Us Solar Fund Regulatory News (USF)

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17 March 2020

US SOLAR FUND PLC (USF, the "Company")

Inaugural Annual Results to 31 December 2019 and Resolution of Fraud

US Solar Fund PLC (LSE: USF) is pleased to announce its inaugural Annual Results. This covers the period ending 31 December 2019[1].

Highlights to 31 December

For further information, please contact:

About US Solar Fund plc 

US Solar Fund plc listed on the premium segment of the London Stock Exchange in April 2019, following its successful US$200m IPO. The Company's investment objective is to provide investors with attractive and sustainable dividends with an element of capital growth by investing in a diversified portfolio of solar power assets in North America and other OECD countries in the Americas. 

The Company acquires or constructs, owns and operates solar power assets that are expected to have an asset life of at least 30 years and generate stable and uncorrelated cashflows by selling electricity to creditworthy offtakers under long-term power purchase agreements (or PPAs). 

Further information on the Company can be found on its website at http://www.ussolarfund.co.uk.

About the Investment Manager 

USF is managed by New Energy Solar Manager (NESM). NESM also manages New Energy Solar, an Australian Securities Exchange (ASX)-listed fund which has committed over US$900m to US and Australian solar plants since late 2015. 

NESM is owned by Walsh & Company, the funds management division of Evans Dixon, an ASX-listed company (ASX: ED1) with over A$20 billion of funds under advice and management. 

 ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS

for the period from 10 January 2019 (incorporation date) to 31 December 2019

1. HIGHLIGHTS.............................................................................................................................................................. 3

STRATEGIC REPORT

2. CHAIR'S STATEMENT...................................................................................................................................... 5

3. INVESTMENT MANAGER'S REPORT............................................................................................................. 8

4. ENVIRONMENTAL, SOCIAL AND GOVERNANCE....................................................................................... 23

5. PRINCIPAL RISK AND UNCERTAINTIES...................................................................................................... 27

6. BOARD OF DIRECTORS............................................................................................................................... 31

DIRECTORS' REPORT

7. DIRECTORS' REPORT.................................................................................................................................. 33

8. DIRECTORS' RESPONSIBILITY STATEMENT............................................................................................. 36

9. CORPORATE GOVERNANCE REPORT...................................................................................................... 38

10. AUDIT COMMITTEE'S REPORT.................................................................................................................... 50

11. DIRECTORS' REMUNERATION REPORT.................................................................................................... 54

12. MANAGEMENT ENGAGEMENT COMMITTEE'S REPORT.......................................................................... 58

13. Independent Auditor's Report................................................................................................................. 61

14. STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME........................................... 69

15. STATEMENT OF FINANCIAL POSITION............................................................................................................. 70

16. STATEMENT OF CHANGES IN EQUITY.............................................................................................................. 71

17. STATEMENT OF CASH FLOWS........................................................................................................................... 72

18. NOTES TO THE FINANCIAL STATEMENTS........................................................................................................ 74

19. DIRECTORS AND ADVISERS............................................................................................................................... 89

[4]Figure 1: US Solar Fund's key milestones

I am pleased to present the first Annual Report for US Solar Fund Plc (USF or the Company) for the period ended 31 December 2019.

Since listing in April 2019, the investment manager, New Energy Solar Manager (NESM or Investment Manager), has worked diligently to invest the proceeds of the fundraising within the first six to nine months from the Initial Public Offering (IPO), as indicated in the Prospectus dated 26 February 2019 (Prospectus). On 29 January 2020, the Company announced its fourth transaction and full commitment of the IPO proceeds.

The current portfolio, including the acquisition after 31 December 2019, is more than 50% operating and revenue generating for the Company, in line with the strategy outlined in the Prospectus. The Board believe that this is an excellent outcome for USF at this early stage in its life.

During the course of the year the share price has remained steady, mostly at a small premium to issue price. Taken together with the initial dividends this has resulted in a total return to shareholders of 5.44% at the year-end.

The US solar market is a growing space and presents many attractive opportunities for investment. The Investment Manager continues to identify and evaluate new investment opportunities to add to their pipeline. As all four acquisitions are now closed, the Board anticipates that the Company will consider a further fund raising. Meanwhile, the Board and Investment Manager will be continuing to focus on delivering maximum value for shareholders from the current portfolio of projects, whilst bearing in mind our responsibility to all our stakeholders.

Investment Progress

In March 2020 (after the end of the period), USF closed the fourth binding acquisition, completing the commitment of the IPO proceeds. The total portfolio now consists of four transactions, including 37 projects across four states and with a combined capacity of 382.4 MWDC. Two of the transactions were for portfolios of operating assets whilst the remainder of the assets which are currently under construction are expected to come into operation from June 2020, in line with the Prospectus target. More details are given in the Investment Manager's Report on page 8.

Given that the proceeds of the IPO are now fully committed the Company is considering raising additional equity to refinance certain of the projects to enhance shareholders returns on those projects in line with the gearing policy.

payment Fraud

At the end of January 2020, the Investment Manager was the victim of a fraud by a third party in relation to contracted construction payments totalling $6.9 million (Fraud). In the subsequent weeks, $6.3 million of the Fraud was successfully recovered and I am delighted to report that the Company has now fully recovered the entire $6.9m.

Immediately following the Fraud, with the full support of the Board, the Investment Manager appointed a major accountancy firm to review the financial controls and processes at the Investment Manager. The review is now complete and, although it identified no material deficiencies, the Investment Manager is implementing the enhancements to its financial controls and processes suggested by the accounting firm.

Performance

From listing to 31 December 2019, the share price traded between $0.98 and $1.05. At 31 December, NAV was $194.4 million or $0.972 per share, and shares were trading at $1.05, an 8.1% premium to NAV. As stated in the highlights, the total return to shareholders was 5.44% atyear-end. During the period, the Company made an after-tax profit of $0.1 million. This small profit reflects the largely break-even financial position of the Company as interest income held on the initial IPO proceeds was largely offset by operating expenditure of the fund.

DIVIDEND

The Company will be paying a dividend of 0.50 cents per share for the fourth quarter of 2019. The dividend is expected to be paid in May 2020. When added to the dividend of 0.41 cents paid in November 2019, and $0.50 cents paid in February 2020 this represents an annualised dividend yield of 2% when measured against the initial issue price of $1 per share.

As mentioned above a significant proportion of the Company's investments are already in operation and thus revenues will begin to flow to the Company from the first quarter of 2020 onwards, so permitting a gradual growth of the dividend yield to the target level of 5.5% indicated in the Prospectus.

BOARD

Josephine Tan will not be standing for re-election at the AGM as she is taking up a new executive position that would not be compatible with the time commitment required to remain on the Board. We are very sorry to see her go and thank her for her significant contribution. The process of recruiting a new non-executive director has commenced.

Outlook

The first year of USF's operations has reflected a strong year for the US solar market overall. By the end of the third quarter of 2019, the contracted pipeline (the total capacity of utility-scale PV solar with an energy offtaker in place) for the US utility-scale solar market reached a record high of 45.5 GWDC. The market opportunity has remained robust as the industry expands. The market continues to be supported by both federal and state subsidies. During 2019, nine states increased their renewable targets indicating broad support for renewable energy in the US. Although the Investment Tax Credit (ITC) (a US federal solar tax credit) begins to roll off this year with its step-down from 30% to 26%, the Investment Manager continues to see a substantial pipeline of investment opportunities that meet its demanding criteria. This is largely due to solar being one of the cheapest forms of new build power generation in the US[5], even without subsidies.

At listing, USF said it would focus primarily on assets with long-term Power Purchase Agreements (PPAs) (financial contracts between electricity generators and power purchasers) with predominantly investment grade offtakers, with terms of 15 to 20+ years where possible. USF's current portfolio includes PPAs with investment grade offtakers (S&P ratings: from BBB+ to A) that have an average remaining term of 16.2 years. Given these stable long-term cashflows, we believe the Company presents an attractive investment given the risk profile and the target returns. We expect the Company's current portfolio to be fully operational by the end of 2020. Once fully operational, the target dividend yield for the Company is 5.5%[6].

From IPO to the end of 2019, yields on US and UK government bonds[7] dropped to below 2% and 1% respectively. Since the end of the period, yields have further reduced with US yields now below 1% and UK yields below 0.5%. At a time when traditional investments are offering such low yields, an investment like USF with contracted stable cashflows for more than 15 years is attractive. The current low yields also present the Company with opportunities to access long-term gearing at competitive rates.

Earlier this year, renewables funds in the UK came under pressure when power price reports released by Bloomberg New Energy Finance forecast that UK baseload electricity price would show a real decline of 4.0% pa to £19/MWh in 2040, and to £15/MWh by 2050. This forecast of real decline raised analyst concern regarding the potential impact to renewable funds' NAVs given their exposure to potential power price volatility. US electricity forecasts continue to show trends toward flat real power prices through 2040 and flat through 2050. As noted above, US Solar Fund's income cashflows are 100% contracted in the US through fixed price PPAs with investment grade offtakers for an average remaining term of 16.2 years. The nature of these cashflows, being in the US and contracted for long periods of time with fixed PPAs, decreases the Fund's exposure to power price volatility.

As the coronavirus spreads across the world we will wait to see what the final impact will be on the global economy. I am pleased to report that the majority of the equipment the Investment Manager requires to complete the investments under construction is either already in the USA, or is being manufactured there. However, as governments of many countries implement controls to minimise the spread of the virus, delays to construction may yet still occur from other factors such as interruptions to the availability of labour. The Investment Manager continues to monitor the situation as it evolves.

As we note in our Sustainability Policy, (see page 24 for further details) US Solar Fund was established to both capitalise on and contribute to the world's increasing awareness of the impact of climate change, and the need to better manage the world's resources for present and future generations. During October 2019, the London Stock Exchange created the Green Economy Mark to recognise LSE listed companies and funds that derive 50% or more of their total annual revenues from products and services that contribute to the global green economy. I am pleased to say USF was one of the first companies to receive this designation. We believe that USF continues to be a promising investment given the current interest in and demand for investment opportunities that help fight climate change.

Gill NottChair17 March 2020

Summary of the Period

Over the year, the Investment Manager has focused on deploying the proceeds of USF's listing on the London Stock Exchange within the nine months laid out in the Prospectus. As at 31 December 2019, the fund had closed on two acquisitions and announced the binding acquisition for its third (the closing of which was announced in January 2020 after year-end) bringing total committed capital to $101 million.

After the end of the reporting period, USF announced its fourth acquisition, noting that in addition to the equity commitment required, the Company intended to deploy the remaining IPO proceeds to complete a refinancing of the acquisition. With these four acquisitions, the IPO proceeds are committed across 37 projects totalling 382.4 MWDC. The Company's income cashflows are 100% contracted in the US with investment grade offtakers for an average remaining term of 16.2 years, decreasing the Fund's exposure to power price volatility. Diversification of the projects across geography and electricity offtaker, further mitigates the operating risks of the Company.

INVESTMENT PROGRESS

USF closed on its first acquisition and financing of 100% of the cash equity interests (approximately US$30m) in a solar project located in Utah in late August. The 128 MWDC Milford Solar Project (Acquisition One) has a 25-year power purchase agreement with PacifiCorp, a wholly owned subsidiary of Berkshire Hathaway Energy, (S&P rating: A) beginning in the second half of 2020 when the plant is expected to become operational. The agreement sets a fixed price for 100% of the electricity produced by the project over the PPA term. By entering a PPA contract with a fixed price, the Company mitigates the risk of fluctuating wholesale electricity prices which significantly impact the profitability of a Solar Power Asset. The project was acquired from developer Longroad Energy Partners, LLC. (Longroad). Longroad has a strong track record of developing and financing more than 5GWDC of utility-scale renewable energy projects since 2004, including over 1GWDC in the state of Utah. The project is being constructed on a fixed-time and fixed-cost basis by McCarthy Building Companies, a leading engineering procurement and construction contractor with a 150-year track record in the US, using First Solar Inc.'s Series 6 solar panels. Once operational, the plant will generate over 277,500 megawatt hours of electricity annually. This volume of electricity is equivalent to displacing approximately 235,000 tonnes of CO2 emissions, powering 31,000 homes, or removing 51,000 cars from the road, every year[8].

In December, USF executed binding agreements with a subsidiary of Cypress Creek Renewables (Cypress Creek) to make its second acquisition, a 39MWDC portfolio of six utility-scale solar power projects (Acquisition Two) located in North Carolina. USF progressed to financial close on 100% of the cash equity interests alongside tax equity financing[9] over the course of two weeks. Each project in the portfolio has executed a power purchase agreement at fixed prices with subsidiaries of Duke Energy (S&P rating: A-) with a weighted average term of 13.1 years. The portfolio is currently under construction and is expected to be operational in the second half of 2020. The projects will be constructed on a fixed-time and fixed-cost basis by Horne Brothers Construction, a North Carolina-based solar installer which has successfully completed over 900MW of solar construction. Cypress Creek will provide operations and maintenance services to the portfolio.

