Foresight Solar Fund Regulatory News (FSFL)

3 September 2020

Foresight Solar Fund Limited

('Foresight Solar', 'FSFL' or 'the Company')

Interim Results to 30 June 2020

Foresight Solar, a fund investing in a diversified portfolio of ground-based solar PV assets in the UK and internationally, is pleased to announce its Interim Results for the six months ended 30 June 2020.

Highlights

Key Metrics

* Annualised from IPO on 29 October 2013.

Commenting on the Company's results, Alex Ohlsson, Chairman of Foresight Solar Fund Limited said:

"Whilst COVID-19 has created unprecedented challenges for both our industry and the wider economy, I am pleased with the resilience the Company has shown and how our team and our operational counterparties have adapted during the first half of 2020. The health and safety of all stakeholders and their staff has been our top priority throughout the period and, with safe working protocols in place, we have delivered a record operational outperformance across the UK portfolio for the period, at 15.9% above base case, and remain on track to deliver our target dividend for the year."

"Whilst the power-price environment and wider global financial markets are set to remain challenging for the remainder of the year, we will continue to focus on delivering operational and financial stability, securing opportunities to enter fixed power price contracts to improve cash flow stability where possible, and will continue to explore opportunities to expand and diversify further our portfolio of assets whilst maintaining our strict criteria for risk-adjusted returns. We look forward to a further period of progress."

Results presentation

Foresight Solar Fund Ltd is holding a webcast presentation for analysts at 08:30 today. Participants wishing to join must register at this link in advance of the presentation to receive access details for the webcast and conference line: https://www.speakservecloud.com/register-for-call/44a529ef-1973-48fc-9233-5f41a9f6a8c5 

Declaration of Dividend

Foresight Solar is also pleased to announce a second interim dividend, in respect of the period 1 April 2020 to 30 June 2020, of 1.73 pence per ordinary share (the "Dividend"). The shares will go ex-dividend on 29 October 2020 and the Dividend will be paid on 27 November 2020 to shareholders on the register as at the close of business on 30 October 2020.

Foresight Solar confirms its dividend target of 6.91 pence per ordinary share for 2020.

Full details of the scrip dividend alternative that is being offered in respect of the Dividend (the "Scrip Offer") and the Scrip Dividend Scheme can be found in the Scrip Dividend Alternative Offer Document (the "Scrip Document") available on the Company's website at https://fsfl.foresightgroup.eu/investor-relations/dividend-history/ . The Scrip Document is also available on the National Storage Mechanism website at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and copies are also available for inspection at JTC House, 28 Esplanade, St. Helier, Jersey JE2 3QA.

The reference price of the new shares issued under the Scrip Offer will be calculated and published on or around 5 November 2020.

Shareholders will receive the Dividend in cash, unless they have previously completed a standing election (a "Form of Election") to receive new shares pursuant to the Scrip Offer. Shareholders who would like to receive such new shares rather than cash, and who have not previously submitted a Form of Election, should complete the Form of Election at the back of the Scrip Document and return it to the Company's Receiving Agent, Computershare Investors Service (Jersey) Limited by no later than 5.00pm on 16 November 2020.

The expected timetable in relation to the Dividend will be as follows:

For further information, please contact:

Foresight Group +44 (0)20 3667 8147Jonathon McManus InstitutionalIR@ForesightGroup.eu

Jefferies International Limited

+44 (0)20 7029 8000

Neil Winward

Gaudi Le Roux

Citigate Dewe Rogerson +44 (0)20 7638 9571 Nick Hayns

Louise Mason-RutherfordElizabeth KittleLucy Eyles

Notes to Editors

About Foresight Solar Fund Limited

Foresight Solar is a Jersey registered, closed-end investment company investing in a diversified portfolio of ground-based solar PV assets in the UK and Australia.

Since its IPO in October 2013, FSFL has more than tripled in size and raised more than £634 million through share placings. The Company targets a progressive dividend policy and has paid all target dividends to date. The target dividend for 2020 is 6.91 pence per share.

FSFL is managed by Foresight Group, a leading independent Global Infrastructure & Private Equity manager, which provides FSFL with depth of experience in fund management, deal origination and execution. The Company has a fully independent Board of Directors and is chaired by Alex Ohlsson. The lead Investment Manager for the Company is Ricardo Piñeiro, Head of UK Solar at Foresight Group.

UNAUDITED INTERIM REPORT AND FINANCIAL STATEMENTS

FOR THE PERIOD 1 JANUARY 2020 TO 30 JUNE 2020

Chairman's Statement

The first half of 2020 presented the Company with its most challenging operating environment since launch as COVID-19 disrupted economic activity across the globe.

The Company's Investment Manager and key service providers adapted quickly to this new environment and the portfolio delivered record operational outperformance.

Though the power price environment remains challenging the Company remains on track to deliver the target total dividend of 6.91 pence per share for the year."

Alexander Ohlsson,Chairman

On behalf of the Board, I am pleased to present the Unaudited Interim Report and Financial Statements for Foresight Solar Fund Limited (the "Company" or the "Fund") for the six months ended 30 June 2020.

The COVID-19 pandemic is the greatest macroeconomic shock to hit global financial markets since the Company's launch in October 2013. At the time of publication, the full economic effects of the crisis remain to be seen, yet the cost to individuals, businesses, and economies will be substantial. The International Energy Agency has already described the impact on global energy markets as 'a macroeconomic shock unprecedented in peacetime'. Governments around the world have responded with record stimulus packages, far in excess of those seen following the 2007-2008 global financial crisis, as they seek to support economies which have effectively ground to a halt in the face of the pandemic.

Throughout the unfolding crisis the Company continued its operations with minimal disruption, but the collapse in UK economic activity has had a substantial impact on the national demand for electricity in the short-term. The shutdown of large parts of UK industry depressed merchant prices at which generators such as the Company are able to sell the power they produce. The Company has a degree of protection from price changes built into its cashflow profile due to the large proportion of its revenues being fixed via subsidy mechanisms or price agreements. Therefore, whilst the crisis has materially weakened the current outlook for power prices, the Board is able to reaffirm its dividend target for the financial year with a high degree of confidence.

The Board has been in close communication with the Investment Manager throughout the period as the COVID-19 pandemic unfolded. The Board is pleased with the continuity of service provided by Foresight and can report that there has been minimal operational disruption to the Company's assets. Both Foresight and the Company's key operational counterparties reacted quickly and effectively as they executed Business Continuity Plans and adapted well to the new working practices with the safety of all Company stakeholders and their staff being a key objective during the pandemic. In addition, the strategic investment in spare parts in recent years has allowed the Company to minimise potential operational disruptions which COVID-19 could have caused to the supply chain.

Despite the challenging backdrop, the UK portfolio performed significantly above expectations during the period. Electricity generation for the six-month period was 15.9% above base case, driven by record levels of irradiation in the first half of the year. This excellent operational performance is a result of both the strong irradiance during the period and the continued hard work and diligence of the asset management, building on an improving performance trend across recent reporting periods.

Key Financials

In the six months to 30 June 2020, the NAV per Ordinary Share decreased to 96.0 pence (31 December 2019: 103.8 pence). The key driver of the decrease was a material downward revision of UK power price forecasts obtained from independent third-party consultants.

During the period, the Investment Manager undertook a review of the discount rates applied to UK asset valuations. As a result of this analysis, discount rates for the UK assets have been reduced by 0.25% to 6.75% to reflect the current market valuation of operational solar assets.

Operational Performance

During the first half of the year electricity generation from the Company's UK portfolio was 15.9% above base case. Irradiation levels in the U.K were 17.1% above base case assumptions. Asset outperformance was driven by the strong performance of the majority of the U.K. assets which continued to operate well despite the new safe working practices many of our key operational counterparties had to implement during the period.

In Australia, further progress was made on the Company's portfolio of four assets. Bannerton resumed operating at full output in April following six months of grid export restrictions. Oakey 2 is currently exporting at approximately 75% of the total installed capacity and is expected to be fully commissioned by the end of the year.

Dividend

The Company declared interim dividends of 3.45 pence per share in the first half of 2020 and is on track to deliver its target of 6.91 pence per share for the year. The first 2020 interim dividend of 1.72 pence was paid on 28 August 2020.

Dividend cover for the period on a 12-month rolling cash basis, was 1.10 times, down from 1.12 times for the prior year on a like-for-like basis reflecting the decrease in UK wholesale power prices during the period, and in particular since COVID-19 lock down measures were implemented. Despite the weakening power price environment, the Company has met its dividend targets each year since IPO.

Debt Facilities

At 30 June 2020, the total outstanding debt of the Company and its subsidiaries amounted to £440.4 million (31 December 2019: £443.5 million), with long-term debt representing £400.4 million (December 2019: £403.5 million). Total gearing represented 43.1% of GAV (December 2019: 41%). Long-term structural gearing represented 39.2% of GAV (December 2019: 38%), within the 40% long-term debt target set by the Board.

The Company's Revolving Credit Facility ("RCF") totalled £105 million at 30 June 2020, of which £65 million remained available for investment at the end of the period.

The Company continues to benefit from the flexibility offered by the RCF facilities to support further growth at a competitive cost of capital and limiting cash drag risk to investors.

The Board believes the current level of debt to be appropriate relative to the size and revenue profile of the Company.

Corporate Governance

The Company announced the appointment of Ms Markey as non-executive Director on 25 August, effective from 4 September. Ms Markey is an experienced business leader and non-executive director with a strong financial background and over 20 years' experience as a senior executive and board director. Ms Markey has extensive experience in the electricity industry, particularly in thermal and renewable generation, including PV solar and wind. Following Ms Markey's appointment, the Company Board of Directors will consist of five non-executive Directors.

