NextEnergy Solar Fund Ltd · LSE:NESF
NextEnergy Solar Fund — FY2020 Earnings Presentation
38 slides from NextEnergy Solar Fund's earnings presentation, Jun 30, 2020
Slide 1: Annual Results Presentation 31 March 2020
NEKTENERGY SOLAR FUND Generating a more sustainable future NextEnergy Solar Fund Limited Annual Results Presentation 31 March 2020 30 June 2020
Slide 2: Contents
Presented by NextEnergy Capital, Investment Adviser - Contents 1) Investment Update p. 4 2) Financial Highlights p. 14 3) Q&A - Appendix p. 26 2
Slide 3: Investment Update
Staughton (50MW) Bedfordshire Energised December 2019 Investment Update
Slide 4: Investment Highlights
Investment Highlights 31 March 2020 NAV – £579m 755MW total diversified capacity through 90 solar assets NAV/share – 99.0p GAV – £991m August 2019: First UK subsidy-free solar asset (Hall Farm II, 5MW) energised 31 March 2019 Generation vs. budget (+4.7%), operating expenses vs. budget (-8.6%)
Slide 5: Operating Portfolio
NEXTENERGY SOLAR FUND Operating Portfolio United Kingdom Operating solar assets ® as at 31 March 2020 (2019: 87) Total capacity installed as at 31 March 2020 755mw (2019: 691MW) Total electricity generation for the year ended 31 March 2020 712cwh (2019: 693GWh] Generation above budget for the year e
Slide 6: Continuous Operating Outperformance
Continuous Operating Outperformance ◼ The portfolio consistently generates more electricity Asset Assets Irradiation Generation than its acquisition budget Period Ended 31 March Management (+5.0% since IPO) monitored (delta vs. budget) (delta vs. budget) Alpha(1) ◼ NESF has achieved Full year 2014/1
Slide 7: COVID-19 Response
COVID-19 Response ▪ The emergence of the COVID-19 pandemic in early 2020 presented an unprecedented operational challenge to NESF and its stakeholders ▪ In these extraordinary times, the NESF Board will continue to monitor closely the impacts of COVID-19 on the UK and Italian economies, and the effe
Slide 8: Portfolio's Secured Power Prices
Portfolio’s Secured Power Prices ◼ Our in-house electricity Apollo - ROC Assets (226 MW) Radius and NIBC assets (112 MW) sales desk continues to Output Locked Locked Price (£/MWh) Output Locked Locked Price (£/MWh) secure higher power Summer 2020 91% 44.4 91% 44.4 Winter 2020 / 2021 41% 55.5 41% 55.
Slide 9: Forecast Revenue Breakdown
Forecast Revenue Breakdown ◼ NESF has secured fixed % of NESF revenues fixed until 31 March 2021 price agreements covering 95% of its electricity generation for summer 2020 and 50% for winter 2020/21 ◼ These agreements cover 85% of expected generation for the financial year ending 31 March 2021 ◼ A
Slide 10: Forecast UK Power Prices (Real 2020)
Forecast UK Power Prices (Real 2020) ◼ The forecast UK power curves incorporate an Forecast UK Power Price (Real 2020 - £/MWh) (1) anticipated reduction in demand for electricity, and a corresponding decrease in energy-related commodity prices, as a result of COVID-19 ◼ The UK power curve forecast c
Slide 11: Forecast Italian Power Prices (Real 2020)
Forecast Italian Power Prices (Real 2020) ◼ The drivers for power Forecast Italy Power Price (Real 2020 - €/MWh) (1) prices are different in the UK and Italy, resulting in power price risk diversification ◼ The decline in forecast power prices after 2025 is attributable to the expected increase in n
Slide 12: Subsidy-free Asset Strategy
Subsidy-free Asset Strategy ◼ NESF’s intends to ◼ As at 31 March 2020 NESF has already energised 55MW of subsidy-free assets (Hall Farm II and Staughton Airfield) maintain target equity ◼ Including High-Garrett (9MW), expected to be energized in Autumn 2020, the total would be 64MW annualised return
Slide 13: Strategic Focus 2020/21
