit Committee, including the significant issues
that the audit committee considered in relation to
the financial statements, and how these issues were
addressed; and
• the Company has not kept proper accounting records; or
• the financial statements are not in agreement with the
accounting records; or
• we have not received all the information and explanations,
which to the best of our knowledge and belief are necessary
for the purpose of our audit.
Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
68, the directors are responsible for: the preparation of the
financial statements including being satisfied that they give a
true and fair view; such internal control as they determine is
necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to
fraud or error; 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.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue our opinion in an auditor’s report. Reasonable
assurance is a high level of assurance, but does not
guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial
statements. .
A fuller description of our responsibilities is provided on the
FRC’s website at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its
use by persons other than the Company’s members
as a body
This report is made solely to the Company’s members, as
a body, in accordance with section 262 of the Companies
(Guernsey) Law, 2008. Our audit work has been undertaken
so that we might state to the Company’s members those
matters we are required to state to them in an auditor’s 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 and the Company’s members, as a
body, for our audit work, for this report, or for the opinions
we have formed.
Barry Ryan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors, Guernsey
27 September 2023
84
INDEPENDENT AUDITOR’S REPORTANNUAL REPORT AND FINANCIAL STATEMENTS Statement
of Financial
Position
As at 30 June 2023
These financial statements were approved and authorised
for issue by the Board of Directors on 27 September 2023
and signed on their behalf by:
Paul Le Page
Director
27 September 2023
Elizabeth Burne
Director
27 September 2023
Assets
NON-CURRENT ASSETS
Financial assets held at fair value through profit or loss
Total non-current assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
Liabilities
CURRENT LIABILITIES
Other payables and accrued expenses
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Share capital
Retained earnings
TOTAL EQUITY
The accompanying notes form an integral part of these
financial statements.
Number of Ordinary Shares in issue at year end
Net Asset Value per Ordinary Share (pence)
Note
30 June 2023
£’000
30 June 2022
£’000
8
9
10
11
13
13
7
852,844
852,844
910
969
1,879
856,380
856,380
882
1,619
2,501
854,723
858,881
534
534
534
490
490
490
854,189
858,391
663,809
190,380
663,809
194,582
854,189
858,391
611,452,217
611,452,217
139.70
140.39
85
ANNUAL REPORT AND FINANCIAL STATEMENTS
Statement of
Comprehensive
Income
For the year ended 30 June 2023
Income
Income from investments
Bank interest
Net gains on financial assets held at fair value
through profit or loss
Operating income
Expenses
Administrative expenses
Operating expenses
Operating profit
Profit and total comprehensive income for the year
Note
Year ended
30 June 2023
£’000
Year ended
30 June 2022
£’000
4
8
5
900
6
906
48,164
49,070
2,277
2,277
46,793
46,793
834
-
834
175,308
176,142
1,569
1,569
174,573
174,573
Earnings per share:
Basic and diluted (pence)
12
7.65
34.91
All items within the above statement have been derived from continuing activities.
The accompanying notes form an integral part of these financial statements.
86
ANNUAL REPORT AND FINANCIAL STATEMENTS
Statement of
Changes in
Equity
For the year ended 30 June 2023
Shareholders’ equity at
1 July 2022
Note
Number of
Ordinary Shares
Share capital
£’000
Retained earnings
£’000
Total equity
£’000
611,452,217
663,809
194,582
858,391
Dividends paid
13,14
Total comprehensive income for the
period
Shareholders’ equity at
30 June 2023
-
-
-
-
(50,995)
(50,995)
46,793
46,793
611,452,217
663,809
190,380
854,189
For the year ended 30 June 2022
Shareholders’ equity at
1 July 2021
SHARES ISSUED DURING THE PERIOD:
Note
Number of
Ordinary Shares
Share capital
£’000
Retained earnings
£’000
Total equity
£’000
406,999,622
413,215
58,210
471,425
Ordinary Shares issued via placing
13
204,452,595
255,100
Share issue costs
Dividends paid
13,14
Total comprehensive income for the
period
Shareholders’ equity at
30 June 2022
-
-
-
(4,506)
-
-
-
-
255,100
(4,506)
(38,201)
(38,201)
174,573
174,573
611,452,217
663,809
194,582
858,391
The accompanying notes form an integral part of these financial statements.
87
ANNUAL REPORT AND FINANCIAL STATEMENTS
Statement of
Cash Flows
Cash flows from operating activities
Total comprehensive income for the year
46,793
174,573
Year ended
30 June 2023
£’000
Note
Year ended
30 June 2022
£’000
For the year ended 30 June 2023
Adjustments:
Increase in trade and other receivables
Increase in other payables and accrued expenses
Net gains on financial assets held at fair value through profit or loss
Net cash used in operating activities*
Cash flows from investing activities
Purchase of financial assets held at fair value through profit or loss
Receipts from investments held at fair value through profit or loss**
Net cash generated from/(used in) investing activities
8
8
8
Cash flow from financing activities
Proceeds from issue of Ordinary Shares
Issue costs paid
Dividends paid
(28)
44
(48,164)
(1,355)
-
51,700
51,700
-
-
The accompanying notes form an integral part of these financial
statements.
* Net cash used in operating activities includes £900,000
(2022: £833,887) of investment income.
** Receipts from investments held at fair value through profit or
loss includes £21.8 million (2022: £14.1 million) of interest.
Net cash generated from/(used in) investing activities
(50,995)
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
10
(650)
1,619
969
14
(50,995)
(109)
85
(175,308)
(759)
(250,282)
39,492
(210,790)
251,410
(816)
(38,201)
212,393
844
775
1,619
88
ANNUAL REPORT AND FINANCIAL STATEMENTS
Notes
to the Financial Statements for the
year ended 30 June 2023
1.General information
The Company is a non-cellular company limited by shares and was
incorporated in Guernsey under the Law on 29 May 2013 with registered
number 56708 as a closed-ended investment company. It is regulated by the
GFSC.
The financial statements for the year ended 30 June 2023 comprise the
financial statements of the Company only (see Note 2 (c)).
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. It also
has the ability to invest a minority of its capital into wind, hydro and energy
storage assets.
The Company has appointed Bluefield Partners LLP as its Investment Adviser.
2. Accounting policies
a) Basis of preparation
The financial statements included in this annual report have been presented
on a true and fair basis and prepared in accordance with IFRS as adopted by
the EU and the DTRs of the UK FCA.
These financial statements have been prepared under the historical cost
convention with the exception of financial assets measured at fair value
through profit or loss, and in compliance with the provisions of the Law.
89
ANNUAL REPORT AND FINANCIAL STATEMENTS Standards, interpretations and amendments to published
standards adopted in the period
New and Revised Standards
The Company has not adopted any new standards, amendments or
interpretations to existing standards because none applicable to the
Company have been published in the accounting period.
The Company has not adopted early any standards, amendments or
interpretations to existing standards that have been published and will
be mandatory for the Company’s accounting periods beginning after 1
July 2023 or later periods.
At the date of authorisation of these financial statements, certain new
standards, and amendments to existing standards have been published
by the IASB that are not yet effective and have not been adopted early
by the Company.
The Board expects that all relevant pronouncements will be adopted in
the Company’s accounting policies for the first period beginning after
the effective date of the pronouncement. New standards, interpretations
and amendments are not expected to have a material impact on the
Company’s financial statements.
b) Going concern
The Board, in its consideration of going concern, has reviewed
comprehensive cash flow forecasts prepared by the Investment
Adviser, as well as the performance of the solar and wind plants
currently in operation. The conflict in Ukraine continues to have a
significant impact on the macro-economic environment in which the
Company operates. The Board and Investment Adviser have been
closely monitoring this and it has been considered as part of the going
concern assessment.
The Board has also consulted with its broker on the likelihood of the
Company receiving support from Shareholders to allow it to continue
operations in its mandatory five year continuation vote that is due
at the 2023 AGM and regards this as very likely, given the strong
performance of the Company and the support which it has received
from its major shareholders.
In the light of these enquiries, at the time of approving these accounts
the Board has a reasonable expectation that the Company has
adequate resources to continue in operational existence for the 12
months from the date of signing the financial statements and does
not consider there to be any material threat to the viability of the
Company. The Board has therefore concluded that it is appropriate to
adopt the going concern basis of accounting in preparing the financial
statements.
c) Accounting for subsidiaries
The Company makes its investments in the SPVs through its wholly
owned subsidiary, BR1 (previously BSIFIL).
In light of the December 2014 amendments to IFRS 10 (the
Consolidation Exception Amendments), which clarified the scope of
the exceptions to mandatory non-consolidation amendments, the
Board considered the investment entity status of BR1 and concluded
that it is, like the Company, an investment entity. As such the Company
is not permitted to consolidate BR1 in the preparation of its financial
statements and all subsidiaries are recognised at fair value through
profit or loss.
d) Functional and presentation currency
These financial statements are presented in Sterling, which is the
functional currency of the Company as well as the presentation
currency. All amounts are stated to the nearest thousand unless
otherwise stated. The Company’s
investments and
transactions are all denominated in Sterling.
funding,
e) Income
Monitoring fee income is recognised on an accruals basis.