Shortly after financial close of Acquisition Two, USF also entered binding agreements with Greenbacker Renewable Energy Corporation (Greenbacker), a leading investor and project sponsor focusing on income-producing renewable energy projects, to acquire a 39MWDC operating utility-scale solar power portfolio (Acquisition Three) consisting of eight projects located in North Carolina. In January 2020, USF closed the acquisition of 100% of the cash equity interests in the eight operating utility-scale solar projects. The projects were constructed by Conergy Projects (Blueleaf Energy) and commenced operations between 2012 and 2015 and all are selling 100% of their electricity output under fixed-price long-term PPAs. The PPAs are with subsidiaries of Duke Energy (S&P rating: A-) with a weighted average term remaining of 10 years. Further details on Acquisition Two and Three and how they meet USF's acquisition principals and mitigate specific risks can be seen in Tables 1. and 2. on pages 9 and 10.

USF's portfolio benefits from geographic diversification but primarily sources revenue from two offtakers, representing the majority of forecasted contracted revenue. For further information on financial and market risks, please refer to the Risks and Uncertainties section on page 27.

The Investment Manager continues to work diligently to identify and review new investment opportunities and looks forward to communicating more information.

Figure 2: USF Funds committed by stage

[10]

SUMMARY OF RECENT TRANSACTIONS

The Investment Manager tests all acquisitions against the Acquisition and Asset Management Principles disclosed in the Prospectus and as set out below for Acquisition Two and Acquisition Three.

Table 1: Acquisition and Asset Management Principles tested against Acquisition Two

See section 2.2 Acquisition and Asset Management Principles in the Prospectus for additional information.

Table 2: Acquisition and Asset Management Principles tested against Acquisition Three

See section 2.2 Acquisition and Asset Management Principles in the Prospectus for additional information.

Pipeline Update

At the time of listing, the Investment Manager disclosed a pipeline of 3,020 MWDC with a $2.9 billion cash equity value, and an average PPA term of 15.2 years. As of 31 December 2019, the Investment Manager's pipeline included 2,036MWDC of assets with a $1.9 billion cash equity value, and an average PPA term of 14.1 years.

The shift in the pipeline has been partially driven by developers fast-tracking projects to be construction-ready in 2019 in order to Safe Harbor projects for the 30% ITC. The ITC has had its first step down in 2020 moving to 26%. The IRS has, however, set out Safe Harbor provisions that provide a mechanism to "lock in" the ITC at 30% by completing an appropriate amount of procurement or construction in 2019 even though the project will not be placed in service until 2020 or beyond.

The Investment Manager continues to see an increase in competition in the market, largely driven by the upcoming step down of the ITC and the ongoing downward trend in interest rates. With this dynamic, the Investment Manager continues to take a conservative approach with pricing and remains consistent with the strategy and return targets of the Company. Throughout the course of the year, the Investment manager has screened over 20 GWDC of projects, totalling to a total value of over $20 billion. The Investment Manager is pleased that the pipeline continues to provide numerous high-quality construction-ready and operational investment opportunities.

Events After the Period

Acquisition FOUR

After the end of the period, in March 2020, USF announced it had closed the acquisition of 100% of the cash equity interests in a portfolio of twenty-two operating utility-scale solar power projects located in North Carolina, Oregon, and California with a total capacity of 177MWDC.

USF will acquire the portfolio from affiliates of Heelstone Renewable Energy, LLC (Heelstone). Heelstone is a leading developer of renewable energy projects in the United States, having developed over 60 projects with an aggregate capacity in excess of 500MWDC.

The projects commenced operations between 2016 and 2018 and sell 100% of their electricity output under fixed price long-term PPAs to a variety of investment grade offtakers (S&P ratings: from BBB+ to A). The PPAs have a weighted average term remaining of 12 years.

USF will fund the equity purchase price for the portfolio with available cash. Combined with the three previously announced transactions, this represents a total commitment of approximately 70% of the net IPO proceeds. Post-acquisition, USF intends to use the remaining 30% of the net IPO proceeds to refinance the existing project level debt with a new, smaller debt facility on more attractive terms resulting in lower portfolio gearing and improved returns or other investment opportunities should they arise.

The expected portfolio returns for the portfolio are in line with those anticipated in the Company's investment objective, as set out in its prospectus. As it is operational, the portfolio will generate revenues for USF immediately upon acquisition close.

Table 3: Acquisition and Asset Management Principles tested against Acquisition Four

See section 2.2 Acquisition and Asset Management Principles in the Prospectus for additional information.

FRAUDULENT ACTIVITY

Post year-end on 30 January 2020, the Investment Manager received fraudulent payment instructions for genuine invoices totalling $6.9m for construction work completed by a contractor (the Contractor) to a USF project company (Project Company). This resulted in payments being made to a third-party US bank account (the Payments) rather than to the Contractor's US bank account. In subsequent announcements the Company advised that $6.3m of the Payments had been recovered and returned to the Project Company's bank account.

The Company has now fully recovered the $6.9m. Following, there is no impact on the Company's Net Asset Value. In addition, there has been no impact to the relevant construction schedules or budgets.

The Board's investigation indicated that the Fraud is an isolated incident originating from outside the Investment Manager with no indication of collusion with any member of the Investment Manager's staff. When making the Payments, the Investment Manager complied with its relevant processes and procedures. The Investment Manager's parent, Evans Dixon, is conducting a review of relevant cyber security arrangements based on its established Cybersecurity Framework. Separately the Contractor is conducting a review of its own cybersecurity arrangements supported by an external cybersecurity consultant.

The Investment Manager, with the full support of the Board and at its own cost, appointed a global accounting firm to undertake a review of the Investment Manager's relevant financial processes and controls. US Solar Fund's Audit Committee Chair met with the global accounting firm in New York to discuss the engagement prior to it commencing. The review is now complete and, although it identified no material deficiencies, the Investment Manager is implementing the enhancements to its financial controls and processes suggested by the accounting firm..

CORONAVIRUS OUTBREAK

The 2019 Novel Coronavirus (COVID-19) outbreak occurred after the period end. As a reaction to the outbreak, the governments of numerous countries have implemented controls to minimise the spread of the virus. Within the solar industry, there is concern that these controls may disrupt the international solar supply chain. Further, as the virus spreads globally, work across industries may be interrupted for periods of time based on workforce availability.

The key risks anticipated revolve around module production and delivery interruption. Some solar manufacturers have halted operations under central and provincial governments' guidance, raising concerns around delayed module delivery. Additionally, ground transportation and shipping from China has been disrupted due to government restrictions. USF's portfolio has sourced panels and other materials from a variety of countries. Of the total 37 projects in the current portfolio, there are seven projects that are yet to be constructed, all of which have met safe harbouring conditions to qualify for the ITC. To meet these conditions, the construction materials for the assets have been purchased ahead of 2020. The solar panels for the six in-construction projects in North Carolina have been imported and delivered and are being stored in various warehouses across the US. The rest of the materials required for construction are either on site or have been procured from various international suppliers overseas and are still scheduled to be delivered on-time. The majority of the construction materials for the project in Utah have already been delivered to the US. The Investment Manager has received confirmations from the vendors that there is currently no delay expected for the remaining materials to be delivered. As such, the Investment Manager believes that USF's in-construction assets are relatively well-positioned regarding supply chain concerns..

As the virus spreads globally, work interruptions across industries are increasingly likely. The Investment Manager continues to work with Engineering, Procurement and Construction contractors to assess and consider alternative risk mitigation strategies at USF's solar plants as more details develop. The Investment Manager has in place a business continuity plan for its teams which is available to be implemented if and when it is required.

INVESTMENT PORTFOLIO

USF's investment portfolio as at 31 December 2019 the Fund had executed binding acquisition agreements on 15 plants, totalling to 205.7 MWDC. Of the 15 plants, USF had interests in 12 plants, totalling to 194.5MWDC, financially closing on the remaining three assets in January 2020. After the period ended, the Company acquired a portfolio of operating assets to bring the total portfolio to 37 plants, representing 382.4 MWDC.

Table 4: Portfolio overview

ACQUISITIONS

Details of the acquisitions made as of March 2020 are listed in the table below.

Table 5: Portfolio acquisition commitment (US$m)

As of 31 December 2019, the fund closed on two acquisitions and announced the binding acquisition for its third (close was announced in January after year-end) bringing total committed capital to $101 million (with $78 million invested as at 31 December 2019). As Acquisition Two includes assets that are in construction, additional equity contributions will be made as construction milestones are achieved as seen in table 5. The Fund closed the acquisition of 100% of the cash equity interests in five of the eight projects in the Acquisition Three, prior to 31 December 2019, with the remaining three projects closed in January. After the end of the reporting period, USF announced it had closed its fourth acquisition, which requires an initial equity commitment for the acquisition and includes a potential further equity commitment to complete a refinancing.

Figure 5: Capacity-weighted portfolio

Although the Acquisition One asset, Milford, makes up just over 30% of the portfolio at 128MWDC as shown in Figure 5, the remaining 70% of the portfolio is well diversified across 36 plants. The portfolio to date is also diversified by development stage with more than 50% of assets currently operating, which benefits the fund by providing cashflows immediately upon acquisition.

Figure 6: Portfolio by Stage

US Solar Market Update

The US utility-scale solar photovoltaic (PV) market experienced a strong year with a robust contracted pipeline and record installation and construction figures. By the end of the third quarter of 2019, the contracted pipeline reached a record high of 45.5 GWDC. When comparing Q3 US utility-scale PV installations to the broader US Solar market, utility PV contributed the largest share of installed capacity. Between Q1 to Q3 2019, solar accounted for 39% of new US electricity-generating capacity additions, second only to natural gas which had 42% of capacity additions.

Over the course of Q1-Q3 2019, 3.8 GWDC of utility-scale projects were installed in the US, representing:

• a 19% increase compared to the same period in 2018;

• a 55% increase compared to the same period five years prior; and

• 19% year on year cumulative capacity growth.

Projects under construction by the end of the third quarter also reached an all-time high of 10.4 GWDC, with 38% of projects expected to be completed during Q4 2019 and the remaining 62% to be completed in 2020 and 2021. This suggests we could see roughly 8 GWDC of installed utility-scale projects for 2019 given 3.8 GWDC of capacity was installed between Q1 to Q3 2019, equating to the second highest volume of installed capacity to date and further emphasises the substantial growth expected in the upcoming years.

Utilities and developers are driving some of this growth as they safe-harbour projects for 2019 in order to qualify for the 30% ITC. The ITC begins to phase-down after this year, stepping down to 26%, 22% and 10% in annual increments and remaining at 10% from 2022.

Even as the ITC steps down, the demand for utility PV remains strong. During Q3, Wood Mackenzie revised their forecast for utility-scale PV from 2019-2024, increasing the estimate by 9.2 GWDC. The increase is driven primarily by utilities procuring or planning to procure more utility-scale solar than expected for their integrated resource plans. Utility-scale solar PV has and will continue to account for the largest share of annual installations in the US solar market as seen below in Figure 7, with 58.4 GWDC of utility-scale solar installations forecast between 2020 and 2024.

Figure 7: Projected growth in the US solar market

Source: Wood Mackenzie, Q4 2019 US Solar Market Insight, December 2019.

The economic cost-competitiveness of utility PV makes it a compelling source for utilities seeking additional energy capacity, and those who need to meet their renewable portfolio standard (RPS) or policy mandate. As of the end of Q3 2019, the US utility-scale solar market grew to be approximately four times the size of the UK utility-scale solar market[19], with a total installed capacity of 40.9 GWDC. Since 2017, the UK installed utility solar capacity increased by 2.1% compared to 31.4% growth since 2017 experienced in the US market.

Over the last five years, US utility-scale solar's levelised cost of energy (LCOE), the average total cost of building and operating the asset per unit of electricity generated over the assumed lifetime of the asset, has declined by 13% p.a. on average, according to Lazard's 2019 LCOE analysis. This continued cost decline strengthens the economic competitiveness of the solar industry and voluntary (non-mandated) procurement, with solar being the cheapest form of newbuild energy production in many states in the US. Voluntary procurement, which is typically driven by cost-competitiveness of utility-scale solar PV, continues to be the primary driver of solar development; accounting for 54% of utility-scale solar capacity additions in 2019 as seen below.

Figure 8: Drivers for utility-scale PV projects announced, Q1-Q3

Source: Wood Mackenzie, US Utility PV Market: Quarterly Update Q4 2019, January 2020.

Whilst voluntary procurement remains as the top driver of utility-scale installations within the US, the share of projects driven by Renewable Portfolio Standards requirements is expected to increase. Since the beginning of 2019, nine states within the US have raised their RPS targets, and as such are expected to drive more RPS-driven procurement in the mid-2020s both before and after the ITC steps down to 10% in 2022.

As at the end of Q4 2019, 37 of the 50 states within the US have implemented a Renewable Portfolio Standard or voluntary renewable target. Six of these states in addition to Washington DC and Puerto Rico have committed to 100% renewable or clean energy targets by a set date. Many states have already met their near term or all RPS targets and as such the US continues to see increases in existing state RPS targets, further driving the demand for installations.

Figure 9: States and territories with RPS requirements

Source: National Conference of State Legislatures, January 2020

Corporate procurement is the second largest driver of projects announced, with the corporate procurement pipeline now greater than 10 GWDC, on track to drive 22% of US utility PV from 2019 to 2024. Up until recently, the LCOE of utility-scale wind has made it the preferred method for corporate procurement, with 12.1 GWDC of corporate procurement wind installed compared to 3.1 GWDC of solar installed through the end of H1 2019. With the federal Production Tax Credit (PTC) stepping down for wind at period end, the LCOE of utility-scale solar starts to become more compelling than wind even after accounting for the ITC step down. Spurred by an increase in demand, utility-scale solar is expected to be the preferred renewable technology choice for corporate procurement, with 3.7 GWDC of corporate offsite solar in 2020.

