NextEnergy Solar Fund Limited Interim Results

Fecha : 14/11/2019 @ 01:01
Fuente : UK Regulatory (RNS & others)
Emisora : Nextenergy Solar Fund Limited (NESF)
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NextEnergy Solar Fund Limited Interim Results

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TIDMNESF

RNS Number : 3477T

NextEnergy Solar Fund Limited

14 November 2019

14 November 2019

NextEnergy Solar Fund Limited

("NESF" or the "Company")

Interim Results for the period ended 30 September 2019

NextEnergy Solar Fund announces its interim results for the six-month period ended 30 September 2019.

Financial highlights

   --      Net asset value per ordinary share of 111.2p (31 March 2019: 110.9p) 
   --      Ordinary shareholder total return of 6.7% (30 September 2018: 3.4%) 
   --      Gearing of 39% (31 March 2019: 36%) 
   --      Cash dividend cover before scrip of 1.3x (30 September 2018: 1.2x) 
   --      Ordinary shareholders' NAV of GBP649m (31 March 2019: GBP645m) 
   --      Dividends per ordinary share of 3.44p (30 September 2018: 3.325p) 

Operational highlights

   --      Total capacity installed of 705 MW (31 March 2019: 691 MW) 
   --      Total electricity generation of 515 GWh (30 September 2018: 480 GWh) 
   --      89 operating solar assets (31 March 2019: 87) 
   --      Electricity generation +5.0% above budget (30 September 2018: +7.9%) 

ESG highlights

   --      134,000 UK homes powered for six months (30 September 2018: 125,000) 
   --      131,000 tonnes of CO2 emissions avoided (30 September 2018: 123,000) 

Kevin Lyon, Chairman of NESF, commented:

"NextEnergy Solar Fund's robust first half results were characterised by another period of outperformance, resulting not only from high levels of solar irradiation but also from technical, financial and operational improvements across the portfolio. In particular, we continued to focus on optimising our portfolio of assets, including extending the useful life of more of our assets, reducing operating costs, making technical improvements and executing our electricity sales strategy to reduce power price risk.

We are particularly proud of our maiden subsidy-free plant, Hall Farm II of 5.4MW, which was energised during the period and is the UK's first subsidy-free solar plant owned by a listed investment company. Its successful development and commissioning gives us industry leadership in this space, and work is underway on our next subsidy-free plant - a 50 MW plant currently under construction and due for commissioning by the end of the financial year.

During the period we also issued GBP100m of preference shares and partially used this to repay financial debt, which resulted in enhanced returns for ordinary shareholders, whilst providing financial stability for the future."

Interim Report

There will be an analyst presentation and conference call at 10.00am this morning for analysts. To register for the call, please contact MHP Communications on 020 3128 8100 or nextenergy@mhpc.com.

For further information:

 
                                                      020 3746 
NextEnergy Capital Limited                             0700 
Michael Bonte-Friedheim 
Aldo Beolchini 
                                                      020 7894 
Cantor Fitzgerald Europe                               7719 
Robert Peel 
                                                      020 7408 
Shore Capital                                          4090 
Anita Ghanekar 
                                                      020 3128 
MHP Communications                                     8100 
Oliver Hughes 
Apex Fund and Corporate Services (Guernsey) Limited   01481 735 827 
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.

As at 30 September 2019, NESF raised equity proceeds of GBP792m (including GBP200m of preference shares) since its initial public offering on the main market of the London Stock Exchange in April 2014. The Company's subsidiaries had financial debt outstanding of GBP211m, on a look-through basis including project level debt. Of the financial debt, GBP197m was long-term fully amortising debt, and GBP14m was drawn under a short-term credit facility.

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 nextenergysolarfund.com, nextenergycapital.com and wise-energy.eu.

NextEnergy Solar Fund Limited

Interim Report and Condensed Interim Financial Statements

for the six months ended 30 September 2019

Contents

 
Highlights                                             1 
Chairman's Statement                                   3 
Company Overview and Principal Risks                   7 
Investment Adviser's Report                            9 
Statement of Directors' Responsibilities              26 
Condensed Interim Financial Statements                27 
Notes to the Condensed Interim Financial Statements   31 
Independent Review Report                             49 
Corporate Information                                 50 
Alternative Performance Measures                      52 
Glossary                                              55 
 

Performance Highlights

Financial Highlights

 
 111.2p (31 March 2019: 110.9p)         6.7% (30 September 2018: 3.4%) 
  NAV per ordinary share                 Ordinary shareholder total return 
  as at 30 September 2019                for the six months ended 30 September 
                                         2019 
 
 39% (31 March 2019: 36%)               1.3x (30 September 2018: 1.2x) 
  Gearing                                Cash dividend cover before scrip 
  as at 30 September 2019                for the six months ended 30 September 
                                         2019 
 
 GBP649m (31 March 2019: GBP645m)       3.44p (30 September 2018: 3.325p) 
  Ordinary shareholder's NAV             Dividends per ordinary share 
  as at 30 September 2019                for the six months ended 30 September 
                                         2019 
 
 Operational Highlights 
 
 705 MW (31 March 2019: 691 MW)         515 GWh (30 September 2018: 480 GWh) 
  Total capacity installed               Total electricity generation 
  as at 30 September 2019                during the six months ended 30 September 
                                         2019 
 
 89 (31 March 2019: 87)                 +5.0% (30 September 2018: +7.9%) 
  Operating solar assets                 Generation above budget 
  as at 30 September 2019                for the six months ended 30 September 
                                         2019 
 
 ESG Highlights 
 
 134,000 (30 September 2018: 125,000)   131,000 (30 September 2018: 123,000) 
  UK homes (equivalent to Bournemouth    Tonnes of CO(2) emissions avoided 
  and                                    during the six months ended 30 september 
  Bradford combined) powered for six     2019 
  months 
 

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 on page 52.

 
                                            Six months 
                                                 ended  Year ended  Year ended  Year ended  Year ended 
                                          30 September    31 March    31 March    31 March    31 March 
Financial KPI                                     2019        2019        2018        2017        2016 
Ordinary shares in issue                        583.6m      581.7m      575.7m      456.4m      278.0m 
Ordinary share price                            122.0p      117.5p      111.0p      110.5p      97.75p 
Market capitalisation of ordinary 
 shares                                        GBP712m     GBP683m     GBP639m     GBP504m     GBP272m 
NAV per ordinary share*                         111.2p      110.9p      105.1p      104.9p       98.5p 
Total ordinary NAV                             GBP649m     GBP645m     GBP605m     GBP479m     GBP274m 
Premium/(discount) to NAV*                        9.7%        6.0%        5.6%        5.3%      (0.8%) 
Earnings per ordinary share                      3.62p      12.37p       5.88p      13.81p       0.78p 
Dividends per ordinary share                     3.44p       6.65p       6.42p       6.31p       6.25p 
Dividend yield*                                  5.63%       5.66%       5.78%       5.71%       6.39% 
Cash dividend cover - pre-scrip 
 dividends*                                       1.3x        1.3x        1.1x        1.1x        1.2x 
Preference shares in issue                        200m        100m           -           -           - 
Debt outstanding at subsidiaries 
 level                                         GBP211m     GBP269m     GBP270m     GBP270m     GBP217m 
Gearing level (debt + preference 
 shares/GAV)*                                      39%         36%         31%         36%         44% 
GAV                                          GBP1,060m   GBP1,014m     GBP875m     GBP749m     GBP489m 
Weighted average cost of capital                  5.5%        5.4%        5.8%        5.9%        5.8% 
Weighted average lease life                 25.5 years  25.2 years  23.3 years  24.6 years  25.7 years 
Ordinary shareholder total return 
 - 
 cumulative since IPO                            54.6%       46.7%       33.6%       26.7%        6.1% 
Ordinary shareholder total return 
 - 
 annualised since IPO                            10.0%        9.5%        8.5%        9.1%        3.2% 
Ordinary shareholder total return                 6.7%       11.8%        6.2%       21.1%        0.2% 
FTSE All-Share total return                       4.0%        8.8%        1.4%       20.9%      (3.6%) 
Ordinary NAV total return*                       3.23%       11.8%        6.3%       14.4%        3.7% 
Ordinary NAV total return - annualised 
 since IPO*                                       8.0%        8.1%        7.0%        4.9%        1.9% 
Invested capital*                              GBP932m     GBP896m     GBP734m     GBP522m     GBP481m 
Ongoing charges ratio*                            1.1%        1.1%        1.1%        1.2%        1.2% 
Weighted average discount rate                    7.0%        7.0%        7.3%        7.9%        7.7% 
Operational KPI 
Number of assets                                    89          87          63          41          33 
Total installed capacity                        705 MW      691 MW      569 MW      454 MW      414 MW 
Electricity production (generation)            515 GWh     693 GWh     451 GWh     394 GWh     225 GWh 
% increase (period-on-period)                       7%          6%         14%         75%        878% 
Generation since IPO                           2.3 TWh     1.8 TWh     1.1 TWh     0.6 TWh     0.2 TWh 
Irradiation (delta vs. budget)                   +4.8%       +9.0%      (0.9%)      (0.3%)       +0.4% 
Generation (delta vs. budget)                    +5.0%       +9.1%       +0.9%       +3.3%       +4.1% 
Asset Management Alpha*                          +0.2%       +0.1%       +1.8%       +3.6%       +3.7% 
 

* Alternative Performance Measures

Chairman's Statement

"NextEnergy Solar Fund's robust first half results were characterised by another period of outperformance, resulting not only from high levels of solar irradiation but also from technical, financial and operational improvements across the portfolio. In particular, we continued to focus on optimising our portfolio of assets, including extending the useful life of more of our assets, reducing operating costs, making technical improvements and executing our electricity sales strategy to reduce power price risk.

We are particularly proud of our maiden subsidy-free plant, Hall Farm II of 5.4MW, which was energised during the period and is the UK's first subsidy-free solar plant owned by a listed investment company. Its successful development and commissioning gives us industry leadership in this space, and work is underway on our next subsidy-free plant - a 50 MW plant currently under construction and due for commissioning by the end of the financial year.

During the period we also issued GBP100m of preference shares and partially used this to repay financial debt, which resulted in enhanced returns for ordinary shareholders, whilst providing financial stability for the future."

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 2019.

We energised our maiden subsidy-free asset in the UK, Hall Farm II, in August 2019, the first listed solar company to do so, marking a defining moment on the solar sector's path to a subsidy-free environment. Construction of this asset began in March 2019 and the plant was fully connected to the grid on 5 August 2019. This 5.4MW plant, adjacent to our existing Hall Farm plant, has benefited from the original site's oversized planning permission and previously built grid access infrastructure.

The construction of our second subsidy-free plant, Staughton, has progressed smoothly and is on track to be connected to the grid by the end of this financial year. This 50MW subsidy-free plant located on the Bedfordshire/Cambridgeshire border will be the largest plant in our portfolio. These achievements are notable as they demonstrate the economic case for subsidy-free solar PV assets in the UK compared to other energy generation technologies, many of which still require extensive and expensive subsidies.

Asset prices on the whole remained at levels we deem unattractive. Nevertheless, during the period, we have acquired one operating solar plant, Ballygarvey in Northern Ireland, which demonstrates our Investment Adviser's expertise in finding value in a somewhat saturated UK market. The 8.2MW plant benefits from subsidies under the Northern Irish ROC ('NIROCS') regulatory framework, and gives the Company a presence in England, Scotland, Wales and now Northern Ireland.

During the period we completed the innovative approach to the financing of our portfolio. In August 2019 we raised a further GBP100m of preference shares on similar terms to the GBP100m issuance in November 2018. The combined GBP200m of preference shares have a fixed 4.75% p.a. coupon, resulting in significantly lower all-in annual cash costs to the Company over the regulatory regime period of our assets, when compared to issuance of ordinary shares or long-term amortising financial debt products. Further details can be found in the Investment Adviser's Report.

Over the past six months our Investment Adviser and Asset Manager have continued to optimise the returns from the portfolio by:

   --      extending the useful life of more of our assets; 

-- reducing operating costs through re-negotiating contractual terms and entering into new agreements;

   --      making technical improvements; and 
   --      executing our electricity sales strategy to maximise revenue and reduce power price risk. 

Our financial performance continues to be robust. Over the five and a half years since IPO, NESF has achieved an annualised ordinary shareholder total return of 10% and an annualised NAV total return of 8.0%, in line with or in excess of the target range of 7% - 9% equity return for investors, based on the IPO price.

Financial Results

Profit before tax was GBP21.1m (30 September 2018: GBP18.7m) with earnings per ordinary share of 3.62p (30 September 2018: 3.23p). Cash dividend cover pre-scrip dividends was 1.3x (30 September 2018: 1.2x).

Portfolio Performance

Energy generated was 515 GWh (30 September 2018: 480GWh), 5.0% above budget. During the period, solar irradiation across the portfolio was 4.8% above expectation (30 September 2018: 8.4%). Asset Management Alpha for the period was 0.2% (30 September 2018: -0.5%), which would have been 1.0% (30 September 2018: 0.5%) if we excluded distributor network outages.

Our UK portfolio performed above expectations with generation outperformance of 5.1% (30 September 2018: 8.2%) and an Asset Management Alpha of 0.1% (30 September 2018: -0.8%).