Interest income on cash and cash equivalents is recognised on an
accruals basis using the effective interest rate method.
f) Expenses
Operating expenses are the Company’s costs incurred in connection
with the ongoing administrative costs and management of the
Company’s investments. Operating expenses are accounted for on an
accruals basis.
g) Finance costs
Finance costs are recognised in the Statement of Comprehensive
Income in the period to which they relate on an accruals basis using
the effective interest rate method. Arrangement fees for finance
facilities are amortised over the expected life of the facility.
h) Dividends
Dividends declared and approved are charged against equity. A
corresponding liability is recognised for any unpaid dividends prior to
year end. Dividends approved but not declared will be disclosed in the
notes to the financial statements.
i) Segmental reporting
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 has considered the requirements of IFRS 8 ‘Operating
Segments’, and is of the view that the Company is engaged in a single
segment of business, being investment in UK renewable energy
infrastructure assets via its holding company and SPVs, and therefore
the Company has only a single operating segment.
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.
The Board has overall management and control of the Company and
will always act in accordance with the investment policy and investment
restrictions set out in the Company’s latest Prospectus, which cannot
be radically changed without the approval of Shareholders. The Board
has delegated the day-to-day implementation of the investment
strategy to its Investment Adviser but retains responsibility to ensure
that adequate resources of the Company are directed in accordance
with their decisions. Although the Board obtains advice from the
Investment Adviser, it remains responsible for making final decisions in
line with the Company’s policies and the Board’s legal responsibilities.
90
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS j) Financial instruments
Classification and measurement of financial assets and
financial liabilities
Financial assets and financial liabilities are recognised
in the
Company’s Statement of Financial Position when the Company
becomes a party to the contractual provisions of the instrument.
i) Financial assets held at fair value through profit or loss
Classification
The Company’s investment in BR1 is accounted for as a financial asset
rather than consolidated as the Company qualifies as an investment
entity under IFRS 10, therefore the Company’s investment is held at
fair value through profit or loss in accordance with the requirements
of IFRS 9.
Recognition and de-recognition
Purchases and sales of investments are recognised on the trade
date – the date on which the Company commits to purchase or sell
the investment. A financial asset is de-recognised either when the
Company has transferred all the risks and rewards of ownership;
or it has neither transferred nor retained substantially all the risks
and rewards and when it no longer has control over the assets or a
portion of the asset; or the contractual right to receive cash flow has
expired.
Measurement
Subsequent to initial recognition, investment in BR1 is measured at
each subsequent reporting date at fair value. The Company holds all
of the shares in the subsidiary, BR1, which is a holding vehicle used
to hold the Company’s SPV 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 are valued semi-
annually as described in Note 8 on a discounted cash flow basis which
is benchmarked against market transactions.
Gains or losses, through profit or loss, are made up of BR1’s profit
or loss, which comprises mainly cash receipts from its SPVs, the fair
value movement of BR1’s SPV portfolio and cash received in respect
of Eurobond instrument interest. Furthermore, cash receipts made to
the Company by BR1 are accounted for as a repayment of loans and
not reflected in the Company’s income, apart from monitoring fees
(see Note 4).
ii) Cash and cash equivalents and trade and other receivables
Cash and cash equivalents comprise cash on hand and short term
deposits with an original maturity of three months or less that are readily
convertible to a known amount of cash and are subject to an insignificant
risk of changes in value. Other receivables are non-derivative financial
assets with fixed or determinable payments that are not quoted in an
active market. These financial assets are included in current assets,
except for maturities greater than twelve months after the reporting date,
which are classified as non-current assets. They are initially recognised
at fair value plus transaction costs that are directly attributable to the
acquisition, and subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
iii) Financial liabilities
The classification of financial liabilities at initial recognition depends
on the purpose for which the financial liability was issued and its
characteristics.
All financial liabilities are initially recognised at fair value net of
transaction costs incurred. All purchases of financial liabilities are
recorded on the trade date, being the date on which the Company
becomes party to the contractual requirements of the financial liability.
The Company’s financial liabilities consist of only financial liabilities
measured at amortised cost.
3. Critical accounting judgements, estimates
and assumptions in applying the Company’s
accounting policies
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.
The area involving a high degree of judgement and/or complexity
and/or area where assumptions and estimates are significant to
the financial statements has been identified as the valuation of the
Company’s investment in BR1 which is estimated predominantly on
the valuation of the portfolio of investments held by BR1 (see Note 8).
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.
Financial liabilities measured at amortised cost
These include trade payables and other short term monetary liabilities,
which are initially recognised at fair value and subsequently carried at
amortised cost using the effective interest rate method..
As disclosed in Note 8, 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 a weighted
average discount rate of 8.00% (6.75% as at 30 June 2022) has been
utilised.
Derecognition of financial liabilities
A financial liability (in whole or in part) is derecognised when the
Company has extinguished its contractual obligations, it expires, or is
cancelled. Any gain or loss on derecognition is taken to profit and loss.
k) Equity instruments
An equity instrument is any contract that evidences a residual interest
in the assets of an entity after deducting all of its liabilities. Equity
instruments issued by the Company are recognised as the proceeds
received, net of direct issue costs. Direct issue costs include those
incurred in connection with the placing and admission which include
fees payable under the Placing Agreement, legal costs and any other
applicable expenses.
Use of a blended power forecast is unchanged, but the inflation
assumption has been increased to 7.0% in 2023 and 3.5% in 2024
to reflect market forecasts, after this a medium-term rate at 3%
(June 2022: 3%) has been extended to June 2029 before reverting
to a reduced long term assumption of 2.25% (June 2022: 2.25%)
thereafter.
The Directors’ Valuation as at 30 June 2023 is based on a weighted
average life of the portfolio of 28 years (vs. 25 years in June 2022),
reflecting both new acquisitions and asset life extensions.
91
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS 4.Income from investments
Monitoring fee in relation to
loans supplied (Note 16)
Year ended
30 June 2023
£’000
Year ended
30 June 2022
£’000
900
900
834
834
The Company provides monitoring and loan administration services to
BR1 (previously BSIFIL) for which an annual fee is charged, payable
in arrears.
5. Administrative expenses
Year ended
30 June 2023
£’000
Year ended
30 June 2022
£’000
Investment advisory base fee *
(see Note 16)
Legal and professional fees
Administration fees
Directors’ remuneration
Audit fees
Non-audit fees
Broker fees
Regulatory Fees
Registrar fees
Insurance
Listing fees
Other expenses
729
300
542
272
112
45
50
58
88
12
45
24
491
166
395
241
98
40
52
50
35
11
37
(47)
2,277
1,569
* The Investment advisory base fee is paid by both the Company (10%) and
BR1 (90%). The amount shown above reflects the amount paid by the
Company only. Note 16 shows the full fee paid to the Investment Adviser.
Investment Advisory Agreement
The Company, BR1 and the Investment Adviser have entered
into an Investment Advisory Agreement, under which the
Investment Adviser has overall responsibility for the non-
discretionary management of the Company’s assets and
any of BR1’s SPVs (including uninvested cash) in accordance
with the Company’s investment policies, restrictions and
guidelines.
The Investment Adviser is entitled to a base fee, which is
payable quarterly in arrears, on the following scale:
• NAV up to and including £750,000,000, 0.8% per annum
• NAV above £750,000,000> £1,000,000,000, 0.75% per
annum
• NAV above £1,000,000,000, 0.65% per annum.
The fee is based on the NAV reported in the most recent
quarterly NAV calculation
On 11 June 2014, BSIFIL (as the previous holding company)
entered into a Technical Services Agreement with the
Investment Adviser, with a retrospective effective date
of 25 June 2013, in order to delegate the provision of the
consultancy services to the Investment Adviser in its capacity
as technical adviser to the SPVs. On the same date the Group
entered into a base fee offset arrangement agreement,
whereby the aggregate technical services fee and base fee
payable (under the Investment Advisory Agreement) shall
not exceed the base fee that would otherwise have been
payable to the Investment Adviser in accordance with the
Investment Advisory Agreement had no fees been payable
under the Technical Services Agreement.
The fees incurred for the Period and the amount outstanding
at the Period end are shown in Note 16.
Administration Agreement
The Administrator has been appointed to provide day-to-
day administration and company secretarial services to the
Company, as set out in the Administration Agreement dated
24 June 2013.
Under the terms of the Administration Agreement, the
Administrator is entitled to an annual fee, at a rate equivalent
to 10 basis points of NAV up to and including £100,000,000,
7.5 basis points of NAV above £100,000,000 and up to
and including £200,000,000 and 5 basis points of the
NAV above £200,000,000, subject to a minimum fee of
£100,000 per annum. The fees are for the administration,
accounting, corporate secretarial services, corporate
governance, regulatory compliance and stock exchange
continuing obligations provided to the Company. In addition,
the Administrator will receive an annual fee of £7,500 and
£3,000 for the provision of a compliance officer and money
laundering reporting officer, respectively.
The Administrator is entitled to an investment related
transaction fee charged on a time spent basis, which
is capped at a total of £5,000 per investment related
transaction. All reasonable costs and expenses incurred by
the Administrator in accordance with this agreement are
reimbursed to the Administrator quarterly in arrears.
The Administrator also receives a fee of £5,000 per annum
in relation to the administration of the Company’s Guernsey
Green Fund Status.
For the year ended 30 June 2023, the Company incurred
fees to the Administrator of £542,176 (2022: £395,329),
of which £135,992 (2022: £204,162) was outstanding at
Period-end.
