TIDMNESF
RNS Number : 8284H
NextEnergy Solar Fund Limited
20 November 2018
20 November 2018
NextEnergy Solar Fund Limited
("NESF" or "Company")
Interim results for the period ended 30 September 2018
NextEnergy Solar Fund announces its interim results for the
period ended 30 September 2018.
Highlights for period ended 30 September 2018
-- Net asset value per share of 105.1p (31 March 2018: 105.1p)
-- Net asset value of GBP610m (31 March 2018: GBP605m)
-- Gross asset value of GBP975m (31 March 2018: GBP875m)
-- Target dividend of 6.65p per share for the 2018/19 financial year
-- Cash dividend cover before scrip of 1.2x (31 March 2018: 1.0x)
-- Gearing of 37% as at 30 September 2018 (31 March 2018: 31%)
-- 87 solar assets as at 30 September 2018 (31 March 2018: 63)
-- Total capacity installed of 691MW (31 March 2018: 569MW)
-- Total electricity generation of 480GWh
-- Electricity generation 7.9% above budget
Kevin Lyon, Chairman of NESF, commented:
"Over the course of the last six months, we have fully deployed
the capital raised in the previous financial year in the
acquisition of operating solar assets.
The first half of this financial year was characterised by a
notable overperformance of the Company's portfolio, driven by high
levels of solar irradiation during the summer. At the same time, we
continued to focus on the portfolio's core technical and operating
performance and reduction in operating expenditure, and selectively
entered into new power purchase agreements and hedges to take
advantage of rising short-term power prices.
Following the end of the period, we implemented an innovative
financing transaction, issuing Preference Shares, which will
improve the Company's cashflows available for re-investment and
distribution."
NESF's Investment Adviser will host a presentation for analysts
this morning.
If you would like to attend or have any further questions,
please contact MHP Communications on 020 3128 8100 or
nextenergy@mhpc.com.
For further information:
NextEnergy Capital Limited 020 3746 0700
Michael Bonte-Friedheim
Aldo Beolchini
Cantor Fitzgerald Europe 020 7894 7667
Robert Peel
Fidante Capital 020 7832 0900
John Armstrong-Denby
Shore Capital 020 7408 4090
Anita Ghanekar
Macquarie Capital (Europe) Limited 020 3037 2000
Nick Stamp
MHP Communications 020 3128 8100
Oliver Hughes
Ipes (Guernsey) Limited 01481 755 137
Nicholas Robilliard
Notes to Editors:
NESF is a specialist investment company that invests primarily
in operating solar power plants in the UK. It is able to invest up
to 15% of its Gross Asset Value in operating solar power plants in
OECD countries outside the UK. The Company's objective is to secure
attractive shareholder returns through RPI-linked dividends and
long-term capital growth. The Company achieves this by acquiring
solar power plants on agricultural, industrial and commercial
sites.
NESF has raised equity proceeds of GBP592m since its initial
public offering on the main market of the London Stock Exchange in
April 2014. It also has preference shares of GBP100m in issue and
credit facilities outstanding of c.GBP365m in place (GBP149m from a
syndicate including MIDIS, NAB and CBA; MIDIS: GBP54m; ING GBP32m;
UniCredit GBP32m; Santander GBP40m; and Bayerische Landesbank
GBP58m).
NESF is differentiated by its access to NextEnergy Capital Group
(NEC Group), its Investment Manager, which has a strong track
record in sourcing, acquiring and managing operating solar assets.
WiseEnergy is NEC Group's specialist operating asset management
division and over the course of its activities has provided
operating asset management, monitoring, technical due diligence and
other services to over 1,300 utility-scale solar power plants with
an installed capacity in excess of 1.9 GW.
Further information on NESF, NEC Group and WiseEnergy is
available at www.nextenergysolarfund.com, www.nextenergycapital.com
and www.wise-energy.eu.
Overview
Chairman's Statement
"Over the course of the last six months, we have fully deployed
the capital raised in the previous financial year in the
acquisition of operating solar assets.
The first half of this financial year was characterised by a
notable overperformance of the Company's portfolio, driven by high
levels of solar irradiation during the summer. At the same time, we
continued to focus on the portfolio's core technical and operating
performance and reduction in operating expenditure, and selectively
entered into new power purchase agreements and hedges to take
advantage of rising short-term power prices.
Following the end of the period, we implemented an innovative
financing transaction, issuing Preference Shares, which will
improve the Company's cashflows available for re-investment and
distribution."
I am pleased to present, on behalf of the Board, the Interim
Report and Condensed Interim Financial Statements for NextEnergy
Solar Fund Limited for the period ended 30 September 2018.
As at 30 September 2018, the Company's portfolio comprised 87
operating assets amounting to 691MW installed solar capacity and an
invested capital of GBP894m (31 March 2018: 63 assets, 569MW and
GBP734m invested capital).
As envisaged in the last Annual Report, we have now fully
deployed all the capital raised through the equity raising and debt
financings in the previous financial year. With new acquisitions
undertaken during the period, the gearing ratio has increased to
37% at the period end.
We have also continued with our programme of reducing operating
costs and have focussed on the portfolio's technical and operating
performance, with the aim of increasing efficiencies across our
plants.
Our plans to begin construction of subsidy-free projects are on
track for an announcement in the second half of this financial
year. We have a pipeline of subsidy-free assets to develop and the
Investment Manager is working on the supply chain to reduce
investment and operating costs of these development projects.
The changing power curves in the short-term provided us with the
opportunity to lock-in electricity prices higher than the budget,
although the longer-term projections by our market consultants
continued to show price declines.
Elsewhere, we are pleased with our first acquisition of two
battery energy storage systems connected to two different solar PV
assets in May 2018. This investment will provide us with ongoing
effective insight into the potential value addition to NESF's
portfolio of the energy storage market opportunity.
As mentioned in the last Annual Report, we have been looking to
optimise the capital structure and, after the period end, on 13
November 2018, we were pleased to announce the issue of an initial
tranche of GBP100m of Preference Shares. This was an innovative
financing transaction that optimises NESF's capital structure,
reduces exposure to secured debt financing and significantly
increases cashflows available for distribution and dividend cover,
as detailed further in the Investment Manager's report. We expect
to issue another tranche of GBP100m before the end of the financial
year.
Financial Results
Profit for the six-month period was GBP18.7m (2017: GBP14.0m)
with earnings per share of 3.23p (2017: 2.69p).
Cash dividend cover was 1.2x (2017: 1.0x). When taking into
account the significant scrip election, the dividend cover was 1.7x
(2017: 1.1x).
The Company's annualised Ongoing Charges Ratio ("OCR") was 1.1%
(2017: 1.1%) for the period, which is in line with the budget for
the full year ending 31 March 2019 of 1.1%.
Portfolio Performance
The months of June, July and August saw exceptional solar
irradiation in the UK. As irradiation levels across our portfolio
were 8.4% over our expectations, energy generation also was notably
above budget. High temperatures reduce the technical efficiency of
solar systems and peaks in generation can also result in grid
curtailment, so that the resulting actual net generation increase
amounted +7.9% (including unexpected and expected grid outages of
various solar plants). The resulting negative Asset Management
Alpha of -0.5% (2017: +1.5%) was an expected result of these high
irradiation and temperature conditions.
The portfolio of assets recorded total energy generated during
the period of 480GWh (2017: 307GWh). This was also as a result of
the integration of new operating assets compared to previous
periods, as detailed further in the Investment Manager's
report.
Net Asset Value
At the period end, the Company's NAV was GBP610m, equivalent to
105.1p per share (31 March 2018: NAV of GBP603m, 105.1p per
share).
Portfolio Growth
During the period, the portfolio's installed capacity increased
by 122MW. The Investment Manager is in negotiation for another
606MW of pipeline assets, of which 470MW represent subsidy free
assets and 136MW are with subsidies.
We believe the development of subsidy-free solar plants will
provide selected attractive opportunities for the Company. We have
already acquired a number of sites and have several options
available in this space, including developing the solar plant from
the ground-up. This allows us to retain control over the entire
value chain and increase the return on investment whilst mitigating
risks.
Capital Raising and Debt Financing
At period end, the Company had total financial debt outstanding
of GBP365.3m (31 March 2018: GBP270.4m) on a pro-forma look-through
basis, including project level debt. Of the total financial debt,
GBP324.0m was long-term fully amortising debt, and GBP40.0m was
drawn under the Company's short-term credit facility. This
represents a gearing level of 37% (31 March 2018: 31%), which is
below the stated maximum debt-to-GAV level of 50%.
The Company intends to deploy the proceeds from the first
Preference Share issue to repay existing debt facilities, resulting
in a capital structure with lower financial debt outstanding and
significantly reduced annual cash costs to NESF. A further
Preference Share issue is expected to be employed primarily to
further repay existing debt facilities, with incremental benefits
to the Company as described above.
Dividend and Dividend Growth
The Company continues to achieve all its dividend and dividend
growth objectives. For the year 2018/19, the Company has targeted a
total dividend of 6.65p per share (2017/18: 6.42p), to be paid in
four quarterly distributions. In September the first quarterly
dividend of 1.665p was paid. The next dividends are due for payment
on 29 December 2018, 29 March 2019 and 29 June 2019.
As mentioned in the last Annual Report, we have been monitoring
the ability of the Company to maintain its dividend target linked
to RPI, despite declining long-term power price forecasts. The
initial GBP100m issuance of Preference Shares provides a
significant improvement in the capital structure of the Company and
materially increases its ability to sustain a growing dividend and
provide positive dividend cover going forward.
Outlook
The Company will focus on future opportunities on several fronts
including:
(i) increasing the technical and operating performance;
(ii) optimising revenues and reducing operating costs across our existing portfolio of assets;
(iii) continuing to identify UK opportunities in the secondary
market with ROC accreditations, despite a narrowing pipeline as
competition for ROC assets has increased substantially over the
last year; and
(iv) progressing preparation of construction of subsidy free
assets: our plans to begin construction of the first sites are on
track for the second half of the financial year.
Kevin Lyon
Chairman
19 November 2018
Investment Objective
KPIs and Investment Objective
Key Performance Indicators ("KPIs")
The Company sets out below its KPIs which it utilises to track
its performance over time against its objectives. Alternative
Performance Measures used by the Company are defined in the
Glossary.
Period ended 30 Year ended 31 Year ended 31 Year ended 31 Year ended 31
Financial KPI September 2018 March 2018 March 2017 March 2016 March 2015
Shares in issue 580.2m 575.6m 456.4m 278.0m 240.3m
Share price 111.5p 111.0p 110.5p 97.75p 103.75p
Market
capitalisation GBP647m GBP639m GBP504m GBP272m GBP249m
NAV per share 105.1p 105.1p 104.9p 98.5p 103.3p
Total NAV GBP610m GBP605m GBP479m GBP274m GBP248m
Premium/(discount)
to NAV 6.1% 5.6% 5.3% (0.8%) 0.4%
Earnings per share 3.23p 5.88p 13.81p 0.78p 9.13p
Dividend per share 3.325p 6.42p 6.31p 6.25p 5.25p
Cash dividend cover
- pre scrip 1.2x 1.0x 1.1x 1.2x 1.8x
Debt outstanding GBP365m GBP270m GBP270m GBP217m GBP0m
Gearing level
(Debt/GAV) 37% 31% 36% 44% 0%
Weighted Average
Cost of Capital 5.6% 5.8% 5.9% 5.8% 7.5%
Weighted Average
Lease Life 23.4 years 23.3 years 24.6 years 25.7 years 26.2 years
Shareholder total
return -
cumulative since
IPO 37.4% 33.6% 26.7% 6.1% 5.9%
Shareholder total
return -
annualised since
IPO 8.4% 8.5% 9.1% 3.2% 6.3%
Shareholder total
return for period 3.4% 6.2% 21.1% 0.2% 5.9%
FTSE All Share
total return for
period 7.9% 1.4% 20.9% (3.6%) 5.5%
NAV total return 3.1% 6.3% 14.4% 3.7% 3.3%
NAV total return -
annualised since
IPO 7.0% 7.0% 4.9% 1.9% 4.0%
Invested Capital GBP894m GBP734m GBP522m GBP481m GBP252m
Ongoing Charges
Ratio 1.1% 1.1% 1.2% 1.2% 1.5%
Weighted Average
Discount Rate 7.3% 7.3% 7.9% 7.7% 7.5%
Operational KPI
Number of assets 87 63 41 33 16
Total capacity 691 MW 569 MW 454 MW 414 MW 217 MW
Electricity
production
(generation) 480GWh 451GWh 394GWh 225GWh 23GWh
% increase
(period-on-period) 6% 14% 75% 870% -
Irradiation (delta
vs. budget) +8.4% (0.9%) (0.3%) +0.4% (0.4%)
Generation (delta
vs. budget) +7.9% +0.9% +3.3% +4.1% +4.8%
Asset Management
Alpha (0.5%) +1.8% +3.6% +3.7% +5.2%
Structure
The Company is a Guernsey registered closed-ended investment
scheme.
