NextEnergy Solar Fund Ltd · LSE:NESF
NextEnergy Solar Fund — H1 FY2025 Earnings Presentation
63 slides from NextEnergy Solar Fund's earnings presentation, Nov 21, 2024
Slide 1: NESF Interim Results 2024
Interim Results 2024 NESF Interim Results 2024 November 2024
Slide 2: Contents
Contents Interim 2024 Interim Results Results 2024 • Introduction P3 • Capital Recycling Programme Update P7 Helen Mahy Chairwoman • Tackling the discount to NAV P9 NextEnergy Solar Fund Limited • Key highlights P12 • Pipeline & Future Growth P19 • Q&A and Appendix p22 Ross Grier Chief Operating Off
Slide 3: Introduction
Interim Results 2024 Introduction 3
Slide 4: Six-months of steady progress
Six-months of steady progress Interim Results 2024 Delivered phase II of the Capital Recycling Programme raising £27m 14% premium Commenced a meaningful Share Buyback Programme of up to £20m c.£5m in period Shareholders overwhelmingly voted ‘Against’ discontinuation at the AGM c.94% Refinanced all r
Slide 5: Delivering shareholder value
Delivering shareholder value Interim Results 2024 Cash Generated Costs Shareholder Value Dividends 2 OPEX: £25m £3.7m Net cash income Debt repayments Portfolio Income from portfolio: available for Generation 1: distribution: 595GWh £45m Preference Shares: £37m Share buybacks 3 £4.8m Re-investment fo
Slide 6: Consistent dividend track record
Consistent dividend track record Interim Results 2024 Current dividend yield Dividend Growth Since IPO c.11% 9.0 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 target 4.0 8.43p 3.0 2.0 1.0 Total ordinar
Slide 7: Tackling the discount to NAV
Interim Results 2024 Tackling the discount to NAV 7
Slide 8: Delivering on our promise
Delivering on our promise Interim Results 2024 Activity Areas addressed ▪ Announced Capital Recycling Programme in April 2023 to sell 246MW portfolio of Solar assets Capital Recycling ▪ Phase I completed in November 2023 for £15.2m (100% premium to holding value) Programme ▪ Phase II completed in Ju
Slide 9: Ongoing actions to tackle the discount
Ongoing actions to tackle the discount Interim Results 2024 Activity Nov Dec Jan Feb Mar Apr May Jun Jul Aug Interim investor roadshow Capital Markets Day FY25/26 Target Dividend FY investor roadshow Engagement & Feedback ▪ Continue to engage and listen to NESF’s shareholder base FY Results AGM ▪ Co
Slide 10: Key Highlights
Interim Results 2024 Key Highlights 10
Slide 11: Key financial highlights (as at September 2024)
Key financial highlights (as at 30 September 2024) Interim Results 2024 Gross Asset Value NAV Per Ordinary Share Cash Income 1 Financial Highlights £1,104m 97.8p £45m (31 March 2024: £1,155m) (31 March 2024 : 104.7p) (31 March 2023: £50m) Dividend Target FY24/25 Target Dividend Cash Cover For FY Div
Slide 12: Operating portfolio (as at September 2024)
Operating portfolio (as at 30 September 2024) Operating Assets 1 Installed capacity 2 Commitment to NPIII 2 Weighted avg. asset life Weighted avg. subsidy life 102 983MW $50m ~26 yrs ~10.4 yrs (31 March 2023: 99) (31 March 2023: 889MW) x x By Location By Installed Capacity 0.8% 0.9% 3.5% 10.5% UK 25
Slide 13: NAV bridge: six-month period breakdown
NAV bridge: six-month period breakdown Interim Results 2024 NAV Bridge 31 March 2024 – 30 September 2024 Capital movements (no The valuation incorporates revisions to short- Shares purchased in the period as part of the Includes both ordinary and net NAV impact) term inflation forecasts from externa
Slide 14: Disciplined capital structure (as at September 2024)
Disciplined capital structure (as at 30 September 2024) Total Gearing to GAV 1 Preference Shares Weighted Average Cost of Debt Weighted Average Cost of Capital 2 48.2% c.£200m 4.9% 6.6% (Gearing level limit of 50% GAV) (Fixed preferred dividend of 4.75% p.a) (5% excluding preference shares) (31 Marc
Slide 15: Portfolio performance & optimisation
Portfolio performance & optimisation (as at 30 September 2024) Interim Results 2024 ▪ Energy generated during the period was 595GWh (30 September 2023: 599GWh) Total Generation Irradiation vs Generation vs FY2024 (GWh) forecast 2 forecast 2 ▪ During the period, solar irradiation across the portfolio
Slide 16: High visibility of future cash flows
High visibility of future cash flows Interim Results 2024 ▪ NESF runs a short-term power purchase agreements (“PPA”) programme where it Forecasted Total Revenue Breakdown 1,2,3,4,5 locks in short term PPA’s over a rolling 36- month period. 2024/25 2025/26 2026/27 2027/28 2028/29 ▪ Actively look to s
