Interim Report to 31 December 2021

RNS Number : 3467C

Bluefield Solar Income Fund Limited

22 February 2022

Bluefield Solar Income Fund Limited
('Bluefield Solar' or the 'Company')

Interim Report and Unaudited Condensed Interim Financial Statements

for the six months ended 31 December 2021

'Generating a 81.69% return to Shareholders since IPO'

Bluefield Solar (LON:BSIF), the UK income fund focused on acquiring and managing UK-based renewable energy and storage projects to provide growing dividends for its shareholders whilst furthering the decarbonisation of the energy system, is pleased to announce its Interim Report for the six months ended 31 December 2021.

Principal highlights of the Company are summarised as follows:

· Raised dividend target for FY22 of 8.16 pence per share, a yield of 6.7%*

· Majority portfolio with revenues linked to RPI providing real inflation protection

· Real asset backed investment delivering significant environmental impact

· NAV per share growth during the period of 6.2%

· Medium term positive power price momentum

· Maiden wind and battery storage acquisitions diversify the Company's future revenue streams

*based off the closing market price at 21.02.22

Financial Highlights

As at 31 December 2021/ 30 June 2021

Net Asset Value (NAV)

£610.0m £471.4m

Dividend Target per Share

FY22 8.16pps 8.00pps

NAV per share

122.96p 115.83p

Six month period to 31 December 2021 / 31 December 2020

Underlying Earnings¹

(pre amortisation of debt)

£21.4m £18.7m

Underlying Earnings per share¹

(pre amortisation of debt)

4.31p 4.59p

Total Shareholder Return²

5.68% -0.37%

Total return to Shareholders since IPO

81.69% 79.39%

Total Return⁴

9.61% 3.52%

Total Underlying Earnings per share available for distribution¹

(post amortisation of debt)

5.24p 4.66p

MWh Generated per MWp³

422 432

1. Underlying earnings is an alternative performance measure employed by the Company to provide insight to the Shareholders by linking the underlying financial performance of the operational projects to the dividends declared and paid by the Company.

2. Total Shareholder Return is based on share price movement and dividends paid in the period. It is defined in the Alternative Performance Measure appendix.

3. Excludes assets invested during the period.

4. Total Return is based on the NAV movement and dividends paid in the period. It is defined in the Alternative Performance Measure appendix.

5. For a year, based on forecasted annual generation.

6. During the 21/22 financial year.

Results Summary:

	Six months ended 31 December 2021	Six months ended 31 December 2020
Total operating income	£54,510,638	£14,189,525
Total comprehensive income before tax	£53,699,532	£13,485,183
Total underlying earnings¹	£21,389,077	£18,678,067
Earnings per share (per page 62)	11.05p	3.57p
Underlying EPS available for distribution²	5.24p	2.63p
Underlying EPS brought forward³	2.67p	2.03p
Total underlying EPS available for distribution	5.24p	4.66p
1^st interim dividend for the year ending 30 June 2022	2.03p	2.00p
NAV per share	122.96p	117.12p
Share Price as at 31 December	124.3p	130.0p
Total Return⁴	9.61%	3.52%
Total Shareholder Return⁵	5.68%	-0.37%
Total Shareholder Return since inception⁶	81.69%	79.39%
Dividends per share paid since inception	57.39p	49.39p

2. Underlying EPS is calculated using underlying earnings available for distribution divided by the weighted average number of shares in issue through the period.

3. Underlying EPS brought forward is calculated using the number of shares in issue.

4. Total Return is based on NAV per share movement and dividends paid in the period.

5. Total Shareholder Return is based on share price movement and dividends paid in the period.

6. Total Shareholder Return since inception is based on share price movement and dividends paid since the IPO.

John Rennocks, Chairman of Bluefield Solar, said:

"It is pleasing to report on another successful period for Bluefield Solar. Having performed very well during the pandemic, Bluefield remains an ideal home for investors looking for robust sterling income with sector leading earnings and dividends. With high levels of index-linked revenues, a defensive debt and power sales strategy and no currency risk, we have proven after close to a decade of operation that we have a strategy that delivers 'whatever the weather'.

Analyst presentation

A presentation for analysts will be hosted by James Armstrong and Neil Wood of Bluefield Partners LLP at 09:30am today, 22 February 2022. For details, please contact Buchanan on [email protected].

A copy of the presentation is available via the Company's website and an audio webcast of the presentation will also be made available after 12pm today.

https://bluefieldsif.com/

For further information:

Bluefield Partners LLP (Company Investment Adviser) James Armstrong / Neil Wood / Giovanni Terranova	Tel: +44 (0) 20 7078 0020 www.bluefieldllp.com

Numis Securities Limited (Company Broker) Tod Davis / David Benda	Tel: +44 (0) 20 7260 1000 www.numis.com

Ocorian (Company Secretary & Administrator) Patrick Ogier	Tel: +44 (0) 1481 742 742 www.ocorian.com

Media enquiries: Buchanan (PR Adviser) Henry Harrison-Topham / Vicky Hayns / Henry Wilson	Tel: +44 (0) 20 7466 5000 www.buchanan.uk.com [email protected]

Notes to Editors

About Bluefield Solar

Bluefield Solar is a UK income fund focused on acquiring and managing UK-based renewable energy and storage projects to generate stable, long term dividends for its shareholders whilst furthering the decarbonisation of the energy system. Not less than 75% of the Company's gross assets will be invested into UK solar assets. The Company can also invest up to 25% of its gross assets into wind, hydro and storage technologies. The majority of the Company's group's revenue streams are regulated and non-correlated to the UK energy market. Bluefield Solar owns and operates one of the UK's largest, diversified portfolios of solar assets with a combined installed power capacity now in excess of 673 MWp.

Further information can be viewed at www.bluefieldsif.com

LEI Code 2138004ATNLYEQKY4B30

About Bluefield Partners

Bluefield Partners LLP was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure. It has a proven record in the selection, acquisition and supervision of large-scale energy assets in the UK and Europe. The team has been involved in over £4 billion renewable funds and/or transactions in both the UK and Europe, including over £1 billion in the UK since December 2011.

Bluefield Partners LLP has led the acquisitions of, and currently advises on, over 100 UK based solar PV assets that are agriculturally, commercially or industrially situated. Based in its London office, it is supported by a dedicated and experienced team of investment, legal and portfolio executives. Bluefield Partners LLP was appointed Investment Adviser to Bluefield Solar in June 2013.

Corporate Summary

Investment objective

The investment objective of the Company is to provide Shareholders with an attractive return, principally in the form of regular income distributions, by being invested in solar energy assets located in the UK. The Company also has the ability to invest a minority of its capital into wind, hydro and energy storage assets.

Structure

The Company is a non-cellular company limited by shares incorporated in Guernsey under the Law on 29 May 2013. The Company's registration number is 56708, and it is regulated by the GFSC as a registered closed-ended collective investment scheme and it is accredited as a Green Fund after successful application to the GFSC under the Guernsey Green Fund Rules on 15 April 2019. The Company's Ordinary Shares were admitted to the Premium Segment of the Official List and to trading on the Main Market of the LSE following its IPO on 12 July 2013. The issued capital during the year comprises the Company's Ordinary Shares denominated in Sterling.

The Company has the ability to use long term and short term debt at the holding company level as well as having long term, non-recourse debt at the SPV level.

Investment Adviser

The Investment Adviser to the Company during the period was Bluefield Partners LLP which is authorised and regulated by the UK FCA under the number 507508. In May 2015 BSL, a company with the same ownership as the Investment Adviser, commenced providing asset management services to the investment SPVs held by BSIFIL. In August 2017 BOL, a company with the same ownership as the Investment Adviser, commenced providing operation and maintenance services to the Company and provides services to 53 of the investment SPVs held by BSIFIL as at period end.

In December 2020 BRD, a company with the same ownership as the Investment Adviser, commenced providing the Company with new build development opportunities in addition to arrangements in place with the Company's other development partners.

Chairman's Statement

It is pleasing to report on another successful period for Bluefield Solar.

Having performed very well during the pandemic, your Company remains an ideal home for investors looking for robust sterling income with sector leading earnings and dividends. With high levels of index-linked revenues, a defensive debt and power sales strategy and no currency risk, we have proven after close to a decade of operation that we have a strategy that delivers 'whatever the weather'.

Furthermore, due to the Company's revenue mix, it stands to flourish further still in the current inflationary environment; something we are already seeing coming through in rising revenues. As such, the Board is pleased to announce that it is raising its full year dividend guidance to not less than 8.16pps, (2021-22: 8.00pps). The NAV is also benefitting from a material uplift, a function of increases in inflation and power forecasts, up to 122.96pps (up from 115.83pps in June 2021 and 117.1pps in September 2021).

The principal activities of the Company, as well as features of the period under review, have been:

· The Company completed the acquisition of its first portfolio of wind assets (109 wind turbines) for an initial consideration of £63m with potential to rise to £95m as a result of re-powering optionality in Northern Ireland, alongside an over-subscribed equity raise of £105.1m;

· Further acquisitions were made on two ready-to-build projects; a co-located 45MWp solar and a 25MWp battery opportunity for £5m (including land rights to the site) and a 20MWp standalone battery storage development opportunity for £1.5m;

· Planning consent was achieved in December 2021 for an unsubsidised 31MWp PV plant, taking the Company to 100MWp of consented PV projects, whilst its proprietary pipeline of solar and battery developments grew to c.800MWp;

· As a result of inflation and continued near term power price highs, at 31 December 2021 the Net Asset Value per share in the Company had risen to 122.96pps (30 June 2021: 115.83pps);

· The share price has risen modestly from 121.4p at 30 June 2021 to 124.3p at 31 December 2021, as investors have gradually bought back into the renewables sector following a period of heavy share issuance;

· Total target dividend for the year has been raised to 8.16pps; and

· Post period end the Company completed the purchase of a 47.5MWp wind and solar portfolio for an enterprise value of up to £63.5m.

The performance of the assets of the Company and how this is reflected in returns to Shareholders is set out in detail in the Investment Adviser's report below.

Key Events

In this half year, and just after the period end, acquisitions totalled £134m, including the successful initiation of the extension of our UK asset base into wind and storage assets. Onshore wind assets are close in risk profile to solar and complementary in generation and revenue production and provide a stable and highly regulated cash flow. We also made our first venture into co-located solar and battery storage. (See the Acquisitions section of the Investment Adviser's report below for further details).

The operational solar and wind acquisitions benefit from high proportions of regulated revenue, with an average remaining weighted duration of 13 years, which further enhance the Company's positive correlation to inflation, and they not only underpin our objective to sustain market leading earnings and dividend payments in the years ahead, but also increase the Company's ability to maximise the potential of higher yielding, new build subsidy free solar assets whilst maintaining the highest levels of regulated revenues for a fund of this kind in the sector.

The Group's total outstanding debt, as at the time of writing, has increased to c.£400 million and its leverage stands at c.40% of GAV (44% as at 30 June 21); comfortably in line with the 35% - 45% range the Directors have previously outlined as desirable for the Company.

When the excellent acquisitions are combined with an equally exciting portfolio of future opportunities totalling over 900MWp, with 100MWp in ready to build solar projects, a strong development pipeline (627MWp) and battery storage projects (179MWp), your Company is exceptionally well placed in its ambition to sustain growth and give active support to the de-carbonisation of UK electricity and the UK Government's net-zero ambitions. As ever, the Investment Adviser continues to evaluate further solar, wind and battery storage investment opportunities and the Board will continue to ensure that these potential new projects are capable of enhancing dividends by a judicious use of debt and equity financing.

Underlying Earnings and Dividend Income

The Underlying Earnings for the period, pre amortisation of long-term finance, were £21.4m or 4.3pps and underlying earnings for distribution, post debt repayments of £8.6m (1.7pps), were £12.7m (2.6pps).

The on-target operational performance of the Company's portfolio over the period to 31 December 2021, combined with the benefit of brought forward reserves of 2.7pps (adjusted for the new shares issued in July 2021), means the Board remains confident of meeting its dividend target of not less than 8.16pps for the year to 30 June 2022, allowing the Company to retain its position as the sector's highest dividend distributor (on a pence per share basis).

Further details of Underlying Earnings are set out in the Investment Adviser's Report below.

Valuation and Discount Rate

Valuation methodology remains consistent with previous reporting periods, with the Board receiving a valuation recommendation from the Investment Adviser which is derived from a comprehensive DCF model. This valuation is then benchmarked, on a capacity basis, against comparable transactional activity for UK based assets where fierce demand for renewable assets, record power prices and rising near term inflation have resulted in valuations for regulated renewable assets rising relative to the period to 30 June 2021. As a consequence, the Investment Adviser is now observing that pricing for solar portfolios, on £m/MWp basis, has moved into the upper band of the value range £1.25m/MWp - £1.40m/MWp.

By valuing the Company's operational portfolio at an enterprise value of £861.2m (£1.30m/MWp for the solar assets vs. £1.26m/MWp in June 2021), the Directors' Valuation as at 31 December 2021 compares appropriately to precedent public market transactions and in keeping with the Company's valuation methodology of 'willing buyer/willing seller'.

Whilst the equity discount rate of 6.00% remains unchanged from 30 Jun 2021, near term inflation expectations have materially increased and the Directors believe it appropriate this is reflected in the valuation as at 31 December 2021. Reflecting the latest aggregate forecasts, as well as the transition from RPI to CPIH post 2030, inflation assumptions within the valuation have been amended from 3.0% until 2025 and 2.75% thereafter, to 6.4% in 2022, 3.4% in 2023 and then 3.0% until 2029 before a drop to 2.25% thereafter.

Due to the highly regulated nature of the Company's revenue, enhanced by recent acquisitions with superior index linked subsidy tariffs, the increased inflation assumptions have resulted in a valuation uplift of c.£18.5m (3.7pps) since June 2021.

Please see below in the Investment Adviser's report for further details on the Directors' Valuation.

Inflation

Rising commodity prices, following a rebound in demand as economies recover from pandemic lows, have pushed inflation (from which the Company is a net beneficiary) into the spotlight for the first time in recent memory, with both CPI and RPI reaching 30 year highs of 5.4% and 7.5%, respectively, in December 2021.

Prevailing opinion among the forecasters remains that inflation will abate by 2023, but it is entirely possible that a longer period of higher inflation will persist. Since earnings from the Company's asset base have a positive correlation with inflation, as a result of indexation provisions in our regulated revenues which outweigh the upward pressure on our cost base, increases in RPI beyond the 3% level which has been previously embedded in our financial forecasts will drive an increase to both forecast earnings and the valuation of the portfolio, as outlined earlier in this Statement and below of the Investment Adviser's report.