The Board will continue to review its composition on an ongoing basis to ensure an appropriately diverse mix of skillsets, experience, and backgrounds.

Sustainability Update

The Company continues to build on its well-established sustainability credentials with each passing year. The excellent operational performance of the UK portfolio generated enough clean energy to power 173,000 homes for a year during the first half of 2020.

While the Company's active engagement with the communities in which it operates has proved challenging in the wake of the national COVID-19 related lockdown, the Company continues to support local charities through grants providing much needed funds to local community projects.

As a signatory to the Principles for Responsible Investment ("PRI") in its 2020 assessment Foresight Group maintained its A+ rating for Strategy & Governance, and improved its Infrastructure score from A to A+, the highest grade, demonstrating the Investment Manager's ongoing commitment to sustainability. This was extended to include a number of the Company's O&M counterparties during the period with three of its largest operational counterparties signing Sustainability Agreements that demonstrate their commitment to operating fairly and sustainably.

Outlook

While the broader global environment is set to remain challenging, the Company has proved its operational resilience during the year to date. The Investment Manager continues to focus on delivering ongoing operational and financial stability as the effects of COVID-19 reverberate throughout global financial markets.

The volatility seen in traditional financial assets throughout the crisis may well enhance the appeal of renewable energy infrastructure investments, which have proved notably resilient in relative terms. Solar assets should continue to provide attractive and sustainable yields going forward in the context of historically low central bank interest rates and an uncertain outlook for corporate dividends. The Board believes that the positive social and environmental impact of the Company's investments will continue to prove to be attractive as investors allocate more capital to sustainable investments. 

Notwithstanding the effects of COVID-19 in the short and medium term, the solar energy market in the UK is expected to thrive, backed by a dynamic renewable industry, decreasing installation costs and support from governments to tackle climate change. This was clearly evidenced by the announcement in June 2019 of the UK Government's commitment to reach a net zero carbon emission target by 2050. This combination of factors is expected to create an attractive environment for further investment in solar technology, either through renewable energy support mechanisms or on a subsidy free basis.

The Investment Manager continues to monitor both subsidised and subsidy-free opportunities in the UK but the yield compression witnessed in this market in recent years, supported by the current low interest rate environment, presents challenges in finding suitably attractive opportunities. As a result, the Company will maintain its selective approach to secondary market investments in the UK, while returns for subsidy-free investments still trail those available in other European markets on a risk-adjusted basis.

While the predominant focus of the Company will continue to be on UK operating solar assets, The Board believes the opportunity to add geographic diversification within the restrictions of the Company's investment policy will benefit shareholders over the long term.

The Investment Manager continues to make positive progress in identifying investment opportunities in Southern Europe having secured exclusivity over a portfolio of subsidy-free assets located in Spain, representing approximately 150MW of installed capacity. The assets are expected to benefit from long term Power Purchase Agreements ("PPAs") with reputable counterparties, delivering a significant level of contracted revenues during the term of the investment. If successful, the Board believes the acquisition of the Fund's first subsidy-free assets is a clear sign of the exciting growth opportunities in the European solar market. The fact that the Investment Manager can source and transact new deals in the current environment demonstrates the benefit of having a dedicated presence in the multiple countries in which it operates.

The Company will continue to work closely with its key operational counterparties to ensure adequate contingencies are in place for any future disruption to servicing or spare parts requirements. In addition, the Company will continue to review opportunities to enter fixed power price contracts to improve cash flow stability during periods of power price volatility.

Finally, on behalf of the Board of Directors, I would like to thank our suppliers and service providers for their support and commitment which have allowed the Company to deliver a strong operational performance period during this challenging period.

Alexander OhlssonChairman

3 September 2020

Corporate Summary and Investment Objective

Foresight Solar Fund Limited is a closed-ended company with an indefinite life and was incorporated in Jersey under the Companies (Jersey) Law 1991, as amended on 13 August 2013, with registration number 113721.

Corporate Summary

As at 30 June 2020, the Company has 606,311,896 ordinary shares in issue which are listed on the premium segment of the Official List and traded on the London Stock Exchange's Main Market.

The Company makes its investments through intermediate holding companies and underlying Project Vehicles/Special Purpose Vehicles ("SPVs").

Investment Objective

The Company's objective is to provide investors with a sustainable, progressive quarterly dividend and enhanced capital value, through investment in ground-based solar assets predominantly located in the UK.

The Company

The Company's Initial Public Offering on 24 October 2013 raised £150 million, creating the largest dedicated solar investment company listed in the UK at the time. To date, the Company has raised a total of £634 million through equity issuance and reached a gross asset value of £1,022.5 million as at 30 June 2020. It is the largest UK-listed dedicated solar energy investment company by installed capacity with a market capitalisation of £660.9 million at the period end.

As at 30 June 2020, the Company's portfolio consisted of 54 assets with a net installed capacity of 869MW, including four Australian assets (representing 146MW), one of which remains under construction.

Investment Policy

The Company pursues its investment objective by acquiring ground-based, operational solar power plants predominantly located in the UK. Investments outside the UK and assets which are, when acquired, still under construction will be limited to 25% of the GAV of the Company and subsidiaries, calculated at the time of investment.

The Company will seek to acquire majority or minority stakes in individual ground-based solar assets. When investing in a stake of less than 100 per cent in a solar power plant SPV, the Company will secure its shareholder rights through shareholders' agreements and other legal transaction documents.

Power Purchase Agreements ("PPAs") will be entered into between each of the individual solar power plant SPVs in the portfolio and creditworthy offtakers. Under the PPAs, the SPVs will sell solar generated electricity and green benefits to the designated offtaker. The Company may retain exposure to power prices through PPAs that do not include mechanisms such as fixed prices or price floors.

Investment may be made in equity, debt or intermediate instruments but not in instruments traded on any investment exchange.

The Company is permitted to invest cash held for working capital purposes and awaiting investment in cash deposits, gilts and money market funds.

In order to spread risk and diversify its portfolio, at the time of investment no single asset shall exceed 30% of the Company's GAV post-acquisition. If the investment is an additional stake in an existing investment, the combined value of both the existing stake and the additional stake acquired should also not exceed 30%. The GAV of the Company will be calculated based on the last published gross investment valuation of the Company's portfolio, including cash, plus acquisitions made since the date of such valuation at their cost of acquisition. The Company's portfolio will provide diversified exposure through the inclusion of not less than five individual solar power plants and the Company will also seek to diversify risk by ensuring that a significant proportion of its expected income stream is derived from regulatory support (which will consist of, for example, without limitation, ROCs and FiTs for UK assets). Diversification will also be achieved by the Company using a number of different third-party providers such as developers, engineering, procurement and construction ("EPC") contractors, operations and maintenance ("O&M") contractors, panel manufacturers, landlords and distribution network operators.

The Articles provide that gearing, calculated as Group Borrowing (including any asset level gearing) as a percentage of the Company's GAV, will not exceed 50% at the time of drawdown. It is the Board's current intention that long-term gearing (including long-term, asset level gearing), calculated as Group borrowings (excluding intra-group borrowings (i.e. borrowings between members of the Group) and revolving credit facilities) as a percentage of the Company's GAV will not exceed 40 per cent at the time of drawdown.

Any material change to the investment policy will require the prior approval of shareholders by way of an ordinary resolution (for so long as the Ordinary Shares are listed on the Official List) in accordance with the Listing Rules.

Significant Shareholders

The Company's shareholders include a substantial number of blue-chip institutional investors.

Shareholders in the Company with more than a 5% holding as at 30 June 2020 are as follows:

Alternative Investment Fund Management Directive ("Aifmd")

The AIFMD, which was implemented across the EU on 22 July 2013, aims to harmonise the regulation of Alternative Investment Fund Managers ("AIFMs") and imposes obligations on managers who manage or distribute Alternative Investment Funds ("AIFs") in the EU or who market shares in such funds to EU investors. Under the AIFMD, the Company is self-managed and acts as its own Alternative Investment Fund Manager.

The Company is located outside the European Economic Area ("EEA") but the Company's marketing activities in the UK are subject to regulation under the AIFMD and the National Private Placement Regime.

Packaged Retail and Insurance-Based Investment Products Regulation

The Packaged Retail and Insurance-based Investment Products Regulation ("PRIIPS") was introduced by the EU and came into effect on 1 January 2018. Its aim is to ensure retail investors are provided with transparent and consistent information across different types of financial products. This regulation requires the Company to publish a Key Information Document ("KID"). The KID is available on the Company's website under Publications and can be found at the following website address: www.fsfl.foresightgroup.eu.

Board of Directors

The Directors are responsible for the determination of the investment policy of the Company, have overall responsibility for the Company including its investment activities and for reviewing the performance of the Company's portfolio.

The Directors are all Non-Executive. Alex Ohlsson, Chris Ambler and Monique O'Keefe are all considered to be independent of the Investment Manager under the AIC Code. Peter Dicks is not considered to be independent from the Investment Manager under the AIC Code, due to his previous service on boards of other Funds managed by the Investment Manager within the last three years. However, Mr Dicks has no current material business relationships with the Company or the Investment Manager, other than serving on the Board of the Company. Accordingly, the Company considers Mr Dicks to be factually independent and unimpaired as a Director of the Company and member of the Audit and Risk Committee and Remuneration and Nomination Committee.

Ann Markey has been appointed to join the Board as a fifth Non-Executive Director, with her appointment effective from 4 September 2020.