6. Taxation
The Company has obtained exempt status under the Income
Tax (Exempt Bodies) (Guernsey) Ordinance 1989 for which
it paid an annual fee of £1,200 (2022: £1,200) (included
within regulatory fees).
The income from the Company’s investments is not subject
to any further tax in Guernsey although the subsidiary and
underlying SPVs, as UK based entities, are subject to the
current prevailing UK corporation tax rate. The standard rate
of UK corporation tax is 25% (2022: 19%).
92
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS 7. Net Asset Value per Ordinary Share
The calculation of NAV per Ordinary Share is based on NAV of £854,189,487 (2022: £858,390,982) and
the number of shares in issue at 30 June 2023 of 611,452,217 (2022: 611,452,217) Ordinary Shares.
8. Financial assets held at fair value through profit or loss
The Company’s accounting policy on the measurement of these financial assets is discussed in Note
2(j)(i) and below.
Opening balance (Level 3)
30 June 2023
Total
£’000
856,380
Additions – funds passed to BR1/BSIFIL
-
30 June 2022
Total
£’000
470,282
250,282
SPV investment portfolio, Directors’ Valuation
1,018,350
939,948
30 June 2023
Total
£’000
30 June 2022
Total
£’000
Immediate Holding Company
Cash
Working capital
Debt
26,407
(38,913)
(153,000)
(165,506)
13,102
(26,670)
(70,000)
(83,568)
Change in fair value of financial assets held at fair
value through profit or loss
(3,536)
135,816
Financial assets at fair value
through profit or loss
852,844
856,380
Closing balance (Level 3)
852,844
856,380
Analysis of net gains on financial assets held at fair value through profit or loss (per statement
of comprehensive income)
Year ended
30 June 2023
£’000
Year ended
30 June 2022
£’000
Fair value measurements
IFRS 13 ‘Fair Value Measurement’ requires disclosure of fair value measurement by level. The level
of fair value hierarchy within the financial assets or financial liabilities is determined on the basis of
the lowest level input that is significant to the fair value measurement. Financial assets and financial
liabilities are classified in their entirety into only one of the three levels.
The fair value hierarchy has the following levels:
Unrealised change in fair value of financial assets
held at fair value through profit or loss
(3,536)
135,816
• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
Cash receipts from non-consolidated subsidiary*
51,700
39,492
• Level 2 – inputs other than quoted prices included within Level 1 that are observable for the assets
or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Net gains on financial assets held at fair value
through profit or loss
48,164
175,308
• Level 3 – inputs for assets or liabilities that are not based on observable market data (unobservable
inputs).
*Comprising of repayment of Loans and Eurobond interest
Investments at fair value through profit or loss comprise the fair value of the SPV investment portfolio
held by BR1 and the fair value of BR1’s cash, working capital and debt balances. BR1 is the Company’s
single direct subsidiary, which changed from BSIFIL to BR1 in May 2022 to facilitate arrangement of
the new RCF. This is valued semi-annually by the Directors. A reconciliation of the SPV investment
portfolio value to financial assets at fair value through profit or loss shown on the Statement of Financial
Position is also shown on page 93.
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 instrument carried at fair value is the investment held by the Company, BR1, which
is fair valued at each reporting date. The Company’s investment has been classified within Level 3 as
BR1’s investments are not traded and contain unobservable inputs.
93
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS
Transfers during the period
There have been no transfers between levels during the year
ended 30 June 2023. Any transfers between the levels will
be accounted for on the last day of each financial period. Due
to the nature of the investments, these are always expected
to be classified as Level 3.
Directors’ Valuation methodology and process
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:
• Projects purchased by the Company from developers are
valued at investment cost (deemed to approximate fair
value).
• Other projects in the Company’s pipeline are valued on
an asset-by-asset basis and benchmarked against values
from wider market processes.
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.
Judgement is used by the Board in increasing the weighted
average discount rate to 8.00% as at 30 June 2023 (2022:
6.75%) with three key factors that have impacted the
adoption of this rate outlined below:
The Investment Adviser recommends the fair value on a
semi-annual basis, subject to the Board’s approval. The key
inputs, as listed below, are derived from various internal and
external sources. 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, asset life, irradiation
forecasts, average wind speeds, operational costs 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 the past twelve months.
This year 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
previously sought external advice from its legal and tax
advisers on how to model the Levy within the valuation
methodology.
Given discount rates are subjective, there is sensitivity within
these to the interpretation of factors outlined above.
a. Transaction values are currently c.£1.20-1.45/MW for
large scale solar portfolios, which the Board have used
to determine that an effective price of £1.35m/MW is an
appropriate basis for the valuation of the BSIF portfolio as
at 30 June 2023;
b. Inclusion of the latest long term power forecasts from the
Company’s three providers;
c. Increase of inflation assumptions;
d. Increase in the cost of debt.
In order to smooth the sensitivity of the valuation to forecast
timing or opinion taken by a single forecast, the Board
continues to adopt the application of blended power curves
from three leading forecasters.
The fair values of operational SPVs are 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.
Sensitivity analysis
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 Directors consider the changes in inputs to be within a
reasonable range based on their 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.
94
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS SOLAR PV AT FREATHY
30 JUNE 2023
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
Power prices
Inflation rate
Energy yield
Operational costs
+ 0.5%
(18.8)
(3.07)
(21.8)
- 0.5%
+10%
-10%
+ 0.5%
- 0.5%
19.4
54.2
(56.9)
31.7
(30.2)
3.17
8.86
(9.31)
5.19
(4.94)
23.1
62.2
(63.8)
25.0
(26.1)
(3.57)
3.77
10.17
(10.43)
4.09
(4.28)
10 year P90
(105.0)
(17.17)
(100.2)
(16.39)
10 year P10
111.9
+10%
-10%
(9.1)
9.1
18.30
(1.49)
1.49
100.5
(10.5)
10.5
16.43
(1.72)
1.72
Subsidiaries and Associates
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.
Name
Bluefield Renewables 1 Limited
Bluefield Renewables 2 Limited
Bluefield SIF Investments Limited
Bunns Hill Solar Limited
HF Solar Limited
Hoback Solar Limited
Littlebourne Solar Farm Limited
Molehill PV Farm Limited
Pashley Solar Farm Limited
ISP (UK) 1 Limited
Solar Power Surge Limited
West Raynham Solar Limited
Sheppey Solar Limited
Capelands Solar Farm Limited
North Beer Solar Limited
WEL Solar Park 2 Limited
Hardingham Solar Limited
Redlands Solar Farm Limited
WEL Solar Park 1 Limited
Saxley Solar Limited
Frogs LakeLoke Solar Limited
Old Stone Farm Solar Park Limited
Bradenstoke Solar Park Limited
GPP Langstone LLP
Ashlawn Solar Limited
Betingau Solar Limited
Ownership
percentage
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
95
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS Name
Grange Solar Limited
Hall Farm Solar Limited
Oulton Solar Limited
Romsey Solar Limited
Salhouse Solar Limited
Tollgate Solar Limited
Trethosa Solar Limited
Welbourne LLP
Barvills Solar Limited
Clapton Farm Solar Park Limited
Court Farm Solar Limited
East Farm Solar Park Limited
Galton Manor Solar Park Limited
Gypsum Solar Farm Limited
Holly Farm Solar Park Limited
Kellingley Solar Farm Limited
Little Bear Solar Limited
Place Barton Farm Solar Park Limited
Willows Farm Solar Limited
Southwick Solar Limited
Butteriss Down Solar Farm Limited
Goshawk Solar Limited
Kite Solar Limited
Peregrine Solar Limited
Promothames 1 LTD
Rookery Solar Limited
Mikado Solar Projects (2) Limited
Mikado Solar Projects (1) Limited
KS SPV 5 Limited
Eagle Solar Limited
Kislingbury Solar Limited
Ownership
percentage
Name
Ownership
percentage
Name
Ownership
percentage
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Thornton Lane Solar Farm Limited
Gretton Solar Farm Limited
Wormit Solar Farm Limited
Langlands Solar Limited
Bluefield Merlin LTD
Harrier Solar Limited
Rhydy Pandy Solar Limited
New Energy Business Solar Ltd
Corby Solar Limited
Falcon Solar Farm Limited
Folly Lane Solar Limited
New Road Solar Limited
Blossom 1 Solar Limited
Blossom 2 Solar Limited
New Road 2 Solar Limited
GPP Eastcott LLP
GPP Blackbush LLP
GPP Big Field LLP
WSE Hartford Wood Limited
Oak Renewables 2 Limited
Oak Renewables Limited
Good Energy Creathorne Farm Solar Park
(003) Limited
Good Energy Lower End Farm Solar Park (026)
Good Energy Woolbridge Solar Park (010) Limited
Good Energy Rook Wood Solar Park (057) Limited
Good Energy Carloggas Solar Park (009) Limited
Good Energy Cross Road Plantation Solar Park
(028) Limited
Good Energy Delabole Windfarm Limited
Good Energy Hampole Windfarm Limited
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Good Energy Generating Assets No.1 Limited
Good Energy Holding Company No.1 Limited
Aisling Renewables LTD
Wind Energy 3 Hold Co
Wind Energy (NI) Limited
Ash Renewables No 3 Limited
Ash Renewables No 4 Limited
Ash Renewables No 5 Limited
Ash Renewables No 6 Limited
Wind Beragh Limited
Wind Camlough Limited
Wind Cullybackey Limited
Wind Dungorman Limited
Wind Killeenan Limited
Wind Mowhan Limited
Wind Mullanmore Limited
Carmoney Energy Limited
Errigal Energy Limited
Galley Energy Limited
S&E Wind Energy Limited
