TIDMNESF
RNS Number : 4815Q
NextEnergy Solar Fund Limited
30 November 2016
30 November 2016
NextEnergy Solar Fund Limited
HALF YEAR RESULTS
Strong progress and positive outlook
NextEnergy Solar Fund ("NESF" or the "Company"), a specialist
investment company that invests in operational solar power plants
in the UK, announces its half year results for the period ended 30
September 2016.
Highlights for the period
-- Investment portfolio at 30 September 2016 of 33 solar
Photovoltaic ("PV") plants for a total of c.414MW installed
capacity in operation
-- With total capital invested of c.GBP481.4m the Company is the
largest listed renewable energy fund on the London Stock Exchange
in terms of installed solar capacity
-- Focus was on-boarding of last year's acquisitions and
generation of a new pipeline of acquisition opportunities.
-- Energy generated from the portfolio amounted to 284.4GWh -
3.2% higher than budgeted as a result of positive asset
management
-- Net Assets grew from GBP273.8m to GBP350.1m. NAV per share
increased from 98.5p on 31 March 2016 to 102.0p as at 30 September
2016
-- Reported profit for the period ended 30 September 2016 was
GBP25.3m and earnings per share were 8.46p
-- Total shareholders return of 13.1%, NAV total return of 8.3%
-- Drawn debt facilities of c.GBP164.3m
-- NESF is on track to achieve a target of 6.31p total dividend
distribution for the full year ending 31 March 2017, in quarterly
instalments
-- The Company paid a first quarterly dividend of 1.5775 pence
per share for the three months to 30 June 2016 on 30 September
2016.
-- A second quarterly dividend of 1.5775 pence per share for the
period ended 30 September 2016 was declared which is to be paid at
the end of December 2016
Post period end
-- In September the Company announced a proposed 350m share
issuance programme and to date has successfully issued 110.3m New
Ordinary Shares raising gross proceeds of GBP115.3m
-- On 22(nd) November announced a further acquisition that
increased portfolio to a total 419MW of installed capacity
-- Strong pipeline of 170MW near-term acquisition opportunities
and a further 430MW under consideration
Financial highlights
As at 30 September 2016
NAV GBP350.1m
Number of shares in issue 343.2m
NAV per share 102.0p
Share price at 30 Sept 2016 106.35p
Market capitalisation GBP365.0m
Total shareholder return 13.1% (based on dividends paid and share price)
NAV total return 8.3% (based on dividends paid and NAV per share)
Kevin Lyon, Chairman of NESF, commented:
"NESF has continued to make major financial and operational
progress during the first half of the year with significant
operating asset outperformance.
"We have completed further capital raisings and grown NAV and
profits during the period and our total shareholder return,
including dividends paid, was 13.1%."
"The decision by the UK to leave the European Union has not
negatively impacted the Company so far and we continue to monitor
the impact of Brexit on power prices."
"Recently we have seen a reverse in the trend of declining
market prices for electricity which began in 2015 and have revised
our power price forecasts to take current market conditions into
account."
"Our new share issuance programme gives us considerable headroom
to pursue appropriate acquisition opportunities and with an
attractive pipeline we expect to increase the portfolio of assets
during the remainder of the financial year."
"We also remain confident of meeting our 6.31p total dividend
distribution target for the full delivered in quarterly
instalments."
Dividend declaration
A second quarterly dividend of 1.5775p per Ordinary Share was
declared on 10 November 2016, totaling GBP 5.4m for payment on 30
December 2016 to all shareholders on the register on 18 November
2016.
Half-Year Report
A copy of the half-year report has been submitted to the
National Storage Mechanism and will shortly be available at
www.morningstar.co.uk/uk/NSM. The half-year report will also be
available on the Company's website at www.nextenergysolarfund.com
where further information on the Company can also be found.
There will be a conference call at 8.30am this morning for
analysts. To register for the call please contact
nextenergy@mhpc.com.
For further information:
NextEnergy Capital Limited 020 3239 9054
Michael Bonte-Friedheim
Aldo Beolchini
Cantor Fitzgerald Europe 020 7894 7667
Sue Inglis
Shore Capital 020 7408 4090
Bidhi Bhoma
Anita Ghanekar
Macquarie Capital (Europe)
Limited 020 3037 2000
Ken Fleming
Nick Stamp
MHP Communications 020 3128 8100
Andrew Leach / Jamie
Ricketts
Notes to Editors:
NextEnergy Solar Fund (NESF)
NESF is a specialist investment company that invests in
operating solar power plants in the UK. Its objective is to secure
attractive shareholder returns through RPI-linked dividends and
long-term capital growth. The Company achieves this by acquiring
solar power plants on agricultural, industrial and commercial
sites.
NESF has raised equity proceeds of approximately GBP465m since
its initial public offering on the main market of the London Stock
Exchange in April 2014. At 30 September 2016, NESF also had credit
facilities of GBP209.8m in place (Macquarie and Santander:
GBP88.5m, of which GBP43.0m is drawn; MIDIS: GBP54.7m; Bayerische
Landesbank: GBP44.9m; and NIBC: GBP21.7m).
NESF is differentiated by its access to NextEnergy Capital Group
(NEC Group), its Investment Manager, which has a strong track
record in sourcing, acquiring and managing operating solar assets.
WiseEnergy is NEC Group's specialist operating asset management
division, providing solar asset management, monitoring and other
services to over 1,250 utility-scale solar power plants with an
installed capacity in excess of 1.7 GW.
Further information on NESF, NEC Group and WiseEnergy is
available at www.nextenergysolarfund.com, www.nextenergycapital.com
and www.wise-energy.eu.
Corporate Summary
NextEnergy Solar Fund Limited (the "Company or NESF") is a
closed-ended investment company limited by shares, registered and
incorporated in Guernsey under the Companies (Guernsey) Law, 2008,
as amended, on 20 December 2013, with registration number 57739.
The Company is a Registered Closed-ended Collective Investment
Scheme regulated by the Guernsey Financial Services Commission (the
"GFSC") pursuant to the Protection of Investors (Bailiwick of
Guernsey) Law 1987, as amended ("POI Law"). The Company's
343,197,405 shares in issue are admitted to the premium listing
segment of the Official List of the UK Listing Authority ("UKLA")
and are traded on the London Stock Exchange's main market for
listed securities under the ticker "NESF". The Company makes its
investments through intermediate holding companies (the "UK
HoldCos") and underlying Special Purpose Vehicles ("SPVs") which
are ultimately wholly-owned by the Company. The UK HoldCos were
registered and incorporated in England and Wales under the
Companies Act, 2006, as amended:
-- NextEnergy Solar Holdings Limited, incorporated on 24 March
2014, with registration number 08956168
-- NextEnergy Solar Holdings II Limited, incorporated on 13
February 2015, with registration number 09438822
-- NextEnergy Solar Holdings III Limited, incorporated on 20
July 2015, with registration number 09693016
-- NextEnergy Solar Holdings IV Limited, incorporated on 16
March 2016, with registration number 10066420
The Company controls the investment policy of each of the UK
HoldCos and its wholly-owned SPVs to ensure that each will act in a
manner consistent with the investment policy of the Company.
The Investment Manager is NextEnergy Capital IM Limited (the
"Investment Manager"), a company incorporated in Guernsey with
registered number 57740 licensed under the POI Law and regulated by
the GFSC. The Investment Manager has appointed NextEnergy Capital
Limited (the "Investment Adviser/NEC"), a company incorporated in
England and Wales on 23 October 2006 with registered number
05975223, to provide investment advice, pursuant to an Investment
Advisory Agreement.
Chairman's Statement
Introduction
I am pleased to present, on behalf of the Board, the Interim
Report for NextEnergy Solar Fund Limited (the "Company" or "NESF")
for the period ended 30 September 2016.
The Company acquires and owns operating solar power projects
exclusively in the UK. Our investment strategy is driven by our
belief that solar power projects have significantly less operating
and financial risk than other renewable energy technologies, while
regulatory risk in the UK continues to be lower relative to other
geographical markets. We target equity returns of between seven and
nine percent, an attractive yield for this low risk profile.
As at 30 September 2016, the Company's portfolio comprised 33
assets amounting to c.414MW installed solar capacity and an
invested capital of c.GBP481.4m. At the Date of Distribution of
this Interim Report, the Company was the largest listed renewable
energy fund on the London Stock Exchange in terms of installed
solar capacity.
Financial Results and Performance
Over the period to date the Company has continued to deliver a
strong set of results despite the challenging power price trading
environment.
Financial Results
The Company has prepared its accounts for the period to 30
September 2016 in accordance with International Financial Reporting
Standards ("IFRS"). In accordance with these accounting policies,
the Company prepares its financial statements considering the fair
value of its investments. Reported profit is GBP25.3m (2015:
GBP8.6m) with earnings per share of 8.46p (2015: 3.56p). NAV total
return was 8.3% and total shareholders return was 13.1%.
Portfolio Performance
We continue to be pleased with the operational performance of
the portfolio. Overall, energy generated by our plants was
284.4GWh, approximately 3.2% above our budget. During the Company's
third financial year we have continued to achieve energy generation
outperformance relative to budget. The energy generation from our
portfolio is equivalent to a saving of 118,000 tonnes of carbon
emissions and sufficient to power some 58,000 households during the
same period.
During the period, solar irradiation across the portfolio was in
line with our expectations. The principal driver for our continued
outperformance continues to rest with the structure and quality of
our operating asset manager organisation, WiseEnergy.
Net Asset Value
At the period end, the Company's NAV was c.GBP350.1m, equivalent
to 102.0p per share (March 2016: NAV of GBP273.8m, 98.5p per
share).
During the previous financial year the Company was affected by
the continuing decline of the market price for electricity which
began in 2015, however in the current financial period prices
started increasing, signaling a potential improvement in the power
price market in the future.
We have revised our power price forecasts to take current market
conditions into account, increasing our forecasts by an average
4.5% over the forecasting term. The weighted average discount rate
remains unchanged at 30 September 2016 being 7.7%. Further details
on the Company's NAV and discount rate are included in the
Financial Review section below.
Portfolio Growth
The Company's Investment Adviser carefully reviews acquisition
targets that are identified in the market. There has been
significant activity in the UK solar sector in terms of assets
being offered for sale. The Investment Adviser pursues only a small
proportion of opportunities it identifies. In the current financial
year the Company is pursuing new capital in the form of a 350m
share issuance program and long-term structured debt which together
are expected to provide a balance of new financing to support the
ambitious pipeline of new acquisitions targeted to grow the NAV per
share.
Capital Raising and Financing
In the current period the Company continued to secure support
from its shareholders to pursue its growth strategy. During July,
August and September 2016 the Company issued 65.2m shares
increasing the number of voting shares to 343.2m. Subsequent to the
period end, the Company issued 110.3 new shares pursuant to a new
350m share issuance program, bringing the total number of voting
shares to 453.5m.
During the previous financial year, the Company took advantage
of the strong interest of institutional debt providers and banks to
lend to the UK solar sector to put in place a mix of short and
long-term debt. At the year-end, the Company had total financial
debt outstanding of GBP216.6m on a pro-forma look-through basis
including project level debt which decreased to GBP164.3m as at 30
September 2016 (as seen in the table on the Investment Manager's
Report). Of the total financial debt, GBP99.5m was long-term fully
amortising debt, while the remainder of GBP64.7m was drawn by the
Company's subsidiaries using short-term credit facilities. The
subsidiaries sourced their financial debt from a number of
different providers, carefully selected to ensure competitive terms
and conditions. During the period GBP64.7m of new equity raised was
used to repay the short-term credit facility. The Company as at the
Date of Distribution of this Interim Report has significantly
progressed the refinancing of the short-term credit facility with a
long-term fully amortising debt (debt which repays both capital and
interest on a periodic basis over the life of the facility) for
GBP155.0m which will provide the Company, through its subsidiaries,
with financing to meet existing and future capital expenditure and
target acquisitions.
Dividend and Dividend Growth
The Company continues to achieve all of its dividend and
dividend growth objectives for the period under consideration. In
July 2016 the Company paid its second interim dividend of 3.125
pence per share for the year ended 31 March 2016. After moving to a
quarterly dividend schedule the Company paid out a total interim
dividend of 1.5775 pence per share in a first quarterly dividend
for the period ended 30 June 2016 paid on the 30 September 2016.
The Company will pay the following quarterly dividend of 1.5775
pence per share for the period ended 30 September 2016 at the end
of December 2016 and currently intends to continue paying quarterly
dividends thereafter.
Outlook
The decision by the UK to leave the European Union in the
referendum held on 23 June 2016 has not negatively impacted the
Company so far. We believe any future impact upon UK climate change
policies will be limited because the policy so far has been
determined in the United Kingdom, and was not derived from a wider
European climate change policy. We will continue to monitor the
impact of Brexit on power prices, sector regulation and growth
opportunities closely.
The risk-return characteristics of acquisition opportunities we
are reviewing continue to be attractive and in line with our
investment objectives. We expect to increase the portfolio of
assets during the remainder of the financial year.
During the second half of the financial year, we expect to
deploy the recently raised capital in the attractive pipeline of
identified opportunities. In parallel, we will continue to focus on
maximising the operating performance of the assets currently owned
and exploring further value-enhancing opportunities around the
existing portfolio.