Power Prices

UK day-ahead power prices rose to multi-year highs, rising from c.£78/MWh on average in June 2021 to c.£245/MWh in December 2021, as European gas hub prices rose to record highs amid tightness across global gas markets, below average gas storage levels and ongoing Russian gas supply limitations potentially exacerbated by developments on the Ukrainian border, with delays to the opening of the Nord Stream 2 gas pipeline further supporting rising gas hub prices.

Further price pressure was created by lower than usual renewable power generation and colder weather conditions increasing the call on carbon intensive thermal - gas and coal - generation, particularly in the second half of the period.

The Company's flexible PPA strategy has meant it was able to manage the timing of power price fixes to avoid the lows in April 2020, before carefully fixing selected asset tranches to take advantage of rising power prices during 2021 (striking contracts at an average price of £71.34MWh post July 2021) and the early months of 2022 (achieving an average of £115.26MWh). The weighted average contracted price per MWh across the portfolio had risen to £51.8MWh as at 31 December 2021, as compared with £51.6MWh for contracts starting post 30 June 2021.

Looking beyond the near term and out over the next decade, whilst de-carbonisation is expected to drive a large increase in demand for electricity, medium to long term power price predictions have been lowered (from predictions in June 2020 and December 2020) as forecasters continue to believe that, despite rising demand for electricity, pricing will be suppressed by falling commodity prices and increased renewable generation post-2030. Volatility within the power markets has shown that power forecasters have underestimated near term future electricity prices and the Company has frequently achieved higher prices than expected.

Please see below in the Investment Adviser's report for a graph illustrating the blended power curves used by the Company in the Directors' Valuation.

Environmental, Social and Governance ("ESG")

ESG focus continues to grow, quite correctly, as an important topic for Boards, investors and shareholders alike and I am pleased to outline a number of key areas of focus over the period to date.

The first is the Company's continued investment into improving its ESG goals and policies by working with a leading ESG consultant to develop an ESG strategy. Alongside this, focus will be given to fulfilling the Company's requirements under Article 8 of the SFDR and alignment against the EU Taxonomy.

The Company is also undertaking a number of complementary ESG workstreams. For example, in relation to biodiversity, the Company has engaged Wychwood Biodiversity, a sector leading consultant, to develop an informed approach to enhancing biodiversity across the portfolio. This will include performing a series of biodiversity assessments across a representative sample of the portfolio, such as botany, breeding bird and invertebrate surveys.

Finally, on behalf of the Board, I would like to extend a warm welcome to Libby Burne who joined us as a Non-Executive Director in October 2021 following a highly distinguished career at PwC, and to thank Laurence McNairn, who has retired from the Board, for his hard work and dedication for the last nine years.

For full details of the Company's ESG activities please refer to the Environmental, Social and Governance Reports below.

Conclusion

The dramatic impacts of the Covid-19 pandemic in the past two years have been remarkable in both the steepness of descent and, more recently, in the speed of recovery around the world.

This rapid recovery has driven inflationary pressures that are being felt around the world and whilst it is difficult to forecast when this inflationary surge will end, what is certain is that the Company is a net beneficiary of increasing inflation and so for investors looking for a company that can deliver stable, growing revenues, Bluefield Solar remains a highly attractive proposition.

John Rennocks

Chairman

21 February 2022

The Company's Investment Portfolio

[chart]

Analysis of the Company's Investment Portfolio

[chart]

Report of the Investment Adviser

1. About Bluefield Partners LLP

Bluefield was established in 2009 and is an investment adviser to companies and funds investing in renewable energy infrastructure. Our team has a proven record in the selection, acquisition and supervision of large scale energy and infrastructure assets in the UK and Europe. The Bluefield team has been involved in over £4.1 billion of renewable funds and/or transactions in both the UK and Europe, including over £1 billion for BSIF in the UK since December 2011.

Bluefield was appointed Investment Adviser to the Company in June 2013. Based in its London office, Bluefield's partners are supported by a dedicated and highly experienced team of investment, legal and portfolio executives. As Investment Adviser, Bluefield takes responsibility, fully inclusive within its advisory fees, for selection, origination and execution of investment opportunities for the Company, having executed over 74 individual SPV acquisitions on behalf of BSIF and other European vehicles.

Bluefield's Investment Committee has collective experience of c.£19 billion of energy and infrastructure transactions.

2. Structure

The Company's corporate structure is summarised below:

[chart]

3. Portfolio: Acquisitions, Performance and Value Enhancement

Portfolio

As at 31 December 2021, the Company held an operational solar portfolio of 106 PV plants (consisting of 65 large scale sites, 39 micro sites and 2 roof top sites) with a total capacity of 613MWp and 109 small scale UK onshore wind turbines with a capacity of 12.6MWp.

It also includes 128MWp of utility scale subsidy free ready to build solar projects and 45 MWp of ready to build battery storage assets. The total capacity of operational renewable energy assets as at 31 December 2021 was therefore 625.6MWp.

The Company's investment mandate permits the Company to make investments of up to 25% of Gross Asset Value into non solar renewable technologies. The past six months have seen the Company's first investments in this field and as at 31 December 2021, 7% of GAV is made up of investments in wind and battery storage technologies.

Acquisitions

In period - Maiden wind and co-located solar and battery acquisitions

In August 2021 the Company completed the acquisition of 109 small scale UK onshore wind turbines for approximately £63 million (including working capital and transaction fees), with an opportunity to increase investment by a further £35 million to re-power 17 turbines in Northern Ireland.

The turbines are spread across England (62), Northern Ireland (29), Scotland (11) and Wales (7), with those located in Great Britain accredited under the FiT regime, whilst those in Northern Ireland qualify under its Renewable Obligation Scheme ("RO Scheme") with a tariff of four Renewable Obligation Certificates ("ROC").

As a result of these accreditations, over 90 per cent of total revenue from the wind portfolio is derived from subsidies, with the remaining revenue received from power sales sold under 15-year power purchase agreements with Power NI.

Following the acquisition of the wind portfolio, in August 2021 the Company also completed the purchase of the rights (and associated land) to build a 45MWp solar asset and co-located 25MWp battery project for approximately £5 million. This co-located project is based in northeast Lincolnshire and is expected to begin construction during 2022.

Post period end - 47.5 MWp UK-based solar and wind portfolio acquisition

On 20 January 2022 the Company announced the acquisition of a 47.5MWp operational solar and wind portfolio from Good Energy Group PLC. The portfolio consists of six ground mounted solar photovoltaic ('PV') plants with a total installed capacity of 30.1MWp and two wind farms with a total installed capacity of 17.4MWp. The portfolio has been acquired for an initial equity consideration of £16.4 million, rising to a total of up to £24.5 million, subject to a series of due diligence milestones expected to be met by the beginning of March 2022. The acquisition contains £39.1 million of long term portfolio debt provided by Gravis Capital Management Ltd.

All the solar sites, as well as one of the wind assets, are located in the South West, while the second wind site is located in the North of England. One of the wind farms acquired within this portfolio was Delabole, the United Kingdom's first commercial onshore wind farm, built in November 1991.

Of the solar projects, five are accredited under the feed-in-tariff ('FIT') regime and one of the projects is accredited under the Renewable Obligation Certificate ('ROC') regime with a tariff of 1.4 ROCs. Both of the wind farms are accredited under the ROC regime, being 1.0 ROC and 0.9 ROCs, respectively. In the period 2021 to 2034, the proportion of regulated revenues from this portfolio is projected to be approximately 65%.

Battery Storage Acquisition

On 31 January 2022 the Company announced the acquisition of the development rights for a 20MW battery storage project. The acquisition represents the development rights, grid connection costs and the leasehold of land of a ready to build 20 MW battery storage project for approximately £1.5 million from Shaw-Energi Ltd. The project is based in Liverpool and construction is expected to begin during 2022. This is the Company's second battery storage acquisition and the first such asset not co-located with a solar project.

Following these acquisitions, the Company's total outstanding debt has increased to £402.9 million, and the total installed capacity of its portfolio has grown to 673.1MWp. The Company's leverage has increased from c.35% as at 31 December 2021 to c.40% of Gross Asset Value ('GAV').

In keeping with the Investment Adviser's objective to deliver value and return accretive acquisition opportunities to the Company, the Investment Adviser is currently assessing a range of transactions as it looks to continue its policy of securing high quality, return accretive acquisitions.

Solar

Performance

As at 31 December 2021, the solar portfolio comprised of 106 PV plants (65 large scale sites, 39 micro sites and 2 rooftop sites), with a total capacity of 613MWp. Whilst no additional solar capacity was added in the period, as noted in the acquisitions section above a further 30MWp was purchased in January 2022.

Table D.1: Aggregated Solar Portfolio Performance, H1 2021/22

	H1 2021/22 - Actual	H1 2021/22 - Forecast	Delta to Forecast (% change)	H1 2020/21 Actual	Delta 21/22 to 20/21, Actual (% change)
Portfolio Total Installed Capacity (MWp)	613.0	N/A	N/A	543.0	+12.9%
Weighted Average Irradiation (Hrs)^{1, 2}	530.4	546.5	-2.9%	541.1	-2.0%
Total Generation (MWh)	258,646	268,354	-3.6%	234,588	+10.0%
Generation Yield (MWh/MWp)	421.9	437.9	-3.6%	432.0	-2.3%
Average Total Power price (£/MWh)	£125.46	£125.18	+0.2%	£127.24	-1.4%

Notes to Table 1.

1. Excluding grid outages and significant periods of constraint or curtailment that were outside of the Company's control (for example, DNO-led outages and curtailments).

2. Periods of irradiation where irradiance exceeds the minimum level required for generation to occur (50W/M²)

Irradiation during the 6-month period was c.2.9% below expectations which, combined with planned annual HV and general maintenance activity during Q2 (which requires plants to be temporarily placed under outage), resulted in the Total Generation and Generation Yield (the generation recorded per each MWp of installed capacity) being 3.6% behind forecasts.

Whilst the months of July, September, and November experienced irradiation slightly above budget, other months all recorded low irradiation, most noticeably December, which was 25.1% behind expectations.

Availability for the 6-month period was in line with expectations at 98.3%, despite planned preventative activity in Q2 which will require plants to be under outage for periods of time.

Chart D.1: Irradiation & Generation (Actual & Forecast) by month, H1 2021/22

[chart]

Total Revenue for the period was £33.03m, equivalent to £53.98k/MWp. As a result of more favourable fixed PPA agreements commencing during the period, the portfolio revenue was close to forecasts, at

-1.89%. Operational Costs for the 6-month period to 31 December 21 were c.£8.5m.

Asset Optimisation & Enhancement

A core focus of the Investment Adviser's activities is protecting, optimising, and enhancing the value of the Company's operational portfolio. Examples of key activities for the solar portfolio include:

· Asset Life Extension: PV plants with an aggregated installed capacity of 371.4MWp now allow for terms beyond 30 years, representing 60.6% of the portfolio, with 332.2MWp (Jun 21: 239MWp) having secured planning extensions up to 40 years - continuing the Investment Adviser's 100% success rate for applications. The Investment Adviser continues to negotiate further lease extensions.

· Transfer of O&M Services to Bluefield Operations Limited ('BOL'): BOL now provide O&M contractor services to 53 of the Company's assets, totalling 486MWp of installed capacity, representing 79.4% of the portfolio. In addition to enhanced service levels, the transition of services to BOL has provided significant operational savings compared to the fees paid previously to external service-providers. Further contracts will continue to transfer to BOL during Q3 and Q4.

· Capital Works Projects: The Investment Adviser is working closely with the asset manager and O&M providers to complete optimisation projects across 10 plants, with a total investment of c.£1.2m. Projects include the replacement of existing transformers, a phased replacement of string inverters, strengthening mounting structures and improving site drainage. Performance-affecting works are scheduled in the low irradiation months, for completion prior to the end of March 2022.

OFGEM Audits

As part of the industry-wide audits of RO-accredited generating assets, the Investment Adviser and Asset Manager have been working closely with OFGEM on those assets (randomly) selected for audit.

All BSIF assets to complete audits have been classified as 'satisfactory'. The success of these audits is principally due to the Company's asset manager, Bluefield Services, who not only completed thorough accreditation reviews prior to purchase of all the Company's operational acquisitions but continued to monitor OFGEM's evolving approach in this area.

Wind

Performance

As at 31 December 2021, the wind portfolio was composed of 109 turbines with installed capacities ranging between 55-250Kw, and an aggregate capacity of 12.6MWp. The assets have been assigned to four distinct geographical regions.

Chart D.2 Wind Assets, Regions by Capacity (MWp) and Fleet by Turbine Type

[chart]

Particularly during Q1 (July-September 2021), national wind speeds were significantly below long-term averages and as a consequence the portfolio's generation of 11.3GWh was -21.9% below expectations.

Table D.2: Aggregated Wind Portfolio Performance, H1 2021/22

Regional Group	Aggregate Capacity (MWp)	Actual Generation (KWh)	Forecast Generation (KWh)	Generation Delta to Forecast (%)
Northern Ireland	5.8	4,989.92	6,209.86	-19.65%
Scotland & Far N England	2.0	1,582.38	2,067.75	-23.47%
N England & N Wales	3.2	3,357.93	4,389.45	-23.50%
SW England & S Wales	1.6	1,404.57	1,852.72	-24.19%
Aggregated Fleet	12.6	11,334.79	14,519.79	-21.9%

Chart D.2 Av. Windspeed & Generation (Actual & Forecast) by month, H1 2021/22

[chart]

Availability for the fleet was largely on budget, with the limited number of component failures, including a requirement for two nacelle rebuilds in line with expectations at acquisition. As of 31 December 2021, all issues have been rectified, and the fleet was operating at full capacity.

Ongoing monitoring of vibration data has allowed several turbines to be proactively investigated for similar faults prior to any failure and downtime. Condition-based monitoring strategies continue to allow for early detection and intervention.

Regular maintenance continues to be carried out on schedule; at 6- and 12-month intervals, and 5,000 rotational hour services, as required. High Voltage maintenance will be scheduled during the low wind periods in the spring and summer months.

Wind Asset Optimisation & Enhancement

The Investment Adviser has initiated a range of operational enhancement measures across the fleet, to both improve performance and protect against future risks of failure. Where possible, works are scheduled during periods of low wind, to minimise generation loss. Examples include:

· The installation of web relay hardware across 70 turbines, which permit remote management of monitoring equipment,

· Condition monitoring hardware now retrofitted to all turbines in Great Britain. Northern Ireland retrofitting activity is underway,

· Bedframe strengthening and full replacement programme across the E3120 turbine fleet, to strengthen structural integrity of the units,

· Complete gearbox replacements or refurbishments on 3 turbines to mitigate losses due to possible future failures.

