NextEnergy Solar Fund Ltd · LSE:NESF
NextEnergy Solar Fund — FY2021 Earnings Presentation
62 slides from NextEnergy Solar Fund's earnings presentation, March 2021
Slide 1: NESF Full Year Results Presentation
Year ended 31 March 2021 NESF Full Year Results Presentation
Slide 2: Speakers & Contents
Speakers & Contents • • • • • • • • •
Slide 3: Chairman introduction
Chairman introduction ▪ NESF in 2020/21 - demonstrating resilience in face of global pandemic ▪ The need to act now to tackle climate change ▪ Corporate governance structure and processes working well ▪ Solar investment opportunity in UK and internationally is very large ▪ NESF well-positioned and f
Slide 4: Positioned to generate income, grow and tackle climate change
Positioned to generate income, grow and tackle climate change NAV £581m GAV £1,025m NAV/share 98.9p
Slide 5: Key highlights
Stalbridge solar farm: 5MW Dorset Key highlights
Slide 6: Value Add of NextEnergy Capital Group
Value Add of NextEnergy Capital Group • • • Investment Management Asset Management Development • • • • • • • • • • • • • • • • •
Slide 7: Key highlights
Key highlights 7.16p £101m £78m £59.5m +5.2% +4 +£7m 195,000 317,600 738 GWh
Slide 8: New acquisitions in year
New acquisitions in year +2 100MW 15-year +3 Asset Location Installed Capacity Site size Status Acquisition cost Grange Yorkshire, UK 50MW 214-acres Energised £33.4m South Lowfield Nottinghamshire, UK 50 MW 200-acres Expected Q3 2021 £30.9m • • •
Slide 9: Track record of operating outperformance
Track record of operating outperformance +6.2% +5.5% +0.7% £4.8m • • • •
Slide 10: Strategy Update
Bay Farm: 8.1MW Suffolk Strategy Update
Slide 11: Strategic focus 2021/22
Strategic focus 2021/22 1 Unlock growth - Expand NESF portfolio into international assets, battery storage and solar PE structures • • 2 Manage risk - Continue to hedge further forward and enhance our electricity sales strategy • 3 Asset performance - Continue NESF operational outperformance •
Slide 12: Strategic focus 2021/22: international solar assets
Strategic focus 2021/22 1 Unlock growth - Expand NESF portfolio into international solar assets, in-line with investment policy • • • • Investment policy: Up to 30% GAV in • international OECD countries North America Portugal Spain Italy 400MW
Slide 13: Strategic focus 2021/22: energy storage assets
Strategic focus 2021/22 1 Unlock growth - Introduce energy storage assets to NESF portfolio, in-line with investment policy • • • Investment policy: Up to 10% GAV in energy storage 500MW
Slide 14: Strategic focus 2021/22: private equity structures
Strategic focus 2021/22 1 Unlock value - Invest into private equity structures to complement NESF portfolio, in-line with investment policy • • • Investment policy: Up to 15% GAV in solar private equity structures Higher Revenue Co-investment Access to new Geographical returns diversification opport
Slide 15: Strategic focus 2021/22: electricity sales strategy
Strategic focus 2021/22 2 Manage risk - Focus on progressing our electricity sales strategy • • • • +£7m 2021/22 2022/23 2023/24 87% 63% 29%
Slide 16: Strategic focus 2021/22: operational outperformance
Strategic focus 2021/22 3 Maximise income generation - Continue NESF operational outperformance • • • +6.2% 10.0% 9.0% 9.1% 8.0% 7.0% NESF 6.0% 6.2% 5.0% 4.8% 4.7% 4.1% 4.0% 3.0% 3.3% 2.0% 1.0% 0.9% 0.0% FY2014/15 FY2015/16 FY2016/17 FY2017/18 FY2018/19 FY2019/20 FY2020/21
Slide 17: Strategic focus end goals
Strategic focus end goals 7.16p Increase portfolio diversification Achieve target dividend of 7.16p Maintain positive dividend cover Maximise income generation Increase Net Asset Value
Slide 18: Financial highlights
Bowden: 5MW Somerset Financial highlights
Slide 19: Financial highlights
Financial highlights • 7.05p 1.1x 98.9p ▪ ▪ 24% 43% £581m ▪ 7.0% 6.1% 5.1%
Slide 20: Summary statement of comprehensive income