Kevin Lyon
Chairman of the Board of Directors
29 November 2016
Investment Manager's Report
About NextEnergy Capital
The Investment Manager and Investment Adviser are both members
of the NextEnergy Capital Group. The NextEnergy Capital Group is a
specialist investment and operating asset manager focused on the
solar energy sector, with a 67-strong team of which 27 are focused
on the UK solar market. Through its operating asset management
division, WiseEnergy, the NextEnergy Capital Group manages and
monitors over 1,250 utility-scale solar plants and approximately
3,000 solar rooftop installations (comprising an installed capacity
of approximately 1.7GW and an estimated GBP3.5 billion asset value)
for a client base which includes leading European banks and equity
investors (including private equity funds, listed funds and
institutional investors). The NextEnergy Capital Group also manages
NextPower II LP, a EUR150m private equity fund dedicated to solar
PV investments in Italy.
Investment Objective
The Company seeks to provide investors with a sustainable and
attractive dividend that increases in line with RPI over the long
term. In addition, the Company seeks to provide investors with an
element of capital growth through the reinvestment of net cash
generated in excess of the target dividend in accordance with the
Company's investment policy.
Investment Policy
The Company intends to achieve its investment objective by
investing exclusively in solar PV plants located in the UK.
The Company intends to continue to acquire solar PV plants that
are primarily ground-based and utility-scale and which are on sites
that may be agricultural, industrial or commercial. The Company may
also acquire portfolios of residential or commercial
building-integrated installations. The solar PV plants that will be
targeted are anticipated to generate stable cash flows over their
asset lifespan.
The Company will typically seek to acquire sole ownership of
individual solar PV plants through SPVs, but may enter into joint
ventures or acquire majority interests, subject, in each case, to
the Company maintaining a controlling interest. Where an interest
of less than 100% in a particular solar PV plant is acquired, the
Company intends to secure controlling shareholder rights through
shareholders' agreements or other legal arrangements.
The Company has built up a diversified portfolio of solar PV
plants and its investment policy contains restrictions to ensure
risk diversification. No single investment (or, if an additional
stake in an existing investment is acquired, the combined value of
both the existing and the additional stake) by the Company in any
one solar PV plant will constitute, at the time of investment, more
than 30% of the Gross Asset Value. In addition, the four largest
solar PV plants will constitute, at the time of investment, not
more than 75% of the Gross Asset Value.
The Company will, primarily, continue to acquire operating solar
PV plants, but may also invest in solar PV plants under development
(that is, at the stage of origination, project planning or
construction) when acquired. Such assets will constitute (at the
time of investment) not more than 10% of the Gross Asset Value in
aggregate. As at period end, the Company has not invested directly
in solar PV plants under development.
The Company may also agree to forward-fund by way of secured
loans the construction costs of solar PV plants where it retains
the right (but not the obligation) to acquire the relevant solar
plant once operational. Such forward-funding will not fall within
the 10% restriction above but will be restricted to no more than
25% of the Gross Asset Value (at the time such arrangement is
entered into) in aggregate and will only be undertaken where
supported by appropriate security (which may include financial
instruments as well as asset-backed guarantees).
A significant proportion of the Company's income is expected to
result from the sale of the entirety of the electricity generated
by the solar PV plants within the terms of power purchase
agreements ("PPA") to be executed from time to time. These are
expected to include the sale of ROC's, other regulated benefits and
the sale of electricity generated by the plants. Within this
context, the Investment Manager expects to conclude PPAs with
creditworthy counterparties at the appropriate time.
The Company will continue to diversify its third party
suppliers, service providers and other commercial counterparties,
such as developers, engineering and procurement contractors,
technical component manufacturers, PPA providers and landlords.
In pursuit of the Company's investment objective, the Company
may employ leverage, which will not exceed (at the time the
relevant arrangement is entered into) 50% of the Gross Asset Value
in aggregate. Such leverage will be deployed for the acquisition of
further solar PV plants in accordance with the Company's investment
policy. The Company may seek to raise leverage at any of the SPV,
UK Holdco or Company levels. The Company has a preference for
medium to long-term amortising debt financing.
The Company intends to invest with a view to holding its solar
PV plants until the end of their useful life. However, assets may
be disposed of or otherwise realised where the Investment Manager
determines, in its discretion, that such realisation is in the best
interest of the Company. Such circumstances may include (without
limitation) disposals for the purposes of realising or preserving
value, or of realising cash resources for reinvestment or
otherwise. The Company will seek to optimise and extend the
lifespan of its assets and may invest in their repowering and/or
integration of ancillary technologies (e.g. energy storage) on its
solar PV plants to fully utilise grid connections and balance the
electricity grid with a view to generating greater revenues. The
Company expects to re-invest any cash surplus (in excess of that
required to meet the Company's dividend target and on-going
operating expenses) in further investments, thereby supporting its
long-term net asset value ("NAV").
The Company may invest cash held for working capital purposes
and pending investment or distribution in cash or near-cash
equivalents, including money market funds. The Company may (but is
not obliged to) enter into hedging arrangements in relation to
interest rates and/or power prices.
Portfolio Highlights and Performance
Since inception the Company had announced the acquisition of 33
separate solar PV plants for a total investment cost of up to
c.GBP481.4m, representing 138% of the equity proceeds raised to
date. The 33 solar PV plants amount to an installed capacity of
c.414MW in operation. In the current period the Company has focused
on completing acquisitions of assets that had been previously
announced at the previous year end.
The NextEnergy Capital Group has actively led the completion
process of all the acquisitions made by the Company. The completion
process is subject to the satisfaction of several conditions set in
the interests of the Company, including the plant satisfactorily
passing strictly-defined technical and performance tests. The
details of these tests, and whether they refer to the delivery of
preliminary, intermediate or final acceptance certificates (or PAC,
IAC, FAC as they are known) vary across the portfolio but in
general terms these are required by the Investment Manager to
ensure that the Company settles the majority of the acquisition
consideration only as and when the target solar PV plants
demonstrate the desired level of quality and ability to obtain and
exceed the expected technical performances in the long run.
The operational performance of the portfolio during the period
was satisfactory. The Investment Manager is providing in this
report details of the actual performance compared to expectation
for 31 of the total 33 solar PV plants, specifically only those
plants that have been managed and monitored by the NextEnergy
Capital Group for at least three months at the period end (at the
period end Green Farm was yet to complete acquisition and Ellough
Phase 2 had been held by the Company for less than three months).
As a result of the Company's operating asset management strategy,
this sub-portfolio of 31 solar PV plants generated an
outperformance of 3.2% above the budgeted generation values, for a
total generation of 284.4GWh. Solar irradiation across the
sub--portfolio was in line with budget.
Typically, energy generation of a solar PV asset is directly
correlated with the level of solar irradiation received by the PV
plant itself, such that a higher level of solar irradiation by any
percentage should normally result in a higher energy generation by
the same percentage. Active asset management practices and
technical improvements can positively affect the technical
performance of PV plants and thus impact this direct correlation
(as well as unplanned outages or technical issues can negatively
impact it). NESF defines Asset Management Alpha as the difference
between the delta of energy generation vs. budget and the delta of
solar irradiation vs. budget. The table below summarises this
analysis for the relevant periods since IPO:
The Asset Management Alpha allows the Company to identify a
"real" outperformance of the solar portfolio due to active
management having neutralised the effects of variation in solar
irradiation. The nominal outperformance is calculated as GWh
generated by the portfolio vs. the GWh expected in the assumptions
used at the time of acquisition. In this light, the "nominal"
outperformance of the Company's portfolio during the period ended
30 September 2016 was 3.2% and the Asset Management Alpha was also
3.2% during the period representing the "real" outperformance due
to active asset management. As a way of comparison, during the
first half of period ended 31 March 2016 the Asset Management Alpha
was 2.8%.
The budgeted electricity generation and solar irradiation are
derived from the financial models prepared at acquisition of each
solar power plant and used to value and acquire such plant. An
on-going operating outperformance versus the acquisition budget is
expected to result in higher asset returns, other things being
equal.
Period Assets monitored Solar Irradiation Power Generation Asset Management
(delta vs budget) (delta vs. budget) Alpha
Full Year 2014/15 6 (0.4%) +4.8% +5.2%
First Half 2015/16 17 +2.9% +5.7% +2.8%
Full Year 2015/16 23 +0.4% +4.1% +3.7%
First Half 2016/17 31 +0.0% +3.2% +3.2%
Cumulative from IPO to
September 2016 31 +1.0% +4.1% +3.1%
Investment Portfolio
The Investment Manager achieved a high level of diversification
in the Company's portfolio: the 33 solar PV plants are located
across 17 different counties of England and Wales, the largest one
represents 9% of the total installed capacity and the four largest
solar PV plants represent together 28% of the total installed
capacity. In addition, the portfolio is diversified across 16
non-connected contractors, 12 different Tier 1 solar panel
manufacturers and eight Tier 1 inverter manufacturers. This spread
of counterparties effectively diversifies the Company's key
counterparty risks.
Below is a summary of the overall investment portfolio with
various relevant breakdown analysis:
Power plant Location Announcement Regulatory Status(2) Plant Investment % of Equity
Date Regime(1) Capacity (GBPM) Proceeds
(MWp)
Higher
Hatherleigh Somerset 01/05/2014 1.6 Completed 6.1 7.3 2.1%
Shacks Barn Northants 09/05/2014 2.0 Completed 6.3 8.2 2.3%
Gover Farm Cornwall 23/06/2014 1.4 Completed 9.4 11.1 3.2%
Bilsham Sussex 03/07/2014 1.4 Completed 15.2 18.9 5.4%
Brickyard Warwickshire 14/07/2014 1.4 Completed 3.8 4.1 1.2%
Ellough Suffolk 28/07/2014 1.6 Completed 14.9 20.0 5.8%
Poulshot Wiltshire 09/09/2014 1.4 Completed 14.5 15.7 4.4%
Condover Shropshire 29/10/2014 1.4 Completed 10.2 11.7 3.3%
Llywndu Ceredigion 22/12/2014 1.4 Completed 8.0 9.4 2.7%
Cock Hill Farm Wiltshire 22/12/2014 1.4 Completed 20.0 23.3 6.7%
Boxted Airfield Essex 31/12/2014 1.4 Completed 18.8 20.6 5.9%
Langenhoe Essex 12/03/2015 1.4 Completed 21.2 22.9 6.5%
Park View Devon 19/03/2015 1.4 Completed 6.5 7.7 2.2%
Croydon Cambridgeshire 27/03/2015 1.4 Completed 16.5 17.8 5.1%
Hawkers Farm Somerset 13/04/2015 1.4 Completed 11.9 14.5 4.1%
Glebe Farm Bedfordshire 13/04/2015 1.4 Completed 33.7 40.5 11.5%
Bowerhouse Somerset 18/06/2015 1.4 Completed 9.3 11.1 3.2%
Wellingborough Northants 18/06/2015 1.6 Completed 8.5 10.8 3.1%
Birch Farm Essex 21/10/2015 FiT Completed 5.0 5.3 1.5%
Thurlestone
Leicester Leicestershire 21/10/2015 FiT Completed 1.8 2.3 0.7%
North Farm Dorset 21/10/2015 1.4 Completed 11.5 14.5 4.1%
Ellough Phase
2 Suffolk 03/11/2015 1.3 Completed 8.0 8.0 2.3%
Hall Farm Leicestershire 03/11/2015 FiT Completed 5.0 5.0 1.4%
Decoy Farm Lincolnshire 03/11/2015 FiT Completed 5.0 5.2 1.5%
Green Farm(3) Essex 26/11/2015 FiT Operational(6) 5.0 5.8 1.7%
Fenland(3)(4) Cambridgeshire 11/01/2016 1.4 Completed 20.4 23.9 6.8%
Green End(3)(4) Cambridgeshire 11/01/2016 1.4 Completed 24.8 29.0 8.3%
Tower Hill(3)(4) Gloucestershire 11/01/2016 1.4 Completed 8.1 8.8 2.5%
Branston(3)(5) Lincolnshire 05/04/2016 1.4 Completed 18.9 }
Great
Wilbraham(3)(5) Cambridgeshire 05/04/2016 1.4 Completed 38.1
Berwick(3)(5) Sussex 05/04/2016 1.4 Completed 8.2 97.9 28.0%
Bottom
Plain(3)(5) Dorset 05/04/2016 1.4 Completed 10.1
Emberton(3)(5) Buckinghamshire 05/04/2016 1.4 Completed 9.0
Total 413.7 481.4 137.5%
(1) An explanation of FiT/ROC Regime is available at
www.ofgem.gov.uk/environmental-programmes.
(2) As at the Date of Distribution of this interim report.
(3) Investment excludes debt drawn down included in cost.
(4) Part of the Three Kings portfolio.
(5) Part of the Radius Portfolio.
(6) Green Farm is operational but the transaction has not yet
completed as at 30 September 16.
Higher Hatherleigh
Higher Hatherleigh was NESF's first acquisition, which took
place in May 2014. The site is located near Wincanton in Somerset
and has a capacity of 6.1MW. The site has performed well since it
became operational in April 2013 and during the period from
acquisition to 30 September 2016 the plant produced 16.0 GWh (+4.5%
vs budget). The acquisition cost was GBP7.3m and the investment
value at period end was GBP7.2m, which is 1.8% of the portfolio
value.
Higher Hatherleigh
Location Somerset
Capacity 6.1MW
Regulatory Regime 1.6 ROCs
EPC Moser Baer/Daylighting Power
Panels JA Solar
Inverter Power-One
Operational Since Apr-13
PE September Since
2016 Acquisition
MWh Generated 4,172 16,026
Solar Irradiation vs expectations (5.9%) (0.8%)
Energy Generation vs Budget (3.1%) +4.5%
Shacks Barn
Announced shortly after the Higher Hatherleigh acquisition,
Shacks Barn, located near Silverstone in Northamptonshire, was also
acquired by the Company in May 2014. This 6.3MW plant has been
operational since March 2013. Since acquisition to 30 September
2016, the site has produced 16.4 GWh (+ 9.8 % vs budget). The
acquisition cost was GBP8.2m and the investment value at period end
was GBP8.1m, which is 2.1% of the portfolio value.