Strategic Focus 2020/21 Target a total of 150MW in subsidy-free solar plants 1 ❑ Building upon our experience with Hall Farm II (5MW) & Staughton (50MW) Focus on developing our electricity sales strategy 2 ❑ Explore corporate PPAs and direct-wire agreements to maximise revenue, and reduce power pric
Slide 14: Financial Highlights
Hall Farm II (5.4MW) Leicestershire Energised August 2019 Financial Highlights
Slide 15: Financial Highlights
Financial Highlights ◼ Targeting a dividend of 7.05p per share for the year ending 31 March 2021 ◼ Second Issuance of Preference Shares for £100m on 12 August 2019 (currently 200m Preference shares outstanding) ◼ Financial debt level of 22% (2019: 27%) (excluding preference shares) ◼ Ongoing charges
Slide 16: Five-year Track Record
Five-year Track Record ◼ As at 31 March 2020, NESF had achieved an annualised ordinary shareholder total return of 6.3% and an annualised NAV total return of 5.9% ◼ After the year end, the share price has risen and, as at 26 June 2020, was 107.4p, equivalent to a premium of 8.5% to the NAV per ordin
Slide 17: Cash Flow Generation
Cash Flow Generation ◼ Table summarises the economic performance of the UK operating portfolio ◼ Illustrative revenues and costs are expressed as average per MW across the portfolio ◼ Total Revenues exceeded budget during the 2019/20 financial year by 6.3% ◼ Operating Expenses below acquisition case
Slide 18: Valuation of Investment Portfolio
Valuation of Investment Portfolio Discount rates ◼ 6.25% unlevered discount rate for UK operating assets ◼ Levered discount rates of up to 7.25% (up to 1.0% risk premium) ◼ 7.75% unlevered discount rate for Italian operating assets implying 1.50% country risk premium ◼ 7.25% unlevered discount rate
Slide 19: Portfolio Valuation Bridge
Portfolio Valuation Bridge 19
Slide 20: NAV Bridge
NEXTENERGY SOLAR FUND NAV Bridge 700 645.0 +61.2 600 wa ee 578.6 (36.8) (75.6) 500 (7.3) 3 Q 400 > =< 300 z 200 100 ry) Opening Prof. Ordinary share Income from Change in fair value Net Closing NESF NAV shares dividend cash dividend investments of investments operating costs NESF NAV (March 2019} (M
Slide 21: Optimised Capital Structure
Optimised Capital Structure Equity ◼ As at 31 March 2020, ◼ 584.2m Ordinary Shares in issue, targeting a total dividend of total financial debt Ordinary Shareholders 7.05p per ordinary share for the financial year ending 31 March facilities outstanding of 2021 £214m which represent 22% of GAV (exclu
Slide 22: Solis Portfolio
Solis Portfolio ◼ High risk-adjusted returns Business Case: Solis Acquisition and performance (9.4% at acquisition) ◼ Acquisition of eight solar plants in Italy in December 2017 for a total installed capacity of 34.5MWp and total value of €132m ◼ Positive contribution to dividend cover – 1.4x ◼ The
Slide 23: Robust Dividend Cover
Robust Dividend Cover ◼ Target dividend of 7.05p per share for the year ending 31 March 2021 ◼ Power prices and inflation levels have become less correlated since the IPO, further exacerbated by the significant fall in the forecast power prices and the uncertain economic outlook as a result of COVID
Slide 24: Summary Statement of Comprehensive Income
Summary Statement of Comprehensive Income 2020 2019 Income Statement for the Year Ended 31 March £m £m Income 61.2 55.6 Movement in Investment Portfolio value (75.7) 24.5 Total net Income (14.5) 80.1 Total expenses (15.1) (8.6) (Loss)/profit and comprehensive (loss)/income (29.7) 71.6 Earnings per o
Slide 25: Summary Balance Sheet and Cash Flows
Summary Balance Sheet and Cash Flows ◼ NAV attributable to 2020 2019 Balance Sheet as at 31 March ordinary shareholders £m £m decreased by £66.4m Investment Portfolio 557.9 616.4 ◼ Investment Portfolio decreased by £58.5m Residual net assets of Holding Companies 195.7 106.4 Current assets 49.1 60.7
Slide 26: Q&A and Appendices