Our Italian portfolio also performed well during the period with 1.8% (30 September 2018: 3.6%) extra generation over budget and an Asset Management Alpha of 1.4% (30 September 2018: 2.4%). The portfolio was acquired with long-term debt of EUR76.9m (GBP68.1m) which was fully repaid following the issuance of the preference shares in November 2018. The vast majority of the future expected cash flows from the portfolio have been hedged at an average forward exchange rate of 0.89 EUR/GBP for the period up to 2032 which includes all hedging costs.

The electricity generated by our portfolio during the period based on the current 705MW is equivalent to a saving of 131,000 (30 September 2018: 123,000) tonnes of CO(2) emissions and sufficient to power some 134,000 (30 September 2018: 125,000) UK homes for six months. This is roughly equivalent to powering a city with 643,000 inhabitants (e.g. Bournemouth and Bradford combined) for six months.

Net Asset Value

At the period end, the Company's ordinary NAV was GBP649m, equivalent to 111.2p per ordinary share (31 March 2019: NAV of GBP645m, 110.9p per ordinary share).

Portfolio Growth

During the period, the portfolio's installed capacity increased by 14MW with the additions of Hall Farm II and Ballygarvey. The construction of Staughton is well-advanced and is expected to add a further 50MW by the end of the financial year. The Investment Adviser is in negotiations on further pipeline assets, the majority of which are subsidy-free. Our strategy envisages adding a total of between 100MW and 150MW in subsidy-free capacity to the portfolio by the end of calendar year 2020. This amounts to an estimated investment of between GBP55m and GBP80m (5% - 8% of GAV). Assuming 125MW of subsidy-free capacity and average generation levels, our subsidy-free portfolio would be equivalent to c.15% of 2018/19 generation. We have identified and are progressing on strategies for the sale of electricity from these subsidy-free plants.

Capital Raising and Debt Financing

In August 2019 the Company successfully issued a second tranche of GBP100m of preference shares. The proceeds were deployed to partially repay a HoldCo level short-term credit facility, finance the acquisition of Ballygarvey and invest in the construction of Staughton.

As at 30 September 2019, the Company's subsidiaries had financial debt outstanding of GBP211m (31 March 2019: GBP269m). Of the financial debt, GBP197m was long-term fully amortising debt, and GBP14m was drawn under a short-term credit facility. The total financial debt, together with the preference shares, represented a gearing level of 39% (31 March 2019: 36%), which is below the stated maximum debt-to-GAV level of 50%.

Dividends

The Company continues to achieve its dividend objective which is to increase dividends annually in line with RPI over the long term. For the year ending 31 March 2020, we are targeting a total dividend of 6.87p per ordinary share.

The Directors have approved a second interim dividend of 1.7175p per ordinary share, which will be payable on 30 December 2019 to ordinary shareholders on the register as at the close of business on 22 November 2019.

The Company offers scrip dividends, details of which can be found on the Company's website.

The cash dividend cover pre-scrip dividends remained robust at 1.3x (2018:1.2x).

Environmental, Social and Governance

We are committed to ESG principles and responsible investment. We continue to develop our ESG policy and are committed to evolving it and delivering sustainable growth across the Company. As well as reduction of CO(2) emissions provided by solar power, one particular area we have focused on is biodiversity. Solar PV assets represent an excellent opportunity to secure long-term biodiversity across the countryside. In the area protected by the fencing around our assets, we are able to create sectors fostering local plant and wildlife. This approach includes initiatives such as: pairing up with a local beekeeper association to locate beehives seasonally on our sites, encouraging local pollinators by planting wild flower mixes/under-panel planting, erecting bird and bat boxes and briefing landowners with our newly devised biodiversity management plan.

Auditors

On 27 September 2019, following a competitive audit tender, the Company announced the appointment of KPMG Channel Islands Limited as its auditor for the financial year ending 31 March 2020 for the Company and its subsidiaries. PWC CI LLP has resigned as the Company's auditor, and the Board would like to take the opportunity to thank PWC for its service as auditor over the last five years since IPO.

Distribution of Reports and Communications

This Interim Report is accessible on the Company's website. As part of our principles of environmental responsibility, the Company no longer issues printed copies of reports or communications, except where a shareholder has expressly requested a hard copy.

Outlook

The Company will continue to focus on generating attractive financial returns for our shareholders, while having positive social and environmental impacts.

The Company continues to extend the useful life of its assets on the remaining portfolio, and is targeting 31 assets.

The completion of Hall Farm II, has provided us with the expertise to construct further subsidy-free assets with attractive risk-adjusted returns using electricity sales agreements, corporate PPAs or direct-wire agreements with off-takers, from the Company's pipeline of development opportunities. We continue to target a total of between 100 MW and 150 MW in subsidy-free solar plants.

We will continue to review deployment of ancillary solar technologies to mitigate the generation risks of individual assets, whilst adapting our portfolio to the changing dynamics of the UK solar market.

Continued focus on developing our electricity sales strategy will enable us to leverage our in-house expertise to maximise value from our assets and deliver further cost efficiencies.

ESG continues to be an important part of our mission. As activities mitigating climate change accelerate globally, execution of our ESG policy will ensure we continue to lead by example. Our Company and stakeholders are aligned to create a better environment for this generation and future generations.

With the underlying quality and performance of our robust portfolio, coupled with the success of our first subsidy-free plant and the construction programme ahead, the outlook for the Company continues to remain strong.

Kevin Lyon

Chairman

13 November 2019

Company Overview and Principal Risks

Structure

The Company is a Guernsey registered closed-ended investment company.

The Company has a premium listing and its ordinary 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 ordinary shareholders 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 on the Company's website.

The Investment Manager, Investment Adviser and Asset Manager

The Company's Investment Manager is NextEnergy Capital IM Limited. The Investment Manager has appointed NextEnergy Capital Limited to act as Investment Adviser in relation to the Company. Michael Bonte-Friedheim, Aldo Beolchini and Abid Kazim comprise the Investment Committee of the Investment Adviser, whose role is to consider and, if thought fit, recommend actions to the Investment Manager in respect of the Company's potential and actual investments.

The Company has entered into an asset management framework agreement with the asset manager, WiseEnergy, a member of the NEC Group. Under the framework agreement, WiseEnergy enters into individual asset management contracts with each solar power plant entity acquired by the Company and performs a broad and defined set of asset management activities for each entity. The collective experience of the NEC Group in managing and monitoring solar PV assets best positions the Company to implement efficiencies at both the investment and operating asset level. The technical and operating outperformance of the portfolio to date underlines the benefits of this comprehensive strategic relationship.

The NEC Group is a privately-owned specialist investment and asset manager focused on the solar sector. It was formed in 2007 and has developed a unique track record in the European solar sector. Prior to the IPO of the Company, it had developed, financed, managed the construction of and owned 14 solar projects in the UK and Italy. Its asset management activities have included the management and monitoring of more than 1,300 utility-scale solar power plants for a total capacity of over 1.9GW on behalf of third-party equity investors and financing banks. Its clients include listed solar funds (in addition to the Company), private equity, family offices, renewable energy specialists and other equity investors as well as some of Europe's leading lenders and financiers in the solar sector. It has developed proprietary hardware and software products and solutions to facilitate delivery of its services to its client base. The NEC Group also manages two private equity funds: NextPower II LP, a EUR232m fund dedicated to solar PV asset investments in Italy, and NextPower III LP, a USD117m fund dedicated to solar PV asset investments globally.

The NEC Group consists of over 160 dedicated staff focused on the solar sector. The team has significant experience in energy and infrastructure transactions not only in the UK but also in other jurisdictions.

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 and Investment Adviser assists the Company in regularly identifying, assessing and mitigating those risks likely to impact the financial or strategic position of the Company.

Under the FCA's Disclosure Guidance and Transparency Rules, the Board is required to identify those material risks to which the Company is exposed and take appropriate steps to mitigate those risks. The material risks identified by the Board can be categorised as follows:

   --      portfolio management and performance risks; 
   --      operational and strategic risks; and 
   --      external risks. 

The principal risks and uncertainties, which are unchanged from 31 March 2019, remain the risks most likely to affect the Company for the remaining six months of the financial year. Each of these categories of risk, together with the principal risks, can be found on pages 13-15 of the 31 March 2019 Annual Report.

Investment Adviser's Report

Portfolio Highlights

During the period, the portfolio grew from 87 to 89 assets, which represented an increase of 14MW to the total capacity.

On 5 August 2019, our first subsidy-free asset Hall Farm II was connected to the grid after a five-month construction period. The 5.4MW plant is the first subsidy-free plant to be energised by a UK-listed investment company.

During the period, construction also began on Staughton, a 50MW subsidy-free asset located on the Cambridgeshire/Bedfordshire border. Construction progressed as scheduled during the period, and grid connection is currently expected to take place by the end of this financial year.

In early August 2019, the Company announced the acquisition of Ballygarvey, an 8.2MW plant located in Northern Ireland. The plant receives subsidies under the Northern Irish ROCS ("NIROCS") regulatory framework and receives 1.4 NIROCS per MWh generated.

In the UK, the summer of 2019 was one of the hottest on record, with the highest ever UK temperature of 38.7 degrees Celsius recorded in Cambridge on 25 July. Whilst the extra irradiation drove a greater than expected level of generation, the Asset Manager had to cope with the adverse effects of high temperatures on the technical performance of solar PV components, which perform optimally at temperatures below 25 degrees Celsius. In addition, certain 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 +0.4% and a generation delta of +1.8% which resulted in an Asset Management Alpha of +1.4%.

Overall, the operational performance of the portfolio during the period was positive and above budget. The resulting Asset Management Alpha of +0.2% was an expected outcome of these exceptional weather conditions and does not represent any change in the ability to achieve a greater level of outperformance in the future.

As at 30 September 2019, the actual performance versus expectations for 85 of the solar PV assets had been monitored by the asset manager for at least two months post completion. The three rooftop portfolios were excluded as irradiation was not monitored.

The Asset Management Alpha measurement allows the Company to identify the "real" outperformance of the portfolio due to active management, as it excludes the effect of variation in solar irradiation.

Portfolio Optimisation

During the period, we secured options or rights to extend the leases on ten individual plants. The positive impact on NAV of these life-extensions amounted to c.+1.3p per ordinary share at the period end. We continue to work on extending the life of the remaining portfolio, with a further five sites expected to secure extensions by the end of the calendar year.

 
                                               Irradiation   Generation        Asset 
                                       Assets   (delta vs.   (delta vs.   Management 
Period                              monitored      budget)      budget)        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% 
First Half 2019/20                         85        +4.8%        +5.0%        +0.2% 
Cumulative from IPO to September 
 2019                                                +2.5%        +5.0%        +2.5% 
 

We have continued a programme of re-structuring and implementing new contracts across the portfolio. Re-negotiating the contracts means we are able to make savings, refine service levels and maximise revenue. Further Operations and Maintenance ("O&M") contract replacements and renegotiations have taken place during the period, with seven contracts terminated or renegotiated securing a cost saving of GBP100,000 p.a. across these assets. In addition to the ongoing work to drive down operating costs, a further eight PPAs have been renewed during the period.

Preference Shares

On 8 November 2018, ordinary shareholders agreed to amend the Company's Articles of Incorporation to create a class of preference share and approved the allotment of up to GBP200m of shares with no pre-emption rights. Subsequently, on 13 November 2018, the Company issued an initial tranche of GBP100m of preference shares. The Company issued a further GBP100m of preference shares on 12 August 2019. The rights of the preference shares are the same as those issued in November 2018, save that the second tranche benefit from certain additional undertakings and covenants given by the Company.

The preference shares are only redeemable at the option of the holders in the event of a change in control or delisting of the Company. They are generally non-voting and carry a fixed preferred dividend of 4.75% p.a. as well as a preferred capital entitlement at nominal value (100p). 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 the same rights to dividends and capital in a liquidation as the ordinary shares. The conversion price will be based on the ratio of the nominal value (100p) (plus unpaid dividends, if any) per preference share relative to NAV per ordinary share at the date of conversion. Accordingly, conversion of the preference shares will not result in any dilution of the NAV per ordinary share.

From 1 April 2030, the Company may elect to redeem all or some of the preference shares. Dividends and, save as referred to in the preceding paragraph, redemption will remain at the sole discretion of the Board during the life of the preference shares. 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 after March 2030.

The proceeds of the initial GBP100m of preference shares were used to repay a portion of the existing long-term project financing facilities associated with portfolio investments. Benefits of the second tranche of preference shares for NESF include:

-- the net subscription proceeds were applied promptly to repay existing short-term debt facilities (GBP90m due in February 2020 and July 2020), removing any short-term refinancing risk, with the balance of the proceeds being available to invest in pipeline opportunities;

-- the fixed preferred dividend of 4.75p per preference share is a significantly lower all-in annual cash cost to the Company compared to issuing ordinary shares (2019/20 target dividend of 6.87p per ordinary share, expected to increase with RPI annually); and

-- the issue allows the Company to further optimise its capital structure and increase cash flows over the long-term compared to refinancing with conventional long-term amortising financing, thereby increasing the cash dividend cover and increasing the IRR for ordinary shareholders.

