TIDMNESF
RNS Number : 0556W
NextEnergy Solar Fund Limited
04 November 2014
4 November 2014
NextEnergy Solar Fund Limited ("NESF")
Announcement of Interim Results
NextEnergy Solar Fund ("NESF" or the "Company") announces its
interim results for the period from 20 December 2013 to 30
September 2014.
Highlights for the period
-- Net Asset Value ("NAV") increased to 103.1p per share from
100p per share at Initial Public Offering ("IPO")
-- Earnings per share outstanding at 30 September 2014 amounted to 3.1p
-- Acquisition of seven different solar power plants with a capacity of c. 68MW
-- Operational performance in line with or above management expectations
-- Committed c. 94% of IPO proceeds in just over four months
-- Entered into revolving credit facility ("RCF") for GBP31.5M
Post period end
-- Announced acquisition of its eighth solar power plant, increasing total capacity to c. 78MW
-- Secured pipeline portfolio of 12 further projects totalling
c. 181MW with an investment value of c. GBP210M for the remainder
of 2014
-- Proposed placing programme of up to 250M new shares, subject to shareholder approval
-- Interim dividend of 2.625p declared
Kevin Lyon, Chairman of NESF, commented:
"The Company has successfully delivered on its principal IPO
undertakings. Our financial and operational performance has been in
line with or above management expectations. In parallel, we have
built the foundations for future growth by securing a large
portfolio of short term opportunities for the remainder of 2014 and
further projects for 2015. Financing for these opportunities is
expected to come from the proposed placing programme's proceeds and
the RCF. The growth opportunities we have identified will continue
to deliver incremental value for our existing and future
shareholders. In parallel, the Company's focus on operating
performance for the existing and future portfolio will maximise
results from operating assets."
Investment Performance
The unaudited NAV at 30 September 2014 amounted to GBP88.3M
(103.1p per share), a 3.1% increase on the initial NAV of GBP85.6M
(100p per share) at 25 April 2014 (being the date of the Company's
IPO).
Earnings and Dividend
The earnings per share outstanding amounted to 3.1p (equal to
5.6p as measured on weighted average number of shares in the
period, for the accounting records). The Board has declared an
interim semi-annual dividend of 2.625 pence per ordinary share,
payable on 17 December 2014 to shareholders on the register on 5
December 2014 (the ex-dividend date will be 4 December 2014). NESF
confirms that it is on track for aggregate dividends of 5.25 pence
per ordinary share for the year ending 31 March 2015.
Acquisitions
The Company announced the acquisition of seven solar projects in
the period from 1 May to 9 September 2014, a period of just over
four months. The portfolio acquired amounts to c. 68MW, accounting
for c. 94% of IPO proceeds. On 29 October 2014, NESF announced the
acquisition of its eighth solar power plant, the Condover project,
bringing the total portfolio to c. 78MW with a value of
GBP92.1M.
Revolving Credit Facility
NESF secured an RCF of GBP31.5M from Macquarie Bank Limited
during September. The RCF will be employed to secure further
acquisitions for the Company.
Outlook, Proposed Placing Programme and Acquisitions
Pipeline
The backdrop for the continued deployment of solar power plants
in the UK remains strong, and the evolving regulatory environment
is expected to continue to provide the Company with the
opportunities it needs to achieve its growth ambitions.
The Company has demonstrated its ability to source growth
opportunities by securing exclusive acquisition rights on a further
portfolio of 12 projects with a total capacity of c. 181MW and a
cumulated investment value of c. GBP210M. This portfolio requires
investment decisions by the end of 2014. In addition, the Company
is in discussions for a 2015 pipeline of in excess of GBP300M. On
this basis, NESF is confident it can achieve its growth
ambitions.
In view of the scale of the Company's acquisition pipeline, the
Company announced, on 9 October 2014, a proposed placing programme
to issue up to 250M new shares. The initial placing is expected to
take place in early November 2014 (subject to shareholders
approving the placing programme at the general meeting to be held
on 4 November 2014) and the Directors will be seeking to utilise
fully the placing programme over its 12-month life to take
advantage of the growth opportunities.