The Company has a premium listing and its shares are traded on
the London Stock Exchange under the ticker "NESF". The Group
comprises the Company and HoldCos which invest in SPVs which hold
the underlying solar PV assets.
Investment Objective
The Company seeks to provide investors with a sustainable and
attractive dividend that increases in line with RPI over the
long-term. In addition, the Company seeks to provide investors with
an element of capital growth through the reinvestment of net cash
generated in excess of the target dividend in accordance with the
Company's investment policy.
Investment Policy
The Company's investment policy can be viewed at
www.nextenergysolarfund.com
Investment Manager's Report
Investment Portfolio
Remaining
life
Plant of the % of
Announcement Regulatory Capacity Investment plant Equity
Power plant Location Date Regime(1) Status(8) (MWp) (GBPM) (years) Proceeds
Higher
1 Hatherleigh Somerset 01/05/2014 1.6 Completed 6.1 7.3(5) 19.5 1.2%
2 Shacks Barn Northamptonshire 09/05/2014 2.0 Completed 6.3 8.2(5) 18.8 1.4%
3 Gover Farm Cornwall 23/06/2014 1.4 Completed 9.4 11.1(5) 20.5 1.9%
4 Bilsham West Sussex 03/07/2014 1.4 Completed 15.2 18.9(5) 21.1 3.2%
5 Brickyard Warwickshire 14/07/2014 1.4 Completed 3.8 4.1(5) 26.5 0.7%
6 Ellough Suffolk 28/07/2014 1.6 Completed 14.9 20.0(5) 21.5 3.4%
7 Poulshot Wiltshire 09/09/2014 1.4 Completed 14.5 15.7(5) 21.5 2.7%
8 Condover Shropshire 29/10/2014 1.4 Completed 10.2 11.7(5) 21.1 2.0%
9 Llywndu Ceredigion 22/12/2014 1.4 Completed 8.0 9.4 20.4 1.6%
Cock Hill
10 Farm Wiltshire 22/12/2014 1.4 Completed 20.0 23.6 21.2 4.0%
11 Boxted Airfield Essex 31/12/2014 1.4 Completed 18.8 20.6(5) 21.1 3.5%
12 Langenhoe Essex 12/03/2015 1.4 Completed 21.2 22.9(5) 21.2 3.9%
13 Park View Devon 19/03/2015 1.4 Completed 6.5 7.7(5) 21.5 1.3%
14 Croydon Cambridgeshire 27/03/2015 1.4 Completed 16.5 17.8(5) 31.2 3.0%
15 Hawkers Farm Somerset 13/04/2015 1.4 Completed 11.9 14.5(5) 20.7 2.4%
16 Glebe Farm Bedfordshire 13/04/2015 1.4 Completed 33.7 40.5(5) 21.5 6.8%
17 Bowerhouse Somerset 18/06/2015 1.4 Completed 9.3 11.1(5) 36.2 1.9%
18 Wellingborough Northamptonshire 18/06/2015 1.6 Completed 8.5 10.8(5) 21.7 1.8%
19 Birch Farm Essex 21/10/2015 FiT Completed 5.0 5.3(5) 27.5 0.9%
Thurlestone
20 Leicester Leicestershire 21/10/2015 FiT Completed 1.8 2.3 27.6 0.4%
21 North Farm Dorset 21/10/2015 1.4 Completed 11.5 14.5(5) 22.3 2.4%
Ellough Phase
22 2 Suffolk 03/11/2015 1.3 Completed 8.0 8.0(5) 26.2 1.4%
23 Hall Farm Leicestershire 03/11/2015 FiT Completed 5.0 5.0(5) 20.9 0.8%
24 Decoy Farm Lincolnshire 03/11/2015 FiT Completed 5.0 5.2(5) 14.6 0.9%
25 Green Farm Essex 26/11/2015 FiT Completed 5.0 5.8 21.8 1.0%
26 Fenland Cambridgeshire 11/01/2016 1.4 Completed 20.4 23.9(2,3) 21.9 4.0%
27 Green End Cambridgeshire 11/01/2016 1.4 Completed 24.8 29.0(2,3) 21.5 4.9%
28 Tower Hill Gloucestershire 11/01/2016 1.4 Completed 8.1 8.8(2,3) 22.5 1.5%
29 Branston Lincolnshire 05/04/2016 1.4 Completed 18.9 27.0
30 Great Wilbraham Cambridgeshire 05/04/2016 1.4 Completed 38.1 23.0
31 Berwick East Sussex 05/04/2016 1.4 Completed 8.2 97.9(2,4) 26.5 16.5%
32 Bottom Plain Dorset 05/04/2016 1.4 Completed 10.1 26.6
33 Emberton Buckinghamshire 05/04/2016 1.4 Completed 9.0 26.4
34 Kentishes Essex 22/11/2016 1.2 Completed 5.0 4.5 23.2 0.8%
35 Mill Farm Hertfordshire 04/01/2017 1.2 Completed 5.0 4.2 23.2 0.7%
36 Bowden Somerset 04/01/2017 1.2 Completed 5.0 5.6 23.4 0.9%
37 Stalbridge Dorset 04/01/2017 1.2 Completed 5.0 5.4 23.5 0.9%
38 Aller Court Somerset 21/04/2017 1.2 Completed 5.0 5.5 23.5 0.9%
39 Rampisham Dorset 21/04/2017 1.2 Completed 5.0 5.8 23.2 1.0%
40 Wasing Berkshire 21/04/2017 1.2 Completed 5.0 5.3 24.0 0.9%
Flixborough
41 South Humberside 21/04/2017 1.2 Completed 5.0 5.1 24.0 0.9%
42 Hill Farm Oxfordshire 21/04/2017 1.2 Completed 5.0 5.5 21.7 0.9%
43 Forest Farm Hampshire 21/04/2017 1.2 Completed 3.0 3.3 33.5 0.6%
44 Birch CIC Essex 12/06/2017 FiT Completed 1.7 1.7 23.5 0.3%
45 Barnby Nottinghamshire 12/06/2017 1.2 Completed 5.0 5.4 23.8 0.9%
46 Bilsthorpe Nottinghamshire 12/06/2017 1.2 Completed 5.0 5.4 24.2 0.9%
47 Wickfield Wiltshire 12/06/2017 1.2 Completed 4.9 5.6 24.6 1.0%
48 Bay Farm Suffolk 18/08/2017 1.6 Completed 8.1 10.5 21.3 1.8%
49 Honington Suffolk 18/08/2017 1.6 Completed 13.6 16.0 21.4 2.7%
50 Macchia Rotonda Apulia 01/11/2017 FiT Completed 6.6 28.0
51 Iacovangelo Apulia 01/11/2017 FiT Completed 3.5 23.4
52 Armiento Apulia 01/11/2017 FiT Completed 1.9 26.1
53 Inicorbaf Apulia 01/11/2017 FiT Completed 3.0 116.2(2,6) 28.5 19.6%
Gioia del
54 Colle Campania 01/11/2017 FiT Completed 6.5 27.4
55 Carinola Apulia 01/11/2017 FiT Completed 3.0 27.7
56 Marcianise Campania 01/11/2017 FiT Completed 5.0 17.3
57 Riardo Campania 01/11/2017 FiT Completed 5.0 17.6
58 Gilley's Dam Cornwall 18/12/2017 1.3 Completed 5.0 6.4 17.6 1.1%
59 Pickhill Bridge Clwyd 18/12/2017 1.2 Completed 3.6 3.7 17.4 0.6%
60 North Norfolk Norfolk 01/02/2018 1.6 Completed 11.0 14.6 18.1 2.5%
61 Axe View Devon 01/02/2018 1.2 Completed 5.0 5.6 18.1 1.0%
62 Low Bentham Lancashire 01/02/2018 1.2 Completed 5.0 5.4 18.0 0.9%
63 Henley Shropshire 01/02/2018 1.2 Completed 5.0 5.2 18.0 0.9%
64 Pierces Farm Berkshire 30/05/2018 FiT Completed 1.7 1.2 20.6 0.2%
65 Salcey Farm Buckinghamshire 30/05/2018 1.4 Completed 5.5 6.5 20.6 1.1%
66 Thornborough Buckinghamshire 25/06/2018 1.2 Completed 5.0 5.7 22.5 1.0%
67 Temple Normaton Derbyshire 25/06/2018 1.2 Completed 4.9 5.6 22.8 1.0%
Fiskerton
68 Phase 1 Lincolnshire 25/06/2018 1.3 Completed 13.0 16.6 31.5 2.8%
Huddlesford
69 HF Staffordshire 25/06/2018 1.2 Completed 0.9 0.9 22.3 0.1%
Little
70 Irchester Northamptonshire 25/06/2018 1.2 Completed 4.7 5.9 23.3 1.0%
71 Balhearty Clackmannanshire 25/06/2018 FiT Completed 4.8 2.6 23.2 0.4%
72 Brafield Northamptonshire 25/06/2018 1.2 Completed 4.9 5.8 22.5 1.0%
Huddlesford
73 PL Staffordshire 25/06/2018 1.2 Completed 0.9 0.9 2.6 0.2%
74 Sywell Northamptonshire 25/06/2018 1.2 Completed 5.0 5.9 22.6 1.0%
75 Coton Park Derbyshire 25/06/2018 FiT Completed 2.5 1.1 32.3 0.2%
76 Hook Somerset 11/07/2018 1.6 Completed 15.3 21.9(2) 20.0 3.7%
77 Blenches Wiltshire 11/07/2018 1.6 Completed 6.1 7.8(2) 20.2 1.3%
78 Whitley Somerset 11/07/2018 1.6 Completed 7.6 10.5(2) 20.5 1.8%
79 Burrowton Devon 11/07/2018 1.6 Completed 5.4 7.3(2) 20.0 1.2%
80 Saundercroft Devon 11/07/2018 1.6 Completed 7.2 9.6(2) 21.0 1.6%
81 Raglington Hampshire 11/07/2018 1.6 Completed 5.7 8.1(2) 35.3 1.4%
82 Knockworthy Cornwall 11/07/2018 FiT Completed 4.6 6.6(2) 19.5 1.1%
Chilton
83 Canetello Somerset 11/07/2018 FiT Completed 5.0 9.0(2) 18.8 1.5%
84 Crossways Dorset 11/07/2018 FiT Completed 5.0 10.1(2) 19.4 1.7%
85 Wyld Meadow Dorset 11/07/2018 FiT Completed 4.8 7.1(2) 21.1 1.2%
Ermis -
86 rooftops Multiple 07/08/2018 FiT Completed 1.0 3.0 18.1 0.5%
Angelia -
87 rooftops Multiple 07/08/2018 FiT Completed 0.2 0.6 18.0 0.1%
Total 690.8 893.8 151.0%(7)
Option
A Francis/Gourton Clwyd 16/06/2017 None to build 10.0 - - -
Option
B Glebe Worcestershire 16/06/2017 None to build 19.6 - - -
Option
C Radbrook Warwickshire 16/06/2017 None to build 20.7 - - -
Option
D Moss Cheshire 16/06/2017 None to build 9.5 - - -
Option
E Staughton Bedfordshire - None to build 50.0 - - -
Option
F Llanwern Gwent - None to build 62.5 - - -
Total 172.3 - - -
(1) An explanation of ROC regime is available at www.ofgem.gov.uk/environmental-programmes/renewables-obligation-ro.
(2) Acquired with project level debt already in place.
(3) Part of the Three Kings portfolio.
(4) Part of the Radius portfolio.
(5) Part of the Apollo portfolio.
(6) Part of the Solis portfolio.
(7) Greater than 100% due to debt financing.
(8) Completed - the asset is operational, and the acquisition completed.
