NextEnergy Solar Fund Ltd · LSE:NESF
NextEnergy Solar Fund — FY2024 Earnings Presentation
65 slides from NextEnergy Solar Fund's earnings presentation, Jun 19, 2024
Slide 1: Full year results presentation
2024 Investor Presentation YEARS Full year results presentation 19 June 2024 1
Slide 2: Speakers & contents
Speakers & contents 2024 Investor Presentation • 10 Year Anniversary P3 • Capital Recycling Programme Update P7 Helen Mahy Chairwoman • Tackling the discount to NAV P9 NextEnergy Solar Fund Limited • Full Year Results P12 • Pipeline & Future Growth P21 • Q&A and Appendix p25 Ross Grier Chief Operati
Slide 3: 10 Year Anniversary
2024 Investor Presentation 10 Year Anniversary 3 3
Slide 4: Your Board of Directors
Your Board of Directors 2024 Investor Presentation A highly experienced independent Board of Directors with over 150 years of combined expertise Helen Mahy Patrick Firth Jo Peacegood Paul Le Page Josephine Bush Caroline Chan Chairwoman Non-executive Director Non-executive Director Senior Independent
Slide 5: Ten years of growth
Ten years of growth 2024 Investor Presentation Grown the portfolio to 103 operating assets 11 consecutive years of growing dividend £345m (67.8pps) of dividends paid to shareholders Added international and technology diversification Now powering 301,000 homes each year Achieved over 1GW of installed
Slide 6: Impressive dividend track record
Impressive dividend track record 2024 Investor Presentation Current dividend yield 1 10 Years Of Dividend Growth c.11% 9.0 The highest in the FTSE 350 1 8.35p 8.43p 8.0 7.52p FY24/25 forecasted cover 7.05p 7.16p 6.87p 7.0 6.65p 6.31p 6.42p 1.1 - 1.3x 6.25p 6.0 5.25p 5.0 Pence (p) FY24/25 dividend ta
Slide 7: Capital Recycling Update
2024 Investor Presentation Capital Recycling Update 7 7
Slide 8: Capital Recycling Programme ("CRP") progress
Capital Recycling Programme (“CRP”) progress 2024 Investor Presentation ▪ Post-period end, the Company successfully delivered phase II of its CRP delivering another attractive premium. ▪ Proceeds will primarily fund the recently announced share buyback programme. Assets Sold Installed Capacity Recyc
Slide 9: Tackling the discount to NAV
2024 Investor Presentation Tackling the discount to NAV 9 9
Slide 10: What we have done
What we have done 2024 Investor Presentation Activity Areas addressed ▪ Announced Capital Recycling Programme in April 2023 to sell 246MW portfolio of Solar assets ▪ Phase I completed in November 2023 for £15.2m (100% premium to holding value) Returning cash ▪ Phase II completed in June 2024 for £27
Slide 11: What we are doing
What we are doing 2024 Investor Presentation AGM & Discontinuation Vote Activity June July Aug Sep Oct Nov Dec Jan Feb Mar Investor Roadshow Capital Markets Day Investor Roadshow ▪ Post results update & forward looking plan Engagement & Feedback ▪ Reasons for investors to vote against discontinuatio
Slide 12: Full Year Results
2024 Investor Presentation Full Year Results 12 12
Slide 13: A year of solid progress
A year of solid progress 2024 Investor Presentation First standalone energy storage asset entered commercial operations 50MW First two co-investments in Europe successfully energised 46MW Refinanced all revolving credit facilities at attractive margins (SONIA + 1.20% to 1.50%) £205m Successfully del
Slide 14: Key financial highlights (as at March 2024)
Key financial highlights (as at 31 March 2024) 2024 Investor Presentation Gross Asset Value NAV Per Ordinary Share Cash Income Financial Highlights £1,155m 104.7p £80m (31 March 2023: £1,1225m) (31 March 2023 : 114.3p) (31 March 2023: £79m) Dividend Target FY24/25 Dividend Cover In Period Dividend Y
Slide 15: Operating portfolio (as at March 2024)
Operating portfolio (as at 31 March 2024) 2024 Investor Presentation Operating Assets1 Installed capacity2 Commitment to NPIII ESG2 Weighted average asset life 103 1,015MW $50m 26.6 years (31 March 2023: 99) (31 March 2023: 889MW) x x By Location 3 By Installed Capacity 3 0.8% 0.8% 3.4% 10.3% UK 26.