________________________
The interim financial statements are set out below. The interim
financial statements have been submitted to the National Storage
Mechanism and will shortly be available for inspection at
www.morningstar.co.uk/uk/NSM. The interim financial statements will
also shortly be available on the Company's website
(www.nextenergysolarfund.co.uk).
For further information:
NextEnergy Capital 020 3239 020 3128
Limited 9054 MHP Communications 8100
Michael Bonte-Friedheim Rupert Trefgarne
Aldo Beolchini Jamie Ricketts
Cantor Fitzgerald 020 7894 020 7408
Europe 7667 Shore Capital 4090
Sue Inglis Bidhi Bhoma
Anita Ghanekar
Notes to Editors:
NextEnergy Solar Fund
NextEnergy Solar Fund (www.nextenergysolarfund.com ) is a
specialist investment fund focused on operational solar
photovoltaic ("PV") assets located in the UK. The Company intends
to provide investors with a sustainable and attractive dividend
that increases in line with RPI over the long term and an element
of capital growth through the re-investment of net cash generated
in excess of the target dividend.
Further information on NextEnergy Capital and WiseEnergy is
available at www.nextenergycapital.com and www.wise-energy.eu.
Chairman's Statement
On behalf of the Board, I am pl ea sed to pr e se n t t h e i n
t e rim r e port f or N e xt E n e rgy S o l a r F un d L i m it e
d ( t h e " Co m p an y" ) f or t h e p e riod f rom 2 0 D e c e mb
e r 2 0 1 3 t o 3 0 Sep te mb e r 2 0 14.
The Company is listed on the premium segment of the London Stock
Exchange on 25 April 2014. The Company raised GBP85.6 million from
a high-quality group of investors, including institutions and
private wealth managers.
The Company's investment strategy is to leverage its investment
manager's experience and expertise in the solar market to acquire
and retain operating solar power projects located exclusively in
the UK, with a view to providing its investors with a stable
long-term dividend linked to RPI.
The Company's Investment Manager is NextEnergy Capital IM
Limited and its Investment Advisor is NextEnergy Capital Limited,
both part of the NextEnergy Capital group of companies ("NEC"). NEC
is the leading specialist asset manager for solar power plants,
managing and monitoring over 1,100 utility-scale plants for a total
of more than 1,000MWp and an estimated asset value of approximately
GBP3 billion.
The Company had a successful start as a listed entity, with the
Company demonstrating a strong underlying investment track record
and excellent operating results from the operating assets acquired.
In addition, the Company's share price has traded at a premium to
its opening NAV since its listing.
In the period to 30 September 2014, the Company announced seven
separate acquisitions for a total investment value of up to c.
GBP80.5 million, representing 94% of its IPO proceeds. The seven
projects amount to an installed capacity of some 67.5MWp.
On 17 September 2014, a subsidiary of the Company, NextEnergy
Solar Holdings Limited, secured a revolving credit facility ("RCF")
of up to GBP31.5 million from Macquarie Bank Limited ("Macquarie").
The debt facility has been designed to allow the Company to secure
additional projects sourced by NEC on behalf of the Company.
TheCompany, on behalf of the UK Holdco, undertook a competitive
selection process among debt providers before signing the RCF with
Macquarie to ensure its terms were the best available to the
Company in the market.
Financial Results
Revenues for the period amounted to GBP3.18 million and profit
and comprehensive income amounted to GBP2.67 million. The increase
in NAV per share since the IPO was 3.1p. Earnings per share
(measured on the weighted average number of shares in the period to
30September 2014) amounted to 5.6p.
The net asset value ("NAV") per share at the end of the period
amounts to 103.1p, an increase of 3.1% over the Company's opening
NAV of 100p per share at IPO on 25 April 2014. More details of the
Company's financial performance are set out in the financial
statements.
Acquisitions
During the period, the Company announced the acquisition of
seven individual solar power plants. Three of the seven
acquisitions were completed, while the remaining four transactions
are on track for completion before the Company's year-end in line
with expectations.
The three solar power plants acquired amount to 27.3MWp in
capacity. Each of the individual power plants is demonstrating
operational performance in excess of expectations. The four
remaining acquisitions will be completed once the respective solar
power projects are commissioned and/or achieve their preliminary
acceptance certificates ("PAC"). NEC is actively involved in
monitoring the construction of these four plants and reports
satisfactory progress at all of them.