Figure 10: US Utility-scale solar PV Corporate procurement installations forecast

Source: Wood Mackenzie, US Utility PV Market: Quarterly Update Q4 2019, January 2020.

In 2019, corporations bought 44% more clean energy through power purchase agreements when compared to the previous year with most of this purchasing occurring within the US. The US purchased 13.6GWDC of renewable energy through corporate PPAs in 2019, more than all global activity in 2018, demonstrating the demand for corporate PPAs in the US. The demand has been driven by an increasing number of corporations pledging to use 100% renewable power by signing to the RE100 leadership initiative, a global corporate leadership initiative bringing together businesses committed to 100% renewable electricity. By the end of 2019, 221 companies had committed to the RE100 initiative, pledging to offset 100% of their electricity demand with clean energy in the shortest possible timeline (by 2050 at the latest). BNEF has estimated that these companies will require an additional 210TWh of clean energy in 2030 to meet their goals. It's estimated that this demand would catalyse an estimated 105GWDC of new solar and wind build globally.

Solar within the US has been supported by the US federal policy and the ITC, with the solar market growing by an average of 52% since the ITC was enacted. Although the ITC has officially stepped down[20], the IRS has issued safe harbouring provisions to allow for projects placed in service after December 31, 2019 and before January 1, 2024 to still qualify for the 30% credit. To be eligible to have projects safe harboured, certain requirements for these projects must be met before December 31, 2019.

It should be noted that solar is competitive even without the ITC in many parts of the US and as such USF believes US solar remains a compelling investment opportunity. The combination of declining costs and expansion and maturation of the industry indicate that the US solar market is likely to remain an attractive industry in the years to come.

Investment Performance

At 31 December 2019, the Company's shares were trading at $1.05 per share. This represents an 8.1% premium to the Net Asset Value of $194.4 million or $0.972 per share. The Net Asset Value is defined as the total assets less any liabilities.

The Company generated a profit after tax of $146,080 (0.07 cents per share) during the period. Interest income of $1,944,795 and a net gain from investments of $472,416 were offset by operating expenses of $2,120,851 and a foreign exchange loss of $150,280 on funds that were retained in GBP. The financial statements of the Company are presented on pages 68 to 88.

Ongoing Charges

The ongoing charges ratio of the Company is 1.50% of the average NAV for the year ended 31 December 2019. The ratio has been calculated using the AIC recommended methodology. The estimated total cost as laid out in the prospectus was 1.35% based on proceeds of $250 million. As total proceeds of the IPO were $200 million, this ratio is slightly higher than estimated at IPO.

Valuation

Net Asset Value

The Net Asset value for the period ending 31 December 2019 is $194.4 million.

An unaudited Net Asset Value and Net Asset Value per Ordinary Share is calculated in US Dollars on a quarterly basis as at 31 March, 30 June, 30 September and 31 December each year, pursuant to the valuation methodology described below, by the Administrator in conjunction with the Investment Manager. The valuation of the Solar Power Assets, will be produced by an independent appraiser on a semi-annual basis as at 30 June and 31 December. These Solar power plant valuations form part of the Net Asset Value calculation of the Company, which will be subject to the audit.

Valuation Methodology

The Company will engage an independent third-party appraiser to value the Solar Power Assets acquired by the Company and its Project SPVs every six months as at 30 June and 31 December. As all acquisitions have been made within six months of 31 December 2019 and were subject to bilateral discussions but with sellers seeking competitive market prices, investments continue to be recognised at purchase price on the basis that this represents fair value. The Investment Manager and the directors feel that this remains consistent with the fair value of these investments as at 31 December 2019 as the purchase price reflects the market value of the asset and no significant changes to key underlying economic considerations have arisen. Looking forward, the Investment Manager will value the Solar Power Assets acquired by the Company and its Project SPVs for the quarterly periods ending 31 March and 30 September. At each quarter end, the Investment Manager will provide the relevant third-party or internal valuations of the Solar Power Assets together with the valuations of the other assets of the Company and its Project SPVs to the Company Secretary and administrator (Administrator) of the Company.

The Administrator, in conjunction with the Investment Manager, will calculate the Net Asset Value and the Net Asset Value per Ordinary Share as at the end of each quarter of the Company's financial year and submit the same to the Board for its approval.

The valuation has been calculated in accordance with Uniform Standards of Professional Appraisal Practice (USPAP) as applied to photovoltaic electricity generation systems in the United States.

Fair value for operational solar power assets will be derived from a discounted cash flow (DCF) methodology. For Solar Power Assets that are not yet operational or where the completion of the acquisition by the Company has not occurred at the time of valuation, the purchase price of the Solar Power Asset including acquisition costs will normally be used as an appropriate estimate of fair value provided no significant changes to key underlying economic considerations have arisen.

In a DCF analysis, the fair value of the Solar Power Asset is the present value of the asset's expected future cash flows, based on a range of operating assumptions for revenues and costs and an appropriate discount rate range.

The Investment Manager will review a range of sources in determining the fair market valuation of the Solar Power Assets, including but not limited to:

• discount rates publicly disclosed by the Company's global peers;

• discount rates applicable to comparable infrastructure asset classes; and

• capital asset price model outputs and implied risk premium over relevant risk-free rates.

A broad range of assumptions are used in valuation models. Given the long-term nature of the assets, valuations are assessed using long-term historical data to reflect the asset life.

Where possible, assumptions are based on observable market and technical data. The Investment Manager also engages technical experts such as long-term electricity price forecasters to provide long-term data for use in its valuations.

The Investment Manager will use its judgement in arriving at the appropriate discount rate. This will be based on its knowledge of the market, taking into account intelligence gained from its bidding activities, discussions with financial advisers in the appropriate market and publicly available information on relevant transactions.

Gearing

On a look-through basis USF had outstanding debt of $22.8 million as at 31 December 2019, which is based on the face value of drawn debt. This equates to 10.5% of Gross Asset Value (GAV) (calculated as NAV plus outstanding debt). If the post-refinance project debt associated with Acquisition Four of $137m is taken into consideration, gearing would increase to 45.1%. This remains within the target gearing of the Company of 50%.

USF's group debt facilities outstanding as at 31 December 2019 are set out below:

The debt is held by a subsidiary (USF Bristol Class B Member, LLC), thus included in "Investment held at fair value" on the Statement of Financial Position.

Refer to Note 10 of the financial statements for further information on USF's debt facilities.

The projected look-through gearing of USF upon full drawdown of the project level debt of Acquisitions One and the assumed project level debt of Acquisition Four is set out below. While the projected gearing of 50.7% will temporarily exceed USF's target operational gearing of 50% this is indicative only as the Company expects to refinance the debt associated with Acquisition Four using available equity or the proceeds of an equity capital raising.

SHARE CAPITAL

On 16 April 2019, the Company was admitted to the premium listing segment of the Official List of the FCA and to trading on the main market of the London Stock Exchange.

As at 31 December 2019, 200,092,323 ordinary shares were in issue and no other classes of shares were in issue at that date.

Following a successful application to the High Court and lodgement of the Company's statement of capital with the Registrar of Companies, the Company was permitted to cancel its share premium account. This was effected on 21 June 2019 by a transfer of the balance of $194 million from the share premium account to the capital reduction reserve (refer to note 18). The capital reduction reserve is classed as a distributable reserve and dividends to be paid by the Company are to be offset against this reserve.

Information on the Investment manager

The US Solar Fund is managed by New Energy Solar Manager which also manages New Energy Solar (www.newenergysolar.com.au). The Investment Manager manages two listed global solar power investment funds, US Solar Fund and New Energy Solar, which combined has committed approximately US$1.2 billion to 53 projects totalling 1.2 GWDC.

The Investment Manager has been given responsibility, subject to the overall supervision of the Board, for active discretionary investment management of the Portfolio in accordance with the Company's investment objective and policy. The Investment Manager offers in-house deal origination, execution and asset management capabilities with experience in equity, tax equity, debt structuring and arranging, and active asset management. The Investment Manager's team currently consists of more than 20 investment and asset management professionals located in Sydney and New York.

Senior Management Team

The senior members of the Investment Manager who are responsible for the management of US Solar Fund are set out below. Further information on the Investment Manager team is provided at www.ussolarfund.co.uk.

John Martin BEcon (USYD)Chief Executive Officer, NESM

John joined the Investment Manager as Managing Director and CEO in May 2017. John brings a wealth of experience and capability to the role after more than two decades of experience in corporate advisory and investment banking with a focus on the infrastructure, energy and utility sectors. John previously led the Infrastructure and Utilities business at corporate advisory firm Aquasia where he advised on more than A$10 billion of infrastructure and utility M&A and financing transactions. Prior to this John held various investment bank management positions including the Head of National Australia Bank Advisory and the Joint Head of Credit Markets and Head of Structured Finance at RBS / ABN AMRO. During his time at ABN AMRO, John managed the Infrastructure Capital business which was viewed as a market leader in the development and financing of infrastructure and utility projects in Australia. John started his career as an economist with the Reserve Bank of Australia and then worked in various treasury and risk management positions, before moving to PwC as the partner responsible for financial risk management.

Liam Thomas BAgribus (Curtin), MSc (Curtin), MBA (MELB)Chief Investment Officer, NESM

Liam joined the Investment Manager as Director - Investments in March 2016, to lead transaction origination and execution activities. Liam has over 15 years' experience in mergers and acquisitions, corporate and business development, projects, and commercial management in the energy, infrastructure, mining and agribusiness sectors. Prior to joining the Investment Manager, Liam was a senior member of the International Development team at Origin Energy focused on the investment and development strategy for utility-scale solar, hydro, and geothermal projects in Latin America and South-East Asia. Liam's previous roles have included General Manager of Commercial Development at Aurizon, Commercial Manager for the Northwest Infrastructure iron ore port joint venture, and Project Manager at Orica, focusing on large scale mining-related infrastructure and manufacturing projects.

Michael van der Vlies BAcc (UTS), CAChief Financial Officer, NESM

Michael is responsible for the finance activities of the Investment Manager, including business planning, budgeting, forecasting, financial reporting, taxation, treasury, balance sheet management and risk management. Michael has over 16 years' experience working in finance, infrastructure and investment management. Michael previously led a team responsible for the financial reporting, fund administration, regulatory and compliance reporting globally across AMP Capital's A$15 billion Infrastructure Equity funds. Prior to this, Michael held various finance roles including General Manager of Finance and Group Financial Controller at BAI Communications, a communications infrastructure business owned by CPPIB and Senior Manager at Macquarie.

Considering environmental, social and governance (ESG) practices is critical to the success and longevity of the Company because it assists in assessing both risks and opportunities as the Investment Manager operates and seeks to grow the Company in the years to come. US Solar Fund is committed to reporting regularly on the implementation of these ESG and Sustainability principles in its business and, specifically, in its investment processes and asset management operations. The Board and Investment Manager believe it is important to demonstrate its goals to its Shareholders and stakeholders, as well as to explain how the Company is meeting them.

US Solar Fund was established to capitalise on the need to decarbonise the world's energy use and to contribute to activity which may reduce the impact of climate change. The Company facilitates the transition to a low-carbon economy and mitigates the consequences of climate change by generating clean, emission-free energy and promoting maximum efficiency in the Company's operations. USF's investment objective is to provide investors with attractive risk-adjusted and sustainable dividends, with an element of capital growth, by investing in a diversified portfolio of Solar Power Assets. By investing in Solar Power Assets and selling the output from these assets to energy users, the Company directly contributes to renewable energy infrastructure and renewable power generation. As at March 2020, USF's portfolio comprised 37 solar plants, 30 of which are operational and seven are under construction. Once all of the 37 assets in USF's current portfolio are operational, the Company will be responsible for displacing over 530,000 tonnes of CO2 emissions, equivalent to powering over 65,000 US homes[25] , or removing over 117,000 US cars from the road[26], every year.

Core to the Company's investment and environmental objectives is the intention to build a long-term, sustainable business. Accordingly, the Directors and the Investment Manager are committed to managing USF in line with the core principles of Environmental, Social and Governance practices, as well as running the business with a focus on overall Sustainability Practices.

ESG principles at work in USF

Adherence to ESG principles requires US Solar Fund to consider the broader impact of its activities and to incorporate practices to further the aim of these principles.

Environmental considerations incorporate the impact on both the local environment, as well as global issues like climate change. USF's primary activity is investing in Solar Power Assets which support renewable energy development and provide a clean energy source to communities in rural and metro areas. Further, USF's strategy of owning and operating solar power portfolios directly contributes to the displacement of CO2 emissions and assists states in their transition to a low carbon economy, helping to achieve their respective renewable energy targets.

USF's positive environmental impact can be seen in USF's first acquisition, the Milford Solar project in Utah. Once operational, this project will generate over 277,500 megawatt hours of electricity annually. This volume of electricity is equivalent to displacing approximately 235,000 tonnes of CO2 emissions, powering 31,000 homes, or removing 51,000 cars from the road, every year[27]. USF has contributed to the development and growth of renewable and low-emissions energy which, as an industry, has created a significant number of new jobs.