For accounting purposes, the preference shares are treated as liabilities. The investment management fee is calculated based on ordinary shareholders' NAV and, accordingly, no management fee is payable in respect of the preference shares.

Italian Portfolio

After repaying the project finance debt during the year ended 31 March 2019, the Company, through a HoldCo, increased the size of the EUR/GBP foreign currency hedging structure to cover 92% of the expected cash flows generated by the portfolio over the next 15 years; this reduces currency fluctuation exposure on returns. The average forward exchange rate is 0.89 EUR/GBP which includes all hedging fees and costs. This FX hedging structure is particularly effective as the Company is not obliged to provide any cash collateral or margin calls.

 
                                                                                    Total 
                                                                   Amount per   pre-scrip 
                                                                     ordinary   dividends 
Dividends declared                               Month of payment   share (p)     GBP'000 
For the period 2014/15                                                 5.2500      10,946 
For the year 2015/16                                                   6.2500      17,372 
For the year 2016/17                                                   6.3100      25,039 
For the year 2017/18                                                   6.4200      36,840 
First quarterly dividend for the year 2018/19              Sep-18      1.6625       9,608 
Second quarterly dividend for the year 
 2018/19                                                   Dec-18      1.6625       9,646 
Third quarterly dividend for the year 2018/19              Mar-19      1.6625       9,666 
Fourth quarterly dividend for the year 
 2018/19                                                   Jun-19      1.6625       9,671 
First quarterly dividend for the year 2019/20              Sep-19      1.7175      10,002 
Total dividends declared to date                                      32.5985     138,790 
Second quarterly dividend for year 2019/20                 Dec-19      1.7175      10,023 
 
 
                                                          Pre-scrip 
                                                          dividends 
Cash income(1)(2)                               GBP'000     GBP'000 
Cash income for period to 30 September 
 2019                                         32,906(1) 
Net operating expenses for period to 30 
 September 2019                                 (3,596) 
Preference shares dividend                      (3,032) 
Net cash income available for distribution       26,278 
Ordinary shares dividend paid during the 
 period                                                      19,673 
Cash dividend cover                                            1.3x 
 

(1) Cash income differs from the Income in the Statement of Comprehensive Income. This is because the Statement of Comprehensive Income is on an accruals basis.

   (2)   Alternative Performance Measure. 

The ordinary dividend calendar is set out in the table below:

 
                                                          Expected 
                                           Expected         amount 
                                            date of   per ordinary 
Ordinary dividend for year 2019/20          payment      share (p) 
First interim                                  Paid         1.1715 
Second interim                        December 2019         1.7175 
Third interim                            March 2020         1.7175 
Fourth interim                            June 2020         1.7175 
Total                                                       6.8700 
 

Operating Expenses

The net operating expenses of the Company for the period amounted to GBP6.6m (30 September 2018: GBP3.3m). The Company's OCR was 1.1% (31 March 2019: 1.1%). The budgeted OCR for the year ending 31 March 2020 is 1.1%. The OCR has been calculated in accordance with AIC recommended methodology. OCR is an Alternative Performance Measure.

NAV Movement

The Company's ordinary NAV is calculated on a quarterly basis based on the valuation of the investment portfolio provided by the Investment Adviser and the other assets and liabilities of the Company provided by the Administrator. The ordinary NAV is reviewed and approved by the Investment Manager and 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 of the DCF valuation. The Company reports its financial results on a non-consolidated basis under IFRS 10 (see note 4c) and the change in fair value of its assets during the period is taken through the statement of comprehensive income.

During the period the ordinary NAV per share increased from 110.9p to 111.2p. The movement was driven by the following factors:

-- the downward revisions in the forecasts for long-term power prices adopted by the Company, being 4.6% lower compared to the assumptions employed at 31 March 2019 (taking into account the most recent forecasts released by the Consultants up to the date of preparation of this Interim Report);

-- the value uplift generated by acquisitions of assets whose IRR at acquisition was higher than the Company's discount rate;

   --      the operating results achieved by the Company's solar PV assets; 
   --      the dividends paid by the Company during the period and the Company's operating costs; and 
   --      the uplift arising from lease extensions. 

Sensitivity Analysis

Sensitivities on the Company's ordinary NAV and detailed disclosure on the asset valuation methodologies are provided below and in note 14 of the Interim Financial Statements.

In the event that Ofgem's Targeted Charging Review results in the removal of embedded benefits from April 2021 onwards, the Company's NAV would decline by c.1.4p per ordinary share.

The chart shows the percentage change in the portfolio resulting from a change in the underlying variables and its impact on the NAV per ordinary share.

Current and Long-Term Power Prices

The Investment Adviser continuously reviews multiple inputs for power price forecasts and takes the average of two of the leading independent energy market 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 downwards in the short-term and the long-term. Short-term projections are mainly driven by the decrease in the commodity prices of gas and coal. In the long-term, wholesale prices are expected to move downwards as more low-cost generation is being deployed, notably offshore wind and solar PV.

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 and is reviewed as frequently as the baseload power price forecasts. The application of such a discount results in a lower long-term price being assumed for the energy generated by NESF's assets compared to the baseload price, driven by the expected further deployment of low-cost renewable capacity. This lower price is included in the financial estimates that drive the Company's NAV.

The Company's current long-term power price forecast implies an average growth rate of approximately +0.9% in real terms over the 20-year period and an average price of c.GBP53.8/MWh in today's terms. This represents a decrease of 4.6% compared to those used at the end of the previous financial year (and 38% below the assumptions employed at IPO).

Compared to the previous interim period end, electricity day ahead prices in the UK decreased from c.GBP67/MWh in September 2018 to c.GBP36/MWh in September 2019. 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 price of electricity in Italy decreased from c.EUR76/MWh in September 2018 to c.EUR51/MWh in September 2019.

Power Purchase Agreements

NEC Group's specialist energy trader, along with the external brokers, continues to ensure that the electricity sales strategy maximises revenues whilst mitigating the negative impact of short-term fluctuations in the power markets. The Investment Adviser has executed a range of short-term PPA hedges from three months to one year on multiple assets through a wider competitive tendering process resulting in more counterparts with reduced fees and increased pass-through value of ROCs, FiTs and embedded benefits.

Valuation of the Investment Portfolio

Introduction

The Investment Manager is responsible for carrying out the fair market valuation of the Company's underlying investment portfolio which is presented to the Company's Board for its 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.

Assets not yet operational or where the completion of the acquisition is not imminent at the time of valuation use the acquisition cost as a proxy for fair value.

The Board reviews the operating and financial assumptions used in the valuation of the Company's underlying portfolio and approves them based on the recommendation of the Investment Manager.

Discount rate

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 resulting in sustained pressure on prices in the last year. These changing dynamics were evidenced by the experience of the Investment Adviser when bidding for solar PV assets in the UK.

As a result, the Company maintained its discount rate for unlevered operating solar PV assets in the UK at 6.5%.

For those operating solar PV assets with debt, the Company adopts a levered discount rate to capture the greater level of volatility 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 the Solis portfolio a 8.0% discount rate was applied. This reflects the additional country risk premium to the UK considering the differences in risk-free rates in the long-term. It is worth noting that the Solis portfolio debt was fully repaid, and the current currency hedge effectively mitigates the revenue exposure to foreign exchange movements.

The resulting weighted average discount rate for the Company's portfolio was 7.0%.

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 2019 was 5.5%. Compared to 31 March 2019 WACC of 5.4% this value reflects a increase in the overall gearing from 36% to 39%, as further described below.

Asset life

The DCF methodology implemented in the portfolio valuation assumes a valuation time-horizon capped to the current terms of the lease or, if earlier, 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: (i) 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; (ii) local planning authorities have already granted initial planning consents that do not expire and/or have granted permissions to extend initial consented periods; and (iii) 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 land leases for some projects with the intention of extending leases for others in due course.

As at 30 September 2019, the remaining weighted average lease life of the Company's portfolio was 25.5 years. 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.

Operating performance

The Company values each solar PV asset on the basis of (i) the minimum Performance Ratio ("PR") guaranteed by the vendor or (ii) the PR estimated by the appointed technical adviser during due diligence. These estimates are generally lower than the actual PR that the Company has been experiencing during subsequent operations. The Investment Adviser deems it appropriate to adopt the actual PR after two years of operating history when, typically, the plants have satisfied tests and received final acceptance certification ("FAC").

As at 30 September 2019, 60 UK solar PV assets and all Italian solar PV assets in the investment portfolio had achieved FAC and their actual PR was used in the DCF valuation. This represents 510MW of the portfolio, with the remaining assets expecting to reach FAC according to the timeline below.

 
Financial quarter ending December 2019:  105  MW 
Financial quarter ending March 2020:      29  MW 
Financial quarter ending June 2020:       14  MW 
Period from July 2020 to June 2021:       47  MW 
 

As at 30 September 2019, the Company's issued share capital comprised 583,617,503 ordinary shares (including shares issued by way of scrip dividends) and 200,000,000 preference shares. The Company's capital raises are shown below:

 
                                Shares          Amount  Amount 
Date                            issued   raised (GBPm)   invested                Time to 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           1 year 2 
June 2017                  115,000,000           126.5   2018                     months 
                                                        Partially used 
November 2018           100,000,000(1)           100.0   to repay debt facility  2 months 
                                                        Partially used 
August 2019             100,000,000(1)           100.0   to repay debt facility  Immediate 
 
   (1)     Preference shares 
 
                                                                 Status at 
                Debt raised                                       30 September 
Date                 (GBPm)  Lender             Amount deployed   2019 
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%             Repaid 
February 2018          20.0  NIBC               Not drawn        Not Drawn 
July 2018              40.0  Santander          Not drawn        Not Drawn 
July 2018              58.3  Bayern Landesbank  100%             Repaid 
January 2019           30.0  Santander          100%             Partially repaid 
 

During the period the ordinary share price increased from 117.5p to 122.0p. The table below shows the returns:

 
                                      Half year       Total  Annualised 
                                        2019/20   since IPO   since IPO 
Ordinary shareholder total return          6.7%       54.6%       10.0% 
NAV total return per ordinary share        3.2%       43.7%        8.0% 
 

The annualised returns since IPO are in line with the target range of 7% - 9% equity return for ordinary shareholders (at IPO both initial issue price and NAV per ordinary share were 100p).

Since April 2019, the ordinary shares have been included in the FTSE 250 Index. NESF's ordinary shares outperformed the FTSE All-Share Index by 18.8% pts over the period from the IPO to 30 September 2019.

Ordinary shareholder total return and ordinary share NAV total return are used to review the Company's performance against its objectives.

Financing and Cash Management

At the period end, the Company's subsidiaries had financial debt outstanding of GBP211m (31 March 2019: GBP269m). Of the financial debt, GBP197m was long-term fully amortising debt, and GBP14m was drawn under a short-term credit facility. The total financial debt, together with the GBP200m preference shares, represented a gearing level of 39% (31 March 2019: 36%), which is below the stated maximum debt-to-GAV level of 50%.

During the period, GBP56m of the Santander RCF facility was re-paid. Consequent to the repayment of debt facilities during the period and prior periods, the HoldCos now have GBP300m Eurobonds issued on TISE, which the Company has acquired to optimise the group capital structure.

The following table is a summary of the financial debt outstanding:

 
                                                                                           Termination 
                                                                   Facility        Amount   (including 
Provider/                                                            amount   outstanding      options  Applicable 
 arranger       Type               Borrower   Tranches                 GBPm          GBPm   to extend)        rate 
                Fully-amortising 
                 long-term 
MIDIS/CBA/NAB    debt              NESH       Medium-term              48.4          48.4       Dec-26    2.91%(1) 
   Floating long-term                                                  24.2          24.2       Jun-35    3.68%(1) 
   Index linked                                                                                          RPI index 
    long-term                                                          38.7          36.4       Jun-35     + 0.36% 
   Fixed long-term                                                     38.7          38.7       Jun-35       3.82% 
   Debt Service 
    Reserve Facility                                                    7.5           0.0       Jun-26       1.50% 
                Fully-amortising 
                 long-term                                                                               RPI index 
MIDIS            debt              NESH IV    Inflation linked         27.5          23.7       Sep-34     + 1.44% 
   Fixed long-term                                                     27.5          25.9       Sep-34       4.11% 
Total long-term debt                                                                197.3 
                                                                                                             LIBOR 
NIBC            RCF                NESH II    n/a                      20.0             -       Feb-20      +2.20% 
                                                                                                             LIBOR 
Santander       RCF                NESH VI    n/a                      70.0          14.0       Jul-20      +1.30% 
Total short-term debt                                                                14.0 
Total debt                                                                          211.3 
 
   (1)       Applicable rate represents the swap rate. 

As at 30 September 2019, the Company held cash of GBP5.3m at financial institutions in the UK with a credit rating at A-1 or above.

Events After the Reporting Period

On 13 November 2019, the Directors approved a dividend of 1.7175 pence per ordinary share for the period ended 30 September 2019 to be announced on 14 November 2019, and paid on 30 December 2019 to ordinary shareholders on the register as at the close of business on 22 November 2019.