Slide 16: NAV bridge: twelve-month period breakdown
NAV bridge: twelve-month period breakdown 2024 Investor Presentation NAV Bridge 31 March 2023 – 31 March 2024 A decrease in short-term (2023-2027) UK power Incorporates the published inflation figures price forecasts provided by Consultants, mainly for 2023 which have been reflected in the Completio
Slide 17: Disciplined capital structure (as at March 2024)
Disciplined capital structure (as at 31 March 2024) 2024 Investor Presentation Total Gearing to GAV 1 Preference Shares Weighted Average Cost of Debt Weighted Average Cost of Capital 2 46.4% c.£200m 4.5% 6.4% (Gearing level limit of 50% GAV) (Fixed preferred dividend of 4.75% p.a) (4.2% excluding pr
Slide 18: Portfolio performance & optimisation (as at March 2024)
Portfolio performance & optimisation (as at 31 March 2024) 2024 Investor Presentation ▪ Energy generated during the period was 852GWh (31 March 2023: 899GWh) Total Generation Irradiation vs Generation vs FY2024 (GWh) forecast 2 forecast 2 ▪ During the period, solar irradiation across the portfolio w
Slide 19: High visibility of future cash flows
High visibility of future cash flows 2024 Investor Presentation ▪ NESF runs a short-term power purchase agreements (“PPA”) programme where it Forecasted Total Revenue Breakdown 1,2,3,4 locks in short term PPA’s over a rolling 36- month period 2024/25 2025/26 2026/27 2027/28 2028/29 ▪ Actively look t
Slide 20: Delivering shareholder value
Delivering shareholder value 2024 Investor Presentation Cash Generated Costs Shareholder Value Dividends: OPEX: £48m £7.7m Net cash income Debt repayments Portfolio Income from portfolio: available for Generation 1: distribution: 852GWh £80m Preference Shares: £63m Future Share buybacks £9.5m Re-inv
Slide 21: Pipeline & Future growth
2024 Investor Presentation Pipeline & Future growth 21 21
Slide 22: Future market outlook
Future market outlook 2024 Investor Presentation Solar PV: Solar and energy storage UK deployment forecast 1 ▪ Solar is the cheapest and most sustainable forms of energy generation which can be deployed at speed. ▪ The UK has one of the most mature solar markets in the world with c.16GW currently de
Slide 23: Strategic growth driven with optionality
Strategic growth driven with optionality 2024 Investor Presentation ▪ Add diversification, strengthen dividend cover, and enhance returns Solar PV ▪ Optionality & flexibility provides value for shareholders in the + + current capital allocation Capital recycling International Co-investment environme
Slide 24: The future of NESF
The future of NESF 2024 Investor Presentation Actively narrow the current share price discount to NAV 1 3 Drive growth through Solar PV & Energy Storage strategy Provide an ongoing attractive dividend to shareholders Focus on adding NAV-accretive value to shareholders Continue to optimise the runnin
Slide 25: Q&A
2024 Investor Presentation Q&A 25 25
Slide 26: Appendix: About NextEnergy Solar Fund
2024 Investor Presentation Appendix: About NextEnergy Solar Fund 26 26
Slide 27: Key facts
Appendix: Key facts Key facts 2024 Investor Presentation Fund Structure ▪ Guernsey-domiciled closed-end investment ▪ Launched in 2014 Issue / Listing ▪ Premium listing of ordinary shares on the London Stock Exchange ▪ Stock ticker code: NESF ▪ Board of Directors: 6 Independent Board Members ▪ Invest
Slide 28: NextEnergy Solar Fund structure
Appendix: Key facts NextEnergy Solar Fund structure 2024 Investor Presentation 28 28
Slide 29: Evolution since IPO