The Company acquires plants that are not yet operational, and as such requires many contractors and jobs to construct each project. As each project creates new opportunities, for example there are currently over 80 contractors on site for the construction of the 128MWDC Milford solar plant, the Company, through the engagement of its contractors, seeks to create quality jobs in the communities in which it operates. Once operational, the plants provide a smaller number of long-term employment opportunities for members of the communities in which the plants are located.

The Company is committed to making tangible contributions to the prosperity and economic development of the regions in which it operates. For example, the Company seeks to form open and strong relationships with the landowners on which its assets are located, as well as those near its assets. The Company also partners up with educational and research institutions to share insights and data to further advance the solar industry. These partnerships also help USF to continue to improve its practices around land preservation, a key consideration for the Company during the construction phase of solar asset ownership as well as throughout an asset's operational life.

Governance considerations require a company to examine its structure, leadership, shareholder rights and internal controls. USF's Board of Directors is independent of the Investment Manager and seeks to implement a system of rules and practices that preserves the integrity and efficiency of its operations. The Board has worked with the Investment Manager and Company Secretary to maintain a framework of governance to meet the interests of stakeholders including security holders, customers, financiers, government, and the community. The Company also considers acquisition and asset management principles and practices as they relate to dealing with anti-corruption and labour standards.

USF recognises that these governance considerations are critical to building a successful, long term business.

SUSTAINABILITY

USF was established to both capitalise on and contribute to the world's increasing awareness of the impact of climate change and the need to better manage the world's resources for present and future generations. The Company is focused on sustainability primarily as an investor in the solar industry but also in the way the Company is managed.

The Company is committed to:

• Incorporate sustainability and ESG considerations into our investment, diligence, and operating decisions and practices

• Ensure that measurable results related to sustainability and ESG practices are monitored and achieved through investment decision making and operations

• Report on progress to stakeholders

In 2015, the United Nations developed 17 Sustainable Development Goals (SDG) to enable individuals, organisations, corporations and government to implement, record and measure their approach to addressing global challenges including poverty, inequality, and climate change. Each goal has specific targets to be achieved within a 15-year timeframe (by 2030).

US Solar Fund is well-aligned with these goals, particularly those concerning the environment (e.g. #13 Climate Action and #7 Affordable and Clean Energy), those concerning social issues (e.g. #8 Decent Work and Economic Growth and #9 Industry Innovation and Infrastructure) and those concerning governance (e.g. #16 Peace, Justice and Strong Institutions). The Company will consider its contribution to the achievement of the United Nations SDG and will report regularly to shareholders on its progress in this regard.

As noted in USF's sustainability policy, the Company has selected two core UNSDG goals to contribute to:

UNSDG GOAL 7.2

Investing in utility-scale solar in order to provide attractive risk-adjusted returns for investors is, by its very nature, a compelling investment for investors focused on sustainability and ESG. It contributes positively and materially to the world's growing awareness of and momentum to address the impact of human activity on the environment and climate. Importantly, through developing utility-scale solar projects and contracting the power purchase agreements with various offtakers, the Company directly contributes to the share of renewable energy in the global energy mix.

The 37 solar power plants in USF's portfolio have a combined capacity of 382.4 MWDC and provide power to electricity consumers by way of long-term PPAs. This power is generated without producing emissions and importantly, also replaces fossil-fuel generated power, thereby displacing CO2 emissions. Once all of USF's 37 assets are operational, it will be responsible for displacing over 530,000 tonnes of CO2 emissions, equivalent to powering over 65,000 US homes, or removing over 117,000 US cars from the road, every year.

As at 31 December 2019, the portfolio had eight operating assets of the 15 acquired. When using first year generation figures, these assets generated enough electricity annually to power over US 4,000 US homes[28] and displace over 38,000 tonnes of CO2 emissions, or remove about 8,200 US cars from the road[29], every year.

As a sustainably run business, USF is conscious of its obligations to carefully consider and plan for the future disposal of solar panels as a sustainably run business. Given USF's solar plants are relatively new, with only 3% of capacity (including the fourth acquisition) being operational for greater than 5 years and the majority being operational between 2-5 years, the business has not yet had to manage the disposal of large quantities of solar panels.

During construction and operation, the solar panels employed in USF's plants have proven to be very robust and rates of damage and waste have been very low. With respect to the bulk of the panels installed at USF's solar power plants, which have life cycles of 25+ years, USF intends to establish a solar panel recycling approach that can facilitate the recovery of valuable secondary raw materials and promote high levels of reuse. To this end, USF is investigating the recycling programs available in the industry and the approaches of its development and construction partners.

UNSDG Goal 8.8

When an acquired project is yet to be constructed, an Engineering, Procurement and Construction Agreement (EPC Agreement) must be agreed upon and signed by USF and the EPC counterparty before construction. This agreement contains a comprehensive and systematic Health and Safety Plan that explicitly outlines certain requirements according to each site location and layout of the plant. This plan incorporates health, safety and security measures that various state and federal laws to which all contractors, subcontractors, and site visitors must adhere to.

A site health and safety committee is established for each project location, comprising field representatives and management from the EPC contractor, once construction commences. These representatives must obtain United States department of labour construction safety certification (OSHA36) and are responsible for daily safety briefings. The representatives also facilitate weekly "toolbox" meetings, designed to address potential safety concerns on-site, and ensure the implementation of preventive safety measures.

USF is also focused on injury reporting and investigation as it allows for investigation into existing preventative measures, thereby reducing the likelihood of a similar event occurring in the future. All injuries and incidents must be reported immediately on the construction site, followed by an investigation process, detailed report, and corrective action.

Over the course of the year to 31 December 2019, there was one recordable accident on site. At the Milford Solar Project (Acquisition One) construction site, there was one injury that occurred in November where an individual's foot sustained a mild injury by moving a racking machine. McCarthy, the EPC contractors have investigated the root cause of the accident and have since made corrections to their operating procedures to reduce the likelihood of further injuries.

The Company continues to monitor and maintain health and safety management policies. The Company continues to take a preventative and proactive approach when dealing with health and safety hazards, rigorously implementing safety practices and improving them where applicable.

The Board is responsible for financial reporting and controls, including the approval of the Annual Report and Accounts, the dividend policy, any significant changes in accounting policies or practices, and treasury policies including the use of derivative financial instruments. During the period the Board has carried out a robust assessment of the principal risks and uncertainties facing the Company and how they are being mitigated.

The Company faces a broad range of risks that the Board and Investment Manager aim to mitigate through internal controls. These risks are regularly assessed on a periodical basis to ensure that the business operates smoothly and that any adverse effect on the Company's performance and share value is mitigated. The Board also maintains a risk matrix that is reviewed annually to ensure that there is a risk management framework in place to minimise the impact of these risks should they occur. The risks that the Board and Investment manager believe to be the most relevant to the business can be categorised into key categories as set below:

• Legal & Regulatory Risks

• Financial & Market Risks

• Operational Risks

Principal risks for the period and their mitigants are summarised in the tables below:

LEGAL & REGULATORY RISKS

FINANCIAL & MARKET RISKS

OPERATIONAL RISKS

LONGER TERM VIABILITY

The Board is responsible for financial reporting and controls, including the approval of the Annual Report and Accounts, the dividend policy, any significant changes in accounting policies or practices, and treasury policies including the use of derivative financial instruments. The Board of the Company is also required to assess the long-term prospects of the Company according to the Association of Investment Companies (AIC) Code. The Board has assessed the prospects of the group over a 5 year period. The Board considers a 5 year timeframe to be reasonable on the basis that the Company is in the initial stage of acquiring assets. The key risks facing the Company including, but not limited to, the risks mentioned on pages 27 to 29 have been individually assessed by the Board. The likelihood and impact of each risk on the Company prior to and after specific risk mitigation controls have taken place have been evaluated.

After assessing these risks, and reviewing the Company's liquidity position, together with forecasts of the Company's future performance under various scenarios, the Board has a reasonable expectation that the Company is well positioned to continue to operate and meet its liabilities over the short term and the 5 year outlook period. While the Board has no reason to believe that the Company will not be viable over the specified outlook period, they are aware that it is difficult to foresee the viability of any business over a longer period given the inherent uncertainty involved.

It is important to note that the risks associated with investments within the infrastructure sector could result in a material adverse effect on the Company's performance and value of Ordinary Shares. When required, experts will be employed to gather information, including tax advisers, legal advisers, and environmental advisers.

STRATEGIC REPORT AND SECTION 172 OBLIGATIONS

The strategic report is set out on pages 5 to 29 of this document and has been prepared to provide information in relation to how the directors have performed their duty to promote the success of the company.

Meaningful engagement with all our stakeholder groups supports our obligations under Section 172 of the Companies Act 2006. On pages 23 to 25 and pages 42 to 45 we set out how the Board, and the Group more widely, has had regard to stakeholder interests when discharging its duty to promote the success of the Company and how we seek to maintain our high standards of business conduct.

The strategic report was approved by the Board of directors on 17 March 2020.

Gill NottChairDate: 17 March 2020

The Directors are responsible for the determination of the Company's investment objective and policy and its investment strategy and have overall responsibility for the Company's activities, including the review of investment activity and performance and the supervision and control of the Investment Manager. The Directors have delegated responsibility for managing the assets comprising the Portfolio to the Investment Manager. Further information on the Board is provided at www.ussolarfund.co.uk.

Gillian NottNon-Executive Chair

Mrs Nott spent the majority of her career working in the energy sector, including positions with BP. In 1994 she became CEO of ProShare, a not for profit organisation promoting financial education, savings and investment, and employee share ownership. She was a non-executive director of the Financial Services Authority from 1998 until 2004. Subsequently she has held numerous board roles, including being a non-executive director of Liverpool Victoria Friendly Society, a leading insurer, and deputy chair of the Association of Investment Companies. Mrs Nott has served as both a non-executive director and chair of a number of venture capital trusts and investment trusts. She is currently chair of JPMorgan Russian Securities plc, Premier Global Infrastructure Trust plc and Gresham House Renewable Energy Venture Capital Trust 1 plc.

Jamie RichardsNon-Executive Director

Mr Richards is a chartered accountant and has 25 years' experience in fund management, banking and corporate recovery with a focus on the infrastructure and solar sector. Mr Richards previously was a partner, executive committee member and head of infrastructure at Foresight Group having joined in 2000. Between 2007 and 2018 he had overall responsibility from inception for the group's infrastructure and solar business in the UK, Australia, Italy and the US. He oversaw, as a member of the investment committee, more than 100 solar projects representing the group's approximately £1.5 billion solar portfolio and led the IPO of Foresight Solar Fund Limited. Prior to 2007, he led a number of venture capital and private equity transactions in the technology and cleantech sectors representing Foresight Group's funds and was a non-executive director of several companies. Previously, Mr Richards worked at PwC, Citibank and Macquarie, both in London and Sydney. Mr Richards also currently acts as alternative chair of the investment committee of Community Owned Renewable Energy LLP, an investment programme targeting UK solar farms for community ownership.

Rachael NutterNon-Executive Director

Ms Nutter has spent over 20 years in the energy sector and the last 12 years in the renewable and clean energy sector. Ms Nutter is currently general manager of business development for Shell International in the nature-based solutions business. Prior to this, she led a global solar business development team in Shell that originated and delivered investments in solar projects and development platforms, having previously led the development of the solar entry strategy for Shell. Ms Nutter also had a role within Shell Ventures and led the portfolio management of technology demonstration projects and assessment of clean energy commercial opportunities such as biogas for Shell. Prior to re-joining Shell in 2012, she worked at CT Investment Partners, Carbon Trust and PA Consulting Group, having started her career as a petroleum engineer with Shell. Ms Nutter is a board member of the Energy Technologies Institute, a UK public-private partnership to accelerate the commercialisation of low carbon technologies.

Josephine TanNon-Executive Director

Ms Tan is an experienced corporate finance adviser to junior mining companies and mining focused private equity funds. She is a founding member and chief financial officer of Sandown Bay Resource Capital, a London-based mining private equity firm focused on investments in the junior mining sector. Prior to this, Ms Tan was a senior investment banker at UBS AG in London and Melbourne. During her 10 years at UBS, she worked across various teams and industry sectors, including as part of the European Energy Group, the Global Industrials Group and the Australian Natural Resources Group. She commenced her career at the Boston Consulting Group in Melbourne. Ms Tan was a non-executive director of the Australian Governance Masters Index Fund from 2015 to 2018 and she currently sits on the advisory board of the Australian Governance and Ethical Index Fund, both managed by a subsidiary of Walsh and Company Investments Limited, the parent Company of the Investment Manager. Ms Tan is not considered independent from the Investment Manager.

The Directors present their report together with the audited financial statements for the period from 10 January 2019 (incorporation date) to 31 December 2019 in accordance with section 839 (4) of the Companies Act 2006. This is the first set of Annual Financial Statements prepared by US Solar Fund Plc and therefore no comparatives are provided.

PRINCIPAL ACTIVITY AND STATUS

US Solar Fund Plc was incorporated as a Public Company, limited by shares, in England and Wales on 10 January 2019 with registered number 11761009. The registered office of the Company is The Scalpel, 18th Floor, 52 Lime Street, London EC3M 7AF. Its share capital is denominated in US Dollars (USD or $) and currently consists of ordinary shares. The Company's principal activity is to invest in a diversified portfolio of Solar Power Assets located in North America and other countries forming part of the Organisation for Economic Co-operation and Development (OECD) in the Americas.