Great Wilbraham (38MW) Cambridgeshire Energised March 2016 Q&A and Appendices
Slide 27: NESF Overview
NESF Overview ◼ NextEnergy Capital IM Ltd NextEnergy Solar Fund and NextEnergy Capital Ltd are both members of the ❑ Attractive acquisition values sourced by NextEnergy Capital NEC Group. NextEnergy Capital Limited acts as the ❑ Operational outperformance supported by WiseEnergy ensuring optimal ass
Slide 28: Environmental, Social and Governance (ESG) Strategy
Environmental, Social and Governance (ESG) Strategy 31 March 2020 185,000 [1) UK homes powered for one year (equivalent to Brighton and Aberdeen combined) 307,500 [2) tonnes of CO2e emissions avoided p.a. Equivalent to removing 220,000 [3) cars off the road for a year 31 March 2019 184,000 [
Slide 29: Performance since IPO vs Benchmark Indices
Performance since IPO vs Benchmark Indices ◼ In April 2019, the NESF Total Return vs. FTSE All-Share Index Total Return Company’s ordinary shares were included in the FTSE-250 Index ◼ The graph [displays NESF ordinary share price total return performance from IPO to 31 March 2020 in comparison to th
Slide 30: Investment Portfolio Diversification
Investment Portfolio Diversification 30
Slide 31: UK Historical Power Prices
UK Historical Power Prices Power Prices ◼ Compared to the previous year, electricity day ahead prices in the UK decreased from approximately £44/MWh in March 2019 to approximately £32/MWh in March 2020 ◼ The Company’s flexible PPA framework allowed NESF to lock in higher power prices Historical UK P
Slide 32: Italy Historical Power Prices
Italy Historical Power Prices Power Prices ◼ Following a similar trend to the UK, the Italian price of electricity decreased from approximately €53/MWh in March 2019 to approximately €32/MWh in March 2020 ◼ The Company’s flexible PPA framework allowed NESF to lock in higher power prices Historical I
Slide 33: NAV Sensitivities
NAV Sensitivities ◼ The sensitivity highlights the percentage change in the portfolio resulting from a change in the underlying variables ◼ It also shows the impact on the NAV per share 33
Slide 34: Capital Raise and Deployment
Capital Raise and Deployment ◼ During the period, NESF issued the second tranche of Preference Shares for £100m in August 2019 ◼ Proceeds applied to repayment of short-term debt facilities, with the balance used for investments ◼ During the period NESF issued an additional 2,475,390 new shares total
Slide 35: Preference Shares
Preference Shares ◼ An issuance of £200m is ◼ On 8 November 2018, the Shareholders approved the issuance of £200m of Preference Shares. The Company expected to increase issued the first tranche of £100m in November 2018, and the second tranche of £100m Preference Shares were dividend cover by 0.15x
Slide 36: Summary of the Financial Debt outstanding
Summary of the Financial Debt outstanding ◼ Total debt outstanding at 31 March 2020 was £214.3m which represents a financial debt gearing of 22% (excluding £200m preference shares) ◼ Average Cost of Debt is 3.4% ◼ NESH V entered into a 15 year FX hedging arrangement with Intesa over the expected div
Slide 37: Investment Policy
Investment Policy ▪ To provide ordinary shareholders with attractive risk-adjusted returns, principally in the Investment Objective form of regular dividends, by investing in a diversified portfolio of primarily UK-based solar energy infrastructure assets ▪ Currently, the Company is permitted to inv
Slide 38: Important Notice
Important Notice This document is issued by Next Energy Capital Limited (“NEC”), which is authorised and regulated by the UK Financial Conduct Authority (“FCA”) with registered number 471192. The contents of this document are strictly private and confidential and accordingly may not be published, re