Appendix: Key facts Evolution since IPO 2024 Investor Presentation IPO 2014 2015 2016 2017 2018 • £85.6m raised at • £99.6m raised • £100.2m raised, 100% • £180m raised (£64.7m • £126.5m raised,100% • £100m raised, used to IPO in April 2014 November/Decemb deployed six weeks used to repay debt deplo
Slide 30: NextEnergy Capital investment committee
Appendix: Governance NextEnergy Capital investment committee 2024 Investor Presentation Michael Bonte- Giulia Guidi Ross Grier Aldo Beolchini Friedheim Founding Partner and Group Head of Environmental, Social COO, Head of UK Investment Managing Partner and Chief CEO of NextEnergy Group and Governanc
Slide 31: NextEnergy Capital investment management Board of Directors
Appendix: Governance NextEnergy Capital investment management Board of Directors 2024 Investor Presentation Joseph D’Mello Jeremy Thompson Charlotte Denton 31 31
Slide 32: Appendix: NextEnergy Group Value Add
2024 Investor Presentation Appendix: NextEnergy Group Value Add 32 32
Slide 33: NextEnergy Group progress
Appendix: NextEnergy Group NextEnergy Group progress 2024 Investor Presentation Investment Management Asset Management Development Incubator Foundation ▪ Grown AUM to c.$4.3bn ▪ Over 1,500 solar and ▪ Green and brownfield ▪ Targeting startups ▪ International charity battery assets managed project de
Slide 34: Benefits to NextEnergy Solar Fund
Appendix: NextEnergy Group Benefits to NextEnergy Solar Fund 2024 Investor Presentation Over 17 years of experience focused exclusively on solar providing expertise across the entire solar value chain Size & Scale Operational Expertise Unique Access ▪ Access to the world’s largest ▪ Provides new dev
Slide 35: NextEnergy Solar Fund specialist team
Appendix: NextEnergy Group NextEnergy Solar Fund specialist team 2024 Investor Presentation NEC SENIOR MANAGEMENT NEC ESG Giulia Guidi (IC) David Hawkins Michael Aldo Beolchini Ross Grier (IC) Giulia Guidi (IC) Gianluca (IC) Boccanera Head of ESG ESG Vice President Bonte-Friedheim (IC) Founding Part
Slide 36: NextEnergy Group membership and recent awards
Appendix: NextEnergy Group NextEnergy Group membership and recent awards 2024 Investor Presentation WINNER WINNER WINNER SHORTLISTED RECOGNISED Environmental Finance; CFI.co; Responsible Investing Awards Environmental Finance; Investment Week; Sustainable Financial News; Fifty Leaders Impact Awards:
Slide 37: Why NextEnergy Solar Fund ("NESF")
Appendix: NextEnergy Group Why NextEnergy Solar Fund (“NESF”) 2024 Investor Presentation A Specialist Solar Energy & Energy Storage Fund Diversified portfolio of operating solar assets Strong inflation-linked revenues Attractive dividend yield & dividend target Proactive management to drive sharehol
Slide 38: Appendix: NAV
NENTENERGY SOLAR FUND Appendix: NAV
Slide 39: NAV bridge: twelve-month period breakdown
Appendix: NAV NAV bridge: twelve-month period breakdown 2024 Investor Presentation NAV Bridge 31 March 2023 – 31 March 2024 A decrease in short-term (2023-2027) UK power Incorporates the published inflation figures price forecasts provided by Consultants, mainly for 2023 which have been reflected in
Slide 40: Discount rate assumptions (31 March 2024)
Appendix: NAV Discount rate assumptions (31 March 2024) 2024 Investor Presentation ▪ No change to discount rates from 31 December 2023 Discount Rates Discount rate assumptions As at 31 March 2024 As at 31 March 2023 Weighted average discount rate UK unlevered 7.50% 6.75% UK levered Italy unlevered 1
Slide 41: Inflation assumptions (31 March 2024)