DIRECTORS

All Directors are non-executive directors.

The Company maintains £20 million of Directors' and Officers' Liability Insurance cover for the benefit of the Directors, which was in place throughout the period and which continues in effect at the date of this report.

Details of the fees paid to Directors in the period are set out below:

\* This includes £20,000 per annum in respect of serving as Chair of the Board.*\* This includes £10,000 per annum in respect of serving as Chair of the Audit committee.

In accordance with FCA Listing Rules 9.8.6(R)(1), Directors' interest in the shares of the Company (in respect of which transactions are notifiable to the Company under FCA Disclosure and Transparency Rule 3.1.2(R)) as at 31 December 2019 are shown below:

Further details on the remuneration of the directors can be found on the remuneration report on pages 53 to 56.

STRATEGIC REPORT AND OTHER DISCLOSURES

The Strategic report on pages 5 to 29 contains disclosures in relation to a review of business performance, future developments, capital structure, engagement with suppliers and customers and environmental reporting. These disclosures form part of this report by cross-reference.

Information about the use of financial instruments by the company and its subsidiaries is given in note 15 to the financial statements.

SIGNIFICANT SHAREHOLDINGS

As at 31 December 2019, the Company is aware of or has received notification in accordance with the Financial Conduct Authority's Disclosure and Transparency Rule 5 of the following interests in 3% or more of USF's shares to which voting rights are attached:

Future Developments

The Company's future outlook is discussed in the Investment Manager's Report on pages 7 to 21.

DividendS

The Company will be paying a dividend of 0.50 cents per share for the fourth quarter of 2019. The dividend is expected to be paid in May 2020. When added to the dividend of 0.41 cents paid in November 2019, and 0.50 cents paid in February 2020 this represents an annualised dividend yield of 2% when measured against the initial issue price of $1 per share.

GOING CONCERN

The Board has reviewed a set of financial projections of the cash flow and distribution profile of the Company prepared by the Investment Manager. The Board has assessed the prospects of the group over a 5 year period given the long-term nature of the underlying assets. After assessing these risks, and reviewing the Company's liquidity position, together with forecasts of the Company's future performance under various scenarios, the Board has a reasonable expectation that the Company is well positioned to continue to operate and meet its liabilities over the short term and the 5 year outlook period. As such the Board concluded that it is appropriate to adopt the going concern basis of preparation in preparing these financial statements.

POLITICAL CONTRIBUTIONS

The Company made no political contributions during the period.

POST BALANCE SHEET EVENTS

The Company's events after the period ended is discussed in the Investment Manager's Report on pages 7 to 21.

DISCLOSURE OF INFORMATION TO AUDITORS

All of the Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

Signed by order of the Board, 

Gill NottChairDate: 17 March 2020

8. Directors' Responsibility

The Directors are responsible for preparing the annual report and financial statements in accordance with applicable law and regulations.

As a Company listed on the London Stock Exchange, US Solar Fund Plc is subject to the FCA's Listing Rules and Disclosure and Transparency Rules, as well as to all applicable laws and regulations in England and Wales where it is registered.

The annual report and financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Under Company law, the Directors must not approve the financial statements unless they are satisfied they give a true and fair view of the state of affairs of the Company and of the profit or loss for the period. In preparing these financial statements, the Directors should:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable;

• specify which generally accepted accounting principles have been adopted in their preparation; and

• prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which are sufficient to show and explain the Company's transactions and are to disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the annual report and financial statements and the Directors confirm that they consider that, taken as a whole, the annual report and financial statements are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy. In accordance with the FCA's Disclosure and Transparency Rules, the Directors confirm to the best of their knowledge that:

a) the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company taken as a whole;

b) the annual report and accounts include a fair view of important events that have occurred during the financial period; and

c) the annual report and accounts include the related parties' transactions that have taken place in the financial period and that have materially affected the financial position or the performance of the enterprise during that period.

The Directors have acknowledged their responsibilities in relation to the financial statements for the period to 31 December 2019.

Signed by order of the Board,

Gill NottChairDate: 17 March 2020

The Board of US Solar Fund Plc has considered the Principles and Provisions of the Association of Investment Companies Code of Corporate Governance (AIC Code). The AIC Code addresses the Principles and Provisions set out in the UK Corporate Governance Code (the UK Code), as well as setting out additional Provisions on issues that are of specific relevance to the Company.

The Board considers that reporting against the Principles and Provisions of the AIC Code, which has been endorsed by the Financial Reporting Council, provides more relevant information to shareholders.

The Company has complied with the Principles and Provisions of the AIC Code. The AIC Code is available on the AIC website (www.theaic.co.uk/aic-code-of-corporate-governance-0). It includes an explanation of how the AIC Code adapts the Principles and Provisions set out in the UK Code to make them relevant for investment companies. The Company is a member of the Association of Investment Companies.

THE BOARD

The Board consists of four non-executive directors of which the Chair, Gill Nott, alongside Jamie Richards and Rachael Nutter are deemed to be independent of the Investment Manager. Josephine Tan is not considered to be independent from the Investment Manager. This is due to the fact that Ms Tan currently sits on the advisory board of the Australian Governance and Ethical Index Company which is managed by a subsidiary of Walsh and Company Investments Limited, the parent company of the Investment Manager. Ms Tan's non-independence is not considered detrimental to the Company as her role on the board of Australian Governance and Ethical Index Company is unlikely to cause any conflicts of interest. Any independence risks are managed by the Chair.

The Company has not appointed a senior independent director. Biographical details of all Board members (including significant other commitments of the Chairman) are shown on page 31.

In accordance with the AIC Code, all the Directors will retire at the forthcoming AGM. Gill Nott, Jamie Richards and Rachael Nutter, being eligible, will offer themselves for re-election. Josephine Tan will not be standing for re-election at the AGM.

Full Board meetings take place quarterly and the Board meets or communicates more regularly to address specific issues. The Board has a formal schedule of matters specifically reserved for its decision which includes, but is not limited to: considering recommendations from the Investment Manager and reviewing, annually, the terms of engagement of all third party advisers (including the Investment Manager).

The Board has also established procedures whereby Directors wishing to do so in the furtherance of their duties may take independent professional advice at the Company's expense.

All Directors have access to the advice and services of the Company Secretary. The Company Secretary provides the Board with full information on the Company's assets and liabilities and other relevant information requested by the Chair, in advance of each Board meeting.

BOARD COMMITTEES

The Board has delegated a number of areas of responsibility to its three committees; the Audit Committee, the Remuneration and Nomination Committee and the Management Engagement Committee. Each committee has defined terms of reference and duties.

AUDIT COMMITTEE

The Audit Committee consists of three independent non-executive directors; Jamie Richards, the Chair, Gill Nott and Rachael Nutter. The Chair is a chartered accountant and has recent and relevant financial experience. The Audit Committee normally meets at least twice yearly to consider, amongst other things, the following:

• the financial reporting process of the Company including the accounting standards, estimates and judgements made by the Company, taking into account the views of the Auditor

• the internal controls and risk management systems

• oversight of the external audit process including scope, independence and objectivity of the external auditors

• the risks facing the Company including ESG risks

A full list of matters reserved for the Audit Committee can be found in the Audit Committee Report on pages 49 to 52.

The Audit Committee has performed an assessment of the audit process and the Auditor's report, details of which can be found in the Audit Committee Report on pages 49 to 52. The Directors have decided to recommend the re-appointment of Deloitte LLP as auditor and a resolution concerning this will be proposed at the Annual General Meeting.

REMUNERATION AND NOMINATION COMMITTEE

The Remuneration Committee is comprised of the whole Board and chaired by Rachael Nutter, which is considered appropriate given the size of the Board and the fact that the Company has no executive directors or employees.

In accordance with the Committee's terms of reference, no director is involved in any decisions with respect to their own remuneration.

The Company has also adopted a Remuneration Policy which will be put to a shareholder vote at the AGM on 17 May 2020. Full details on this Policy can be found in the Remuneration Report on pages 53 to 56.

This committee meets as required to consider, amongst other things, the following:

• the composition and balance of skills, knowledge and experience of the Board

• succession planning for the Company

• the levels of remuneration of the Directors

In reviewing Board composition, the Committee will consider the benefits of all aspects of diversity including, but not limited to, differences in knowledge and understanding of relevant diverse geographies, peoples and their backgrounds including race or ethnic origin, sexual orientation, gender, age, disability or religion, in order to maintain an appropriate range and balance of skills, experience and background on the Board.

The Committee has begun the process of recruiting a new non-executive director to replace Josephine Tan.

MANAGEMENT ENGAGEMENT COMMITTEE

The Management Engagement Committee is comprised of the entire Board and is chaired by Rachael Nutter. This Committee meets as required to consider, amongst other things, the following:

• the appointment and terms of engagement of the Company's service providers including the Investment Manager

• the performance of all service providers

BOARD AND COMMITTEE MEETINGS

The following table sets out the Directors' attendance at the Board and Committee meetings during the period:

The Board meets formally on a quarterly basis and our attendance is shown in the table above. Ad hoc meetings are also held; these are generally called to approve specific announcements or transactions and frequently involve a quorate sub-committee of the board, appointed as necessary.

Representatives of JTC (UK) Limited attend all our scheduled meetings as Secretary to the Board. In addition, representatives of the Investment Manager, our external auditor and other advisers, are invited to attend as required.

The Board agenda

At our quarterly meetings, the Board follows a formal agenda. This agenda generally includes, amongst other things:

• The Investment Manager's report for the period, including strategic performance and acquisitions, a review of the performance of the investments and market conditions

• Financial results against budget and cash flow forecasts, including dividends declared and forecast

• Reports and updates on shareholder and investor communications

• The corporate governance and secretary's report, with a review of policies and procedures, a compliance report and an update on legislative/regulatory obligations as appropriate

• Recommendations and updates from board committees as appropriate

Key activities of the board during 2019

The primary focus at regular board meetings has been on delivering the strategy and monitoring performance against our strategic objectives. This included:

• Considering capital structure

• Discussing asset acquisitions and pipelines

• Reviewing conflicts of interest register and significant shareholdings

• Reviewing the risk register

BOARD EVALUATION

The Board undertook a formal internal annual evaluation of its own performance by way of a questionnaire for each Director. The Chair then discussed the results with the Board and took appropriate action to address any issues arising from the process. It was concluded that the Board performed well in the first year and that members work effectively together to achieve the objectives and that each Director continues to contribute effectively. No weaknesses in the Board's capabilities were identified.

RELATIONS WITH SHAREHOLDERS

The Company communicates with Shareholders and solicits their views where it considers it is appropriate to do so. Individual shareholders are welcomed to the Annual General Meeting where they have the opportunity to ask questions of the Directors. The Board is also happy to respond to any written queries made by Shareholders during the course of the period, or to meet with major Shareholders if so requested.

During the period the Chair has met with Shareholders on several occasions.

In addition to the formal business of the AGM, representatives of the Investment Manager and the Board are available to answer any questions a Shareholder may have. Separate resolutions are proposed at the AGM on each substantially separate issue. The Registrar collates proxy votes and the results (together with the proxy forms) are forwarded to the Company Secretary immediately prior to the AGM. Proxy votes are announced at the AGM, following each vote on a show of hands, except in the event of a poll being called. The notice of the first AGM and proxy form will be circulated with this Annual Report.

The terms of reference of the Committees and the conditions of appointment of non-executive directors are available to Shareholders on request.

Internal control

Although the Board is ultimately responsible for safeguarding the assets of the Company, the Board has delegated, through written agreements, the day-to-day operation of the Company (including the Financial Reporting Process) to the following advisers:

Investment Manager New Energy Solar Manager Pty Limited

Administrator JTC (UK) Limited

The Audit Committee keeps under review the internal financial controls and internal control and risk management, ensuring that the procedures to be followed by the advisers and themselves are in place.

The Board then reviews the effectiveness of the internal controls system, based on the report from the Audit Committee, on an annual basis to ensure that the controls remain relevant and were in operation throughout the year.

The Board has approved a Financial Position and Prospectus Procedures (FPPP) board memorandum which was prepared by the Investment Manager. This sets out the procedures operating to identify the information needed to monitor the business and manage risk so as to make proper judgements on its financial position and prospects. In addition, it sets out the procedures to identify, assess and document the risk factors likely to impact on the Company's financial position, prospects and any changes and on the preparation and communication to the Directors of related information.

As part of its regular risk assessment procedures, the Board takes account of the significance of environmental, social and governance matters to the business of the Company. The Board has identified and assessed the significant ESG risks to the Company's short and long-term value, as well as the opportunities to enhance value that may arise from an appropriate response. Further information on the Company's approach to ESG can be found on pages 22 to 25.

FRAUDULENT ACTIVITY

Post year-end on 30 January 2020, the Investment Manager received fraudulent payment instructions for genuine invoices totalling $6.9m for construction work completed by a contractor to a USF project company. This resulted in payments being made to a third-party US bank account rather than to the Contractor's US bank account. In subsequent announcements the Company advised that $6.3m of the Payments had been recovered and returned to the Project Company's bank account.

The Company has now fully recovered the $6.9m with no impact to the Company's Net Asset value. In addition, there has been no impact to the relevant construction schedules or budgets.