Within the Northern Ireland region, 17 out of 29 turbines have been identified for repowering with replacement EWT 250KW turbines. As at 31 December 2021, 3 turbines have been repowered and are operational, and 3 have received full planning approval for new 25-year terms with decommissioning and repowering works scheduled in Q3/4. A further 11 turbines have planning submissions under review by the relevant Local Planning Authorities.

Portfolio Health & Safety

The Company and the Bluefield group seek to operate in accordance with the highest levels of Health & Safety standards, policies, and procedures.

During the reporting period, new Health & Safety (H&S) policies were adopted by all corporate entities within the Company's structure. The SPV's contractors are legally required to meet these standards and ensure the same of all sub-contractors. The Company conducts annual audits of all approved contractors, the results of which are shared to ensure compliance and, if necessary, highlight areas for improvement. The policies are reviewed by specialist consultants every 12-months and updated as required.

The Asset Manager and O&M contractors routinely hold forums and work collaboratively to share, discuss, and promote best practice and advancements in industry developments. An established H&S Committee, comprising key representatives from across the group and external consultants, meets quarterly to discuss, and implement, improvements to these policies and general working practices. O&M contractors are furthermore mandated to periodically provide full H&S logs to the Company, which are reviewed by the directors with any appropriate recommendations then being actioned.

Table D.3: Generation Yield by Asset (Solar)

Asset	Total Investment Commitment (GBP)	Capacity (MWp)	Generation Yield MWh/MWp
Asset	Total Investment Commitment (GBP)	Capacity (MWp)	Generation Yield MWh/MWp
Bradenstoke	89.0	70.0	405.78
West Raynham	55.9	50.0	397.18
Southwick	61.0	47.9	436.79
Elms	32.8	28.9	430.29
Hardingham	22.7	20.1	403.28
Pentylands	21.4	19.2	398.08
Molehill	23.1	18.0	457.07
Hoback	19.0	17.5	415.55
Littlebourne	22.0	17.0	429.22
Goosewillow	19.0	16.9	417.08
Hill Farm	17.3	15.2	440.67
Roves	14.0	12.7	384.91
Pashley	15.4	11.5	469.04
Hall Farm	13.4	11.4	404.74
Sheppey	12.0	10.6	464.6
Betingau	11.2	10.0	347.08
Capelands	8.6	8.4	437.68
North Beer	9.3	6.9	424.45
Ashlawn	7.6	6.6	439.65
Redlands	6.4	6.2	444.06
Bidwell	8.1	6.1	444.77
Nottington	11.8	6.0	536.74
Lower Marsh	8.6	5.9	426.77
Saxley	7.0	5.9	381.49
Cobbs Cross	9.1	5.7	453.04
Foxcombe	7.5	5.3	350.6
Stow Longa	8.8	5.3	409.26
Beaford	8.3	5.2	375.57
Great Houndbeare (Little Bear)	6.8	5.0	468.5
Court Farm	5.5	5.0	463.8
Place Barton	5.5	5.0	452.14
Eastcott	10.1	5.0	446.43
Holly Farm	7.2	5.0	493.95
Kellingley	5.0	5.0	444.55
Durrants	6.4	5.0	484.86
East Farm	7.2	5.0	481.95
Clapton	6.3	5.0	447.41
Oulton	5.3	5.0	400.85
Rookery	5.2	5.0	406.47
Frogs Loke	5.6	5.0	401.76
Salhouse	5.6	5.0	434.87
Romsey	5.8	5.0	455.33
Kislingbury	5.0	5.0	428.14
Bunns Hill	5.3	5.0	350.5
Old Stone	5.7	5.0	471.83
Willows	4.6	5.0	392.07
Grange	5.4	5.0	440.17
Hamptworth (Big Field)	8.8	5.0	419.32
Wormit	5.1	5.0	388.19
Gretton	5.1	4.9	416.18
Trethosa	5.8	4.8	443.15
Folly Lane	5.3	4.8	431.72
Gypsum	4.4	4.5	410.02
Tollgate Farm	4.6	4.3	427.09
Burnaston	14.4	4.1	384.7
Galton	5.5	3.8	464.38
Thornton Lane	3.7	3.6	373.58
Black Bush	6.6	3.4	390.85
Barvills	3.3	3.2	446.15
Norton Hall	4.1	2.8	428.23
Hazel	4.3	2.8	462.29
Lount Farm	3.3	2.5	365.43
Langlands	3.1	2.1	457.27
Stantway	2.7	1.8	422.95
Aberporth	2.0	1.4	404.88
Goshawk	2.0	1.1	398.98
Butteriss	2.3	0.8	357.21
Corby	2.3	0.5	275.98
Promothames	1.3	0.4	304.41
SUB -TOTAL	763.8	613.0	421.94

PPA Strategy

Over the period the Company maintained its strategy of fixing power price contracts for periods between 12 and 36 months with the majority of contracts continuing to be struck for a minimum of 18 months.

The driver behind this strategy is to mitigate the Company's exposure to seasonal fluctuations, whilst giving it flexibility to capitalise on periods of above-forecasted power prices but also to avoid fixing at points of significant market deterioration (e.g., in April 2020 and May 2020). This is made possible by the Board and Investment Adviser's strategy, where possible, of securing leverage at the portfolio, rather than asset level, as asset level financing covenants typically require long-term pricing agreements to be in place.

Prices can be agreed up to 3 months in advance of the commencement of the fixing period and PPA counterparties are selected on a competitive basis, but with a clear focus on achieving value and diversification of counterparty risk.

The graph below shows that as at 31 December 2021 the Company has a price confidence level of 100% to June 2022 and c.93% to December 2022 over its power and subsidy revenue streams.

Figure 4. % of BSIF revenues fixed as at 31 December 2021

[chart]

Note: There is c.95MWp of capacity (c.15.5% of the portfolio) which benefits from long term offtake agreements, with 8 years remaining. These agreements have built in floor prices, which are automatically applied in the absence of direct short-term power price fixes.

Revenues and Power Price

The portfolio's revenue streams in the reporting period (excluding any ROC recycle estimates for CP20: the Compliance Period April 2021 to March 2022) show that the sale of electricity accounted for 38% (June 2021: 38%) of the Company's income. Regulated revenues from the sale of FiTs and ROCs accounted for 62% (June 2021: 62%).

Looking at the first six months of the Company's financial year, the prices in the wholesale power market have continued to set record highs, driven by a combination of surging commodity markets, pressures on global gas supply and a period of low renewables generation.

As natural gas prices and UK and EU carbon pricing continue to be key drivers of the UK power market, factors impacting these areas have a significant impact on the price of electricity. To this end, gas prices have continued to increase throughout the Period to December 2021 as a result of tightening supply across global markets, driven by high demand in Asia and principally China, which were exacerbated by low levels of European storage and ongoing concerns around Russian supplies.

Lower than expected renewable generation resulted in the consumption of more gas in the UK, and even coal at times, in turn driving up gas prices and thus the marginal price of electricity. The UK Emissions Trading Scheme market, also saw the strong gains, reaching its highest price point since the scheme's inception at £78.70/t, and continuing to trade at a premium to its European counterpart.

The impact of the drivers outlined above was a year-on-year increase of over 250% between the UK day ahead market base load power price for the 12 months to 31 December 2020 from £36.85 per MWh to £133.34 per MWh for the 12 months to 31 December 2021. As a further illustration of the points mentioned above, the chart below compares the wholesale electricity prices versus gas and carbon from June 2019 to December 2021.

[chart]

Source data from Bloomberg. Carbon price EU ETS from Bloomberg, effective GB price based on IA calculations

The upward movement of the wholesale power market, due to the Company's rolling short term hedging strategy is reflected to a limited extent in the Company's average seasonal weighted power price which has increased by c.3.7%, from £48.37 per MWh for the 12 months ended 31 December 2020, to £50.14 per MWh to 31 December 2021.

However, fixes of power contracts between July 2021 and December 2021, which covered c.182MWp of installed capacity, were struck at an average price of £71.34MWh, for terms between 24 and 36 months (an increase of c.42% on the annualised figure of £50.14 per MWh). The impact of power prices on NAV is set out in the valuations section.

4. Analysis of underlying earnings

The total generation and revenue earned (including ROC recycle estimate) in the 6 months to 31 December 2021 by the Company's portfolio, split by subsidy regime, is outlined below.

Subsidy Regime	Generation (MWh)	PPA Revenue (£m)	Regulated Revenue (£m)
FiT	17,028	0.9	3.7
4.0 ROC	4,990	0.7	1.3
2.0 ROC	12,399	0.8	1.5
1.6 ROC	48,887	2.3	4.7
1.4 ROC	106,000	5.1	8.7
1.3 ROC	24,523	1.4	1.9
1.2 ROC	56,153	2.8	4.3
Total	269,980	14.0	26.1

The Company includes ROC recycle assumptions within its long term forecasts and applies a market based approach on recognition within any current financial period, including prudent estimates within its accounts where there is clear evidence that participants are attaching value to ROC recycle for the current accounting period.

In October 2021, Ofgem announced that value for ROC recycle for the period April 2020 to March 2021 (CP19) was £3.87/ROC (equivalent to 7.7% of CP19 ROC buyout prices). This was in line with the 7% ROC Recycle estimate the Company had recognised in its 30 June 2021 Financial Statements. The key drivers behind the changes in Underlying Earnings between H1 2021/22 and H1 2020/21 are the combined effects of the acquisitions within the 12 month period, with lower generation offset by higher PPA pricing.

Underlying Portfolio Earnings

	Half year period to 31 Dec 21 (£m)	Half year period to 31 Dec 20 (£m)	Full year to 30 June 21 (£m)	Full year to 30 June 20 (£m)
Portfolio Revenue	40.0	31.9	73.1	65.9
Liquidated damages and Other Revenue*	0.3	1.2	2.0	3.8
Net Earnings from Acquisitions in the period	0.0	0.0	5.1	0.0
Portfolio Income	40.3	33.1	80.2	69.7
Portfolio Costs	-11.0	-7.8	-17.6	-14.1
Project Finance Interest Costs	-1.0	-0.8	-1.8	-0.6
Total Portfolio Income Earned	28.3	24.5	60.8	55.0
Group Operating Costs^#**	-4.5	-3.7	-7.5	-5.8
Group Debt Costs	-2.4	-2.1	-4.7	-4.6
Underlying Earnings	21.4	18.7	48.6	44.6
Group Debt Repayments	-8.6	-8.0	-9.3	-9.2
Underlying Earnings available for distribution	12.8	10.7	39.3	35.3

	Half year to 31 Dec 2021 (£m)	Half year to 31 Dec 2020 (£m)	Full year to 30 June 21 (£m)	Full year to 30 June 20 (£m)
Brought forward reserves	13.4	8.4	8.4	2.3
Total funds available for distribution -1	26.2	19.1	47.7	37.6
Target distribution***	N/A	N/A	34.3	29.3

Actual Distribution -2	10.1	8.1	34.3	29.3
Underlying Earnings carried forward (1-2)	N/A	N/A	13.4	8.4

*Other Revenue includes insurance proceeds, ROC Recycle late payment and Mutualisation, O&M settlement agreements and rebates received

#Includes the Company and BSIFIL (within BSIFIL is a group tax charge of c. £1m)

**Excludes one-off transaction costs and the release of up-front fees related to the Company's debt facilities

***Target distribution is based on funds required for total target dividend for each financial period.

The table below presents the underlying earnings on a per share basis.

	Half year period to 31 Dec 21	Half year period to 31 Dec 20	Full year to 30 June 21	Full year to 30 June 20
Target Distribution - £m	N/A	N/A	34.3	29.3
Total funds available for distribution (inc. reserves) - £m	26.2	19.1	47.7	37.6
Average number of shares in the period*	496,067,602	406,999,622	429,266,617	370,499,622
Target Dividend (pps)	N/A	N/A	8.00	7.90
Total funds available for distribution (pps) - 1	5.24	4.66	11.19	10.13
Total Dividend Declared for the period (pps)** - 2	2.03	2.00	8.00	7.90
Reserves carried forward (pps) *** - 1-2	N/A	N/A	2.67	2.23

*Average number of shares is calculated based on shares in issue at the time each dividend was declared.

**Half year period to 31 Dec 21 dividend of 2.03pps declared 31 Jan 22, with a payment date on or around 10 March 2022.

***Reserves carried forward are based on the shares in issue at the point of Annual Accounts publication (being c.496m shares for the 30 June 21 Annual Report).

5. NAV and Valuation of the Portfolio

The Investment Adviser is responsible for advising the Board in determining the Directors' Valuation and, when required, for carrying out the fair market valuation of the Company's investments. Valuations are carried out on a six-monthly basis as at 31 December and 30 June each year, with the Company committed to conducting independent reviews as and when the Board believes it benefits the Shareholders.

As the portfolio comprises only non-market traded investments, the Investment Adviser has adopted a valuation process based upon the IPEV Valuation Guidelines published by the BVCA (the British Venture Capital Association). The application of these guidelines is considered consistent with the requirements of compliance with IFRS 9 and IFRS 13.

Following consultation with the Investment Adviser, the Directors' Valuation adopted for the portfolio as at 31 December 2021 was £785.7.m (31 December 2020, £608.4m).

The table below shows a breakdown of the Directors' Valuations over the last four reporting periods:

Valuation Component (£m)	Dec 2021	June 2021	Dec 2020	June 2020
Enterprise Portfolio DCF value (EV)	861.2	770.1	698.3	602.7
Consented Solar & Battery projects*	7.3	1.8
Deduction of Project Co debt & NatWest 3 year Term loan	-119.3	-119.8	-120.3	-10.8
Project Net Current Assets	36.5	42.4	30.4	32.4
Directors' Valuation	785.7	694.5	608.4	624.3
Portfolio Size (MWp)	625.6	613.0	543.0	478.8

*Value is recognised on development projects only at 'Ready to Build' stage - e.g., when grid and planning have been secured.

Discounting Methodology

The Directors' Valuation is based on the discounting of post-tax, projected cash flows of each investment, based on the Company's current capital structure, with the result then benchmarked against comparable market multiples. The discount rate applied on the post-tax levered project cash flows is the weighted average discount rate.