Wind Energy 2 Hold Co
Boston RE Ltd
DC21 Earth SPV Limited
E5 Energy Limited
E6 Energy Limited
E7 Energy Limited
Hallmark Powergen 3 Limited
Warren Wind Limited
Wind Energy Three Limited
Wind Energy Holdings Limited
Wind Energy 1 Hold Co
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS Name
Ownership
percentage
Name
Ownership
percentage
Name
Wind Energy Scotland (Fourteen Arce Fields) Limited
Wind Energy Scotland (Birkwood Mains) Limited
Wind Energy Scotland (Holmhead) Limited
Moscliff Power 5 Limited
Mosscliff Power 10 Limited
Mosscliff Power 2 Limited
Mosscliff Power 3 Limited
Mosscliff Power 4 Limited
Mosscliff Power 6 Limited
Mosscliff Power 7 Limited
Mosscliff Power Limited
E2 Energy PLC
Wind Energy One Limited
Wind Energy Two Limited
New Road Wind Limited
Yelvertoft Solar Farm Limited
Peradon Solar Farm Limited
Lower Tean Leys Solar Farm Limited
Lower Mays Solar Farm Limited
Longpasture Solar Farm Limited
Leeming Solar Farm Limited
Wallace Wood Solar Farm Limited
LEO1B Energy Park Limited
LH DNO Grid Services Limited
Sweet Briar Solar Farm Limited
BF31 WHF Solar Limited
BF27 BF Solar Limited
BF13A TF Solar Limited
HW Solar Farm Limited
AR108 Bolt Solar Farm Limited
BF33C LHF Solar Limited
AR006 GF Solar Farm Limited
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
100
60
60
60
60
60
60
60
60
60
100
100
60
100
Mauxhall Farm Energy Park Limited
BF16D BHF Solar Limited
BF33E BHF Solar Limited
BF58 Hunts Airfield Solar Ltd under
Lightning 1 Energy Park Limited
Abbots Ann Farm Solar Park Limited
Canada Farm Solar Park Limited
Crockbaravally Wind Holdco Limited
Crockbaravally Wind Farm Limited
Dayfields Solar Limited
Farm Power Apollo Limited
Freathy Solar Park Limited
IREEL FIT TopCo Limited
IREEL FIT HoldCo Limited
IREEL Wind TopCo Limited
IREEL Solar HoldCo Limited
IREL Solar HoldCo Limited
Ladyhole Solar Limited
Morton Wood Solar Limited
Nanteague Solar Limited
Newton Down Wind HoldCo Limited
Newton Down Windfarm Limited
Padley Wood Solar Limited
Peel Wind Farm (Sheerness) Limited
Port of Sheerness Wind Farm Limited
Sandys Moor Solar Limited
St Johns Hill Wind Holdco Limited
St Johns Hill Wind Limited
Trickey Warren Solar Limited
Whitton Solar Limited
LPF UK Equityco Limited
LPF UK Solar Limited
100
100
60
60
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
LPF Kinetica UK Limited
Kinetica 846 Limited
Kinetica 868 Limited
Twineham Energy Limited
Sheepwash Lane Energy Barn Limited
Whitehouse Farm Energy Barn Limited
Bluefield Durrants GmBH
Ownership
percentage
100
100
100
60
100
100
100
9.Trade and other receivables
CURRENT ASSETS
Income from investments
Other receivables
Prepayments
30 June 2023
£’000
30 June 2022
£’000
900
10
-
910
834
43
5
882
There are no material past due or impaired receivable balances
outstanding at the period end.
The Directors consider that the carrying amount of all receivables
approximates to their fair value.
10. Cash and cash equivalents
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 amount of these assets as at 30 June 2023 was £968,878
(2022: £1,619,313) and approximated their fair value. Cash held by
BR1, the Company’s immediate wholly owned subsidiary, as at 30
June 2023 is shown in Note 8.
97
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS
11. Other payables and accrued expenses
13. Share capital
14. Dividends
CURRENT LIABILITIES
Investment advisory fees
Administration fees
Audit fees
Directors’ Fees
Other payables
30 June 2023
£’000
30 June 2022
£’000
164
136
109
72
53
534
121
204
95
60
10
490
The Company has financial risk management policies in place to
ensure that all payables are paid within the agreed credit period.
The Directors consider that the carrying amounts of all payables
approximate to their fair value.
12. Earnings per share
Profit attributable to
Shareholders of the Company
Weighted average number of
Ordinary Shares in issue
Basic and diluted earnings
from continuing operations
and profit for the year (pence
per share)
Year ended
30 June 2023
Year ended
30 June 2022
£46,793,621
£174,572,832
611,452,217
500,110,688
7.65
34.91
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.
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.
Number of Ordinary Shares
Year ended
30 June 2023
Number
Year ended
30 June 2022
Number
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
Year ended
30 June 2023
£’000
Year ended
30 June 2022
£’000
Opening balance
858,391
471,425
Ordinary Shares issued for cash
Share issue costs
-
-
255,100
(4,506)
On 30 September 2022, the Board declared 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.
On 23 January 2023, the Board declared its first interim dividend of
£12,840,497, in respect of the year ended 30 June 2023, equating to
2.10pps (first interim dividend in respect of the year ended 30 June
2022: 2.03pps), which was paid on 3 March 2023 to Shareholders on
the register on 3 February 2023.
On 11 May 2023, the Board declared a second interim dividend of
£12,840,497, in respect of the year ended 30 June 2023, equating to
2.10pps (second interim dividend in respect of the year ended 30 June
2022: 2.03pps), which was paid on 12 June 2023 to Shareholders on
the register on 19 May 2023.
Dividends paid
(50,995)
(38,201)
Retained earnings
46,793
174,573
15. Risk management policies and
procedures
Closing balance
854,189
858,391
Rights attaching to shares
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 Shareholders also have the right
to receive all income attributable to those shares and participate in
distributions 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.
The Company is exposed to a variety of financial risks, including market
risk (including price risk, currency risk and interest rate risk), credit risk,
liquidity risk and portfolio operational risk. The Investment Adviser and
the Administrator report to the Board on a quarterly basis and provide
information to the Company which allows it to monitor and manage
financial risks relating to its operations.
The Company’s overall risk management programme focuses on the
unpredictability of financial markets and government energy policy and
seeks to minimise potential adverse effects on the Company’s financial
performance, as referenced in the Principal and Emerging Risks section
in the Strategic Report.
98
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS The Board is ultimately responsible for the overall risk management
approach within the Company. The Board has established procedures
for monitoring and controlling risk. The Company has investment
guidelines that set out its overall business strategies, its tolerance for
risk and its general risk management philosophy.
In addition, the Investment Adviser monitors and measures the overall
risk bearing capacity in relation to the aggregate risk exposure across
all risk types and activities. Further details regarding these policies are
set out below:
Market price risk
Market price risk is defined as the risk that the fair value of future
cash flows of a financial instrument held by the Company, in particular
through the Company’s subsidiary, BR1, will fluctuate because of
changes in market prices.
Floating rate
RBSI
Fixed rate
Lloyds
Floating rate
RBSI
Fixed rate
Lloyds
Market price risk will arise from changes in electricity prices whenever
PPAs expire and are renewed. The timing of these is staggered to
minimise risk.
BR1’s future SPV investments are subject to fluctuations in the price
of secondary assets which could have a material adverse effect on the
BR1’s ability to source projects that meet its investment criteria and
consequently its business, financial position, results of operations and
business prospects.
The Company’s overall market position is monitored by the Investment
Adviser and is reviewed by the Board of Directors on an ongoing basis.
Currency risk
The Company does not have any direct currency risk exposure as all
its investments, borrowings and other transactions are in Sterling.
The Company is however indirectly exposed to currency risk on future
equipment purchases, made through BR1’s SPVs, where equipment
is imported.
Interest rate risk
Interest rate risk is the risk that the value of financial instruments and
related income from the cash and cash equivalents will fluctuate due
to changes in market interest rates.
The Company is also exposed, through BR1, to interest rate risk on
drawings under its RCF. Please see page 23 in the Investment Adviser’s
report for details of the third party debt within the Company’s subsidiaries.
The Company’s interest bearing financial assets consist of cash and
cash equivalents. The interest rates on the short term bank deposits
are fixed and do not fluctuate significantly with changes in market
interest rates.
The underlying SPVs are contracted only with investment grade
counter parties, mitigating PPA counterparty risk. The Directors do
not have any concerns around the continuing purchasing of power
through its current PPAs.
The following table shows the portfolio profile of the financial assets
at year end:
Interest rate
Total as at
30 June 2023
(£’000)
1.70%
753
0.00%
216
969
Interest rate
Total as at
30 June 2022
(£’000)
0.00%
1,508
0.00%
111
1,619
interest. The Company maintains
The Company’s credit risk exposure is due to a portion of the
Company’s assets being held as cash and cash equivalents and
accrued
its cash and cash
equivalents and borrowings across two different banking groups
to diversify credit risk. The total exposure to credit risk arises
from default of the counterparty and the carrying amounts of
financial assets best represent the maximum credit risk exposure
at the period end date. As at 30 June 2023, the maximum credit
risk exposure in relation to cash and cash equivalents held by the
Company was £968,878 (2022: £1,619,313). If the cash and cash
equivalents held by BR1 are included, this increases to £27,375,878
(2022: £14,721,105). All cash and cash equivalents held by the
Company and BR1 is with banks that have a credit rating which is of
investment grade.