Appendix: NAV Inflation assumptions (31 March 2024) 2024 Investor Presentation ▪ The Company continues to take a consistent approach to its inflation assumptions, using external third-party, independent inflation data from HM Treasury Forecasts and long-term implied rates from the Bank of England fo
Slide 42: Forecast power prices (real 2024)
Appendix: NAV Forecast power prices (real 2024) 2024 Investor Presentation ▪ Forward power prices significantly above previous forecasts 31 March 2023 31 March 2024 ▪ The Company’s current UK 20-year average power price UK short-term power £101.8/MWh (real 2023) £65.4/MWh (real 2024)1 forecast repre
Slide 43: NAV sensitivities (31 March 2024)
Appendix: NAV NAV sensitivities (31 March 2024) 2024 Investor Presentation ▪ NAV sensitivities updated NAV per share every six months at interim and full-year results ▪ The sensitivity highlights the percentage change in Discount rate (+/- 0.5%) (3.2)p (2.5%) 2.6% 3.5p the portfolio valuation result
Slide 44: Appendix: Portfolio
NENTENERGY SOLAR FUND Appendix: Portfolio
Slide 45: Portfolio optimisation & enhancement activity
Appendix: Portfolio Portfolio optimisation & enhancement activity 2024 Investor Presentation Focused on implementing technical improvements across the portfolio, reducing operating costs through effective procurement and targeted re-negotiation of contractual terms with suppliers Asset Repowering Ta
Slide 46: Investment policy limits (31 March 2024)
Appendix: Portfolio Investment policy limits (31 March 2024) 2024 Investor Presentation ▪ The Company may also invest in standalone energy storage systems (not ancillary to or co- ▪ 5.5% of GAV currently located with solar PV assets owned by the Company) up to an aggregate limit of 10% of the invest
Slide 47: Portfolio breakdown (31 March 2024)
Appendix: Portfolio Portfolio breakdown (31 March 2024) 2024 Investor Presentation By Subsidy/PPA1 By Installed Capacity1 By Revenue Type1 1.6% 0.1% 1.1% 2.9% 1.2 ROCs 11.3% 11.6% 1.3 ROCs 10.8% 26.2% Brown Power - Fixed PPA 1.4 ROCs 11.1% ROCs 1.6 ROCs 0.9% 2.0 ROCs 0-5 MWp FiTs (UK & Italy) 47.1%
Slide 48: The Italian Solis portfolio
Appendix: Portfolio The Italian Solis portfolio 2024 Investor Presentation ▪ High risk-adjusted returns (9.4% at acquisition) Business Case: Solis Acquisition and Performance ▪ Positive contribution to dividend cover – ▪ Acquisition of eight solar plants in Italy in December 2017 for a total install
Slide 49: Private Solar Fund Investment: NextPower III ESG
Appendix: Portfolio Private Solar Fund Investment: NextPower III ESG 2024 Investor Presentation ▪ NextPower III ESG (“NPIII”) was launched by NextEnergy Capital in 2018 to target utility-scale solar in OECD countries ▪ NESF made a $50m commitment to NPIII in June 2021 ▪ NPIII is targeting a gross in
Slide 50: Appendix: Capital Structure
50 Appendix: Capital Structure 50
Slide 51: Preference shares
Appendix: Capital Structure Optimised capital structure – details (31 March 2024) 2024 Investor Presentation 590m Ordinary Shares in issue, targeting a total dividend of 8.43p per ordinary Equity ◼ Ordinary Shareholders share for the financial period ending 31 March 2024 Preference shares ◼ Two £100
Slide 52: Financial debt outstanding (31 March 2024)
Appendix: Capital Structure Financial debt outstanding (31 March 2024) 1 2024 Investor Presentation Financial debt gearing Total gearing 2 No. of Loan to Termination 2 Applicable 28.9% 46.4% power Facility Type Borrower Value Tranches Amount Outstanding (inc. options rate Provider / arranger plants
Slide 53: Preference shares
