NAV, Operational Update and Interim Dividend
LEI: 213800ZPHCBDDSQH5447
13 May 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") as at 31 March 2021, its latest operational update and its final interim dividend for the year ended 31 March 2021.
The Company continues to outperform operationally, despite disruptions resulting from the COVID-19 pandemic, and remains well-placed to provide shareholders with an on-going attractive risk-adjusted return from a diversified portfolio of solar infrastructure assets.
Financial highlights
· Unaudited NAV per ordinary share of 98.9p (31 December 2020: 100.7p)
· Ordinary shareholders' unaudited NAV of £581m (31 December 2020: £591m)
· Interim dividend of 1.7625p per ordinary share for the quarter ending 31 March 2021 (31 March 2020: 1.7175p)
· Total dividend of 7.05p per ordinary share in respect of the year ended 31 March 2021 (year ended 31 March 2020: 6.87p per ordinary share)
Operational highlights
· 814MW total capacity installed to date across 94 operating solar assets (31 December 2020: 763 MW and 91 operating solar assets)
· 100MW acquisition of two UK assets under construction for a consideration of c.£64.3m, both with a 15-year corporate power purchase agreement ("PPA") with AB InBev, the world's largest brewer
· Successfully energised two assets with a 25-year corporate PPA with utility provider, Anglian Water Group (1.5MW)
· Continued operational resilience and outperformance through COVID-19 pandemic
· Electricity generation was 6.2% above budget for the year ended 31 March 2021, generating c.£4.8m in additional revenue
· Irradiation levels exceeded expectations by 5.5%, for the year ended 31 March 2021
· Asset management alpha of +0.7% for the year ended 31 March 2021
· Continued active hedging strategy securing future UK contracted revenues*:
Ø 2021/22 financial year: 87% of budgeted generation hedged
Ø 2022/23 financial year: 63% of budgeted generation hedged
*As at 13 May 2021, covers c.95% of total portfolio (775MW)
NAV
The Company's latest unaudited NAV reduction reflects the current market environment, taking into account changes in the power price forecasts provided by the Company's three independent consultants (-2.1p per ordinary share from 31 December 2020 to 31 March 2021), the recent Budget announcement with UK corporation tax rate rising to 25% from 2023, expected to remain in place for the remainder of the life of the portfolio (-1.8p per ordinary share from 31 December 2020 to 31 March 2021), and small changes in inflation expectations.
These reductions were offset by the Company's operating outperformance, the acquisition of the 100MW Camden portfolio which was financed by a drawdown on the existing revolving credit facility ("RCF"), and a reduction of 0.25% in the unlevered discount rate to 5.75% for UK operating assets (resulting from market values observed on transactions in the secondary market for UK solar assets) taking the weighted average discount rate to 6.3%.
The above NAV numbers are unaudited and the Company will publish an audited NAV as at 31 March 2021 as part of its final results for the year.
Power price strategy
The Company continues to benefit from NextEnergy Capital's specialist energy sales desk, which drives the successful monitoring and implementation of NESF's forward hedging strategy. This strategy, which also includes various long-term Power Price Agreements, is designed to secure high levels of revenue certainty across the NESF portfolio and mitigate exposure to short-term fluctuations in power prices. The Company generally seeks to hedge the majority of its market exposure over any forward 24-month period, leveraging its market expertise for the implementation and pricing of hedges.
During the 2020/21 financial year, this strategy reduced the Company's exposure to lower power prices resulting from reduced electricity demand due to the COVID-19 pandemic, lower UK gas prices and warmer weather patterns. It also resulted in a c.£7m revenue uplift when compared to the market power prices over the year.
The current UK power market prices continue to improve, in contrast to 2020, following colder weather patterns, low gas supply and storage levels, and sustained demand for electricity. The Company has taken advantage of these recent higher power prices to hedge the majority of its expected generation for the 2021/22 and 2022/23 financial years at prices significantly above the projections provided by its three independent market consultants.
Dividend
The Company is pleased to announce an interim dividend of 1.7625p per ordinary share for the quarter ended 31 March 2021. This will be paid on 30 June 2021 to shareholders on the register as at the close of business on 21 May 2021. The ex-dividend date is 20 May 2021.
The Company will also be offering shareholders a scrip dividend alternative to this interim dividend as detailed in the Scrip Circular dated 19 August 2020, 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 27 May 2021, with elections to be made by 4 June 2021.
NESF achieved its target of delivering a dividend of 7.05p per ordinary share in respect of the financial year ended 31 March 2021 (2020: 6.87p).
Future pipeline
In line with its investment policy, the Company continues to advance a significant pipeline of exciting opportunities in international solar assets, domestic energy storage assets and investments in private equity structures. This pipeline, when converted will complement the Company's existing portfolio, with a view to achieve higher financial returns with increased geographical, technology, and revenue diversification.
Kevin Lyon, NextEnergy Solar Fund Chairman, commented:
"I am encouraged with the on-going outperformance of our portfolio, as we successfully increased installed capacity and the asset base through value-enhancing acquisitions. Whilst COVID has presented a number of pricing and disruptive challenges, a strong operating performance has helped to mitigate this impact and enabled us to deliver an increased dividend from the previous year."
Michael Bonte-Friedheim, CEO and Founding Partner of NextEnergy Capital, commented:
"I am pleased that NESF delivered its target total dividend for the year and, whilst the economic environment has put pressure on the sector's NAV, our excellent operational performance offset some of these challenges. We added to our installed capacity with high quality PPAs, and we are continuing to explore a strong pipeline of exciting growth opportunities, both in the UK and internationally, in line with last year's revised investment policy."
For further information:
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NextEnergy Capital Group |
020 3746 0700 |
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Michael Bonte-Friedheim |
ir@nextenergysolarfund.com |
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Aldo Beolchini Ross Grier Peter Hamid (Investor Relations) |
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Cenkos Securities |
020 7397 8900 |
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James King William Talkington |
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Shore Capital |
020 7408 4090 |
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Anita Ghanekar Sarah Mather |
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Camarco |
020 3781 8334 |
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Owen Roberts Eddie Livingstone-Learmonth |
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Apex Fund and Corporate Services (Guernsey) Limited |
01481 735 827 |
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Nick Robilliard |
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Notes to Editors1 :
About NextEnergy Solar Fund
NextEnergy Solar Fund is a renewable energy infrastructure investment company that currently owns operating solar power plants in the UK and Italy. The Company may invest internationally up to 30% of its gross asset value in non-UK OECD countries, 15% in private equity structures, and 10% in standalone energy storage.
NESF currently has a diversified portfolio comprising 94 operating solar assets, primarily on agricultural, industrial, and commercial sites, with a combined installed power capacity of c.814MW.
As at 31 March 2021, the Company had gross assets of £1,025 million, of which 88% was invested in the UK, and net assets of £581 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. The dividend is payable quarterly, and the Company has achieved its dividend target for the year ended 31 March 2021 of 7.05p per ordinary share.
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 USA and assets under management of over $2.5bn across three institutional funds.
NEC Group donates 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. NESF is differentiated by its access to WiseEnergy, which has provided operating asset management, monitoring, technical due diligence, and other services to over 1,500 utility-scale solar power plants with an installed capacity in excess of 2.3GW.
For further information on Wise Energy please visit wise-energy.com
[1] Note: All financial data is unaudited as at 31 March 2021, being the latest date in respect of which NESF has published financial information
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