RBSI
Lloyds
RBSI
Lloyds
Cash
£’000)
Fixed deposit
£’000)
Total as at
30 June 2023
(£’000)
753
-
753
Cash
£’000)
1,508
-
1,508
-
216
216
753
216
969
Fixed deposit
£’000)
Total as at
30 June 2022
(£’000)
-
111
111
1,508
111
1,619
The carrying amount of these assets approximates their fair value.
99
The valuation of BR1’s SPV investments is subject to variation in the
discount rate, which are themselves subject to changes in interest
rate risk due to the discount rates applied to the discounted cash
flow technique when valuing the investments. The Investment
Adviser reviews the discount rates semi-annually and takes into
consideration market activity to ensure appropriate discount rates are
recommended to the Board. The Group is exposed to interest rate risk
on the Directors’ Valuation of £1,018.4m (2022: £939.9m).
Credit risk
Credit risk is the risk that a counterparty will be unable to pay
amounts in full when due. At the reporting date BR1’s SPVs held
performance bonds totalling £nil (2022: £1,830,000) with banks
that have a credit rating which is of investment grade.
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS RAINBOW AT LITTLE BEAR
Less than one
year
(£’000)
Between one
and five years
(£’000)
After five
years
(£’000)
Total as at
30 June 2023
(£’000)
ASSETS
Financial assets held at fair
value through profit or loss*
Trade and other receivables**
Cash and cash equivalents
LIABILITIES
Other payables and accrued
expenses
-
910
969
(534)
1,345
-
-
-
-
-
454,460
454,460
-
-
-
910
969
(534)
454,460
455,805
* the Company passes debt to BR1 under loan agreements; as at the year end there is an additional amount of
non-contractual cash which is not reflected above in addition to the interest income
** excluding prepayments
As part of the financing terms provided by all third party leaders to companies within the Group, lenders
have security packages which include charges over the shares of the borrower entity and any wholly owned
subsidiaries.
Liquidity risk
Liquidity risk is the risk that the Company will not
be able to meet its liabilities as they fall due. The
Investment Adviser and the Board continuously
monitor forecasted and actual cash flows from
operating, financing and investing activities.
As the Company’s investments, through BR1, are in
the SPVs, which are private companies that are not
publicly listed, the return from these investments is
dependent on the income generated or the disposal
of renewable energy infrastructure assets by the
SPVs and will take time to realise.
The Company, through BR1, expects to comply with
the covenants of its revolving credit facility.
The following table details the Company’s expected
maturity for its financial assets and liabilities. These
are undiscounted contractual cash flows:
ASSETS
Financial assets held at fair
value through profit or loss*
Trade and other receivables**
Cash and cash equivalents
LIABILITIES
Other payables and accrued
expenses
Less than one
year
(£’000)
Between one
and five years
(£’000)
After five
years
(£’000)
Total as at
30 June 2022
(£’000)
-
877
1,619
(490)
2,006
-
-
-
-
-
484,322
484,322
-
-
-
877
1,619
(490)
484,322
486,328
* the Company passes debt to BR1 under loan agreements; as at the year end there is an additional amount of
non-contractual cash which is not reflected above
** excluding prepayments
Portfolio operational risk
Portfolio operational risk is defined as the risk that
renewable energy infrastructure assets perform
below expectation after acquisition and revenue
received from the sale of electricity is reduced. This
risk is mitigated by BSL ensuring that operation and
maintenance contractors are compliant with their
contractual obligations including reaction times,
maintenance plans and service levels.
risk arise
Concentrations of risk
Concentrations of
from financial
instruments that have similar characteristics and
are affected similarly by changes in economic
or other conditions. The concentrations of the
Company’s assets by geography, construction
contractor and revenue type are shown on page 10.
This analysis forms an integral part of the financial
statements.
Capital management policies and
procedures
The Company’s capital management objectives are
to ensure that the Company will be able to continue
as a going concern while maximising the capital
return to equity Shareholders.
In accordance with the Company’s investment
policy, the Company’s principal use of cash
(including the proceeds of any share issuance and
loan facilities) is to fund BR1’s projects, as well as
expenses related to fundraising, the share issues,
ongoing operational expenses and payment of
dividends and other distributions to Shareholders
in accordance with the Company’s dividend policy.
The Board, with the assistance of the Investment
Adviser, monitors and reviews the broad structure
of the Company’s capital on an ongoing basis.
The Company has no imposed capital requirements.
The capital structure of the Company consists of
issued share capital and retained earnings.
100
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS 16. Related Party Transactions and
Directors’ Remuneration
In the opinion of the Directors, the Company has no immediate
or ultimate controlling party.
The Chair was entitled to an annual remuneration of £68,906
(2022: £62,500). The other Directors were entitled to an
annual remuneration of £43,050 (2022: £39,000). Paul Le
Page received an additional annual fee of £8,768 (2022:
£8,000) for acting as Chair of the Audit and Risk Committee.
Meriel Lenfestey received an additional annual fee of £5,250
(2022: N/A) for acting as Chair of the Environmental, Social
and Governance Committee. Elizabeth Burne received an
additional annual fee of £3,150 (2022: N/A) for acting as
Chair of the Management Engagement and Service Providers
Committee.
The total Directors’ fees expense for the period amounted
to £271,634 (2022: £240,818) of which £71,517 was
outstanding at 30 June 2023 (2022: £59,750).
At 30 June 2023, the number of Ordinary Shares held by each
Director is as follows:
2023
Number of
Ordinary Shares
2022
Number of
Ordinary Shares
John Scott*
625,619
543,312
Elizabeth Burne
15,000
15,000
Michael Gibbons
Meriel Lenfestey
-
7,693
N/A
7,693
Paul Le Page
35,000
35,000
John Rennocks*
N/A
290,388
John Scott and Michael Gibbons are Directors of BR1. They
received an annual fee of £6,565 (2022: £6,250) each
for their services to this company. Neil Wood and James
Armstrong, who are partners of the Investment Adviser, are
also Directors of BSIFIL and BR1.
The Company and BR1’s investment advisory fees for the
year amounted to £7,052,064 (2022: £5,131,527) of which
£554,919 (2022: £494,485) was outstanding at the year
end. James Armstrong, Giovanni Terranova and Neil Wood,
who are partners of the Investment Adviser, hold a 0.03%,
0.06% and 0.01% interest in the Company as at 30 June
2023, respectively.
Fees paid during the period by SPVs to BSL, a company which
has the same ownership as that of the Investment Adviser
totalled £4,456,173 (2022: £3,199,594). BSL provides asset
management and other services relating to the operation of
daily management activities of the renewable energy project
companies.
Fees paid during the period by SPVs to BOL, a company
which has the same ownership as that of the Investment
Adviser totalled £10,156,959 (2022: £5,788,585). BOL
provides O&M and other services relating to the operation of
daily management activities of the renewable energy project
companies.
Fees paid during the period by SPVs to BRD, a company
which has the same ownership as that of the Investment
Adviser, totalled £1,624,024 (2022: £691,280). BRD locates
and manages a pipeline of development projects for the
Company and the amount includes £966,681 for BRD’s
share in the development project, Brick House Lane.
683,312
891,393
The Company’s monitoring fee income received from BR1
amounted to £900,000 (2022: £833,887) of which £900,257
was outstanding at the year end (2022: £833,887).
*Including shares held by PCAs
17. Subsequent events
The following events happened after the end of the Company’s
reporting period on 30th June
Post year end, on 7 August 2023, the Board declared a third interim
dividend of £12,840,497, in respect of the year ended 30 June 2023,
equating to 2.10pps (third interim dividend in respect of the year
ended 30 June 2022: 2.05pps), which was paid on 1 September
2023 to Shareholders on the register on 18 August 2023.
Post year end, John Scott bought an additional 18,310 Ordinary
Shares and Michael Gibbons bought an additional 17,800 Ordinary
Shares in the Company.
Post year end, on 27 September 2023, the Board approved a fourth
interim dividend of £14,063,401 in respect of the year ended 30
June 2023, equating to 2.30pps (fourth interim dividend in respect
of the year ended 30 June 2022: 2.09pps), which will be declared
on 28 September 2023 and paid on or around 6 November 2023 to
Shareholders on the register on 6 October 2023.