Valuation Policy
The Company's investments are measured at fair value for
reporting purposes. Operating assets are valued on the basis of
discounted cash flows prepared by the Investment Manager and
approved by the Board. Projects under construction are valued at
the acquisition price agreed with the respective vendor.
The Board is satisfied that the valuations prepared by the
Investment Manager are based on market terms and has approved the
valuation of GBP55.9 million for the Company's portfolio of seven
solar power plants. A breakdown of the valuation is detailed in the
report.
Capital Raising
On October 9(th) 2014 the Company announced a proposed placing
programme ("PPP") of up to 250 million new shares. The PPP provides
the Company with the flexibility to issue ordinary shares and/or
C-shares to finance incremental acquisitions from investment
opportunities secured by NEC on behalf of the Company.
In addition to any capital raised from the PPP (if approved),
the Company also intends to utilise its RCF to secure further
projects from the portfolio of opportunities described above.
Going Concern
Under the UK Corporate Governance Code and applicable
regulations, the directors are required to satisfy themselves that
it is reasonable to assume that the Company is a going concern.
The directors have undertaken a rigorous review of the Company's
ability to continue as a going concern including reviewing the
on-going cash flows and the level of cash balances as of the
reporting date as well as taking forecasts of future cash flows
into consideration.
After making enquiries of the Investment Manager, the Investment
Adviser and the Administrator, the directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they
continue to adopt a going concern basis in preparing these
unaudited financial statements.
Outlook
The Company and its board are satisfied with the results
achieved to date, both in terms of investment record and operating
and financial performance. The Board is encouraged by the portfolio
of opportunities sourced by NEC which provide the foundation for
the Company's further growth and continued achievement of its
strategic and financial objectives.
The backdrop for the continued deployment of solar power plants
in the UK remains strong, and we see the evolving regulatory
environment as continuing to provide the Company with the
opportunities it needs to achieve its growth ambitions.
The Board will continue to update you on progress made by the
Company through market updates and other statements as
appropriate.
On behalf of the Board, I would like to thank you for your
commitment to the Company.
Kevin Lyon
Chairman
Investment Manager's Report
About NextEnergy Capital
NextEnergy Capital IM Limited and NextEnergy Capital Limited,
both members of the NextEnergy Capital Group (the "NEC Group"), act
as Investment Manager to the Company and Investment Adviser to the
Investment Manager, respectively. The NEC Group is a specialist
asset manager focused on the solar energy sector, with an 11-strong
team focussed on the UK solar market. Through its asset management
division, WiseEnergy, the NEC Group manages and monitors over 1,100
solar power plants (comprising an installed capacity of
approximately 1,000 MWp and an estimated GBP3.0 billon asset value)
for a client base which includes leading European banks and equity
investors (including private equity funds, publicly listed funds
and institutional investors).
Investment Objective
The Company seeks to provide investors with a sustainable and
attractive dividend that increases in line with RPIover the long
term by investing in a diversified portfolio of solar 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
dividendin accordance with the Company's investment policy.
Investment Policy
The Company intends to achieve its investment objective by
investing exclusively in solar PV assets located in the UK.
The Company intends to continue to acquire assets 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 selected building-integrated installations. The assets
that will be targeted will be anticipated to generate stable cash
flows over their asset lifespan.
The Company will, primarily, continue to acquire operating
assets, but may invest in assets that are 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 per cent. of the Gross Asset Value in
aggregate. As at period end, the Company has not invested directly
in assets under development.
A significant proportion of the Group's income is expected to
result from the sale of the entirety of the electricity generated
by the assets within the terms of power purchase agreements
("PPA"). These are expected to include the monetisation of
renewable obligation certificates ("ROC"), other regulated benefits
and the sale of electricity to energy consumers and energy
suppliers ("Brown Power"). Within this context, the Manager expects
to conclude for the Company PPAs with creditworthy counterparties
at the appropriate time. The Manager will also continue to monitor
the emerging Electricity Market Reform mechanism and will consider
the opportunities arising (including contracts for difference)
therefrom, which may be applicable to projects completed from 31
March 2015.