Slide 17: Capital Recycling Update
Interim Results 2024 Capital Recycling Update 17
Slide 18: Capital Recycling Programme progress
Capital Recycling Programme (“CRP”) progress Interim Results 2024 Assets Sold Installed Capacity Recycled Phases Delivered Total Capital Raised NAV Uplift Produced Three 145MW 3 £72.5m 2.76pps Subsidy-free solar Installed Capacity Type Location Status Price NAV uplift Premium Unlevered IRR asset Hat
Slide 19: Pipeline & Future growth
Interim Results 2024 Pipeline & Future growth 19
Slide 20: Future market outlook
Future market outlook Interim Results 2024 Solar PV: Solar and energy storage UK deployment forecast 1 ▪ Solar is the cheapest and most sustainable form 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 deployed
Slide 21: Strategic growth driven with optionality
Strategic growth driven with optionality Interim Results 2024 ▪ 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 environment pro
Slide 22: Stepping stones towards NESF's future success
Stepping stones towards NESF’s future success Interim Results 2024 Actively narrow the current share price discount to NAV Progress the Capital Recycling Programme to completion Maintain a disciplined capital structure Optimise the running of the existing large portfolio Focus on adding NAV-accretiv
Slide 23: Q&A
Interim Results 2024 Q&A 23
Slide 24: Appendix: About NextEnergy Solar Fund
Interim Results 2024 Appendix: About NextEnergy Solar Fund 24
Slide 25: Key facts
Key facts Interim Results 2024 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 ▪ Investment Manager: NextEnergy C
Slide 26: NextEnergy Solar Fund structure
NextEnergy Solar Fund structure Interim Results 2024 26
Slide 27: Evolution since IPO
Evolution since IPO 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 deployed within 14 partially repay debt and 100% dep
Slide 28: Your Board of Directors
Your Board of Directors Interim Results 2024 A highly experienced independent Board of Directors with over 120 years of combined expertise Helen Mahy Jo Peacegood Paul Le Page Josephine Bush Caroline Chan Chairwoman Non-executive Director Senior Independent Director Non-executive Director Non-execut
Slide 29: NextEnergy Capital investment committee
NextEnergy Capital investment committee Interim Results 2024 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 Governance (ESG) at NextEnergy Capit
Slide 30: NextEnergy Capital investment management Board of Directors
NextEnergy Capital investment management Board of Directors Interim Results 2024 Joseph D’Mello Jeremy Thompson Charlotte Denton 30
Slide 31: Appendix: NextEnergy Group Value Add
Interim Results 2024 Appendix: NextEnergy Group Value Add 31
Slide 32: NextEnergy Group progress
NextEnergy Group progress Interim Results 2024 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 development focused on sustainabili
Slide 33: Benefits to NextEnergy Solar Fund
Benefits to NextEnergy Solar Fund Interim Results 2024 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 development ▪ Access to proprietary
Slide 34: NextEnergy Solar Fund specialist team
NextEnergy Solar Fund specialist team Interim Results 2024 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 Partner Managing Partner & COO & Head
Slide 35: NextEnergy Group membership and recent awards
NextEnergy Group membership and recent awards Interim Results 2024 WINNER WINNER WINNER WINNER SHORTLISTED AJ Bell Awards: Environmental Finance; CFI.co; Responsible Investing Awards Environmental Finance; Investment Week; Sustainable Impact Awards: 2022: Impact Awards: Investment Awards: Award For
Slide 36: Why NextEnergy Solar Fund (NESF)
Why NextEnergy Solar Fund (“NESF”) Interim Results 2024 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 shareholder value Attractive growth prosp
Slide 37: Appendix: NAV
NENTENERGY SOLAR FUND Appendix: NAV
Slide 38: Discount rate assumptions (30 September 2024)
Discount rate assumptions (30 September 2024) Weighted average discount rate Interim Results 2024 ▪ No change to discount rates from 31 December 2023 8.0% (31 March 2024: 8.1%) Discount Rates Discount rate assumptions As at 30 September 2024 As at 30 September 2023 UK unlevered 7.50% 7.50% UK levere
Slide 39: Inflation assumptions (30 September 2024)
Inflation assumptions (30 September 2024) Interim Results 2024 ▪ 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 for its UK assets.