Shacks Barn
Location Northants
Capacity 6.3MW
Regulatory Regime 2.0 ROCs
EPC Moser Baer/Daylighting Power
Panels JA Solar
Inverter Power-One
Operational Since Mar-13
PE September Since
2016 Acquisition
MWh Generated 4,397 16,400
Solar Irradiation vs expectations (3.4%) +1.4%
Energy Generation vs Budget +4.5% +9.8%
Gover Farm
Gover Farm is the Company's most south-westerly asset, located
near to Truro in Cornwall. The acquisition was announced at 9.4MW
in June 2014. From acquisition to 30 September 2016, the plant
produced 18.1 GWh (+4.0% vs budget). The acquisition cost was
GBP11.1m and the investment value at period end was GBP11.4m, which
is 2.9% of the portfolio value. As part of the Company's commitment
to biodiversity, the site is in the NextEnergy grazing programme
ensuring that the land is dual-purpose and remains employed in food
production.
Gover Farm
Location Cornwall
Capacity 9.4MW
Regulatory Regime 1.4 ROCs
EPC Moser Baer
Panels BYD
Inverter ABB
Operational Since Oct-14
PE September Since
2016 Acquisition
MWh Generated 6,348 18,074
Solar Irradiation vs expectations (1.0%) +0.9%
Energy Generation vs Budget (5.3%) +4.0%
Bilsham
Bilsham is located near Bognor Regis in Sussex, close to the
southern coast of the UK. The plant was delivered to the Company in
two phases with an initial phase of 12.7MW followed by an extension
of 2.5MW in March 2015. The site produced 29.8 GWh (+3.5% vs
budget) since acquisition to 30 September 2016. The acquisition
cost was GBP18.9m and the investment value at period end was
GBP18.3m, which is 4.6% of the portfolio value.
Bilsham
Location Sussex
Capacity 15.2MW
Regulatory Regime 1.4 ROCs
EPC GDF Suez
Panels Renesola
Inverter ABB
Operational Since Nov-14
PE September Since
2016 Acquisition
MWh Generated 11,587 29,814
Solar Irradiation vs expectations (1.5%) (0.4%)
Energy Generation vs Budget +2.2% +3.5%
Brickyard
Brickyard is a site located near Leamington Spa in Warwickshire
and has a capacity of 3.8MW. Since acquisition to 30 September
2016, Brickyard produced 6.9 GWh (+5.8% vs budget). The acquisition
cost was GBP4.1m and the investment value at period end was
GBP4.0m, which is 1.0% of the portfolio value.
Brickyard
Location Warwickshire
Capacity 3.8MW
Regulatory Regime 1.4 ROCs
EPC Moser Baer
Panels BYD
Inverter ABB
Operational Since Nov-14
PE September Since
2016 Acquisition
MWh Generated 2,673 6,853
Solar Irradiation vs expectations +0.0% +1.4%
Energy Generation vs Budget +3.6% +5.8%
Ellough
Ellough is a solar plant located on a disused airfield near
Ellough in Suffolk and has been operational since March 2014. The
14.9MW site has produced 33.7 GWh (+5.1% vs budget) since
acquisition to 30 September 2016. The acquisition cost was GBP20.0m
and the investment value at period end was GBP19.3m, which is 4.9%
of the portfolio value. The Company has committed to acquire a
second phase to this project which has already been constructed and
commissioned.
Ellough
Location Suffolk
Capacity 14.9MW
Regulatory Regime 1.6 ROCs
EPC Lark Energy
Panels Hanwha
Inverter Free Sun
Operational Since Mar-14
PE September Since
2016 Acquisition
MWh Generated 11,116 33,737
Solar Irradiation vs expectations (1.7%) (1.8%)
Energy Generation vs Budget +3.9% +5.1%
Poulshot
The Poulshot plant is located near Trowbridge in Wiltshire and
has a capacity of 14.5MW. The plant was acquired in September 2014
and has been operational since March 2015. The site has produced
18.5 GWh (+1.6% vs budget) since acquisition to 30 September 2016.
The acquisition cost was GBP15.7m and the investment value at
period end was GBP16.4m, which is 4.1% of the portfolio value.
Poulshot
Location Wiltshire
Capacity 14.5MW
Regulatory Regime 1.4 ROCs
EPC Moser Baer/Daylighting Power
Panels BYD
Inverter ABB
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 10,202 18,491
Solar Irradiation vs expectations (2.3%) (3.5%)
Energy Generation vs Budget +3.0% +1.6%
Condover
Condover is located near Shrewsbury in Shropshire and has a
capacity of 10.2MW. The plant was acquired in October 2014 has been
operational since March 2015. The site has produced 14.2GWh (+0.7%
vs budget) since acquisition to 30 September 2016. The acquisition
cost was GBP11.7m and the investment value at period end was
GBP11.0m, which is 2.8% of the portfolio value. The Plant has been
installed around two existing rocky outcrops on the site. These add
an interesting dimension to the layout and provide sheltered
habitat for local wildlife.
Condover
Location Shropshire
Capacity 10.2MW
Regulatory Regime 1.4 ROCs
EPC Zaragoza Group
Panels Canadian Solar
Inverter Free Sun
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 6,741 14,197
Solar Irradiation vs expectations (1.5%) (2.4%)
Energy Generation vs Budget (3.0%) +0.7%
Llwyndu
Currently Llwyndu is the only asset owned by the Company that is
not in England. This site is located in Mid-Wales and has a
capacity of 8.0MW. The plant was acquired in December 2014 and has
been operational since February 2015. This site has produced 9.5GWh
(--1.6% vs budget) since acquisition to 30 September 2016. The
acquisition cost was GBP9.4m and the investment value at period end
was GBP9.1m, which is 2.3% of the portfolio value. It is the most
westerly plant that the Company has acquired in the mid-country
sector, close to the Ceredigion coast.
Llwyndu
Location Ceredigion
Capacity 8.0MW
Regulatory Regime 1.4 ROCs
EPC Greencells
Panels BYD
Inverter Hauwei
Operational Since Feb-15
PE September Since
2016 Acquisition
MWh Generated 5,409 9,524
Solar Irradiation vs expectations (7.0%) (7.1%)
Energy Generation vs Budget (3.2%) (1.6%)
Cock Hill Farm
Cock Hill Farm is located near Trowbridge in Wiltshire and has a
capacity of 20.0MW. The plant was acquired in December 2014 and has
been operational since March 2015. The site has produced 24.8GWh
(+0.7% vs budget) since acquisition to 30 September 2016. The
acquisition cost was GBP23.6m and the investment value at period
end was GBP22.3m, which is 5.6% of the portfolio value.
Cock Hill Farm
Location Wiltshire
Capacity 20.0MW
Regulatory Regime 1.4 ROCs
EPC Greencells
Panels Jinko
Inverter Huawei
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 14,231 24,833
Solar Irradiation vs expectations (2.1%) (4.2%)
Energy Generation vs Budget +1.2% +0.7%
Boxted Airfield
Boxted site is located north of Colchester in Essex on the now
disused Boxted Airfield. Boxted has a capacity of 18.8MW and was
acquired in March 2015, after it became operational. The site has
produced 32.9GWh (+4.1% vs. budget) since acquisition to 30
September 2016. The acquisition cost was GBP20.6m and the
investment value at period end was GBP21.1m, which is 5.3% of the
portfolio value. The site has been sympathetically installed and
benefits from wildflower seeding which has been specifically
designed to enhance the local wildlife population.
Boxted Airfield
Location Essex
Capacity 18.8MW
Regulatory Regime 1.4 ROCs
EPC Push Energy
Panels Yingli
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 14,255 32,887
Solar Irradiation vs expectations +1.8% +0.4%
Energy Generation vs Budget +5.6% +4.1%
Langenhoe
Langenhoe is located near Colchester in Essex and has a capacity
of 21.2MW. The plant has been operational since March 2015. The
site has produced 38.5GWh (+7.7% vs budget) since acquisition to 30
September 2016. The acquisition cost was GBP22.9m and the
investment value at period end was GBP22.8m, which is 5.7% of the
portfolio value. The site overlooks the Mersey estuary and has
innovative wildlife enhancement measures incorporated in to its
design and operation with specific support for both local bird and
bumblebee populations. The construction works also energised three
previously off-grid properties.
Langenhoe
Location Essex
Capacity 21.2MW
Regulatory Regime 1.4 ROCs
EPC Push Energy
Panels Yingli
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 16,645 38,544
Solar Irradiation vs expectations +3.9% +3.2%
Energy Generation vs Budget +8.9% +7.7%
Park View
Park View is located near Ashburton in Devon, situated at the
top edge of a valley with a capacity of 6.5MW. The site has
produced 8.1GWh (-4.3% vs budget) since acquisition to 30 September
2016. The acquisition of Park View was first announced in March
2015. The acquisition cost was GBP7.7m and the investment value at
period end was GBP7.7m, which is 1.9% of the portfolio value.
Park View
Location Devon
Capacity 6.5MW
Regulatory Regime 1.4 ROCs
EPC Ethical
Panels Astronergy
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 4,510 8,091
Solar Irradiation vs expectations (8.0%) (7.9%)
Energy Generation vs Budget (6.5%) (4.3%)
Croydon
Croydon is a plant located in South Cambridgeshire and has a
capacity of 16.5MW. The plant was acquired and has been operational
since March 2015. The site has produced 27.5GWh (+5.6% vs budget)
since acquisition to 30 September 2016. The acquisition cost was
GBP17.8m and the investment value at period end was GBP17.7m, which
is 4.5% of the portfolio value. The site also forms part of the
Company's biodiversity drive after being sown with wildflower seed
mix. The site will provide lengthy foraging seasons for bumblebees,
a vital and declining species.
Croydon
Location Cambridgeshire
Capacity 16.5MW
Regulatory Regime 1.4 ROCs
EPC Push Energy
Panels Yingli
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 11,990 27,535
Solar Irradiation vs expectations +4.0% +3.1%
Energy Generation vs Budget +9.7% +5.6%
Hawkers Farm
Hawkers Farm is a site located near Theale in Somerset with a
capacity of 11.9MW. The plant was acquired in April 2015 and has
been operational since March 2015. The site has produced
15.7GWh
(-1.3% vs budget) since acquisition to 30 September 2016. The
asset is located on a dairy farm and the site itself is being
grazed by sheep ensuring that the land stays in food production.
The acquisition cost was GBP14.5m and the investment value at
period end was GBP14.6m, which is 3.7% of the portfolio value.
Hawkers Farm
Location Somerset
Capacity 11.9MW
Regulatory Regime 1.4 ROCs
EPC Greencells
Panels Jinko
Inverter Huawei
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 8,211 15,684
Solar Irradiation vs expectations (4.2%) (4.3%)
Energy Generation vs Budget (4.3%) (1.3%)
Glebe Farm
Located not far from Wellingborough and partially on the old
airfield land that is now taken up by the Santa Pod Raceway, Glebe
Farm is one of the largest solar plants acquired by the Company
with a capacity of 33.7MW. The acquisition was completed in May
2015. The plant has been operational since March 2015. The site has
produced 50.6GWh (+9.3% vs budget) since acquisition to 30
September 2016. The acquisition cost was GBP40.5m and the
investment value at period end was GBP40.5m, which is 10.2% of the
portfolio value.
Glebe Farm
Location Bedfordshire
Capacity 33.7MW
Regulatory Regime 1.4 ROCs
EPC Bejulo
Panels Canadian Solar
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 24,522 50,555
Solar Irradiation vs expectations +3.7% +2.8%
Energy Generation vs Budget +8.5% +9.3%
Bowerhouse
Bowerhouse is located near Banwell in Somerset and has a
capacity of 9.3MW. The plant was acquired in June 2015 and has been
operational since March 2015. The site has produced 11.5GWh (-1.2%
vs budget) since acquisition to 30 September 2016. The acquisition
cost was GBP11.1m and the investment value at period end GBP11.0m,
which is 2.8% of the portfolio value.
Bowerhouse
Location Somerset
Capacity 9.3MW
Regulatory Regime 1.4 ROCs
EPC Ethical
Panels LDK
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 6,569 11,505
Solar Irradiation vs expectations (1.4%) (3.0%)
Energy Generation vs Budget (0.9%) (1.2%)
Wellingborough
Wellingborough is located near the town of Wellingborough in
Northamptonshire and has a capacity of 8.5MW. The plant was
acquired in June 2015 and has been operational since March 2015.
The site has produced 11.6GWh (+3.7% vs budget) since acquisition
to 30 September 2016. The acquisition cost was GBP10.8m and the
investment value at period end was GBP10.0m, which is 2.5% of the
portfolio value.
Wellingborough
Location Northants
Capacity 8.5MW
Regulatory Regime 1.6 ROCs
EPC Lark Energy
Panels LDK
Inverter Free Sun
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 5,980 11,558
Solar Irradiation vs expectations (0.6%) (1.8%)
Energy Generation vs Budget +3.8% +3.7%
Birch Farm
Birch Farm is a 5.0MW site located near Colchester in Essex. The
plant was acquired in September 2015 and has been operational since
June 2015. The site has produced 5.3GWh (+3.0% vs budget) since
acquisition to 30 September 2016. The acquisition cost was GBP5.3m
and the investment value at period end was GBP5.5m, which is 1.4%
of the portfolio value. The site also enabled an energy supply to
be created at an adjoining recycling facility.