NextEnergy Capital Limited

13 November 2019

Investment Portfolio

 
                                                                                                   Remaining 
                                                                         Installed                   life of 
                                               Announcement  Regulatory   capacity    Investment   the plant 
    Power plant              Location                  date   regime(1)      (MWp)   cost (GBPM)     (years) 
1   Higher Hatherleigh       Somerset            01/05/2014         1.6        6.1        7.3(5)        18.5 
2   Shacks Barn              Northamptonshire    09/05/2014         2.0        6.3        8.2(5)        17.8 
3   Gover Farm               Cornwall            23/06/2014         1.4        9.4       11.1(5)        29.4 
4   Bilsham                  West Sussex         03/07/2014         1.4       15.2       18.9(5)        20.1 
5   Brickyard                Warwickshire        14/07/2014         1.4        3.8        4.1(5)        35.5 
6   Ellough                  Suffolk             28/07/2014         1.6       14.9       20.0(5)        20.5 
7   Poulshot                 Wiltshire           09/09/2014         1.4       14.5       15.7(5)        20.5 
8   Condover                 Shropshire          29/10/2014         1.4       10.2       11.7(5)        24.7 
9   Llywndu                  Ceredigion          22/12/2014         1.4        8.0           9.4        19.4 
10  Cock Hill Farm           Wiltshire           22/12/2014         1.4       20.0          23.6        20.2 
11  Boxted Airfield          Essex               31/12/2014         1.4       18.8       20.6(5)        20.1 
12  Langenhoe                Essex               12/03/2015         1.4       21.2       22.9(5)        20.2 
13  Park View                Devon               19/03/2015         1.4        6.5        7.7(5)        35.3 
14  Croydon                  Cambridgeshire      27/03/2015         1.4       16.5       17.8(5)        30.2 
15  Hawkers Farm             Somerset            13/04/2015         1.4       11.9       14.5(5)        19.7 
16  Glebe Farm               Bedfordshire        13/04/2015         1.4       33.7       40.5(5)        35.5 
17  Bowerhouse               Somerset            18/06/2015         1.4        9.3       11.1(5)        35.2 
18  Wellingborough           Northamptonshire    18/06/2015         1.6        8.5       10.8(5)        20.7 
19  Birch Farm               Essex               21/10/2015         FiT        5.0        5.3(5)        36.5 
20  Thurlestone Leicester    Leicestershire      21/10/2015         FiT        1.8           2.3        41.0 
21  North Farm               Dorset              21/10/2015         1.4       11.5       14.5(5)        21.3 
    Ellough Phase 
22   2                       Suffolk             03/11/2015         1.3        8.0        8.0(5)        30.2 
23  Hall Farm                Leicestershire      03/11/2015         FiT        5.0        5.0(5)        19.9 
24  Decoy Farm               Lincolnshire        03/11/2015         FiT        5.0        5.2(5)        13.6 
25  Green Farm               Essex               26/11/2015         FiT        5.0           5.8        20.8 
26  Fenland                  Cambridgeshire      11/01/2016         1.4       20.4     23.9(2,3)        20.9 
27  Green End                Cambridgeshire      11/01/2016         1.4       24.8     29.0(2,3)        20.5 
28  Tower Hill               Gloucestershire     11/01/2016         1.4        8.1      8.8(2,3)        21.5 
29  Branston                 Lincolnshire        05/04/2016         1.4       18.9                      35.7 
30  Great Wilbraham          Cambridgeshire      05/04/2016         1.4       38.1                      22.0 
31  Berwick                  East Sussex         05/04/2016         1.4        8.2     97.9(2,4)        25.5 
32  Bottom Plain             Dorset              05/04/2016         1.4       10.1                      40.6 
33  Emberton                 Buckinghamshire     05/04/2016         1.4        9.0                      25.4 
34  Kentishes                Essex               22/11/2016         1.2        5.0           4.5        22.2 
35  Mill Farm                Hertfordshire       04/01/2017         1.2        5.0           4.2        37.2 
36  Bowden                   Somerset            04/01/2017         1.2        5.0           5.6        22.4 
37  Stalbridge               Dorset              04/01/2017         1.2        5.0           5.4        37.5 
38  Aller Court              Somerset            21/04/2017         1.2        5.0           5.5        22.5 
39  Rampisham                Dorset              21/04/2017         1.2        5.0           5.8        22.2 
40  Wasing                   Berkshire           21/04/2017         1.2        5.0           5.3        28.3 
41  Flixborough South        Humberside          21/04/2017         1.2        5.0           5.1        23.0 
42  Hill Farm                Oxfordshire         21/04/2017         1.2        5.0           5.5        20.7 
43  Forest Farm              Hampshire           21/04/2017         1.2        3.0           3.3        32.5 
44  Birch CIC                Essex               12/06/2017         FiT        1.7           1.7        32.4 
45  Barnby                   Nottinghamshire     12/06/2017         1.2        5.0           5.4        22.8 
46  Bilsthorpe               Nottinghamshire     12/06/2017         1.2        5.0           5.4        23.2 
47  Wickfield                Wiltshire           12/06/2017         1.2        4.9           5.6        23.6 
48  Bay Farm                 Suffolk             18/08/2017         1.6        8.1          10.5        34.3 
49  Honington                Suffolk             18/08/2017         1.6       13.6          16.0        34.4 
50  Macchia Rotonda        Apulia                01/11/2017         FiT        6.6                      27.0 
51  Iacovangelo            Apulia                01/11/2017         FiT        3.5                      22.4 
52  Armiento               Apulia                01/11/2017         FiT        1.9                      25.1 
53  Inicorbaf              Apulia                01/11/2017         FiT        3.0    116.2(2,6)        27.9 
54  Gioia del Colle        Campania              01/11/2017         FiT        6.5                      26.4 
55  Carinola               Apulia                01/11/2017         FiT        3.0                      26.7 
56  Marcianise             Campania              01/11/2017         FiT        5.0                      16.3 
57  Riardo                 Campania              01/11/2017         FiT        5.0                      16.6 
58  Gilley's Dam           Cornwall              18/12/2017         1.3        5.0           6.4        16.6 
59  Pickhill Bridge        Clwyd                 18/12/2017         1.2        3.6           3.7        16.4 
60  North Norfolk          Norfolk               01/02/2018         1.6       11.0          14.6        17.1 
61  Axe View               Devon                 01/02/2018         1.2        5.0           5.6        17.1 
62  Low Bentham            Lancashire            01/02/2018         1.2        5.0           5.4        17.0 
63  Henley                 Shropshire            01/02/2018         1.2        5.0           5.2        17.0 
64  Pierces Farm           Berkshire             30/05/2018         FiT        1.7           1.2        19.6 
65  Salcey Farm            Buckinghamshire       30/05/2018         1.4        5.5           6.5        19.6 
66  Thornborough           Buckinghamshire       25/06/2018         1.2        5.0           5.7        21.5 
67  Temple Normaton        Derbyshire            25/06/2018         1.2        4.9           5.6        21.8 
    Fiskerton Phase 
68   1                     Lincolnshire          25/06/2018         1.3       13.0          16.6        30.5 
69  Huddlesford HF         Staffordshire         25/06/2018         1.2        0.9           0.9        21.3 
70  Little Irchester       Northamptonshire      25/06/2018         1.2        4.7           5.9        22.3 
71  Balhearty              Clackmannanshire      25/06/2018         FiT        4.8           2.6        22.2 
72  Brafield               Northamptonshire      25/06/2018         1.2        4.9           5.8        21.5 
73  Huddlesford PL         Staffordshire         25/06/2018         1.2        0.9           0.9        21.6 
74  Sywell                 Northamptonshire      25/06/2018         1.2        5.0           5.9        21.6 
75  Coton Park             Derbyshire            25/06/2018         FiT        2.5           1.1        31.3 
76  Hook                   Somerset              11/07/2018         1.6       15.3       21.9(2)        34.5 
77  Blenches               Wiltshire             11/07/2018         1.6        6.1        7.8(2)        19.2 
78  Whitley                Somerset              11/07/2018         1.6        7.6       10.5(2)        19.5 
79  Burrowton              Devon                 11/07/2018         1.6        5.4        7.3(2)        19.0 
80  Saundercroft           Devon                 11/07/2018         1.6        7.2        9.6(2)        34.4 
81  Raglington             Hampshire             11/07/2018         1.6        5.7        8.1(2)        34.3 
82  Knockworthy            Cornwall              11/07/2018         FiT        4.6        6.6(2)        18.5 
83  Chilton Canetello      Somerset              11/07/2018         FiT        5.0        9.0(2)        17.8 
84  Crossways              Dorset                11/07/2018         FiT        5.0       10.1(2)        32.8 
85  Wyld Meadow            Dorset                11/07/2018         FiT        4.8        7.1(2)        33.8 
86  Ermis - rooftops       Multiple              07/08/2018         FiT        1.0           3.0        17.1 
87  Angelia - rooftops     Multiple              07/08/2018         FiT        0.2           0.6        17.0 
88  Ballygarvey            Northern Ireland      07/08/2019   1.4NIROCS        8.2           8.5        28.3 
89  Hall Farm II           Leicestershire        07/08/2019        None        5.4           2.5        39.8 
    Total                                                                      705           905 
To be built/under construction 
A   Francis/Gourton        Clwyd                 12/06/2017        None       10.0             -           - 
B   Strensham              Worcestershire        12/06/2017        None       19.6             -           - 
C   Radbrook               Warwickshire          12/06/2017        None       20.7             -           - 
D   Moss                   Cheshire              12/06/2017        None        9.5             -           - 
E   Staughton              Bedfordshire          13/06/2018        None       50.0            27           - 
F   Llanwern               Gwent                 13/06/2018        None       62.5             -           - 
Total                                                                          172            27           - 
Grand Total                                                                                  932           - 
 
 
   (1)   An explanation of ROC regime is available at ofgem.gov.uk/environmental-programmes/renewables-obligation-ro. 
   (2)   Acquired with project level debt. 
   (3)   Part of the Thirteen Kings portfolio. 
   (4)   Part of the Radius portfolio. 
   (5)   Part of the Apollo portfolio. 
   (6)   Part of the Solis portfolio. 