Alex Ohlsson (Chairman)

Mr Ohlsson is Managing Partner of the law firm Carey Olsen in Jersey. He is recognised as a leading expert in corporate and finance law in Jersey and is regularly instructed by leading global law firms and financial institutions. He sits on the boards of a number of companies and is also Chairman of the listed company GCP Asset Backed Income Fund Limited. He is an Advisory Board member of Jersey Finance, Jersey's promotional body and Treasurer of the Jersey Law Society. He has recently retired as the independent Chairman of the States of Jersey's Audit Committee. He was educated at Victoria College, Jersey and at Queens' College, Cambridge, where he obtained an MA (Hons) in Law. He has also been an Advocate of the Royal Court of Jersey since 1995.

Mr Ohlsson was appointed as a Non-Executive Director and Chairman on 16 August 2013 and was re-elected on 16 July 2020.

Chris Ambler

Mr Ambler has been the Chief Executive of Jersey Electricity Plc since 1 October 2008. He has experience in a number of senior positions in the global industrial, energy and materials sectors working for major corporations including ICI/Zeneca, The BOC Group and Centrica/British Gas, as well as in strategic consulting roles. He is a Director on other boards including a Non-Executive Director of Apax Global Alpha Limited, a listed fund which launched on the London Stock Exchange on 15 June 2015. Mr Ambler is a Chartered Director, a Chartered Engineer and a Member of the Institution of Mechanical Engineers. He holds a First-Class Honours Degree from Queens' College, Cambridge and an MBA from INSEAD.

Mr Ambler was appointed as a Non-Executive Director on 16 August 2013 and was re-elected on 16 July 2020.

Peter Dicks

Mr Dicks is currently a Director of a number of quoted and unquoted companies. He is also on the Board of Mercia Fund 1 General Partnership Limited and Miton UK Microcap Trust plc and Chairman of SVM Emerging Fund plc and Gabelli Value Plus+ Trust PLC.

Mr Dicks was appointed as a Non-Executive Director on 16 August 2013 and was re-elected on 16 July 2020.

Monique O'Keefe

Mrs O'Keefe is the co-founder of investment consultancy business, Kairos Wealth Limited. She serves on a number of boards, including Phoenix Spree Deutschland Limited which is a London Stock Exchange listed property fund, as well as a private equity fund, a European hedge fund and a non‑performing credit fund. Mrs O'Keefe also sits on the Board of Commissioners at the Jersey Financial Services Commission.

Mrs O'Keefe was appointed as a Non-Executive Director on 1 June 2019 and was re-elected on 16 July 2020.

Ann Markey (appointment effective from 4 September 2020)

Ms Markey is an experienced business leader and non-executive director with a strong financial background and over 20 years' experience as a senior executive and board director in a number of businesses. Ms Markey has extensive experience in the electricity industry, particularly in thermal and renewable generation, including PV solar and wind. She was a senior executive with ESB, a leading Irish electricity utility, and with Greencoat Capital, a leading renewable energy investment manager.

Ms Markey is a Fellow of Chartered Accountants Ireland having trained and qualified with Arthur Andersen. She is currently a Board Member and Chair of the Audit & Risk Committee of the Sustainable Energy Authority of Ireland (SEAI), the national sustainable energy authority of Ireland. Ann is also a Member of the Audit & Risk Committee of Ireland's national public health service provider, Health Services Executive (HSE), and a Board Member of the Digital Hub Development Agency (DHDA), Ireland's largest cluster of digital companies.

Investment Manager

The Company's Investment Manager, Foresight Group LLP, is responsible for the acquisition and management of the Company's portfolio, including the sourcing and structuring of new investments and advising on the Company's borrowing strategy.

Foresight Group was founded in 1984 and is a leading independent infrastructure and private equity investment company managing £6.5 billion of assets on behalf of institutions and retail clients with offices in Australia, Italy, South Korea, Spain Luxembourg and the UK.

The Investment Manager's 97 strong infrastructure team includes 41 investment professionals, with an average of 12 years industry experience.

Foresight Group's Investment Management team is led by three experienced UK-based managers, supported by a team of investment managers located in the UK and internationally. The Investment Management team based in Australia comprises three investment professionals and three portfolio managers. This team is instrumental in the management of the Company's four Australian assets.

The Investment Manager is overseen by an Executive Committee of which Gary Fraser is a member. Foresight Group's Executive Committee provides strategic investment advice to the management team and the Board.

Foresight Group LLP is a limited liability partnership registered in England and Wales with registered number OC300878. Its authorised and regulated by the Financial Conduct Authority.

Ricardo Piñeiro, PartnerRicardo has led Foresight Group's UK solar investments team since 2011 and has been part of the Company's advisory team since its IPO, remaining primarily focused on identifying and acquiring new renewable energy transactions across the UK and international markets. Prior to joining Foresight, Ricardo worked at Espirito Santo Investment where he focused on lending and advisory for the energy infrastructure and transportation sectors.

Gary Fraser, Partner, Chief Financial OfficerGary is a Chartered Accountant and Chartered Fellow of the Securities Institute. He worked with Ernst & Young between 1993 and 1999, predominantly in the audit and risk assurance and corporate finance areas and joined ISIS Asset Management plc in 1999 where he was responsible for the provision of similar services to several investment companies. He joined Foresight Group in 2004 and is a member of the Executive Committee.

Peter Bolton, DirectorPeter is an Investment Director in Foresight Group's Infrastructure Team having joined Foresight in January 2014. Peter focusses on originating and acquiring renewable energy transactions across the UK and international markets, with a specific interest in the solar sector. Peter has over 11 years' experience in the energy sector, having previously worked within the M&A Team at Gazprom Marketing & Trading and in PwC's Deals Advisory Team.

Portfolio Assets

Current Portfolio

1 Original equity cost at time of acquisition, including transaction costs.

2 Includes the 2MW extension acquired in March 2015.

3 Accounts for the 48.5% stake the Company holds of Bannerton (110MW) and 49% stake held of Longreach (17MW) and Oakey 1 (30MW).

Investment Managers Report

Key Investment Metrics

Portfolio Summary

As at 30 June 2020, the Company's portfolio consisted of 54 assets with a total net peak capacity of 869MW. Of the 54 assets, 50 assets are located in the UK and represent 723MW of total installed capacity. The remaining four assets are located in Australia and account for 146MW of total installed capacity.

All of the Company's current assets benefit from regulatory support. The Company's UK assets are accredited under the Renewables Obligation ("RO") scheme, with the exception of Yardwall which is a Feed-in-Tariff scheme ("FiT") accredited asset (representing less than 1% of the UK portfolio). The Australian assets benefit from subsidies in the form of Large-Scale Generation Certificates ("LGC").

In the first half of 2020, approximately 57% of revenues were derived from subsidies, with the remaining 43% from the sale of electricity.

The Renewables Obligation Certificate ("ROC") buy-out price for the 2020-2021 annual compliance period increased to £50.05 per certificate (2019-2020 compliance period: £48.78), reflecting the average monthly percentage change in RPI during 2019. On average, the Company received 1.42 ROC/MWh across the UK portfolio.

The charts on pages 14-15 show a detailed analysis of the portfolio as at 30 June 2020. The portfolio continues to be well diversified by inverter and panel manufacturers and by O&M counterparties.

Market Developments

United Kingdom

The emergence of COVID-19 quickly became the principal obstacle to further growth in UK renewables during the first half of 2020. The decision to implement widescale lockdown measures and close all but essential shops and services on 23 March 2020 impacted the prospect of any short-term buildout. The most direct impact of the crisis on the energy industry was the collapse in energy demand across the country as industrial and commercial businesses shut down overnight. This sharp contraction in demand resulted in wholesale energy prices reaching historic lows.

As a result of the low electricity demand caused by the COVID-19 control measures, National Grid contacted embedded generators to discuss the feasibility of turning off solar generation in this period of low electricity demand to help balance the network. Historically this has been done widely at the transmission level (connections at 132kV and above) but not at the distribution level (connections at 33kV or below), at which most of the Company's assets are connected.

The objective is to be able to curtail solar output with willing participants and offer financial compensation for the generation shortfall. The scheme is now operating on a rolling weekly basis, where generators offer solar parks the chance to participate and indicate prices for curtailment for the week ahead. There has been no curtailment required during the period across the portfolio.

In addition, in May 2020, Ofgem clarified that National Grid can disconnect embedded generators to protect system stability as a "last resort action" without facing legal consequences. Under this scenario no compensation would be due, creating an incentive for embedded generators to participate in the curtailment scheme.

The Asset Manager is working with the main O&M suppliers to explore the technical feasibility of reducing generation and participating in the curtailment scheme should further periods of low demand occur.

In May 2020, Ofgem also announced the intention to defer the additional BSUoS (Balancing Service Use of System) costs arising from COVID-19 being incurred in 2020/21 to 2021/22. This is expected to have a significant impact on embedded generation as the latest forecast has identified a £500 million increase in the cost of managing the electricity transmission system arising from the COVID-19 pandemic. Under current government policy these costs would be recovered via BSUoS charges this year, resulting in an embedded benefit payment to distributed generators. If approved, any additional revenue would be deferred until next year or potentially waived as solar assets will no longer be entitled to revenue arising from the distribution of the BSUoS costs. This is not expected to have a significant impact on the Company as the additional embedded benefit revenues were not included in this year's financial forecasts.

Governments and supra-national organisations such as the EU are constructing substantial economic recovery packages, and clean energy is likely to play a key role in such plans. Over the last five years renewable power has emerged as the most cost‑effective energy source in many countries around the globe; two thirds of the world's population now live in areas where the cheapest form of energy is electrons generated from wind and solar. This is important because it implies there is no longer a trade-off between stimulating economic recovery and financing green growth.

