NextEnergy Solar Fund Ltd · LSE:NESF
NextEnergy Solar Fund — H1 2020/21 Earnings Presentation
34 slides from NextEnergy Solar Fund's earnings presentation, Nov 23, 2020
Slide 1: Interim Results Presentation
Interim Results Presentation 23 November 2020
Slide 2: Contents
Presented by NextEnergy Capital, Investment Adviser - Contents 1) Investment Update p.3 2) Financial Highlights p.15 3) Q&A - Appendix p.24 2
Slide 3: Investment Update
Staughton (50MW) Bedfordshire Energised December 2019 Investment Update
Slide 4: Investment Highlights
Investment Highlights 30 September 2020 Generation vs. budget (+11.1%) translates into additional revenues of £6.0m NAV – £583.5m during the period NAV/share – 99.6p GAV – £994m £5.4m benefit from power price contract fixes vs baseload prices during the 31 March 2020 period NAV – £578.6m N
Slide 5: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) ◼ NESF considers the three pillars of Climate Change, Biodiversity and Human Rights as an integral part of the investment process ◼ NESF is committed to supporting the UK Government in its ambitious objective of bringing all greenhouse gas emissions to net
Slide 6: Operating Portfolio
Operating Portfolio ◼ High Garrett, an 8.5MW extension to the 5MW ROC asset known as Kentishes acquired in 2016, was energised post the period end on 22 October 2020 ◼ We are currently seeking to identify value creating opportunities in OECD countries in line with the amended Investment Policy to ma
Slide 7: Continuous Operating Outperformance
Continuous Operating Outperformance ◼ The portfolio consistently generates more electricity Asset Assets Irradiation Generation than its acquisition Period Management budget (+6.0% since IPO) monitored (delta vs. budget) (delta vs. budget) Alpha(1) ◼ NESF has achieved First half 2015/16 17 +2.9% +5.
Slide 8: Historical Power Prices (12-month)
Historical Power Prices (12-month) ◼ The Company’s flexible Historical UK Power Prices (£/MWh) (1) PPA framework locked in additional revenues of £5.4m from power price contract fixes vs baseload prices during the period ◼ UK power prices were declining into March 2020 as a result of lower gas price
Slide 9: Hedges from 1 July 2020 vs Forward Curve
Hedges from 1 July 2020 vs Forward Curve ◼ Graph shows UK Forward Curve (NESF) as of 30 UK Forward Curve (NESF) 30 June 2020 - (£/MWh) (1) June 2020 57 18.6 ◼ Hedges are shown with 13.2 orange dots 52 8.8 9.3 2.8 ◼ With the exception of one 15.0 33.7 trade in July 2020 for our newly commissioned 13.
Slide 10: UK Forecast Power Prices (Real 2020)
UK Forecast Power Prices (Real 2020) ◼ For the period 2020- 2040, the average UK Forecast UK Power Price (Real 2020 - £/MWh) (1) solar capture price is approximately £46.7/MWh ◼ At the short end (the next two years), where PPAs are in place we use the PPA prices and, for periods where there are no P
Slide 11: Italy Forecast Power Prices (Real 2020)
Italy Forecast Power Prices (Real 2020) ◼ For the period 2020- 2040, the average Italian Forecast Italy Power Price (Real 2020 - €/MWh) (1) solar capture price is approximately €46.5/MWh ◼ The drivers for power prices are different in the UK and Italy, resulting in power price risk diversification ◼
Slide 12: Forecast Revenue Breakdown
Forecast Revenue Breakdown ◼ NESF proactively hedges FY 2020/21 (1) FY 2021/22 (1) its forward generation profile ◼ Hedging strategy designed to eliminate exposure to day-ahead power prices and outperform the forward UK £81.1m £79.6m curve Italy €14.7m €15.4m Notes: (1) Projected revenues (2) Genera
Slide 13: Subsidy-free Asset Strategy
Subsidy-free Asset Strategy ◼ NESF is targeting a ◼ As at 30 September 2020 NESF has energised 55MW of subsidy-free assets (Hall Farm II and subsidy-free portfolio of Staughton Airfield) c.150MW ◼ Including High Garrett (8.5MW), which was energised on 22 October 2020, the total is 64MW ◼ The Company
Slide 14: 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) and High Garrett (8.5MW) Focus on progressing our electricity sales strategy 2 ❑ Exploring corporate PPAs and direct-wire agreements to maximise rev
Slide 15: Financial Highlights
Hall Farm II (5.4MW) Leicestershire Energised August 2019 Financial Highlights
Slide 16: Financial Highlights
Financial Highlights ◼ During the period, the uncertainty surrounding the COVID-19 pandemic resulted in global equity markets suffering an unprecedented decline ◼ As a result, at 30 September 2020, NESF had achieved an ordinary shareholder annualised total return since IPO of 6.4% and an NAV annuali