Portfolio Assets

 
                                                   Period ended 30 September                           Since 
                                                              2019                               acquisition 
                    Operational  Acquisition              Irradiation  Generation                Irradiation      Generation 
                           date         date  Generation        delta       delta  Generation          delta           delta 
    Power plant                                    (MWh)          (%)         (%)       (MWh)              (%)              (%) 
    Higher 
1   Hatherleigh          Apr-14       May-14       4,448          3.4         4.9      34,171            0.2             4.6 
2   Shacks Barn          May-14       May-14       4,272          3.6         3.0      34,692            2.5             8.2 
3   Gover Farm           Jan-15       Jun-14       6,669          6.6         1.0      44,576            2.3           (0.4) 
4   Bilsham              Jan-15       Jul-14      11,692          6.7         4.7      79,468            4.3             5.6 
5   Brickyard            Jan-15       Jul-14       2,687          2.9         5.7      17,616            2.6             5.2 
6   Ellough              Jul-14       Jul-14      10,963          1.2         4.1      80,257            0.4             6.3 
7   Poulshot             Apr-15       Sep-14      10,198          2.9         4.5      60,837          (0.2)             4.0 
8   Condover             May-15       Oct-14       6,526        (0.8)       (4.7)      42,541          (0.8)             0.3 
9   Llywndu              Jul-15       Dec-14       5,954        (0.5)         8.2      32,805          (4.2)             1.7 
10  Cock Hill Farm       Jul-15       Dec-14      14,644          3.8         5.7      85,051            2.1             3.4 
    Boxted 
11  Airfield             Apr-15       Dec-14      14,491          5.0         8.9      89,827            3.2             5.6 
12  Langenhoe            Apr-15       Mar-15      16,024          7.8         6.5     104,817            5.8             8.6 
13  Park View            Jul-15       Mar-15       4,438        (2.9)       (6.6)      27,751          (3.6)           (1.1) 
14  Croydon              Apr-15       Mar-15      11,793          9.3         9.5      75,804            5.8             7.0 
15  Hawkers Farm         Jun-15       Apr-15       9,036          3.5         6.2      52,751          (0.7)             3.0 
16  Glebe Farm           May-15       Apr-15      25,360          7.9        13.9     154,593            5.4            11.5 
17  Bowerhouse           Jul-15       Jun-15       6,632          7.7         1.6      39,224            1.9             1.2 
18  Wellingborough       Jun-15       Jun-15       5,706          4.0         0.6      35,944            1.9             3.5 
19  Birch Farm           Sep-15       Oct-15       3,807          6.3         7.4      20,438            3.8             5.6 
    Thurlestone 
20   Leicester           Oct-15       Oct-15       1,063            -       (0.9)       7,243              -             0.5 
21  North Farm           Oct-15       Oct-15       9,086          1.7         2.7      48,296          (3.6)           (1.9) 
    Ellough Phase 
22   2                   Aug-16       Nov-15       6,021          7.0         7.2      27,012            8.8            11.4 
23  Hall Farm            Apr-16       Nov-15       3,597          4.1         8.7      13,645            3.5             0.7 
24  Decoy Farm           Mar-16       Nov-15       3,654          6.7         6.4      15,332            4.4             8.5 
25  Green Farm           Dec-16       Nov-15       3,744          4.4         5.1      14,869            4.0             4.6 
26  Fenland              Jan-16       Jan-16      15,642          7.4        11.2      82,055            4.9             9.3 
27  Green End            Jan-16       Jan-16      18,189          7.5         6.6      95,958            4.6             5.4 
28  Tower Hill           Jan-16       Jan-16       5,995          5.4         6.6      31,379            2.6             6.0 
29  Branston             Mar-16       Apr-16      14,054          9.8        11.4      68,385            6.2             4.8 
    Great 
30  Wilbraham            Mar-16       Apr-16      28,297          7.7         8.4     141,706            5.2             5.7 
31  Berwick              Mar-16       Apr-16       6,799          6.8        10.0      34,690            5.4             8.8 
32  Bottom Plain         Mar-16       Apr-16       8,015          8.3         8.7      39,609            3.1             4.2 
33  Emberton             Mar-16       Apr-16       6,589          7.5         6.9      33,140            4.5             4.2 
34  Kentishes            Jul-17       Nov-16       3,786          5.3         3.3      13,726            5.5             5.4 
35  Mill Farm            Jul-17       Jan-17       3,846          8.6        10.3      13,661            8.6            10.3 
36  Bowden               Sep-17       Jan-17       3,854          2.1       (0.2)      10,981            0.2             0.4 
37  Stalbridge           Sep-17       Jan-17       3,916          2.2         4.6      11,196            0.6             5.5 
38  Aller Court          Sep-17       Apr-17       3,925          5.3         5.3      10,947            3.5             4.2 
39  Rampisham            Sep-17       Apr-17       3,989        (0.3)         0.9      10,869          (1.6)           (1.9) 
40  Wasing               Aug-17       Apr-17       3,881          9.0        10.5      11,822            6.9            10.2 
41  Flixborough          Aug-17       Apr-17       3,641          6.1         7.7      10,996            5.6             7.9 
42  Hill Farm            Mar-17       Apr-17       3,757          7.9        11.4      10,548            7.6            10.3 
43  Forest Farm          Mar-17       Apr-17       2,292          6.7         8.3       6,401            5.1             8.3 
44  Birch CIC            May-17       Jun-17       1,292          6.6         3.9       4,547            5.3             4.4 
45  Barnby               Aug-17       Jun-17       3,571          5.4         8.2      10,649            5.6             7.7 
46  Bilsthorpe           Aug-17       Jun-17       3,593          5.8         7.3      10,883            5.1             8.2 
47  Wickfield            Mar-17       Jun-17       3,615          6.6         6.1      10,016            5.5             4.9 
48  Bay Farm             Sep-17       Aug-17       5,619          6.3         5.7      16,973            8.5             6.4 
49  Honington            Sep-17       Aug-17       9,720          2.9         3.9      28,598            4.4             3.6 
    Macchia 
50  Rotonda              Nov-17       Nov-17       5,998          4.5         2.4      18,281            3.2             3.3 
51  Iacovangelo          Nov-17       Nov-17       3,270          3.6         3.0       9,815          2.0             4.1 
52  Armiento             Nov-17       Nov-17       1,790          3.5         4.3       5,372          2.4             4.7 
53  Inicorbaf            Nov-17       Nov-17       2,807          2.7         3.4       8,567          2.1             4.1 
    Gioia del 
54  Colle                Nov-17       Nov-17       5,857        (4.7)       (1.0)      17,642        (3.3)             0.6 
55  Carinola             Nov-17       Nov-17       2,691        (0.5)         3.1       7,987        (0.4)             3.4 
56  Marcianise           Nov-17       Nov-17       4,450        (0.6)         1.5      13,252          0.2             2.1 
57  Riardo               Nov-17       Nov-17       4,548        (0.7)         1.7      13,241        (0.2)           (0.4) 
58  Gilley's Dam         Nov-17       Dec-17       3,638        (4.2)       (3.4)       9,717        (4.9)           (2.4) 
    Pickhill 
59  Bridge               Dec-17       Dec-17       2,578          3.0         5.3       6,987          5.6             8.5 
60  North Norfolk        Dec-17       Feb-18       8,489          7.1        10.0      21,952          7.5            10.2 
61  Axe View             Dec-17       Feb-18       3,776          6.9         7.5       9,778          5.5             6.8 
62  Low Bentham          Dec-17       Feb-18       3,426          1.4         1.3       8,991          2.4             3.7 
63  Henley               Jan-18       Feb-18       3,508          2.3         5.5       9,174          3.2             6.0 
64  Pierces Farm         May-18       May-18       1,233          4.2         4.1       2,641          6.5             7.4 
65  Salcey Farm          May-18       May-18       3,795          7.7         1.0       8,282         12.6             5.9 
66  Thornborough         Jun-18       Jun-18       3,328          0.8       (7.2)       6,181          7.9           (9.2) 
    Temple 
67  Normaton             Jun-18       Jun-18       3,332          1.6       (0.7)       6,283          7.1           (1.8) 
    Fiskerton 
    Phase 
68  1                    Jun-18       Jun-18       9,144          7.3         0.3      17,574         11.3             0.6 
    Huddlesford 
69   HF                  Jun-18       Jun-18         617          2.7         2.3       1,200          8.5             4.4 
    Little 
70  Irchester            Jun-18       Jun-18       3,247          0.8       (4.5)       6,003          8.2           (7.9) 
71  Balhearty            Jun-18       Jun-18       2,828        (5.6)      (11.5)       5,055        (1.6)          (14.5) 
72  Brafield             Jun-18       Jun-18       3,432          2.7       (3.5)       6,684          9.0           (1.9) 
    Huddlesford 
73   PL                  Jun-18       Jun-18         640          2.2         1.6       1,244          8.2             3.7 
74  Sywell               Jun-18       Jun-18       3,467          2.1       (2.4)       6,605         10.1           (3.0) 
75  Coton Park           Jun-18       Jun-18       1,663          2.6         3.6       3,256          7.4             6.5 
76  Hook                 Jul-18       Jul-18      11,176          3.7         1.1      20,549          4.4             0.9 
77  Blenches             Jul-18       Jul-18       4,310          2.0         4.4       8,090          5.1             7.5 
78  Whitley              Jul-18       Jul-18       5,137          4.9       (5.8)       9,875          4.7           (0.9) 
79  Burrowton            Jul-18       Jul-18       9,206          3.8       (0.0)      17,194          3.3             1.3 
80  Saundercroft         Jul-18       Jul-18 
81  Raglington           Jul-18       Jul-18       4,048          5.4       (6.1)       7,888          6.4           (2.1) 
82  Knockworthy          Jul-18       Jul-18       3,431          3.1       (0.3)       6,397          3.0             1.0 
    Chilton 
83  Canetello            Jul-18       Jul-18       3,901          4.8         6.2       7,374          5.5             8.1 
84  Crossways            Jul-18       Jul-18       3,951          5.8         2.9       7,633          5.4             5.6 
85  Wyld Medow           Jul-18       Jul-18       3,619        (1.1)       (0.2)       6,853        (1.1)             0.9 
86  Ermis                Aug-18       Aug-18         594            -       (0.3)       1,004            -           (0.9) 
87  Angelia              Aug-18       Aug-18         118            -         7.1         203            -             7.4 
88  Ballygarvey          Mar-18       Aug-19       1,344          2.1         3.7       1,344          2.1             3.7 
89  Hall Farm II         Aug-19       Aug-19           -            -           -           -            -               - 
Total                                            514,771          4.8         5.0   2,285,466          2.5             5.0 
 
 

Rooftop assets are not monitored for irradiation

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 Adviser'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 Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the period from 1 April 2019 to 30 September 2019 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 Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the period from 1 April 2019 to 30 September 2019 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 Disclosure Guidance and Transparency Rules.

The 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. The Annual Report and Financial Statements for the year ended 31 March 2019 includes: the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; and details of its financial instruments and its exposure to credit risk and liquidity risk. The Directors believe the principal risks and uncertainties have not changed materially since the date of the Annual Report and Financial Statements and are not expected to change materially for the remainder of the Company's financial year. 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 Interim 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

13 November 2019

Condensed Interim Financial Statements

Condensed Statement of Comprehensive Income

For the period ended 30 September 2019

 
                                                                                      Unaudited 
                                                         Unaudited  1 April 2018   1 April 2018 
                                                      1 April 2019            to             to 
                                                   to 30 September      31 March   30 September 
                                                              2019          2019           2018 
                                           Notes           GBP'000       GBP'000        GBP'000 
Income 
Income                                         5            34,238        55,613         26,349 
Net changes in fair value of investments       6           (6,524)        24,538        (4,401) 
Total net income                                            27,714        80,151         21,948 
Expenditure 
Preference share dividends                                   3,032         1,822              - 
Management fees                               16             2,834         5,402          2,675 
Legal and professional fees                                    390           732            335 
Administration fees                                            136           277            131 
Audit fees                                                      60           156             83 
Directors' fees                               19               104           173             86 
Sundry expenses                                                 38            27              3 
Regulatory and listing fees                                     22            33             29 
Insurance                                                       12            15              7 
Total expenses                                               6,628         8,637          3,349 
Operating profit                                            21,086        71,514         18,599 
Finance income                                                   -            65             55 
Profit and comprehensive income for 
 the period/year                                            21,086        71,579         18,654 
Earnings per ordinary share - basic           11             3.62p        12.37p          3.23p 
Earnings per ordinary share - diluted         11             3.46p        11.93p          3.23p 
 

All activities are derived from ongoing operations.

There is no other comprehensive income or expense apart from those 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 2019

 
                                                       Unaudited                Unaudited 
                                                    30 September  31 March   30 September 
                                                            2019      2019           2018 
                                            Notes        GBP'000   GBP'000        GBP'000 
Non-current assets 
Investments                                     6        818,352   722,763        590,448 
Total non-current assets                                 818,352   722,763        590,448 
Current assets 
Cash and cash equivalents                                  5,270    19,285          3,836 
Trade and other receivables                     7         52,228    41,409         54,754 
Total current assets                                      57,498    60,694         58,590 
Total assets                                             875,850   783,457        649,038 
Current liabilities 
Trade and other payables                        8         29,438    39,384         39,259 
Total current liabilities                               (29,438)  (39,384)       (39,259) 
Non-current liabilities 
Preference shares                                        197,708    99,022              - 
Total non-current liabilities                          (197,708)  (99,022)              - 
Net assets                                               648,704   645,051        609,779 
Equity 
Share Capital and Premium                      10        602,269   600,029        598,370 
Retained earnings                                         46,435    45,022         11,409 
Total equity attributable to shareholders                648,704   645,051        609,779 
Net assets per ordinary share                  13         111.2p    110.9p         105.1p 
 

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

The condensed interim financial statements were approved and authorised for issue by the Board of Directors on 13 November 2019 and signed on its behalf by:

   Director                                                                         Director 

Condensed Statement of Changes in Equity

For the period ended 30 September 2019

 
                                                   Share capital   Retained 
                                                     and premium   earnings  Total equity 
                                                         GBP'000    GBP'000       GBP'000 
For the period 1 April 2019 to 30 September 
 2019 (unaudited) 
Shareholders' equity at 1 April 2019                     600,029     45,022       645,051 
Profit and comprehensive income for the period                 -     21,086        21,086 
Ordinary shares issued                                     2,240          -         2,240 
Ordinary dividends declared                                    -   (19,673)      (19,673) 
Shareholders' equity at 30 September 2019                602,269     46,435       648,704 
For the year 1 April 2018 to 31 March 2019 
Shareholders' equity at 1 April 2018                     593,388     11,602       604,990 
Profit and comprehensive income for the year                   -     71,579        71,579 
Ordinary shares issued                                     6,641          -         6,641 
Ordinary dividends declared                                    -   (38,159)      (38,159) 
Shareholders' equity at 31 March 2019                    600,029     45,022       645,051 
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 
Ordinary shares issued                                     4,982          -         4,982 
Ordinary dividends declared                                    -   (18,847)      (18,847) 
Shareholders' equity at 30 September 2018                598,370     11,409       609,779 
 
 

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

Condensed Statement of Cash Flows

For the period ended 30 September 2019

 
                                                        Unaudited                  Unaudited 
                                                          1 April                    1 April 
                                                       2019 to 30  1 April 2018   2018 to 30 
                                                        September   to 31 March    September 
                                                             2019          2019         2018 
                                               Notes      GBP'000       GBP'000      GBP'000 
Cash flows from operating activities 
Profit and comprehensive income for 
 the period/year                                           21,086        71,579       18,654 
Adjustments for: 
Investment proceeds from HoldCos                                -         4,654        4,654 
Investment payments to HoldCos                           (99,862)     (176,658)     (70,573) 
Change in fair value on investments                6        6,524      (24,538)        4,401 
Finance income                                                  -          (65)         (55) 
Amortisation                                                   36            22            - 
Operating cash flows before movements 
 in working capital                                      (72,216)     (125,006)     (42,919) 
Changes in working capital 
Movement in trade receivables                            (13,069)      (13,012)     (26,357) 
Movement in trade payables                                (9,946)        13,863       11,029 
Net cash used in operating activities                    (95,231)     (124,155)     (58,247) 
Cash flows from investing activities 
Finance income                                                  -            65           55 
Net cash generated from investing activities                    -            65           55 
Cash flows from financing activities 
Net proceeds from issuance of preference 
 shares                                                    98,650        99,000            - 
Dividends paid                                           (17,434)      (31,518)     (13,865) 
Net cash generated from financing activities               81,216        67,482     (13,865) 
Net movement in cash and cash equivalents 
 during period/year                                      (14,015)      (56,608)     (72,057) 
Cash and cash equivalents at the beginning 
 of the period/year                                        19,285        75,893       75,893 
Cash and cash equivalents at the end 
 of the period/year                                         5,270        19,285        3,836 
 

The accompanying notes are an integral part of these condensed financial statements.