Birch Farm
Location Essex
Capacity 5.0MW
Regulatory Regime FiT
EPC Push Energy
Panels Yingli
Inverter Ingeteam
Operational Since Jun-15
PE September Since
2016 Acquisition
MWh Generated 3,747 5,337
Solar Irradiation vs expectations +2.1% +0.9%
Energy Generation vs Budget +4.6% +3.0%
Thurlestone Leicester
Thurlestone Leicester is located in Leicestershire and has a
capacity of 1.8MW. The plant was acquired in October 2015 and has
been operational since April 2013. The site has produced 0.3GWh
(-3.0% vs budget) since acquisition to 30 September 2016. The
acquisition cost was GBP2.3m and the investment value at period end
was GBP2.5m, which is 0.6% of the portfolio value. This asset is
the only rooftop component of the Company's portfolio providing
green energy to tenants of Social housing.
Thurlestone Leicester
Location Leicestershire
Capacity 1.8MW
Regulatory Regime FiT
EPC Stepnell
Panels Znshine Solar
Inverter Power-One
Operational Since Apr-13
PE September Since
2016 Acquisition
MWh Generated 1,028 1,343
Solar Irradiation vs expectations N/A N/A
Energy Generation vs Budget (1.7%) (2.3%)
North Farm
North Farm is a 11.5MW site located in Dorset. The plant was
acquired in October 2015 and has been operational since March 2015.
The site has produced 11.5GWh (-6.8% vs budget) since acquisition
to 30 September 2016. The acquisition cost was GBP14.5m and the
investment value at period end was GBP14.3m, which is 3.6% of the
portfolio value.
North Farm
Location Dorset
Capacity 11.5MW
Regulatory Regime 1.4 ROCs
EPC British Solar Renewables
Panels Jinko
Inverter Gamesa
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 8,434 11,531
Solar Irradiation vs expectations (8.5%) (10.2%)
Energy Generation vs Budget (5.7%) (6.8%)
Ellough Phase 2
Ellough Phase 2 is located in Suffolk and has a capacity of
8.0MW. The transaction was completed in August 2016 and has been
operational since March 2016. The site has produced 1.8GWh (+9.8%
vs budget) since acquisition to 30 September 2016. The acquisition
cost was GBP8.0m and the investment value at period end was
GBP9.1m, which is 2.3% of the portfolio value.
Ellough Phase 2
Location Suffolk
Capacity 8.0MW
Regulatory Regime 1.3 ROCs
EPC Lark Energy
Panels Hanwha
Inverter Free Sun
Operational Since Mar-16
PE September Since
2016 Acquisition
MWh Generated 1,768 1,768
Solar Irradiation vs expectations +12.7% +12.7%
Energy Generation vs Budget +9.8% +9.8%
Hall Farm
Hall Farm is located in Leicestershire and has a capacity of
5.0MW. The plant was acquired in November 2015 and has been
operational since May 2016. The site has produced 0.4GWh (-1.2% vs
budget) since acquisition to 30 September 2016.The acquisition cost
was GBP5.0m and the investment value at period end was GBP5.6m,
which is 1.4% of the portfolio value.
Hall Farm
Location Leicestershire
Capacity 5.0MW
Regulatory Regime FiT
EPC Push Energy
Panels Hanwha
Inverter Ingeteam
Operational Since May-16
PE September Since
2016 Acquisition
MWh Generated 395 395
Solar Irradiation vs expectations (5.9%) (5.9%)
Energy Generation vs Budget (1.2%) (1.2%)
Decoy Farm
Decoy Farm is a 5.0MW site located near Colchester in Essex. The
plant was acquired in November 2015 and has been operational since
January 2016. The site has produced 0.4GWh (-9.9% vs budget) since
acquisition to 30 September 2016.The acquisition cost was GBP5.2m
and the investment value at period end was GBP5.6m, which is 1.4%
of the portfolio value.
Decoy Farm
Location Lincolnshire
Capacity 5.0MW
Regulatory Regime FiT
EPC Push Energy
Panels Hanwha Q Cells
Inverter Ingeteam
Operational Since Jan-16
PE September Since
2016 Acquisition
MWh Generated 372 372
Solar Irradiation vs expectations (8.5%) (8.5%)
Energy Generation vs Budget (9.9%) (9.9%)
Green Farm
Green Farm is located in Essex and has a capacity of 5.0MW. The
plant was acquired in November 2015 and has been operational since
December 2015. The acquisition cost was GBP5.8m and the investment
value at period end GBP5.8m, which is 1.5% of the portfolio
value.
Green Farm
Location Essex
Capacity 5.0MW
Regulatory Regime FiT
EPC Moser Baer/Daylighting Power
Panels Atersa
Inverter Power Electronics
Operational Since Dec-15
PE September Since
2016 Acquisition
MWh Generated N/A N/A
Solar Irradiation vs expectations N/A N/A
Energy Generation vs Budget N/A N/A
Fenland
Fenland is located in Cambridgeshire and has a capacity of
20.4MW. The plant was acquired in January 2016 and has been
operational since March 2015. The site has produced 18.4GWh (+7.8%
vs budget) since acquisition to 30 September 2016. Fenland is part
of the Three Kings portfolio which has project level debt, the
equity acquisition cost was GBP7.6m and the investment value at
period end was GBP8.4m, which is 2.1% of the portfolio value.
Fenland
Location Cambridgeshire
Capacity 20.4MW
Regulatory Regime 1.4 ROCs
EPC Hanwha Q Cells
Panels Hanwha Q Cells
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 15,220 18,397
Solar Irradiation vs expectations +1.5% +2.6%
Energy Generation vs Budget +7.1% +7.8%
Green End
Green End is a 24.8MW site located in Cambridgeshire. The plant
was acquired in January 2016 and has been operational since March
2015. The site has produced 21.7GWh (+4.8% vs budget) since
acquisition to 30 September 2016. Green End is part of the Three
Kings portfolio which has project level debt, the equity
acquisition cost was GBP9.2m and the investment value at period end
was GBP10.1m, which is 2.6% of the portfolio value.
Green End
Location Cambridgeshire
Capacity 24.8MW
Regulatory Regime 1.4 ROCs
EPC Hanwha Q Cells
Panels Hanwha Q Cells
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 17,805 21,713
Solar Irradiation vs expectations +0.9% +1.8%
Energy Generation vs Budget +3.2% +4.8%
Tower Hill
Tower Hill is located in Gloucestershire and has a capacity of
8.1MW. The plant was acquired in January 2016 and has been
operational since March 2015. The site has produced 7.1GWh (+4.7%
vs budget) since acquisition to 30 September 2016. Tower Hill is
part of the Three Kings portfolio which has project level debt, the
equity acquisition cost was GBP3.0m and the investment value at
period end was GBP3.5m, which is 0.9% of the portfolio value.
Tower Hill
Location Gloucestershire
Capacity 8.1MW
Regulatory Regime 1.4 ROCs
EPC Hanwha Q Cells
Panels Hanwha Q Cells
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 5,875 7,114
Solar Irradiation vs expectations (1.9%) (0.9%)
Energy Generation vs Budget +3.3% +4.7%
Branston
Branston is located in Lincolnshire and has a capacity of
18.9MW. The plant was acquired in March 2016 and has been
operational since March 2015. The site has produced 13.6GWh (+7.0%
vs budget) since acquisition to 30 September 2016. This solar PV
plant is part of the Radius portfolio whose acquisition of GBP47.5m
was financed with project level debt and whose equity investment
value at period end was GBP54.1m, which is 13.6% of the portfolio
value.
Branston
Location Lincolnshire
Capacity 18.9MW
Regulatory Regime 1.4 ROCs
EPC Goldbeck
Panels REC
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 13,648 13,648
Solar Irradiation vs expectations +3.7% +3.7%
Energy Generation vs Budget +7.0% +7.0%
Great Wilbraham
Great Wilbraham is a 38.1MW site located in Cambridgeshire. The
plant was acquired in March 2016 and has been operational since
March 2015. The site has produced 27.1GWh (+2.8% vs budget) since
acquisition to 30 September 2016. This solar PV plant is part of
the Radius portfolio whose acquisition of GBP47.5m was financed
with project level debt and whose equity investment value at period
end was GBP54.1m, which is 13.6% of the portfolio value. This site
is the largest in the Company's portfolio.
Great Wilbraham
Location Cambridgeshire
Capacity 38.1MW
Regulatory Regime 1.4 ROCs
EPC Abakus Bouygues
Panels REC
Inverter Schneider
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 27,145 27,145
Solar Irradiation vs expectations +1.7% +1.7%
Energy Generation vs Budget +2.8% +2.8%
Berwick
Berwick is located in Sussex and has a capacity of 8.2MW. The
plant was acquired in March 2016 and has been operational since
March 2015. The site has produced 6.6GWh (+5.4% vs budget) since
acquisition to 30 September 2016. This solar PV plant is part of
the Radius portfolio whose acquisition of GBP47.5m was financed
with project level debt and whose equity investment value at period
end was GBP54.1m, which is 13.6% of the portfolio value. The site
has an adjoining community flower meadow and boards displaying
information about the site for use by local residents and
school.
Berwick
Location Sussex
Capacity 8.2MW
Regulatory Regime 1.4 ROCs
EPC Abakus Bouygues
Panels Renesola
Inverter SMA
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 6,587 6,587
Solar Irradiation vs expectations +2.9% +2.9%
Energy Generation vs Budget +5.4% +5.4%
Bottom Plain
Bottom Plain is a 10.1MW site located in Dorset. The plant was
acquired in March 2016 and has been operational since December
2014. The site has produced 7.8GWh (+0.4% vs budget) since
acquisition to 30 September 2016. This solar PV plant is part of
the Radius portfolio whose acquisition of GBP47.5m was financed
with project level debt and whose equity investment value at period
end was GBP54.1m, which is 13.6% of the portfolio value.
Bottom Plain
Location Dorset
Capacity 10.1MW
Regulatory Regime 1.4 ROCs
EPC Abakus Bouygues
Panels Renseola
Inverter SMA
Operational Since Dec-14
PE September Since
2016 Acquisition
MWh Generated 7,843 7,843
Solar Irradiation vs expectations (1.8%) (1.8%)
Energy Generation vs Budget +0.4% +0.4%
Emberton
Emberton is located in Buckinghamshire and has a capacity of
9.0MW. The plant was acquired in March 2016 and has been
operational since March 2015. The site has produced 6.4GWh (+2.0%
vs budget) since acquisition to 30 September 2016. This solar PV
plant is part of the Radius portfolio whose acquisition of GBP47.5m
was financed with project level debt and whose equity investment
value at period end was GBP54.1m, which is 13.6%.
Emberton
Location Buckinghamshire
Capacity 9.0MW
Regulatory Regime 1.4 ROCs
EPC Goldbeck
Panels REC
Inverter Schneider
Operational Since Mar-15
PE September Since
2016 Acquisition
MWh Generated 6,358 6,358
Solar Irradiation vs expectations +1.6% +1.6%
Energy Generation vs Budget +2.0% +2.0%
Current and Long Term Power Prices
During the Company's interim period, the wholesale power market
in the UK experienced an upward movement which has increased
revenues from the sale of electricity generated by the portfolio.
Electricity spot prices rose from c.GBP34/MWh in March 2016 to
c.GBP40/MWh (Source: Inenco Group) in September 2016 (UK baseload -
day ahead). At the Date of Distribution, electricity prices for
Winter 2016 have further increased (to over GBP70/MWh for December
2016 and January 2017), but the indications derived from forward
prices are that these prices are expected to come down
significantly for Summer and Winter 2017 (to c.GBP45/MWh and
c.GBP50/MWh respectively). The Investment Manager continuously
reviews multiple inputs from market contributors and the Company's
appointed independent market consultants and adjusts the Company's
power price forecasts periodically to reflect the latest market
developments.
The Company's current long-term power price forecast implies an
average growth rate of approximately 2.1% in real terms over the
20-year period starting October 2016. This power price curve is
higher by 4.5% compared to the one assumed for the March 2016
NAV.
Dividends
During the period the Company paid the second interim dividend
for the financial period ended 31 March 2016 of 3.1250 per Ordinary
Share and the first interim quarterly dividend for the period ended
30 June 2016 of 1.5775 per Ordinary Share. For the quarter ended 30
September 2016 a second interim quarterly dividend of 1.5775p per
Ordinary Share totaling GBP5,413,939 will be paid to shareholders
in December 2016. As a result, the Company is on track to pay a
total dividend of 6.31p for the full year ending 31 March 2017. The
summary of all dividends paid by the Company until the Date of
Distribution of this interim report is set out in the table
below.
During the period the Company generated investment income of
GBP17.0m and had net operating costs of GBP2.0m. As a result, the
net dividend cover for the period was 1.2x. The table below
provides additional details and metrics.
Dividend Month of Payment Amount per Total Amount
Ordinary Share (GBPm)
(p)
First interim for year 14/15 December 2014 2.625 4,635,750
Second interim for year 14/15 July 2015 2.625 6,309,188
First interim for year 15/16 December 2015 3.125 8,686,160
Second interim for year 15/16 July 2016 3.125 8,686,160
First quarterly dividend for year 16/17 September 2016 1.5775 4,058,499 (1)
Total (Cash Dividends paid to date) 32,375,757
Second quarterly dividend for year 16/17 Dec 2016 1.5775 5,413,939
Total (Dividends to be paid) 16,241,817
Investment Income Total (GBP)
Investment Income for 6 months to 30
September 16 17,038,776
Net operating costs for 6 months to
30 September 16 (2,020,827)
Net Investment Income 15,017,949 Gross Dividend Net Dividend
Cover Cover
Dividends paid during period 12,744,658 (2) 1.3 x 1.2 x
Dividends in relation to the period 9,472,438 (3) 1.8 x 1.6 x
1 A scrip dividend payment was elected by some shareholders for
1,139,374 shares resulting in lower total cash dividend payout. The
total amount to be paid out before the scrip dividend was
GBP5,387,414.
