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Gross Asset Value: Just shy of GBP1.4 billion.
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Net Asset Value (NAV): Dropped around 10p.
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Operational Cash Flow: Circa GBP95 million.
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All-in Cost of Debt: 3.4%, down from last year.
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Dividend Cover: 1.8 times pre-debt amortization, 1.4 times post.
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Dividend Yield: 8.3%, up from 7.3% last year.
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Dividend Paid: 8.8p, increased to 8.9p for the coming year.
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NAV Total Return: 104%.
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Dividends Paid: Over GBP300 million.
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Radiation Figures: Down 4.3% against forecast.
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ROC Price Increase: 9.8% from April '24.
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Inflation Rate: Fell from 7.3% to 2.8% as of June 30, '24.
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Bank of England Rate Cut: 25 basis points in August '24.
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Average Seasonal Weighted Power Price: GBP148 per megawatt hour.
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Power Fixed: Over 60% of the portfolio at circa GBP130 per megawatt hour for the 12 months to June '25.
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Dividend Cover Forecast: Expected to grow to circa 1.8 times in June '25.
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Development Pipeline: Over 1.5 gigawatts, including 954 megawatts of solar and 603 megawatts of batteries.
Release Date: September 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Executed strategic partnership with GLIL, releasing approximately GBP70 million back to the company.
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Initiated a share buyback program to address the discount to NAV.
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Maintained a solid operational cash flow of approximately GBP95 million.
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Achieved a dividend yield of 8.3%, up from 7.3% last year.
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Developed a highly diversified and defensive portfolio with high levels of regulated revenues and power fixes.
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NAV dropped by around 10p due to a falling power market and lack of new asset purchases.
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Operational cash flow decreased from the previous record year.
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Radiation figures were down 4.3% against forecast, the worst in 11 years.
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Operational performance was slightly below expectations due to maintenance and specific asset issues.
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Power price estimates for the period to 2030 were lowered, impacting NAV by 15p per share.
Q: Can you elaborate on the strategic partnership with GLIL and its impact on liquidity? A: James Armstrong, Founder and Managing Partner: The strategic partnership with GLIL has been instrumental in creating liquidity. We sold 50% of our portfolio assets, which were 100% owned by BSIF at NAV, releasing approximately GBP70 million back to the company. This move underpins the valuation of the company and enhances our liquidity.
Q: What are the key financial highlights for the year? A: James Armstrong, Founder and Managing Partner: The gross asset value is just shy of GBP1.4 billion. NAV dropped around 10p due to a falling power market. Operational cash flow remains healthy at circa GBP95 million. The dividend yield is now 8.3%, up from 7.3% last year, and we have increased the dividend to 8.9p for the coming year.
Q: How has the company managed its debt strategy? A: Neil Wood, Partner: Since its IPO in 2013, the company has maintained leverage levels prudently below the overall limit of 50%. The all-in cost of debt is 3.4%, and the average duration of debt is about 12 years. This strategy provides operational flexibility and reduces financial risks.
Q: What is the outlook for dividend cover and future projections? A: James Armstrong, Founder and Managing Partner: The current dividend cover is 1.8 times pre-debt amortization and 1.4 times post. We expect this to increase to nearly two times in the coming years due to better performance and improved radiation levels.
Q: Can you discuss the company's PPA strategy and its impact on revenue? A: Neil Wood, Partner: Bluefield Solar focuses on fixing power price agreement contracts at the short end of the power curve, between 6 to 30 months. This strategy has allowed us to secure higher prices, with over 60% of the portfolio fixed at circa GBP130 per megawatt hour for the 12 months to June '25, significantly above the day-ahead market prices.
Q: How has the company's operational performance been over the past year? A: Neil Wood, Partner: The solar portfolio was impacted by lower-than-forecasted radiation and operational underperformance, but the wind portfolio exceeded generation compared to the prior year by 21%. Overall, the portfolio's cumulative generation over the decade has been in line with expectations.
Q: What are the company's plans for its development pipeline? A: Neil Wood, Partner: We have a pipeline of over 1.5 gigawatts, including 954 megawatts of solar and 603 megawatts of batteries. We plan to sell over 300 megawatts in the current financial year, which will be highly accretive for the business.
Q: How is the company addressing ESG and public policy initiatives? A: James Armstrong, Founder and Managing Partner: We are focused on mitigating social and environmental impacts, building biodiversity datasets, and understanding how climate change may impact our portfolio. We are also engaging with the government to accelerate net-zero targets and improve grid capacity.
Q: What are the priorities for the coming financial year? A: James Armstrong, Founder and Managing Partner: Our priorities include reducing the revolving credit facility, leveraging our valuable development pipeline, and continuing our strategic partnership with GLIL. We are optimistic about the macro position and political conditions, which are favorable for our growth.
Q: How do you view the future of power prices and their impact on the company? A: James Armstrong, Founder and Managing Partner: We believe there is a reasonable expectation of higher power prices due to decarbonization and increased demand from AI and data centers. This should support our ability to deliver dividends and maintain strong financial performance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