Summary statement of comprehensive income £59.9m 6.87p 2021 2020 Income Statement for the Year Ended 31 March 2021 £m £m Income 59.9 61.2 Movement in Investment Portfolio value (3.4) (75.7) Total net Income 56.6 (14.5) Total expenses (16.4) (15.1) Profit/(loss) and comprehensive income/(loss) 40.2 (
Slide 21: Revenue generation
Revenue generation +6.6% (6.2%) +10.5%
Slide 22: Ordinary share dividends
Ordinary share dividends 7.05p 1.1x 8.0 7.05 7.16 (4) 6.65 6.87 7.0 7 years 6.25 6.31 6.42 6.0 5.25 (3) 5.0 4.0 (Pence) 3.0 2.0 7.16p 1.0 0.0 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
Slide 23: Valuation of investment portfolio
Valuation of investment portfolio Discount rates (as at 31 March 2021) • 98.9p • • • • • £581m Valuation movements were driven by the following factors: • • £1,025m
Slide 24: NAV Bridge
NAV Bridge 578.6 600 500 = 400 a z 2 300 200 100 ° ‘ Opening NESF NAV (Mar 2020) Ordinary NAV per share (p) 99.0p NAV bridge for the year ended 31 March 2021 — = — aI = |_| « wo (38.1) Pref. shares Ordinary shares Income frem Change in fair value _Net operating dividend cash dividend investments of
Slide 25: Portfolio Bridge
Portfolio Bridge Portfolio valuation bridge for the year ended 31 March 2021 900 +62.5 +68.2 753.6 || || +20.0 +2.0 769.6 800 = — |_| — — — — (35.2) (7.5) (60.0) (17.3) (6.4) (10.3) 700 = 600 € = 2 500 3 2 3 400 300 200 100 Opening Net RCF Distribution Operating Distribution Change in Change in Chan
Slide 26: NAV sensitivities (31 March 2021)
NAV sensitivities (31 March 2021) ▪ ▪
Slide 27: Optimised capital structure
Optimised capital structure £246m Equity ◼ Preference shares ◼ ◼ £192m ◼ Financial debt facilities ◼ ◼ ◼ £54m ◼ ◼ ◼ ◼
Slide 28: Long term debt repayment profile
Long term debt repayment profile ▪ ▪ ▪ ▪ (£'m)
Slide 29: Operating Update
Forest Farm: 3MW Hampshire Operating Update
Slide 30: Operating portfolio 814MW 738GWh
Operating portfolio 94 814MW 738GWh 6.2%
Slide 31: Historical power prices (12 months)
Historical power prices (12 months) • • • • •
Slide 32: UK hedging activity during the year
UK hedging activity during the year • • • 55 50 49 48 48 46 46 45 (£/MWh) 42 40 35 30 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Live Forward Curve - 2021/22 (£/MWh) Weighted average hedge price (£/MWh) Adviser forecast - 31/03/20 NAV (£/MWh)
Slide 33: Forecast power prices (real 2021)
Forecast power prices (real 2021) • 55.0 50.0 45.0 40.0 (£/MWh) 35.0 30.0 • 25.0 20.0 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 • 60.0 55.0 • 50.0 45.0 (€/MWh) 40.0 35.0 30.0 • 25.0 20.0 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041
Slide 34: Power price recovery
Power price recovery • • • Winter 21 Summer 22 Winter 22 Summer 23 90 87 84 £/MW 81 78 75 72 69 66 63 £62MW 60 57 £55MW 54 51 £49MW 48 45 £44MW 42 39 36 33 30
Slide 35: ESG
Emberton: 9MW Buckinghamshire ESG
Slide 36: Environment, Social and Governance
Environment, Social and Governance • • • • • 195,000 317,600 738 GWh •
Slide 37: Biodiversity overview
Biodiversity overview Boxted Airfield - Exemplar case study • • • 500% 300% 85% • •
Slide 38: The NextEnergy Foundation and Selected Projects
The NextEnergy Foundation and Selected Projects USA UNITED KINGDOM ITALY SYRIA • INDIA JORDAN AFGHANISTAN PAKHISTAN • NEPAL SIERRA LEONE RWANDA ETHIOPIA COLOMBIA • GHANA KENYA PERU NIGERIA UGANDA ZAMBIA • THE ANDES TANZANIA ZIMBABWE MALAWI
Slide 39: In summary
Wasing: 5MW Berkshire In summary
Slide 40: NESF going forward
GuERNSE® NESF going forward A fil Positioned for growth @® Large diversified portfolio EY Mttractive dividend Focused on shareholder returns & NAV optimisation %, zs Continuous asset management and portfolio outperformance Sor Efficient balance sheet financing structure EO) Revenue optimisation
Slide 41: Q&A
Great Wilbraham: 38MW Cambridgeshire Q&A
Slide 42: Appendix
Kentishes: 5MW Essex Appendix
Slide 43: NESF Board of Directors