Portfolio Assets
Period ended 30 September
2018 Since acquisition
Operational Acquisition Irradiation Generation Irradiation Generation
Power plant date date Generation delta delta Generation delta delta
(MWh) (%) (%) (MWh) (%) (%)
1 Higher Hatherleigh Apr-14 May-14 4,529 3.9 6.2 28,021 (0.6) 4.1
2 Shacks Barn May-14 May-14 4,779 10.2 14.7 28,534 1.6 8.2
3 Gover Farm Jan-15 Jun-14 5,484 3.9 (17.4)(1) 35,191 1.0 (1.4)
4 Bilsham Jan-15 Jul-14 12,168 9.7 8.4 63,172 3.1 5.5
5 Brickyard Jan-15 Jul-14 2,687 10.5 5.2 13,882 1.7 4.0
6 Ellough Jul-14 Jul-14 11,722 7.5 10.7 64,487 (0.6) 5.5
7 Poulshot Apr-15 Sep-14 10,658 4.8 8.7 46,746 (1.2) 3.6
8 Condover May-15 Oct-14 7,478 6.8 8.7 33,367 (1.1) 1.0
9 Llywndu Jul-15 Dec-14 5,897 1.5 6.6 24,776 (5.3) 0.0
Cock Hill
10 Farm Jul-15 Dec-14 14,427 6.4 3.6 64,307 0.3 1.9
11 Boxted Airfield Apr-15 Dec-14 14,805 10.1 10.7 70,442 2.2 4.6
12 Langenhoe Apr-15 Mar-15 17,505 12.7 15.7 82,862 4.8 8.5
13 Park View Jul-15 Mar-15 4,786 (1.5) 0.3 21,329 (4.6) (1.0)
14 Croydon Apr-15 Mar-15 12,551 15.1 15.9 59,641 4.4 6.5
15 Hawkers Farm Jun-15 Apr-15 8,915 2.6 4.3 40,049 (2.1) 1.4
16 Glebe Farm May-15 Apr-15 26,599 13.8 18.9 118,438 3.7 9.7
17 Bowerhouse Jul-15 Jun-15 6,505 5.6 (0.8) 29,825 0.1 0.2
18 Wellingborough Jun-15 Jun-15 6,341 10.8 11.2 28,119 0.1 4.5
19 Birch Farm Sep-15 Oct-15 3,899 10.4 9.6 15,364 2.6 4.9
Thurlestone
Leicester
20 -
rooftops(2) Oct-15 Oct-15 N/A N/A N/A N/A N/A N/A
21 North Farm Oct-15 Oct-15 9,074 2.7 2.2 35,765 (5.2) (3.3)
Ellough Phase
22 2 Aug-16 Nov-15 6,323 13.8 12.2 18,542 7.7 10.8
23 Hall Farm Apr-16 Nov-15 3,676 10.7 10.7 8,763 2.4 (4.6)
24 Decoy Farm Mar-16 Nov-15 3,921 11.1 13.8 10,310 2.7 7.6
25 Green Farm Dec-16 Nov-15 3,894 9.2 8.9 9,587 2.8 2.7
26 Fenland Jan-16 Jan-16 16,267 10.8 15.3 60,221 3.0 7.9
27 Green End Jan-16 Jan-16 18,808 11.4 9.9 70,551 2.7 4.2
28 Tower Hill Jan-16 Jan-16 6,196 5.6 9.8 23,239 1.4 5.5
29 Branston Mar-16 Apr-16 12,894 14.2 1.8 48,591 4.8 1.6
30 Great Wilbraham Mar-16 Apr-16 29,974 14.4 14.4 102,395 3.6 4.1
31 Berwick Mar-16 Apr-16 6,816 9.5 9.8 25,084 4.5 7.4
32 Bottom Plain Mar-16 Apr-16 8,104 9.4 9.5 28,560 1.6 2.5
33 Emberton Mar-16 Apr-16 6,962 13.7 12.5 23,896 2.8 2.5
34 Kentishes Jul-17 Nov-16 4,012 11.0 9.1 8,407 4.5 4.3
35 Mill Farm Jul-17 Jan-17 3,920 14.7 12.1 8,273 6.9 7.6
36 Bowden Sep-17 Jan-17 3,851 1.9 (0.6) 5,592 (1.6) (1.3)
37 Stalbridge Sep-17 Jan-17 3,912 2.2 4.1 5,706 (1.1) 3.8
38 Aller Court Sep-17 Apr-17 3,829 3.0 2.4 5,568 1.4 2.3
39 Rampisham Sep-17 Apr-17 3,961 0.9 (0.2) 5,564 (2.4) (3.1)
40 Wasing Aug-17 Apr-17 4,014 12.3 13.9 6,351 5.8 9.3
41 Flixborough Aug-17 Apr-17 3,712 8.9 9.4 5,827 3.7 5.7
42 Hill Farm Mar-17 Apr-17 3,892 13.1 15.0 5,221 7.6 8.5
43 Forest Farm Mar-17 Apr-17 2,381 9.5 12.1 3,212 4.4 8.2
44 Birch CIC May-17 Jun-17 1,340 10.5 7.4 2,806 4.0 3.3
45 Barnby Aug-17 Jun-17 3,712 11.5 12.1 5,632 4.7 6.5
46 Bilsthorpe Aug-17 Jun-17 3,783 10.9 12.5 5,757 3.8 7.0
47 Wickfield Mar-17 Jun-17 3,555 8.2 4.0 4,930 4.3 2.7
48 Bay Farm Sep-17 Aug-17 5,751 13.2 7.8 8,851 7.2 3.7
49 Honington Sep-17 Aug-17 10,010 8.3 6.6 14,717 3.2 (0.3)
Macchia
50 Rotonda Nov-17 Nov-17 6,400 4.7 6.3 8,513 0.9 2.9
51 Iacovangelo Nov-17 Nov-17 3,383 4.8 6.2 4,556 0.9 3.5
52 Armiento Nov-17 Nov-17 1,825 4.4 5.9 2,472 0.6 3.2
53 Inicorbaf Nov-17 Nov-17 2,889 2.8 6.1 3,938 (0.5) 2.8
Gioia del
54 Colle Italy Nov-17 Nov-17 6,062 (3.1) 2.1 8,134 (4.5) (0.9)
55 Carinola Nov-17 Nov-17 2,744 0.2 4.8 3,605 (3.6) 0.1
56 Marcianise Nov-17 Nov-17 4,437 (0.3) 0.8 5,923 (3.1) (2.6)
57 Riardo Nov-17 Nov-17 4,495 0.2 0.1 5,889 (3.1) (4.9)
Gilley's
58 Dam Nov-17 Dec-17 3,697 (3.6) (2.2) 4,649 (5.1) (2.6)
Pickhill
59 Bridge Dec-17 Dec-17 2,804 12.1 14.1 3,396 8.7 11.3
60 North Norfolk Dec-17 Feb-18 8,367 8.6 8.1 10,037 5.8 6.5
61 Axe View Dec-17 Feb-18 3,759 7.4 6.6 4,562 5.4 5.5
62 Low Bentham Dec-17 Feb-18 3,592 5.8 5.8 4,357 4.8 6.0
63 Henley Jan-18 Feb-18 3,669 7.8 9.9 4,326 4.6 6.9
Pierces
64 Farm May-18 May-18 928 15.2 12.0 928 15.2 12.0
65 Salcey Farm May-18 May-18 2,738 11.6 7.5 2,738 11.6 7.5
66 Thornborough Jun-18 Jun-18 1,422 12.9 (27.3)(1) 1,422 12.9 (27.3)
Temple
67 Normaton Jun-18 Jun-18 1,744 15.3 (3.2) 1,744 15.3 (3.2)
Fiskerton
68 Phase Jun-18 Jun-18 5,092 17.8 4.0 5,092 17.8 4.0
Huddlesford
69 HF Jun-18 Jun-18 353 16.1 8.3 336 16.1 8.3
Little
70 Irchester Jun-18 Jun-18 1,385 17.1 (24.6)(1) 1,385 17.1 (24.6)
71 Balhearty Jun-18 Jun-18 1,379 4.4 (16.8)(1) 1,379 4.4 (16.8)
72 Brafield Jun-18 Jun-18 1,784 17.2 (7.1) 1,784 17.2 (7.1)
Huddlesford
73 PL Jun-18 Jun-18 386 15.4 13.0 363 15.4 13.0
74 Sywell Jun-18 Jun-18 1,604 18.7 (16.4)(1) 1,604 18.7 (16.4)
75 Coton Park Jun-18 Jun-18 942 13.9 9.8 942 13.9 9.8
76 Hook Jul-18 Jul-18 4,996 8.7 4.0 4,996 8.7 4.0
77 Blenches Jul-18 Jul-18 1,974 6.6 8.1 1,974 6.6 8.1
78 Whitley Jul-18 Jul-18 2,440 4.2 3.2 2,440 4.2 3.2
79 Burrowton Jul-18 Jul-18 4,019 2.1 3.0 4,019 2.1 3.0
80 Saundercroft Jul-18 Jul-18
81 Raglington Jul-18 Jul-18 1,963 9.0 6.9 1,963 9.0 6.9
82 Knockworthy Jul-18 Jul-18 1,538 1.3 2.6 1,538 1.3 2.6
Chilton
83 Canetello Jul-18 Jul-18 1,755 9.1 10.4 1,755 9.1 10.4
84 Crossways Jul-18 Jul-18 1,892 8.8 11.3 1,892 8.8 11.3
85 Wyld Meadow Jul-18 Jul-18 1,680 0.5 4.5 1,680 0.5 4.5
86 Ermis -
rooftops(2) Aug-18 Aug-18 N/A N/A N/A N/A N/A N/A
87 Angelia
- rooftops(2) Aug-18 Aug-18 N/A N/A N/A N/A N/A N/A
Total 480,416 8.4 7.9 1,552,801 1.6 4.2
(1) Underperformance is due to defects which were known at the
time of acquisition and are currently in the process of being
rectified. These are expected to be fully rectified within the next
12 months.
(2) Rooftop assets are not monitored for generation and irradiation.
Investment Manager's Report
About NextEnergy Capital
The Investment Manager and Investment Adviser are both members
of the NEC Group. The NEC Group is a specialist investment and
operating asset manager focused on the solar energy sector, with
over 125 staff across its offices in UK and Italy. Through its
operating asset management division, WiseEnergy, the NEC Group has
managed and monitored over 1,300 utility-scale solar plants and
approximately 720 solar rooftop installations (comprising an
installed capacity in excess of 1.9GW) for a client base which
includes leading European banks and equity investors (including
private equity funds, listed funds and institutional investors).
The NEC Group also manages NextPower II LP, a EUR184m private
equity fund dedicated to PV investments in Italy. Related party
transactions with the Investment Manager, Investment Adviser and
the Operating Asset Manager are detailed in note 17 of the
Condensed Interim Financial Statements.
Portfolio Highlights
During the period, the portfolio grew from 63 to 87 assets,
which represented an increase of 122MW to the portfolio
capacity.
In May 2018, the Company announced the acquisition of two
operating solar plants of 7.2MW with integrated battery energy
storage systems of 1MW capacity.
In June 2018, the Company acquired ten operating solar plants
with total installed capacity of 46.6MW with subsidies including
ROC and FiTs.
In July 2018, the Company announced a further ten operating
solar plants in the UK with installed capacity of 66.8MW. The
assets were purchased with a long-term debt facility of GBP58.3m
already in place. The Company entered into an RCF for GBP40m with
Santander to finance part of the transaction.
These acquisitions utilised the remaining proceeds from the
capital raised in the previous year. The Company has now fully
invested all its share capital.
At period end, all the Company's assets that were completed,
were operational and connected to the grid and qualified for ROC or
FiT subsidies.
The summer of 2018 was one of the hottest in UK history and
multiple solar irradiation records were broken. With these high
temperatures, the asset manager had to cope with the adverse
effects of this weather pattern on the performance ratios of the
solar plants, which are optimal at lower than 25 degrees
Centigrade. The estimated loss of generation due to high
temperature is 1.8% of the total energy production. Furthermore,
some plants suffered from grid curtailment, as generation peaks
driven by exceptional irradiation levels exceeded at times the
export capacity allocated by the grid authority to each plant.
In Italy, as the weather pattern was not unusual during the
period, the Solis portfolio had an irradiation delta of +1.2%,
generation delta of +3.6% which resulted in an Asset Management
Alpha of +2.4%.
Overall, the operational performance of the portfolio during the
period was positive and above budget. The resulting negative Asset
Management Alpha of -0.5% (2017: +1.5%) was an expected outcome of
these exceptional weather conditions and does not represent any
change in the ability to obtain future overperformance.
As at 30 September 2018, the actual performance versus
expectations for 84 of the portfolio solar PV assets had been
managed and monitored by the Asset Manager for at least two months
post completion. Rooftop assets are excluded as irradiation is not
monitored. This sub-portfolio of solar PV assets generated an
outperformance of +7.9% above the budgeted generation values, for a
total generation of 480GWh.
The Asset Management Alpha measurement allows the Company to
identify the "real" outperformance of the portfolio due to active
management, excluding the effect of variation in solar irradiation.
