NAV, Operational Update and Interim Dividend

LEI: 213800ZPHCBDDSQH5447

10 August 2021

 

NextEnergy Solar Fund Limited

 

("NESF" or the "Company")

 

Quarterly Net Asset Value, Operational Update and Interim Dividend

 

NextEnergy Solar Fund, the specialist solar power renewable energy investment company, announces its unaudited Net Asset Value ("NAV"), its latest operational update, and its interim dividend for the quarter ended 30 June 2021.

 

The Company continues to outperform operationally and remains well-placed to provide shareholders with an ongoing attractive risk-adjusted return from a diversified portfolio of solar infrastructure assets.

 

Financial highlights

·    Unaudited NAV per ordinary share of 98.7p (31 March 2021: 98.9p)

·    Ordinary shareholders' unaudited NAV of £580m (31 March 2021: £581m)

·    Interim dividend of 1.79p per ordinary share for the quarter ended 30 June 2021 (30 June 2020: 1.7625p)

·    Ordinary shareholders' unaudited Gross Asset Value ("GAV") of £1,058m (31 March 2021: £1,025m)

 

Operational highlights

·    Increased total installed capacity to 893MW (31 March 2021: 814MW)

·    Increased operating solar assets to 99 (31 March 2021: 94)

·    Successfully energised five sites, including South Lowfield (51MW)

·    Electricity generation 3.8% above budget for the quarter, equating to c.£1.1m in additional revenue for the quarter

·    Committed $50m to NextPower III LP ("NPIII"), a private solar infrastructure fund:

o  Adding 28MW to NESF installed capacity on a look-through equivalent basis

·    Secured new £100m Revolving Credit Facility on highly attractive terms at 120bps over SONIA ("Sterling Overnight Index Average")

·    Irradiation levels exceeded expectations by 4.8%, for the quarter

·    Continued active hedging strategy securing future UK contracted revenues, budgeted generation hedged as at 6 August 2021:

o  2021/22 financial year: 90%

o  2022/23 financial year: 63%

o  2023/24 financial year: 31%

 

NAV

The Company's latest unaudited NAV as at 30 June 2021 is broadly in line with the 31 March 2021 NAV. 

 

The NAV reflects the Company's strong operating performance (+2.1p per ordinary share), changes to short-term inflation assumptions (+0.8p per ordinary share), and an increase in power price forecast assumptions (+0.2p per ordinary share).  Detracting from the Company's NAV, the revaluation of new assets (-0.6p per ordinary share), movement in residual value (-0.4p per ordinary share), and normal routine distributions to the fund (-1.3p per ordinary share).

 

Short-term forward UK baseload power prices continue to strengthen and in part were already captured in NESF's previous NAV due to its successful forward hedging strategy which locked in higher prices as they emerged.  Our hedging activities demonstrated NESF's continued ability to deliver consistent NAV performance, whilst removing short-term merchant risk, cash flow volatility and ensuring guaranteed stable future cash flows. 

 

The latest power price projections of the Company's consultants have indicated that future power price estimates are currently lower than the figures used in March 2021, signalling a slight reduction in the power price consultant estimates from 2027 onwards.

 

Electricity sales strategy

NESF continues to lock in tapered power price hedges over a 36-month period at levels above the three independent market consultant's predicted levels.  This proactive risk mitigation helps secure and underpin both dividend commitments and dividend cover. 

 

NESF implements this strategy through NextEnergy Capital's specialist in-house energy sales team with direct access to energy market trading. 

 

Dividend

The Company is pleased to announce an interim dividend of 1.79p per ordinary share for the quarter ended 30 June 2021.  This will be paid on 30 September 2021 to shareholders on the register as at the close of business on 20 August 2021.  The ex-dividend date is 19 August 2021.

 

The Company will also be offering shareholders a scrip dividend alternative to this interim dividend as detailed in the Scrip Circular dated 12 July 2021, a copy of which can be viewed and / or downloaded from 'Circulars' in the Investor Relations part of the NESF website (nextenergysolarfund.com).  The Scrip Share reference price will be announced on 26 August 2021, with elections to be made by 3 September 2021.

 

NESF continues to target a dividend of 7.16p per ordinary share for the financial year ended 31 March 2022 (31 March 2021: 7.05p). 

 

NextPower III LP

NESF's $50m NPIII commitment is the current equivalent to ownership of 11.4% of NPIII's 245MW operational assets, providing exposure to a growing portfolio of both development and operational international solar assets.

 

On the 14 July 2021, NPIII announced the acquisition of Portfolio Guanaco II in Chile, adding a further 45MW to the NPIII portfolio.  This increased NPIII's total installed capacity to 245MW.

 

Future pipeline

In line with its investment policy, the Company continues to advance a significant pipeline of international solar assets (400MW), UK energy storage assets (500MW), and international co-investment opportunities through NESF's commitment to NPIII.