2 This amount is post scrip dividend take out. If the shares
from the scrip dividend were included the total amount paid during
the year would be GBP14,073,574. The Gross dividend cover would
have been 1.2x and the net would have been 1.1x. Dividends paid
during period include the second and final semiannual dividend for
year 15/16 and the first quarterly interim for year 16/17 (as such
they relate to a 9-month period)
3 This amount is post scrip dividend take out. If the shares
from the scrip dividend were included, the total amount paid during
the period would be GBP10,801,353. The Gross dividend cover would
be 1.6x and the net dividend cover would be 1.4x.
As stated in the Chairman's Statement the Company is targeting a
dividend of 6.31p per share for the financial year ending 31 March
2017.
Following the Board's decision to move to a quarterly dividend,
as announced in April 2016, the quarterly forward looking dividend
calendar is set out in the table below:
Dividend for year 16/17 Date of Expected Payment Amount per Ordinary
Share (p)
Second interim December 2016 1.5775
Third interim March 2017 1.5775
Fourth interim July 2017 1.5775
Total 4.7325
Operating Costs and Profits for the Year
The operating costs of the Company amounted to GBP2.0m, in line
with expectations. The profit before tax for the year ended 30
September 2016 was GBP25.3m and the earnings per share were 8.46p,
positively impacted by an increase in the fair value of
investments.
Valuation of the Investment Portfolio
The Investment Manager is responsible for carrying out the fair
market valuation of the Company's underlying investment portfolio,
as described in Note 12. The resulting fair market value of the
Company's investment portfolio is presented to the Company's Board
of Directors for their review and approval. The valuation is
carried out at least quarterly or more often if capital increases
or other relevant events arise. The valuation principles used are
based on a discounted cash flow methodology, and take into account
Invest Europe (formerly European Private Equity and Venture Capital
Association) guidelines.
The Investment Manager reviews multiple sources and inputs in
determining the fair market value of the underlying investments,
including analysing recently announced solar transactions in the UK
as well as undertaking a discounted cash flow analysis of each
investment made by the Company. The Investment Manager exercises
its judgement based on its expertise in the UK solar PV market and
in assessing the expected future cash flows from each investment.
In the discounted cash flow analysis, the fair value for each
operating asset is derived from the present value of the
investment's expected future cash flows, using reasonable
assumptions and forecasts for revenues and operating costs, and an
appropriate discount rate.
For solar PV plants not yet operational or where the completion
of the acquisition is not imminent at the time of valuation, the
acquisition cost is used as an approximate estimate of fair
value.
The Board reviews the operating and financial assumptions,
including the discount rates, used in the valuation of the
Company's underlying portfolio and approves them based on the
recommendation of the Investment Manager. The 'valuation' process
comprises the analysis of multiple factors, all relevant to
ascertain the fair value of the portfolio, including:
-- Discount rates applicable for other comparable infrastructure
assets classes or regulated energy sectors
-- CAPM ("Capital Asset Pricing Model") analysis and risk premium over relevant risk free rates
-- Discount rates publicly disclosed by the Company's peers in the UK solar sector
-- Discount rates implied in the price at which comparable
transactions have been announced or completed in the UK solar
sector
Based on all of the above, the Company continues to adopt a 7.5%
discount rate for unlevered operating solar assets and started to
adopt a discount rate up to 8.5% for solar assets with project
level debt at the previous year end which remains unchanged as at
30 September 2016. At each year-end, PricewaterhouseCoopers CI LLP
("PwC CI") reviews investment valuations as part of its overall
audit of the Company.
For those operating solar assets with fully-amortising long-term
project level debt (the Radius portfolio comprising Branston,
Berwick, Bottom Plain, Emberton and Great Wilbraham, and the Three
Kings portfolio comprising Fenland, Green End and Tower Hill) the
Company adopted a higher discount rate to capture the greater level
of risk associated with the cash flows available to equity
investors after debt service. The appropriate level of risk premium
due to project level debt was evaluated taking into account various
factors for each specific asset including level of financial
gearing, maturity profile and cost of debt. As a result, the
discount rates applied to these projects range up to 8.5%.
The resulting weighted average discount rate for the Company's
portfolio is 7.7%.
As a way of comparison, the Company's pre-tax WACC ("Weighted
Average Cost of Capital") as of 30 September 2016 was 6.1%.
The DCF methodology implemented in the Portfolio Valuation
assumes a valuation time-horizon capped to the current terms of the
lease on the properties where each individual solar PV asset is
located. As of 30 September 2016, the remaining weighted average
lease duration of the Company's portfolio was 25.2 years.
The Company's NAV is calculated on a quarterly basis based on
the valuation of the investment portfolio determined by the
Investment Manager and the overlay of other net assets provided by
Ipes (Guernsey) Limited (the"Administrator"). It is then reviewed
and approved by the Board of Directors. All variables relating to
the performance of the underlying assets are reviewed and
incorporated in the process of identifying relevant drivers for the
discounted cash flow valuation.
The Company experienced NAV growth during the period driven
mainly by the issuance of new capital in July, August and September
2016 totaling GBP64.7m. As a result, NAV grew over the year from
GBP273.8m to c.GBP350.1m as at 30 September 2016.
The increase in NAV per share in the period from 98.5p to 102.0p
was mainly driven by the following factors:
-- There was a 4.5% increase in the forecasts for long-term
power prices adopted by the Investment Manager compared to 31 March
2016;
-- An increase in long-term RPI inflation rate estimates from 2.5% to 2.75%
-- The operating results achieved by the Company's solar PV plants; and
-- The dividends paid in July 2016 and September 2016 and the Company's operating costs.
NAV Bridge (Movement) (GBPm)
Opening NAV (March 2016) 273.8
Further Capital Raising 64.7
Capital Raising Costs (1.0)
Dividends Paid to Investors (12.7)
Income from Investments 17.0
Change in Fair Value of Investments 10.3
Net Fund Costs (2.0)
Closing NAV (September 2016) 350.1
Another important driver for the growth in NAV was revaluation
of the Investments which accounted for GBP10.3m. The portfolio
revaluation bridge chart below highlights the main factors driving
the portfolio revaluation and reconciles the total revaluation for
the period. The revaluation is summarised in the net changes in
financial assets at fair value in the Condensed Statement of
Comprehensive Income.
The Company's investment portfolio through its directly held
subsidiaries is valued at GBP397.1m, comprising 28 investments
valued through discounted cash flow methodology and 1 investment
valued at acquisition cost. Among the 29 investments, Radius is
considered as one portfolio consisting of five solar PV plants. The
valuation of the investment portfolio is net of the project level
debt: GBP44.9m outstanding advanced by Bayerische Landesbank for
the 53MW Three Kings portfolio comprising Fenland, Green End and
Tower Hill, acquired by the Company in January 2016; and GBP54.9m
outstanding arranged by Macquarie Infrastructure Debt Investment
Solutions ("MIDIS") in conjunction with the acquisition of the 84MW
Radius portfolio signed by the Company in March 2016.
Investments which are valued at acquisition cost are those solar
PV plants for which the relevant milestones and technical tests had
not yet been finalised at period end, and as such their completion
was not deemed imminent. As at 30 September 2016, only Green Farm
was held at acquisition cost.
Directors' Valuation Directors' Valuation
31 March 2016 30 September
2016 (GBP)
Investment (GBP) (GBP)
Higher Hatherleigh 6,907,206 7,165,736
Shacks Barn 7,993,437 8,145,869
Ellough 18,780,284 19,288,849
Condover 10,451,176 11,003,050
Langenhoe 21,517,834 22,750,345
Boxted 20,059,008 21,109,909
Llwyndu 9,010,754 9,132,051
Hawkers Farm 13,841,456 14,573,954
Cock Hill Farm 22,214,893 22,277,395
Bilsham 17,573,137 18,326,651
Poulshot 15,347,350 16,441,358
Gover Farm 11,390,789 11,449,637
Brickyard 3,729,258 3,989,927
Croydon 16,958,191 17,742,291
Park View 7,341,299 7,655,350
Glebe Farm 38,832,745 40,450,309
Wellingborough 9,911,957 9,977,427
Bowerhouse 10,519,042 10,975,787
Birch 5,508,836 5,514,607
North Farm 13,884,261 14,300,945
Thurlestone - Evo 2,713,983 2,514,590
Fenland(3) 8,437,289 8,439,694
Green End(3) 10,091,867 10,148,418
Tower Hill(3) 3,507,200 3,544,093
Decoy Farm 5,557,217 5,615,492
Ellough Phase 2 8,047,967 9,071,938
Green Farm(1) 5,775,461 5,775,461
Hall Farm 4,980,825 5,603,646
Project Radius(3) 51,448,533 54,147,237
Total Investment Portfolio 382,333,255 397,132,016
Residual Net Assets of NESH (43,788,593) (29,185,246)
Residual Net Assets of NESH II (23,147,238) (21,927,579)
Residual Net Assets of NESH III 69,255 26,692
Residual Net Assets of NESH IV - 2,302,947
Total Investment in Holding Companies(2) 315,466,679 348,348,830
(1) These investments were not yet completed as at 30 September
2016.
(2) A summary of the total investment in Holding Companies is
provided in note 5 (Investments) of the Financial Statements.
(3) These investments have financial leverage at project
level.
Sensitivity Analysis
Sensitivities on the Company's NAV and detailed disclosure on
the asset valuation methodologies are provided below and in note 12
(Financial instruments) of the Financial Statements.
Sensitivity on energy yield is usually a P10/P90 probability
analysis on solar irradiation over 10 years since it is a technical
standard employed across the broader renewable energy asset class
and is particularly relevant for Wind assets given the significant
volatility of Wind energy sources year on year. The Investment
Manager, based on its experience, considers that for solar PV
assets more appropriate and meaningful information is provided by
the sensitivity analysis of the aggregated effect of solar
irradiation and technical performance (in a reasonable range of -/+
5% over the life of the DCF valuation horizon). For reference
purposes, the sensitivity based on P10/P90 would have resulted in a
-/+9.6% impact on portfolio valuation.
In addition to the above sensitivities on NAV, the Investment
Manager has performed further sensitivities on actual cash
generation. This analysis takes into account the impact of selected
changes in valuation assumptions over the twelve months to
September 2017. In this analysis, should energy prices fall by 10%
from current forecasts, NESF would experience a reduction of 4.5%
in its net operating cashflows, such impact being mitigated by the
fixed price PPAs in place over the period. Also, should the
portfolio achieve an over performance of 5% throughout the twelve
months to September 2017 (whether due to higher solar irradiation
or asset management), total operating cashflows would increase by
14.3%. Conversely, these sensitivities on cash generation would
have similar but opposite results in their respective inverted
scenario.
Since the Company's IPO in April 2014 the long-term power price
forecast used by the Company was revised nine times (August 2014 to
October 2016) with a cumulative reduction of c.27%. For sake of
illustration, had the power price forecasts remained in line with
those at the time of the IPO, the Company's NAV would be 127.5p per
share.
Summary of Capital Raising and Capital Deployment
At the period end, the Company had completed seven capital
raisings since inception: its IPO of 85.6m New Ordinary Shares in
April 2014, a second issue of 91.0m New Ordinary Shares in November
2014, a placing of 4.0m New Ordinary Shares in December 2014, 59.8m
New Ordinary Shares in February 2015, a placing of 37.6m New
Ordinary Shares in September 2015, 54.9m New Ordinary Shares in
July and August 2016, and a further 9.2m New Ordinary Shares in
September 2016.
On 30 September 2016, the Company made a scrip dividend issue of
1,139,374 New Ordinary Shares at a price of 104.6p per Share.
Following the scrip issue outlined above, the Company's issued
share capital comprised 343,197,405 Ordinary shares. The figure of
343,197,405 may be used by Shareholders and other investors as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in, the Company under the FCA's Disclosure and
Transparency Rules. During the current period the Company announced
a 350m share issuance program and post period end successfully
issued 110.3m new shares. The proceeds of this initial issue will
allow the Company to pursue acquisitions targeted in the current
financial year.
Below is a capital deployment table that outlines the timing of
the equity raising and speed of the capital deployment which, in
conjunction with the debt financing raised, allowed the Company to
rapidly grow its investment portfolio since inception.
Date Equity Raised Equity Invested Time to Deployment
(GBPm)
April 2014 85.6 c.95% by September c.4 months
2014
November/December 99.6 c.95% by January c.6 weeks
2014 2015
February 2015 61.4 c.100% by April c.6 weeks
2015
September 2015 38.8 c.100% by November c.6 weeks
2015
July/August 2016 55.2 Capital used Immediate
to pay down
debt facility
September 2016 9.5 Capital used Immediate
to pay down
debt facility
Date Debt Raised Lender Amount Deployed
(GBPm)
July 2015 22.7 NIBC c.100%
November 2015 100.0 Macquarie c.74.5%
January 2016 45.4 Bayern Landesbank c.100%
March 2016 55.0 Arranged by c.100%
MIDIS
May 2016 20.0 Macquarie c.0%
Share Price Development
During the period the share price increased from 97.75p to
106.13p.
NESF shares are included in the FTSE All-Shares Index as well as
the FTSE Small Cap Index. Without taking into accounts dividends
paid, NESF shares outperformed its FTSE All-Shares benchmark on
83.3% of days during the period and on 83.7% of days since IPO.
During the period, NAV total return was 8.3% and total shareholders
return was 13.1% (respectively 6.2% and 7.9% since IPO).