The "nominal" outperformance is calculated as GWh generated by the
portfolio vs. the GWh expected in the assumptions used at the time
of acquisition. The negative Alpha registered in the period was
expected in such higher temperature and solar irradiation
conditions which have driven the significant portfolio
overperformance.
Irradiation Generation
Period Assets monitored (delta vs. budget) (delta vs. budget) Asset Management Alpha
First half 2015/16 17 +2.9% +5.7% +2.8%
First half 2016/17 31 +0.0% +3.2% +3.2%
First half 2017/18 41 +0.5% +2.0% +1.5%
First half 2018/19 84 +8.4% +7.9% -0.5%
Cumulative from IPO to 30
September 2018 84 +1.6% +4.2% +2.6%
Current and Long-Term Power Prices
The Investment Manager continuously reviews multiple inputs for
power price forecasts and takes the average of two of the leading
independent energy market consultants' (the "Consultants")
long-term projections to derive the power curve adopted in the
valuation of the Company's portfolio. This approach allows
mitigation of inevitable forecasting errors as well as any delay in
response from the Consultants in publishing periodic (quarterly) or
ad hoc updates following any significant market development.
During the period, the Consultants revised their forecasts for
the UK wholesale power price upwards on average and project a lower
real growth rate. Factors that contributed to these revisions
include the stronger commodity prices in the near-term relative to
recent years driven by the expectation of cold winters, a decline
in gas storage as well as oil supply in the UK and the increasing
demand from gas generation. In the long-term, wholesale prices are
expected to increase in line with gas and carbon prices but
counterbalanced by the growth in low-cost renewable generation.
The power price forecasts used by the Company also reflect an
assumed "solar capture" discount which reflects the difference
between the prices available on the market in the daylight hours of
operation of a solar plant vs. the baseload prices included in the
power price estimates. This solar capture discount is estimated by
the Consultants on the basis of a typical load profile of a solar
plant located in the UK and is reviewed as frequently as the
baseload power price forecasts. The application of such a discount
results in a lower long-term price expected for solar assets driven
by the deployment projections of low-cost renewable capacity.
The Company's current long-term power price forecast implies an
average growth rate of approximately 0.2% in real terms over the
20-year period and an average price of c.GBP53/MWh in today's
terms. This represents an increase of 1.0% compared to those used
at the end of the previous reporting year (and 35.3% below the
assumptions employed at IPO).
Compared to the previous interim period end, electricity day
ahead prices in the UK rose from c.GBP46/MWh in September 2017(1)
to c.GBP67/MWh in September 2018(1) . The Company continues to
secure attractive prices for the energy generated by its portfolio
through its electricity sales strategy with short to medium term
prices significantly above the projections provided by its
Consultants. Following a similar trend, the Italian purchasing
price of electricity rose from c.EUR49/MWh in September 2017(2) to
c.EUR76/MWh in September 2018(2) . The Investment Manager continues
to observe an upward trend both in the day ahead and forward
electricity markets after the period end.
(1) Source: N2EX - UK Baseload - day ahead
(2) Source: Gestore del Mercato Elettrico S.p.A.
Financial Results
Profit before tax was GBP18.7m (30 September 2017: GBP14.0m),
with earnings per share of 3.23p (30 September 2017: 2.69p).
Dividends
During the period, the Company paid dividends in relation to two
quarterly accounting periods: the fourth interim dividend for the
financial year 2017/18 (of 1.605p per ordinary share) and the first
quarterly dividend for the financial year 2018/19 (of 1.6625p per
ordinary share). As a result, the Company achieved its target for
total dividends for financial year 2017/18 of 6.42p per ordinary
share.
As stated in the Chairman's Statement, the Company is targeting
to pay a dividend of 6.65p per ordinary share for financial year
2018/19, which represents a growth in line with RPI applicable to
the underlying portfolio revenues. During the period, the Company
generated income of GBP26.3m and had net operating costs of
GBP3.2m. The net cash dividend cover for the period before taking
into account scrip dividends was 1.2x (2017: 1.0x). This
improvement in the dividend cover was mainly driven by the greater
levels in energy generation (+7.9% over expectations) during the
period.
In future periods, it is expected that the dividend cover will
significantly benefit from the optimised capital structure
following the GBP100m issuance of Preference Shares. The Investment
Manager expects to be able to maintain a dividend cover of 1.2x in
the long term, based on current assumptions and a full deployment
of the GBP200m Preference Shares programme.
The material difference between Dividend Cover pre and post
scrip is due to the relatively high scrip election (4.6m shares)
during the period. The Company still benefits from additional
sources of capital to deploy in further assets, or extension of the
current portfolio.
Income for the period ended 30 September 2018 includes GBP14.5m
(2017: GBP4.1m) which has been retained in certain subsidiaries as
their respective banking covenants only permit cash to flow out
twice a year. This is shown as a receivable on the Condensed
Interim Statement of Financial Position. If these banking
restrictions did not exist, the cash would have flowed up to the
Company on or before 30 September 2018.
Total Total
Amount per ordinary pre scrip pre scrip
Dividends paid Month of payment share (p) GBP'000 GBP'000
For the year 2014/15 5.2500 10,946 10,946
For the year 2015/16 6.2500 17,372 17,372
For the year 2016/17 6.3100 25,039 20,681
First quarterly dividend
for year 2017/18 Sep-17 1.6050 9,171 7,336
Second quarterly dividend
for year 2017/18 Dec-17 1.6050 9,197 6,922
Third quarterly dividend
for year 2017/18 Mar-18 1.6050 9,232 8,719
Fourth quarterly dividend
for year 2017/18 Jun-18 1.6050 9,239 6,760
First quarterly dividend
for year 2018/19 Sep-18 1.6625 9,608 7,105
Total dividends declared
to date 25.8925 99,804 85,841
Second quarterly dividend
for year 2018/19 Dec-18 1.6625 9,646 9,646(1)
Total
Income GBP'000
Income for period to 30
September 2018 26,349
Net operating costs for
period to 30 September
2018 (3,293)
Net income 23,056
Dividends during period 18,847 13,865
Net Dividend cover 1.2x 1.7x
(1) Before election of
scrip dividend.
The forecast dividend calendar is set out in
the table below:
Forecast amount per
Proposed dividend for year ordinary
2018/19 Date of expected payment share (p)
Second interim December 2018 1.6625
Third interim March 2019 1.6625
Fourth interim June 2019 1.6625
Total 4.9875
Operating Costs
The operating costs of the Company for the period amounted to
GBP3.3m. The Company's annualised OCR for the period was 1.1%
(2017: 1.1%), in line with the budget. The budgeted OCR for the
year ending 31 March 2019 is 1.1%.
Valuation of the Investment Portfolio
The Investment Manager is responsible for carrying out the fair
market valuation of the Company's underlying investment portfolio,
as described in note 6 of the Condensed Interim Financial
Statements. The resulting fair market value of the Company's
investment portfolio is presented to the Company's Board for their
review and approval. The valuation is carried out quarterly or more
often if capital increases or other relevant events arise. The
valuation principles used are based on a discounted cash flow
methodology and take into account IPEV guidelines.
The Investment Manager reviews multiple sources and inputs in
determining the fair market value of the underlying investments,
including analysing all announced solar transactions in the UK
during the period as well as undertaking a discounted cash flow
analysis of each investment made by the Company. The Investment
Manager exercises its judgement based on its expertise in the solar
PV market and in assessing the expected future cash flows from each
investment. In the discounted cash flow analysis, the fair value
for each operating asset is derived from the present value of the
investment's expected future cash flows, using reasonable
assumptions and forecasts for revenues and operating costs, and an
appropriate discount rate.
For solar PV assets not yet operational or where the completion
of the acquisition is not imminent at the time of valuation, the
acquisition cost is used as an appropriate estimate of fair
value.
The Board reviews the operating and financial assumptions,
including the discount rates, used in the valuation of the
Company's underlying portfolio and approves them based on the
recommendation of the Investment Manager. The valuation process
comprises the analysis of multiple factors, all relevant to
ascertain the fair value of the portfolio, including:
-- discount rates implied in the price at which comparable
transactions have been announced in the solar PV sector (including
those where the Investment Manager submitted a bid for the same
projects that was not deemed competitive by the vendors);
-- discount rates publicly disclosed by the Company's peers in the solar PV sector;
-- discount rates applicable for other comparable infrastructure
assets classes or regulated energy sectors;
-- capital asset pricing model analysis and risk premia over relevant risk-free rates;
-- macro-economic assumptions including inflation, taxation and regulation; and
-- key project specific assumptions.
During the period, the solar PV market continued to experience
increased competition for operating and subsidised assets on the
secondary market. In the context of high liquidity provided to
international investors, a maturing renewable market, a scarcity of
subsidised assets and lack of any incentive framework for new
installations, demand for operating solar assets remained strong
and sustained pressure on prices observed in the last year. These
changing dynamics were evidenced by the experience of the
Investment Manager in bidding for solar PV assets in the UK.
As a result, during the period the Company maintained its
discount rate for unlevered operating solar PV assets at 6.75% and
will continue to monitor this rate.
For those operating solar assets with fully-amortising long-term
project level debt (the Apollo portfolio, the Radius portfolio, the
Three Kings portfolio, the Solis portfolio and the ten projects
acquired in July 2018), the Company adopts a levered discount rate
to capture the greater level of risk associated with the cash flows
available to equity investors after debt service. The appropriate
level of risk premium due to project level debt was evaluated
taking into account various factors for each specific asset,
including the level of financial gearing, maturity profile, cost of
debt and other factors mentioned above. This range was unchanged
from the previous period (0.7% - 1.0%).
For solar assets outside the UK, an additional country risk
premium has been applied. For the Solis portfolio this premium was
1.25%, which is substantial considering the difference in risk free
rates on long-term securities ranging from 0.5% - 1.0% depending on
maturity. It is also worth noting that the underlying revenues from
the Solis portfolio have lower volatility due to market power
prices than average UK assets, and that the currency hedge
effectively mitigates FX exposure. As a result, the levered
discount rate applied to the Solis portfolio was 9.0%.
The resulting weighted average discount rate for the Company's
portfolio was 7.3%.
The Company does not adopt WACC as a discount rate for its
investments, as it believes that the reduction in WACC deriving
from the introduction of long-term debt financing does not reflect
the greater level of risk to equity investors associated with
levered assets or levered portfolios. However, for the purposes of
transparency, the Company's pre-tax WACC as of 30 September 2018
was 5.6%. Compared to year end's WACC of 5.8% this value reflects
an increase in the overall gearing from 31% to 37%, as further
described below.
The value uplift generated by the assets valued for the first
time on a DCF basis demonstrates how the new acquisitions are
adding value compared to the applicable discount rates.
The DCF methodology implemented in the portfolio valuation
assumes a valuation time-horizon capped to the current terms of the
lease and planning permission on the properties where each
individual solar PV asset is located. These leases have been
typically entered into for a 25-year period from commissioning of
the relevant PV plants (specific terms may vary). However, the
useful operating life of the Company's portfolio of solar PV assets
is expected to be longer than 25 years. This is due to many
factors, including: a) solar PV assets with technology components
similar to the ones deployed in the Company's portfolio have been
demonstrated to be capable of operating for over 40 years, with
levels of technical degradation lower than those assumed or
guaranteed by the manufacturers; b) local planning authorities have
already granted initial planning consents that do not expire and/or
have granted permissions to extend initial consented periods; and
c) the Company owns rights to supply electricity into the grid
through connection agreements that do not expire. The Company
continues to seek to extend the useful life of its assets, mainly
by extending the terms of the property leases for some projects
with the intention of extending leases for others in due course.
During the period, four assets in the portfolio which had already
secured unilateral lease extensions have received an extension to
the planning consent for up to 15 years. The Company expects to
secure further lease or planning extensions by the end of the
financial year therefore securing additional value for the existing
portfolio.
As at 30 September 2018, the remaining weighted average lease
life of the Company's portfolio was 23.4 years. For illustrative
purposes, should the entire portfolio of assets be valued on a
35-year basis from connection (assuming current lease terms) the
Company's NAV would increase by c.7.4% (112.6p). The table on pages
8 to 9 provides the remaining lease duration for each of the
Company's assets as at 30 September 2018. The DCF valuation assumes
a zero-terminal value at the end of the lease term for each asset
or the end of the planning permission, whichever is the
earlier.
As to the other main operating assumptions adopted in the DCF
valuation of the portfolio, the Company conservatively values each
solar PV asset on the basis of the minimum Performance Ratio
guaranteed by the vendor or on the basis of the Performance Ratio
estimated by the appointed technical adviser during due diligence.
These estimates are generally lower than the actual Performance
Ratios that the Company has been experiencing during subsequent
operations. The Investment Manager deems it appropriate to adopt
the actual Performance Ratio after two years of operating history,
when, typically the plants have satisfied the final acceptance
tests and received FAC certification.