 

These investment opportunities aim to achieve robust financial returns, increase dividend cover, and add geographical, technological, and revenue diversification to the NESF portfolio. 

 

 

Factsheet

The 30 June 2021 factsheet is now available on the Company's website.  

 

Kevin Lyon, Chairman of NextEnergy Solar Fund said:

"NESF continues to provide solid operational performance and lock in guaranteed cash flows to meet our shareholder dividend targets.  Our commitment into NPIII and pipeline of energy storage, international solar assets and co-investment opportunities provides strong momentum into the second half of the calendar year, where significant progress is being made in executing these additional dividend-enhancing acquisitions."

 

Michael Bonte-Friedheim, CEO and Founding Partner of NextEnergy Capital, added:

"During the period, short- and medium-term power prices in the UK increased significantly.  NESF continues to benefit from NextEnergy Capital's energy sales desk and our ability to manage forward power sales to take advantage of higher market prices or reducing exposure to falling prices.  Hedging forward power generation allows us to reduce volatility and increase visibility of cash flows."

 

 

For further information:

NextEnergy Capital Group	020 3746 0700
Michael Bonte-Friedheim	[email protected]
Aldo Beolchini Ross Grier Peter Hamid (Investor Relations)
Cenkos Securities	020 7397 8900
James King William Talkington
Shore Capital	020 7408 4090
Anita Ghanekar Fiona Conroy - Corporate Broking
Camarco	020 3781 8334
Owen Roberts Eddie Livingstone-Learmonth
Apex Fund and Corporate Services (Guernsey) Limited	01481 735 827
Nick Robilliard Duke Le Prevost

 

Notes to Editors¹:

 

About NextEnergy Solar Fund

NESF is a specialist solar power renewable energy investment company listed on the premium segment of the London Stock Exchange that invests in operating utility-scale solar power plants.  The Company may invest up to 30% of its gross asset value in non-UK OECD countries, 15% in solar-focused private equity structures, and 10% in energy storage.

 

NESF currently has a diversified portfolio comprising 99 operating solar assets (primarily on agricultural, industrial, and commercial sites), and a $50m commitment into NextPower III (a private ESG solar infrastructure fund providing exposure to operating and in-development international solar assets).

 

The NESF portfolio has a combined installed power capacity of 893MW (including NextPower III MW on an equivalent look-through basis).

 

As at 30 June 2021, the Company had gross assets of £1,058 million and net assets of £580 million. The majority of long-term cash flows from its investments are inflation-linked.

 

NESF's investment objective is to provide ordinary shareholders with attractive risk-adjusted returns, principally in the form of regular dividends, by investing in a diversified portfolio of primarily UK-based solar energy infrastructure assets.

 

For further information on NESF please visit nextenergysolarfund.com

 

Commitment to ESG

NESF is committed to ESG principles and responsible investment which make a meaningful contribution to reducing CO2 emissions through the generation of clean solar power.  NESF will only select investments that meet the requirements of NEC Group's Sustainable Investment Policy.  Based on this policy, NESF benefits from NEC's rigorous ESG due diligence on each investment.  NESF is committed to reporting on its ESG performance in accordance with the UN Sustainable Development Goals framework and the EU Sustainable Finance Disclosure Regulation.

 

NESF has been awarded the London Stock Exchange's Green Economy Mark and has been designated a Guernsey Green Fund by the Guernsey Financial Services Commission.

 

NESF's sustainability-related disclosures in the financial services sector in accordance with Regulation (EU) 2019/2088 can be accessed on the ESG section of both the NESF website (nextenergysolarfund.com/esg/) & NEC Group website (nextenergycapital.com/sustainability/transparency-and-reporting/).

 

About NextEnergy Capital Group ("NEC Group")

NESF is managed by the NextEnergy Capital Group, a specialist solar investment manager, which has a strong track record in sourcing, acquiring, and managing operating solar assets.  NEC Group is a leading player in the global solar investment sector and has over 190 team members with offices in UK, Italy, India, and the USA and assets under management of over $2.8bn across three institutional funds.

 

NextEnergy Capital Group donates at least 5% of its net annual profits to NextEnergy Foundation. NextEnergy Foundation is an international charity that was founded in 2016. Its mission is to participate proactively in the global effort to reduce carbon emissions, provide clean power sources in regions where they are not yet available, and contribute to poverty alleviation.

 

For further information on NEC Group please visit nextenergycapital.com  

For further information on NextEnergy Foundation visit nextenergyfoundation.org 

 

About WiseEnergy

WiseEnergy is NEC Group's specialist operating asset management division made up over 110 professionals.  NESF is differentiated by its access to WiseEnergy, which provides 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 2.2GW, across seven markets.

 

For further information on WiseEnergy please visit wise-energy.com  

 

 

 

^[1] Note: All financial data is as at 30 June 2021, being the latest date in respect of which NESF has published financial information