NextEnergy Solar Fund Ltd · LSE:NESF
NextEnergy Solar Fund — FY2022 Earnings Presentation
41 slides from NextEnergy Solar Fund's earnings presentation, Jun 27, 2022
Slide 1: Full Year Results Investor Presentation
27 June 2022 Full Year Results Investor Presentation Period ended 31 March 2022 1
Slide 2: Speakers & contents
Speakers & contents Financial highlights & Valuation p.3 Operational highlights Investment update ay Michael Bonte-Friedheim Group CEO & Founding Partner NextEnergy Group Sustainability Outlook Appendix Ross Grier Managing Director, UK NextEnergy Capital s « % fas
Slide 3: Introduction: Value accretive
Introduction Value accretive Attractive dividend, targeting long term growth ▪ Strong inflation linked revenue ▪ Large pipeline for portfolio growth ▪ ▪ Strong expected budget generation ▪ Low correlation to other asset classes ▪ Classified as Article 9 fund under EU SFDR and Taxonomy
Slide 4: Key financial highlights, as at 31 March 2022
Financial highlights & Valuation Key financial highlights, as at 31 March 2022 ▪ £668.5m 113.5p £1,150m ▪ 42% 1.2x 7.16p 7.52p 1.3x – 1.5x
Slide 5: Valuation assumptions
Financial highlights & Valuation Valuation assumptions Discount rates (Remain unchanged as at 31 March 2022) Inflation assumption sources ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ Inflation assumption breakdown 2030 Year ending 2022 2023 2024 2025 2026 2027 2028-2030 onwards 31 March 2021 3.00% 2.90% 2.90% 2.80% 2.80% 3.00%
Slide 6: Forecast power prices (real 2022)
Financial highlights & Valuation Forecast power prices (real 2022) ▪ Blended power curves (capture price) ▪ Blended power curves (baseload vs capture price) ▪ ▪
Slide 7: Tailwinds, growth and value drivers
Financial highlights & Valuation Tailwinds, growth and value drivers Macro environment Direction of travel Effect on NESF Power Prices: Inflation: Government: Energy Infrastructure: Long-term drivers NESF’s active investment & asset management ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
Slide 8: Headwinds, mitigants and opportunities
Financial highlights & Valuation Headwinds, mitigants and opportunities Potential headwinds Mitigant in place Opportunity ▪ ▪ ▪ Power price ▪ ▪ ▪ Government regulation ▪ (Windfall tax) ▪ ▪ ▪ Inflation ▪ ▪ ▪ ▪ Interest rates ▪ ▪ ▪ ▪ Supply chain ▪ ▪
Slide 9: NAV bridge: 12-month period
Financial highlights & Valuation NAV bridge: 12-month period ▪ NAV Bridge March 2021 – March 2022 ▪ ▪ ▪ Ordinary NAV per 98.9p 113.5p share (p) 15%
Slide 10: NAV sensitivities (31 March 2022)
Financial highlights & Valuation NAV sensitivities (31 March 2022) ▪ NAV per share (3.4)p (2.7%) 2.9% 3.7p (8.3)p (6.6%) 6.3% 7.9p ▪ (7.8)p (6.3%) 6.0% 7.5p (22.6)p (18.0%) 25.9% 32.4p (1.1)p (0.9%) 0.9% 1.1p
Slide 11: Optimised capital structure
Financial highlights & Valuation Optimised capital structure Equity ◼ £1.15bn Preference shares ◼ £200m ◼ ◼ £283m Financial debt facilities ◼ ◼ ◼ 42% ◼ ◼ ◼ £49m ◼
Slide 12: Track record of operating outperformance
Operational highlights Track record of operating outperformance ▪ ▪ +1.8% £2.0m ▪ ▪ ▪
Slide 13: Revenue generation
Operational highlights Revenue generation +27.8% +18.1% (7.9%)
Slide 14: Protecting future cash flows
Operational highlights Protecting future cash flows ▪ Current UK hedging position of budgeted generation (1) 2022/23 2023/24 2024/25 ▪ 85% 74% 42% Average fix price of Average fix price of Average fix price of ▪ £78MWh £73MWh £86MWh By Subsidy/PPA2 By Revenue Type2 ▪ ▪