The Board's investigation indicated that the Fraud is an isolated incident originating from outside the Investment Manager with no indication of collusion with any member of the Investment Manager's staff. When making the Payments, the Investment Manager complied with its relevant processes and procedures. The Investment Manager's parent, Evans Dixon, is conducting a review of relevant cyber security arrangements based on its established Cybersecurity Framework. Separately the Contractor is conducting a review of its own cybersecurity arrangements supported by an external cybersecurity consultant.

The Investment Manager, with the full support of the Board and at its own cost, appointed a global accounting firm to undertake a review of the Investment Manager's relevant financial processes and controls. US Solar Fund's Audit Committee Chair met with the global accounting firm in New York to discuss the engagement prior to it commencing. The review is now complete and, although it identified no material deficiencies, the Investment Manager is implementing the enhancements to its financial controls and processes suggested by the accounting firm.

ANTI-BRIBERY POLICY

The Company operates an anti-bribery policy to ensure that it meets its responsibilities arising from the Bribery Act 2010.

Gill NottChairDate: 17 March 2020

COMPLIANCE WITH THE 2019 Association of Investment Companies (AIC) CODE

The below table sets out the Company's compliance with the 2019 AIC Code:

The Audit Committee (the Committee) is chaired by Jamie Richards and comprises all of the Independent Directors set out on page 38. The Committee operates within clearly defined terms of reference and includes all matters indicated by Rule 7.1 of the UK FCA's DTRs and the AIC Code. The terms of reference were reviewed during the year under review and were updated to enhance the Committee's scope to consider key risks facing the Company. The Board is satisfied that the Committee is properly constituted with one member of the Committee who is a chartered accountant with recent and relevant financial experience.

The Committee meets a minimum of twice a year, and at such other times as the Committee shall require. Any Director who is not a member of the Committee, the Administrator and representatives of the Investment Manager may be invited to attend meetings as and when deemed appropriate.

Role and Responsibilities of the Audit Committee

The function of the Committee is to ensure that the Company maintains the highest standards of integrity, financial reporting, internal and risk management systems and corporate governance. The main duties of the Audit Committee are:

• monitoring the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance and reviewing significant financial reporting judgements contained in them;

• reporting to the Board on the appropriateness of the Board's accounting policies and practices including critical judgement areas;

• reviewing the valuation of the Company's investments prepared by the Investment Manager, and making a recommendation to the Board on the valuation of the Company's investments;

• meeting regularly with the Auditor to review their proposed audit plan and the subsequent audit report and assess the effectiveness of the audit process and the levels of fees paid in respect of both audit and nonaudit work;

• making recommendations to the Board in relation to the appointment, re-appointment or removal of the Auditor and approving their remuneration and the terms of their engagement;

• monitoring and reviewing annually the Auditor's independence, objectivity, expertise, resources, qualification and non-audit work;

• reviewing the effectiveness of the accounting and internal control systems of the Company and considering annually whether there is a need for the Company to have its own internal audit function;

• reviewing and considering the UK Code, the AIC Code, the FRC Guidance on Audit Committees and the Company's institutional investors' commitment to the UK Stewardship code; and

• reviewing the risks facing the Company and monitoring the risk matrix.

The Audit Committee is required to report formally to the Board on its findings after each meeting on all matters within its duties and responsibilities.

Financial Reporting

The primary role of the Committee in relation to financial reporting is to review with the Investment Manager, the Administrator and the Auditor the appropriateness of the half-year report and Annual Report and financial statements, concentrating on, amongst other matters:

• the quality and acceptability of accounting policies and practices;

• the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirements;

• amendments to legislation and corporate governance reporting requirements and accounting treatment of new transactions in the year;

• the impact of new and amended accounting standards on the Company's financial statements;

• whether the Audit Committee believes that proper and appropriate processes and procedures have been followed in the preparation of the half year report and Annual Report and financial statements;

• whether the Annual Report and financial statements, taken as a whole, is fair, balanced, and understandable and provides the information necessary for shareholders to assess the Company's performance, business model and strategy;

• material areas in which significant judgements and estimates have been applied or there has been discussion with the Auditor; and

• any correspondence from regulators in relation to the Company's financial reporting.

Meetings

During the year covered by this report, the Committee met formally on two occasions. The Committee considered and discussed the following matters:

• Consideration and agreement of the terms of reference of the Audit Committee for approval by the Board;

• Review of the Company's risk matrix;

• Review of the internal controls of the Investment Manager and Administrator;

• Review and approval of the audit plan of the Auditor and timetable for the interim and annual financial statements; and

• Detailed review of the interim financial statements.

Internal Audit

The Committee considers at least once a year whether or not there is a need for an internal audit function. Currently it does not consider there to be a need for an internal audit function, given that there are no employees in the Company and all outsourced functions are with parties who have their own internal controls and procedures.

External Audit

Deloitte was appointed at the Company's inception during the year as the external Auditor.

Effectiveness of the Audit Process

To fulfil its responsibility regarding the independence of the Auditor, the Committee has considered:

• discussions with or reports from the Auditor describing its arrangements to identify, report and manage any conflicts of interest; and

• the extent of non-audit services provided by the Auditor and arrangements for ensuring the independence and objectivity and robustness and perceptiveness of the Auditor and their handling of key accounting and audit judgements.

To assess the effectiveness of the Auditor, the Committee has reviewed and challenged:

• the Auditor's fulfilment of the agreed audit plan and variations from it;

• discussions or reports highlighting the major issues that arose during the course of the audit;

• feedback from other service providers evaluating the performance of the audit team;

• arrangements for ensuring independence and objectivity; and

• robustness of the Auditor in handling key accounting and audit judgements.

The Committee is satisfied with Deloitte's effectiveness and independence as Auditor, having considered the degree of diligence and professional scepticism demonstrated by them.

Non-Audit Services

Details of fees paid to Deloitte during the year are disclosed in note 7 to the financial statements. The Committee approved these fees after a review of the level and nature of work to be performed, and are satisfied that they are appropriate for the scope of the work required.

The objectivity of the Auditor is reviewed by the Committee which also reviews the terms under which the external Auditor may be appointed to perform non-audit services. The Committee reviews the scope and results of the audit, its cost effectiveness and the independence and objectivity of the Auditor, with particular regard to any non-audit work that the Auditor may undertake. In order to safeguard Auditor independence and objectivity, the Committee ensures that any other advisory and/or consulting services provided by the external Auditor do not conflict with its statutory audit responsibilities. Advisory and/or consulting services will generally only cover reviews of interim financial statements, tax compliance and capital raising work. Any non-audit services conducted by the Auditor outside of these areas will require the consent of the Committee before being initiated.

Independence

The Committee is required to consider the independence of the external Auditor. In fulfilling this requirement, the Committee has considered a report from Deloitte describing its arrangements to identify, report and manage any conflict of interest and the extent of non-audit services provided by them. The Committee has concluded that it considers Deloitte to be independent of the Company and that the provision of the non-audit services described above is not a threat to the objectivity and independence of the conduct of the audit.

Auditor's Tenure

The Auditor is required to rotate the audit partner every five years. The current partner is in his first year of tenure. There are no contractual obligations restricting the choice of external auditor and the Company will consider putting the audit services contract out to tender at least every ten years. In line with the FRC's recommendations on audit tendering, this will be considered further when the audit partner rotates every five years. Under the Companies Law, the reappointment of the external Auditor is subject to shareholder approval at the AGM.

Having carried out the review described above and having satisfied itself that the Auditor remains independent and effective, the Audit Committee has recommended to the Board that Deloitte be reappointed as Auditor for the year ending 31 December 2020.

Annual General Meeting

The Chairman of the Committee will be present at the Company's AGM to answer questions on the Audit Committee's activity and matters within the scope of the Audit Committee's responsibilities.

Jamie RichardsChairman of the Audit Committee

17 March 2020

The Board has prepared this report in line with the AIC Code as well as the requirements of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI2008/410) and the Companies Act 2006.

Under the requirements of Section 497 of the Companies Act 2006, the Company's Auditor is required to audit certain disclosures contained within the report. These disclosures have been highlighted and the audit opinion thereon is contained within the Auditor's Report on pages 60 to 67.

Annual Statement from the Chairman of the Remuneration & Nomination Committee

The Committee comprises of the full US Solar Fund Plc Board and consists solely of Non- Executive Directors. Three of the Directors are independent from the Investment Manager, however, Ms Tan is not considered independent from the Manager. The Committee considers at least annually the level of the Board's fees.

Consideration by the Directors of matters relating to directors' remuneration

The Remuneration and Nomination Committee comprises the entire Board with Rachael Nutter as Chair. The Committee has responsibility for reviewing the remuneration of the Directors, specifically reflecting the time commitment and responsibilities of the role, and meets at least annually. The Committee also undertakes external comparisons and reviews to ensure that the levels of remuneration paid are broadly in line with industry standards and members have access to independent advice where they consider it appropriate.

During the year neither the Board nor the Committee has been provided with external advice or services by any person, but has received industry comparison information from the Investment Manager in respect of the Directors' remuneration. The remuneration policy set by the Board is described below. Individual remuneration packages are determined by the Remuneration and Nomination Committee within the framework of this policy.

The Directors are not involved in deciding their own individual remuneration with each Director abstaining from voting on their own remuneration.

Remuneration Policy

Below is the Fund's remuneration policy. This policy was adopted on 19 November 2019 and will be put to a Shareholder vote at the forthcoming AGM.

Policy

The Company's policy is that the remuneration of Non-Executive Directors should be determined with due regard to the experience of the Board as a whole, the time commitment required and to be fair and comparable to that of other non-executive directors of similar companies. The Company may also periodically choose to benchmark directors' fees with an independent review, to ensure they remain competitive, fair and reasonable.

The fees for the Directors are determined within the limits set out in the Company's Articles of Association which states that the Directors' remuneration for their services in the office of director shall, in the aggregate not exceed £500,000 per annum or such higher figure as the Company, by ordinary resolution, determines. The Directors may elect to apply the cash amount equal to their annual fee to subscribe for or to purchase ordinary shares. Directors' fees will be reviewed at least annually.

The Directors are entitled only to their annual fee and to be reimbursed for any expenses properly and reasonably incurred by them respectively in and about the business of the Company or in the discharge of his or her duties as a director.

Any director who performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a director, may be paid such reasonable additional remuneration to be determined by the Directors or any committee appointed by the Directors and such additional remuneration shall be in addition to any remuneration provided for by way of their annual fee and their reasonable expenses.

No element of the Directors' remuneration is performance related, nor does any director have any entitlement to pensions, share options or any long-term incentive plans from the Company.

The Directors hold their office in accordance with the Articles and their appointment letters. No director has a service contract with the Company, nor is any such contract proposed. The Directors' appointments can be terminated in accordance with the Articles and without compensation.

Retirement by rotation

In accordance with the Articles of Association, the requirements of the AIC Code and the Board's policy, all the Directors will retire annually. Gill Nott, Jamie Richards and Rachael Nutter, being eligible, will offer themselves for re-election. Biographical notes on the Directors are given on page 31. The Board believes that each Director's skills, experience and knowledge continue to complement each other and add value to the Company and recommends their re-election to the Board. Josephine Tan will not offer herself for re-election at the upcoming AGM. No Director has a contract of service with the Company.

Details of Directors' Remuneration (audited)

The emoluments in respect of qualifying services of each person who served as a Director during the period are shown below. All of the Directors are paid a basic annual fee of £40,000 quarterly in arrears for their services. In addition to this fee, Gill Nott is paid an additional £20,000 per annum for her role as Chair of the Board. Jamie Richards is paid an additional £10,000 per annum for serving as Chair of the Audit committee. No Director has waived or agreed to waive any emoluments from the Company in the current year. No other remuneration was paid or payable by the Company during the current period nor were any expenses claimed by or paid to them other than for expenses incurred wholly, necessarily and exclusively in furtherance of their duties as Directors of the Company.

\* This includes £20,000 per annum in respect of serving as Chair of the Board.

*\* This includes £10,000 per annum in respect of serving as Chair of the Audit committee.

The Directors who held office during the year and their interests in the issued shares of 1p each of the Company were as follows:

All of the Directors' share interests shown above were held beneficially.

Approval of the Remuneration Report

An ordinary resolution for the approval of this Directors' Remuneration Report will be put to Shareholders at the forthcoming Annual General Meeting.

Approval of the Remuneration Policy

In addition, Resolution 3, which is seeking shareholder approval for the Directors' Remuneration Policy, will, if approved, take effect from the AGM and will be valid for a period of three years unless renewed, varied or revoked by the Company at a general meeting.

Companywide considerations

There are no executive directors, nor are there any employees of the Company, so there are no statements to make on any consultations, comparisons or pay and employment conditions within the Company.

Statement of consideration of shareholder views

No comments were received in meetings held with Shareholders in 2019 in relation to directors' fees. Following publication of the 2019 Annual Report and prior to the AGM, the Company will offer to meet with Shareholders to discuss the Company's performance and prospects and give Shareholders the opportunity to ask questions about the Remuneration Policy and levels of remuneration.

This Directors' Remuneration Report was approved by the Board on 17 March 2020 and is signed on its behalf by Rachael Nutter (Director and Chair of the Remuneration and Nomination Committee).