The Company will continue to diversify its third party
suppliers, service providers and other commercial counterparties,
such as developers, EPC contractors, technical component
manufacturers, PPA providers and landlords.
The Company intends to invest with a view to holding assets
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 interests 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
expects to re-invest any cash surplus (arising in excess of that
required to meet the Company's dividend target and ongoing
operating expenses) in further investments, thereby supporting
its
long-term net asset value ("NAV").
Portfolio Highlights and Performances
In the period to 30 September 2014, the Company announced seven
separate acquisitions for a total investment value of up to c.
GBP80.4 million, representing 94% of its IPO proceeds. The seven
projects amount to an installed capacity of some 67.5MWp.
Three of the seven acquisitions were successfully completed,
while the remaining four transactions are on track for completion
before the Company's year-end in line with expectations.
The three solar power plants acquired amount to 27.3MWp in
capacity. Each of the individual power plants is demonstrating
operational performance since acquisition in excess of expectations
with an average over- performance of around 10% above the budgeted
generation values (partially explained by the positive solar
irradiation of the June and July months and partially by the higher
operational performance of the assets).
The other four acquisitions will be completed once the
respective solar power projects are commissioned and/or achieve
their preliminary acceptance certificates ("PAC"). The Investment
Manager is actively involved in monitoring the construction of
these four plants and reports satisfactory progress at all of
them.
During the period ending 30 September 2014, the NAV per share
increased to 103.1p, an increase of 3.12% over the Company's
opening NAV of 100p per share at IPO on 25 April 2014. The share
price in the same period increased from 100p to 105.38p per share
trading at a 2.2% premium on NAV.
Investment Portfolio
In the period to 30 September 2014, the Company announced seven
separate acquisitions for a total investment value of up to c.
GBP80.4 million, representing 94% of its IPO proceeds. The seven
projects amount to an installed capacity of some 67.5MWp.
Plant Acquisition
Investment ROC capacity value (GBPm)* % of IPO
Asset Name Location Date regime (MWp) proceeds
------------- --------------- ---------------------------- ------------ --------------- ------------------ ---------------
Higher
Hatherleigh Somerset 01/05/14 1.6 6.1 7.27 8.5%
Shacks Barn Northants 09/05/14 2.0 6.3 8.12 9.5%
Gover Farm Cornwall 23/06/14 1.4 9.4 10.68 12.5%
Bilsham Sussex 03/07/14 1.4 12.5 15.20 17.7%
Brickyard Midlands 14/07/14 1.4 3.8 4.02 4.7%
Ellough Suffolk 28/07/14 1.6 14.9 19.58 22.9%
Poulshot Wiltshire 09/09/14 1.4 14.5 15.57 18.2%
------------- --------------- ---------------------------- ------------ --------------- ------------------ ---------------
Total 67.5 80.44 94.0%
------------------------------------------------------------ ------------ --------------- ------------------ ---------------
* Price includes transaction costs
Summary of the Investment Portfolio:
Details of each investment can be found in the tables below:
Higher Hatherleigh
------------------------------------------------------------------------------------
Location Somerset Acquired by the Company for GBP7.3 million,
Higher Hatherleigh is a 6.1MWp solar plant
located near Wincanton in Somerset, in operation
since April 2013. During the period from
acquisition to 30 September 2014, the plant
produced ca. 4.0GWh (+13.0% vs. budget).
------------------- ----------- --------------------------------------------------
Capacity (MWp) 6.1
------------------- ----------- --------------------------------------------------
ROCs 1.6
------------------- -----------
EPC Moser Baer
------------------- -----------
Panels JA Solar
------------------- -----------
Inverter Power One
------------------- -----------
Operational Since Apr-13
------------------- ----------- --------------------------------------------------
Shacks Barn
--------------------------------------------------------------------------------
Location Northants Acquired by the Company for GBP8.2 million,
Shacks Barn is a 6.3MWp solar plant located
near Silverstone in Northamptonshire, in
operation since March 2013.
During the period from acquisition to 30
September 2014 the plant produced ca. 4.0GWh
(+15.4% vs. budget).