Slide 15: Portfolio overview
Investment update Portfolio overview Solar PV Energy Storage Private Solar Infrastructure Fund Operating1 Under construction Operating & under construction 100 1 $50m Under construction2 Under development Portfolio Map 2 1 • • Development stage 1 4 Ready to build2 1 = Direct asset ownership and co-i
Slide 16: Portfolio growth & pipeline
Investment update Portfolio growth & pipeline ▪ Solar PV ▪ Completion of UK subsidy-free target + International expansion + Additional co-investment opportunities ▪ Energy Storage Stand-alone batteries + Co-located batteries >£350m • • •
Slide 17: An impact ESG investment
Sustainability An impact ESG investment ▪ NextEnergy Solar Fund – Green Impact Data Track Record Metric Units FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 ▪ GHG avoided ktCO2e 30.6 110.0 191.4 211.2 299.4 307.7 317.6 328.7 NOx avoided tonnes 41.3 108.3 176.3 193.1 276.5 274.4 283.4 296.3
Slide 18: Biodiversity and social enhancement
Sustainability Biodiversity and social enhancement ▪ Biodiversity looking forward 34 45% ✓ ✓ 37 47% ✓ ✓ Enhanced community engagement ✓ ✓ ✓
Slide 19: Going forward
Outlook Going forward Positioned for growth Large diversified portfolio Attractive dividend Focused on shareholder returns & NAV optimisation Continuous asset management and portfolio outperformance Efficient balance sheet financing structure Revenue optimisation
Slide 20: Q&A / Appendix
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Slide 21: Key Facts
Appendix: Key Facts Fund Structure ▪ ▪ Issue / Listing ▪ ▪ ▪ ▪ Governance / Management ▪ ▪ Ongoing charge ▪ ▪ ▪ ▪ ▪ Investment Policy ▪ ▪ ▪ ▪ ▪ Contact ▪
Slide 22: NextEnergy Solar Fund board of directors
Appendix: Governance NextEnergy Solar Fund board of directors Kevin Lyon Patrick Firth Jo Peacegood Vic Holmes Josephine Bush Chairman Non-executive Director Non-executive Director Senior Independent Non-executive Director Director ▪ >30 years of experience ▪ >30 years' experience ▪ >20 years of exp
Slide 23: NextEnergy Capital investment committee
Appendix: Governance NextEnergy Capital investment committee Michael Bonte- Giulia Guidi Ross Grier Aldo Beolchini Friedheim Founding Partner and Head of Environmental, UK Managing Director at Managing Partner and Group CEO of NextEnergy Social and Governance NextEnergy Capital Chief Investment Offi
Slide 24: NextEnergy Capital Investment Management board of directors
Appendix: Governance NextEnergy Capital Investment Management board of directors Joseph D’Mello Jeremy Thompson Charlotte Denton ▪ > 30 years of experience ▪ >30 years of multiple- ▪ >25 years experience in as a chartered sector experience with a the global private client accountant. As Director foc
Slide 25: Summary statement of comprehensive income
Appendix: Financial Summary statement of comprehensive income 2022 2021 Income Statement for the year ended 31 March 2022 £m £m £143.7m 21.69p
Slide 26: Ordinary share dividends
Appendix: Financial Ordinary share dividends 8 years 7.52p 8.0 NESF transitioned to a progressive dividend policy in FY20/21 7.52 4 7.05 7.16 6.65 6.87 7.0 6.31 6.42 6.25 6.0 5.25 5.0 (pence) 4.0 3.0 2.0 1.0 0.0 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23