Rachael NutterDirector

17 March 2020

The Management Engagement Committee is comprised of the entire Board and chaired by Rachael Nutter. The Committee's two principal functions are:

• to review annually the compliance by the Investment Manager with the Company's investment policy as established by the Board and with the investment management agreement entered into between the Company and the Investment Manager from time to time (the "Management Agreement"); and

• to review annually the performance of any other key service providers to the Company.

The Committee is required to report formally to the Board on its findings after each meeting on all matters within its duties and responsibilities.

Investment Manager Review

When reviewing the Investment Manager's performance, the Committee considers:

• the integrity of the financial statements of the Company and any formal announcements relating to the Company's financial performance and reviews significant financial reporting judgements contained in them;

• the Investment Manager's compliance with the terms of the Management Agreement;

• the terms of the Management Agreement to ensure that the terms thereof comply with all relevant regulatory requirements, conform with market and industry practice and remain in the best interests of shareholders;

• the merit of obtaining an independent appraisal of the Investment Manager's services;

• the level and method of remuneration of the Investment Manager pursuant to the terms of the Management Agreement, including the methodology of calculation of the relevant annual fee. The review of these fee arrangements shall seek to ensure that the methodology does not encourage excessive risk and that it rewards demonstrably superior performance by the Investment Manager in managing or advising on the portfolio against the stated investment objective when compared to a suitable benchmark or peer group;

• whether the continuing appointment of the Investment Manager on the agreed terms is in the best interests of the Company and shareholders and whether any recommendations should be made to the Board in this respect;

• the adequacy and security of the Investment Manager's arrangements for its employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters; and

• the relationship with the Investment Manager including (but not limited to):

- making recommendations on the Investment Manager's remuneration;

- approving of the terms of engagement of the Investment Manager and the terms of the Management Agreement;

- assessing annually the Investment Manager's independence and objectivity taking into account relevant regulatory requirements;

- assessing annually the qualifications, expertise and resources of the Investment Manager; and

- meeting regularly with the Investment Manager and at least twice a year, to discuss the Investment Manager's remits, the performance of the Company's investments and any issues arising from the management of the Company's investments.

OTHER SERVICE PROVIDERS

The Committee also reviews the performance of the Company's other service providers and in particular:

• monitors compliance by providers of other services to the Company with the terms of their respective agreement from time to time;

• reviews and considers the appointment and remuneration of providers of services to the Company; and

• considers any points of conflict which may arise between the providers of services to the Company.

COMMITTEE MEETINGS

The Committee met once in the period under review and all members were present. During this meeting, the Committee's terms of reference were adopted. The Committee also carried out a review of the Investment Manager's performance during which it was noted that the Investment Manager had complied with the terms of its engagement and had met its obligations to the Company. The International Standard on Assurance Engagements (ISAE) Report for JTC (UK) Limited was tabled at a Board Meeting during the period and following its review the Board was satisfied with the controls in place and the performance of the Company Secretary.

A Manager Review Paper was also reviewed at the meeting. This paper, which focuses on the Investment Manager's performance in respect of Investment Process and Performance, Business Process and Business Continuity, Marketing, Legal, Regulatory and Corporate Governance, and Shareholders Communications will be used by the Committee as an additional tool to analyse performance going forwards.

The Board also reviewed a Service Provider Questionnaire which will be used to assess each Service Provider to the Company's performance and terms of engagement. The Committee did not consider it appropriate to carry out a full performance review of all its service providers at its last meeting as only a few months had passed since these had been engaged and all letters of engagement and fees were carefully considered by the Board.

RACHAEL NUTTERDirector

17 March 2020

13. Independent Auditor's report to the members of

Report on the audit of the financial statements

1. Opinion

In our opinion the financial statements of US Solar Fund plc (the 'company'):

• give a true and fair view of the state of the company's affairs as at 31 December 2019 and of its profit for the year then ended;

• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

• the statement of profit and loss and other comprehensive income statement;

• the statement of financial position;

• the statement of changes in equity;

• the statement of cash flows; and

• the related notes 1 to 24.

The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union.

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.

We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council's (the 'FRC's') Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the company for the year are disclosed in note 7 to the financial statements. We confirm that the non-audit services prohibited by the FRC's Ethical Standard were not provided to the company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

3. Summary of our audit approach

4. Conclusions relating to going concern, principal risks and viability statement

5. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

5.1. Fair value of investments

6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

A lower materiality threshold of £0.2 million based upon 5% of expenses has also been applied to all administrative expenses and related balances recognised within the statement of financial position at the reporting date. The use of a lower materiality threshold reflects the nature of these transactions being primarily from related parties.

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Performance materiality was set at 70% of materiality for the 2019 audit. In determining performance materiality, we considered the following factors:

a. our understanding of the control environment relevant to the financial reporting process;

b. no significant changes in the business during the year against the expected business plan and strategy communicated as part of the IPO process;

c. relative complexity of operations and stage of investment lifecycle in the current period.

6.3. Error reporting threshold

We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.19 million, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

7. An overview of the scope of our audit

7.1. Scoping

Our audit was scoped by obtaining an understanding of the entity and its environment, including internal control, and assessing the risks of material misstatement. Audit work to respond to the risks of material misstatement was performed directly by the audit engagement team.

As the company is required to measure its subsidiaries at fair value rather than consolidate on a line-by-line basis, the company has been treated as having only one component and this all of the work was carried out by one audit team.

8. Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

In this context, matters that we are specifically required to report to you as uncorrected material misstatements of the other information include where we conclude that:

• Fair, balanced and understandable - the statement given by the directors that they consider the annual report and financial statements taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the company's position and performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or

• Audit committee reporting - the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee; or

• Directors' statement of compliance with the UK Corporate Governance Code - the parts of the directors' statement required under the Listing Rules relating to the company's compliance with the UK Corporate Governance Code containing provisions specified for review by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

We have nothing to report in respect of these matters.

9. Responsibilities of directors

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

10. Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Details of the extent to which the audit was considered capable of detecting irregularities, including fraud and non-compliance with laws and regulations are set out below.

A further description of our responsibilities for the audit of the financial statements is located on the FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

11. Extent to which the audit was considered capable of detecting irregularities, including fraud

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

11.1. Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

the nature of the industry and sector, control environment and business performance including the design of the company's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets;

• results of our enquiries of management and the audit committee about their own identification and assessment of the risks of irregularities;

• any matters we identified having obtained and reviewed the company's documentation of their policies and procedures relating to:

- identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

- detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud including the fraudulent transactions arising after the period end date as disclosed on page 5;

- the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

• the matters discussed among the audit engagement team and involving relevant internal specialists, including tax specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the assessment of the fair value of investments and transactions with related parties. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.

We also obtained an understanding of the legal and regulatory framework that the company operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Tax legislation, Alternative Investment Fund Managers (AIFM) Directive, Non-Mainstream Pooled Investments regulations and the Listing Rules.

11.2. Audit response to risks identified

As a result of performing the above, we identified the assessment of the fair value of investments as a key audit matter related to the potential risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response to that key audit matter.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

• enquiring of management and the audit committee concerning actual and potential litigation and claims;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

• reading minutes of meetings of those charged with governance;

• in addressing the risk of fraud in the related party transactions, we have challenged management on the rationale for all transactions entered into and reviewed the accounting treatments adopted by management against the specific contractual terms and arrangements associated with each individual transaction and reviewed the related disclosures in the financial statements; and

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

Report on other legal and regulatory requirements

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors' report.

13. Matters on which we are required to report by exception

13.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

13.2. Directors' remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made or the part of the directors' remuneration report to be audited is not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

14. Other matters

14.1. Auditor tenure

Following the recommendation of the audit committee, we were appointed by the directors on 30 June 2019 to audit the financial statements for the year ending 31 December 2019 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 1 year.

14.2. Consistency of the audit report with the additional report to the audit committee

Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).

15. Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Anthony Matthews FCA(Senior Statutory Auditor)for and on behalf of Deloitte LLPStatutory AuditorLondon

Date: 17 March 2020

14. Statement of Profit and Loss

All items dealt with in arriving at the result for the period relate to continuing operations.

The Total column of this statement represent the Company's profit and loss account, prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations adopted by the European Union. The return on ordinary activities after taxation is the total comprehensive income and therefore no additional statement of other comprehensive income is presented. The supplementary revenue and capital columns are presented for information purposes in accordance with the Statement of Recommended Practice issued by the Association of Investment Companies as further explained in note 2.

The notes on pages 73 to 88 form an integral part of these financial statements.

15. Statement of

The financial statements of US Solar Fund Plc (registered number 11761009) were approved by the Board of Directors and authorised for issue on • March 2020. They were signed on its behalf by:

Gill NottDirectorDate: 1 March 2020

The notes on pages 73 to 88 form an integral part of these financial statements.

16. Statement of

The notes on pages 73 to 88 form an integral part of these financial statements.

17. Statement of

The notes on pages 73 to 88 form an integral part of these financial statements.

18. Notes to the Financial

For the period from 10 January 2019 (incorporation date) to 31 DECEMBER 2019

1. GENERAL INFORMATION

US Solar Fund Plc was incorporated as a Public Company, limited by shares, in England and Wales on 10 January 2019 with registered number 11761009. The registered office of the Company is The Scalpel, 18th Floor, 52 Lime Street, London EC3M 7AF. Its share capital is denominated in US Dollars and currently consists of ordinary shares. The Company's principal activity is to invest in a diversified portfolio of Solar Power Assets located in North America and other countries forming part of the Organisation for Economic Co-operation and Development in the Americas.

2. BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards and interpretations adopted by the European Union and also considers Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts", issued by the Association of Investment Companies, (the AIC SORP) in October, 2019. The financial statements have been prepared on a historical cost basis, except where balances are recognised at fair value. The principal accounting policies are set out in Note 5.

In terms of the AIC SORP, the Company presents an Income Statement which shows amounts split between those which are revenue and capital in nature. The determination of whether an item should be recognised as revenue or capital (or part revenue and part capital) is carried out in accordance with the recommendations and principles as set out in the SORP.

The determination of the revenue or capital nature of a transaction is determined by giving consideration to the underlying elements of the transaction. Capital transactions are considered to be those arising as a result of the appreciation or depreciation in the value of assets, whether due to the retranslation of assets held in foreign currency or fair value movements on investments held at fair value through profit and loss. Revenue transactions are all transactions, other than those which have been identified as capital in nature.

FUNCTIONAL AND PRESENTATION CURRENCY

The currency of the primary economic environment in which the Company operates (the functional currency) is US Dollar which is also the presentation currency.

GOING CONCERN

The financial position of the Company, its cash flows, liquidity position and borrowing facilities are described in the financial statements and related notes. In addition, note 16 to the financial statements includes the policies and processes for managing its capital, its financial risk management, details of its financial instruments and its exposure to credit risk and liquidity risk. The Company has sufficient financial resources and expectation of growth in the medium-term to meet its financial obligations. As such the Directors believe that the Company will continue into the foreseeable future and have adopted the going concern basis of preparation in preparing these financial statements.

3. CRITICAL JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

During the period the Directors considered the following significant judgements, estimates and assumptions:

Judgements

ASSESSMENT AS AN INVESTMENT ENTITY

Entities that meet the definition of an investment entity within IFRS 10 are required to measure their subsidiaries at fair value through profit or loss rather than consolidate them unless they provided investment related services to the Company. To determine that the Company continues to meet the definition of an investment entity, the Company is required to satisfy the following three criteria:

a) the Company obtains funds from one or more investors for the purpose of providing those investors with investment management services;

b) the Company commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income, or both; and

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

The Company meets the criteria as follows:

• the Company provides investment management services and has several investors who pool their funds to gain access to infrastructure related investment opportunities that they might not have had access to individually;

• the stated strategy of the Company is to deliver stable returns to shareholders through investing in a diversified portfolio of utility-scale solar power plants and associated infrastructure, which may include transmission and storage (e.g. batteries) assets which will typically be co‑located with the solar power plant (together, Solar Power Assets) located in North America and other OECD countries in the Americas; and

• the Company measures and evaluates the performance of all of its investments on a fair value basis. The fair value method is used to represent the Company's performance in its communication to the market, including investor presentations. In addition, the Company reports fair value information internally to Directors, who use fair value as the primary measurement attribute to evaluate performance.

The Directors are of the opinion that the Company has all the typical characteristics of an investment entity and continues to meet the definition in the standard. This conclusion will be reassessed on an annual basis.

In respect of the second criterion the Company's purpose is to invest funds for returns from capital appreciation and investment income. In respect of the requirement that investments should not be held indefinitely but should have an exit strategy for their realisation the Company may hold these assets until the end of their expected useful lives, unless there is an opportunity in the market to dispose of the investments at a price that is considered appropriate. There continues to be an active secondary market for renewables projects in the countries in which we operate.

As at 31 December 2019, the Company only had one subsidiary, USF Holding Corp. Being an investment entity, it is measured at fair value as opposed to being consolidated on a line-by-line basis, meaning its cash, debt and working capital balances are included in the fair value of investments rather than the Group's current assets.

ESTIMATES

valuation of investment in subsidiary

The significant estimate in the Company's financial statements that carry the most significant risk of a material effect on next year's financial statements are the fair value of investments. This estimate is considered to be at risk of actual outcomes in the next 12 months varying from the estimates made in determining the reported amount of an asset. As at 31 December 2019, the fair value of the underlying investments has been assessed as equivalent to their cost. This assessment is considered to be a significant estimate at year end, as the assumptions used are subject to measurement uncertainty and possible changes could be significant. Refer to note 17 for further year-end detail on the fair value measurement as at 31 December 2019.