Notes to the Condensed Interim Financial Statements

For the period ended 30 September 2019

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 and the take-up of the scrip dividend option also took place, increasing total equity to GBP602.3m as at 30 September 2019 (31 March 2019: GBP600.0m). On 12 November 2018 the Company issued preference shares, raising GBP100m before transaction costs. On 12 August 2019 the Company issued further preference shares, raising GBP100m before transaction costs. 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 and other OECD countries. 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 directly or indirectly wholly-owned by the Company. The Company controls the investment policy of each of the HoldCos and its wholly-owned SPV's 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 (the "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 (the "Investment Adviser") pursuant to the Investment Advisory Agreement dated 18 March 2014. 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

a) 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 interim financial information should be read in conjunction with the annual report and audited financial statements for the year ended 31 March 2019, which have been prepared in accordance with IFRS.

b) 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.

c) 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 in accordance with the investment objective. The financial information used by the Chief Operating Decision Maker to manage the Company presents the business as a single segment.

d) 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

The Directors have considered new accounting standards, amendments and interpretations in issue but not yet effective and do not expect that their adoption will result in a material impact on the financial statements of the Company in future periods.

4. Critical Accounting Estimates and Judgements

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 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 GBP818.4m (31 March 2019: GBP722.8m) and consist of 89 investments in solar PV assets (held indirectly through the HoldCos) (31 March 2019: 87 (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 2019 valuation was 6.50% (31 March 2019: 6.50%). The discount rate is a significant Level 3 input and a change in the discount rate 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 unobservable inputs used at 30 September 2019 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 investment 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 detailed in note 4c).

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 4a).

c) Significant judgement: subsidiaries

The Company and the HoldCos operate as an integrated structure whereby the Company invests solely in the HoldCos. Per IFRS 10, there is a requirement for the Board of Directors to assess whether the HoldCos are themselves investment entities. The Board of Directors have performed this assessment and has concluded that each of the HoldCos are investment entities for the reasons below:

(a) The HoldCos have obtained funds for the purpose of investing in equity or other similar interests in multiple investments and providing the Company (and its investors) with returns from capital appreciation and investment income.

(b) The performance of investments made through the HoldCos are measured and evaluated on a fair value basis.

Furthermore, the HoldCos themselves are not deemed to be operating entities providing services to the Company, so the group is able to apply the exception to consolidation.

5. Income

 
                         Period ended     Year ended 
                         30 September       31 March 
                         2019 GBP'000   2019 GBP'000 
Interest income                 3,655            614 
Investment income              26,361         46,957 
Management fee income           4,222          8,042 
Total Income                   34,238         55,613 
 

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 Statement of Financial Position.

 
                                                   Period ended  Year ended 
                                                   30 September    31 March 
                                                           2019        2019 
                                                        GBP'000     GBP'000 
Brought forward cost of investments                     689,478     517,474 
Investment proceeds from HoldCos                              -     (4,654) 
Investment payments to HoldCos                          102,113     176,658 
Additions - acquisition of Eurobonds                    125,000     175,000 
Disposal - de-recognition of loans*                   (125,000)   (175,000) 
Carried forward cost of investments                     791,591     689,478 
Brought forward unrealised gains on valuation            33,285       8,747 
Movement in unrealised gains on valuation               (6,524)      24,538 
Carried forward unrealised gains on investments          26,761      33,285 
Total investments at fair value                         818,352     722,763 
 

* Non-cash transactions: On 28 February 2019 and 18 September 2019, a number of facilities totaling GBP125m, between the Company and certain of the Holdcos were de-recognised and replaced with Eurobond instruments listed on the TISE.

On 28 February 2019, NESH III and NESH V issued Eurobond instruments listed on TISE totalling GBP175m. On 18 September 2019, a further issue by NESH III was made totalling GBP125m. The Eurobonds were purchased by the Company as a non-cash transaction by re-allocating cost of investment.

The total change in the value of the investments in the HoldCos is recorded through profit and loss in the Condensed Statement of Comprehensive Income.

7. Trade and Other Receivables

 
                                     Period ended     Year ended 
                                     30 September       31 March 
                                     2019 GBP'000   2019 GBP'000 
Management fee income receivable            1,582            249 
Prepayments                                   501            461 
Due from HoldCos                           48,749         40,699 
Interest receivable                         1,396              - 
Total trade and other receivables          52,228         41,409 
 

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 2019 
                                  2019 GBP'000         GBP'000 
Other payables                             141             264 
Preference dividends payable             1,848           1,171 
Due to HoldCos                          27,449          37,949 
Total trade and other payables          29,438          39,384 
 

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, as per note 4c), are 100% directly owned. Below is the legal entity name for the SPVs, all owned 100% at 31 March 2019 and 30 September 2019 indirectly through the HoldCos (unless otherwise stated).

 
Name                                                  Country of incorporation 
Push Energy (Boxted Airfield) Ltd                                           UK 
Next Power Gover Farm Ltd                                                   UK 
NextPower Higher Hatherleigh Ltd                                            UK 
NextPower Shacks Barn Ltd                                                   UK 
BL Solar 2 Ltd                                                              UK 
North Farm Solar Park Ltd                                                   UK 
Glorious Energy Ltd                                                         UK 
Sunglow Power Ltd                                                           UK 
Push Energy (Croydon) Ltd                                                   UK 
Wellingborough Solar Ltd                                                    UK 
Nextpower Ellough LLP                                                       UK 
Push Energy (Birch) Ltd                                                     UK 
Bowerhouse Solar Ltd                                                        UK 
Push Energy (Langenhoe) Ltd                                                 UK 
ST Solarinvest Devon 1 Ltd                                                  UK 
Greenfields (A) Ltd                                                         UK 
Push Energy (Decoy) Ltd                                                     UK 
Push Energy (Hall Farm) Ltd                                                 UK 
Glebe Farm Ltd                                                              UK 
Ellough Solar 2 Ltd                                                         UK 
SSB Condover Ltd                                                            UK 
NESF - Ellough Ltd                                                          UK 
Trowbridge PV Ltd                                                           UK 
ESF Llwyndu Ltd                                                             UK 
Warmingham Solar Ltd                                                        UK 
Moss Farm Solar Ltd                                                         UK 
Gwent Farmers Community Solar Partnership Limited*                          UK 
Greenfields (T) Limited*                                                    UK 
EMGEN Solar 1288 Ltd                                                        UK 
Lumicity 1 Ltd                                                              UK 
BESS Pierces Ltd                                                            UK 
Thornborough Solar Ltd                                                      UK 
Temple Normanton Solar Ltd                                                  UK 
UK Solar (Fiskerton) LLP                                                    UK 
Helios Solar 2 Ltd                                                          UK 
Little Irchester Solar Ltd                                                  UK 
Balhearty Solar Ltd                                                         UK 
Brafield Solar Ltd                                                          UK 
Sywell Solar Ltd                                                            UK 
Helios Solar 1 Ltd                                                          UK 
Pierces Solar Ltd                                                           UK 
Micro Renewables (Domestic) Ltd                                             UK 
RRAM Energy Ltd                                                             UK 
RRAM (Portfolio 1) Ltd                                                      UK 
Knockworthy Solar Park Ltd                                                  UK 
RRAM (Portfolio 2) Ltd                                                      UK 
Burcroft Solar Parks Ltd                                                    UK 
Burrowton Farm Solar Park Ltd                                               UK 
Saundercroft Farm Solar Park Ltd                                            UK 
Renewable Energy Holdco Ltd                                                 UK 
Chilton Cantello Solar Park Ltd                                             UK 
Crossways Solar Park Ltd                                                    UK 
Wyld Meadow Farm Solar Park Ltd                                             UK 
Raglington Farm Solar Park Ltd                                              UK 
Nextpower Water Projects Ltd                                              UK 
Nextpower Bosworth Ltd                                                    UK 
NextZest Ltd                                                              UK 
Nextpower SPV 2 Ltd                                                       UK 
Nextpower SPV 3 Ltd                                                       UK 
Glebe Solar Ltd                                                           UK 
Thurlestone-Leicester Solar Ltd                                           UK 
Empyreal Energy Ltd                                                       UK 
Birch Solar Farm CIC                                                      UK 
Fiskerton Limited                                                         UK 
LE Solar 51 Ltd                                                           UK 
Lark Energy Bilsthorpe Ltd                                                UK 
Wickfield Solar Ltd                                                       UK 
SL Solar Services Ltd                                                     UK 
Tau Solar Ltd                                                             UK 
NESH 3 Portfolio A Ltd                                                    UK 
Push Energy (Mill Farm) Ltd                                               UK 
Rampisham Estate Solar Park Ltd                                           UK 
WHEB European Solar (UK) 2 Ltd                                            UK 
WHEB European Solar (UK) 3 Ltd                                            UK 
PF Solar Ltd                                                              UK 
Micro Renewables Ltd                                                      UK 
Francis Lane Solar Ltd                                                    UK 
Gourton Hall Solar Ltd                                                    UK 
TGC Solar Radbrook Ltd                                                    UK 
Moss Lane Farm Solar Ltd                                                  UK 
Little Staughton Airfield Solar Ltd                                       UK 
Push Energy (Kentishes) Ltd                                               UK 
Ballygarvey Solar Ltd*                                                    UK 
Whitley Solar Park (Ashcott Farm) Ltd                                       UK 
Hook Valley Farm Solar Park Ltd                                             UK 
Blenches Mill Farm Solar Park Ltd                                           UK 
NextEnergy Solar Holding VI Ltd                                             UK 
Fenland Renewables Ltd                                                      UK 
Tower Hill Farm Renewables Ltd                                              UK 
Green End Renewables Ltd                                                    UK 
Bowden Lane Solar Park Ltd                                                  UK 
Garden Tiger Ltd                                                            UK 
INRG (Solar Parks) 20 Ltd                                                   UK 
KS SPV 39 Ltd                                                               UK 
INRG (Solar Parks) 17 Ltxd                                                  UK 
INRG (Solar Parks) 21 Ltd                                                   UK 
Waltham Solar Ltd                                                           UK 
Barred Straw Ltd                                                            UK 
Stalbridge Solar Park Ltd                                                   UK 
Aller Court Solar Park Ltd                                                  UK 
Nextpower Radius Ltd                                                        UK 
Berwick Solar Park Ltd                                                      UK 
Bottom Plain Solar Park Ltd                                                 UK 
Branston Solar Park Ltd                                                     UK 
Emberton Solar Park Ltd                                                     UK 
Great Wilbraham Solar Park Ltd                                              UK 
Macchia Rotonda Solar S.r.l.                                             Italy 
SunEdison Med. 6 S.r.l.                                                  Italy 
Starquattro S.r.l                                                        Italy 
Fotostar 6 S.r.l.                                                        Italy 
Agrosei S.r.l.                                                           Italy 
 
   *          as at 31 March 2019 the percentage ownership of these SPVs was 0% 

10. Share Capital and Retained Earnings

Ordinary shares

 
                                  Gross amount               Share capital 
                       Number of        raised  Issue costs    and premium 
Share issuance            shares       GBP'000      GBP'000        GBP'000 
Total issued at 
 31 March 2019       581,730,541       607,494      (7,465)        600,029 
Scrip dividend - 
 28 June 2019            646,767           756            -            756 
Scrip dividend - 
 30 September 2019     1,240,195         1,484            -          1,484 
Total issued at 
 30 September 2019   583,617,503       609,734      (7,465)        602,269 
 

The Company currently has one class of ordinary share in issue. All the holders of the ordinary shares, which total 583,617,503, 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.

Preference shares

On each of 12 November 2018 and 12 August 2019, the Company issued 100,000,000 preference shares at a price of 100.0p per preference share. The preference shares pay a preferred dividend of 4.75% p.a. fixed until March 2036 after which the preference shareholders have the right to convert into new ordinary shares or a new class of unlisted B shares with dividend and capital rights pari passu to ordinary shareholders, based on the NAV at the time of conversion. The preference shares do not hold any voting rights, except in limited circumstances.

The preference shares are also redeemable at the option of the Company at any time after 1 April 2030, in full or in part. The redemption price will be the subscription price plus any unpaid dividends. In addition, the preference shares may be redeemed in full at the election of the holders in the event of a delisting or change of control of the Company.

Retained earnings

Retained earnings are detailed in the Condensed Statement of Changes in Equity.