------------------- ----------- ----------------------------------------------
Capacity (MWp) 6.3
------------------- ----------- ----------------------------------------------
ROCs 2.0
------------------- -----------
EPC Moser Baer
------------------- -----------
Panels JA Solar
------------------- -----------
Inverter Power One
------------------- -----------
Operational Since Mar-13
------------------- ----------- ----------------------------------------------
Gover Farm
---------------------------------------------------------------------------------------------
Location Cornwall The Company entered into a binding agreement
to acquire the plant, subject to PAC, for
GBP10.7 million.
Gover Farm is a 9.4MWp solar plant located
near Truro in Cornwall. As of the 30 of September
the plant was under construction and as at
24 October 2014 is in the process of being
commissioned.
------------------- ------------------- ---------------------------------------------------
Capacity (MWp) 9.4
------------------- ------------------- ---------------------------------------------------
ROCs 1.4
------------------- -------------------
EPC Moser Baer
------------------- -------------------
Panels BYD
------------------- -------------------
Inverter ABB
------------------- -------------------
Operational Since Under Construction
------------------- ------------------- ---------------------------------------------------
Bilsham
--------------------------------------------------------------------------------------------
Location Sussex The Company entered into a binding agreement
to acquire the plant, subject to PAC, for
GBP15.2 million.
Bilsham is a 12.5MWp solar plant located
near Bognor Regis in Sussex. As of the 30
of September the plant reached mechanical
completion and as at 24 October 2014 is awaiting
to be commissioned.
------------------- ------------------- --------------------------------------------------
Capacity (MWp) 12.5
------------------- ------------------- --------------------------------------------------
ROCs 1.4
------------------- -------------------
EPC GDF Suez
------------------- -------------------
Panels Renesola
------------------- -------------------
Inverter ABB
------------------- -------------------
Operational Since Under Construction
------------------- ------------------- --------------------------------------------------
Brickyard
-------------------------------------------------------------------------------------------------
Location Warwick The Company entered into a binding agreement
to acquire the plant, subject to PAC, for
GBP4.0 million.
Brickyard is a 3.8MWp solar plant located
near Leamington Spa in the Midlands. As of
the 30 of September the plant was under construction
and as at 24 is in the process of being commissioned.
------------------- ------------------- -------------------------------------------------------
Capacity (MWp) 3.8
------------------- ------------------- -------------------------------------------------------
ROCs 1.4
------------------- -------------------
EPC Moser Baer
------------------- -------------------
Panels BYD
------------------- -------------------
Inverter ABB
------------------- -------------------
Operational Since Under Construction
------------------- ------------------- -------------------------------------------------------
Ellough
-----------------------------------------------------------------------------------
Location Suffolk Acquired by the Company for GBP19.6 million,
Ellough is a14.9MWp solar plant located on
a disused airfield near Ellough in Suffolk
and has been in operation since March 2014.
During the period from acquisition to 30
September 2014 the plant produced ca. 3.2GWh
(+0.6% vs. budget) despite significantly
lower solar irradiation (-5.1% vs. estimates).
------------------- ------------ ------------------------------------------------
Capacity (MWp) 14.9
------------------- ------------ ------------------------------------------------
ROCs 1.6
------------------- ------------
EPC Lark Energy
------------------- ------------
Panels Hanwha
------------------- ------------
Inverter Free Sun
------------------- ------------
Operational Since Mar-14
------------------- ------------ ------------------------------------------------
Poulshot
------------------------------------------------------------------------------------------------
Location Wiltshire The Company entered into a binding agreement
to acquire the plant, subject to PAC, for
GBP15.6 million.
Poulshot is a 14.5MWp solar plant located
near Trowbridge in Wiltshire. The EPC contractor
has commenced the preliminary works for construction
and has a target date for delivery on/in
advance of 28 February 2015.
------------------- ------------------- ------------------------------------------------------
Capacity (MWp) 14.5
------------------- ------------------- ------------------------------------------------------
ROCs 1.4
------------------- -------------------
EPC Moser Baer
------------------- -------------------
Panels BYD
------------------- -------------------
Inverter ABB
------------------- -------------------
Operational Since Under Construction
------------------- ------------------- ------------------------------------------------------
Valuation of the Portfolio
The Investment Manager is responsible for carrying out the fair
market valuation of the Company's investment portfolio which is
presented to the Directors for their approval and adoption. The
valuation is carried out on at least a six monthly basis (at 30
September and 31 March in each year). The valuation principles used
in such methodology are based on a discounted cash flow
methodology, and adjusted for EVCA (European Private Equity and
Venture Capital Association) guidelines.