As at 30 September 2018, 49 of the UK solar PV assets in the
investment portfolio had FAC certification and their actual
Performance Ratio was used in the DCF valuation, generating an
uplift. This represents 378MW of the portfolio. The remaining
plants are expected to reach their two-year operating life
milestone and begin relevant FAC tests according to the timeline
below.
Financial quarter ending
December 2018: 90MW
Financial quarter ending
March 2019: 75MW
Financial quarter ending
June 2019: 50MW
Financial quarter ending
September 2019: 47MW
Financial quarter ending
December 2019: 5MW
Period from January 2020
to June 2021: 47MW
The Company's NAV is calculated on a quarterly basis based on
the valuation of the investment portfolio determined by the
Investment Manager and the other assets and liabilities of the
Company provided by the Administrator. It is then reviewed,
questioned and approved by the Board of Directors. All variables
relating to the performance of the underlying assets are reviewed
and incorporated in the process of identifying relevant drivers for
the discounted cash flow valuation.
The Company experienced a small NAV growth during the period
ended 30 September 2018 driven by reinvested dividend from scrip
elections. As a result, the Company's NAV grew over the period from
GBP605.0m to GBP609.8m as at 30 September 2018.
The evolution of the NAV per share during the period was
affected by positive and negative factors. During the period NAV
per share remained static at 105.1p. The static NAV per share
during the period was mainly driven by the following factors:
-- the cash dividends paid during the period, the reinvestment
of dividend following scrip elections and the Company's operating
costs;
-- upward revisions in the forecasts for power prices adopted by
the Company, 1.0% higher compared to the assumptions employed at 31
March 2018 (taking into account the most recent forecasts released
by the Consultants up to the date of preparation of this interim
report); and
-- the value uplift generated by the Company completing
acquisitions of assets whose IRR was higher than the discount rate
applied when valuing them on a discounted cash flow basis.
The investment portfolio represents an investment value of
GBP894m. Among the investments, the Apollo portfolio is considered
as one investment consisting of 21 solar PV assets, the Radius
portfolio is considered as one investment consisting of five solar
PV assets, and the Solis portfolio is considered as one investment
consisting of eight solar PV assets.
Sensitivity Analysis
Sensitivities on the Company's NAV and detailed disclosure on
the asset valuation methodologies are provided below and in note 14
of the Condensed Interim Financial Statements.
Since the Company's IPO in April 2014, the long-term power price
forecast used by the Company has been revised several times with a
cumulative reduction of c.36%. For the purpose of illustration, had
the power price forecasts remained in line with those at the time
of the IPO, the Company's NAV would be 142.2p per share.
The chart above shows the percentage change in the portfolio
resulting from a change in the underlying variables. It also shows
the subsequent impact on the NAV per share.
In addition to the above sensitivities on NAV, the Investment
Manager has performed further specific sensitivities on valuation
and cash generation over the 12 months to September 2019.
First, sensitivity on energy generation is usually a P10/P90
probability analysis on solar irradiation over ten years, which is
a technical standard employed across the broader renewable energy
asset class and is particularly relevant for wind assets given the
significant volatility of wind energy sources year on year. The
Investment Manager, based on its experience, considers that for
solar PV assets, more appropriate and meaningful information is
provided by the sensitivity analysis of the aggregated effect of
solar irradiation and technical performance (in a reasonable range
of +/-5% over the life of the DCF valuation horizon). For reference
purposes, the sensitivity based on P10/P90 would have resulted in
c. +/-11% impact on portfolio valuation.
Secondly, should energy prices fall by 10% from current
forecasts, NESF would experience a reduction of 2.2% in its net
operating cashflows, such impact being mitigated by the fixed price
PPAs in place over the period.
Finally, should the portfolio achieve an outperformance of 5%
throughout the 12 months to September 2019 (whether due to higher
solar irradiation or asset management), total operating cashflows
would increase by 7.3%. Conversely, these sensitivities on cash
generation would have similar but opposite results in their
respective inverted scenario.
Capital Deployment Timeline
The Company's issued share capital comprised 580,232,465
ordinary shares as at 30 September 2018, which includes scrip
dividends. The Company's capital raises are detailed below:
Shares Equity raised Time to
Date issued (GBPm) Equity invested deployment
100% by September
April 2014 85,600,000 85.6 2014 5 months
November/December 100% by January
2014 95,000,000 99.6 2015 6 weeks
February 2015 59,750,000 61.4 100% by April 2015 6 weeks
100% by November
September 2015 37,607,105 38.8 2015 6 weeks
July/August/September Used to repay debt
2016 64,100,926 64.7 facility Immediate
100% by August
November 2016 110,300,000 115.3 2017 10 months
100% by August
June 2017 115,000,000 126.5 2018 1.2 years
Debt raised
Date (GBPm) Lender Amount deployed Status
July 2015 22.7 NIBC 100% Repaid
January 2016 45.4 Bayern Landesbank 100% Repaid
March 2016 55.0 MIDIS 100% Drawn
February 2017 150.0 Macquarie/NAB/CBA 100% Drawn
November 2017 68.1 UniCredit & ING 100% Drawn
February 2018 20.0 NIBC Not drawn Not drawn
July 2018 40.0 Santander 100% Drawn
July 2018 58.3 Bayern Landesbank 100% Drawn
Share Price Movement
During the period the share price increased from 111.0p to
111.5p. The table below shows the returns:
Total since Annualised since
Half Year 2018/19 IPO IPO
Shareholder total return 3.4% 37.4% 8.4%
NAV per share total return 3.1% 31.0% 7.0%
The annualised returns since IPO are in line with the target
range of seven to nine percent equity return for investors (at IPO
both NAV per share and initial issue price was 100p).
NESF's shares are included in the FTSE All-Share Index as well
as the FTSE Small Cap Index. NESF's shares outperformed the FTSE
All-Share Index by 5.7% over the period from the IPO to 30
September 2018.
Shareholder total return and NAV total return are used to review
the Company's performance against its objectives.
Financing and Cash Management
Preference Shares
On 8 November 2018, the Shareholders agreed to amend the
Company's Articles of Incorporation to create a new class of
Preference Share and approved the allotment of up to GBP200m of
shares with no pre-emption rights. Subsequently, on the 13 November
2018, the Company announced the issuance of an initial tranche of
GBP100m Preference Shares and advised that a subsequent issue of up
to GBP100m Preference Shares may take place before the next
AGM.
The Preference shares are non-redeemable and non-voting shares
which carry a fixed preferred dividend of 4.75% as well as
preferred capital entitlement at nominal value. From 1 April 2036,
the Preference Shareholders have the right to convert all or some
of their Preference Shares into either Ordinary Shares or B shares,
at the election of the holder, with B shares being unlisted shares
carrying rights to dividends and capital in a liquidation ranking
pari passu with Ordinary Shares. Conversion price will be at
nominal value (plus unpaid dividend if any) relative to NAV per
Ordinary Share at the date of conversion.
The Preference Shares give limited redemption and voting rights
to the holder - redemption only in the event of a delisting or
change of control of the Company and voting in a single pool with
the Ordinary Shareholders in the event of changes to the Investment
Policy and changes to the Articles detrimental to the rights and
terms of the Preference Shares.
From 1 April 2030, the Company may elect to redeem all or some
of the Preference Shares. Dividends and redemption will remain at
the sole discretion of the Board of Directors of the Company during
the life of the Preference Shares therefore representing no
refinancing risks for Ordinary Shareholders. Should more
competitive sources of capital become available, the Company may
choose at its sole discretion to issue new capital (debt or equity)
to fund a full or partial redemption.
The Preference Shares represent a cheaper and more flexible
source of funds in terms of lower annual cash cost compared to
alternative financing sources, ranging from long-term debt
financing to issuance of new Ordinary Shares. This reduced cost is
achieved mainly in exchange for priority of dividend payments over
the Ordinary Shares.
The proceeds of the initial GBP100m Preference Shares will be
used to repay a portion of the existing long-term project financing
facilities associated with portfolio investments, thereby
generating cash savings starting in the current financial year.
Should the Company repay the non-optimised debt and the RCF
totalling GBP162m through issuance of Preference Shares, the total
external debt outstanding would reduce from 37% to 21% of GAV.
Benefits of the preference shares for NESF include:
-- significant increase in dividend cover and equity returns for
its Ordinary Shareholders by replacing debt facilities with high
cash costs (including interest and principal amortisation);
-- the option to redeem Preference Shares starting from 1 April
2030 is at the sole discretion of the Company;
-- simplify its capital structure by reducing the number of
loans outstanding and the number of financial covenants for the
Company;
-- reduction in the exposure to secured debt financing;
-- in recognition of the priority granted to the Preference
Shareholder, the Company amended its Investment Policy to add the
Preference Shares to the total debt outstanding for the purpose of
the calculation of the 50% Company's leverage limit over GAV
(adjusted gearing ratio); and
-- the Investment Manager agreed to waive the investment
management fees related to the Preference Shares payable by the
Company to the Investment Manager under the Investment Management
Agreement
Preference Shares are entitled to their fixed dividend before
any dividend is distributed to Ordinary shareholders. Should the
Company be unable to pay a preferred dividend in full, this will be
rolled over onto the following periods until it can be paid. Unpaid
preferred dividends accrue at a 4.75% interest rate. Payment of
preferred dividends remains at the discretion of the Board. The
Preference Shares holder has no redemption rights or voting rights
in case of unpaid dividends. Should unpaid dividends be rolled
over, they will be included in the calculation for the purposes of
determining the conversion ratio post 31 March 2036. Effectively,
any unpaid dividends will eventually convert into Ordinary Shares
or B shares together with the issued preferred capital.
Debt Financing
As at 30 September 2018, the total pro-forma debt position of
the Company on a look-through basis was GBP365.3m (31 March 2018:
GBP270.4m). This represents gearing of 37% (31 March 2018: 31%) in
terms of total debt outstanding vs. GAV (which is equal to NAV plus
total debt outstanding). The average cost of debt is 3.7% (31 March
2018: 3.8%).
During the period, the Company closed a GBP40.0m RCF with
Santander and immediately deployed the proceeds. The Company also
acquired projects with debt facilities in place (GBP58.3m with
Bayern Landesbank and GBP1.2m with Lombard).
The table below is a summary of the debt outstanding:
Termination
Facility Amount (including
amount outstanding options Applicable
Provider/Arranger Type Borrower Tranches GBP'000 GBP'000 to extend) rate
NESH
(Apollo
Fully-amortising portfolio
long-term level Tranche A -
MIDIS/CBA/NAB debt debt) Medium-term 48,387 48,387 31-Dec-26 2.91%(1)
Tranche B -
Floating long-term 24,194 24,194 30-Jun-35 3.68%(1)
Tranche C -
Index linked RPI index
long-term 38,710 37,302 30-Jun-35 + 0.36%
Tranche D -
Fixed long-term 38,710 38,710 30-Jun-35 3.82%
Debt Service
Reserve Facility 7,500 - 30-Jun-26 1.50%
NESH IV
Fully-amortising (portfolio Inflation
long-term level linked RPI index
MIDIS debt debt) Tranche 27,500 25,281 30-Sep-34 + + 1.44%
Fixed Tranche 27,500 26,891 30-Sep-34 4.11%
NESH V
Fully-amortising (portfolio
long-term level Floating
UniCredit debt debt) long-term 32,920 31,330 30-Jun-29 3.04%(1)
NESH V
Fully-amortising (portfolio
long-term level Floating
ING debt debt) long-term 35,133 33,618 30-Jun-30 4.13%(1)
NIBC RCF NESH II n/a 20,000 - 13-Feb-20 LIBOR+2.20%
Santander RCF NESH VI n/a 40,000 40,000 03-Jul-20 LIBOR+1.30%
NESH III
Fully-amortising (project
Bayerische long-term level Tranche A -
Landesbank debt debt) Medium-term 5,615 5,615 30-Jun-20 2.89%(1)
Tranche B -
Floating long-term 52,705 52,705 31-Mar-33 4.11%(1)
NESH III
(project
Asset purchase level
Lombard agreement debt) n/a 437 437 31-Jul-21 3.48%
NESH III
(project
level
Lombard Term loan debt) n/a 816 816 12-Jun-25 4.20%
Total 365,285
(1) Applicable rate represents the swap rate.
As at 30 September 2018 the Company held cash of GBP3.8m in
highly rated financial institutions.
Post Period End
Since 30 September 2018, the following relevant events
occurred:
On 6 November 2018, the Company announced an interim dividend of
1.6625 pence per ordinary share for the quarter ended 30 September
2018, to be paid on 28 December 2018 to shareholders on the
register as at close of business on 15 November 2018.