The UK has also announced a £3 billion Green Recovery Package which should accelerate progress towards the 2050 net carbon neutral goal with the renewables sector likely to be a beneficiary in terms of job creation and benign future energy policy.

Australia

The Australian market has been less impacted than the UK and European markets by the reduction in gas prices and demand for electricity due to COVID-19. Compared to the significant drops in demand witnessed elsewhere in the second quarter of 2020, Australian National Electricity Market operational demand was down only 2% year-on-year. COVID-19 specifically caused an estimated 2.1% reduction in demand, with distributed solar PV experiencing a further 1.2% reduction. This was offset by the impact of greater heating requirements due to cooler weather which increased demand by 1.4%. In the second quarter of 2020, energy utilities, generators and the Australian Energy Market Operator ("AEMO") reviewed business practices to ensure that the essential service of electricity supply remains uninterrupted during COVID-19.

Marginal Loss Factors ("MLFs") were released for FY2021 in June 2020 with smaller year-on-year variations, compared to prior years. This is due to smaller changes in the generation mix and the emergence of new generation limits which affect the economics of new build wind and solar. AEMO is committed to increasing transparency for MLFs by publishing indicative reports in September and December of the preceding year. AEMO is also committed to a review of the MLF methodology to address aspects of the methodology that are no longer fit for purpose and to consider practical improvements to the process.

Strong projects are continuing to proceed to investment stage with 3.6GW of new wind and solar projects forecast for 2020. State Governments continue to support the growth of the renewable energy market with each State having adopted a net zero target by 2050. New South Wales, the largest State, announced economic growth plans which also support the deployment of renewable energy projects including the development of a 3GW renewable energy zone in Central West New South Wales.

In 2019, Australian energy regulators were considering numerous changes to the regulatory framework. These changes are expected to be delayed and potentially omitted as regulators and Ministers focus on economic growth and jobs. The Company is actively engaging in the regulatory dialogue through meetings with the regulators, written submissions and participation in industry groups and closely monitoring proposed regulatory changes.

Historic Power Prices

Daily and monthly generation weighted spot electricity prices at UK portfolio level (£/mwh)

United Kingdom

Wholesale power prices decreased throughout the reporting period to approximately £27/MWh in June 2020. The general downward trend has been driven by lower natural gas prices globally as a result of new supplies from the US and Australia entering the market. In addition to this, historically high gas storage levels in Western Europe, following consecutive mild winters had a downward effect on spot and forward prices for natural gas resulting in further downward pressure on wholesale power prices. From this already soft position, the UK Government's restrictions in response to the COVID-19 pandemic drove down demand for gas, oil and power which has resulted in even lower wholesale power prices.

The average power price achieved across the UK portfolio during the period, including fixed price arrangements was£33.62/MWh, versus £47.25/MWh in the first half of 2019, a decrease of 28.8% year-on-year as a result of low power prices experienced during the second half of the period. The proportion of revenues subject to fixed price arrangements across the UK portfolio during the period was c.30% of the total UK generation of electricity.

Fixed price arrangements for the 2021 financial year represent approximately 30% of the expected generation of electricity. This represents a material increase from a value of 8% at 31 December 2019, offering higher cash flow certainty for the upcoming periods. The generation weighted price of secured fixed prices across the portfolio is £45.71/MWh.

The Company will continue to monitor forward electricity prices and, where appropriate, will enter into new fixed price arrangements.

The Investment Manager regularly reassesses conditions in the electricity market and updates its view on likely future movements. The Company retains the option to fix the PPAs for its assets at any time. The Investment Manager is satisfied that the current proportion of fixed price arrangements provides the appropriate level of price certainty.

Australia

Wholesale gas prices continued to decrease during the period, with the Gas Supply Hub price averaging $4.10/GJ in Q2 2020, its lowest level since Q4 2015. As a result, power prices fell across Australia during the period as global gas prices, and to a lesser extent reduction in demand due to COVID-19, impacted electricity prices in Australia. Given Australia's relatively small reliance on gas generation (21%) compared to coal-fired generation (56%), Australian wholesale energy prices are less impacted by the reduction in global gas prices compared to other markets which are more dominated by gas generation.

During the period, the time weighted average spot price in Queensland was A$43.94/MWh, versus A$62.75/MWh in the second half of 2019, a decrease of 30%.

During the period, prices were lower in Victoria with a time weighted average spot price of A$59.71/MWh, versus A$87.62/MWh in the second half of 2019, a decrease of 32%. 

Three of the four assets in the Australian portfolio benefit from long term PPAs that offer protection against the power price volatility experienced during the period. The average power price achieved across the Australian portfolio during the period, including fixed price arrangements, was A$56.11/MWh.

Power Price Forecasts

The Investment Manager uses forward looking power price assumptions to assess the likely future income of the portfolio assets for valuation purposes. The Company's assumptions are based on a blended average of the forecasts provided by third party consultants and are updated on a quarterly basis for each market.

United Kingdom

During the period, power price forecasts decreased by 8.3% mainly due to movements in the short and medium term as a result of the COVID-19 pandemic. The main driver has been reduction in the forecast gas and power demand and the period of lower economic output assumed by third party consultants. In the longer term the deployment of more low-cost generation, notably onshore wind, is expected to offset the upward pressure from an increase in demand.

The Company's forecasts assume an increase in power prices in real terms over the medium to long-term of 1.3% per annum (31 December 2019: 0.4%).

Where the assumed asset life extends beyond 2050, the Investment Manager has assumed no real growth in forecast power prices.

Australia

During the period, Queensland and Victoria power price forecasts decreased by 4.8% and 3.2% respectively,mainly due to assumptions around the impact of COVID-19 in the short and medium term. Projections post 2030 were broadly in line with the December 2019 forecasts.

The Company's forecasts assume an increase in Queensland and Victoria power prices in real terms over the medium to long-term of 3.7% and 2.6% respectively, per annum.

Investment Performance

The Net Asset Value per share as at 30 June 2020 decreased to 96.0 pence compared to 103.8 pence as at 31 December 2019.

Movements in Net Asset Value

A breakdown in the movement of the Company's NAV during the reporting period is shown in the table below.

Valuation of The Portfolio

The Investment Manager is responsible for providing fair market valuations of the Company's underlying assets to the Board of Directors. The Directors review and approve these valuations following appropriate challenge and examination. Valuations are undertaken quarterly. A broad range of assumptions are used in the valuation models. These assumptions are based on long-term forecasts and are not affected by short-term fluctuations, economic or technical.

It is the policy of the Investment Manager to value with reference to Discounted Cash Flows ("DCF") from the latter of commissioning or transaction completion. This is partly due to the long periods between agreeing an acquisition price and financial completion of the acquisition. Occasionally this delay reflects construction. Revenues accrued do not form part of the DCF calculation in making a fair valuation.

The current portfolio consists of non-market traded investments and valuations are based on a DCF methodology or held at cost where the assets have not yet reached commissioning. This methodology adheres to both IAS 39 and IFRS 13 accounting standards as well as the International Private Equity and Venture Capital ("IPEV") Valuation Guidelines.

The Company's Directors review and challenge the operating and financial assumptions, including the discount rates, used in the valuation of the Company's portfolio and approve them based on the recommendation of the Investment Manager.

Methodology

During the period, the Investment Manager undertook a review of the discount rates applied to the valuation of the portfolio as a result of the valuation information received from participating in a number of tender processes to acquire UK operational assets during the period. As a result of this analysis, discount rates for the UK portfolio have been reduced by 0.25% from 7.00% to 6.75% on a levered basis in order to bring valuations in line with the expected market pricing for operational assets.

The discount rate used for UK asset cashflows which have received lease extensions beyond the initial investment period of 25 years is 7.75% for subsequent years, reflecting the merchant risk of the expected cash flows beyond the initial 25-year period.

For the Australian portfolio, operational assets are valued using an 8.0% discount rate. Assets under construction are valued at cost and will continue to be held at cost until the assets are connected to the grid and fully operational. These asset valuations are updated quarterly to reflect movements related to exchange rates.

The weighted average levered discount rate across the portfolio is now 6.83% compared to 7.06% as at 31 December 2019.

Asset life

The expected weighted average life of the UK portfolio as at 30 June 2020 is 30.6 years (31 December 2019: 29.8 years) from the date of commissioning. This represents a remaining portfolio useful life of 25.3 years when the historical operational periods are taken into consideration.

The average useful economic life across 40 of the 50 UK assets goes beyond 25 years, averaging 32.0 years from the date of commissioning. Additional conservative operational and lifecycle costs are incorporated into the extended useful life period.

Assets located in Australia currently assume a useful economic life of 25 years. This assumption remains under review.

Movements in Net Asset Value

Dividends Paid

The Company paid dividends of £19.2 million during the six-month period to 30 June 2020 or 3.20p per share.

Fund Costs

Total costs of £4.8 million, which include corporation tax, management fees, finance and other costs, were incurred by the Company and its subsidiaries on a consolidated basis during the period.

Time Value

A value uplift resulting from moving the valuation date forward and therefore bringing future cash flows closer to the present date (and therefore discounting them less).

Actuals: Projects

Cash generation from UK projects exceeded modelled forecasts by £1.9 million in the period due to base case outperformance.

Foreign Exchange Movements

Fluctuations in the exchange rate over the period impacted the GBP valuation of Australian assets.

Power Price Forecasts

The Company uses forward looking power price assumptions to assess the likely future income of the portfolio assets for valuation purposes. The Company's assumptions are based upon a blended average of the forecasts provided by third party consultants and are updated on a quarterly basis.