In addition, the Board continues to adopt the approach under the 'willing buyer/willing seller' methodology, that the valuation of the Company's portfolio be appropriately benchmarked on £/MWp basis against comparable portfolio transactions.

Key factors behind the valuation

During the reporting period there have been a number of key factors that have been considered in the Investment Adviser's recommendation to the Directors' Valuation:

(i) Competition for operational assets continues to be fierce, driving up transaction prices. These have been towards the upper end of the range witnessed by the Investment Adviser over the past few years, being between c.£1.20m/MWp and c.£1.40m/MWp, on subsidised solar assets, despite portfolios being lower quality and less subsidised than the Company's;

(ii) Inflation has continued to rise during 2021, with RPI reaching 7.5% as at 31 December 2021. Furthermore, data from Bloomberg shows an average forecast of 6.4% for 2022 and 3.4% for 2023 (based on its composite basket of independent forecasters) whilst HM Treasury's average of independent forecasters is 5.4% for RPI in 2022 (as per their January 2022 publication). In the longer term, forecasters are expecting a tapering to c.2% post 2030 as RPI is replaced with CPIH. As such, the inflation assumption within the December 2021 valuation has been adjusted to reflect this profile (being 6.4% in 2022, 3.4% in 2023, 3.0% to 2029 and 2.25% from 2030);

(iii) Inclusion, on a discounted cash flow basis, of the 12.6MWp wind portfolio the Company acquired in August 2021 following the Company's £105m equity raise (resulting in the Company's RCF being £60m drawn as at 31 December 2021);

Strong competition for large scale solar portfolios of equivalent or lower ROC banding to the Company's, has meant that pricing is now at the upper end of the range of £1.20m/MWp - £1.40m/MWp. By valuing the portfolio at an EV of £861.2m (June 2021: £770.1m), with an effective price of £1.30m/MWp for the solar component (June 2021: £1.26m/MWp), and maintaining a discount rate of 6.0%, the Board remains conservatively within the pricing range of precedent market transactions.

Valuation Assumptions

Discount Rate

To ensure the Company's portfolio sensibly reflects market pricing (outlined above in key valuation factors) as at 31 December 2021, the Directors have continued to apply a discount rate of 6.00% (cf. 6.00% in June 2021).

Debt

The debt assumptions within the Directors' Valuation reflect all third-party loans within the Company's capital structure as at the valuation date. Interest rates and repayment profiles are matched to the terms of each loan. In the case of any short-term financing, conservative assumptions are applied with respect to interest rates and repayment profiles post maturity.

As at 31 December 2021, the Company's short term debt consisted of £60m drawn under its RCF along with a £110m term loan from NatWest, maturing in September 2023, with the conversion assumption within the Directors' Valuation aligned to the percentage of the loan that has been hedged (being 75% with 18-year interest rate swaps at a rate of 0.31% until 2038).

The interest rate applied to the converted balance of both the RCF and the NatWest term loan (being a cumulative balance of £145.5m) is 3.0%.

Power Price

The blended forecast of three leading consultants used within the latest Directors' Valuation, as shown graphically below, is based on forecasts released in October 2021 and December 2021 and implies a compound annual growth rate, in real terms from 2022, to 2050, of -3.06% per annum.

The curves used in the 31 December 2021 Directors' Valuation reflect the following key updates:

1. UK electricity demand, driven principally through electrification of heat and transport, is expected to rise from 308TWh in 2022 to 484TWh by 2050;

2. Short-term gas prices have continued to rise, driving material increases in near term wholesale power prices;

3. Increased renewable deployment in the UK (notably by 2030 c.33GWp of Offshore wind, c.19GWp of Onshore Wind and c.19GWp of solar) and in Europe, which reflect the Government's energy budgets, the Net Zero Strategy outlined in October 2021 which signalled an intent to decarbonise the power sector by 2035.

For illustration purposes, the graph below also includes the blended curves used in the past two Directors' Valuations.

[chart]

The DCF for each project applies the contractually fixed power price applicable to each solar PV asset until the end of the fixed period and, thereafter, the blended independent forecast price.

Plant Performance

With all operational assets in the Company's portfolio generating for a minimum of four years, the entirety of the portfolio (being 625MWp as at 31 December 2021) is now being valued using Performance ratios (PRs) that reflect historical operational performance of each asset. The weighted average PR in the Directors' Valuation for the solar assets, including the effects of degradation, is 80.6% (June 2021: 81.6%) with weighted average availability of 100% for the wind assets.

Consistent with the valuation approach taken in previous periods, the Directors' Valuation does not amend long term plant performance forecasts based upon short term performance, especially while the plants remain within the warranty period and subject to outstanding contractual testing obligations.

Inflation

The Directors' Valuation applies the following inflation assumptions.

Year	2022	2023	2024-2029	2030 onwards
RPI Inflation	6.4%	3.4%	3.0%	2.25%

Asset life

Reflecting continued progress of the Company's asset life extension, the Directors' Valuation assumes 490MWp (equal to Jun 21) of the Company's portfolio is valued on the basis of 30-40 years of operational life. The Board continues to believe the most suitable method to value the additional cash flows from these assets is to apply a combination of prudent assumptions on performance and maintenance reserve, as well as a discount rate of 7.5% (7.5% in June 2021) for periods over 30 years. As at 31 December 2021, the weighted average remaining life of the portfolio was 29.4 years (June 2021: 30.2 years). The higher than expected decrease is due to the addition of the wind portfolio acquired in August 2021, as wind turbines have shorter asset lives compared to solar PV.

Other Cash flow Assumptions

No material changes have been made regarding regulatory revenue or cost assumptions.

NAV movement

In the period, the Company paid total dividends of £18.1m, being 4.00pps in total for the third and fourth interim dividends in respect of the year ended 30 June 2021.

Over the period the Company's NAV has increased by £138.6m, from £471.4m as at 30 June 2021, to £610.0m as at 31 December 2021. Adjusting the 30 June 2021 NAV of £471.4m for the dividends paid in the period (£18.1m) and net equity raised of £102.9m results in an uplift in the NAV of the Company during the period of £17.6m.

A breakdown in the movement of the NAV of the Company over the period and how this interacts with the movement in the valuation of the portfolio is illustrated in the charts below. Post period end, in January 2022 the Company announced the first interim dividend for the 2021/22 financial year of 2.03pps.

[chart]

Directors' Valuation movement

		(£million)	As % of rebased valuation
		(£million)	As % of rebased valuation
30 June 2021 Valuation	694.5

New investment (Wind Portfolio)	63.6
Investment in solar and battery storage development pipeline	9.0
Rebased valuation		767.1
Cash receipts from portfolio	(41.2)		-5.4%
Date change, degradation, inflation of costs, O&M updates	(12.9)		-1.7%
Power curve updates (incl. PPAs)	15.4		2.0%
Updated inflation forecast	24.9		3.2%
Balance of portfolio return	32.3		4.3%

31 December 2021 Valuation		785.6	2.4%

Each movement since the 30 June 2021 valuation is considered in turn below:

Cash receipts from the Portfolio

This movement reflects the cash payments made from the underlying project companies up to BSIFIL and the Company to enable the companies to settle operating costs and distribution commitments as they fall due within the period.

New investments - 12.6MWp wind portfolio & development pipeline

These movements reflect the base investment cost of £63.6m of the 12.6MWp, 109 single stick wind portfolio the Company acquired in August 2021 as well £9.0m in relation to project rights purchased, also in August 2021, in relation to a consented 45MWp solar and 25MWp storage project and the Company's wider development pipeline of solar and storage projects.

Power curve updates (incl. PPAs)

The Company's three independent forecasters released updated forecasts in October and December 2021, and these have been applied to the Directors' Valuation. The impact of adopting an even blend of three independent forecasters as well as the latest power price fixes, against power price expectations applied in the 30 June 2021 valuation, results in a valuation increase of £15.4m.

The discounted cash flow for each project applies the contractually fixed power price applicable to each solar PV asset until the end of the fixed period, and thereafter an even blend of three independent forecasters' prices.

Balance of Portfolio Return

The balance of portfolio return is predominantly the result of the unwinding of the discount rate over the period, but it also includes the effects of the Company's change in capital structure following the equity issuance of £105m, partial repayment of the RCF in July 2021 as well as minor operational and financial assumption changes.

Other assumptions

Consistent with previous Directors' Valuations, the valuation assumes a terminal value of zero for all solar projects within the portfolio c.25 years after their commencement of operation, or 30 to 40 years for those with asset life extensions.

There have been no material changes to assumptions regarding the future performance or cost optimisation of the portfolio when compared to the Directors' Valuation of 30 June 2021.

On the basis of these key assumptions, the Board believes there remains further potential for NAV enhancement from the potential extensions of asset life for further projects in the portfolio as well as cost optimisation on long term O&M fees.

The assumptions set out in this section will remain subject to continuous review by the Investment Adviser and the Board.

Reconciliation of Directors' Valuation to Balance sheet

	Balance at Period End
Category	31 December 2021 (£m)	30 June 2021 (£m)	31 December 2020 (£m)	30 June 2020 (£m)
Directors' Valuation	785.7	694.5	608.4	624.3
BSIFIL Working Capital	37.8	26.4	27.1	20.9
BSIFIL Debt*	(214.7)	(250.6)	(160.1)	(212.8)
Financial Assets at Fair Value per Balance sheet	608.8	470.3	475.4	432.4
Gross Asset Value	942.7	840.7	755.8	653.3
Gearing (% GAV**)	35%	44%	37%	33%

*30 June 2021, 30 June 2020 and 30 June 2019 include c.£1m of upstream intercompany loans.

**GAV is the Financial Assets, as at 31 December 2021, at Fair Value of £608.8m plus Aviva long term debt of £154.6m, Durrants' project debt of £9.3m, RCF of £60m and NatWest of £110m term loan, (giving total debt of £333.9m).

Directors' Valuation sensitivities

Valuation sensitivities are set out in tabular form in Note 7 of the financial statements. The following diagram reviews the sensitivity of the EV of the portfolio to the key underlying assumptions within the discounted cash flow valuation.

[chart]

6. Financing

Aviva Investors Long Term Facility (LTF)

The LTF is provided by Aviva Investors in two tranches.

Loan	Original Amount (Sept 16)	Current Amount (Dec 21)	Tenor	Cost	Average Loan Life at drawdown
Fixed	£121.5m	£94.4m	Fully amortising over 18 years to 2034, sculpted to cash flows	All in cost of 287.5bps	10.6
Index-Linked	£65.5m	£60.2m	Fully amortising over 18 years to 2034, sculpted to cash flows	RPI plus 70bps	11.3

Both tranches are fully amortising over 18 years, providing natural alignment with the average remaining life of the Company's regulated revenues, eliminating refinancing risk as well as insulating the Company's equity cash flows from significant principal repayments in the final years of the facility when the contribution of revenue from power is increased.

During the Period principal repayments of £8.1m, combined with indexation increases of £2.2m, resulted in a total outstanding balance to Aviva Investors as at 31 December 2021 of £154.6m (Fixed £94.4m, Index linked £60.2m).

The LTF is held by the Company's wholly-owned subsidiary, BSIFIL, and is the result of a deliberate structuring approach to maximise both transparency and portfolio management flexibility, whilst also delivering a low cost of capital (as at 31 December 2021, the blended all-in debt cost of the facilities was 2.4%).

Thanks to the prudent leverage, under the Company's base case projections the average DSCR remains close to 3 times, as at 31 December 2021. The leverage is 40% of GAV as at 21 February 2022, reflecting the Company's position post period end acquisitions and project development costs.

NatWest Revolving Credit Facility

On 6 November 2020, the Company agreed with NatWest to extend the tenor of its £50m RCF to September 2022. This includes flexibility for a further one year extension to 30 September 2023, as well as an uncommitted facility of a further £50m. The facility therefore has £100m available. The terms of the revised facility are unchanged, with a constant margin of 2.0% over LIBOR with a Sterling Over Night Indexed Average (SONIA) adjustment.

As at 31 December 2021 the Company's subsidiary had drawn £60m from its RCF, out of the £100m available.

Post period end, following the Company's acquisitions of the 47.5 MWp UK-based solar and wind portfolio for approximately £24.5 million, £1.75 million for acquisition of the development rights for a 20MW battery storage project in Liverpool and £3.75m drawn for development projects, the drawn balance of the RCF is currently £90m (out of £100m available).

Project level debt

In addition to the LTF and the RCF, the Company also has a three year term loan with NatWest of £110m which is 75% hedged by a 17 year swap at c.0.3%, maturing in September 2023 (secured against a portfolio of 141.7MWp within the Company's structure) and a small project finance loan of £9.3m, provided by BayernLB and fully amortising until maturity in 2029, secured against Durrants, a 5MWp FiT plant located on the Isle of Wight.

7. Market Developments

UK solar photovoltaic capacity and deployment

According to BEIS, the UK's total installed solar photovoltaic capacity as at December 2021 (the latest statistics available) was 13.65GWp, across just over 1.1 million installations. This compares to 13.53GWp in June 2021. Expansion over the period, of 121MWp, has been driven exclusively by the deployment of c. 35,000 small unaccredited installations with capacities below 50kWp. The chart below illustrates how the deployment of new generating capacity has diminished significantly since the closure of the RO scheme in 2017.

[chart]

*Source; BEIS, Solar photovoltaics deployment December 2021

Capacity accredited nationally under the RO Scheme is 7.3GWp, representing 54% of the total solar capacity in the UK, but it constitutes only 2.0% of the number of installations. Capacity accredited under the FiT scheme was 5.1GWp according to the latest data from BEIS released in December 2021. This equates to about 37% of total solar capacity and 78% of all installations. Subsidy-free capacity stands at 1.2GWp and 20% of installations, although many of these are micro installations.

Secondary market transactions and subsidy-free activity

Transactional activity in the UK secondary solar PV market continued its momentum during 2021 with investor appetite for subsidised assets remaining very high. According to the most recent figures from Bloomberg New Energy Finance (BNEF), 732MWp of subsidised projects changed hands during 2021. For reference, some 300MWp of solar PV project deals were reported in 2019.

Activity in the UK subsidy-free market has also continued at pace. Significant development activity is being carried out within the UK, which is being driven by factors such as ambitious decarbonisation targets, increasing preferences by customers for clean energy, demand for ESG investments and the inclusion of solar PV in the recent CfD auction round.

Estimates from Solar Power Media indicate that there are over 37GWp of large-scale solar projects in the development/ready-to-build phase as at the end of December 2021, a 117% increase on the 17GWp reported in June 2021.