MORNING FROST AT ASHLAWN
101
NOTES TO THE FINANCIAL STATEMENTSANNUAL REPORT AND FINANCIAL STATEMENTS
ANNUAL REPORT AND FINANCIAL STATEMENTS
Glossary
of Defined Terms
Administrator
AGM
AIC
AIC Code
AIF
AIFM
AIFMD
Articles
Auditor
Aviva Investors
BEIS
BEPS
Bluefield
Bluefield Group
BOL
Board
BR1
BRD
Brexit
BSIF
BSIFIL
BSL
BSUoS
Business days
Ocorian Administration (Guernsey) Limited
The Annual General Meeting
The Association of Investment Companies
The Association of Investment Companies Code of
Corporate Governance
Alternative Investment Fund
Alternative Investment Fund Manager
The Alternative Investment Fund Management
Directive
The Memorandum of 29 May 2013 as amended
and Articles of Incorporation as adopted by
special resolution on 7 November 2016
KPMG Channel Islands Limited (see KPMG)
Aviva Investors Limited
The Department for Business, Energy and
Industrial Strategy
Base erosion and profit shifting
Bluefield Partners LLP
Bluefield Partners LLP and Bluefield Companies
Bluefield Operations Limited
The Directors of the Company
Bluefield Renewables 1 Ltd being the only direct
subsidiary of the Company
Bluefield Renewable Developments Ltd
Departure of the UK from the EU
Bluefield Solar Income Fund Limited
Bluefield SIF Investments Limited being the only
direct subsidiary of the Company
Bluefield Asset Management Services Limited
Balancing Services Use of System charges: costs
set to ensure that network companies can recover
their allowed revenue under Ofgem price controls
Every official working day of the week, generally
Monday to Friday excluding public holidays
102
CAGR
Calculation Time
CCC
CfD
Company
Companies Law
Compound annual growth rate
The Calculation Time as set out in the Articles of
Incorporation
Committee on Climate Change
Contract for Difference
Bluefield Solar Income Fund Limited
The Companies (Guernsey) Law 2008, as amended
(see Law)
Consolidation Exception The 18 December 2014 further amendments to
Amendments
IFRS 10 Investment Entities: Applying the Conso-
lidation Exception (Amendments to IFRS 10, IFRS
12 and IAS 28)
Cost of debt
CO2e
CRS
C shares
CSR
DCF
DECC
Defect Risk
Directors’ Valuation
DNO
DSCR
DTR
EBITDA
EGM
EIS
EPC
EPS
ESG
EU
EV
The blended cost of debt reflecting fixed and
index-linked elements
Carbon Dioxide emissions
Common Reporting Standard
Ordinary Shares approved for issue at no par value
in the Company
Corporate Social Responsibility
Discounted Cash Flow
Department of Energy and Climate Change
An over-reliance on limited equipment
manufacturers which could lead to large proportions
of the portfolio suffering similar defects
Gross value of the SPV investments held by BR1,
including their holding companies.
Distribution Network Operator
Debt service cover ratio
The Disclosure Guidance and Transparency
Rules of the UK’s FCA
Earnings before interest, tax, depreciation and
amortisation
Extraordinary General Meeting
Enterprise Investment Scheme
Engineering, Procurement & Construction
Earning per share
Environmental, Social & Governance
The European Union
Enterprise valuation
FAC
FATCA
Financial Statements
FiT
Final Acceptance Certificate
The Foreign Account Tax Compliance Act
The audited annual financial statements
Feed-in Tariff
GAV
GDPR
GFSC
GHG
GHG Protocol
Group
Guernsey Code
GWh
GW
IAS
IASB
IFRS
Gross Asset Value
General Data Protection Regulation
The Guernsey Financial Services Commission
Greenhouse gas
Supplies the world’s most widely used greenhouse
gas accounting standards
Bluefield Solar Income Fund Limited and Bluefield
SIF Investments Limited
The Guernsey Financial Services Commission
Finance Sector Code of Corporate Governance
Gigawatt hour
Gigawatt peak
International Accounting Standard
The International Accounting Standards Board
International Financial Reporting Standards as
adopted by the EU
Investment Adviser
IPEV Valuation Guidelines The International Private Equity and Venture
Bluefield Partners LLP
IPO
IRR
IVSC
KID
KPI
KPMG
kWh
kW
Law
LD
Listing Rules
Capital Valuation Guidelines
Initial public offering
Internal Rate of Return
International Valuation Standards Council
Key Information Document
Key Performance Indicators
KPMG Channel Islands Limited (see Auditor)
Kilowatt hour
Kilowatt peak
Companies (Guernsey) Law, 2008 as amended (see
Companies Law)
Liquidated damages
The set of FCA rules which must be followed by all
companies listed in the UK
103
GLOSSARY OF DEFINED TERMSANNUAL REPORT AND FINANCIAL STATEMENTS Lloyds
LSE
LTF
Lloyds Bank Group plc
London Stock Exchange plc
Long term facility provided by Aviva Investors
Limited
RBSI
RCF
RO Scheme
Main Market
MW
MWh
The main securities market of the LSE
Megawatt (a unit of power equal to one million
watts)
Megawatt hour
ROC
ROC recycle
Royal Bank of Scotland International Limited
Revolving Credit Facility
The Renewable Obligation Scheme which is the
financial mechanism by which the UK Government
incentivises the deployment of large-scale renew-
able electricity generation by placing a mandatory
requirement on licensed UK electricity suppliers
to source a specified and annually increasing
proportion of the electricity they supply to customers
from eligible renewable sources, or pay a penalty
Renewable Obligation Certificates
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
NatWest
NAV
NMPI
NPPR
O&M
OECD
Official List
Ofgem
Ordinary Shares
Outage Risk
P10
P90
PCA
PPA
pps
PR
PRIIPS
PV
NatWest International plc
Net Asset Value as defined in the prospectus
Non-mainstream Pooled Investments and Special
Purpose Vehicles and the rules around their
financial promotion
The AIFMD National Private Placement Regime
Operation and Maintenance
The Organisation for Economic Cooperation and
Development
The Premium Segment of the UK Listing
Authority’s Official List
Office of Gas and Electricity Markets
The issued ordinary share capital of the Company,
of which there is only one class
A higher proportion of large capacity assets hold
increased exposure to material losses due to
curtailments and periods of outage
Irradiation estimate exceeded with 10%
probability
Irradiation estimate exceeded with 90%
probability
Persons Closely Associated
Power Purchase Agreement
Pence per share
Performance ratio (the ratio of the actual and
theoretically possible energy outputs)
Packaged Retail and Insurance-Based Investment
Products
Photovoltaic
RPI
The Retail Price Index
Santander UK
SASB
SDG
SFDR
SONIA
SPA
SPVs
Santander UK plc
Sustainability Accounting Standards Board
The United Nations Sustainable Development
Goals
The Sustainable Finance Disclosure Regulation
Sterling Overnight Index Average
Share Purchase Agreement
The Special Purpose Vehicles which hold the
Company’s investment portfolio of underlying
operating assets
Sterling
The Great British pound currency
TCFD
TISE
UK
Task Force for Climate-related Financial Disclosures
The International Stock Exchange (based in the
Channel Islands)
The United Kingdom of Great Britain and Northern
Ireland
The United Kingdom Corporate Governance Code
The UK Financial Conduct Authority
The United Nations Global Compact
UK Code
UK FCA
UNGC
United Nations Principles An approach to investing that aims to incorporate
for Responsible
environmental, social and governance factors into
Investment
investment decisions, to better manage risk and
generate sustainable, long term returns
104
GLOSSARY OF DEFINED TERMSANNUAL REPORT AND FINANCIAL STATEMENTS Alternative Performance Measures
Unaudited
APM
Total return
DEFINITION
PURPOSE
CALCULATION
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.
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.
Total Dividends
Declared in Period
This is the sum of the dividends that the Board has
declared relating to the reporting period.
Underlying Earnings
Total net income of the Company’s investment portfolio.
A measure of the income that the company has paid to
shareholders that can be compared to the Company’s
target dividend.
A measure to link the underlying financial performance
of the operational projects to the dividends declared and
paid by the Company.
Market Capitalisation
The total value of the Company’s issued share capital.
This is a key indicator of the Company’s liquidity.
NAV per Ordinary Share
The Company’s closing NAV per share at the period end.
A measure of the value of one Ordinary Share.
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 change in NAV for the period plus any
dividends paid divided by the initial NAV. (139.70-
140.39+2.05+2.09+2.10+2.10)/140.39=5.45%
The change in share price for the period plus any
dividends paid divided by the initial share price. (120.00-
131.00+2.05+2.09+2.10+2.10)/131.00=(2.03)% The
measure excludes transaction costs.
The linear sum of each dividend declared in the reporting
period
Total income of the Company’s portfolio minus Group
operating costs minus Group debt costs.
The price per share multiplied by the number of shares in
issue.
The net assets attributable to Ordinary Shares on the
statement of financial position (£854.2m) divided by the
number of ordinary shares in issue (611,452,217) as at
the calculation date.
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 a full
12 months.
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 its Immediate
Holding Company 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.
105
ANNUAL REPORT AND FINANCIAL STATEMENTS ALTERNATE PERFORMANCE MEASURES
ANNUAL REPORT AND FINANCIAL STATEMENTS
APM
DEFINITION
PURPOSE
CALCULATION
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.
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.
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.
Gross Asset Value
The Market Value of all Assets
within the Company.
A measure of the total value of
the Company’s 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.
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.
A reconciliation of the
Directors’ Valuation to
Financial assets at fair value
through profit and loss
is shown in Note 8 of the
financial statements.
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.
Ongoing Charges
Year to 30 June 2023
The Company
£’000s
Immediate Holding Company
£’000s
Fees to Investment Adviser
Legal and professional fees
Administration fees
Directors’ remuneration
Audit fees
Other ongoing expenses
Total ongoing expenses
Average NAV
729
240
542
272
112
257
2,150
6,230
106
-
13
16
102
6,467
SUNSET AT PASHLEY
Ongoing Charges (using AIC methodology)
Total
£’000s
6,959
346
542
285
128
359
8,617
863,508,987
1.00%
106
SFDR Periodic Disclosures (Unaudited)
ANNUAL REPORT AND FINANCIAL STATEMENTS
Sustainable
investment means
an investment in an
economic activity
that contributes to
an environmental or
social objective,
provided that the
investment does not
significantly harm
any environmental or
social objective and
that the investee
companies follow
good governance
practices.