On 8 November 2018, the Shareholders of the Company voted to
amend some provisions in the Articles of Incorporation of the
Company and to change the Investment Policy for the purpose of the
issuance of Preference Shares as detailed in the circulars dated 16
October 2018 and 23 October 2018.
On 13 November 2018, the Company announced the issuance of the
initial tranche of GBP100m of Preference Shares and advised that a
subsequent issue of up to GBP100m Preference Shares may take place
before the next AGM.
Principal Risks
The Company has in place risk management procedures and internal
controls to monitor and mitigate the main risks faced as well as a
process to review the effectiveness of those controls over the
Company and its subsidiaries as a whole. The Investment Manager
assists the Company in regularly identifying, assessing and
mitigating those risk factors likely to impact the financial or
strategic position of the Company.
As detailed in the Company's Annual Report to 31 March 2018, the
principal risks and uncertainties applicable to the Company remain
as follows:
-- a decline in the price of electricity;
-- electricity generation falling below expectation;
-- adverse changes in government policy or regulatory framework for Solar PV;
-- the pipeline of acquisitions could decrease;
-- the financial model used for the valuation could have inaccurate assumptions:
-- the life of the land lease could change;
-- the operation and maintenance contractor could fail to fulfil their obligations;
-- a counterparty could become insolvent;
-- increased competition could make it difficult to acquire assets; and
-- adverse changes to the taxation rates.
Further information in relation to these principal risks and
uncertainties, which are unchanged from 31 March 2018 and remain
the risks most likely to affect the Company for the remaining six
months of the year, may be found on pages 44 to 46 of the Company's
Annual Report for the year ended 31 March 2018.
Governance
Statement of Directors' Responsibilities
To the best of their knowledge, the directors of NextEnergy
Solar Fund Limited confirm that:
(a) The Interim Report and Condensed Interim Financial
Statements have been prepared in accordance with IAS 34 Interim
Financial Reporting;
(b) The Interim Report, comprising the Chairman's Statement and
the Investment Manager's Report, meets the requirements of an
interim management report and includes a fair review of information
required by:
(i) DTR 4.2.7R of the UK Disclosure and Transparency Rules,
being an indication of important events that have occurred during
the period from 01 April 2018 to 30 September 2018 and their impact
on the Condensed Interim Financial Statements, and a description of
the principal risks and uncertainties for the remaining six months
of the year; and
(ii) DTR 4.2.8R of the UK Disclosure and Transparency Rules,
being related party transactions that have taken place in the
period from 01 April 2018 to 30 September 2018 and that have
materially affected the financial position or performance of the
Company during that period, and any material changes in the related
party transactions disclosed in the last Annual Report; and
(c) The Condensed Interim Financial Statements give a true and
fair view of the assets, liabilities, financial position and profit
of the Company as required by DTR 4.2.4R of the UK Disclosure and
Transparency Rules.
The Company's Directors believe that the Company has adequate
resources to continue in operational existence for at least 12
months from the date of approval of the condensed interim financial
statements. Note 14 to the Annual Report and Financial Statements
for the year ended 31 March 2018 includes the Company's objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and its
exposure to credit risk and liquidity risk. The Directors have
undertaken a rigorous review of the Company's ability to continue
as a going concern including reviewing the level of the Company's
assets and significant areas of financial risk including the timing
of future investment transactions, expenditure commitments and
forecast income and cashflows. As a result, the Directors have, at
the time of approving these condensed financial statements, a
reasonable expectation that the Company has adequate resources to
meet its liabilities and continue in operational existence for at
least 12 months from the date of approval of the condensed interim
financial statements. The Directors have therefore concluded that
it is appropriate to adopt the going concern basis of accounting in
preparing these condensed interim financial statements.
The maintenance and integrity of the Company's website is the
responsibility of the Directors. Legislation in Guernsey governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
By order of the Board
For NextEnergy Solar Fund Limited
Patrick Firth
Director
19 November 2018
Financial Statements
Condensed Interim Financial Statements
Condensed Statement of Comprehensive Income
For the period ended 30 September 2018
Unaudited Unaudited
1 April 2018 to 1 April 2017 to
30 September 1 April 2017 to 30 September
2018 31 March 2018 2017
Notes GBP'000 GBP'000 GBP'000
Income
Income 5 26,349 41,083 16,421
Net changes in fair value of financial
assets at fair value through profit or loss 6 (4,401) (2,880) 528
Total net income 21,948 38,203 16,949
Expenditure
Management fees 16 2,675 5,070 2,418
Legal and professional fees 335 482 226
Administration fees 131 268 134
Regulatory fees 29 144 110
Audit fees 83 177 94
Directors' fees 19 86 146 70
Insurance 7 29 15
Sundry expenses 3 12 3
Total expenses 3,349 6,328 3,070
Operating profit 18,599 31,875 13,879
Finance income 55 285 141
Profit and comprehensive income for the period/year 18,654 32,160 14,020
Earnings per share 11 3.23p 5.88p 2.69p
There were no potentially dilutive instruments in issue at 30
September 2018.
All activities are derived from ongoing operations.
There is no other comprehensive income or expense apart from
expenditure that is disclosed above and consequently a Condensed
Statement of Other Comprehensive Income has not been prepared.
The accompanying notes are an integral part of these condensed
interim financial statements.
Condensed Interim Statement of Financial Position
As at 30 September 2018
Unaudited Unaudited
30 September 30 September
2018 31 March 2018 2017
Notes GBP'000 GBP'000 GBP'000
Non-current assets
Investments 6 590,448 526,221 377,612
Total non-current assets 590,448 526,221 377,612
Current assets
Cash and cash equivalents 3,836 75,893 220,750
Trade and other receivables 7 54,754 28,397 19,154
Total current assets 58,590 104,290 239,904
Total assets 649,038 630,511 617,516
Current liabilities
Trade and other payables 8 39,259 25,521 15,025
Total current liabilities 39,259 25,521 15,025
Net assets 609,779 604,990 602,491
Equity
Share Capital and Premium 10 598,370 593,388 590,600
Retained Earnings 10 11,409 11,602 11,891
Total equity attributable
to shareholders 609,779 604,990 602,491
Net assets per share 13 105.1p 105.1p 105.1p
The accompanying notes are an integral part of these condensed
interim financial statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 19 November 2018 and signed on its
behalf by:
Patrick Firth Sharan Parr
Director Director
Condensed Statement of Changes in Equity
For the period ended 30 September 2018
Share Capital and Premium Retained earnings Total Equity attributable to
GBP'000 GBP'000 Shareholders GBP'000
For the period 1 April 2018 to
30 September 2018 (Unaudited)
Shareholders' equity at 1 April
2018 593,388 11,602 604,990
Profit and comprehensive income
for the period - 18,654 18,654
Shares issued 4,982 - 4,982
Dividends declared - (18,847) (18,847)
Shareholders' equity at 30
September 2018 598,370 11,409 609,779
For the year 1 April 2017 to 31
March 2018
Shareholders' equity at 1 April
2017 464,341 14,242 478,583
Profit and comprehensive income
for the year - 32,160 32,160
Shares issued 129,047 - 129,047
Dividends declared - (34,800) (34,800)
Shareholders' equity at 31 March
2018 593,388 11,602 604,990
For the period 1 April 2017 to
30 September 2017 (Unaudited)
Shareholders' equity at 1 April
2017 464,341 14,242 478,583
Profit and comprehensive income
for the period - 14,020 14,020
Shares issued 126,259 - 126,259
Dividends paid - (16,371) (16,371)
Shareholders' equity at 30
September 2017 590,600 11,891 602,491
The accompanying notes are an integral part of these condensed
interim financial statements.
Condensed Statement of Cash Flows
For the period ended 30 September 2018
1 April 2018 to 1 April 2017 to
30 September 1 April 2017 to 30 September
2018 31 March 2018 2017
Cash flows from operating activities Notes GBP'000 GBP'000 GBP'000
Profit and comprehensive income for the
period/year 18,654 32,160 14,020
Adjustments for:
Investment proceeds from HoldCos 4,654 104,248 98,385
Investment payments to HoldCos (70,573) (217,486) (59,605)
Change in fair value on investments 6 4,401 2,880 (528)
Finance income (55) (285) (141)
Operating cash flows before movements in working capital (42,919) (78,483) 52,131
Changes in working capital
Movement in trade receivables (26,357) (17,231) (7,943)
Movement in trade payables 11,029 17,244 6,747
Net cash used in operating activities (58,247) (78,470) 50,935
Cash flows from investing activities
Finance income 55 285 96
Net cash generated from investing activities 55 285 96
Cash flows from financing activities
Proceeds from issue of shares - 124,372 124,372
Dividends paid (13,865) (30,125) (14,484)
Net cash generated from financing activities (13,865) 94,247 109,888
Net movement in cash and cash equivalents during period/year (72,057) 16,062 160,919
Cash and cash equivalents at the beginning of the
period/year 75,893 59,831 59,831
Cash and cash equivalents at the end of the period/year 3,836 75,893 220,750
The accompanying notes are an integral part of these condensed
interim financial statements.
Notes to the Condensed Interim Financial Statements
For the period ended 30 September 2018
1. General Information
The Company was incorporated with limited liability in Guernsey
under the Companies (Guernsey) Law, 2008, as amended, on 20
December 2013 with registered number 57739, and is regulated by the
GFSC as a registered closed-ended investment company. The
registered office and principal place of business of the Company is
1, Royal Plaza, Royal Avenue, St Peter Port, Guernsey, Channel
Islands, GY1 2HL.
On 16 April 2014, the Company announced the results of its
initial public offering, which raised net proceeds of GBP85.6
million. The Company's ordinary shares were admitted to the premium
segment of the UK Listing Authority's Official List and to trading
on the Main Market of the London Stock Exchange as part of its
initial public offering which completed on 25 April 2014.
Subsequent fundraisings since the initial public offering also took
place, increasing total equity to GBP598.4m as at 30 September 2018
(31 March 2018: GBP593.4m). Details can be found in note 10.
The Company seeks to provide investors with a sustainable and
attractive dividend that increases in line with the retail price
index over the long-term by investing in a diversified portfolio of
solar PV assets that are located in the UK. In addition, the
Company seeks to provide investors with an element of capital
growth through the reinvestment of net cash generated in excess of
the target dividend in accordance with the Company's investment
policy.
The Company currently makes its investments through HoldCos and
SPVs, which are wholly-owned by the Company. The Company controls
the investment policy of each of the HoldCos and its wholly-owned
SPVs in order to ensure that each will act in a manner consistent
with the investment policy of the Company.
The Company has appointed NextEnergy Capital IM Limited as its
Investment Manager pursuant to the Management Agreement dated 18
March 2014. The Investment Manager is a Guernsey registered
company, incorporated under the Companies (Guernsey) Law, 2008,
with registered number 57740 and is licensed and regulated by the
GFSC and is a member of the NEC Group. The Investment Manager acts
as the Alternative Investment Fund Manager of the Company.
The Investment Manager has appointed NextEnergy Capital Limited
as its Investment Adviser pursuant to the Investment Advisory
Agreement. The Investment Adviser is a company incorporated in
England with registered number 05975223 and is authorised and
regulated by the FCA.
The financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Company operates.
2. Significant accounting policies
Basis of preparation
The condensed interim financial statements have been prepared on
a going concern basis in accordance with IAS 34 Interim Financial
Reporting. The condensed interim financial statements should be
read in conjunction with the annual report and audited financial
statements for the year ended 31 March 2018, which have been
prepared in accordance with IFRS.
Seasonal and cyclical variations
The Company's results may vary during reporting periods as a
result of the spread of irradiation during the period and, together
with other factors, will impact the NAV. Other factors include
changes in inflation and power prices.
Segmental reporting
The Chief Operating Decision Maker, which is the Board, is of
the opinion that the Company is engaged in a single segment of
business, being investment in solar power to generate investment
returns whilst preserving capital. The financial information used
by the Chief Operating Decision Maker to manage the Company
presents the business as a single segment.
Going concern
The Directors have reviewed the current and projected financial
position of the Company making reasonable assumptions about future
performance. The key areas reviewed were:
-- Timing of future investment transactions;
-- Expenditure commitments; and
-- Forecast income and cashflows.
The Company has cash and short-term deposits as well as
projected positive income streams and an available credit facility
(see note 20) and as a consequence the Directors have, at the time
of approving the financial statements, a reasonable expectation
that the Company has adequate resources to continue in operational
existence for the next 12 months. Accordingly they have adopted the
going concern basis of preparation in preparing the financial
statements.