Towards the end of 2020 there were indications that the construction of larger-scale unsubsidised projects was starting to gain momentum as projects progressed through the development phase. However, throughout the 2021 calendar year, this has slowed due to increased construction costs. The elevated pricing is being driven by a significant increase in module prices, together with increases in commodity prices and higher shipping costs/disruption in global supply chains.

With 643MWp of operational solar under management, the Company continues to maintain a strong position within the UK solar market, as it owns and operates about 6.8% of the country's utility-scale solar PV capacity. As an established and experienced market participant, this predominantly regulated revenue base provides a strong foundation for growth of the Company through its subsidy-free solar strategy and diversification into other renewables.

8. Regulatory Environment

Update on Contracts for Differences (CfD)

The CfD scheme is now the Government's main mechanism for supporting low-carbon electricity generation and operates via an auction process. The current CfD allocation round (AR4) opened in December 2021 and is currently in process. Solar PV is being allowed to participate in the auction for the first time since 2015.

The UK Government is aiming to support around 12GW of renewable energy projects in AR4, which opened in December 2021. The tender has been set a £265m budget and will split technologies across three 'pots'. Pot 1 (£10m) includes established technologies such as onshore wind and solar PV; Pot 2 (£55m) includes less-established renewable technologies such as advanced conversion technologies and tidal stream, while a new Pot 3 (£200m) has been set up for offshore wind.

The Investment Adviser has entered a selection of its projects into AR4 and is awaiting the outcomes of the qualification review at the end of February 2022. After this, it is expected that a competitive auction will take place to decide the allocation of CfDs. Subsequent rounds are then expected to be held approximately every two years.

UK net zero target

Since the UK introduced legislation requiring net greenhouse gas emissions to reduce to zero by 2050, the Government has published its Ten Point Plan for a Green Industrial Revolution and the Energy White Paper. These documents address how the Government envisages development of our energy system to accelerate the delivery of net-zero emissions and how it will promote a greener future for the country.

In December 2020 the UK Government also announced its new Nationally Determined Contribution (NDC) under the Paris Agreement, which commits the UK to reducing nationwide greenhouse gas emissions by at least 68% by 2030, compared to 1990 levels. The Climate Change Committee ("CCC") also published its sixth carbon budget (covering the period 2033 - 2038), which targets a 78% reduction in emissions relative to 1990 levels. This target came into force on 24 June 2021 and will for the first time cover the UK's share of international aviation and shipping emissions.

COP26

In the period, the UK hosted the 26^th UN Climate Change Conference of the Parties (COP26) in Glasgow from 31 October 2021 - 12 November 2021. The climate talks brought together heads of state, climate experts and environmental campaigners with the objective of agreeing coordinated action to tackle climate change. In the role of COP26 Presidency the UK stated that it is committed to working with all countries and joining forces with civil society, companies and people on the front line of climate change to inspire action ahead of COP26. The main goals of COP26 were to:

1. Secure global net zero by mid-century and keep a temperature rise of 1.5 degrees within reach. To deliver this, countries are expected to set stretching targets to deliver emissions reductions by accelerating the phase-out of coal, curtailing deforestation, speeding up the transition to electric vehicles and encouraging investment in renewables.

2. Adapt to protect communities and natural habitats. For example, by protecting and restoring ecosystems and building resilient infrastructure to protect those affected by climate change.

3. Mobilise finance. To deliver the first two goals, developed countries are being encouraged to work to unleash trillions of dollars to secure global net zero.

4. Work together to deliver. At COP26 the Paris Rulebook (the detailed rules that make the Paris Agreement operational) is expected to be finalised, while talks are expected to help collaboration between governments, businesses and society.

Bluefield Partners LLP

21 February 2022

Environmental, Social and Governance Report

1. Introduction from Chairman

Opportunity for the renewable market has never been greater. In the battle against climate change, the need for global decarbonisation of the energy sector places renewable technology at the forefront. Founded on the belief that renewable investments deliver positive environmental benefits whilst providing stable and attractive returns, the Company is well positioned to support the UK's net zero targets.

Furthermore, interest in the co-benefits of renewable technology, beyond the reduction of carbon emissions, is mounting. More than ever before, there is research into how solar parks may support natural capital (including biodiversity and carbon sequestration) and focus given to how benefits to local communities can be maximised. These considerations are, too, a focus for the Company.

As the renewable sector expands, funds must approach investment responsibly and take accountability for their environmental and social impacts. It is for this reason the Company has made, and will continue to make, ESG a priority. The following report summarises the Company's ESG journey to date, highlights areas of recent progress and, I hope, informs our Shareholders of our ESG aspirations over the next six months. For a full overview of the Company's ESG activities, please refer to the Company's Annual Report and Financial Statements relating to the period ended 30 June 2021.

John Rennocks,

Chairman

2. ESG Highlights

Estimated figures based on forecasted generation data for the period 1 July 2021 - 30 June 2022:

3. The Company's Approach to ESG

In recent years, growing ESG awareness within investor and fund manager communities has resulted in increased interest, and scrutiny, into the relationship between ESG and long-term performance. Whilst a non-controvertible correlation between these factors cannot yet be presented (and perhaps not for many years, given the long-term value ESG attributes), two points are hard to dispute. Firstly, that a transparent, effective governance framework is the foundation upon which low risk, sustainable returns are generated. Secondly, that identification and mitigation of material environmental and social risks will support the long-term stability and profitability of an organisation. This is particularly pertinent given current levels of environmental and social instability being experienced globally. However, the identification and seizing of ESG opportunities allows businesses to maximise their positive impact.

It is the Company's belief that consideration of ESG, including a responsible investment approach, will help create long term value for its Shareholders. Where possible since its IPO in 2013, the Company has undertaken portfolio-related environmental and social initiatives. However, in line with its increasing commitment to ESG, the Company wanted to build on existing activities and develop an ESG approach which would support the delivery of sustainable returns whilst maximising its positive impact on the environment and society.

To deliver this, in 2021 the Company engaged an external consultant to perform a Materiality Assessment. Based on the results of a Business Impact Assessment and stakeholder feedback, ESG risks and opportunities material to the Company were identified. The focus since then, and over the coming months, has been the development of the Company's ESG strategy. The findings from the Materiality Assessment will inform this process, alongside stakeholder interviews, identification of key ESG themes, ambitions and objectives. The result will be an informed strategy, communicated as a written ESG policy which sets out the Company's ESG priorities, targets and KPIs.

Complementary to this work, and an important element of the ESG framework, is the Company's compliance with the Sustainable Finance Disclosure Regulation (SFDR) and EU Taxonomy. The assessment and reporting required under this legislation will be carried out alongside development of the ESG strategy, with both workstreams delivered in partnership with an external consultant.

Though the ESG landscape continues to evolve quickly, it is the intention of the Company to develop a robust framework which can respond and adapt to new ESG requirements as they arise, ensuring both ESG risks and opportunities are suitably addressed. The Board looks forward to providing a full update on progress in the Company's 2022 Annual Report.

4. Responsible Investment

On behalf of the Company, the Investment Adviser undertakes detailed due diligence on each investment opportunity to identify risks and opportunities, including those relating to ESG. A final recommendation for investment is then presented to the Board of the Company. The following diagram details how sustainability risks are currently integrated into the Company's investment process:

[chart]

The Investment Adviser is committed to continually improving its approach to Responsible Investment, which will be explored during the development of the Company's ESG Strategy. Further efforts will be made to deepen the integration of ESG factors into investment and due diligence processes, particularly as the Company builds out new capacity.

Case Study - Principles of Responsible Investment (PRI)

The Principles of Responsible Investment (PRI) are a set of voluntary investment principles which promote the integration of ESG considerations into investment practice. The Investment Adviser has been signatory to the PRI since 2019.

5. Sustainable Development Goals¹

The Sustainable Development Goals² (SDGs) will be a key consideration during the development of the Company's ESG strategy. The Company positively contributes to the following SDGs:

SDG

Description

Company's Contribution

[image]

"Ensure access to affordable, reliable, sustainable and modern energy for all"

The Company invests in renewable energy infrastructure and associated technologies, such as storage. The Company's portfolio continues to grow in size and as at 31 December 2021 has over 625 MWp installed capacity. In addition to investing in existing infrastructure, the Company is also developing new capacity to maximise its contribution of renewable energy to the UK electricity grid.

[image]

"Take urgent action to combat climate change and its impacts"

Through the production of renewable energy (and thereby displacement of fossil fuel generated energy), the Company generates hundreds of thousands of tonnes of CO2e savings each year, supporting the UK's net zero target. To maximise generation, the Bluefield Group achieves optimal asset performance through activities such as a robust Planned Preventative Maintenance (PPM) programme, quick fault resolution, comprehensive analytics and a skilled workforce.

[image]

"Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss"

The Company is committed to enhancing biodiversity across its portfolio. Biodiversity enhancement measures (such as beehives, hibernacula and bat/bird boxes) are in place across the sites and the Bluefield Group ensures assets comply with Landscape and Ecological Management Plans (LEMPs). More recently the Company has committed to developing a biodiversity strategy, supported by independent consultant Wychwood Biodiversity.

¹ Disclaimer: The content of this publication has not been approved by the United Nations and does not reflect the views of the United Nations or its officials or Member States.

² https://www.un.org/sustainabledevelopment/sustainable-development-goals/

6. Environmental Updates

Renewable Energy Generation

The Company plays an important role in the decarbonisation of the energy sector in the UK. Since 2013, the Company has saved nearly a million tonnes of CO2e from being released into the atmosphere, as highlighted in the table below. CO2e savings have been calculated for each financial year using generation data aligned with the appropriate Government CO2e conversion factor³.

Based on forecasted annual generation for the period ending 30 June 22, the portfolio will generate enough renewable energy to power approximately 200,000 homes for a year, corresponding to a city similar in population size to Bristol⁴.

Reporting Year (01 July - 30 June)	Total CO2e Savings (tonnes)	Equivalent No. of Houses Powered
13/14	12,604	8,841
14/15	67,878	42,917
15/16	142,845	99,697
16/17	168,769	132,124
17/18	154,917	142,147
18/19	135,932	154,906
19/20	126,534	170,705
20/21	127,063	187,933
21/22 (forecasted)	128,000	200,000

Though CO2e savings have been a useful metric to demonstrate the positive environmental impact of renewable technology, the table highlights that CO2e savings for the portfolio have generally declined since 2017, despite installed capacity increasing. This is a reflection of the reducing consumption of fossil fuels by the UK's electricity mix (and within that mix coal has largely been replaced by gas, which produces significantly less CO2 than other fossil fuels). As renewable energy generation increases, the proportion of the grid supplied by fossil fuels will continue to decrease. This means CO2e savings, derived from the displacement of fossil fuel generated energy, will also decline over time. As a result, the positive impact of renewable technology may be better illustrated by the absolute generation of energy produced each year or the equivalent number of houses powered.

Recognising its positive environmental impact, the Company has received a number of accreditations:^5,6,7

[image]

³ https://www.gov.uk/government/collections/government-conversion-factors-for-company-reporting

⁴Based on Ofgem's Typical Domestic Consumption Values https://www.ofgem.gov.uk/publications/decision-typical-domestic-consumption-values-2020

⁵ https://www.londonstockexchange.com/raise-finance/equity/green-economy-mark

⁶ https://tisegroup.com/sustainable

⁷ https://www.gfsc.gg/industry-sectors/investment/guernsey-green-fund

Carbon Footprint

To date, the Company has primarily invested in secondary assets, meaning the PV sites were operational when acquired. Once operational, a renewable asset will generate more energy than it will consume, making its carbon impact net positive.

However, the Company is aware of the footprint associated with the construction of new assets and that this must be reduced in line with the UK's net zero targets. The Investment Adviser is working to better understand the Company's footprint, and this will remain a focus over the coming year.

Case Study - Bluefield's Carbon Footprint

The Investment Adviser and Bluefield companies have been carbon neutral since 2018. Annual calculation of the footprint considers factors such as electricity consumption, gas usage, travel and electronic purchases. Bluefield Operations Limited continues to investigate how electric vehicles can be incorporated effectively into its fleet.

Biodiversity

In its Annual Report, the Company informed Shareholders of its intention to deliver a biodiversity strategy in partnership with independent consultant Wychwood Biodiversity. To create meaningful targets, existing biodiversity must first be measured. To achieve this, biodiversity assessments will be performed over coming months across a representative sample of the portfolio. The results, alongside data obtained from university student studies, will be used to create a proposal of biodiversity measures which, over time, will be implemented across the portfolio. Such work will support the development of a baseline level of biodiversity across all project sites. Following this, next steps may include the identification of sites able to support enhanced levels of biodiversity.

In addition to developing a biodiversity strategy, the Company has been engaged in other environmental initiatives, as highlighted by the following case studies:

[image]

"West Raynham is a great example of how a solar site can be managed for energy production, biodiversity and agriculture with parts of the site being allocated for light sheep grazing and others as diverse wildflower meadows. The site previously comprised a mixture of hardstanding, arable and species poor grassland, but with the implementation of a Management Plan geared towards increasing biodiversity, it now offers habitat for a range of species including a diversity of birds and invertebrates" - Hannah Montag, Principal Ecologist at Clarkson & Woods

[image]

7. Social Updates

Supporting Local Communities

The Company views its relationships with local communities as highly important. The Investment Adviser is continuing to engage with local communities and EPC contractors to ensure local stakeholder feedback is considered during the build out of new capacity.

The Company supports community benefit schemes across the portfolio, which are often agreed during the planning phase of new projects. For the financial year ending 30 June 2022, the Company expects to pay over £153,000 to community schemes, which will be used by councils to fund local projects.

Diversity and Inclusion

The Company recognises the value of diversity and has previously stated its commitment to making progress in this area. In October 2021 the Board was pleased to announce the appointment of Ms. Libby Burne as an independent non-executive director, bringing the current representation of women on the Board to 40%, being two of five current Directors.

The Board, Investment Adviser and other Bluefield companies will continue to make progress in relation to diversity & inclusion matters.

Health & Safety

Health & Safety is of the highest importance to the Company and its service providers, with the Company regularly updated on Health & Safety matters. Every asset owning SPV has Health & Safety policies, standards and process requirements, with which all contractors must comply. Approved contractors (including those companies within the Bluefield Group) undergo annual Health & Safety audits by the SPVs, to ensure internal compliance. Each SPV reviews its Health & Safety records and policies annually, to ensure compliance with the latest Health & Safety guidance and industry best-practise.

Within the Bluefield Group there was one major H&S incident during the interim period, which resulted in no injuries to personnel.

