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.
END
IR BXLLFKFFZFBV
(END) Dow Jones Newswires
November 14, 2019 02:01 ET (07:01 GMT)
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