The EU Taxonomy is
a classification
system laid down in
Regulation (EU)
2020/852,
establishing a list of
environmentally
sustainable
economic activities.
That Regulation
does not lay down a
list of socially
sustainable
economic activities.
Sustainable
investments with an
environmental
objective might be
aligned with the
Taxonomy or not.
Sustainability
indicators measure
how the
environmental or
social
characteristics
promoted by the
financial product
are attained.
ANNEX IV
Template periodic disclosure for the financial products referred to in Article 8, paragraphs 1, 2 and
2a, of Regulation (EU) 2019/2088 and Article 6, first paragraph, of Regulation (EU) 2020/852
Product name: Bluefield Solar Income Fund Limited (the Company)
Legal entity identifier: 2138004ATNLYEQKY4B30
Environmental and/or social characteristics
Did this financial product have a sustainable investment objective?
Yes
No
It made sustainable
investments with an
environmental objective: ___%
in economic activities that
qualify as environmentally
sustainable under the EU
Taxonomy
in economic activities that do
not qualify as environmentally
sustainable under the EU
Taxonomy
It promoted Environmental/Social (E/S)
characteristics and
while it did not have as its objective a
sustainable investment, it had a proportion of
97.39%1 of sustainable investments
with an environmental objective in economic
activities that qualify as environmentally
sustainable under the EU Taxonomy
with an environmental objective in
economic activities that do not qualify as
environmentally sustainable under the EU
Taxonomy
with a social objective
It made sustainable investments
with a social objective: ___%
It promoted E/S characteristics, but did not
make any sustainable investments
To what extent were the environmental and/or social characteristics promoted
by this financial product met?
As a renewable energy company, the Company’s investment policy only allows investment into
renewable energy assets and supporting technologies, such as energy storage. 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, which it achieves through
investment in renewable energy assets and supporting technologies.
Given that the Company only invested in renewable energy assets during the reporting period
(including development stage projects), it met the environmental characteristics described above.
However, the Company recognises that it has broader environmental and social impacts, and that
these must be considered alongside good governance as part of ensuring its long-term success. The
Company’s ESG strategy has been developed with a focus upon priority ESG risks and opportunities,
considered as part of the Company’s responsible investment approach. These have been integrated
into a holistic framework through which the Company can deliver value for its stakeholders, and
which will support delivery of long-term returns for shareholders. The Company communicates its
ESG performance through a comprehensive set of commitments and KPIs. Please refer to the
Company’s 2023 ESG Report within its Annual Accounts for further information.
Please note that the Company updated its Article 23 pre-contractual disclosure on 28 September
2023. The % of sustainable investments made by the Company was reduced from 100% to 97.39%,
to account for the Company’s use of interest rate swaps. The Company’s operational portflio remains
100% aligned with the EU Taxonomy.
How did the sustainability indicators perform?
The ESG commitments and KPIs which most closely relate to the Company’s environmental
characteristics are presented below, with the Company’s performance during the reporting period
presented in the fourth column:
Commitment
KPIs
As at 30 June 2022
As at 30 June 2023
Renewable
generated (MWh)
energy
CO2e
achieved (tCO2e)
savings
> 624,000 MWh
>836,231 MWh
>120,000 tonnes
>173,000 tonnes
Equivalent
powered (#)
houses
215,000
288,000
We will report our
renewable
energy
generation annually.
Additional
infrastructure
construction (MW)
solar
under
0 MW
93MW
Estimated
annual
energy
(MWh)
N/A
additional
renewable
generation
Battery assets under
construction (MW)
0 MW
91,000 MWh
0 MW
‘CO2e savings’ are calculated using generation data and the appropriate greenhouse gas conversion
factor from the UK Government. ‘Equivalent number of homes powered’ is calculated using UK Office
of Gas and Electricity Markets’ (Ofgem) Typical Domestic Consumption Values for a medium-sized
household.
Please refer to the Company’s ESG report within its 2023 Annual Accounts for the Company’s
performance against its full set of commitments and KPIs, which cover a broader spectrum of
environmental, social and governance topics.
1 As at 30 June 2023.
As at 30 June 2023
1
As at 30 June 2023
2
107
…and compared to previous periods?
Please see the table above.
What were the objectives of the sustainable investments that the financial
product partially made and how did the sustainable investment contribute to such
objectives?
The Company’s investments aim to contribute substantially to the environmental objective
of climate change mitigation, as defined under the EU Taxonomy Regulation. The Company
intends to achieve these objectives through its production of clean, renewable energy, and
by investing in new renewable energy infrastructure and energy storage facilities. Such
activities will help reduce the UK’s reliance on fossil fuels and contribute to domestic energy
security. Please refer to the ‘Climate Change Mitigation’ section of the Company’s 2023 ESG
report for additional information on the Company’s contributions in this area.
During the reporting period, the Company engaged an external consultant to undertake a
review to determine the portfolio’s alignment to the EU Taxonomy. The assessment was
conducted in four parts in order to follow the EU Taxonomy Regulation:
• Assessment of the Company’s economic activities eligibility under the EU Taxonomy
Regulation.
• Review of the Company’s economic activities against the technical screening criteria (TSC),
to determine whether they make a substantial contribution to the environmental objectives
of climate change adaptation and climate change mitigation.
• A Do No Significant Harm (DNSH) assessment was carried out to confirm that the
Company’s activities do no significant harm to the environmental objectives considered
under the EU Taxonomy. It is noted that the DNSH assessment was conducted based on the
specific TSC defined and specific to the economic activity.
• Review of the Company’s procedures to ensure minimum social safeguards, as well as
compliance with the regulatory framework in which each economic activity operates.
The assessment was conducted in relation to the 2022 calendar year and included the
following economic activities: Electricity generation using solar photovoltaic technology;
Electricity generation from wind power; and Installation, maintenance, and repair of
renewable energy technologies. The economic activity of ‘Storage of electricity’ was
excluded from this assessment as the only constructed battery projects currently within the
portfolio are offline and not 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.
A representative asset of each economic activity type was selected as a ‘case study’ for the
assessment, to allow for an in-depth analysis and asset-specific evidence to be reviewed. In
addition, to ensure that the information provided was as representative as possible,
relevant documentation applicable to the wider portfolio was also considered.
The results of the assessment were provided as a report from the consultant, which deemed
that the Company’s portfolio was 100% aligned with the EU Taxonomy at the time of the
3
Principal adverse
impacts are the
most significant
negative impacts of
investment
decisions on
sustainability factors
relating to
environmental,
social and employee
matters, respect for
human rights, anti‐
corruption and anti‐
bribery matters.
assessment. Since then, the only operational assets acquired by the Company have been
two solar PV assets, which are deemed to meet the same sustainabilty standards as the
other solar PV assets in the Company’s portfolio. The Company therefore deems these
newly acquired assets to be Taxonomy-aligned. During the reporting period, the Company
also made investments into development projects and repowering activities associated with
existing assets.
A full breakdown of the methodology used to assess EU Taxonomy alignment is available on
the Company’s website, on the page titled ‘Sustainability-related Disclosures’. The Company
acknowledges that ongoing 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.
How did the sustainable investments that the financial product partially made not
cause significant harm to any environmental or social sustainable investment
objective?
As part of the investment process, diligence is undertaken in relation to the requirements
of the SFDR, including in relation to PAI indicators and climate risk screening, and the EU
Taxonomy’s DNSH criteria. This enables the Company to identify pre-investment any risks
which may impact upon the Company’s regulatory compliance, and helps maintain the
Company’s alignment with the EU Taxonomy criteria as it continues to grow its portfolio.
Once acquired into the portfolio, there is active management of sustainability issues over
the operational lifetime of the assets, in line with the Company’s ESG strategy. Each asset is
subject to routine ESG data reporting to allow the remote monitoring of ESG performance
and fulfilment of ESG reporting requirements.
Activities undertaken during the reporting period to support the Company’s alignment with
DNSH criteria include:
• Undertaking a Climate Risk and Vulnerability Assessment (CRVA) and physical and
transitional scenario analysis. This work further supports the Company’s aligment
to DNSH criteria relating to ‘Climate Change Adaptation’.
• Adopting a Sustainable Procurement Policy and identifying a potential partnership
with a UK university to support the Company’s approach to decommissioning. Such
activities further support the Company’s alignment with DNSH criteria relating to
‘Transition to a Circular Economy’.
• Adopting a Waste Management Policy, further supporting the Company’s
alignment with DNSH criteria relating to ‘Pollution Prevention and Control’.
• Undertaking independent biodiversity assessments and calculating Biodiversity
Net Gain (BNG) across its operational portfolio, and enhancing land management
activities to reduce the Company’s environmental impact, supporting the
Company’s alignment with DNSH criteria relating to ‘Protection and Restoration of
Biodiversity and Ecosystems’.
Please refer to the Company’s 2023 ESG and TCFD reports for further information on
these activities and the broader ESG progress made by the Company during the
reporting period. The Company will continue its work to ensure the ongoing
compliance of its investments with the requirements of the Taxonomy Regulation.