Slide 17: Track Record
Track Record ◼ Targeting a dividend of 7.05p per share for the year ending 31 March 2021 ◼ As at 30 September 2020, the dividend yield of 6.9% was the highest in the sector ◼ Financial debt gearing of 21% (excluding preference shares) is the lowest amongst the peer group ◼ Ongoing charges ratio stab
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 1.5% country risk premium ◼ 7.25% unlevered discount rate f
Slide 19: Portfolio Valuation Bridge
Portfolio Valuation Bridge Notes: (1) Operating result includes excess cash generated for the period of £4.5m 19
Slide 20: NAV Bridge
NEKTENERGY NAV Bridge NAV bridge for the six months ended 30 September 2020 700 +326 = — Ys (0.9) 3.3) (18.7) 600 578.6 500 400 NAV (£m) 300 200 100 Opening Pref. shares Ordinary shares Income from Change in fair value Net operating NESF NAV dividend cash dividend investments of investments costs (M
Slide 21: Robust Dividend Cover
Robust Dividend Cover ◼ The Board has concluded its review of Six months ended Pre-scrip dividends the Company’s dividend 30 September 2020 £’000 £’000 policy. To the extent the Board considers it Cash income for period1,2 32,490 appropriate, we will each Net operating expenses for period (3,299) ye
Slide 22: Optimised Capital Structure
Optimised Capital Structure Equity ◼ As at 30 September ◼ 585.7m Ordinary Shares in issue, targeting a total dividend 2020, total financial Ordinary Shareholders of 7.05p per ordinary share for the financial year ending 31 debt facilities March 2021 outstanding of £213m represent 21% of GAV (excludi
Slide 23: Long-term Debt Repayment Profile
Long-term Debt Repayment Profile ◼ As at 30 September 2020, £194m of the financial debt was long- term fully amortising ◼ The charts show the precise yearly repayment profile for both long-term debt facilities (interest plus principal) until maturity in 2035 ◼ The Apollo facility has 21 solar assets
Slide 24: Q&A and Appendices
Great Wilbraham (38MW) Cambridgeshire Energised March 2016 Q&A and Appendices
Slide 25: NESF Overview
NESF Overview ◼ NextEnergy Capital IM Ltd and NextEnergy Capital NextEnergy Solar Fund Ltd are both members of the NEC Group. ❑ Attractive acquisition values sourced by NextEnergy Capital NextEnergy Capital Limited acts as the ❑ Operational outperformance supported by WiseEnergy ensuring optimal ass
Slide 26: Ongoing COVID-19 Response
Ongoing 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
Slide 27: Solis Portfolio
Solis Portfolio ◼ High risk-adjusted Business Case: Solis Acquisition and performance returns (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 ◼ The €74.7m long term proje
Slide 28: Biodiversity Overview
Biodiversity Overview ◼ NESF aims to leads the Boxted Airfield - Exemplar case study way in biodiversity. We have an unique ◼ Plant species in 2017 = 20 which increased to 37 in 2020 opportunity to make a ◼ Invertebrates - since 2017 substantial increase in both bumblebee (+500%) and butterfly obser
Slide 29: Investment Portfolio Diversification
Investment Portfolio Diversification 29
Slide 30: 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 30
Slide 31: Preference Shares
Preference Shares ◼ An issuance of £200m is ◼ On 8 November 2018, the Shareholders approved the issuance of £200m of Preference Shares. The expected to increase Company issued the first tranche of £100m in November 2018, and the second tranche of £100m dividend cover by 0.15x Preference Shares were
Slide 32: Summary of the Financial Debt outstanding
Summary of the Financial Debt outstanding ◼ Total debt outstanding at 30 September 2020 was £213m which represents a financial debt gearing of 21% (excluding £200m preference shares) ◼ The Santander RCF of £70m has been extended from July 2020 to July 2022 ◼ Weighted average cost of debt is 3.1% ◼ N
Slide 33: Investment Policy Limits
Investment Policy Limits Investment Objective ▪ The Company may also invest in standalone energy storage systems (not ancillary ◼ To provide ordinary Technology Limit to or co-located with solar PV assets owned by the Company) up to an aggregate shareholders with limit of 10% of the Gross Asset Valu
Slide 34: 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
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