Subsidy Forecasts

The Company uses forward looking price assumptions to assess the likely future income of both LGC and ROC recycle income from the Australian and UK portfolio respectively.

UK Discount Rate Changes

As reported, the levered discount rate for UK operational assets has decreased from 7.0% to 6.75%.

Corporation Tax Change

The Government has held the corporation tax rate flat at 19%, abandoning the previously announced plan to cut the rate to 17%.

Inflation Forecasts

The Company uses short term inflation forecasts as released by the Office of Budget Responsibility. As a result of lower forecast inflation, revenues linked to RPI will be adversely impacted.

Operational

The Company has extended the forecast useful economic life of UK solar assets to 40 years within existing land restrictions.

Valuation Sensitivities

Where possible, assumptions are based on observable market and technical data. In many cases, such as forward power prices, independent advisors are used to provide evidenced information enabling the Investment Manager to adopt a prudent approach. The Investment Manager has set out the inputs which it has ascertained would have a material effect upon the NAV in note 16 of the Financial Statements. All sensitivities are calculated independently of each other.

Outlook

While the COVID-19 pandemic has been an unexpected shock to financial and energy markets across the globe, it is unlikely to have a long-term impact on the future importance of renewable energy generation given the long-term challenge that climate change presents. At the time of writing, economies are re-opening, albeit at different speeds, and power demand with prices starting to recover as industries return to normal operation.

The United Kingdom remains committed to decarbonisation and achieving net-zero carbon emissions by 2050. The COVID-19 pandemic could provide additional momentum to future renewables growth despite the hiatus in construction caused by the national shutdown and the reduction in short and medium term power price forecasts. Countries across Europe have committed vast sums to stimulate economic recovery with large portions of this spending earmarked for 'green recovery' programmes and tackling climate change. The UK has already committed £3 billion to a green investment package with promises of further infrastructure spending. Investment in the grid and its future stability will likely be a policy priority going forwards.

Before the disruption caused by the COVID-19 pandemic, solar deployment across the UK and Europe was forecast to pick up rapidly in 2020 as decreasing construction costs and increasing investor demand drove a new wave of subsidy-free buildout. In the UK, a pipeline of approximately 10GW of subsidy-free projects is estimated to be in planning stages and while the pandemic is expected to delay the installation of new projects as a result of the lower power price environment, the attractiveness of renewable energy to investors remains undiminished.

The landscape for the acquisition of operational subsidised assets in the UK and European is highly competitive and is expected to remain so in the foreseeable future, as a result of the low interest rate environment and the resilience demonstrated by returns from renewable investments. At the current level of pricing for quality operational assets, the number of attractive growth opportunities for the Company in the secondary market will continue to be low.

The Investment Manager, through its network of advisers and project developers, has identified and reviewed a significant number of investment opportunities during the period and secured exclusivity over approximately 150MW of subsidy-free assets in Spain. The assets have been secured from a small number of vendors and are expected to be acquired in the near future. The deals are conservatively structured and will have in place long term PPAs with creditworthy counterparties for the sale of electricity. In our view the Spanish market represents one of the most established subsidy-free markets, benefiting from consistently high irradiation and attractive long-term PPAs with high quality counterparties without the support of government subsidies. Although the Company will continue to be predominantly invested in the UK, the successful acquisition of the Spanish assets will bring additional diversification benefits to the portfolio.

We will continue to monitor the UK, Europe, and other global markets for further attractive investment opportunities.

At portfolio level, we will continue to focus on consistently delivering strong operational performance and identifying optimisation initiatives, at a commercial and technical level, that support additional value creation for the Company. This includes the ongoing development of battery storage co-location opportunities across a limited number of UK assets.

Financial Review

The Company publishes "Consolidated Financial Statements" in which it is a requirement that investment entities value all their subsidiaries that are themselves investment entities at fair value. The Directors deem the Company to be an investment entity which therefore accounts for its interest in its wholly owned direct subsidiary Foresight Solar (UK Hold Co) Limited as an investment at fair value through profit or loss.

The Company's intermediate holding companies provide services that relate to the Company's investment activities on behalf of the parent. These companies are recognised in the financial statements at their fair value, which is equivalent to their net assets.

The Company and its intermediate holding companies (the "Group") hold investments in 54 portfolio assets which make distributions in the form of interest on loans and dividends of equity as well as loan repayments and equity redemptions.

For more information on the basis of accounting and Company structure please see refer to the Notes to the Financial Statements starting on page 52.

Key metrics for the period ended 30 June 2020

(1) Also referred to as Net Asset Value or "NAV".

(2) Classified as fair value of underlying gross assets in the portfolio

Net Assets

Net assets decreased from £628.0 million at 31 December 2019 to £582.1 million at 30 June 2020, primarily driven by the reduction of long-term power price forecast on the portfolio value.

The net assets of £582.1 million comprise £981.1 million portfolio value of UK and Australian solar investments and the Company's cash balance of £4.7 million, the intermediate holding companies' cash balances of £50.9 million, partially offset by £440.4 million of intermediate holding companies' net liabilities and other net liabilities of £14.2 million.

The intermediate holding companies' net liabilities of £440.4 million comprises long term debt of £400.4 million and a £40.0 million revolving credit facility ("RCF").

Analysis of the Group's net assets at 30 June 2020

[1] GAV is equal to the sum of the portfolio value, Intermediate holding companies' cash, Intermediate holding companies' other liabilities, Company's cash and Company's other liabilities

Third Party Debt Arrangements and Gearing Position

As at 30 June 2020, total outstanding long-term debt was £400.4 million, representing 39% of the GAV (calculated as NAV plus outstanding debt) of the Company and its subsidiaries (31 December 2019: £403.5 million or 38% of GAV).

As at 30 June 2020, total outstanding debt including RCFs was £440.4 million, representing 43% of GAV (31 December 2019: £443.5 million or 41% of GAV).

The Company's Group net debt position, after deducting existing Group cash balances, is £384.9 million, representing 38% of GAV.

Long-Term Facilities

As at 30 June 2020, £400.4 million of long-term debt facilities were outstanding.

Inflation linked debt facilities represent £84.3 million of total long-term debt outstanding as at 30 June 2020.

At 30 June 2020, the average cost of long-term debt, was 2.70% per annum, including the cost of inflation linked facilities of 1.34% per annum. The cost of the inflation linked facility is expected to increase over time assuming the Company's long-term annual RPI forecast of 2.75%, to an equivalent average annual cost of around 3.1% over the term of the facilities.

Revolving Credit Facilities

The Company currently holds two separate RCF facilities totalling £105 million. The £65 million RCF provided by NatWest was undrawn as at 30 June 2020.

At 30 June 2020, the weighted total cost of the RCFs was 2.7% (2019: 2.8%).

Debt Structure

The following table summarises the debt position of the Company as at 30 June 2020.

1 Interest rate swap for 100% of the outstanding debt during the initial five years, 75% from years six to ten and 50% thereafter

2 Australian debt prorated for Company's share of asset ownership. AUD/GBP exchange rate of 0.56 as at 30 June 2020

The Company continues to have limited exposure to benchmark rate movements in the UK and Australia as a result of the long-term interest rate swaps in place to protect the Company from underlying interest rate movements. Sterling denominated debt facilities priced over LIBOR benefit from interest rate swaps hedging between 80% and 100% of the outstanding debt during the terms of the loans, depending on the facility. In Australia, debt facilities entered into with the CEFC have no exposure to the Bank Bill Swap Bid Rate ("BBSY") as the rate was fixed at financial close. Debt facilities provided by Mitsubishi UFJ Financial Group ("MUFG") have in place interest rate swaps on a decreasing nominal amount for a notional tenor of 20 years.

Profit and Loss

The Company's loss before tax for the period ended 30 June 2020 is £(26.7)m, generating losses of 4.4 pence per share.

In the period to 30 June 2020, the operating income and gains/(losses) on fair value of investments was £(23.4) million which comprised of the receipt of £19.7 million of interest on the Foresight Solar (UK HoldCo) loan notes and £43.1m net losses on investments at fair value incurred in the period.

Operating expenses included in the income statement for the period were £3.3 million, in line with expectations. These comprise Investment Management fees of £2.9 million and £0.4 million of operating expenses. The details on how the Investment Management fees are charged are as set out in note 5 to the financial statements.

Cash flow

The Company had a total cash balance at 30 June 2020 of £4.7 million (31 December 2019 of £18.9 million). This amount excludes cash held in Subsidiaries. The breakdown of the movements in cash during the year is shown below.

Cash flows of the Company only for the period to 30 June 2020 (£million)

Cash flows of the Company and intermediate holding companies for the 12-month period to 30 June 2020 (£million)

During the 12 months to 30 June 2020 the underlying solar assets paid £68.9 million of ordinary distributions to the intermediate holding companies. An additional £12.4 million was distributed ahead of the refinancing in August 2019.

Cash received from underlying solar investments covers the long-term debt repayments, financing costs and the operating and administrative expenses of the Company and the intermediate holding companies as well as the dividends declared to shareholders.

Dividend Cover

Total dividends of £19.2 million were paid during the period to 30 June 2020 with £37.1 million paid during the 12 months to 30 June 2020. Compared with the relevant net cash flows from operations of the Company and underlying investments of £40.9 million, these dividends were covered 1.10 times (30 June 2019: 1.12 times).

Dividends

The Company is targeting a full year dividend for the year ending 31 December 2020 of 6.91 pence, representing a 2.20% increase against the dividend declared for the 2019 financial year. The Company has met all target dividends since IPO and follows a progressive dividend policy aiming to grow its dividend over time.

Dividend Timetable for FY2020

On 2 September 2020 the Board approved the second interim dividend relating to FY2020 of 1.73 pence per share.