The Investment Manager exercises its judgement based on its
expertise in assessing the expected future cash flows from each
investment. 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 based on comparable market
transactions. Assets under construction are conservatively valued
at their acquisition cost as an estimate of fair value.
Calculation of Net Asset Value
The Company's NAV is calculated on a semi-annual basis based on
the valuation of the portfolio determined by the Investment
Manager. It is then reviewed and approved by the Board of the
Company. NAV per Share as of 30 September 2014 is 103.1p
(corresponding to an overall NAV of GBP88,272,968).
The opening NAV per share of 100.0p is substantially equal to
the IPO proceeds given the NEC Group paid for allthe costs of the
initial shares issue (some of these costs have been initially paid
by the Company and subsequently reimbursed by the Investment
Advisor, as per the Related Party Transaction disclosed in note 14
of the Financial Statements). Operating profit generated by the
solar assets has been retained by the relevant SPVs. The 2.1p
change in NAV per share mainly derives from the application of
discounted cashflow methodology to those investments in operating
assets.
Detailed disclosure on the asset valuation methodologies and
sensitivities on the Company's NAV are provided in the notes to the
Financial Statement.
Financing
On 17 September 2014 a subsidiary of the Company, NextEnergy
Solar Holdings Limited, entered into a two- year revolving credit
facility ("RCF") agreement for up to GBP31.5 million. This facility
can be drawn to fund the acquisition of further UK solar power
plants. It is expected that the facility will be repaid through one
or more of: excess dividend cover, further equity issuance and/or
refinancing with a long-term debt facility.
The provider of the facility is Macquarie Bank Limited. The
facility is secured against the operating solar assets of the UK
Holdco, and as the four assets under construction become
operational, it is expected that the facility line can be further
extended thus providing additional funding flexibility to acquire
further assets.
The Company, on behalf of the UK Holdco, undertook an extensive
selection process among debt providers before signing the RCF with
Macquarie to ensure its terms are in line with the prevailing
market conditions.
Outlook
The backdrop for the continued deployment of solar power plants
in the UK remains strong, and we see the evolving regulatory
environment as continuing to provide the Company with the
opportunities it needs to achieve its growth ambitions.
The NEC Group, on behalf of the Company, is continuing to seek
out new investment opportunities that are either in operation,
under construction or to be constructed before April 2015. The
Investment Manager is targeting the same returns on these new
opportunities as at the time of the IPO, that equate to an
unlevered IRR between 7 and 9 per cent. after fees and
expenses.
Description of the Principal Risks and Uncertainties for the
Remaining Six Months of the Year
The Company has in place risk management procedures and internal
controlsto 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 risks faced by the Company over the remaining six months of
the year span across various areas including:
-- Interest rate exposure should the RCF be drawn down
-- Delay in delivery of commissioned solar assets from vendors
-- Risk that further planned acquisitions do not take place,
affecting the Company's growth potential
-- Exposure to wholesale energy market for a relevant portion of
the revenues generated by the operating assets
-- Risk of introduction of an unexpected retroactive change in
law reducing the level of support to solar projects, affecting the
value of the Company's assets
Post September Update
Since 30 September 2014, the following relevant events
occurred:
-- On 9 October 2014 the Company announced a proposed placing
programme ("PPP") of up to 250 million new shares. The PPP will be
voted upon by shareholders in an Extraordinary General Meeting to
be held on 4 November 2014, and, if approved, will give the Company
the ability to issues new shares over the subsequent 12 months from
such date. The PPP provides the Company with the flexibility to
issue ordinary shares and / or C-shares to finance incremental
acquisitions from among the substantial portfolio of opportunities
secured by NEC on behalf of the Company.
-- On 29 October 2014 the Company announced the agreement to
acquire Condover: a 10.2MWp plant located in Shropshire for a total
acquisition price of GBP11.7 million assuming 1.4 ROC
accreditation. The purchase will be completed at commissioning.