11. Earnings Per Share

 
                                                           Period ended   Year ended 
                                                           30 September     31 March 
                                                                   2019         2019 
Profit and comprehensive income for the period/year 
 (GBP'000)                                                       21,086       71,579 
Plus: preference share dividends (GBP'000)                        3,032        1,822 
Profit and comprehensive income for the period/year 
 used to calculate diluted earnings per ordinary 
 share (GBP'000)                                                 24,118       73,401 
Basic weighted average number of ordinary shares            582,073,071  578,844,510 
Weighted average number of additional ordinary 
 shares used to calculate dilutive effect of preference 
 shares                                                     114,558,171   36,234,245 
Weighted average number of ordinary shares used 
 to calculate diluted earnings per share                    696,631,242  615,078,755 
Earnings per ordinary share - basic                               3.62p       12.37p 
Earnings per ordinary share - diluted                             3.46p       11.93p 
 

The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding for the ordinary shares that are potentially issuable on conversion of the preference shares and adding back the dividends paid on the preference shares to the profit and comprehensive income for the period. From 1 April 2036, the preference shares have the right to convert into new ordinary shares or a new class of unlisted B shares with dividend and capital rights pari passu to ordinary shares, based on the NAV at the time of conversion.

12. Dividends

 
                                                            Period ended 
                                                            30 September     Year ended 
                                                                    2019       31 March 
Amounts recognised as distributions to equity holders:           GBP'000   2019 GBP'000 
Interim dividend for the period ended 31 March 2018 
 of 1.605p per ordinary share, paid on 26 June 2018                    -          9,239 
Interim dividend for the period ended 30 June 2018 
 of 1.6625p per ordinary share, paid on 28 September 
 2018                                                                  -          9,608 
Interim dividend for the period ended 30 September 
 2018 of 1.6625p per ordinary share, paid on 28 December 
 2018                                                                  -          9,646 
Interim dividend for the period ended 31 December 
 2018 of 1.6625p per ordinary share, paid on 28 March 
 2019                                                                  -          9,666 
Interim dividend for the period ended 31 March 2019 
 of 1.6625p per ordinary share, paid on 28 June 2019               9,671              - 
Interim dividend for the period ended 30 June 2019 
 of 1.7175p per ordinary share, paid on 30 September 
 2019                                                             10,003              - 
Total                                                             19,674         38,159 
 

13. Net Assets Per Ordinary Share

 
                                                  As at        As at 
                                           30 September     31 March 
                                                   2019         2019 
Ordinary shareholders' equity (GBP'000)         648,704      645,052 
Number of ordinary shares                   583,617,503  581,730,541 
Net assets per ordinary share - pence            111.2p       110.9p 
 

The conversion price of the preference shares will be based on the ratio of the nominal value (100p) (plus unpaid dividends, if any) per preference share relative to NAV per ordinary share at the date of conversion. Accordingly, conversion of the preference shares will not result in any dilution of the NAV per ordinary share.

14. Financial Risk Management

Capital management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders. In accordance with the Company's investment policy, the Company's principal use of cash (including the proceeds of the IPO, other ordinary share issuance and issue of preference shares) has been to fund investments and repay debt, as well as ongoing operational expenses.

The Board, with the assistance of the Investment Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. The capital and debt structure of the Company consists of equity comprising ordinary share capital and retained earnings, preference shares and financial debt.

The Company is not subject to any externally imposed capital requirements.

Financial risk management objectives

The Board, with the assistance of the Investment Manager, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risk. These risks include market risk (including price risk, currency risk and interest rate risk), credit risk and liquidity risk.

Price risk

The value of the investments held by the Company is affected by the discount rate applied to the expected future cash flows and as such may vary with movements in interest rates, inflation, power prices, market prices and competition for these assets.

Currency risk

The Company is indirectly exposed to currency risk due to the cash flows from its Italian subsidiaries to NESH V. 92% of the expected cash flows are hedged to limit the exposure. The Company itself is not exposed to currency risk as all assets and liabilities are in pounds sterling, therefore the Company's functional and presentational currency is GBP.

Interest rate risk

The Company is indirectly exposed to interest rate risk from the credit facilities of the HoldCos. Of the GBP211m credit facilities outstanding, GBP124.7m had fixed interested rates and the remaining GBP86.6m had floating interest rates. For the floating amount of GBP72.6m, Interest Rate Swaps were implemented over the term of the loans to mitigate interest rate risks. The counterparties to these swaps are all Investment grade financial institutions. The remaining GBP14m had floating rates which are not hedged and are not considered to be significant.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company.

The maximum exposure to credit risk is the carrying amounts of the respective financial assets set out below:

 
                              30 September 
                                      2019  31 March 2019 
                                   GBP'000        GBP'000 
Cash and cash equivalents            5,270         19,285 
Trade and other receivables         52,228         41,409 
Debt investments                   300,000        175,000 
Total                              357,498        235,694 
 

Debt investments relates to the Eurobond instruments executed in accordance with the investment objectives of the Company and which has been fair valued as part of the "Investments" as disclosed in note 6. No collateral is received from NESH III and NESH V. The credit quality of these investments is based on the financial performance of NESH III and NESH V as well as the underlying investments they own. The risk of default is deemed to be low and the principal repayments and interest payments are expected to be made in accordance with the agreed terms and conditions.

The Company does not have any significant credit risk exposure to any single counterparty in relation to trade and other receivables. Ongoing credit evaluation is performed on the financial condition of accounts receivable. As at 30 September 2019 the probability of default is considered to be close to zero and therefore no allowance has been recognised based on 12 month expected credit loss as any impairment would be insignificant to the Company. All receivables are from other entities in the NextEnergy Group and so management has sufficient oversight of the receivables to assess the probability of default.

At investment level, the credit risk relating to significant counterparties is reviewed on a regular basis and potential adjustments to the discount rate are considered to recognise changes to these risks where applicable.

The Company maintains its cash and cash equivalents across various banks to diversify credit risk. These are subject to the Company's credit monitoring policies including the monitoring of the credit ratings issued by recognised credit rating agencies.

 
                                                Total as at 
                    Credit rating              30 September 
                     Standard &         Cash           2019 
30 September 2019    Poor's          GBP'000        GBP'000 
                    Long - A 
Barclays Bank PLC    Short - A-1       5,270          5,270 
                    Long - BBB+            -              - 
Lloyds Bank PLC      Short - A-2 
Total                                  5,270          5,270 
 
 
                                                                     Total as at 
                                                           Cash    31 March 2019 
31 March 2019       Credit rating Standard & Poor's     GBP'000          GBP'000 
                    Long - A 
Barclays Bank PLC    Short - A-1                         19,283           19,283 
                    Long - BBB+ 
Lloyds Bank PLC      Short - A-2                              2                2 
Total                                                    19,285           19,285 
 

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Board of Directors has established an appropriate liquidity risk management framework for the management of the Company's short-, medium- and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves by monitoring forecast and actual cash flows and by matching the maturity profiles of assets and liabilities.

The Company is indirectly exposed to liquidity risk from the credit risk facilities of the HoldCos. The HoldCos have sufficient funds to meet the obligations of the credit facilities, and this is monitored by the Investment Adviser.

The table below shows the maturity of the Company's non-derivative financial assets and liabilities. The amounts disclosed are contractual, undiscounted cash flows and may differ from the actual cash flows received or paid in the future as a result of early repayments.

 
                                          Between 3  Between 1 
                                  Up to         and        and 
                               3 months   12 months    5 years     Total 
30 September 2019               GBP'000     GBP'000    GBP'000   GBP'000 
Assets 
Cash and cash equivalents         5,270           -          -     5,270 
Trade and other receivables      52,228           -          -    52,228 
Liabilities 
Trade and other payables       (29,438)           -          -  (29,438) 
Total                            28,060           -          -    28,060 
 
 
                                          Between 3  Between 1 
                                  Up to         and        and 
                               3 months   12 months    5 years     Total 
31 March 2019                   GBP'000     GBP'000    GBP'000   GBP'000 
Assets 
Cash and cash equivalents        19,285           -          -    19,285 
Trade and other receivables      41,409           -          -    41,409 
Liabilities 
Trade and other payables       (39,384)           -          -  (39,384) 
Total                            21,310           -          -    21,310 
 

Valuation methodology

The Directors have satisfied themselves as to the methodology used and the discount rates and key judgements applied in producing the valuations in accordance with the IPEV guidelines. All operational investments are at fair value through profit or loss and are 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 
                                         2019  31 March 2019 
Weighted Average discount rate           7.0%           7.0% 
Discount rates                   6.5% to 8.0%   6.5% to 8.0% 
 

A change to the weighted average discount rate by plus or minus 0.5% has the following effect on the valuation.

 
                                                 Total Portfolio 
Discount rate                      +0.5% change            value  -0.5% change 
30 September 2019                    (GBP19.7m)        GBP647.6m      GBP21.0m 
Fair value - percentage movement         (3.0%)                           3.2% 
31 March 2019                        (GBP20.6m)        GBP616.4m      GBP22.0m 
Fair value - percentage movement         (3.3%)                           3.6% 
 

Power price

The NEC Group continuously reviews multiple inputs from market contributors and leading consultants and adjust the inputs to the power price forecast when a different approach is deemed more appropriate. Current estimates imply an average rate of decline of electricity prices of approximately (0.3%) in real terms and a long term inflation rate of 3.0%.

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.

 
                                         -10%  Total Portfolio      +10% 
Power price                            change            value    change 
30 September 2019                  (GBP42.8m)        GBP647.6m  GBP43.9m 
Fair value - percentage movement       (6.6%)                       6.8% 
31 March 2019                      (GBP42.5m)        GBP616.4m  GBP43.4m 
Fair value - percentage movement       (6.9%)                       7.0% 
 

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 valuation to a sustained increase or decrease of energy generation by plus or minus 5% on the valuation, with all other variables held constant.

 
                                       5% under  Total Portfolio       5% over 
Energy generation                   performance            value   performance 
30 September 2019                    (GBP42.5m)        GBP647.6m      GBP40.5m 
Fair value - percentage movement         (6.6%)                           6.3% 
31 March 2019                        (GBP43.8m)        GBP616.4m      GBP43.4m 
Fair value - percentage movement         (7.1%)                           6.6% 
 

Inflation rates

The portfolio valuation assumes long-term inflation of 3.0% p.a. for investments (based on UK 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:

 
                                                 Total Portfolio 
Inflation rate                     -0.5% change            value  +0.5% change 
30 September 2019                    (GBP28.7m)        GBP647.6m      GBP30.3m 
Fair value - percentage movement         (4.4%)                           4.7% 
31 March 2019                        (GBP34.6m)        GBP616.4m      GBP36.6m 
Fair value - percentage movement         (5.6%)                           5.9% 
 

Operating costs

The table below shows the sensitivity of the portfolio to changes in operating costs by plus or minus 10% at project company level, with all other variables held constant.

 
                                                Total Portfolio      -10% 
Operating costs                    +10% change            value    change 
30 September 2019                   (GBP12.1m)        GBP647.6m  GBP11.6m 
Fair value - percentage movement        (1.9%)                       1.8% 
31 March 2019                       (GBP11.5m)        GBP616.4m  GBP11.2m 
Fair value - percentage movement        (1.9%)                       1.8% 
 

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% after 2020.

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.

Preference shares are measured at nominal value less transaction costs amortised over the expected life of the preference shares.

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 ordinary NAV; 

-- for the tranche of NAV above GBP200m and up to and including GBP300m, 0.9% of ordinary NAV; and

   --      for the tranche of NAV above GBP300m, 0.8% of ordinary NAV. 

For the period ending 30 September 2019 the Company incurred GBP2.8m in management fees of which GBPnil was outstanding at 30 September 2019. For the year ending 31 March 2019 the Company incurred GBP5.4m in management fees of which GBPnil was outstanding at 31 March 2019. For the period ending 30 September 2018 the Company incurred GBP2.7m in management fees of which GBPnil was outstanding at 30 September 2018.

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 17. The Investment Manager was paid GBP0.5m for the issuance of the preference shares during the period (for the year ended 31 March 2019: GBP0.5m).

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 Asset Manager, WiseEnergy (Great Britain) Limited and WiseEnergy Italia Srl, are related parties 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 the asset manager. The total value of recurring and one-off services paid to the asset manager during the six month period amounted to GBP2.5m (for the year to 31 March 2019: GBP4.0m, and for the six month period to 30 September 2018: GBP2.9m).

At the period end, GBP27.4m (31 March 2019: GBP37.9m, 30 September 2018: GBP39.0m) was owed to and from the subsidiaries, in relation to their restructuring. GBP4.2m of management fees were received from the subsidiaries during the period (year to 31 March 2019: GBP8.0m, period to 31 September 2018: GBP3.9m), GBP1.6m of which was outstanding at the period end (31 March 2019: nil, 30 September 2018: GBP1.7m). During the period dividends of GBP26.4m were received from subsidiaries.

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 GBP104k for the period (for the year to 31 March 2019: GBP173k, for the period to 30 September 2018: GBP86k) which consisted solely of short-term employment benefits.

20. Revolving Credit and Debt Facilities

The Company's HoldCos have revolving credit and debt facilities which are factored into the calculation of the fair value of the underlying investments.

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 Limited. As at 30 September 2019, the outstanding amount was GBP148.2m.

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 2019, the outstanding amount was GBPnil.

In March 2016, NESH IV agreed the purchase of Project Radius. The acquisition was part-funded by a debt facility entered into between NESH IV and Macquarie Bank Limited for GBP55.0m, which was fully drawn down in April 2016. As part of the debt facility agreement Macquarie Bank Limited holds a charge over the assets of NESH. As at 30 September 2019, the outstanding amount was GBP49.6m.