Full details of the scrip dividend alternative that is being offered in respect of the Dividend (the "Scrip Offer"), its timetable and the Scrip Dividend Scheme can be found in the Scrip Dividend Alternative Offer Document (the "Scrip Document") available on the Company's website to view and/or download at fsfl.foresightgroup.eu/investor-relations/. The Scrip Document is also available on the National Storage Mechanism website at www.morningstar.co.uk/uk/NSM and copies are also available for inspection at JTC House, 28 Esplanade, St. Helier, Jersey JE2 3QA.

Foreign Exchange

The Company is exposed to foreign exchange movements in respect of its investments in Australia. As such, the Company continues to implement a hedging strategy in order to reduce the possible impact of currency fluctuations and to minimise the volatility of equity returns and cash flow distributions. The Company has entered into forward contracts for up to two years for an amount equivalent to approximately 75% of its expected distributable foreign currency cash flows at project level. Due to the predictable nature of solar irradiation in Australia and the known dividend payment dates, the Investment Manager believes this hedging strategy will protect the cash yields from the Australian assets.

Foreign exchange hedging will not be applied to the cost of the equity investments, considering the long-term investment strategy of the Company.

The Company reviews its foreign exchange strategy on a regular basis with the objective of limiting the short-term volatility in sterling distributable cash flows caused by foreign exchange fluctuations and optimising the costs of the hedging instruments.

Ongoing Charges

The ongoing charges ratio for the period to 30 June 2019 was 1.14% (31 December 2019: 1.14%). This has been calculated using methodology as recommended by the Association of Investment Companies ("AIC"). Asset management fees charged by Foresight Group LLP on an arm's length basis at project level are excluded from the ongoing charge ratio.

Asset Managers Report

Portfolio Performance

The operational performance during the period has been significantly higher than expected with UK electricity generation 15.9% above base case, when adjusted for minor compensation payments received from O&M counterparties. Performance has been driven by irradiation 17.1% above base case. The irradiation levels in May 2020 in particular, exceeded base case by morethan 35%.

Although above average levels of irradiation were seen from March through to May 2020, there is not a direct linear relationship between irradiation and electricity generation. Higher irradiation and therefore temperatures reduce the efficiency of the solar modules resulting in a lower percentage of irradiation (over and above our base case) being converted into electricity.

The impact of COVID-19 on operational performance has been minimal with site operators acting promptly when reactive maintenance was required in the field. Where preventative maintenance activities were postponed, they will still be completed within the contractual year. A number of Distribution Network Operators ("DNO") planned outages were also postponed during the COVID-19 period but were subsequently carried out later. The Asset Manager has actively engaged with the DNOs to reduce the impact as much as possible.

Minor performance related issues during the period included DNO outages (Sawmills, Welbeck, Wymeswold) and equipment failures that were promptly rectified, as was the case at Sheepbridge which was affected by faults on string combiner boxes and inverter issues.

The portfolio has continued to benefit from additional key spare parts being purchased following the strategic review in 2018 and throughout 2019. There has also been continuous development and consolidation of the inhouse monitoring tools to enhance fault notifications leading to quicker remediation and therefore reduced downtime.

Optimisation of the portfolio remains a key focus with existing projects including the use of string optimisers continuing to be monitored to ensure a full dataset is obtained. Results of this initiative are due to be reviewed towards the end of 2020. At Pitworthy an inverter station was successfully repowered with string inverters to maintain the site's performance. New optimisation initiatives, including anti‑reflective coating technology, continue to be investigated and appraised across the portfolio.

O&M benchmarking has been maintained to ensure that fees remain competitive for the services procured, whilst a number of O&M contracts are also currently being renegotiated to bring them in line with market in terms of both fee and scope.

During the period, in Australia, Bannerton resolved its temporary network constraint and resumed generation at full export capacity on the 23 of April. The site export capacity was limited to 50% of total capacity negatively affecting electricity generation during the period. Since the temporary network constraint has been resolved the site has been exporting at full capacity and no further impact to performance is expected going forwards.

Longreach continues to experience some limited levels of grid curtailment caused by export constraints at one of the local substations. A solution to the curtailment issue is being implemented by the local DNO. It is currently undergoing testing and is expected to be fully implemented before the end of 2020.

Assets under Construction

In Australia Oakey 2 has progressed its staged commissioning process, reaching approximately 75% of its nominal capacity. The project is expected to be fully commissioned later in 2020.

Electricity Generation

The generation figures below have been adjusted, where relevant, for events where compensation has been, or will be, received.

UK

• Total includes 24,288 MWh pre-commissioning electricity generation from Oakey 2 site,

Sustainability and ESG

Approach

Sustainability and Environmental, Social and Governance ("ESG") considerations are firmly at the centre of the Company's strategy, helping to inform its investment process and its asset management operations.

The nature of the Company's business means it is well positioned to serve the needs of those investors seeking to achieve positive environmental and social outcomes alongside attractive financial returns.

There are five central themes to Foresight Group's Sustainability Evaluation Criteria, which are applied to its investments:

1) Sustainable Development Contribution

Mobilising investment in resilient and sustainable infrastructure that increase resource and energy efficiency while driving decarbonisation and meeting climate change targets.

2 ) Environmental Footprint

Assessing projects against any potential contributions they may make to the minimisation of air, land and water pollution, biodiversity loss, and noise and light pollution. Long-term climate resilience is also an essential consideration.

3) Social Engagement

Remaining conscious of our role in the local communities in which our assets operate and engaging local stakeholders.

4) Governance

Ensuring that infrastructure project companies comply with all relevant legislative and legal requirements.

5) Third Party Interactions

Aligning our work with socially minded and responsible counterparties and ensuring our engagement with them is shaped by ESG performance.

Please refer to the 2019 Annual Report for an in-depth exploration of each of these five themes.

Sustainability and ESG Highlights

The Company reports on its ESG initiatives and progress in its Annual Report, however the following highlights were achieved in the reporting period:

Generated 502,579 MWh of clean energy, enough to power over 173,000 UK homes for a year. This represents an increase of over 25% year-on-year

Donated approximately £67,000 to local communities in which it operates via grants to local authorities and parishes

Established O&M Provider Sustainability Agreements with three major counterparties which commits these suppliers to complying with a comprehensive ESG Framework (more details provided later in this section)

The Investment Manager maintained its A+ rating for Strategy & Governance, and improved its Infrastructure score from A to A+ in its annual PRI assessment

Contribution to Sustainable Development Goals

Demonstrating Foresight Group's commitment to sustainability is the Company's ability to report against the United Nations Sustainable Development Goals ("SDGs"). The SDGs, which were adopted by all United Nations member states in 2015, comprise the most urgent economic, social and environmental issues to be addressed for peace and prosperity for people and the planet.

While we support all SDGs, Foresight Group contributes most significantly to the following:

O&M Provider Sustainability Agreement

As detailed in previous reports the Investment Manager has been working closely with its major suppliers and counterparties to encourage the adoption of ESG and sustainability policies where such policies either did not exist or were not as robust as that of the Investment Manager's own.

The Company is now pleased to report that significant progress has been made on this initiative. Foresight has established an O&M Provider Sustainability Agreement which has been signed by three of the Company's major O&M providers. As important stakeholders in the success of the Company, we are pleased that these key O&M providers have agreed to align their approach with that of our own in placing sustainability at the heart of their operations.

This ground-breaking agreement stipulates where Foresight believes positive environmental and social outcomes can be achieved within supplier activity. Foresight also believes that adherence can offer long-term cost benefit and business opportunities through more efficient use of resources and intelligent forward planning.

In the long-term, Foresight will expect its O&M providers to track their own performance in these areas and provide related evidence. Foresight also expects its O&M providers to communicate these requirements and standards within their supply chain.

In order to review the performance of our O&M providers, the Investment Manager will meet with them once a year and discuss how these principles worked in practice, as well as working together to update the principles, if necessary. Foresight plans to integrate these principles into future O&M contracts.

The principles that underpin the obligations of the agreements incorporate elements of both the United Nations Sustainable Development Goals and the Principles for Responsible Investment ("PRI") international frameworks.

The key commitments in the areas of Environmental, Social, and Governance policies are set out below:

1. Environmental

a. Reduction of fuel use. All suppliers should aim to source local contractors to reduce the 'miles travelled' and associated fuel costs. Consideration should also be given to the use of more fuel efficient / hybrid vehicles to further reduce fuel use and CO2 emissions. Where possible, the use of public transport is also encouraged. Suppliers should aim to track fuel use and CO2 emissions per site/MW.

b. Recycling and waste management. Suppliers will be expected to track the amount of waste produced at site (inclusive of construction phases) and ensure that the maximum possible amount of waste is recycled in accordance with local regulations. This is applicable both at site, and within the suppliers' offices.

c. Reduction of water use. All suppliers are expected to be conscious of the water usage in their operations and should seek to minimise water use through adoption of new processes and use of more efficient equipment or methodologies.

d. Reduction of herbicide use. The grassland and wildflower meadows on solar farms are a valuable environmental asset that must be protected. They also represent a significant financial investment (and often a consent requirement). Suppliers will be expected to manage sites to ensure dense grass coverage and to minimise weeds, rather than allow weed infestations to develop that require intensive herbicide use to manage. The use of non-selective herbicides such as glyphosate should be limited to applications where only weeds are targeted and no other vegetation is touched, such as spot treatment of weeds and weed wiping. The practice of industrial-scale spraying of non-selective herbicides should be avoided as it destroys the valuable grassland and wildflower asset and often results in ongoing and worsening weed infestations and weakened soil structure.

e. Enhancement of biodiversity. Appropriate consideration should be given to the introduction of initiatives that support biodiversity and ecosystem enhancement (e.g. sheep grazing, bee hives, swales, hedgerow planting.) as well as initiatives that reduce adverse environmental impacts (e.g. lightweight vehicles to avoid ground ruts, reduction of CO2 emissions.).