NextEnergy Capital IM Limited
Investment Manager
Investment Portfolio
Cost Paid(1) GBP Directors' Valuation
Notes GBP
------------------- ----- ---------------- ---------------------------
Higher Hatherleigh 7,300,000 8,467,711
Shacks Barn 8,200,000 9,389,488
Bilsham 2 11,510,250 11,510,250
Gover Farm 2 5,629,484 5,629,484
Ellough 17,972,810 18,790,939
Brickyard 2 2,096,216 2,096,216
Poulshot 2 - -
Total Company 52,708,760 55,884,088
------------------- ----- ---------------- ---------------------------
Notes to the Investment Portfolio
1. Cost includes transaction costs and working capital
financing
2. Bilsham, Gover Farm, Brickyard and Poulshot are not yet
operational as at 30 September 2014.
Statement of Directors' Responsibilities
To the best of their knowledge, the directors of NextEnergy
Solar Fund Limited confirm that:
(a) The Interim Report and Unaudited Financial Statements have
been prepared in accordance with International Financial Reporting
Standards (IFRS); and
(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 inception to 30 September 2014 and their impact on
the unaudited 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 inception to 30 September 2014 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.
By order of the Board
For NextEnergy Solar Fund Limited
Patrick Firth
Director
3 November 2014
Independent Review Report to NextEnergy Solar Fund Limited
Introduction
We have been engaged by NextEnergy Solar Fund Limited ("the
Company") to review the financial statements in the interim
financial report for the period to 30 September 2014, which
comprises the statement of comprehensive income, the statement of
financial position as at 30 September 2014, the statement of
changes in equity, the statement of cash flows and the related
notes. We have read the other information contained in the interim
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the financial statements.
Directors' Responsibilities
The interim financial report is the responsibility of, and has
been approved by, the directors. The directors are responsible for
preparing the interim financial report in accordance with the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1, the annual financial statements of the
company are prepared in accordance with International Financial
Reporting Standards. The financial statements included in this
interim 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 financial statements in the interim 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
for use in the United Kingdom. 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 financial statements in the interim
financial report for the period from inception to 30 September 2014
is 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
3 November 2014
Publication of Interim Financial Report
The maintenance and integrity of the NextEnergy Solar Fund
Limited website is the responsibility of the directors; the work
carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for
any changes that may have occurred to the interim financial report
and unaudited condensed consolidated financial statements since
they were initially presented on the website.
Legislation in Guernsey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
Statement of Comprehensive Income
For the period ended 30 September 2014
20 December 2013 to
30 September 2014
Income GBP
Notes
--------------------------------------- ------- ---------------------------------------
Net changes in fair value of financial
assets at fair value through profit
or loss 5 3,175,328
--------------------------------------- ------- ---------------------------------------
Total net income 3,175,328
--------------------------------------- ------- ---------------------------------------
Expenditure
Management fees 13 369,759
Directors' fees 16 85,075
Administration fees 52,500
Sundry expenses 37,709
Audit fees 12 18,750
Insurance 14,134
Regulatory fees 5,741
Legal and professional fees 2,448
--------------------------------------- ------- ---------------------------------------
Total expenses 586,116
--------------------------------------- ------- ---------------------------------------
Operating profit 2,589,212
Finance income 83,755
--------------------------------------- ------- ---------------------------------------
Profit and comprehensive income for
the period 2,672,967
--------------------------------------- ------- ---------------------------------------
Earnings per share - Basic - (pence) 8 5.6p
--------------------------------------- ------- ---------------------------------------
There were no potentially dilutive instruments in issue at 30
September 2014.
All activities are derived from ongoing operations.
There is no other comprehensive income or expense apart from
those disclosed above and consequently a Statement of Other
Comprehensive Income has not been prepared.
Statement of Financial Position
As at 30 September 2014
Non-current assets
Investments 5 55,884,088
----------------------------- -------------
Total non-current assets 55,884,088
----------------------------- -------------
Current assets
Cash and cash equivalents 32,552,859
Trade and other receivables 1,368
----------------------------- -------------
Total current assets 32,554,227
----------------------------- -------------
Total assets 88,438,315
----------------------------- -------------
Current liabilities
Trade and other payables 165,347
----------------------------- -------------
Total current liabilities 165,347
----------------------------- -------------
Net assets 88,272,968
----------------------------- -------------
Equity
Share Capital 85,600,001
Reserves 2,672,967
----------------------------- -------------
Total equity attributable
to shareholders 88,272,968
Net assets per share 9 103.1p
The accompanying Notes are an integral part of these financial
statements.