In July 2018, NESH VI agreed a RCF with Santander for GBP40.0m which was subsequently fully drawndown. In January 2019, the facility was increased to a total commitment of GBP70.0m with a subsequent GBP30.0m drawdown. In August 2019, GBP56.0m was repaid. As at 30 September 2019, the outstanding amount was GBP14.0m.

21. Reconciliation of Financing Activities

 
                                             Net income    Non-cash 
                       Opening  Cash flows   allocation       flows     Closing 
                     (GBP'000)   (GBP'000)    (GBP'000)   (GBP'000)   (GBP'000) 
Share capital          600,029           -            -       2,240     602,269 
Preference shares       99,022      98,650            -          36     197,708 
Retained earnings       45,022    (17,434)       21,086     (2,240)      46,434 
Total                  744,073      81,216       21,086          36     846,411 
 

22. Commitments and Guarantees

The Company has parental guarantees in place with two financial institutions for a debt obligation and a currency hedge transaction executed by some of its HoldCos. The Company has no outstanding commitments.

23. 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.

24. Events After The Reporting Period

On 13 November 2019, the Directors approved a dividend of 1.7175 pence per ordinary share for the period ended 30 September 2019 to be announced on 14 November 2019, and paid on 30 December 2019 to ordinary shareholders on the register as at the close of business on 22 November 2019.

Independent Review Report to NextEnergy Solar Fund Limited

Conclusion

We have been engaged by NextEnergy Solar Fund Limited (the "Company") to review the condensed interim financial statements in the half-yearly financial report for the six months ended 30 September 2019 of the Company which comprises the Condensed Statement of Comprehensive Income, Condensed Statement of Financial Position, Condensed Statement of Changes in Equity, Condensed Cash Flow Statement and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed interim financial statements in the half-yearly financial report for the six months ended 30 September 2019 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting ("ISA 34") and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

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

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

Directors' responsibilities

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

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

Our responsibility

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

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

This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Dermot Dempsey

For and on behalf of

KPMG Channel Islands Limited

Chartered Accountants, Guernsey

13 November 2019

Corporate Information

 
Directors:                            Kevin Lyon, Chairman 
                                      Patrick Firth 
                                      Vic Holmes 
                                      Sue Inglis 
                                      Sharon Parr 
Registered Office:                    1 Royal Plaza 
                                      Royal Avenue 
                                      St Peter Port 
                                      Guernsey 
                                      GY1 2HL 
Company Website:                      nextenergysolarfund.com 
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 
                                      Apex Funds and Corporate Services (Guernsey) 
Secretary and Administrator:           Limited 
                                      (formerly Ipes (Guernsey) Limited) 
                                      1 Royal Plaza 
                                      Royal Avenue 
                                      St Peter Port 
                                      Guernsey 
                                      GY1 2HL 
                                      KPMG Channel Islands Limited (appointed 
Independent Auditor:                   27 September 2019) 
                                      Glategny Court 
                                      Glategny Esplanade 
                                      St Peter Port 
                                      Guernsey 
                                      GY1 1WR 
 
Independent Auditor                   PricewaterhouseCoopers CI LLP (resigned 
                                       following a competitive tender 
                                       process on 27 September 2019) 
                                      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 LLP and Carey Olsen (Guernsey) 
 to Guernsey law:                      LLP 
Legal Adviser to the Group as         Stephenson Harwood LLP 
 to Debt Financing: 
Financial Adviser and Broker to       Cantor Fitzgerald Europe 
 the Company: 
Broker to the Company:                Shore Capital and Corporate Ltd 
Media and Public Relations Adviser:   MHP Communications Limited 
 
 

Alternative Performance Measures ('APMs')

This Interim Report and Accounts contain APMs, which are financial measures not defined in IFRS. These include certain financial KPIs shown in the table on page 2, certain financial highlights on page 1 and cash income on page 28. The definition of each of these APM measures is shown below. In addition to the APMs, the Interim Report shows portfolio information including debt held by the HoldCos or SPVs.

We assess our performance using a variety of measures that are not specifically defined under IFRS and are therefore termed APMs. The APMs that we use may not be directly comparable with those used by other companies. These APMs are used to present a clearer picture of how the Company has performed over the period and are all financial measures of historical performance.

The table below defines our APMs.

 
APM                      Definition                   Purpose                    Calculation and 
                                                                                  (where relevant) 
                                                                                  reconciliation 
                                                                                  to IFRS 
Asset Management         The outperformance           A measure of the           The difference 
 Alpha                    relative to budget           operating performance      between (i) the 
                          of the portfolio             of the portfolio.          delta of generation 
                          due to active management,                               vs. budget and 
                          excluding the effect                                    (ii) the delta 
                          of variation in                                         of irradiation 
                          solar irradiation.                                      vs. budget. 
Cash dividend cover      The ratio of the             A measure of the           The cash income 
 - pre-scrip dividends    cash income over             cash available             (as defined below) 
                          the ordinary dividends       to pay dividends.          less total expenses 
                          paid in the period                                      from the statement 
                          (and, for this                                          of comprehensive 
                          purpose, treating                                       income (GBP32.9m 
                          all scrip dividends                                     for the period 
                          as if they had                                          ended 30 September 
                          been paid as cash                                       2019) divided by 
                          dividends).                                             the pre-scrip dividends 
                                                                                  paid from the statement 
                                                                                  of changes in equity 
                                                                                  (GBP19.7m for the 
                                                                                  period ended 30 
                                                                                  September 2019). 
Cash income              The cash received            A measure of the           The reconciliation 
                          from the Company's           cash generated             of cash income 
                          investment portfolio         from operations.           to IFRS for the 
                          during the year.                                        period ended 30 
                                                                                  September 2019 
                                                                                  is shown below. 
Dividend yield           The annual dividend          A measure of the           For the period 
                          per ordinary share           return to the ordinary     ended 30 September 
                          expressed as a               shareholders.              2019, the expected 
                          percentage of the                                       annual dividend 
                          share price.                                            for the year to 
                                                                                  31 March 2020 (6.87p) 
                                                                                  divided by the 
                                                                                  share price as 
                                                                                  at the period-end 
                                                                                  (122.0p). 
Gearing level            Financial debt               A measure of the           The ratio of financial 
                          of the NESF Group            NESF Group's financial     debt outstanding 
                          plus the fair value          debt and the preference    at the subsidiaries 
                          of the preference            shares relative            (GBP197m as at 
                          shares expressed             to GAV.                    30 September 2019) 
                          as a percentage                                         plus the preference 
                          of GAV.                                                 shares from the 
                                                                                  statement of financial 
                                                                                  position (GBP198m 
                                                                                  as at 30 September 
                                                                                  2019) divided by 
                                                                                  GAV (being, as 
                                                                                  at 30 September 
                                                                                  2019, the aggregate 
                                                                                  of each of the 
                                                                                  foregoing and the 
                                                                                  net assets from 
                                                                                  the condensed statement 
                                                                                  of financial position 
                                                                                  of GBP649m). 
Invested capital         The amount deployed          A measure of capital       The valuation of 
                          into solar PV assets         deployed to generate       the Company's portfolio 
                          through the HoldCos          investment returns         (GBP932m as at 
                          and SPVs.                    for shareholders.          30 September 2019). 
NAV per ordinary         The Company's NAV            A measure of the           The net assets 
 share                    divided by the               value of one ordinary      as shown on the 
                          number of ordinary           share.                     statement of financial 
                          shares in issue.                                        position (GBP649m 
                                                                                  as at 30 September 
                                                                                  2019) divided by 
                                                                                  the number of ordinary 
                                                                                  shares in issue 
                                                                                  as at the calculation 
                                                                                  date (583.6m as 
                                                                                  at 30 September 
                                                                                  2019). 
Ongoing charges ratio    Annualised regular           A measure of ongoing       The total expenses 
                          operating costs              and regular costs          less the preference 
                          incurred in the              relative to the            share dividends 
                          reporting period             Company's NAV.             as shown on the 
                          (excluding costs                                        statement of comprehensive 
                          suffered within                                         income (being, 
                          HoldCos and SPVs,                                       for the period 
                          interest costs,                                         ended 30 September 
                          preference share                                        2019, GBP6.6m and 
                          dividends and taxation)                                 GBP3.0m respectively) 
                          calculated as a                                         and any non-recurring 
                          percentage of the                                       expenses (GBP90k 
                          average ordinary                                        for the period 
                          NAV in that period.                                     ended 30 September 
                                                                                  2019), annualised 
                                                                                  and divided by 
                                                                                  the average ordinary 
                                                                                  NAV over the relevant 
                                                                                  period (being GBP646m 
                                                                                  for the period 
                                                                                  ended 30 September 
                                                                                  2019). 
Ordinary NAV total       The increase/(decrease)      A measure of the           The difference 
 return                   in the NAV per               overall financial          in the NAV per 
                          ordinary share               performance of             ordinary share 
                          plus the dividends           the Company.               at the beginning 
                          per ordinary share                                      and end of the 
                          paid in the period.                                     period from the 
                                                                                  statement of financial 
                                                                                  position (0.3p 
                                                                                  for the period 
                                                                                  ended 30 September 
                                                                                  2019) plus the 
                                                                                  dividends per ordinary 
                                                                                  share paid in the 
                                                                                  period (3.44p for 
                                                                                  the period ended 
                                                                                  30 September 2019) 
                                                                                  as a percentage 
                                                                                  of the opening 
                                                                                  NAV per ordinary 
                                                                                  share as shown 
                                                                                  in the statement 
                                                                                  of financial position 
                                                                                  (being 110.9p per 
                                                                                  ordinary share 
                                                                                  as at 31 March 
                                                                                  2019). 
Ordinary shareholder     The increase/(decrease)      A measure of the           The difference 
 total return             in the ordinary              performance of             in the ordinary 
                          share price plus             the Company's ordinary     share price at 
                          the dividends per            shares.                    the beginning and 
                          ordinary share                                          end of the period 
                          paid in the period.                                     plus the dividends 
                                                                                  per ordinary share 
                                                                                  paid in the period 
                                                                                  as a percentage 
                                                                                  of the share price 
                                                                                  at the beginning 
                                                                                  of the period. 
Premium/(discount)       The amount by which          A measure of the           The Company's share 
 to NAV                   the ordinary share           performance of             price as a relative 
                          price is higher/lower        the Company's share        percentage of the 
                          than the NAV per             price relative             NAV per ordinary 
                          ordinary share,              to the NAV.                share. 
                          expressed as a 
                          percentage of the 
                          NAV per ordinary 
                          share. 
 

Reconciliation to financial statements

 
Cash income reconciliation                                     GBP'000 
Income per statement of comprehensive income                    34,238 
Trade and other receivables - management service fee accrual 
 at 1 April 2019                                                   250 
Trade and other receivables - management service fee accrual 
 at 30 September 2019                                          (1,582) 
Cash income                                                     32,906 
 

Glossary

 
AIC                       Association of Investment Companies 
APM                       Alternative Performance Measure 
Asset Management Alpha    The difference between (i) the delta of generation 
                           vs. budget and (ii) the delta of irradiation vs. 
                           budget 
Apollo portfolio          21 plants held within NESH 
Cash dividend cover       The ratio of the Company's Cash 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 
DCF                       Discounted Cash Flow 
ESG                       Environmental, Social and Governance 
FCA                       Financial Conduct Authority 
FiT                       Feed-in Tariff 
GAV                       Gross asset value, being the net asset value of 
                           the ordinary shares plus the value of the outstanding 
                           preference shares plus the amount of debt outstanding 
                           at the subsidiaries 
GFSC                      Guernsey Financial Services Commission 
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 
ISAs                      International Standards on Auditing 
KPI                       Key Performance Indicator 
KPMG                      KPMG Channel Islands Limited 
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 
OCR                       Ongoing charges ratio per the AIC website (www.theaic.co.uk) 
OECD                      Organisation for Economic Co-operation and Development 
Official List             The premium segment of the UK Listing Authority's 
                           Official List 
Ordinary shareholder      The actual rate of return from dividends paid and 
 total return              capital gains on share price movements over a given 
                           period of time 
Ordinary shares           The issued ordinary share capital of the Company 
Performance ratio         Actual generation/expected generation when array 
                           constructed 
POI Law                   Protection of Investors (Bailiwick of Guernsey) 
                           Law, 1987 
PPA                       Power purchase agreement 
Premium/discount to NAV   The amount by which the Company's ordinary shares 
                           trade above or below its NAV 
PV                        Photovoltaic 
PwC CI                    PricewaterhouseCoopers CI LLP 
Radius portfolio          Five plants held within NESH IV 
RCF                       Revolving Credit Facilities 
RO Scheme                 Renewable Obligation Scheme 
ROC                       Renewable Obligation Certificates 
RPI                       Retail Price Index 
Solis portfolio           Eight plants held within NESH V 
SPVs                      Special purpose vehicles which hold the Company's 
                           investment portfolio of underlying operating assets 
Thirteen Kings portfolio  13 plants held in NESH III 
TISE                      The International Stock Exchange 
UK                        United Kingdom of Great Britain and Northern Ireland 
WACC                      Weighted average cost of capital 
WiseEnergy                WiseEnergy (Great Britain) Limited and WiseEnergy 
                           Italia Srl 
 

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.

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