In the Chancellor's budget on 8 July 2015, he announced two changes which have an impact on the valuation of Thrive Renewables plc. The first, a reduction in Corporation Tax to 18% from 2020 has a positive impact on valuation. The second was the abolishment of the eligibility of renewable generators to claim exemption from the Climate Change Levy. The removal of the exception from the Climate Change Levy will reduce the financial performance of all renewable projects in the UK including our wind farms and hydro project.
The justification for change to Climate Change Levy exemption announced relates to approximately a third of the exemption payments being made to overseas operators which was not the intended purpose of the exemption. These two changes combined with a reduction in our long term view of electricity prices have a negative impact on the value of Thrive Renewables plc.
As a result the Director's recommended share price was adjusted to £2.18. This represented a 7% reduction from the £2.34 recommended earlier in the year. A revaluation at the start of 2016 has subsequently adjusted the Director's recommended share price to £2.27 to reflect a revised energy price projection, the financial position at the end of 2015 and inclusion of a new investment in a 6.9MW wind farm made in December.
Read more about the Government’s announcement on LEC’s here.