8. Corporate Governance Updates

SFDR & EU Taxonomy

The Company is working with an external consultant to fulfil its requirements under Article 8 of the SFDR and to ensure alignment against the EU Taxonomy. This work will run alongside ESG strategy development, to ensure a complementary approach to both areas.

To ensure legislative compliance, the Company is identifying which elements of disclosure apply, will collate the required asset and fund level data, analyse reporting requirements and undertake an EU taxonomy review. The intention is for the Company to develop, test and implement an assessment framework to bring together SFDR and EU Taxonomy requirements for the portfolio. This will be supported, as required, by new policies and processes to ensure ongoing compliance. An update on progress will be provided to Shareholders in due course.

Supply Chain & Forced Labour Concerns

The Company continues to place priority on concerns relating to forced labour within the polysilicon supply chain and is working closely with the Investment Adviser to ensure appropriate action is being taken. As previously stated, the Company believes industry collaboration will be key in fully investigating and eradicating these concerns. The pressure which can be applied through a unified approach will far surpass the leverage of individual organisations.

The Investment Adviser continues to support the response of the UK solar trade association, Solar Energy UK, regarding transparency across the sector's global supply chain. In addition to signing the Solar Energy UK's industry joint statement, the Investment Adviser is an active member of the Solar Power Europe and Solar Energy UK's joint initiative which seeks to develop new systems and processes to further improve transparency and sustainability within the PV supply chain. The Investment Adviser is a key member of this initiative, having recently committed financial support - one of only a few UK solar power organisations to do so.

The Company will continue to monitor and engage on the issue over coming months.

Bluefield Partners LLP

21 February 2022

Statement of Principal and Emerging Risks and Uncertainties for the Remaining Six Months of the year to 30 June 2022

As described in the Company's annual financial statements as at 30 June 2021, the Company's principal and emerging risks and uncertainties include the following:

· Portfolio acquisition risk;

· Portfolio operational risk;

· Valuation error;

· Depreciation of NAV;

· Unfavourable weather and climate conditions;

· Unfavourable electricity market conditions;

· Changes in tax regime;

· Changes to Government Plans;

· Political risk;

· Cyber risk;

· Adverse publicity;

· Covid-19 pandemic;

· Inadequate ESG reporting, and

· Board Succession.

The Board believes that these risks are unchanged in respect of the remaining six months of the year to 30 June 2022.

Further information in relation to these principal risks and uncertainties may be found on pages 23 to 30 of the Company's annual financial statements as at 30 June 2021.

These inherent risks associated with investments in the renewable energy sector could result in a material adverse effect on the Company's performance and value of Ordinary Shares.

Risks including emerging risks are mitigated and managed by the Board through continual review, policy setting and regular reviews of the Company's risk matrix by the Audit Committee to ensure that procedures are in place with the intention of minimising the impact of the above mentioned risks. The Board carried out a formal review of the risk matrix at the Audit Committee meeting held on 26 November 2021. The Board relies on periodic reports provided by the Investment Adviser and Administrator regarding risks that the Company faces. When required, experts will be employed to gather information, including tax advisers, legal advisers, and environmental advisers.

Directors' Statement of Responsibilities

The Directors are responsible for preparing the Interim Report and Unaudited Condensed Interim Financial Statements in accordance with applicable regulations. The Directors confirm that to the best of their knowledge:

§ the Unaudited Condensed Interim Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union; and

§ the interim management report which includes the Chairman's Statement, Report of the Investment Adviser and Statement of Principal and Emerging Risks and Uncertainties for the remaining six months of the year to 30 June 2022 includes a fair review of the information required by:

a. DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the Unaudited Condensed Interim Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

b. DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.

The Board is responsible for the maintenance and integrity of the corporate and financial information included on the Company's website, and for the preparation and dissemination of financial statements. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

On behalf of the Board

Paul Le Page

Meriel Lenfestey

Director

21 February 2022

Independent Review Report to Bluefield Solar Income Fund Limited

Conclusion

We have been engaged by Bluefield Solar Income Fund (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2021 of the Company which comprises the unaudited condensed statements of financial position, comprehensive income, changes in equity, cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2021 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this 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 for our review work, for this report, or for the conclusions we have reached.

Barry Ryan

for and on behalf of KPMG Channel Islands Limited

Chartered Accountants, Guernsey

21 February 2022

Unaudited Condensed Statement of Financial Position

As at 31 December 2021

		31 December 2021	30 June 2021
		Unaudited	Audited
	Note	£'000	£'000
ASSETS
Non-current assets
Financial assets held at fair value through profit or loss	7	608,723	470,282
Total non-current assets		608,723	470,282

Current assets
Trade and other receivables	8	1,200	773
Cash and cash equivalents	9	497	775
Total current assets		1,697	1,548

TOTAL ASSETS		610,420	471,830

LIABILITIES
Current liabilities
Other payables and accrued expenses	10	445	405
Total current liabilities		445	405

TOTAL LIABILITIES		445	405

NET ASSETS		609,975	471,425

EQUITY
Share capital		516,127	413,215
Retained earnings		93,848	58,210
TOTAL EQUITY	12	609,975	471,425

Number of Ordinary Shares in issue at period/year end	12	496,067,602	406,999,622

Net Asset Value per Ordinary Share (pence)	6	122.96	115.83

These unaudited condensed interim financial statements were approved and authorised for issue by the Board of Directors on 21 February 2022 and signed on their behalf by:

Paul Le Page

Meriel Lenfestey

Director

21 February 2022

The accompanying notes form an integral part of these unaudited condensed interim financial statements.

Unaudited Condensed Statement of Comprehensive Income

For the six months ended 31 December 2021

		Six months ended	Six months ended
		31 December 2021	31 December 2020
		Unaudited	Unaudited
	Note	£'000	£'000
Income
Income from investments	4	408	362
		408	362

Net gains on financial assets held at fair value through profit or loss	7	54,103	13,827
Operating income		54,511	14,189

Expenses
Administrative expenses	5	812	704
Operating expenses		812	704

Operating profit		53,699	13,485

Total comprehensive income for the period		53,699	13,485

Attributable to:
Owners of the Company		53,699	13,485

Earnings per share:
Basic and diluted (pence)	11	11.05	3.57

All items within the above statement have been derived from continuing activities.

The accompanying notes form an integral part of these unaudited condensed interim financial statements.

Unaudited Condensed Statement of Changes in Equity

For the six months ended 31 December 2021

	Note	Number of Ordinary Shares	Share capital	Retained earnings	Total equity
			£'000	£'000	£'000
Shareholders' equity at 1 July 2021		406,999,622	413,215	58,210	471,425

Shares issued during the period	12	89,067,980	105,100	-	105,100
Share issue costs	12	-	(2,188)	-	(2,188)
Dividends paid	12,13	-	-	(18,061)	(18,061)
Total comprehensive income for the period		-	-	53,699	53,699

Shareholders' equity at 31 December 2021		496,067,602	516,127	93,848	609,975

For the six months ended 31 December 2020

	Note	Number of Ordinary Shares	Share capital	Retained earnings	Total equity
			£'000	£'000	£'000
Shareholders' equity at 1 July 2020		370,499,622	368,712	64,793	433,505

Shares issued during the period	12	36,500,000	45,260	-	45,260
Share issue costs	12	-	(758)	-	(758)
Dividends paid	12,13	-	-	(14,820)	(14,820)
Total comprehensive income for the period		-	-	13,485	13,485

Shareholders' equity at 31 December 2020		406,999,622	413,214	63,458	476,672

The accompanying notes form an integral part of these unaudited condensed interim financial

statements.

Unaudited Condensed Statement of Cash Flows

For the six months ended 31 December 2021

		Six months ended	Six months ended
		31 December 2021	31 December 2020
		Unaudited	Unaudited
	Note	£'000	£'000

Cash flows from operating activities
Total comprehensive income for the period		53,699	13,485
Adjustments:
Increase in trade and other receivables		(427)	(364)
Increase/(decrease) in other payables and accrued expenses		40	(64)
Net gains on financial assets held at fair value through profit or loss	7	(54,103)	(13,827)
Net cash used in operating activities		(791)	(770)

Cash flow from investing activities
Purchase of financial assets held at fair value through profit or loss		(102,600)	(44,625)
Receipts from unconsolidated subsidiary	7	18,262	15,470
Net cash used in investing activities		(84,338)	(29,155)

Cash flow from financing activities
Proceeds from issue of Ordinary Shares	12	103,450	44,625
Issue costs paid	12	(538)	(123)
Dividends paid	12,13	(18,061)	(14,820)
Net cash generated from financing activities		84,851	29,682

Net decrease in cash and cash equivalents		(278)	(243)
Cash and cash equivalents at the start of the period		775	747

Cash and cash equivalents at the end of the period	9	497	504

The accompanying notes form an integral part of these unaudited condensed interim financial statements.

Notes to the Unaudited Condensed Interim Financial Statements

For the six months ended 31 December 2021

1. General information

The Company is a non-cellular company limited by shares, incorporated in Guernsey under the Law on 29 May 2013. The Company's registration number is 56708, and it is regulated by the GFSC as a registered closed-ended collective investment scheme.

The investment objective of the Company is to provide Shareholders with an attractive return, principally in the form of regular income distributions, by being invested in solar energy assets located in the UK. It also has the ability to invest a minority of its capital into wind, hydro and energy storage assets.

The Company has appointed Bluefield Partners LLP as its Investment Adviser.

2. Accounting policies

a) Basis of preparation

The financial statements, included in this interim report, have been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the EU and the DTR. These financial statements comprise only the results of the Company as all of its subsidiaries are measured at fair value as explained in Note 2.c. The financial statements have been prepared on a basis that is consistent with accounting policies applied in the preparation of the Company's annual financial statements for the year ended 30 June 2021, approved for issue on 4 October 2021.

These financial statements have been prepared under the historical cost convention with the exception of financial assets held at fair value through profit or loss and in accordance with the provisions of the DTR.

These financial statements do not include all information and disclosures required in the annual financial statements and should be read in conjunction with the Company's audited financial statements for the year ended 30 June 2021, which were prepared under full IFRS requirements and the DTRs of the UK FCA.

Seasonal and cyclical variations

Although the bulk of the Company's electricity generation occurs during the summer months when the days are longer, the Company's results do not vary significantly during reporting periods as a result of seasonal activity.

b) Going concern

The Directors, in their consideration of going concern, have reviewed comprehensive cash flow forecasts prepared by the Investment Adviser, future projects in the pipeline and the performances of the current solar and wind plants in operation. At the time of approving these financial statements, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for at least 12 months from the date of signing and do not consider there to be any threat to the going concern status of the Company.

The current worldwide Coronavirus outbreak (Covid-19), declared by the World Health Organization as a global health emergency in March 2020, has caused disruption to businesses and economic activity. The Board and Investment Adviser have been closely monitoring this and it has been considered as part of its going concern assessment.

Included within the blended power price forecasts used in the Directors' Valuation is the forecasters' latest analysis on fuel and carbon price dynamics, which consider the UK's evolving supply and demand position. The latest forecasts also take into account assumptions in relation to the generation capacity mix and capacity procured through the CfD allocation round 4, in line with the budget announcement. Electricity prices continued to be at elevated levels during the period, with UK day ahead base load prices rising to around £166/MWh on average in the six months to 31 December 2021, up from c.£68/MWh in the six months from 1 January to 30 June 2021 and c.£42/MWh in the six months from 1 July to 31 December 2020.

The Directors have concluded that it is appropriate to adopt the going concern basis of accounting in preparing these financial statements.

c) Accounting for subsidiaries

The Board considers that the Company is an investment entity. In accordance with IFRS 10, all subsidiaries are recognised at fair value through profit and loss.

d) Segmental reporting

IFRS 8 'Operating Segments' requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes.

The Board, as a whole, has been determined as constituting the chief operating decision maker of the Company. The key measure of performance used by the Board to assess the Company's performance and to allocate resources is the total return on the Company's NAV, as calculated under IFRS, and therefore no reconciliation is required between the measure of profit or loss used by the Board and that contained in these financial statements.

For management purposes, the Company is engaged in a single segment of business, being investment in renewable energy infrastructure assets via SPVs, and in one geographical area, the UK.

e) Fair value of subsidiary

The Company holds all of the shares in the subsidiary, BSIFIL, which is a holding vehicle used to hold the Company's investments. The Directors believe it is appropriate to value this entity based on the fair value of its portfolio of SPV investment assets held plus its other assets and liabilities. The SPV investment assets held by the subsidiary, inclusive of their intermediary holding companies, are valued semi-annually as described in Note 7 based on referencing comparable transactions supported by discounted cash flow analysis and are referred to as the Directors' Valuation.

3. Critical accounting judgements, estimates and assumptions in applying the Company's accounting policies

The preparation of these financial statements under IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The area involving a high degree of judgement or complexity or area where assumptions and estimates are significant to the financial statements has been identified as the valuation of the portfolio of investments held by BSIFIL (see Note 7).

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future period if the revision affects both current and future periods.

As disclosed in Note 7, the Board believes it is appropriate for the Company's portfolio to be benchmarked on a £m / MWp basis against comparable portfolio transactions and on this basis the weighted average discount rate remains at 6.00% (6.00% in June 2021), which reflects the return hurdles in the market for lowly levered, subsidised assets.

4. Income from investments

	Six months ended	Six months ended
	31 December 2021	31 December 2020
	£'000	£'000
Monitoring fee in relation to loans supplied	408	362
	408	362

The Company provides monitoring and loan administration services to BSIFIL for which an annual fee is charged and is payable in arrears.

5. Administrative expenses

	Six months ended 31 December 2021	Six months ended
	Six months ended 31 December 2021	31 December 2020
	£'000	£'000
Investment advisory base fee (see Note 14)	236	170
Administration fees	168	151
Directors' remuneration (see Note 14)	123	114
Legal and professional fees	87	109
Audit fees	47	32
Non-audit fees (interim review)	40	30
Regulatory Fees	27	27
Registrar fees	25	26
Broker fees	25	25
Listing fees	12	10
Insurance	11	5
Other expenses	11	5
	812	704

6. Net Asset Value per Ordinary Share

The calculation of NAV per Ordinary Share is arrived at by dividing the total net assets of the Company as at the unaudited condensed statement of financial position date by the number of Ordinary Shares of the Company at that date.