Financing and Cash Management
As of 30 September 2016 and the Date of Distribution of this
interim report, the Company had a total of GBP64.7m in short-term
financial debt outstanding at Holdco level, resulting from the
following:
-- GBP43.0m drawn under the two-year revolving credit facility
("RCF") advanced by Macquarie Bank Limited on 17 September 2014
(and subsequently syndicated for 40% to Santander). The current
value of the total facility is GBP88.5m of which GBP45.5m is
available to draw down.
-- GBP21.7m drawn under the debt facility advanced by NIBC Bank
B.V ("NIBC") to finance the acquisition of two assets (Cock Hill
and Llwyndu).
As at 30 September 2016 the Company had executed the extension
of the NIBC facility for a further 3 years to 4 July 2019. NIBC
previously financed the construction of the two projects for the
vendor. The upfront costs to the Company favorably reflected NIBC's
previous involvement in and knowledge of the two projects and the
remaining terms of the facility are in line with current market
conditions. During the period the Company began executing the
refinancing of the short-term debt provided by Macquarie with fully
amortising long-term debt which will provide the Company with
additional capital to meet current obligations and targeted
acquisitions for the future. The refinancing is expected to
complete before the Company's year end.
As a result, the total pro-forma debt position of the Company on
a look-through basis as of 30 September 2016 is GBP164.3m. This
represents a gearing of 33% in terms of total debt vs. Gross Asset
Value (which is equal to NAV plus total financial debt
outstanding). The corresponding average cost of debt is 3.1%. The
table below provides detailed information on the total debt
outstanding as of 30 September 2016:
Facility Type Borrowing Tranches Current Amount Termination Applicable
Platform Facility Outstanding Rate
Size (GBPm)
(GBPm)
Macquarie Revolving NextEnergy RCF - Tranche - - 17/09/2016 N/A
& Santander Credit Solar A
Facility Holdings
I
RCF - Tranche 1m Libor
B 68.5 43.0 17/06/2017 + (1.95-2.50)%
RCF - Tranche 1m Libor
C 20.0 - 19/11/2017 + (1.95-2.50)%
NextEnergy
Acquisition Solar Holdings 3m Libor
NIBC Facility II 21.7 21.7 04/07/2019 + 2.20%
Fully-amortising NextEnergy
long-term Solar Holdings From
debt and III 30/06/2020
Bayern short term (Three kings to 3.73% (Average
LB debt facility portfolio) 44.9 44.9 30/06/2033- Rate)
NextEnergy
Solar
Holdings
Fully-amortising IV Inflation
long-term (Radius Linked RPI index
MIDIS debt portfolio) Tranche 27.2 27.2 30/09/2034 + 1.44%
Fixed Tranche 27.5 27.5 30/09/2034 4.11%
Total 209.8 164.3
The Investment Manager has not charged any fees to the Company
in conjunction with the structuring, execution and monitoring of
any of these financial debt facilities.
As at 30 September 2016 the Company's total assets includes cash
totaling GBP1.8m split between Barclays Bank PLC and Lloyds Bank
PLC.
Outlook
The Company believes that there remains a material pipeline of
opportunities for growth which is supported by the continued equity
raising achieved during the period and current refinancing
opportunities presented in the market. The NEC Group continues to
leverage its long-standing experience as an investor and leading
asset manager in the solar sector to focus on reducing solar
investment and operating costs to meet a decreasing support and
no-support market in the future.
The Company will benefit from the pipeline of opportunities
identified by the Developer, ranging from large industrial scale
plants in operation and benefiting from the previous ROCs and FiT
regimes, or under construction and benefiting from the 1.2 ROCs
regime as well as portfolios of residential and commercial
rooftops. At the Date of Distribution of this interim report the
Investment Manager, together with the Developer, have identified a
pipeline of over c.170MW of short-term acquisition targets and are
actively developing c.430MW of further opportunities.
In addition to these further growth opportunities, in the mid to
long-term period the Investment Manager intends to add value to the
Company's portfolio by optimising the technical and financial
performances of its assets and by extending the useful lifespan of
its plants. Furthermore, the Investment Manager remains fully
engaged in monitoring technological change in the energy sector and
is already exploring the feasibility of the application of energy
storage facilities to the Company's portfolio of solar PV plants.
Consequently, the Company is well-positioned to incorporate the
continuing innovation in energy technology and benefit from the
associated incremental returns and/or cost reductions in solar
energy generation and storage.
Description of the Principal Risks and Uncertainties
The Company has in place risk management procedures and internal
controls to monitor and mitigate the main risks faced as well as a
process to review the effectiveness of those controls. The
Investment Manager assists the Company in regularly identifying,
assessing and mitigating those risk factors likely to impact the
financial or strategic position of the Company. The Company's Risk
Matrix is regularly reviewed on at least a semi-annual basis, and
includes:
-- External and Market Risks
-- Investment Strategy
-- Investment Process and Management of Assets
-- Monitoring Process
-- Valuation Process
-- Financial and Accounting Process
-- Governance, Tax and Regulatory Compliance
Based on the Board's assessment, the main risks faced by the
Company are likely to be related to the following areas, the other
ones being less likely or less significant:
-- Uncertainty for the future regulatory framework for solar PV
in the UK and risk that as a consequence further planned
acquisitions do not take place, affecting the Company's growth
potential, or that regulatory changes may affect the profitability
and valuation of the current portfolio
-- Risk that the heightened competition for solar assets will
make it more difficult for the Company to continue acquiring assets
at attractive values. This increased competition may be fueled by
investors with aggressive financial structures seeking lower
returns than the Company for the same solar PV assets
-- Exposure to the wholesale energy market impacts the prices
received for energy generated and revenues forecasted by the
operating assets of the company. This also exposes the company to a
risk of further reduction in forward price curves
-- The UK government held a referendum on 23 June 2016 for the
UK to vote either to remain in or leave the European Union. As a
result of the referendum, the majority of those voting elected to
leave the European Union ("Brexit"). The Investment Manager
believes Brexit is likely to have a very limited negative effect,
if any at all, on the Company's financial and operating prospects.
The UK's 2008 Climate Change Act enshrines the Government's
commitment to reduce the country's greenhouse gas emissions by 80
per cent compared to 1990 levels, and we do not think government
will introduce primary legislation to reverse this commitment as a
result of Brexit. Given the pending decision on triggering Article
50 there is uncertainty in the market around future impact of
Brexit, however the Investment Manager currently has no reason to
expect the availability of debt financing in the UK solar sector to
be affected significantly following Brexit. In addition, the
Company's exclusive focus on the solar sector in the UK protects it
from any adverse foreign currency fluctuations emerging as a result
of Brexit. At the other end, the Company is positively exposed
towards potential increases in power prices and RPI inflation that
may indirectly come from a Brexit scenario (also due to weakening
of sterling versus other currencies and its impact on UK power
prices).
Post Period-End Update
Since 30 September 2016, the following relevant events
occurred:
-- On 10 November 2016, the Company announced an interim
dividend of 1.5775 pence per Ordinary Share for the quarter ending
30 September 2016, to be paid on 30 December 2016 to shareholders
on the register as at close of business on 18 November 2016.
-- On 15 September 2016 the Company announced a 350m share
issuance program and post period end successfully issued 110.3 new
shares. The proceeds of this issue will allow the Company to pursue
acquisitions targeted in the current financial year.
-- On 22 November 2016, the Company announced the signing of a
share purchase agreement to acquire the 5MWp Kentishes solar
plant.
NextEnergy Capital IM Limited
29 November 2016
Statement of Directors' Responsibilities
To the best of their knowledge, the directors of NextEnergy
Solar Fund Limited confirm that:
(a) The Interim Report and Condensed Half-Yearly Financial
Statements have been prepared in accordance with IAS 34 Interim
Financial Reporting;
(b) The Interim Report, comprising the Chairman's Statement and
the Investment Manager's Report, meets the requirements of an
interim management report and includes a fair review of information
required by:
(i) DTR 4.2.7R of the UK Disclosure and Transparency Rules,
being an indication of important events that have occurred during
the period from 01 April 2016 to 30 September 2016 and their impact
on the Condensed Half-Yearly Financial Statements, and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(ii) DTR 4.2.8R of the UK Disclosure and Transparency Rules,
being related party transactions that have taken place in the
period from 01 April 2016 to 30 September 2016 and that have
materially affected the financial position or performance of the
Company during that period, and any material changes in the related
party transactions disclosed in the last Annual Report; and
(c) The Condensed Half Yearly Financial Statements give a true
and fair view of the assets, liabilities, financial position and
profit of the Company as required by DTR 4.2.4R of the UK
Disclosure and Transparency Rules.
The Company's Directors believe that the Company has adequate
resources to continue in operational existence for the foreseeable
future. Note 12 to the Annual Report and financial statements for
the year ended 31 March 2016 includes the Company's objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and its
exposure to credit risk and liquidity risk. The Directors have
undertaken a rigorous review of the Company's ability to continue
as a going concern including reviewing the level of the Company's
assets and significant areas of financial risk including the timing
of future investment transactions, expenditure commitments and
forecast income and cashflows. As a result, the Directors have, at
the time of approving these condensed financial statements, a
reasonable expectation that the Company has adequate resources to
meet its liabilities and continue in operational existence for the
foreseeable future. The Directors have therefore concluded that it
is appropriate to adopt the going concern basis of accounting in
preparing these interim financial statements.
By order of the Board
For NextEnergy Solar Fund Limited
Patrick Firth
Director
29 November 2016
Condensed Financial Statements
Condensed Statement of Comprehensive Income
For the period ended 30 September 2016
Unaudited Unaudited
1 April 2016 1 April 2015 1 April 2015
to to to
30 September 30 September
2016 31 March 2016 2015
Notes (GBP) (GBP) (GBP)
Income
Investment income 17,038,776 24,046,160 6,400,000
Net changes in fair value of financial
assets
at fair value through profit or
loss 5 10,267,502 (18,503,991) 3,895,737
Total net income 27,306,278 5,542,169 10,295,737
Expenditure
Legal and professional fees 230,777 490,324 287,242
Administration fees 129,108 201,152 120,752
Audit fees 109,828 75,000 42,637
Directors' fees 17 61,500 123,000 61,500
Insurance 27,125 31,194 31,194
Regulatory fees 21,505 72,652 42,074
Sundry expenses 2,278 6,595 2,736
Management fees 14 1,438,706 2,615,662 1,242,304
Total expenses 2,020,827 3,615,579 1,830,439
Operating profit 25,285,451 1,926,590 8,465,298
Finance income 4,518 108,111 93,888
Profit and comprehensive income
for the period/year 25,289,969 2,034,701 8,559,186
Earnings per share 9 8.46p 0.78p 3.56p
There were no potentially dilutive instruments in issue at 30
September 2016.
All activities are derived from ongoing operations.
There is no other comprehensive income or expense apart from
expenditure that is disclosed above and consequently a Statement of
Other Comprehensive Income has not been prepared.
The accompanying notes are an integral part of these financial
statements.
Condensed Statement of Financial Position
As at 30 September 2016
Unaudited Unaudited
30 September 30 September
2016 31 March 2016 2015
Non-current assets Notes (GBP) (GBP) (GBP)
Investments 5, 12 348,348,830 315,466,679 248,490,669
Total non-current assets 348,348,830 315,466,679 248,490,669
Current assets
Cash and cash equivalents 1,846,373 5,937,663 29,503,244
Trade and other receivables 10,561 13,000 11,264,214
Total current assets 1,856,934 5,950,663 40,767,458
Total assets 350,205,764 321,417,342 289,258,127
Current liabilities
Trade and other payables 151,462 137,825 236,605
Investment payable 6 - 47,468,639 -
Total current liabilities 151,462 47,606,464 236,605
Net assets 350,054,302 273,810,878 289,021,522
Equity
Share Capital and Premium 8 347,762,824 314,956,625 282,872,625
Treasury shares 8 - (32,084,000) -
Reserves 2,291,478 (9,061,747) 6,148,897
Total equity attributable to shareholders 350,054,302 273,810,878 289,021,522
Net assets per share - (pence) 11 102.0p 98.5p 104.0p
The accompanying notes are an integral part of these financial
statements.
The interim financial statements were approved and authorised
for issue by the Board of Directors on 29 November 2016, and signed
on its behalf by:
Patrick Firth
Director
Condensed Statement of Changes in Equity
For the period ended 30 September 2016
Share Capital Treasury Retained
and Premium shares earnings Total Equity
(GBP) (GBP) (GBP) (GBP)
For the period 1 April 2016 to
30 September 2016 (Unaudited)
Shareholders' equity at 1 April
2016 314,956,625 (32,084,000) (9,061,747) 273,810,878
Profit and comprehensive income
for the period - - 25,289,969 25,289,969
Shares issued 32,806,199 - - 32,806,199
Shares issued from treasury - 32,084,000 - 32,084,000
Dividends paid - - (13,936,744) (13,936,744)
Shareholders' equity at 30 September
2016 347,762,824 - 2,291,478 350,054,302
For the period 1 April 2015 to
31 March 2016
Shareholders' equity at 1 April
2015 244,459,639 - 3,898,899 248,358,538
Profit and comprehensive income
for the year - - 2,034,701 2,034,701
Shares issued 70,496,986 (32,084,000) - 38,412,986
Dividends paid - - (14,995,347) (14,995,347)
Shareholders' equity at 31 March
2016 314,956,625 (32,084,000) (9,061,747) 273,810,878
For the period 1 April 2015 to
30 September 2015 (unaudited)
Shareholders' equity at 1 April
2015 244,459,639 - 3,898,899 248,358,538
Profit and comprehensive income
for the period - - 8,559,186 8,559,186
Shares issued 38,412,986 - - 38,412,986
Dividends paid - - (6,309,188) (6,309,188)
Shareholders' equity at 30 September
2015 282,872,625 - 6,148,897 289,021,522
The accompanying notes are an integral part of these financial
statements.