Appendix: Capital Structure Preference shares 2024 Investor Presentation ▪ The issuance of £200m preference On 8 November 2018, the Shareholders approved the issuance of £200m of Preference Shares. The Company issued shares is expected to increase the first tranche of £100m in November 2018, and the
Slide 54: Long term debt repayment profile
Appendix: Capital Structure Long term debt repayment profile 2024 Investor Presentation ▪ As at 31 December 2023, c.£161m of the financial debt was long-term fully Apollo Repayment Profile amortising £18 £16 ▪ The charts show the precise yearly £14 repayment profile for both long-term £12 £10 debt f
Slide 55: Appendix: Energy Storage
55 Appendix: Energy Storage 55
Slide 56: The right platform to deploy energy storage
Appendix: Energy Storage The right platform to deploy energy storage 2024 Investor Presentation ▪ 17 years experience as a Manager Existing deep knowledge of UK power markets ▪ C.$4.3bn Solar AUM Experience of managing storage assets, co-located ▪ Over 400 solar assets acquired with solar since 2018
Slide 57: Five key reasons to add energy storage
Appendix: Energy Storage Five key reasons to add energy storage 2024 Investor Presentation Battery storage benefits from intermittency of renewables ▪ As the UK decarbonises, renewables are expected to provide the backbone of the future energy mix. However, renewables are a cause of strain on the gr
Slide 58: Appendix: ESG, Sustainability & Outlook
2024 Investor Presentation Appendix: ESG, Sustainability & Outlook 58 58
Slide 59: An impact ESG investment
Appendix: ESG An impact ESG investment 2024 Investor Presentation ▪ An Article 9 fund under EU SFDR and Taxonomy Emission Data Track Record ▪ Overseen by ESG Board Committee, chaired by Josephine Bush, Non-Executive Director Metric Units FY2015 1 FY2016 1 FY2017 1 FY2018 1 FY2019 1 FY2020 1 FY20211
Slide 60: ESG integration into the NESF investment process
Appendix: ESG ESG integration into the NESF investment process 2024 Investor Presentation ▪ ESG factors are considered throughout the investment process, from potential excluded activities during the project selection phase, to initial screening and full due diligence during the pre-acquisition phas
Slide 61: ESG considerations for energy storage
Appendix: ESG 2024 Investor Presentation ESG considerations for energy storage Mineral Mineral Extraction Due diligence Audits Extraction ▪ COBALT: most of global supply originates from the DRC, of which c. 30% derives from small-scale miners ▪ NextEnergy Capital (“NEC”) carries out ▪ NEC plans to a
Slide 62: Biodiversity & social enhancement
Appendix: ESG Biodiversity & social enhancement 2024 Investor Presentation ▪ NESF benefits from a dedicated Biodiversity team to ensure that land management and native fauna and flora are being considered throughout the investment and ownership Total acres of wildflowers Portfolio with enhanced phas
Slide 63: EU Taxonomy & SFDR
Appendix: ESG EU Taxonomy & SFDR 2024 Investor Presentation ▪ The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing and to increase transparency around sustainability
Slide 64: The NextEnergy Foundation
Appendix: Foundation The NextEnergy Foundation 2024 Investor Presentation ITALY ▪ Established in 2016, the Partner Etifor Foundation’s mission is to Years 2022-2024 alleviate poverty through the Restoring forest area and recreating the nexus with clean energy access Project habitat for an endangered
Slide 65: Important notice
Important notice 2024 Investor Presentation This document is issued by NextEnergy 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 accordingl