4
As at 30 June 2023
As at 30 June 2023
108
SFDR PERIODIC DISCLOSURESANNUAL REPORT AND FINANCIAL STATEMENTS How were the indicators for adverse impacts on sustainability factors taken
into account?
As referenced, sustainability considerations are integrated into the Company’s
investment process (please refer to the Company’s Sustainable Investment Policy for
a full breakdown) and PAI indicators are included within the Company’s investment
ESG due diligence questionnaire.
Were sustainable
investments aligned with the OECD Guidelines for
Multinational Enterprises and the UN Guiding Principles on Business and
Human Rights? Details:
SFDR PAI’s relating to the OECD Guidelines and UN Guiding Principles are included
within the Company’s investment ESG due diligence questionnaire. Human rights are
also considered more broadly within this, including in relation to any O&M
arrangements which may form part of the investment opportunity.
During the reporting period, the Company adopted a Human Rights Policy and Supplier
Code of Conduct, both informed by global human rights frameworks (including the
OECD Guidelines and UN Guiding Principles). Whilst human rights due diligence
processes are already in place, these will be reviewed by the Company over the coming
year as commitments made within the Human Rights Policy are embedded across the
asset lifecycle for its investments. Please refer to the ‘Generating Energy Responsibly’
section of the Company’s ESG report for further information.
How did this financial product consider principal adverse
sustainability factors?
impacts on
The Company takes into consideration the PAIs of its investment decisions on sustainability factors.
On 30 June 2023, the Company published its first PAI report covering the reporting period of 1 January
to 31 December 2022, available here in the ‘Sustainability-related disclosures’ section of the
Company’s website.
The Company diligently assessed and reported against all mandatory PAI indicators and chose two
additional indicators based on their materiality to the Company’s operations (comprised of those
relating to natural species & protected areas, and human rights impacts). The Company took a detailed
approach to its PAI statement, providing sufficient explanatory information to ensure stakeholders
The EU Taxonomy sets out a “do not significant harm” principle by which
Taxonomy-aligned investments should not significantly harm EU Taxonomy
objectives and is accompanied by specific Union criteria.
The “do no significant harm” principle applies only to those investments
underlying the financial product that take into account the Union criteria for
environmentally sustainable economic activities. The investments underlying the
remaining portion of this financial product do not take into account the Union
criteria for environmentally sustainable economic activities.
Any other sustainable investments must also not significantly harm any
environmental or social objectives.
could meaningfully interpret the PAI metrics and the approach taken by the Company to calculate
these. The Company also disclosed details of any estimates or assumptions applied, to ensure
appropriate transparency.
As an investment company, the Company has no employees and management of the portfolio is
outsourced to key business partners and service providers. Through its Investment Adviser, the
Company worked collaboratively with key service providers to establish processes for the collection of
PAI data. However, PAI reporting requires a breadth and depth of data that has not been experienced
across the industry to date, and as such data collection proved challenging in some circumstances. The
Company is committed to working with and supporting its key service providers to ensure continual
improvement in the availability and quality of sustainability-related data, which is expected to improve
as data collection processes mature over time.
The list includes the
investments
constituting the
greatest proportion
of investments of
the financial product
during the reference
period which is: 1
July 2022 – 30 June
2023
What were the top investments of this financial product?
Please note the below table relates to the top investments held by the Company during the
reporting period.
Largest investments
Solar Asset
Solar Asset
Wind Portfolio
Solar Asset
Solar Asset
Solar Asset
Solar Development
Wind Asset
Solar Asset
Solar Asset
Solar Asset
Solar Asset
Solar Asset
Solar Asset
Solar Asset
Sector
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
Energy
% Assets2
Country
7.63%
5.07%
4.88%
4.78%
3.68%
3.10%
2.45%
2.10%
2.00%
2.00%
1.95%
1.91%
1.73%
1.72%
1.68%
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
As at 30 June 2023
As at 30 June 2023
5
2 Calculated using investment value as a proportion of the Company’s enterprise, development, and construction
portfolio value.
6
109
SFDR PERIODIC DISCLOSURESANNUAL REPORT AND FINANCIAL STATEMENTS Enabling activities
directly enable
other activities to
make a substantial
contribution to an
environmental
objective.
Transitional
activities are
activities for which
low-carbon
alternatives are not
yet available and
among others have
greenhouse gas
emission levels
corresponding to the
best performance.
Taxonomy-aligned
activities are
expressed as a share
of:
- turnover reflects
the “greenness” of
investee
companies today.
- capital
expenditure
(CapEx) shows the
green investments
made by investee
companies,
relevant for a
transition to a
green economy.
- operational
expenditure
(OpEx) reflects the
green operational
activities of
investee
companies.
Asset allocation
describes the
share of
investments in
specific assets.
What was the proportion of sustainability-related investments?
The proportion of sustainability-related investments as at 30 June 2023 was 97.39%.This was
calculated based on the Company’s enterprise, development portfolio, and construction portfolio
value. Cash holdings were not included. The proportion of non-sustainable investments was 2.61%,
which related to the value of Interest Rate Swaps (IRS) as at 30 June 2023.
What was the asset allocation?
Investments
#1 Aligned with
E/S
characteristics
#2 Other
#1A Sustainable
Taxonomy-aligned
#1 Aligned with E/S characteristics includes the investments of the financial product used to attain the
environmental or social characteristics promoted by the financial product.
#2Other includes the remaining investments of the financial product which are neither aligned with the
environmental or social characteristics, nor are qualified as sustainable investments.
The category #1 Aligned with E/S characteristics covers environmentally sustainable investments.
In which economic sectors were the investments made?
The Company invests primarily in solar energy infrastructure assets, with minority exposure
to other forms of renewable energy infrastructure (including wind assets) and supporting
technologies, such as battery storage.
To what extent were the sustainable investments with an environmental
objective aligned with the EU Taxonomy? 3
The graphs below show in green the percentage of investments that were aligned with the EU Taxonomy.
As there is no appropriate methodology to determine the taxonomy-alignment of sovereign bonds*, the
first graph shows the Taxonomy alignment in relation to all the investments of the financial product
including sovereign bonds, while the second graph shows the Taxonomy alignment only in relation to the
investments of the financial product other than sovereign bonds.
1. Taxonomy-alignment of investments
including sovereign bonds*
2. Taxonomy-alignment of investments
excluding sovereign bonds*
Turnover
97.5%
CapEx
OpEx
100%
98.9%
Turnover
97.5%
CapEx
OpEx
100%
98.9%
90%
95%
100%
Taxonomy aligned investments
90% 92% 94% 96% 98% 100%
Taxonomy aligned investments
Other investments
Other investments
*For the purpose of these graphs, ‘sovereign bonds’ consist of all sovereign exposures
are
sustainable
investments with an
environmental
objective that do
not take into
account the criteria
for environmentally
sustainable
economic activities
under Regulation
(EU) 2020/852.
What was the share of investments made in transitional and enabling activities?
The share of investments made in enabling activities was 0.61%4 as at 30 June 2023, which
related to the Company’s battery investment value (based on operational and controlled
pipeline). No investments were made in transitional activities.
How did the percentage of investments that were aligned with the EU Taxonomy
compare with previous reference periods?
N/A – this is the first reporting period.
What was the share of sustainable investments with an environmental
objective not aligned with the EU Taxonomy?
The sustainable investments made by the Company align with an environmental objective
specified by the EU Taxonomy.
What was the share of socially sustainable investments?
The Company does not hold investments that would be considered to be socially sustainable
investments.
3 % of OpEx was determined based on the costs of interest rate swaps as a proportion of total Company costs
during the reporting period. % Turnover was determined based on the revenue obtained from interest rate swaps
as a proportion of total Company revenue during the reporting period.
7
4 Based on investment value of operational and controlled pipeline capacity as a proportion of the Company’s
enterprise, development portfolio, and construction portfolio value.
8
As at 30 June 2023
As at 30 June 2023
110
SFDR PERIODIC DISCLOSURESANNUAL REPORT AND FINANCIAL STATEMENTS What investments were included under “other”, what was their purpose and
were there any minimum environmental or social safeguards?
The investments made by the Company that are classified as non-sustainable include hedging
instruments, which are used by the Company to protect shareholders against voltaility in
interest rates.
What actions have been taken to meet the environmental and/or social
characteristics during the reference period?
Given the nature of the Company’s investments, shareholder engagement actions are not
relevant to the Company’s ESG strategy. However, on behalf of the Company, the Investment
Adviser engages with external service providers on the collection of ESG data and the continued
integration of ESG into portfolio-related activities. Such engagement enables the Company to
monitor the ESG performance of its investments over time.
How did this financial product perform compared to the reference benchmark?
The Company has not designated an index as a reference benchmark to determine its alignment
with the environmental and social characteristics that it promotes.
How does the reference benchmark differ from a broad market index?
Not applicable.
How did this financial product perform with regard to the sustainability indicators
to determine the alignment of the reference benchmark with the environmental
or social characteristics promoted?
Not applicable.
How did this financial product perform compared with the reference benchmark?
Not applicable.
How did this financial product perform compared with the broad market index?
Not applicable.
As at 30 June 2023
9
Reference
benchmarks are
indexes to
measure whether
the financial
product attains the
environmental or
social
characteristics that
they promote.
111
SFDR PERIODIC DISCLOSURESANNUAL REPORT AND FINANCIAL STATEMENTS