7. Financial assets held at fair value through profit or loss

	Six months ended		Twelve months ended
	31 December 2021		30 June 2021
		Total	Total
		£'000	£'000
Opening balance (Level 3)		470,282	432,426
Additions		102,600	44,625
Change in fair value		35,841	(6,769)
Closing balance (Level 3)		608,723	470,282

Investments at fair value through profit or loss comprise the fair value of the investment portfolio, which is valued semi-annually by the Directors, and the fair value of BSIFIL, the Company's single, direct subsidiary being its cash, working capital and debt balances. A reconciliation of the investment portfolio value to financial assets at fair value through profit and loss in the Unaudited Condensed Statement of Financial Position is shown below.

		31 December 2021	30 June 2021
		Total	Total
		£'000	£'000
Investment portfolio, Directors' Valuation		785,657	694,543

BSIFIL
	Cash	33,064	22,542
	Working capital	4,649	3,754
	Debt	(214,647)	(250,557)
		(176,934)	(224,261)

Financial assets at fair value through profit or loss		608,723	470,282

Analysis of net gains on financial assets held at fair value through profit or loss (per unaudited condensed statement of comprehensive income)
	Six months ended	Six months ended
	31 December 2021	31 December 2020
	£'000	£'000

Unrealised change in fair value of financial assets held at fair value through profit or loss	35,841	(1,643)

Cash receipts from unconsolidated subsidiary*	18,262	15,470

Net gains on financial assets held at fair value through profit and loss	54,103	13,827

*Comprising of repayment of loans and Eurobond interest

Fair value measurements

Financial assets and financial liabilities are classified in their entirety into only one of the following three levels:

· Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

· Level 2 - inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

· Level 3 - inputs for assets or liabilities that are not based on observable market data (unobservable inputs).

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The only financial instruments carried at fair value are the investments held by the Company, through BSIFIL, which are fair valued at each reporting date. The Company's investments have been classified within Level 3 as BSIFIL's investments are not traded and are valued using unobservable inputs.

Transfers during the period

There have been no transfers between levels during the six month period ended 31 December 2021. Any transfers between the levels will be accounted for on the last day of each financial period. Due to the nature of investments, these are always expected to be classified as Level 3.

Directors' Valuation methodology and process

The same valuation methodology and process for operational assets is followed in these financial statements as was applied in the preparation of the Company's financial statements for the year ended 30 June 2021. Assets under construction and not yet operational are valued at cost (deemed to approximate fair value) and exclude acquisition costs which are expensed in the period in which they are incurred, whilst investments that are operational are valued on a DCF basis over the life of the asset (typically more than 25 years) and, under the 'willing buyer-willing seller' methodology, prudently benchmarked on a £/MWp basis against comparable transactions for large scale portfolios.

Each investment is subject to full UK corporate taxation at the prevailing rate with the tax shield being limited to the applicable capital allowances from the Company's SPV investments.

The key inputs to a DCF based approach are: the equity discount rate, the cost of debt (influenced by interest rate, gearing level and length of debt), power price forecasts, long term inflation rates, irradiation forecasts, average wind speeds, operational costs, asset life and taxation. Given discount rates are a product of not only the factors listed previously but also regulatory support, perceived sector risk and competitive tensions, it is not unusual for discount rates to change over time. Evidence of this is shown by way of the revisions to the original discount rates applied between the first renewable acquisitions and those witnessed in recent years.

Given the fact discount rates are subjective, there is sensitivity within these to the interpretation of factors outlined above.

Judgement is used by the Board in determining the weighted average discount rate of 6.00% (6.00% as at 30 June 2021), with three key factors that have impacted the adoption of this rate outlined below:

a. Transaction values have remained consistent at c.£1.20-1.40/MWp for large scale solar portfolios and which the Board have used to determine that an effective price of £1.30/MWp is an appropriate basis for the valuation of the BSIF solar portfolio as at 31 December 2021.

b. Inclusion of the latest blended long term power forecasts from the Company's three providers.

c. Inclusion of an uplift with respect to asset extensions of 15 years on a subset (460 MWp) of the portfolio.

The debt assumptions within the valuation reflect all third-party loans within the Group's capital structure as at the valuation date. Interest rates and repayment profiles are matched to the terms of each loan. In the case of any short-term financing, conservative assumptions are applied with respect to interest rates and repayment profiles post maturity. As at 31 December 2021, the Group's short term debt consisted of a £110m term loan with NatWest, maturing in September 2023, and the conversion assumption within the valuation is aligned to the percentage of the loan that has been hedged (being 75% with 17-year swaps at a rate of 0.31% until 2037). The interest rate applied to the converted balance (being £82.5m) is 3.0%. In addition, the Company has a small project finance loan of £9.3m, provided by BayernLB and fully amortising until maturity in 2029, secured against Durrants, a 5 MWp FiT plant located on the Isle of Wight.

In order to smooth the sensitivity of the valuation to forecast timing or the opinion taken by a single forecast, the Board continues to adopt the application of a blended power curve from three leading forecasters.

The fair value of operational SPVs is calculated on a discounted cash flow basis in accordance with the IPEV Valuation Guidelines. The Investment Adviser produces fair value calculations on a semi-annual basis as at 30 June and 31 December each year.

Sensitivity analysis

The table below analyses the sensitivity of the fair value of the Directors' Valuation to an individual input, while all other variables remain constant.

The Board considers the changes in inputs to be within a reasonable expected range based on its understanding of market transactions. This is not intended to imply that the likelihood of change or that possible changes in value would be restricted to this range.

		31 December 2021		30 June 2021
Input	Change in input	Change in fair value of Directors' Valuation £m	Change in NAV per share (pence)	Change in fair value of Directors' Valuation £m	Change in NAV per share (pence)
Discount rate	+ 0.5%	(20.6)	(4.15)	(16.0)	(3.93)
Discount rate	- 0.5%	19.8	3.99	17.1	4.20
Power prices	+10%	44.4	8.95	41.4	10.17
Power prices	-10%	(44.5)	(8.97)	(43.5)	(10.69)
Inflation rate	+ 0.50%	21.0	4.23	14.2	3.49
Inflation rate	- 0.50%	(21.0)	(4.23)	(13.9)	(3.42)
Energy yield	10 year P90	(74.2)	(14.96)	(66.6)	(16.36)
Energy yield	10 year P10	74.4	15.00	65.9	16.19
Operational costs	+10%	(8.6)	(1.73)	(8.3)	(2.04)
Operational costs	-10%	8.6	1.73	8.3	2.04

8. Trade and other receivables

	31 December 2021	30 June 2021
	£'000	£'000
Current assets
Monitoring fees receivable (see Note 4)	1,147	740
Other receivables	19	13
Prepayments	34	20
	1,200	773

There are no material past due or impaired receivable balances outstanding at the period end, the probability of default of BSIFIL was considered low and so no allowance has been recognised based on 12-month expected credit loss as any impairment would be insignificant.

The Board considers that the carrying amount of all receivables approximates to their fair value.

9. Cash and cash equivalents

Cash and cash equivalents comprises cash held by the Company and short term bank deposits held with maturities of up to three months. The carrying amounts of these assets approximate their fair value.

10. Other payables and accrued expenses

	31 December 2021	30 June 2021
	£'000	£'000
Current liabilities
Investment advisory fees	113	89
Administration fees	94	89
Directors' Fees (see Note 14)	69	60
Audit fees	44	85
Other payables	125	82
	445	405

The Company has financial risk management policies in place to ensure that all payables are paid within the agreed credit period. The Board considers that the carrying amount of all payables approximates to their fair value.

11. Earnings per share

	Six months ended	Six months ended
	31 December 2021	31 December 2020

Profit attributable to Shareholders of the Company	£53,699,532	£13,485,183
Weighted average number of Ordinary Shares in issue	485,902,235	377,839,296
Basic and diluted earnings from continuing operations and profit for the period (pence per share)	11.05	3.57

12. Share capital

The authorised share capital of the Company is represented by an unlimited number of Ordinary Shares of no par value which, upon issue, the Directors may designate into such classes and denominate in such currencies as they may determine.

Share capital	Six months ended 31 December 2021	Year ended 30 June 2021
	Number of Ordinary Shares	Number of Ordinary Shares

Opening balance	406,999,622	370,499,622
Shares issued for cash	89,067,980	36,500,000
Closing balance	496,067,602	406,999,622

Shareholders' equity	Six months ended 31 December 2021	Year ended 30 June 2021
	£'000	£'000

Opening balance	471,425	433,505
Ordinary Shares issued for cash	105,100	45,260
Share issue costs	(2,188)	(757)
Dividends paid	(18,061)	(31,100)
Total comprehensive income	53,699	24,517
Closing balance	609,975	471,425

Dividends declared and paid in the period are disclosed in Note 13.

Shares issued during the period

On 21 July 2021, the Company announced the issue of 89,067,980 new Ordinary Shares, at a price of £1.18 per ordinary share, raising gross proceeds of approximately £105.1 million. Following the issue, the number of ordinary shares that the Company has in issue is 496,067,602.

Rights attaching to shares

The Company has a single class of Ordinary Shares which are entitled to dividends declared by the Company. At any General Meeting of the Company each ordinary Shareholder is entitled to have one vote for each share held. The Ordinary Shares also have the right to receive all income attributable to those shares and participate in dividends made and such income shall be divided pari passu among the holders of Ordinary Shares in proportion to the number of Ordinary Shares held by them.

Retained earnings

Retained earnings comprise of accumulated retained earnings as detailed in the unaudited condensed statement of changes in equity.

13. Dividends

On 7 July 2021, the Board declared a third interim dividend of £8,139,992, in respect of the year ended 30 June 2021, equating to 2.00pps (third interim dividend in respect of the year ended 30 June 2020: 1.95pps), which was paid on 4 August 2021 to Shareholders on the register on 16 July 2021.

On 4 October 2021, the Board approved a fourth interim dividend of £9,921,352 in respect of the year ended 30 June 2021, equating to 2.00pps (fourth interim dividend in respect of the year ended 30 June 2020: 2.05pps), which was paid on 8 November 2021 to Shareholders on the register on 15 October 2021.

Post period end, on 31 January 2022, the Board declared its first interim dividend of £10,070,172, in respect of year ending 30 June 2022, equating to 2.03pps (first interim dividend in respect of the year ended 30 June 2021: 2.00pps), which will be paid on 10 March 2022 to Shareholders on the register on 11 February 2022.

14. Related Party Transactions and Directors' Remuneration

In the opinion of the Directors, the Company has no immediate or ultimate controlling party.

The total Directors' fees expense for the period amounted to £122,439 (31 December 2020: £113,250) of which £68,939 was outstanding at 31 December 2021 (30 June 2021: £59,750).

Remuneration paid to each Director is as follows:

	31 December 2021	31 December 2020
	£'000	£'000
John Rennocks	31	31
Paul Le Page	23	23
John Scott	20	20
Laurence McNairn	20	20
Meriel Lenfestey	20	20
Elizabeth Burne	9	-
	123	114

The number of Ordinary Shares held by each Director is as follows:

	31 December 2021	31 December 2020
John Rennocks*	316,011	316,011
John Scott*	512,436	512,436
Laurence McNairn	441,764	441,764
Paul Le Page	35,000	35,000
Meriel Lenfestey	-	-
Elizabeth Burne	-	-
	1,305,211	1,305,211

*Includes shares held by PCAs.

John Scott and John Rennocks are Directors of BSIFIL. Neil Wood and James Armstrong, who are partners of the Investment Adviser, are also Directors of BSIFIL.

Fees paid during the period by SPVs to BSL, a company which has the same ownership as that of the Investment Adviser totalled £1,489,243 (31 December 2020: £1,288,761).

Fees paid during the period by SPVs to BOL, a company which has the same ownership as that of the Investment Adviser totalled £2,168,452 (31 December 2020: £1,544,107).

Fees paid during the period by SPVs to BRD, a company which has the same ownership as that of the Investment Adviser, totalled £200,396 (31 December 2020: £nil).

Under the terms of the Investment Advisory Agreement, the Investment Adviser is entitled to a base fee. The base fee is payable quarterly in arrears in cash, at a rate equivalent to 0.80% per annum of the NAV up to and including £750,000,000, 0.75% per annum of the NAV above £750,000,000 and up to and including £1,000,000,000 and 0.65% per annum of the NAV above £1,000,000,000. The base fee will be calculated on the NAV reported in the most recent quarterly NAV calculation as at the date of payment.

The Company and BSIFIL's investment advisory fees for the period amounted to £2,420,685 (31 December 2020: £1,894,986) of which £392,320 (30 June 2021: £299,763) was outstanding at the period end and is to be settled in cash. The investment advisory fees for the period attributable to the Company amounted to £235,817 (31 December 2020: £170,096) of which £113,394 (30 June 2021: £88,819) was outstanding at the period end.

The Company's loan monitoring fee income for the period, due from its subsidiary BSIFIL, amounted to £407,517 (31 December 2020: £362,500) of which £1,147,483 was outstanding at the period end (30 June 2021: £739,966).

15. Risk Management Policies and Procedures

As at 31 December 2021 there has been no change to financial instruments risk to those described in the financial statements of 30 June 2021.

16. Subsequent events

On 20 January 2022, the Board announced the acquisition of a 47.5 MWp operational solar and wind portfolio from Good Energy Group PLC. The portfolio has been acquired for an initial equity consideration of £16.4 million rising to a total of up to £24.5 million, subject to a series of due diligence milestones being met within the next 4-6 weeks. The acquisition contains £39.1 million of long term portfolio debt provided by Gravis Capital Management Ltd. The Company receives the economic benefit, from 1 July 2021, of all cashflows from the portfolio, which has been acquired using funds from the RCF.

On 31 January 2022, the Board declared its first interim dividend of £10,070,172, in respect of the year ending 30 June 2022, equating to 2.03pps (first interim dividend in respect of the year ended 30 June 2021: 2.00pps), which will be paid on 10 March 2022 to Shareholders on the register on 11 February 2022.

On 31 January 2022, the Board further announced the acquisition of the development rights for a 20 MW battery storage project. The acquisition represents the development rights, grid connection costs and the leasehold of land of a ready to build 20 MW battery storage project for approximately £1.5 million from Shaw-Energi Ltd. The project is based in Liverpool and construction is expected to begin during 2022.

On 17 February 2022, Laurence McNairn, who has served as a non-executive director since the Company's launch in 2013, retired from the Board. The Company extends its thanks to Mr McNairn for his hard work and dedication for the last nine years. His input has been invaluable and the Company wishes him well in his retirement.