2. Social

a. UK Living Wage. All suppliers should aim to ensure the UK Living Wage is paid to all employees and to achieve UK Living Wage accreditation by 2021.

b. Working conditions. All suppliers are to ensure adequate working conditions are provided to all employees on site and in the office through the provision of adequate equipment, training and Health & Safety procedures.

c. Working Time Regulations. Ensure that employment practices are in line with the UK Government's Working Time Directive at all times.

d. Overtime and work under adverse conditions. All suppliers should aim to adequately pay their employees for overtime and work under adverse conditions.

e. Regional contractors. All suppliers should aim to use regional contractors whenever possible to support local employment and to provide local economic benefits. This has the added benefit of harbouring local support for both the supplier and the asset as a whole.

3. Governance

a. Modern Slavery Act. All suppliers are to ensure they comply with the UK Government's Modern Slavery Act 2015 and be able to provide evidence of the processes they have in place to ensure compliance.

b. Bribery Act. All suppliers are to ensure they comply with the Bribery Act 2010 and be able to provide evidence of the processes they have in place to ensure compliance.

c. Anti-money laundering regulations. All suppliers are to ensure they comply with the anti-money laundering regulations as laid out in the Proceeds of Crime Act 2002 and be able to provide evidence of the processes they have in place to ensure compliance.

d. Comply with environmental regulations and permits. All suppliers are to ensure the stipulations in the site-specific environmental regulations and permits are adhered to at all times and should be able to evidence how these requirements are being fulfilled.

PRINCIPAL RISKS

The Directors consider the following as the principal risks and uncertainties to the Company at this time:

More detailed information on the risks and uncertainties affecting the Company can be found on pages 19-37 of the Company's most recent Prospectus issued on 3 March 2017 and the Risk Management section in the Company's latest Full Year Results Report for the year ended 31 December 2019.

Emerging Risks identified during the period:

Risks relating to global pandemics, such as COVID-19, and the potential future impact on operational performance, power prices, revenues and equity distributions in the short and medium-term. For details of the impact of Covid-19 during the period please refer to the Investment Manager's report.

STATEMENT OF DIRECTORS RESPONSIBILITIES

The Disclosure Guidance and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Unaudited Half-Yearly Financial Report for the six months ended 30 June 2020.

The Directors confirm to the best of their knowledge that:

(a) the summarised set of financial statements has been prepared in accordance with the pronouncement on interim reporting issued by the Accounting Standards Board;

(b) the Unaudited Half-Yearly Financial Report for the six months ended 30 June 2020 includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months of the year and a description of principal risks and uncertainties that the Company faces for the remaining six months of the year);

(c) the summarised set of financial statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by DTR 4.2.4R; and

(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

Alexander OhlssonChairman

Statement of Comprehensive Income

For and on behalf of Foresight Solar Fund Limited2 September 2020

All items above arise from continuing operations, there have been no discontinued operations during the period.

The accompanying notes on pages 51 to 81 form an integral part of these Financial Statements.

Statement of Financial Position

The Financial Statements on pages 47 to 81 were approved by the Board of Directors on 2 September 2020

The accompanying notes on pages 51 to 81 form an integral part of these Financial Statements.

Statement of Changes in Equity

For the period 1 January 2019 to 30 June 2019 (unaudited)

For the period 1 January 2019 to 31 December 2019 (audited)

The accompanying notes on pages 51 to 81 form an

 integral part of these Financial Statements.

For the period 1 January 2020 to 30 June 2020

Statement of Cash Flows

The accompanying notes on pages 51 to 81 form an integral part of these Financial Statements.

Notes to the Financial Statements

1. Company information

Foresight Solar Fund Limited (the "Company") is a closed-ended company with an indefinite life and was incorporated in Jersey under the Companies Law (Jersey) 1991, as amended, on 13 August 2013, with registered number 113721. The address of the registered office is: 28 Esplanade, St Helier, Jersey, JE4 2QP.

The Company has one investment, Foresight Solar (UK Hold Co) Limited ("UK Hold Co").

UK Holdco has investments in four subsidiaries: FS Holdco Limited ("FS Holdco"), FS Holdco 3 Limited ("FS Holdco 3"), FS Holdco 4 Limited ("FS Holdco 4") and FS Top Holdco 2 Limited ("Topco"). FS Holdco 3 in turn has an investment in a subsidiary, SGP Holdings 1 Limited ("SGP Holdings 1") which in turn holds has an investment in Second Generation Portfolio 1 ("SGP 1"). Topco in turn has an investment in a subsidiary, Foresight Intermediate Solar Holdings Limited ("FISH"); FISH in turn has an investment in a subsdiary, FS Holdco 2 Limited ("FS Holdco 2") and FS Holdco 2 in turn has an investment in a subsidiary, FS Debtco Limited ("FS Debtco"). FS Holdco, FS Debtco, FS Holdco 3, SGP 1 and FS Holdco 4 invest in further holding companies (the "SPVs") which then invest in the underlying solar investments.

The principal activity of the Company, UK Hold Co, FS Holdco, Topco, FISH, FS Holdco 2, FS Debtco, FS Holdco 3, SGP Holdings 1, SGP 1, FS Holdco 4, and the SPVs (together "the Group") is investing in operational UK and Australian ground based solar power plants.

2. Summary of significant accounting policies

2.1 Basis of presentation

The Unaudited Interim Financial Statements (the "Interim Financial Statements") for the period 1 January 2020 to 30 June 2020 have been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' ("IAS 34").

The Interim Financial Statements do not include all the information and disclosures required in the annual Financial Statements, and should be read in conjunction with the annual Financial Statements as at 31 December 2019.

These are not statutory accounts in accordance with Article 105 of the Companies Law (Jersey) 1991, as amended and the financial information for the period ended 30 June 2020 has been neither audited nor formally reviewed. Statutory accounts in respect of the period to 31 December 2019 have been audited and reported on by the Company's auditors and delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under Article 113B (3) or 113B (6) of the Companies Law (Jersey) 1991. No statutory accounts in respect of any period after 31 December 2019 have been reported on by the Company's auditors or delivered to the Registrar of Companies.

2.2 Going concern

Since the start of January 2020, the outbreak of coronavirus, which is a rapidly evolving situation, has adversely impacted global commercial activities. The rapid development and fluidity of this situation precludes any prediction as its ultimate impact, which may have a continued adverse impact on economic and market conditions and trigger a period of global economic slowdown.

The Directors acknowledge the pandemic has impacted the Financial Statements as at 30 June 2020 as a result of lower power price forecasts reducing the net asset value. However, the Directors do not believe there is any impact on the Company's ability to continue as a going concern. The Directors refer to cash flow forecasts prepared by the Investment Manager for the period of at least 12 months following the date of these accounts, which includes assessment of the severe possible downside resulting from COVID-19.

In making this assessment the Investment Manager has considered the largely predictable revenue streams stemming from the underlying portfolio companies trading on solar sites, a large proportion of which is fixed and with a government backed counterparty. Despite the reduction in power prices driven by a reduced forecast electricity demand as a result of COVID-19 induced economic restrictions, the Directors have concluded that the impacts of movements in market prices do not significantly impact the Company's ability to continue as a going concern. The Directors have considered forward looking power prices assumptions by third party providers in making this assessment.

The Manager is monitoring developments relating to coronavirus and is coordinating its operational response based on existing business continuity plans and on guidance from global health organisations, relevant governments, and general pandemic response best practices.

Brexit continues to present certain risks in relation to the operation of the UK solar portfolio (discussed in note 19.4) and the Asset Manager continues to monitor the robust spare parts provision in the UK and continues to work with the operating and maintenance providers and their downstream suppliers to ensure any downtime is minimised across the portfolio as much as possible.

Based on this assessment, the Directors believe that it remains appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would result from the basis of preparation being inappropriate.

2.3 Changes in accounting policies and disclosures

New and revised IFRSs adopted by the Company

The Directors have assessed all new standards and amendments to standards and interpretations which are effective for annual periods after 1 January 2020 and have deemed none of them to be applicable to the Company.

New and revised IFRSs in issue but not yet effective

There are no standards, amendments or interpretations in issue at the reporting date which are effective after 1 January 2020 that are deemed to be material to the Company.

2.4 Consolidation

Associates

Associates are entities over which the Company has significant influence, being the power to participate in the financial and operating policy decisions of the investee (but not control or joint control).

Subsidiaries

All subsidiaries are entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has the rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Investment Entity

Qualifying entities that meet the definition of an investment entity are not required to produce a consolidated set of Financial Statements and instead account for subsidiaries at fair value through profit or loss.

The defined criteria of an 'investment entity' are as follows:

It holds more than one investment;

It has more than one investor;

It has investors that are not related parties to the entity; and

It has ownership interests in the form of equity or similar interests.

However, the absence of one or more of these characteristics does not prevent the entity from qualifying as an 'investment entity', provided all other characteristics are met and the entity otherwise meets the definition of an 'investment entity':

It obtains funds from one or more investors for the purpose of providing those investor(s) with professional investment management services;

It commits to its investor(s) that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

It measures and evaluates the performance of substantially all of its investments on a fair value basis.