3. New and revised standards
i) Standards, amendments and interpretations that are in issue
but not yet effective:
The following accounting standards and interpretations which
have not been applied in these financial statements were in issue
but not yet effective:
IFRS 16 Leases
IFRS 17 Insurance Contracts
The Directors do not expect that the adoption of the accounting
standards, amendments and interpretations listed above will have a
material impact on the financial statements of the Company in
future periods.
ii) New standards adopted as at 1 April 2018:
IFRS 9 'Financial Instruments - Classification and Measurement'
replaces IAS 39 'Financial Instruments: Recognition and
Measurement'. It makes major changes to the previous guidance on
the classification and measurement of financial assets and
introduces an 'expected credit loss' model for the impairment of
financial assets. Under IFRS 9, the classification of assets is
driven by the business model in which the financial asset is
managed and the contractual nature of the cash flows arising from
the investment. The Company invests in financial assets with a view
to profiting from their total return in the form of interest and
changes in fair value, and so these investments are classified as
fair value through profit or loss.
IFRS 15 'Revenue from Contracts with Customers' replaces IAS 18
'Revenue' and several revenue-related Interpretations. There are no
changes to the recognition of income by the Company as a result of
the new Standard.
The adoption of new standards has not had a material impact on
the condensed interim financial statements, and there are no
restatements of comparative information required.
4. Critical accounting judgements and key sources of estimation
uncertainty
The Company makes estimates and judgements that affect the
reported amounts of assets and liabilities. Estimates and
judgements are continually evaluated and based on historic
experience and other factors believed to be reasonable under the
circumstances.
a) Critical accounting estimate: Investments at fair value
through profit or loss
The Company's investments are measured at fair value for
financial reporting purposes. The Board of Directors has appointed
the Investment Manager to produce investment valuations based upon
projected future cashflows. These valuations are reviewed and
approved by the Board. The underlying investments are held through
SPVs.
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. Fair
value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Board
bases the fair value of the investments on the information received
from the Investment Manager.
The Company classified its investments at fair value through
profit or loss as Level 3 within the fair value hierarchy. Level 3
investments amount to GBP590m (31 March 2018: GBP526m) and consist
of 87 investments in solar PV assets (held indirectly through the
HoldCos) (31 March 2018: 63 held indirectly through the HoldCos),
all of which have been valued on a look through basis based on the
discounted cash flows of the solar PV assets (except for those
solar plants not yet operational) and the residual value of net
assets at the HoldCo level. The unlevered discount rate applied in
the 30 September 2018 valuation was 6.75% (31 March 2018: 6.75%).
The discount rate is a significant Level 3 input and a change in
the discount applied could have a material effect on the value of
the investments. Investments in solar PV assets that are not yet
operational are held at fair value, where the cost of the
investment is used as an appropriate approximation of fair value.
Level 3 valuations are reviewed regularly by the Investment Manager
who reports to the Board of Directors on a periodic basis. The
Board considers the appropriateness of the valuation model and
inputs, as well as the valuation result.
Information about the significant unobservable inputs used at 30
September 2018 in measuring financial instruments categorised as
Level 3 in the fair value hierarchy and their sensitivities are
disclosed in note 14. Unlisted investments reconcile to the Closing
Investment Portfolio Value as per the Investments table in note
6.
b) Significant judgement: consolidation of entities
The Company, under the Investment Entity Exemption rule, holds
its investments at fair value.
The Company meets the definition of an investment entity per
IFRS 10 as the following conditions exist:
1. The Company has obtained funds for the purpose of providing
investors with professional investment management services;
2. The Company's business purpose, which was communicated
directly to investors, is investing for capital appreciation and
investment income; and
3. The investments are measured and evaluated on a fair value basis.
The Company does not have any other subsidiaries other than
those determined to be controlled subsidiary investments.
Controlled subsidiary investments are measured at fair value
through profit or loss and are not consolidated in accordance with
IFRS 10. The fair value of controlled subsidiary investments is
determined as described in note 4(a).
5. Income
Period ended Year ended
30 September 31 March
2018 2018
GBP'000 GBP'000
Investment income 22,474 35,242
Management fee income 3,875 5,841
Total Income 26,349 41,083
6. Investments
The Company owns the Investment Portfolio through its
investments in the HoldCos. This is comprised of the Investment
Portfolio and the Residual Net Assets of the HoldCos. The Total
Investments at fair value are recorded under Non-Current Assets in
the Condensed Interim Statement of Financial Position.
Period ended Year ended
30 September 31 March
2018 2018
GBP'000 GBP'000
Brought forward cost of investments 517,474 404,236
Investment proceeds from HoldCos (4,654) (104,248)
Investment payments to HoldCos 70,573 217,486
Investments payable 2,709 -
Total investments at cost 586,102 517,474
Brought forward unrealised gains on investments 8,747 11,627
Movement in unrealised gains on valuation (4,401) (2,880)
Carried forward unrealised gains on investments 4,346 8,747
Total investments at fair value 590,448 526,221
The total change in the value of the investments in the HoldCos
is recorded through profit or loss in the Condensed Statement of
Comprehensive Income.
7. Trade and other receivables
Period ended Year ended
30 September 31 March
2018 2018
GBP'000 GBP'000
Management fee income receivable 1,706 608
Prepayments 20 458
Distributions receivable from HoldCos 14,476 -
Due from HoldCos 38,552 27,331
Total trade and other receivables 54,754 28,397
Amounts due from HoldCos are interest free and payable within 12
months.
8. Trade and other payables
Period ended Year ended
30 September 31 March
2018 2018
GBP'000 GBP'000
Other payables 248 290
Investments payable 2,709 -
Due to HoldCos 36,302 25,231
Total trade and other payables 39,259 25,521
Amounts due to HoldCos are interest free and payable on
demand.
9. Subsidiaries
The Company holds investments through subsidiary companies
("HoldCos") which have not been consolidated as a result of the
adoption of IFRS 10: Investment entities exemption to
consolidation. The HoldCos are incorporated in the UK and 100%
directly owned.
10. Share capital and reserves
Share Issuance Number of shares Gross amount raised GBP'000 Issue costs GBP'000 Share premium GBP'000
Total issued at 31 March
2018 575,643,840 600,853 (7,465) 593,388
Scrip Dividend - 29 June
2018 2,276,348 2,479 - 2,479
Scrip Dividend - 28
September 2018 2,312,277 2,503 - 2,503
Total issued at 30
September 2018 580,232,465 605,835 (7,465) 598,370
As at 30 September 2018, the Company currently had one class of
ordinary share in issue. All the holders of the ordinary shares,
which total 580,232,465, are entitled to receive dividends as
declared from time to time and are entitled to one vote per share
at general meetings of the Company.
Retained reserves
Retained reserves comprise the retained earnings as detailed in
the Condensed Statement of Changes in Equity.
11. Earnings per share
Period ended Year ended
30 September 31 March
2018 2018
Profit and comprehensive income for the period/year (GBP'000) 18,654 32,160
Weighted average number of ordinary shares 576,851,018 547,300,544
Earnings per ordinary share 3.23p 5.88p
12. Dividends
Period ended Year ended
30 September 31 March
2018 2018
GBP'000 GBP'000
Amounts recognised as distributions to equity holders:
Interim dividend for the period ended 31 March 2017 of 1.577p per share,
paid on 30 June 2017 - 7,199
Interim dividend for the period ended 30 June 2017 of 1.605p per share,
paid on 29 September 2017 - 9,171
Interim dividend for the period ended 30 September 2017 of 1.605p per share,
paid on 28 December 2017 - 9,198
Interim dividend for the period ended 31 December 2017 of 1.605p per share,
paid on 28 March 2018 - 9,232
Interim dividend for the period ended 31 March 2018 of 1.605p per share,
paid on 26 June 2018 9,239 -
Interim dividend for the period ended 30 June 2018 of 1.6625p per share,
paid on 28 September 2018 9,608 -
Total 18,847 34,800
13. Net assets per ordinary share
As at As at
30 September 31 March
2018 2018
Shareholders' equity (GBP'000) 609,779 604,989
Number of ordinary shares 580,232,465 575,643,840
Net assets per ordinary share 105.1p 105.1p
14. Financial risk management
Valuation methodology
The Directors have satisfied themselves as to the methodology
used and the discount rates and key assumptions applied in
producing the valuations in accordance with the IPEV guidelines.
All operational investments are at fair value through profit or
loss and are fair valued using a discounted cash flow methodology.
Investments which are not yet operational are held at fair value,
where the cost of the investment is used as an appropriate
approximation of fair value.
Discount rates
The discount rate used for valuing a solar PV asset is based on
the industry unlevered discount rate and the risk premium, which
takes into account risks and opportunities associated with the
investment earnings.
The discount rates used for valuing the investments in the
Portfolio are as follows:
30 September 31 March
2018 2018
Weighted Average discount rate 7.30% 7.30%
Discount rates 6.75% to 9.00% 6.75% to 9.00%
A change to the weighted average discount rate by plus or minus
0.5% has the following effect on the valuation:
Discount rate +0.5% change Total Portfolio value -0.5% change
30 September 2018 (GBP21.8m) GBP591.3m GBP23.3m
Fair value - percentage movement (3.7%) 3.9%
31 March 2018 (GBP18.2m) GBP481.4m GBP19.4m
Fair value - percentage movement (3.8%) 4.0%
Power price
NEC Group continuously reviews multiple inputs from market
contributors and leading consultants and adjusts the inputs to the
power price forecast when deemed most appropriate. Current
estimates imply an average rate of growth of electricity prices of
approximately 0.2% in real terms and a long-term inflation rate of
2.75%.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect on the valuation, with all
other variables held constant:
Power Price -10% change Total Portfolio value +10% change
30 September 2018 (GBP38.5m) GBP591.3m GBP40.6m
Fair value - percentage movement (6.5%) 6.9%
31 March 2018 (GBP32.5m) GBP481.4m GBP31.5m
Fair value - percentage movement (6.8%) 6.5%
Energy generation
The Portfolio's aggregate energy generation yield depends on the
combination of solar irradiation and technical performance of the
solar PV assets. The table below shows the sensitivity of the
Portfolio to a sustained increase or decrease of energy generation
by plus or minus 5% on the valuation, with all other variables held
constant:
Energy generation 5% under performance Total Portfolio value 5% over performance
30 September 2018 (39.7m) GBP591.3m GBP40.8m
Fair value - percentage movement (6.7%) 6.9%
31 March 2018 (GBP32.6m) GBP481.4m GBP32.5m
Fair value - percentage movement (6.8%) 6.7%
Inflation rates
The Portfolio valuation assumes long-term inflation of 2.75% per
annum for investments (based on applicable RPI). A change in the
inflation rate by plus or minus 0.5% has the following effect on
the valuation, with all other variables held constant:
Inflation rate -0.5% change Total Portfolio value +0.5% change
30 September 2018 (GBP26.6m) GBP591.3m GBP28.0m
Fair value - percentage movement (4.5%) 4.7%
31 March 2018 (GBP20.1m) GBP481.4m GBP21.2m
Fair value - percentage movement (4.2%) 4.4%
Operating costs
The table below shows the sensitivity of the Portfolio to
changes in operating costs by plus or minus 10% at SPV level, with
all other variables held constant.
Operating cost +10% change Total Portfolio value -10% change
30 September 2018 (GBP10.7m) GBP591.3m GBP10.4m
Fair value - percentage movement (1.8%) 1.8%
31 March 2018 (GBP8.7m) GBP481.4m GBP8.4m
Fair value - percentage movement (1.8%) 1.7%
Tax rates
The UK corporation tax assumption for the Portfolio valuation
was 19% to 2020, and 17% thereafter in accordance with the UK
Government announced reductions.
The Italian tax rate used is 24% with an additional 2.7% local
tax rate in accordance with the local tax authority of the
incorporated entity.
15. Financial assets and liabilities not measured at fair
value
Cash and cash equivalents are level 1 items on the fair value
hierarchy. Current assets and current liabilities are Level 2 items
on the fair value hierarchy. The carrying value of current assets
and current liabilities approximates fair value as these are
short-term items.
16. Management fee expense
The Investment Manager is entitled to receive an annual fee,
accruing daily and calculated on a sliding scale, as follows
below:
-- for the tranche of NAV up to and including GBP200m, 1% of the
Net Asset Value ("NAV") of the Company.
-- for the tranche of NAV above GBP200m and up to and including GBP300m, 0.9% of NAV.
-- for the tranche of NAV above GBP300m, 0.8% of NAV.