NESF Board of Directors KEVIN LYON PATRICK FIRTH JO PEACEGOOD VIC HOLMES Kevin has over 30 years of Patrick has almost 30 Jo has over 20 years of Vic has been involved in the experience in fund years' experience advising experience in the financial services industry management, investment management
Slide 44: NextEnergy Capital Group – NESF Investment Committee
NextEnergy Capital Group – NESF Investment Committee MICHAEL BONTE- ALDO FRIEDHEIM GIULIA GUIDI ROSS GRIER BEOLCHINI Michael is Founding Partner Giulia is the Head of Ross is the UK Managing Aldo is Managing Partner and Group CEO of Environmental, Social and Director of NextEnergy and Chief Investme
Slide 45: Ongoing Covid-19 response
Ongoing Covid-19 response • • • • • • • • •
Slide 46: NESF Group Structure
NESF Group Structure INVESTMENT ADVISER Nectneray Coptal Umied SHAREHOLDERS INVESTMENT ! COMPANY SECRETARY & ADMINISTRATOR ‘Ape Fund and Corporate Services (Guersey ited INVESTMENT MANAGER NEXTENERGY SOLAR FUND LIMITED INVESTMENT (OTHER KEY SERVICE PROVIDERS & ADVISERS: Registra HOLDCOs INVESTMENT S
Slide 47: NextEnergy Capital overview and track record
NextEnergy Capital overview and track record • • • • •
Slide 48: Investment portfolio diversification (31 March 2021)
Investment portfolio diversification (31 March 2021)
Slide 49: The Italian Solis portfolio
The Italian Solis portfolio • Business Case: Solis Acquisition and performance • • • • • • • •
Slide 50: Financial debt outstanding (31 March 2021)
Financial debt outstanding (31 March 2021) 24% 43% • • •
Slide 51: Preference shares
Preference shares • • • • • • • Alternative Funding Sources - Comparison of Fully-Costed Cost of Capital •
Slide 52: Investment policy limits
Investment policy limits ▪ • 0% of GAV currently Investment Objective Technological Limit invested • Private Equity Limit • • 0% of GAV currently invested • • 11.3% of GAV Geographical Limit • currently invested in Italy • • Currently constitutes Development Limit 2.7% of GAV • • • The largest inves
Slide 53: NEC ESG approach to NextEnergy Solar Fund
NEC ESG approach to NextEnergy Solar Fund NESF Shareholders ESG Universe NextEnergy Capital Investment Independent Board Committee Investment Manager Holdco SPV Asset Manager
Slide 54: NEC’s mission and sustainability framework
NEC’s mission and sustainability framework • • • • •
Slide 55: NEC sustainable investment: policy & commitments
NEC sustainable investment: policy & commitments • • Publicly available • leadership groups SDFR best practice • • Principles and Commitments • • abide by • them climate change • TCFD biodiversity human rights • Integration
Slide 56: ESG integration into the NESF investment process
ESG integration into the NESF investment process • • • • Supply Chain DDQ
Slide 57: Supply Chain and Human Rights
Supply Chain and Human Rights • • • • •
Slide 58: The NextEnergy Foundation: COVID-19 response
The NextEnergy Foundation: COVID-19 response Open Kitchens The Akshaya Patra Foundation (UK) Intrecci Cooperativa Sociale Associazione La Rotonda The Akshaya Patra Foundation (India) Fondazione Francesca Rava
Slide 59: 5-year track record
5-year track record Year Ended 31 March Financial Key Performance Indicators 2017 2018 2019 2020 Ordinary shares in issue 456.4m 575.7m 581.7m 584.2m Ordinary share price 110.5p 111.0 117.5p 101.5p Market capitalisation of ordinary shares £504m $639m £683m £593m NAV per ordinary share* 104.9p 105.1p
Slide 60: Solar growth potential
Solar growth potential Predicted global solar capacity growth, 2019 and 2050 Renewables predicted to be main energy source in future 832GW 7,749GW 2019 2050 Global installed capacity mix, 2019 and 2050 What will drive this demand? • Immediate need to address global climate change • Increase in globa
Slide 61: NESF investment case - detail
NESF investment case - detail
Slide 62: 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