As discussed in note 1, the Company has one direct subsidiary, a 100% controlling interest in UK Hold Co and a number of indirect subsidiaries and associates. The investment in UK Hold Co is held at net asset value on the Statement of Financial Position in line with the International Private Equity and Venture Capital 2018 ("IPEVC") Valuation Guidelines.

Under IFRS 10 "Consolidated Financial Statements", the Directors deem that the Company is an investment entity and therefore the Company does not consolidate its subsidiary but carries it at fair value through profit or loss. The Company does not meet all the defined criteria of an 'investment entity' as the Company only has one investment. However, the Directors deem that the Company is nevertheless an 'investment entity' as the remaining requirements have been met and, through the Group, there is a diverse investment portfolio which will fill the criteria of having more than one investment. Therefore, the Company qualifies as an 'investment entity'.

As UK Hold Co is not consolidated, its subsidiaries (plus their underlying investments) are not separately presented at fair value through profit or loss in the Company's accounts.

3. Critical accounting estimates and judgements

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies.

The Board considers that the only areas where management make critical estimates and judgements that may have a significant effect on the financial statements are in relation to the valuation of investments at fair value through profit and loss, significant judgements and key sources of estimation uncertainty related to the determination that the Company meets the definition of an investment entity.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and underlying assumptions are reviewed on an ongoing basis.

The Board considers that the determination that the Company meets the definition of an investment entity involves significant judgement because the entity does not possess all the typical characteristics of an investment entity. While the absence of one or more of the typical characteristics of an investment entity described in IFRS 10 Consolidated Financial Statements does not immediately disqualify an entity from being classified as an investment entity. The entity is required to disclose its reasons for concluding that it is nevertheless an investment entity if one or more of these characteristics are not met. In order to reach that conclusion of whether the Company meets the definition of an investment entity the Board had to make significant judgements.

The Board considers that the fair value of investments not quoted in an active market involves critical accounting estimates because it is determined by the Directors using their own valuation models, which are based on valuation methods and techniques generally recognised as standard within the industry. Models use observable data to the extent practicable. However, they also rely on significant unobservable inputs about the output of the asset (including assumptions such as solar irradiation and technological performance of the asset), power prices, operating costs, discount and inflation rates applied to the cash flows, and the duration of the useful economic life of the asset. The Directors calculate the fair value of the investments based on information received from the Investment Manager. The Investment Manager's assessment of fair value of investments is determined in accordance with the International Private Equity and Venture Capital 2018 ("IPEVC") Valuation Guidelines, using a Discounted Cash Flow valuation methodology. Furthermore, changes in these inputs and assumptions could affect the reported fair value of financial instruments. The determination of what constitutes 'observable' requires 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.

4. Interest income

Loan notes were issued by the Company to UK Hold Co for the purchase of investments. Interest is payable at 9% per annum in arrears on each Interest Payment Date (28/29 February and 31 August each year). Where interest is not paid on the payment date, it will compound and future interest shall accrue at 11% per annum from the due date up to the date of actual payment, compounding on each Interest Payment Date. The loan notes balance at period end on which interest is charged is £250,000,000 (30 June 2019: £250,000,000, 31 December 2019: £250,000,000). These loans form part of the fair value of the investments as per note 14.

A Shareholder loan is created when the total amount paid by the Company on behalf of UK Hold Co to acquire the underlying investments is more than the total loan notes issued by the Company to UK Hold Co. Interest is accrued at 2% per annum and is repayable in full on demand. The shareholder loan balance at period end is £304,316,450 (30 June 2019: £158,609,725, 31 December 2019: £304,316,450). These loans form part of the fair value of the investments as per note 14.

5. Management fees

The Investment Manager of the Company was Foresight Group CI Limited Following an internal restructuring at Foresight Group on 26 February 2020, Foresight Group LLP (the "Investment Manager") has replaced Foresight Group CI Limited as investment manager to the Company.

The Investment Manager receives an annual fee of 1% of the Net Asset Value ("NAV") of the Company up to £500m and NAV in excess to this is charged at 0.9% per annum. This is payable quarterly in arrears and is calculated based on the published quarterly NAV. For the period ended 30 June 2020, the Investment Manager was entitled to a management fee of £2,907,302 (1 January 2019 to 30 June 2019: £2,971,549, 1 January 2019 to 31 December 2019: £5,966,823) of which £1,433,487 was outstanding as at 30 June 2020 (30 June 2019: £1,506,292, 31 December 2019: £1,571,139).

6. Administration and Accountancy fees

Under an Administration Agreement, the Administrator of the Company, JTC (Jersey) Limited, is entitled to receive minimum annual administration and accountancy fees of £156,000 (2019: £156,000) payable quarterly in arrears. For the period ended 30 June 2020, total administration and accountancy fees were £91,000 (1 January 2019 to 30 June 2019: £82,557, 1 January 2019 to 31 December 2019: £186,358) of which £136,500 was outstanding as at 30 June 2020 (1 January 2019 to 30 June 2019: £39,000, 1 January 2019 to 31 December 2019: £45,500).

7. Directors' fees

No members of staff were employed during the period (period ended 30 June 2019: nil, year ended 31 December 2019: nil).

Total Directors' fees were £107,500 (1 January 2019 to 30 June 2019: £85,000, 1 January 2019 to 31 December 2019: £196,444). The increased fees for the period are due to an additional Board member for the full period.

8. Other Expenses

Included within legal and professional fees is £18,850 (1 January 2019 to 30 June 2019: £11,250, 1 January 2019 to 31 December 2019: £32,500) relating to the accrual of the 2020 audit fees. There were no other fees paid to the auditors for non-audit services (1 January 2019 to 30 June 2019: £nil, 1 January 2019 to 31 December 2019: £nil).

9.Earnings per Ordinary share - basic and diluted

The basic and diluted loss per Ordinary Share for the Company is 4.42 pence per share (period ended 30 June 2019: 1.71 profit, year ended 31 December 2019: 1.89 loss). This is based on the loss for the period of £26,743,535 (1 January 2019 to 30 June 2019: £9,397,313 profit, 1 January 2019 to 31 December 2019: £10,750,671 loss) and on 605,680,167 (1 January 2019 to 30 June 2019: 548,941,550, 1 January 2019 to 31 December 2019: 567,804,584) Ordinary Shares, being the weighted average number of shares in issue during the period.

There is no difference between the weighted average ordinary or diluted number of shares.

10. Interest receivable

Information about the Company's exposure to credit and market risk and impairment losses for interest receivable is included in note 19.

11. Trade and other receivables

Information about the Company's exposure to credit and market risk and impairment losses for trade and other receivables is included in note 19.

12. Cash and cash equivalents

Information about the Company's exposure to credit and market risk and impairment losses for cash and cash equivalents is included in note 19.

13. Trade and other payables

*Amounts due to subsidiaries are unsecured, interest free and repayable on demand.

14. Investments at fair value through profit or loss

The following table presents the Company's investments at fair value through profit or loss:

The Company has one investment in Foresight Solar (UK Hold Co) Limited ("UK Hold Co"). This investment consists of both debt and equity (Share Capital of £100) and is not quoted in an active market. Accordingly, the investment in UK Hold Co has been valued using its net assets.

In turn, UK Hold Co has four investments in FS Holdco Limited ("FS Holdco"), FS Holdco 3 Limited ("FS Holdco 3"), FS Holdco 4 Limited ("FS Holdco 4") and FS Top Holdco 2 Limited ("Topco"). FS Holdco 3 has one investment in SGP Holdings 1 Limited ("SGP Holdings 1") which in turn has one investment in Second Generation Portfolio 1 ("SGP 1"). Topco has one investment in Foresight Intermediate Solar Holdings Limited ("FISH"). FISH has one investment in FS Holdco 2 and FS Holdco 2 has one investment in FS Debtco Limited ("FS Debtco"). These investments also consist of both debt and equity and are not quoted in an active market. FS Holdco and FS Debtco are fair valued using their net asset value as reported at year end, with adjustments to their long term external debt to reflect the fact that the carrying value at amortised cost is not considered to be the best approximation of their fair value. FS Holdco 3, SGP Holdings 1, SGP 1, FS Holdco 4, FISH, FS Holdco 2 and Topco are fair valued using their net asset value as reported at year end.

In turn, FS Holdco, FS Holdco 2, FS Debtco, FS Holdco 3. SGP 1 and FS Holdco 4's investment portfolios consist of unquoted investments in solar projects, the valuations of which are based on a discounted cash flow methodology (as set out in note 16) for solar projects that are operational.

Fair value hierarchy

IFRS 13 "Fair Value Measurement" requires disclosures relating to fair value measurements using a three-level fair value hierarchy. The level within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability. The following table shows investments recognised at fair value, categorised between those whose fair value is based on:

(a) Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

(b) Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and

(c) Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

All investments held at fair value through profit or loss are classified as level 3 within the fair value hierarchy.

As UK Hold Co's net asset value is not considered observable market data the investment in UK Hold Co has been classified as level 3. There were no movements between levels during the period.

As at 30 June 2020:

As at 30 June 2019:

As at 31 December 2019:

Sensitivity Analysis

Due to the nature of the Group structure and the underlying valuation basis of UK Hold Co, FS Holdco, Topco, FISH, FS Holdco 2, FS Debtco, FS Holdco 3, FS Holdco 4 and the underlying solar project investments, the valuation of the Company's investment at fair value through profit or loss is directly linked to the valuation of the underlying solar investments. Therefore, the unobservable inputs driving the valuation of the Company's investments in UK Hold Co are directly attributable to the valuation of the unquoted investments in FS Holdco, FS Debtco, FS Holdco 3 and FS Holdco 4 which are discussed further in note 16.

15. Subsidiaries and associates

Investments in subsidiaries