For the period ended 30 September 2018 the Company has incurred
GBP2.7m in management fees of which GBPnil was outstanding at 30
September 2018. For the year ended 31 March 2018 the Company
incurred GBP5.1m in management fees of which GBPnil was outstanding
at 31 March 2018. For the period ended 30 September 2017 the
Company incurred GBP2.4m in management fees of which GBPnil was
outstanding at 30 September 2017.
17. Related parties
The Investment Manager, NextEnergy Capital IM Limited, is a
related party due to having common key management personnel with
the subsidiaries of the Company. All management fee transactions
with the Investment Manager are disclosed in note 16.
The Investment Adviser, NextEnergy Capital Limited, is a related
party due to sharing common key management personnel with the
subsidiaries of the Company. There are no advisory fee transactions
between the Company and the Investment Adviser.
The Operating Asset Manager, WiseEnergy (Great Britain) Limited,
is a related party due to sharing common key management personnel
with the subsidiaries of the Company. Each of the operating
subsidiaries of the Company entered into an asset management
agreement with WiseEnergy (Great Britain) Limited. The total value
of recurring and one-off services paid to the Operating Asset
Manager during the reporting period amounted to GBP2.9m (for the
year to 31 March 2018: GBP4.1m, for the period to 30 September
2017: GBP1.2m).
At the period end, GBP39.0m (31 March 2018: GBP25.2m, 30
September 2017: GBP14.8m) was owed to the subsidiaries. GBP3.9m of
management fees were received from the subsidiaries during the
period (year to 31 March 2018: GBP5.8m, period to 31 September
2017: GBP2.6m), GBP1.7m of which was outstanding at the period end
(31 March 2018: nil, 30 September 2017: GBP0.2m).
NextPower Development Limited is a related party due to sharing
common key management personnel with the subsidiaries of the
Company. There are no advisory fee transactions between the
Company, its subsidiaries and NextPower Development Limited.
At the period end, the Directors owned the following shares in
the Company:
-- Kevin Lyon 160,000
Patrick
-- Firth 78,104
-- Vic Holmes 110,000
18. Controlling party
In the opinion of the Directors, on the basis of shareholdings
advised to them, the Company has no immediate or ultimate
controlling party.
19. Remuneration of the Directors
The remuneration of the Directors was GBP86k for the period (for
the year to 31 March 2018: GBP146k, for the period to 30 September
2017: GBP70k) which consisted solely of short-term employment
benefits. Sharon Parr was appointed with effect from 1 January
2018.
20. Revolving credit and debt facilities
In January 2017, NESH, closed a syndicated loan with MIDIS, NAB
and CBA for GBP157.5m ("Project Apollo") to refinance its revolving
credit facility. As part of the facility agreement, the lenders
provide an additional Debt Service Reserve Facility of GBP7.5m and
hold a charge over the assets of NESH. As at 30 September 2018, the
outstanding amount was GBP148.6m.
In July 2015, NESH II agreed a loan with NIBC for GBP22.7m. In
July 2016, GBP1m was repaid and in March 2018, the remaining
balance was repaid. At the same time as the repayment the
short-term facility was converted into a new GBP20m in revolving
credit facility. As at 30 September 2018, the outstanding amount
was GBPnil.
In 31 March 2016, NESH IV agreed the purchase of Project Radius.
The acquisition was partially funded by a debt facility entered
between NESH IV Limited and Macquarie Bank Limited for GBP55.0m,
which was fully drawn down. In April 2016. As at 30 September 2018,
the outstanding amount was GBP52.2m. In March 2018, Santander
issued a Letter of Credit to the Security Trustee of the facility
of GBP2.0m and NESF provided a counter indemnity to Santander.
In December 2017, NESH V acquired a portfolio of eight operating
plants totalling 34.5MW which had a long-term fully-amortising
project of GBP68.1m in place. As at 30 September 2018, the
outstanding amount was GBP64.9m.
In May 2018, NESH III acquired a portfolio of two operating
plants totalling 7.2MW which had a term loan and an asset purchase
agreement in place with Lombard. As at 30 September 2018 the
outstanding amount was GBP1.3m.
In July 2018, NESH III acquired a portfolio of ten operating
plants totalling 66.8MW which had a long-term fully-amortising
project financing of GBP58.3m in place. As at 30 September 2018,
the outstanding amount was GBP58.3m
In July 2018, NESH VI closed a RCF with Santander for GBP40.0m
which was subsequently fully drawndown. As at 30 September 2018,
the outstanding amount was GBP40.0m.
21. Taxation
Under the current system of taxation in Guernsey, the Company is
exempt from paying taxes on income, profit or capital gains.
Therefore, income from investments in solar PV assets is not
subject to any further tax in Guernsey, although these investments
are subject to tax in the UK or Italy.
22. Reconciliation of Financing Activities
Non-cash
flows Closing
Opening (GBP'000) Cash flows (GBP'000) Net income allocation (GBP'000) (GBP'000) (GBP'000)
Share Capital 593,388 - - 4,982 598,370
Retained Earnings 11,602 (13,865) 18,654 (4,982) 11,409
Total 604,990 (13,865) 18,654 - 609,779
23. Events after the reporting period
Since 30 September 2018, the following relevant events
occurred:
-- On 6 November 2018, the Company announced an interim dividend
of 1.6625 pence per ordinary share for the quarter ended 30
September 2018, to be paid on 28 December 2018 to shareholders on
the register as at close of business on 15 November 2018.
-- On 8 November 2018, the Shareholders of the Company voted to
amend some provisions in the Articles of Incorporation of the
Company and to change the Investment Policy for the purpose of the
issuance of Preference Shares as detailed in the circulars dated 16
October 2018 and 23 October 2018.
-- On 13 November 2018, the Company announced the issuance of
the initial tranche of GBP100m of Preference Shares and advised
that a subsequent issue of up to GBP100m Preference Shares may take
place before the next AGM.
Additional Information
Independent review report to
NextEnergy Solar Fund Limited
Our conclusion
We have reviewed the accompanying condensed interim financial
statements of NextEnergy Solar Fund Limited (the "Company") as of
30 September 2018. Based on our review, nothing has come to our
attention that causes us to believe that the accompanying condensed
interim financial statements is not prepared, in all material
respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
What we have reviewed
The accompanying condensed interim financial statements
comprise:
-- the condensed interim statement of financial position as of 30 September 2018;
-- the condensed statement of comprehensive income for the six-month period then ended;
-- the condensed statement of changes in equity for the six-month period then ended;
-- the condensed statement of cash flows for the six-month period then ended; and
-- the notes, comprising a summary of significant accounting
policies and other explanatory information.
The condensed interim financial statements have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Our responsibilities and those of the directors
The Directors are responsible for the preparation and
presentation of these condensed interim financial statements in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on these condensed
interim financial statements based on our review. This report,
including the conclusion, has been prepared for and only for the
Company for the purpose of complying with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of interim financial
information performed by the independent auditor of the entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing 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.
We have read the other information contained in the interim
report and condensed interim financial statements and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
19 November 2018
Company Information
Directors: Kevin Lyon, Chairman
Patrick Firth
Vic Holmes
Sharon Parr
Registered Office: 1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Investment Manager: NextEnergy Capital IM Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Investment Adviser: NextEnergy Capital Limited
20 Savile Row
London
UK
W1S 3PR
Secretary and Administrator: Ipes (Guernsey) Limited
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey
GY1 2HL
Independent Auditor: PricewaterhouseCoopers CI LLP
Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey
GY1 4ND
Registered Number: 57739
Registrar: Link Market Services (Guernsey)
Ltd
Legal Adviser to the Group as Simmons & Simmons LLP
to UK law:
Legal Adviser to the Group as Mourant Ozannes and Carey Olsen
to Guernsey law: (Guernsey) LLP
Legal Adviser to the Group as Stephenson Harwood LLP
to Debt Financing:
Brokers to the Company: Cantor Fitzgerald Europe
Shore Capital and Corporate Ltd
Fidante Partners (Europe) Ltd
Macquarie Capital (Europe) Ltd
Media and Public Relations MHP Communications Ltd
Adviser:
Glossary of Defined Terms
AGM Annual General Meeting
AIC Association of Investment Companies
AIC Code AIC Code of Corporate Governance
AIC Guide AIC Corporate Governance Guide for Guernsey
Domiciled Investment Companies
AIF Alternative Investment Fund
AIFM Alternative Investment Fund Manager
AIFMD Alternative Investment Fund Management Directive
Asset Management The difference between the delta of energy
Alpha generation vs. budget and the delta of solar
irradiation vs. budget
Apollo portfolio 21 plants held within NESH
Base Fee The fee that the Investment Manager is entitled
to under the Investment Management Agreement
BEIS The Department for Business, Energy & Industrial
Strategy
Brexit The UK voting to leave the European Union
Cash Dividend Cover The ratio of the Company's Income over dividends
paid during the financial year
CBA Commonwealth Bank of Australia
Company/NESF NextEnergy Solar Fund Limited
Consultants Two of the leading energy market consultants
CfD Contract for Difference
CRS Common Reporting Standard for automatic exchange
of tax information
CSR Corporate Social Responsibility
DCF Discounted Cash Flow
Developer NextPower Development Limited
Premium/discount The amount by which the Companies shares trade
to NAV above or below the NAV
DNO Distribution Network Operators
EPC Engineering, Procurement and Construction
ESG Environmental, Social and Governance
EU European Union
FATCA Foreign Account Tax Compliance Act
FiT Feed-in Tariff
GAV Gross Asset Value
GFSC Guernsey Financial Services Commission
GFSC Code Guernsey Financial Services Commission Finance
Sector Code of Corporate Governance
Gross Dividend Cover The ratio of the Company's Gross Income over
dividends paid during the financial year
Group The Company, HoldCos and SPVs
GWh Gigawatt hour - a measure of electricity generated
per hour
HoldCos Intermediate holding companies - NESH, NESH
II, NESH III, NESH IV, NESH V and NESH VI
IAS International Accounting Standards
IFRS International Financial Reporting Standards
Investment Adviser NextEnergy Capital Limited
Investment Manager NextEnergy Capital IM Limited
IPEV International Private Equity and Venture Capital
IPO Initial Public Offering
IRR Internal Rate of Return
ISA International Standards on Auditing
KPI Key Performance Indicator
KWh Kilowatt hour - a measure of electricity generated
per hour
LOI Letter of Intent
MIDIS Macquarie Infrastructure Debt Investment Solutions
MWh Megawatt hour - a measure of electricity generated
per hour
NAB National Australia Bank
NAV Net Asset Value
NAV per share Net Asset Value per ordinary share
NAV Total Return The actual rate of return from dividends paid
and capital gains on NAV per share over a
given period of time
NESH NextEnergy Solar Holding Limited
NESH II NextEnergy Solar Holding II Limited
NESH III NextEnergy Solar Holding III Limited
NESH IV NextEnergy Solar Holding IV Limited
NESH V NextEnergy Solar Holding V Limited
NESH VI NextEnergy Solar Holding VI Limited
Net Dividend Cover The ratio of the Company's Net Income over
dividends paid during the financial year
NPPR National Private Placement Regime
OCR Ongoing Charges Ratio - the ratio of annualised
on-going charges to average NAV
OECD Organisation for Economic Co-operation and
Development
Official List The Premium Segment of the UK Listing Authority's
Official List
Ordinary Shares The issued ordinary share capital of the Company
POI Law Protection of Investors (Bailiwick of Guernsey)
Law, 1987
PPA Power Purchase Agreement
Performance Ratio The measure of the PV plant energy output
compared to the theoretical output on acquisition
PV Photovoltaic
PwC CI PricewaterhouseCoopers CI LLP
Radius portfolio Five plants held with NESH IV
RCF Revolving Credit Facilities
RO Scheme Renewable Obligation Scheme
ROC Renewable Obligation Certificates
RPI Retail Price Index
Solis portfolio Eight plants held with NESH V
SPA Share Purchase Agreement
SPVs Special purpose vehicles which hold the Company's
investment portfolio of underlying operating
assets
Total Shareholder The actual rate of return from dividends paid
Return and capital gains on share price movements
over a given period of time
Three Kings portfolio Three plants held with NESH III
UK United Kingdom of Great Britain and Northern
Ireland
UK Code UK Corporate Governance Code dated April 2016
UKLA UK Listing Authority
WACC Weighted Average Cost of Capital
WiseEnergy WiseEnergy (Great Britain) Limited and WiseEnergy
Italia Srl
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NextEnergy Solar Fund Limited
Registered Address
1 Royal Plaza, Royal Avenue Email:
St Peter Port ir@nextenergysolarfund.com
Guernsey GY1 2HL Website:
T: +44 (0) 1481 713 843 nextenergysolarfund.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BIBDBXSBBGIC
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