Slide 27: Investment policy limits
Appendix: Valuation Investment policy limits 0.6% of GAV currently Investment Objective ▪ • Technological Limit invested ▪ Private Equity Limit ▪ • 1.9% of GAV currently invested ▪ • 12.8% of GAV currently invested non-UK Geographical Limit ▪ • 0.2% of GAV currently invested outside OE CD through NP
Slide 28: Portfolio breakdown
Appendix: Portfolio Portfolio breakdown By Subsidy/PPA1 By Installed Capacity1 By Revenue Type1 By Inverter Manufacturer1 By Solar Module Manufactuer1 By Location1
Slide 29: Active hedging strategy example
Active hedging strategy example Example: Hedging Strategy for Summer 2022 100.0 100% 95.3 90.4 90% 90.0 89.7 80% ▪ 80.0 70% ▪ 71.6 £/MWh 60% 70.0 64.7 50% ▪ 60.0 56.6 40% 52.8 53.7 56.0 49.9 51.7 49.6 50.0 48.2 50.4 30% ▪ 45.4 20% 40.0 10% ▪ 30.0 0%
Slide 30: The Italian Solis portfolio
Appendix: Portfolio The Italian Solis portfolio ▪ Business Case: Solis Acquisition and performance ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
Slide 31: Long term debt repayment profile
Appendix: Capital Structure Long term debt repayment profile ▪ Apollo Repayment Profile £18 £16 £14 ▪ £12 £10 (£'m) £8 £6 £4 £2 ▪ £0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Total Principal Repayment (Nominal) Total Interest Payment ▪ MIDIS Repayment Profile £6 £5 £4 (£'
Slide 32: Financial debt outstanding (31 March 2022)
Appendix: Capital Structure Financial debt outstanding (31 March 2022) 25% 42% ▪ ▪ ▪ ▪
Slide 33: Preference shares
Appendix: Capital Structure Preference shares ▪ ▪ ▪ ▪ ▪ ▪ ▪ Alternative Funding Sources - Comparison of Fully-Costed Cost of Capital ▪
Slide 34: EU Taxonomy and Sustainable Finance Disclosure Regulation
Appendix: ESG EU Taxonomy and Sustainable Finance Disclosure Regulation ▪ ▪ ▪ ▪ ▪
Slide 35: ESG integration into the NESF investment process
Appendix: ESG ESG integration into the NESF investment process ▪ ▪ ▪ ▪
Slide 36: Solar growth potential
Appendix: Growth Drivers Solar growth potential Predicted global solar capacity growth, 2019 and 2050 What will drive this demand? ▪ 832GW 7,749GW ▪ ▪ 2019 2050 ▪ ▪ Global installed capacity mix, 2019 and 2050 Renewables predicted to be main energy source in future
Slide 37: NextEnergy Solar Fund structure
Appendix: Structure NextEnergy Solar Fund structure
Slide 38: Value add of NextEnergy Group
Appendix: Structure Value add of NextEnergy Group ▪ ▪ Investment Management Asset Management Development ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
Slide 39: Value add of WiseEnergy
Appendix: Structure Value add of WiseEnergy WiseEnergy is NESF’s operating asset manager ▪ ▪ 1 Increasing asset revenue 2 Minimising asset risk 3 Minimising asset opex WiseEnergy consistently drives superior results through: ▪ ▪ ▪
Slide 40: The NextEnergy Foundation
Appendix: Structure The NextEnergy Foundation ▪ USA ITALY UNITED KINGDOM SYRIA INDIA JORDAN AFGHANISTAN PAKISTAN ▪ NEPAL SIERRA LEONE RWANDA ETHIOPIA COLOMBIA ▪ GHANA KENYA PERU NIGERIA UGANDA ZAMBIA THE ANDES TANZANIA ZIMBABWE MALAWI
Slide 41: Important notice
Important notice This document is issued by NextEnergy Capital Limited ("NEC"), which is authorised and regulated by the UK Financial Conduct authovity (“FCA") with registered number 471192. The contents of this document are strictly private and confidential and accordingly may not be published, rep