General Information

Board of Directors (all non-executive)

John Rennocks (Chairman)

John Scott (Senior Independent Director)

Paul Le Page (Chairman of Audit Committee)

Laurence McNairn (retired 17 February 2022)

Meriel Lenfestey

Elizabeth Burne (appointed 7 October 2021)

Registered Office

PO Box 286

Floor 2, Trafalgar Court

Les Banques, St Peter Port
Guernsey, GY1 4LY

Administrator, Company Secretary and Designated Manager

Ocorian Administration (Guernsey) Limited
Floor 2, Trafalgar Court

Les Banques, St Peter Port
Guernsey, GY1 4LY

Independent Auditor & Reporting Accountants

KPMG Channel Islands Limited

Glategny Court, Glategny Esplanade

St Peter Port

Guernsey, GY1 1WR

Registrar

Link Market Services (Guernsey) Limited

Mont Crevelt House

Bulwer Avenue, St Sampson

Guernsey, GY2 4LH

Receiving Agent and UK Transfer Agent

Link Asset Services Limited

The Registry

34 Beckenham Road, Beckenham

Kent, BR3 4TU

Investment Adviser

Bluefield Partners LLP

6 New Street Square

London, EC4A 3BF

Sponsor, Broker and Financial Adviser

Numis Securities Limited

45 Gresham Street

London, EC2V 7BF

Legal Advisers to the Company
(as to English law)

Norton Rose Fulbright LLP

3 More London Riverside

London, SE1 2AQ

Legal Advisers to the Company
(as to Guernsey law)

Carey Olsen

PO Box 98, Carey House

Les Banques, St Peter Port

Guernsey, GY1 4BZ

Principal Bankers

NatWest International plc

35 High Street

St Peter Port

Guernsey, GY1 4BE

Glossary of Defined Terms

Administrator means Ocorian Administration (Guernsey) Limited

AGM means the Annual General Meeting

AIC means the Association of Investment Companies

AIC Code means the Association of Investment Companies Code of Corporate Governance

AIF means Alternative Investment Fund

AIFM means Alternative Investment Fund Manager

AIFMD means the Alternative Investment Fund Management Directive

Articles means the Memorandum of 29 May 2013 as amended and the Articles of Incorporation as adopted by special resolution on 7 November 2016.

Auditor means KPMG Channel Islands Limited (see KPMG)

Aviva Investors means Aviva Investors Limited

BEIS means the Department for Business, Energy & Industrial Strategy

BEPS means Base erosion and profit shifting

Bluefield means Bluefield Partners LLP

Bluefield Group means Bluefield Partners LLP and Bluefield Companies

BOL means Bluefield Operations Limited

Board means the Directors of the Company

BRD means Bluefield Renewable Developments Limited

Brexit means departure of the UK from the EU

BSIF means Bluefield Solar Income Fund Limited

BSIFIL means Bluefield SIF Investments Limited being the only direct subsidiary of the Company

BSL means Bluefield Asset Management Services Limited

BSUoS means Balancing Services Use of System charges: costs set to ensure that network companies can recover their allowed revenue under Ofgem price controls

Business days means every official working day of the week, generally Monday to Friday excluding public holidays

CAGR means compound annual growth rate

Calculation Time means the Calculation Time as set out in the Articles of Incorporation

CCC means Committee on Climate Change

CfD means Contract for Difference

Company means Bluefield Solar Income Fund Limited (see BSIF)

Companies Law means the Companies (Guernsey) Law 2008, as amended (see Law)

Cost of debt means the blended cost of debt reflecting fixed and index-linked elements

CO2e means Carbon Dioxide emissions

C Shares means Ordinary Shares approved for issue at no par value in the Company

CSR means Corporate Social Responsibility

CP means Compliance Period

CPIH means Consumer Price Index including owner occupiers' housing costs

DCF means Discounted Cash Flow

DECC means the Department of Energy and Climate Change

Defect Risk means that there is an over-reliance on limited equipment manufacturers which could lead to large proportions of the portfolio suffering similar defects

Directors' Valuation means the gross value of the SPV investments held by BSIFIL, including their holding companies

DNO means Distribution Network Operator

DSCR means Long Term Debt Service Cover Ratio calculated as net operating income as a multiple of debt obligations due within one year

DTR means the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority

EBITDA means earnings before interest, tax, depreciation and amortisation

EGM means Extraordinary General Meeting

EIS means Enterprise Investment Scheme

EPC means Engineering, Procurement & Construction

EPS means Earning per share

ESG means Environmental, Social and Governance

EU means the European Union

EV means enterprise valuation

FAC means Final Acceptance Certificate

FATCA means the Foreign Account Tax Compliance Act

Financial Statements means the unaudited condensed interim financial statements

FiT means Feed-in Tariff

GAV means Gross Asset Value on investment basis including debt held at SPV level

GDPR means General Data Protection Regulation

GFSC means the Guernsey Financial Services Commission

Group means Bluefield Solar Income Fund Limited and Bluefield SIF Investments Limited

Guernsey Code means the Guernsey Financial Services Commission Finance Sector Code of Corporate Governance

GWh means Gigawatt hour

GWp means Gigawatt peak

IAS means International Accounting Standard

IASB means the International Accounting Standards Board

IFRS means International Financial Reporting Standards as adopted by the EU

Investment Adviser means Bluefield Partners LLP

IPEV Valuation Guidelines means the International Private Equity and Venture Capital Valuation Guidelines

IPO means initial public offering

IRR means Internal Rate of Return

IVSC means The International Valuation Standards Council

KPI means Key Performance Indicators

KPMG means KPMG Channel Islands Limited (see Auditor)

KWh means Kilowatt hour

KWp means Kilowatt peak

Law means Companies (Guernsey) Law, 2008 as amended (see Companies Law)

LCOE means Levelised Cost of Electricity: average unit cost of electricity over the lifetime of a generating asset expressed on a net present cost basis

LD means liquidated damages

LIBOR means London Interbank Offered Rate

Listing Rules means the set of FCA rules which must be followed by all companies listed in the UK

LSE means London Stock Exchange plc

LTF agreement means Long Term Financing agreement with Aviva Investors

Main Market means the main securities market of the London Stock Exchange

Mutualisation Rebate means the additional payments made when a shortfall occurs if a supplier is unable to meet its obligation under the RO Buy-Out Scheme

MW means Megawatt (a unit of power equal to one million watts)

MWh means Megawatt hour

MWp means Megawatt peak

NatWest means NatWest International plc

NAV means Net Asset Value as defined in the prospectus

NMPI means Non-mainstream Pooled Investments and Special Purpose Vehicles and the rules around their financial promotion

NPPR means the AIFMD National Private Placement Regime

O&M means Operation and Maintenance

Official List means the Premium Segment of the UK Listing Authority's Official List

Ofgem means Office of Gas and Electricity Markets

Ordinary Shares means the issued ordinary share capital of the Company, of which there is only one class

Outage Risk means that a higher proportion of large capacity assets hold increased exposure to material losses due to curtailments and periods of outage

P10 means Irradiation estimate exceeded with 10% probability

P90 means Irradiation estimate exceeded with 90% probability

PCA means Persons Closely Associated

PPA means Power Purchase Agreement

pps means pence per Ordinary Share

PR means Performance Ratio (the ratio of the actual and theoretically possible energy outputs)

PV means Photovoltaic

RBSI means Royal Bank of Scotland International plc

RCF means Revolving Credit Facility

RO Scheme means the Renewable Obligation Scheme which is the financial mechanism by which the UK Government incentivises the deployment of large-scale renewable electricity generation by placing a mandatory requirement on licensed UK electricity suppliers to source a specified and annually increasing proportion of electricity they supply to customers from eligible renewable sources or pay a penalty

ROC means Renewable Obligation Certificates

ROC recycle means the payment received by generators from the redistribution of the buy-out fund. Payments are made into the buy-out fund when suppliers do not have sufficient ROCs to cover their obligation

RPI means the Retail Price Index

SDG means the United Nations Sustainable Development Goals

SFDR means Sustainable Finance Disclosure Regulation

SONIA means Sterling Over Night Indexed Average

SPA means Share Purchase Agreement

SPV means a Special Purpose Vehicle which hold the Company's investment portfolio of underlying operating assets

Sterling means the Great British pound currency

TISE means The International Stock Exchange (based in the Channel Islands)

UK means the United Kingdom of Great Britain and Northern Ireland

UK Code means the UK Corporate Governance Code

UK FCA means the UK Financial Conduct Authority

United Nations Principles for Responsible Investment means an approach to investing that aims to incorporate environmental, social and governance factors into investment decisions, to better manage risk and generate sustainable, long term returns.

Alternative Performance Measures ^Unaudited

APM	Definition	Purpose	Calculation
Total return	The percentage increase/(decrease) in NAV, inclusive of dividends paid, in the reporting period.	A key measure of the success of the Investment Adviser's investment strategy.	The change in NAV for the period plus any dividends paid divided by the initial NAV. (122.96-115.83+2.0+2.0)/115.83=9.6%
Total Shareholder Return	The percentage increase/(decrease) in share price, inclusive of dividends paid, in the reporting period.	A measure of the return that could have been obtained by holding a share over the reporting period.	The change in share price for the period plus any dividends paid divided by the initial share price. (124.30-121.40+2.0+2.0)/121.40=5.68% The measure excludes transaction costs.
Underlying Earnings	Total net income of the Company's investment portfolio.	A measure to link the underlying financial performance of the operational projects to the dividends declared and paid by the Company.	Total income of the Company's portfolio minus Group operating costs minus Group debt costs.
NAV per Ordinary Share	The Company's closing NAV per share at the period end.	A measure of the value of one Ordinary Share.	The net assets attributable to Ordinary Shares on the statement of financial position (£610.0m) divided by the number of ordinary shares in issue (496,067,602) as at the calculation date
Sale of Electricity	The total proportion of revenue generated by the Company's portfolio that is attributable to electricity sales.	A measure to understand the proportion of revenue attributable to sales of electricity.	The amount of revenue attributable to electricity sales divided by the total revenue generated by the Company's portfolio, expressed as a percentage.
Total Revenue	Total net income of the Company's investment portfolio.	A measure to outline the total revenue of the portfolio on per MWp basis.	Total income of the Company's portfolio owned for the period.
PPA Revenue	Revenue generated through PPAs.	A measure to outline the revenue earned by the portfolio from power sales.	Total revenue from all power price sales during the period from the Company's portfolio.
Regulated Revenue	Revenue generated from the sale of FiTs and ROCs.	A measure to outline the revenue earned by the portfolio from government subsidies.	Total revenue from all subsidy income earned during the period from the Company's portfolio.

Ongoing charges ratio	The recurring costs that the Company and BSIFIL has incurred during the period excluding performance fees and one off legal and professional fees expressed as a percentage of the Company's average NAV for the period.	A measure of the minimum gross profit that the Company needs to produce to make a positive return for Shareholders.	Calculated in accordance with the AIC methodology detailed in the table below.
Weighted Average ROC	A relative indicator of the regulatory revenues within a renewable portfolio.	A measure of the Company's portfolio earnings as a proportion of its assets.	Total Regulated Revenue received by the portfolio divided by the product of the current market value of a ROC and the annual generation capacity of the portfolio.
Weighted Average Life	The average operational life of the Company's portfolio.	A measure of the Company's progress in extending the life of its portfolio beyond the end of the subsidy regime in 2036.	The sum of the product of each plant's operational capacity in MWp and the plant's expected life divided by the total portfolio capacity in MWp.
Directors' Valuation	The gross value of the SPV Investments held by BSIFIL, including their holding companies minus Project level debt.	An estimate of the sum that would be realised if the Company's portfolio was sold on a willing buyer, willing seller basis.	A reconciliation of the Directors' Valuation to Financial assets at fair value through profit and loss is shown in Note 7 of the financial statements.
Gross Asset Value	The Market Value of all Assets within the Company.	A measure of the total value of the Company's Assets.	The total assets attributable to Ordinary Shares on the Statement of Financial Position.
Total Outstanding Debt	The total outstanding balances of all debt held within the Company and its subsidiaries.	A measure that is used to establish the Company's level of gearing.	The sum of the Sterling equivalent values of all loans held within the Company.

Ongoing Charges	Period to 31 December 2021
	The Company	BSIFIL	Total
	£'000	£'000	£'000
Fees to Investment Adviser	236	2,185	2,421
Legal and professional fees*	101	37	138
Administration fees	168	-	168
Directors' remuneration	123	6	129
Audit fees	47	17	64
Other ongoing expenses	111	223	334

Total ongoing expenses	786	2,468	3,254

Average NAV			554,234

Annualised Ongoing Charges (using AIC methodology)			1.17%

* Includes non-audit fees (interim review)

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END

IR FLFSAFEILFIF

TIDM	BSIF
Share Price	91.96p0.00%
Market Cap	£544.50m

TIDM	BSIF
Share Price	91.96p0.00%
Market Cap	£544.50m

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Company Information

RNS Metadata

Company Information

RNS Metadata

Financial Highlights

Results Summary:

Corporate Summary

Chairman's Statement

The Company's Investment Portfolio

Analysis of the Company's Investment Portfolio

Report of the Investment Adviser

Environmental, Social and Governance Report

Statement of Principal and Emerging Risks and Uncertainties for the Remaining Six Months of the year to 30 June 2022

Directors' Statement of Responsibilities

Conclusion

Scope of review

Directors' responsibilities

Our responsibility

The purpose of our review work and to whom we owe our responsibilities

Unaudited Condensed Statement of Financial Position

Unaudited Condensed Statement of Comprehensive Income

Unaudited Condensed Statement of Changes in Equity

Unaudited Condensed Statement of Cash Flows

Notes to the Unaudited Condensed Interim Financial Statements

General Information

Glossary of Defined Terms

Alternative Performance Measures ^Unaudited

t

Company Information

RNS Metadata

Company Information

RNS Metadata

Financial Highlights

Results Summary:

Corporate Summary

Chairman's Statement

The Company's Investment Portfolio

Analysis of the Company's Investment Portfolio

Report of the Investment Adviser

Environmental, Social and Governance Report

Statement of Principal and Emerging Risks and Uncertainties for the Remaining Six Months of the year to 30 June 2022

Directors' Statement of Responsibilities

Conclusion

Scope of review

Directors' responsibilities

Our responsibility

The purpose of our review work and to whom we owe our responsibilities

Unaudited Condensed Statement of Financial Position

Unaudited Condensed Statement of Comprehensive Income

Unaudited Condensed Statement of Changes in Equity

Unaudited Condensed Statement of Cash Flows

Notes to the Unaudited Condensed Interim Financial Statements

General Information

Glossary of Defined Terms

Alternative Performance Measures Unaudited

Alternative Performance Measures ^Unaudited