4. NEW AND REVISED STANDARDS AND INTERPRETATIONS

application of new and revised stAndards

This following standards are required to be adopted in annual periods beginning on or after 1 January 2019:

• IFRIC 23 Uncertainty over Income Tax Treatments

• Annual Improvements to IFRSs 2015-2017 Cycle (Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 23)

NEW AND REVISED STANDARDS IN ISSUE BUT NOT YET EFFECTIVE

There are no standards, amendments or interpretations in issue at the reporting date which have been issued but are not yet effective and are deemed to be material to the Company.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in the preparation of the financial statements have been consistently applied during the period ended 31 December 2019.

The principal accounting policies applied in the preparation of the financial statements are set out below:

segmental information

The Board is of the opinion that the Group is engaged in a single segment business, being the investment in Solar Power Assets located in North America and other countries forming part of the Organisation for Economic Co-operation and Development in the Americas.

INCOME

Income comprises interest income (bank interest and loan interest). Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be measured reliably. Loan interest income is accrued by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

No income is earned from contracts with customers and as such IFRS 15 has not been applied.

EXPENSES

Operating expenses are the Company's costs incurred in connection with the on-going management of the Company's investments and administrative costs. Operating expenses are accounted for on an accruals basis.

The Company's management and administration fees, finance costs and all other expenses are charged through the Statement of Profit and Loss and Other Comprehensive Income.

Directly attributable acquisition costs of assets are capitalised on purchase of assets. Costs directly relating to the issue of Ordinary Shares are charged to share premium.

NET GAIN OR LOSS ON INVESTMENTS AT FAIR VALUE THROUGH PROFIT AND LOSS

The Company recognises movements in the fair value of investments in subsidiaries through profit and loss.

TAXATION

The Company is approved as an Investment Trust Company under sections 1158 and 1159 of the Corporation Taxes Act 2010 and Part 2 Chapter 1 Statutory Instrument 2011/29999 for accounting periods commencing on or after 25 May 2018. The approval is subject to the Company continuing to meet the eligibility conditions of the Corporations Tax Act 2010 and the Statutory Instrument 2011/29999. The Company intends to ensure that it complies with the Investment Trust Company regulations on an ongoing basis and regularly monitors the conditions required to maintain Investment Trust Company status.

From 1 April 2015 there is a single corporation tax rate of 19%. Tax is recognised in the Statement of Profit and Loss and Other Comprehensive Income except to the extent that it relates to the items recognised as direct movements in equity, in which case it is similarly recognised as a direct movement in equity. Current tax is the expected tax payable on any taxable income for the period, using tax rates enacted or substantively enacted at the end of the relevant period.

INVESTMENT IN SUBSIDIARIES

Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed, or has rights, to variable returns from its involvement with the subsidiary entity and has the ability to affect those returns through its power over the subsidiary entity. In accordance with the exception under IFRS 10 Consolidated financial statements, the Company is an investment entity.

The Company does not have any subsidiaries that provide investment management services and are not themselves investment entities. As a result the Company does not consolidate any of its subsidiaries.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash at bank and deposits held with the bank.

TRADE AND OTHER RECEIVABLES

Trade and other receivables are recognised initially at fair value and subsequently stated at amortised cost less loss allowance which is calculated using the provision matrix of the expected credit loss model, the effect of which is considered immaterial.

TRADE AND OTHER PAYABLES

Trade and other payables are recognised initially at fair value and subsequently stated at amortised cost.

EQUITY

Equity instruments issued by the Company are recorded at the amount of the proceeds received, net of directly attributable issue costs. Costs not directly attributable to the issue are immediately expensed in the Statement of Profit and Loss and Other Comprehensive Income. The Company's capital is represented by the Ordinary Shares, Share Premium (until cancellation), Accumulated losses and Capital Reduction Reserve.

FINANCIAL INSTRUMENTS

In accordance with IFRS 9, the Company classifies its financial assets and financial liabilities at initial recognition into the categories of amortised cost or fair value through profit or loss. None of the financial instruments are classified as fair value through other comprehensive income.

FINANCIAL ASSETS

The Company classifies its financial assets at amortised cost or fair value through profit or loss on the basis of both:

• the entity's business model for managing the financial assets

• the contractual cash flow characteristics of the financial asset

FINANCIAL ASSETS MEASURED AT AMORTISED COST

A debt instrument is measured at amortised cost if it is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Company includes in this category short-term non-financing receivables including cash and financial instruments classified as trade and other receivables.

FINANCIAL ASSET MEASURED AT FAIR VALUE THROUGH PROFIT OR LOSS (FVPL)

A financial asset is measured at fair value through profit or loss if:

a) its contractual terms do not give rise to cash flows on specified dates that are solely payments of principal and interest (SPPI) on the principal amount outstanding; or

b) it is not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell; or

c) it is classified as held for trading (derivative contracts in an asset position).

The Company's investment in subsidiaries (which comprises both debt and equity) is held at fair value through profit or loss under IFRS 9 as the equity portion of the investment does not meet the SPPI test nor will the Company elect to designate the investments at fair value through other comprehensive income. The debt investment forms part of a group of assets that are managed and the performance evaluated on a fair value basis.

The Company includes in this category equity instruments including investments in subsidiaries (which comprises both debt and equity). There are no consolidated subsidiaries.

FINANCIAL LIABILITIES MEASURED AT AMORTISED COST

This category includes all financial liabilities, other than those measured at fair value through profit or loss, including short-term payables.

RECOGNITION AND DERECOGNITION

Financial assets are recognised on trade date, the date on which the Company commits to purchase or sell an asset. A financial asset is derecognised where the rights to receive cash flows from the asset have expired, or the Company has transferred its rights to receive cash flows from the asset. The Company derecognises a financial liability when the obligation under the liability is discharged, cancelled or expired.

IMPAIRMENT OF FINANCIAL ASSETS

While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, there has been no impairment loss identified. Investment held at fair value through profit or loss is not subject to IFRS 9 impairment requirements.

The company holds trade receivables with no financing component and which have maturities of less than 12 months at amortised cost and, as such has chosen to apply an approach similar to the simplified approach for expected credit losses (ECL) under IFRS 9 to all of its trade receivables.

Interest receivable on cash balances, fall within the scope of IFRS 9. The Company has completed some high-level analysis and forward looking qualitative and quantitative information, the Directors consider the interest receivable to be low credit risk as the deposits are held with reputable financial institutions.

For interest receivable that are low credit risk, IFRS 9 allows a 12 month expected credit loss to be recognised. The Directors have concluded that any ECL on the interest receivable would be immaterial to the Annual Financial Statements and therefore no impairment adjustments were accounted for.

FAIR VALUE MEASUREMENT AND HIERARCHY

Fair value is the price that would be received on the sale of an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market. It is based on the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interest. A fair value measurement of a non-financial asset takes into account the best and highest value use for that asset.

The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose significance of the inputs is assessed against the fair value measurement in its entirety. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs or any other significant unobservable inputs, that measurement is a Level 3 measurement.

The fair value hierarchy to be applied under IFRS 13 is as follows:

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are carried at fair value and which will be recorded in the financial information on a recurring basis, the Company will determine whether transfers have occurred between levels in the hierarchy by reassessing categorisation at the end of each reporting period.

6. INTEREST INCOME

7. ADMINISTRATIVE AND OTHER EXPENSES

1. During the year, the Company's auditor, Deloitte, was paid GBP76,500 for their role as reporting accountant prior to the IPO. This fee was recognised directly in equity as a cost associated with the initial capital raising of the Company.

2. The non-audit services provided related to the review of the initial financial statements.

The Company has no employees and therefore no employee related costs have been incurred.

8. TAXATION

The Company is approved as an Investment Trust Company with effect as of 16 April 2019 and is subject to tax at the UK corporation tax rate of 19%. An Investment Trust Company can claim a corporation tax deduction for dividends designated as interest distributions that are derived from net interest income. Therefore, no UK corporation tax charge has been recognised by the Company for the period ended 31 December 2019.

The tax credit of $361,031 arose as a result of dividends payable in respect of the period being designated as interest distributions in accordance with UK tax legislation specific to Investment Trust Companies.

9. EARNINGS PER SHARE

Earnings per share amounts are calculated by dividing the profit or loss for the period attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period. As there are no dilutive instruments outstanding, basic and diluted earnings per share are identical.

10. INVESTMENT IN SUBSIDIARY

The Company meets the definition of an investment entity. Therefore, it does not consolidate its subsidiaries but, rather, recognises them as investments held at fair value through profit or loss. The Company is not contractually obligated to provide financial support to the subsidiary and there are no restrictions in place on passing monies up the structure.

The net fair value movement comprises the following:

Within the net results presented above are intercompany interest charges of $377,253 and intercompany MSA fees of $2,047,726. On 28 June 2019, the Company entered into a Management Services Agreement (MSA) with its subsidiary USF Holding Corp. The Board of the Company, with further assistance by delegation of duties to the Investment Manager, will provide strategic management services to USF Holding Corp as it pursues investment into US solar plants. The fair value movement in the period to 31 December 2019 includes an MSA fee of $2,047,726.

The investment in subsidiaries comprises on a 'look-through' basis the following:

(i) The balance recorded at 31 December 2019 relates to the Company's purchase price of the Olympos Acquisition One, Acquisition Two, and Acquisition Three, Granite and Preserve portfolio solar asset plants.

(ii) 3rd party loan funding is comprised of the following:

On 29 August 2019, USF Bristol Class B Member, LLC and Milford Solar I Holdings, LLC, each as borrowers, entered into a financing agreement with Zions Bancorporation, N.A. and KeyBank National Association, each as lenders. The facility includes a construction loan commitment and an ITC bridge loan commitment of $48.5 million and $79.2 million respectively. The ITC bridge loan is scheduled to be repaid in December 2020 using proceeds from the tax equity investor. Concurrently, the construction loan will convert to a term loan which will be fully amortised over a 25-year tenure. $22.8 million of the construction loan was drawn as of period end. The construction loan and subsequent term loan facility is hedged with a fixed interest rate swap for the full duration of the loan. As at 31 December 2019, the drawn fair value of the loan includes mark-to-market revaluation of associated interest rate swaps of $2.9 million.

In addition to the above, the following Letters of Credit have been issued:

• KeyBank National Association has provided Letters of Credit to USF Bristol Class B Member LLC to the value of US$20.6 million, expiring in November 2045.

• Zions Bancorporation, N.A. has provided Letters of Credit to USF Bristol Class B Member LLC to the value of US$9.9 million, expiring in November 2045.

11. TRADE AND OTHER RECEIVABLES

12. CASH AND CASH EQUIVALENTS

13. TRADE AND OTHER PAYABLES

14. Dividends payable

During the year the Company declared dividends totalling $1,820,633 of which $820,172 has been paid. The Company paid a dividend of 0.50 cents per share, totalling $1,000,461 for the period ending 30 September 2019. The dividend was paid on 7 February 2020.

15. CATEGORIES OF FINANCIAL INSTRUMENTS

At the balance sheet date, all financial assets and liabilities were measured at amortised cost except for the investment in subsidiary which is measured at fair value as further explained in note 17.

16. FINANCIAL RISK MANAGEMENT

The Company is exposed to certain risks through the ordinary course of business and the Company's financial risk management objective is to minimise the effect of these risks. The management of risks is performed by the Directors of the Company and the exposure to each financial risk considered potentially material to the Company, how it arises and the policy for managing it is summarised below:

CREDIT RISK

The Company is exposed to third party credit risk in several instances and the possibility that counterparties with which the Company and its subsidiaries, together the Group, contracts may fail to perform their obligations in the manner anticipated by the Group.

Counterparty credit risk exposure limits are determined based on the credit rating of the counterparty. Counterparties are assessed and monitored on the basis of their ratings from Standard & Poor's and/or Moody's. No financial transactions are permitted with counterparties with a credit rating of less than BBB- from Standard & Poor's or Baa3 from Moody's unless specifically approved by the Board.

Cash and other assets that are required to be held in custody will be held at bank. Cash and other assets may not be treated as segregated assets and will therefore not be segregated from the banks own assets in the event of the insolvency of a custodian. Cash held with the bank will not be treated as client money subject to the rules of the FCA and may be used by the bank in the ordinary course of its own business. The Company will therefore be subject to the creditworthiness of the bank. In the event of the insolvency of the bank, the Company will rank as a general creditor in relation thereto and may not be able to recover such cash in full, or at all.

Credit risk is managed by diversifying exposures among a portfolio of counterparties and through applying credit limits to those counterparties with lower credit standing.

Credit exposures may also be managed using credit derivatives. No credit derivatives were in place as at 31 December 2019.

Cash and bank deposits are held with major international financial institutions who each hold a Moody's credit rating of A2 or higher.

LIQUIDITY RISK

The objective of liquidity management is to ensure that all commitments which are required to be funded can be met out of readily available and secure sources of funding. The Company's only financial liabilities are trade and other payables. The Company intends to hold sufficient cash across operating accounts to meet the working capital needs over a horizon of at least the next 6 months. Cash flow forecasts are prepared on a six-monthly basis to assist in the ongoing analysis of daily cash flow.

The following table reflects the maturity analysis of financial assets and liabilities.