Condensed Statement of Cash Flows
For the period ended 30 September 2016
1 April 2016 1 April 2015 1 April 2015
to to to
30 September 30 September
2016 31 March 2016 2015
Cash flows from operating activities Notes (GBP) (GBP) (GBP)
Profit and comprehensive income
for the period/year 25,289,969 2,034,701 8,559,186
Adjustments for:
Movement in investment cost (22,614,649) (128,341,159) (86,434,060)
Movement in investment payable (47,468,639) - -
Change in fair value on investments 5 (10,267,502) 18,503,991 (3,895,737)
Finance income (4,518) (108,111) (93,888)
Operating cash flows before movements
in
working capital (55,065,339) (107,910,578) (84,864,499)
Changes in working capital
Movement in trade receivables 2,439 56,482 (11,194,732)
Movement in trade payables 13,637 48,883 147,663
Net cash used in operating activities (55,049,263) (107,805,213) (92,911,568)
Cash flows from investing activities
Finance income 4,518 108,111 93,888
Net cash generated from investing
activities 4,518 108,111 93,888
Cash flows from financing activities
Proceeds from issue of shares 8 31,614,114 38,412,986 38,412,986
Proceeds from treasury shares 8 32,084,000 - -
Dividends paid 10 (12,744,659) (14,995,347) (6,309,188)
Net cash generated from financing
activities 50,953,455 23,417,639 32,103,798
Net movement in cash and cash equivalents
during period/year (4,091,290) (84,279,463) (60,713,882)
Cash and cash equivalents at the
beginning of the period/year 5,937,663 90,217,126 90,217,126
Cash and cash equivalents at the
end of the period/year 1,846,373 5,937,663 29,503,244
The accompanying notes are an integral part of these financial
statements.
Notes to the Unaudited Financial Statements
For the period ended 30 September 2016
1. General Information
NextEnergy Solar Fund Limited ("the Company") was incorporated
with limited liability in Guernsey under the Companies (Guernsey)
Law, 2008, as amended, on 20 December 2013 with registered number
57739, and is regulated by the GFSC as a registered closed-ended
investment company. The registered office and principal place of
business of the Company is 1, Royal Plaza, Royal Avenue, St Peter
Port, Guernsey, Channel Islands, GY1 2HL.
On 16 April 2014, the Company announced the results of its
initial public offering, which raised net proceeds of GBP85.6
million. The Company's ordinary shares were admitted to the premium
segment of the UK Listing Authority's Official List and to trading
on the Main Market of the London Stock Exchange as part of its
initial public offering which completed on 25 April 2014.
Subsequent fundraisings also took place, details of which can be
found in note 8.
The Company seeks to provide investors with a sustainable and
attractive dividend that increases in line with the retail price
index over the long-term by investing in a diversified portfolio of
solar Photovoltaic ("PV") assets that are located in the UK. In
addition, the Company seeks to provide investors with an element of
capital growth through the reinvestment of net cash generated in
excess of the target dividend in accordance with the Company's
investment policy.
The Company currently makes its investments through holding
companies (the "HoldCo's") and Special Purpose Vehicles ("SPVs"),
which are wholly-owned by the Company. The Company controls the
investment policy of each of the holding companies and its
wholly-owned SPV's in order to ensure that each will act in a
manner consistent with the investment policy of the Company.
The Company has appointed NextEnergy Capital IM Limited as its
Investment Manager ("the Investment Manager") pursuant to the
Management Agreement dated 18 March 2014. The Investment Manager is
a Guernsey registered company, incorporated under the Companies
(Guernsey) Law, 2008, with registered number 57740 and is licensed
and regulated by the GFSC and is a member of the NextEnergy Capital
Group. The Investment Manager is licensed and regulated by the GFSC
and will act as the Alternative Investment Fund Manager of the
Company.
The Investment Manager has appointed NextEnergy Capital Limited
as its Investment Adviser ("the Investment Adviser") pursuant to
the Investment Advisory Agreement. The Investment Adviser is a
company incorporated in England with registered number 05975223 and
is authorised and regulated by the FCA.
The financial statements are presented in pounds sterling
because that is the currency of the primary economic environment in
which the Company operates.
2. Significant accounting policies
Basis of preparation
The condensed interim financial statements have been prepared on
a going concern basis in accordance with IAS 34 Interim Financial
Reporting. The interim financial information should be read in
conjunction with the annual report and audited financial statements
for the year ended 31 March 2016, which have been prepared in
accordance with International Financial Reporting Standards
("IFRS").
Seasonal and cyclical variations
The Company's results vary during reporting periods as a result
of the spread of irradiation during the year.
Segmental reporting
The Board, as a whole, has been determined as constituting the
chief operating decision maker of the Company. The key measure of
performance used by the Board to assess the Company's performance
and to allocate resources is the Company's profit and NAV,
calculated under IFRS.
For management purposes, the Company is engaged in a single
segment of business, being investment in UK solar energy
infrastructure assets via SPVs, and in one geographical area, the
UK.
Going concern
The Directors have reviewed the current and projected financial
position of the Company making reasonable assumptions about future
performance. The key areas reviewed were:
-- Timing of future investment transactions
-- Expenditure commitments
-- Forecast income and cashflows
The Company has cash and short-term deposits as well as
projected positive income streams and an available credit facility
(see note 18) and as a consequence the Directors have, at the time
of approving the financial statements, a reasonable expectation
that the Company has adequate resources to continue in operational
existence for the foreseeable future. Accordingly they have adopted
the going concern basis of preparation in preparing the financial
statements.
3. New and revised standards
The following accounting standards and interpretations which
have not been applied in these financial statements were in issue
but not yet effective:
IFRS 7 (amendments) Financial Instrument: Disclosure
IFRS 9 Financial Instruments (revised, early adoption permitted)
IFRS 15 Revenue from Contracts with Customers
IFRS 16 Leases
IAS 7 Additional disclosure of changes in liabilities arising
from financial activities
The Directors do not expect that the adoption of the accounting
standards, amendments and interpretations listed above will have a
material impact on the financial statements of the Company in
future periods.
The following accounting standards and interpretations where
adopted during the period:
IFRS 10 and IAS 28 Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
IFRS 12 Disclosure of Interests in Other Entities
IAS 1 Disclosure Initiative
IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation
IAS 27 Equity Method in Separate Financial Statements
The adoption of the above standards has not had a material
impact on the financial statements.
4. Critical accounting judgements and key sources of estimation
uncertainty
The Company makes estimates and assumptions that affect the
reported amounts of assets and liabilities. Estimates and
judgements are continually evaluated and based on historic
experience and other factors believed to be reasonable under the
circumstances.
a) Investments at fair value through profit or loss
The Company's investments are measured at fair value for
financial reporting purposes. The Board of Directors has appointed
the Investment Manager to produce investment valuations based upon
projected future cashflows. These valuations are reviewed and
approved by the Board. The investments are held indirectly through
UK Holdco's. A list of subsidiaries is included in note 7.
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. Fair
value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The Board
bases the fair value of the investments on the information received
from the Investment Manager.
The investments at fair value through profit or loss, whose fair
values include the use of Level 3 inputs, are valued by discounting
future cash flows from investments to the Company at a discount
rate when the assets are operational. The weighted average discount
rate applied in the 30 September 2016 valuation was 7.7% (31 March
2016: 7.5%). The discount rate is a significant level 3 input and a
change in the discount applied could have a material effect on the
value of the investments. Investments in solar PV plants that are
not yet operational are held at fair value, where the cost of the
investment is used as an appropriate approximation of fair
value.
Level 3 investments amount to GBP348,348,830 (31 March 2016:
GBP315,466,679) and consist of 33 investments in solar PV plants
(held indirectly through the HoldCo's) (31 March 2016: 33), all of
which have been valued on a look through basis based on the
discounted cash flows of the solar PV plants and the residual value
of net assets at the HoldCo level, apart from Green Farm which is
valued at acquisition cost at period end. Level 3 valuations are
reviewed regularly by the Investment Manager who reports to the
Board of Directors on a periodic basis. The Board considers the
appropriateness of the valuation model and inputs, as well as the
valuation result.
b) Significant judgement: consolidation of entities
The Company, under the Investment Entity Exemption rule, holds
its investments at fair value.
The table below sets out information about significant
unobservable inputs used at 30 September 2016 in measuring
financial instruments categorised as Level 3 in the fair value
hierarchy. Unlisted investments reconcile to the Closing Investment
Portfolio Value as per the Investments table in note 5.
Description Fair value Valuation Unobservable Input value Sensitivity to change
at technique input in significant unobservable
30 September inputs
2016 (GBP)
Discounted
cash flows
based on
underlying
valuation
of residual The estimated fair
assets value would increase
at the if the discount rate
four hold Discount was lower and vice
Unlisted investments 391,356,555 cos. rate 7.70% versa.
Investments held at 5,775,461 Cost n/a n/a n/a
cost
Residual value of (48,783,186) Adjusted n/a n/a n/a
net assets at HoldCo's net asset
value attributable
to the
Company
at fair
value
Total 348,348,830 n/a n/a n/a
The only investment held at cost is Green Farm, this is due to
the transaction not being completed at period end.
5. Investments
The Company owns the Investment Portfolio through its
investments in NextEnergy Solar Holdings Limited, NextEnergy Solar
Holdings II Limited, NextEnergy Solar Holdings III Limited and
NextEnergy Solar Holdings IV Limited. This is comprised of the
Investment Portfolio and the Residual Net Assets of the Holding
Companies. The Total Investments at fair value are recorded under
Non-Current Assets in the Statement of Financial Position.
Period ended Year ended
30 September 31 March
2016 2016
(GBP) (GBP)
Total Investments
Brought forward cost of investments 323,400,117 147,590,319
Total investment acquired in the period/year 22,614,649 175,809,798
Carried forward cost of investments 346,014,766 323,400,117
Brought forward unrealised (losses)/gains on
valuation (7,933,438) 10,570,553
Movement in unrealised gains on valuation 10,267,502 (18,503,991)
Carried forward unrealised gains/ (losses) on
valuation 2,334,064 (7,933,438)
Total Investments at Fair Value 348,348,830 315,466,679
The total change in the value of the investments in the Holding
Companies are recorded through profit and loss in the Statement of
Comprehensive Income.
6. Investment payable
As at As at
30 September 31 March
2016 2016
(GBP) (GBP)
Radius investment payable - (47,468,639)
Total investment payable - (47,468,639)
On 31 March 2016 the Company agreed the purchase of Project
Radius. The acquisition is part funded by a debt facility between
NextEnergy Solar Holding IV Limited and Macquarie Bank Limited for
GBP55.0m. On 11 April 2016 the above amount was settled by a
combination of equity and loan payments.
7. Subsidiaries
The Company holds investments through subsidiary companies which
have not been consolidated as a result of the adoption of IFRS 10:
Investment entities exemption to consolidation.
Below are the legal entity names for the Holding Companies and
the legal entity names of those companies owned indirectly through
the Holding Companies. All are incorporated in the UK which is also
their principal place of business.
Country Direct Principal Ownership Ownership
of Incorporation or Indirect Activity at at
Holding September March
Name 2016 2016
Berwick Solar
Park Ltd UK Indirect SPV 100% 100%
BL Solar 2 Limited UK Indirect SPV 100% 100%
Bottom Plain
Solar Park UK Indirect SPV 100% 100%
Bowerhouse Solar
Limited UK Indirect SPV 100% 100%
Branston Solar
Park Ltd UK Indirect SPV 100% 100%
Ellough Solar
2 Ltd UK Indirect SPV 100% 0%
Emberton Solar
Park Ltd UK Indirect SPV 100% 100%
Empyreal Energy
Ltd UK Indirect SPV 0% 0%
ESF Llwyndu
Ltd UK Indirect SPV 100% 100%
Fenland Renewables
Ltd UK Indirect SPV 100% 100%
Glebe Farm SPV
Limited UK Indirect SPV 100% 100%
Glorious Energy
Limited UK Indirect SPV 100% 100%
Great Wilbraham
Solar Park Ltd UK Indirect SPV 100% 100%
Green End Renewables
Ltd UK Indirect SPV 100% 100%
Greenfields
(A) Limited UK Indirect SPV 100% 100%
Hanwha UK Solar
1 Ltd UK Indirect SPV 100% 100%
NESF - Ellough
LTD UK Indirect SPV 100% 100%
NextEnergy Solar
Holding II Limited UK Direct HoldCo 100% 100%
NextEnergy Solar
Holding III
Limited UK Direct HoldCo 100% 100%
NextEnergy Solar
Holding IV Limited UK Direct HoldCo 100% 100%
NextEnergy Solar
Holding Limited UK Direct HoldCo 100% 100%
NextPower Ellough
LLP UK Indirect SPV 100% 100%
NextPower Gover
Farm Ltd UK Indirect SPV 100% 100%
NextPower Higher
Hatherleigh
Ltd UK Indirect SPV 100% 100%
NextPower Radius
Ltd UK Indirect SPV 100% 100%
NextPower Shacks
Barn Ltd UK Indirect SPV 100% 100%
North Farm Solar
Park Limited UK Indirect SPV 100% 100%
Push Energy
(Birch) Ltd UK Indirect SPV 100% 100%
Push Energy
(Boxted Airfield)
Ltd UK Indirect SPV 100% 100%
Push Energy
(Croydon) Ltd UK Indirect SPV 100% 100%
Push Energy
(Decoy) Ltd UK Indirect SPV 100% 100%
Push Energy
(Hall) Ltd UK Indirect SPV 100% 0%
Push Energy
(Langenhoe)
Ltd UK Indirect SPV 100% 100%
SSB Condover
Ltd UK Indirect SPV 100% 100%
ST Solarinvest
Devon 1 Limited UK Indirect SPV 100% 100%
Sunglow Power
Limited UK Indirect SPV 100% 100%
Thurlestone-Leicester
Solar Ltd UK Indirect SPV 100% 100%
Tower Hill Farm
Renewables Ltd UK Indirect SPV 100% 100%
Trowbridge PV
Ltd UK Indirect SPV 100% 100%
Wellingborough
Solar Limited UK Indirect SPV 100% 100%
8. Share capital and reserves
Number Gross amount Share capital
of raised Issue costs and premium
Share Issuance shares (GBP) (GBP) (GBP)
Issued on 20 December 2013 1 1 - 1
Issued on 25 April 2014 85,600,000 85,600,000 - 85,600,000
Cancellation of founder's share
on 24 October 2014 (1) (1) - (1)
Issued on 19 November 2014 91,000,000 95,459,000 (1,399,246) 94,059,754
Issued on 19 December 2014 4,000,000 4,120,000 (43,565) 4,076,435
Issued on 27 February 2015 59,750,000 61,405,075 (681,625) 60,723,450
Issued on 30 September 2015 37,607,105 38,848,139 (435,153) 38,412,986
Issued on 6 November 2015 30,850,000 32,084,000 - 32,084,000
Total issued at 31 March 2016 308,807,105 317,516,214 (2,559,589) 314,956,625
Sale of treasury shares (see below) (30,850,000) (32,084,000) - (32,084,000)
Issued on 27 July 2016 41,991,242 42,159,207 (649,635) 41,509,572
Issued on 27 July 2016 1,822,656 1,829,947 (28,202) 1,801,745
Issued on 4 August 2016 4,254,855 4,297,404 (64,461) 4,232,942
Issued on 4 August 2016 1,040,690 1,051,097 (15,766) 1,035,330
Issued on 9 August 2016 5,775,557 5,833,313 (87,500) 5,745,813
Issued on 9 September 2016 9,215,926 9,515,444 (142,732) 9,372,712
Scrip Dividend - 30 September 2016 1,139,374 1,192,085 - 1,192,085
Total issued at 30 September 2016 343,197,405 351,310,710 (3,547,885) 347,762,824
The Company currently has one class of ordinary share in issue.