Slide 40: Forecast power prices (real 2024)
Forecast power prices (real 2024) Interim Results 2024 ▪ Forward power prices significantly above previous forecasts 31 March 2024 30 September 2024 ▪ The Company’s current UK 20-year average power price UK short-term power £65.4/MWh (real 2024) £62.0/MWh (real 2024) forecast represents a decrease o
Slide 41: NAV sensitivities (30 September 2024)
NAV sensitivities (30 September 2024) Interim Results 2024 ▪ NAV sensitivities updated NAV per share every six months at interim and full-year results Discount rate (+/- (2.9)p 3.1p ▪ The sensitivity highlights 0.5%) (2.8%) 3.0% the percentage change in the portfolio valuation resulting from a chang
Slide 42: Appendix: Portfolio
NENTENERGY SOLAR FUND Appendix: Portfolio
Slide 43: Portfolio optimisation & enhancement activity
Portfolio optimisation & enhancement activity Interim Results 2024 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 Targeted Improvements Strate
Slide 44: Investment policy limits (30 September 2024)
Investment policy limits (30 September 2024) Interim Results 2024 30 September 2024 (GAV = Investment Policy Limit (%) RAG £1,104m) The Company may also invest in standalone energy storage systems (not ancillary 5.78% of GAV invested in standalone Technology to or co-located with solar PV assets own
Slide 45: Portfolio breakdown (30 September 2024)
Portfolio breakdown (30 September 2024) Interim Results 2024 By Subsidy/PPA1 By Installed Capacity1 By Revenue Type1 1.9% 2.5% 2.8% 1.2 ROCs 15.1% 11.1% 1.3 ROCs 11.6% 25.5% 1.4 ROCs Fixed PPAs 10.6% 1.6 ROCs ROCs 2.0 ROCs 0-5 MWp 45.0% 0.9% FiTs (UK & Italy) FiTs UK 6-10 MWp 3.7% Wholesale Revenues
Slide 46: The Italian Solis portfolio
The Italian Solis portfolio Interim Results 2024 ▪ 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 installed capacity of 34.5MW 1.4x
Slide 47: Private Solar Fund Investment: NextPower III ESG
Private Solar Fund Investment: NextPower III ESG Interim Results 2024 ▪ 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 investor IRR of between 13%
Slide 48: Appendix: Capital Structure
48 Appendix: Capital Structure
Slide 49: Optimised capital structure – details
Optimised capital structure – details (31 March 2024) Interim Results 2024 590m Ordinary Shares in issue, targeting a total dividend of 8.43p per ordinary Equity ◼ share for the financial period ending 31 March 2025 Preference shares ◼ Two £100m tranches issued in November 2018 and August 2019 ◼ Non
Slide 50: Financial debt outstanding (30 September 2024)
Financial debt outstanding (30 September 2024) 8 Interim Results 2024 Loan Number Termination to Facility Amount of plants (including Provider/Arranger Type Borrower Tranches Value amount outstanding Applicable rate secured options to (LTV) £m £m Financial debt gearing Total gearing (1) (3) extend)
Slide 51: Preference shares
Preference shares Interim Results 2024 ▪ 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 second tranche of £100m Preferenc
Slide 52: Long term debt repayment profile
Long term debt repayment profile Interim Results 2024 ▪ As at 30 September 2024, c.£156m of the financial debt was long-term fully Apollo Repayment Profile amortising £20 ▪ The charts show the precise yearly £15 repayment profile for both long-term debt facilities (interest plus principal) £10 (£'m)
Slide 53: Appendix: Energy Storage
NENTENERGY SOLAR FUND NENIENERGY Appendix: Energy Storage
Slide 54: The right platform to deploy energy storage
The right platform to deploy energy storage Interim Results 2024 ▪ 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 450 solar assets acquired with solar since 2018 ▪ 3GW+ across UK, Italy, US, P
Slide 55: Five key reasons to add energy storage
Appendix: Energy Storage Five key reasons to add energy storage Interim Results 2024 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 grid due
Slide 56: Appendix: ESG, Sustainability & Outlook
Interim Results 2024 Appendix: ESG, Sustainability & Outlook 56
Slide 57: An impact ESG investment
Appendix: ESG An impact ESG investment Interim Results 2024 ▪ 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 FY2022
Slide 58: ESG integration into the NESF investment process
Appendix: ESG ESG integration into the NESF investment process Interim Results 2024 ▪ 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 phase ▪ ES
Slide 59: ESG considerations for energy storage
Appendix: ESG Interim Results 2024 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 adopt t
Slide 60: Biodiversity & social enhancement
Appendix: ESG Biodiversity & social enhancement Interim Results 2024 ▪ 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 phases. ac
Slide 61: EU Taxonomy & SFDR
Appendix: ESG EU Taxonomy & SFDR Interim Results 2024 ▪ 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 claim
Slide 62: The NextEnergy Foundation
Appendix: Foundation The NextEnergy Foundation Interim Results 2024 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 bat s
Slide 63: Important notice
Important notice Interim Results 2024 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 accordingly may
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