All the holders of the ordinary shares, which total 343,197,405 are
entitled to receive dividends as declared from time to time and are
entitled to one vote per share at meetings of the Company.
Treasury shares
On 6 November 2015 the Company issued 30,850,000 new ordinary
shares which the Company then purchased at a price of 104.0p per
share. The shares purchased were placed in treasury. The Treasury
shares were not entitled to receive dividends and did not hold any
voting rights. On 22 July 2016 the Treasury shares were sold, as
part of the capital issuance programme at a price of 100.4 pence
per share.
Retained reserves
Retained reserves comprise the retained earnings as detailed in
the Statement of Changes in Equity.
9. Earnings per share
Period ended Year ended
30 September 31 March
2016 2016
Profit and comprehensive income for the period/year
(GBP) 25,289,969 2,034,701
Weighted average number of ordinary shares 298,764,797 259,256,304
Earnings per ordinary share - pence 8.46p 0.78p
10. Dividends
Period ended Year ended
30 September 31 March
2016 2016
(GBP) (GBP)
Amounts recognised as distributions to equity
holders:
Interim dividend for the period ended 31 March
2015 of 2.625p per share, paid on 30 July 2015 - 6,309,188
Interim dividend for the period ended 30 September
2015 of 3.125p per share, paid on 18 December
2015 - 8,686,159
Interim dividend for the period ended 31 March
2016 of 3.125p per share, paid on 22 July 2016 8,686,160 -
Interim dividend for the period ended 30 June
2016 of 1.5775p per share, paid on 30 September
2016 5,250,584 -
Total 13,936,744 14,995,347
11. Net assets per ordinary share
As at As at
30 September 31 March
2016 2016
Shareholders' equity (GBP) 350,054,302 273,810,878
Number of ordinary shares (excluding Treasury
shares) 343,197,405 277,957,105
Net assets per ordinary share - pence 102.0p 98.5p
12. Financial instruments
Valuation methodology
The Directors have satisfied themselves as to the methodology
used, the discount rates and key assumptions applied, and the
valuation. All completed investments are at fair value through
profit or loss and are valued using a discounted cash flow
methodology. Investments which are not yet completed are held at
fair value, where the cost of the investment is used as an
appropriate approximation of fair value.
Discount rates
The discount rates used for valuing each renewable
infrastructure investment are based on both the industry discount
rate and on the specific circumstances of each project. The risk
premium takes into account risks and opportunities associated with
the investment earnings.
The discount rates used for valuing the investments in the
Portfolio are as follows:
30 September 31 March
2016 2016
Weighted Average discount rate 7.70% 7.70%
A change to the weighted average discount rate by plus or minus
0.5% has the following effect on the valuation.
Total Portfolio
Discount rate +0.5% change value -0.5% change
Directors' valuation at 30 September
2016 (GBP) (15.6m) 397.1m 16.7m
Directors' valuation - percentage movement (3.9%) 4.2%
Directors' valuation at 31 March 2016
(GBP) (14.6m) 382.3m 15.7m
Directors' valuation - percentage movement (3.8%) 4.1%
Power price
NEC Group continuously reviews multiple inputs from market
contributors and leading consultants and adjusts the inputs to the
power price forecast when a conservative approach is deemed most
appropriate. Current estimates imply an average rate of growth of
electricity prices of approximately 2.1% in real terms and a long
term inflation rate of 2.75%.
A change in the forecast electricity price assumptions by plus
or minus 10% has the following effect on the valuation.
Total Portfolio
Power price -10% change value +10% change
Directors' valuation at 30 September
2016 (GBP) (22.6m) 397.1m 22.4m
Directors' valuation - percentage movement (5.7%) 5.6%
Directors' valuation at 31 March 2016
(GBP) (19.7m) 382.3m 19.6m
Directors' valuation - percentage movement (5.2%) 5.1%
Energy generation
The Portfolio's aggregate energy generation yield depends on the
combination of solar irradiation and technical performance of the
solar PV plants.
A change in energy generation by plus or minus 5% has the
following effect on the valuation:
Total Portfolio
Energy generation 5% Under performance value 5% Out performance
Directors' valuation at 30 September
2016 (GBP) (25.4m) 397.1m 25.1m
Directors' valuation - percentage movement (6.4%) 6.3%
Directors' valuation at 31 March 2016
(GBP) (24.6m) 382.3m 24.3m
Directors' valuation - percentage movement (6.4%) 6.4%
Inflation rates
The Portfolio valuation assumes long-term inflation of 2.75% per
annum for investments (based on UK RPI). A change in the inflation
rate by plus or minus 0.5% has the following effect on the
valuation:
Total Portfolio
Inflation rate -0.5% change value +0.5% change
Directors' valuation at 30 September
2016 (GBP) (21.2m) 397.1m 22.5m
Directors' valuation - percentage movement (5.3%) 5.7%
Directors' valuation at 31 March 2016
(GBP) (16.7m) 382.3m 17.6m
Directors' valuation - percentage movement (4.4%) 4.6%
Operating costs
The table below shows the sensitivity of the Portfolio to
changes in operating costs by plus or minus 10% at project company
level:
Total Portfolio
Operating costs +10% change value -10% change
Directors' valuation at 30 September
2016 (GBP) (5.9m) 397.1m 5.9m
Directors' valuation - percentage movement (1.5%) 1.5%
Directors' valuation at 31 March 2016
(GBP) (6.3m) 382.3m 6.3m
Directors' valuation - percentage movement (1.6%) 1.6%
Tax rates
The UK corporation tax assumption for the Portfolio valuation
was 20% until 31 March 2017, 19% until 31 March 2020 and 17%
thereafter in accordance with the UK Government announced
reductions.
13. Financial assets and liabilities not measured at fair
value
Cash and cash equivalents are level 1 items on the fair value
hierarchy. Current assets and current liabilities are Level 2 items
on the fair value hierarchy. The carrying value of current assets
and current liabilities approximates fair value as these are
short-term items.
14. Management fee
The Investment Manager is entitled to receive an annual fee,
accruing daily and calculated on a sliding scale, as follows
below:
-- for the tranche of NAV up to and including GBP200m, 1% of the
Net Asset Value ("NAV") of the Company.
-- for the tranche of NAV above GBP200m and up to and including GBP300m, 0.9% of NAV.
-- for the tranche of NAV above GBP300m, 0.8% of NAV.
For the period ending 30 September 2016 the Company has incurred
GBP1,438,706 in management fees of which GBPnil was outstanding at
30 September 2016. For the year ending 31 March 2016 the Company
incurred GBP2,615,662 in management fees of which GBPnil was
outstanding at 31 March 2016. For the period ending 30 September
2015 the Company incurred GBP1,242,304 in management fees of which
GBP17,401 was outstanding at 30 September 2015.
15. Related parties
The Investment Manager, NextEnergy Capital IM Limited, is a
related party due to having common key management personnel with
the subsidiaries of the Company. All management fee transactions
with the Investment Manager are disclosed in note 14.
The Investment Adviser, NextEnergy Capital Limited, is a related
party due to sharing common key management personnel with the
subsidiaries of the Company. There are no advisory fee transactions
between the Company and the Investment Adviser.
The Operating Asset Manager, WiseEnergy (GB) Limited, is a
related party due to sharing common key management personnel with
the subsidiaries of the Company. Each of the operating subsidiaries
of the Company entered into an asset management agreement with
WiseEnergy (GB) Limited. The total value of recurring and one-off
services paid to the Operating Asset Manager during the reporting
period amounted to GBP1,172,737 (31 March 2016: GBP1,374,373).
NextPower Development Limited is a related party due to sharing
common key management personnel with the subsidiaries of the
Company. There are no advisory fee transactions between the
Company, its subsidiaries and NextPower Development Limited.
16. Controlling party
In the opinion of the Directors, on the basis of shareholdings
advised to them, the Company has no immediate or ultimate
controlling party.
17. Remuneration of the Directors
The remuneration of the Directors was GBP61,500 for the period
(for the year to 31 March 2016: GBP123,000, for the period to 30
September 2015: GBP61,500) which consisted solely of short-term
employment benefits. With effect from 1 October 2016 total fees
were increased to GBP137,500 per annum.
18. Revolving credit and debt facilities
In September 2014, NextEnergy Solar Holding Limited entered into
a revolving credit facility with Macquarie Bank Limited
(subsequently 40% of which was syndicated to Santander) for up to
GBP31.5m and extended to GBP100.0m and then to GBP120.0m. In
September 2016, the GBP31.5m tranche was cancelled and as at 30
September 2016 GBP43.0m of the facility was drawn (31 March 2016:
GBP51.5m). As part of the revolving credit facility agreement
Macquarie Bank Limited and Santander hold a charge over the assets
of NextEnergy Solar Holding Limited.
In July 2015, NextEnergy Solar Holdings II Limited, a subsidiary
of the Company, agreed a loan with NIBC Bank N.V. ("NIBC") for
GBP22.7m ("NIBC Facility"). In July 2016, GBP1.0m was repaid and
the remaining outstanding amount as at 30 September 2016 was
GBP21.7m.
In January 2016, NextEnergy Solar Holdings III Limited, a
subsidiary of the Company, acquired a portfolio of three operating
plants totalling 53MWp for GBP61.7m which had a long term
fully-amortising project financing of GBP45.4m in place. As at 30
September 2016 the outstanding amount was GBP44.9m.
On 31 March 2016 NextEnergy Solar Holdings IV Limited, a
subsidiary of the Company agreed the purchase of Project Radius.
The portfolio of five operating plants totalling 84.3MWp was
acquired for GBP47.5m with long term fully-amortising project
financing of GBP55.0m in place. As at 30 September 2016 the
outstanding amount was GBP54.7m.
19. Taxation
Under the current system of taxation in Guernsey, the Company is
exempt from paying taxes on income, profit or capital gains.
Therefore, income from investments in UK solar PV plants is not
subject to any further tax in Guernsey, although these investments
are subject to corporate tax in the UK.
20. Events after the reporting period
Since 30 September 2016 the following relevant events
occurred:
On 10 November 2016, the Company announced an interim dividend
of 1.5775 pence per Ordinary Share for the quarter ending 30
September 2016, to be paid on 30 December 2016 to shareholders on
the register as at close of business on 18 November 2016.
On 15 September 2016, the Company announced a 350m share
issuance program and on 21 November 2016 issued 110.3m new shares,
raising total gross proceeds of GBP115.3m.
On 22 November 2016, the Company announced the signing of a
share purchase agreement to acquire the 5MWp Kentishes solar
plant.
Independent review report to NextEnergy Solar Fund Limited
Introduction
We have been engaged by NextEnergy Solar Fund Limited ("the
Company") to review the condensed unaudited set of financial
statements in the half-yearly financial report for the six months
ended 30 September 2016, which comprises the Condensed Statement of
Comprehensive Income, the Condensed Statement of Financial Position
as at 30 September 2016, the Condensed Statement of Changes in
Equity, the Condensed Statement of Cash Flows and related notes. We
have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards. The condensed unaudited set of financial
statements included in this half-yearly financial report has been
prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review. This report, including the
conclusion, has been prepared for and only for the Company for the
purpose of the Disclosure and Transparency Rules of the Financial
Conduct Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2016 are not prepared, in all material respects, in
accordance with International Accounting Standard 34 and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
29 November 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BIBDBUSDBGLC
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