The financial statements were approved and authorised for issue
by the Board of Directors on 3 November 2014, and signed on its
behalf by:
Patrick Firth
Director
Statement of Changes in Equity
For the period ended 30 September 2014
Retained
Share Capital Earnings Total Equity
Notes GBP GBP GBP
----------------------- -------- ---------------- ---------- ---------------
Shareholders' equity
at 20 December 2013
Profit for the period - 2,672,967 2,672,967
Share capital issued 7 85,600,001 - 85,600,001
----------------------- -------- ---------------- ---------- ---------------
Shareholders' equity
at 30 September 2014 85,600,001 2,672,967 88,272,968
----------------------- -------- ---------------- ---------- ---------------
Cash Flow Statement
For the period ended 30 September 2014
20 December 2013
to
Cash flow from operating activities Notes 30 September 2014
GBP
Profit and comprehensive income for
the period 2,672,967
Adjustments for:
Change in fair value on investments 5 (3,175,328)
Finance income (83,755)
------------------------------------------------ -------- -------------------
Operating cashflows before movements
in working capital (586,116)
------------------------------------------------ -------- -------------------
Changes in working capital
Increase in trade receivables (1,368)
Increase in trade payables 165,347
------------------------------------------------ -------- -------------------
Net cash used in operating activities (422,137)
------------------------------------------------ -------- -------------------
Cash flows from investing activities
Purchase of investments 5 (52,708,760)
Finance income 83,755
------------------------------------------------ -------- -------------------
Net cash used in investing activities (52,625,005)
------------------------------------------------ -------- -------------------
Cash flows from financing activities
Proceeds from issue of shares 7 85,600,001
------------------------------------------------ -------- -------------------
Net cash generated from investing activities 85,600,001
------------------------------------------------ -------- -------------------
Net increase in cash and cash equivalents
during period 32,552,859
Cash and cash equivalents at the beginning -
of the period
------------------------------------------------ -------- -------------------
Cash and cash equivalents at the end
of the period 32,552,859
------------------------------------------------ -------- -------------------
Statement of Changes in Equity
For the period ended 30 September 2014
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 has been authorised by the GFSC as an authorised
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.
The Company seeks to provide investors with a sustainable and
attractive dividend that increases in line with retail price index
over the long term by investing in a diversified portfolio of solar
photo-voltaic 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 anticipates that it will make its
investments through holding companies and special-
purpose-vehicles, which are wholly-owned by the Company. The
Company controls the investment policy of each of the holding
companies and its wholly-owned special-purpose-vehicles 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 Law
with registered number 57740 and is licensed and regulated by the
GFSC and is a member of the NEC 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 ("theInvestment 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 Financial Conduct Authority.
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
a) Basis of Accounting
The interim financial statements, which give a true and fair
view, have been prepared on a going concern basis in accordance
with IAS 34 Interim Financial Reporting . A complete rather than a
condensed set of financial statements has been prepared as allowed
under IAS 34 Interim Financial Reporting .
The financial statements have been prepared on the historical
cost basis, except for the revaluation of certain investments and
financial instruments. Historical cost is generally based on the
fair value of the consideration given in exchange for the assets.
The principal accounting policies adopted are set out below. These
policies have been consistently applied.
Fair value is 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, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or
liability, the Company takes into account the characteristics of
the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these financial statements is determined on such a
basis.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety which are described as follows:
Level 1 inputs are quoted prices in active markets for identical
assets or liabilities that the Company can access at the
measurement date;
Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or
liability.
b) 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 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 accounting
in preparing the financial statements.
c) Basis of Non-Consolidation
The Company holds its investments through holding companies. The
Company meets the definition of an investment entity as described
by IFRS 10. Under IFRS 10 investment entities are required to hold
subsidiaries atfair value through the Statement of Comprehensive
Income rather than consolidate them.
Characteristics of an investment entity
Under the definition of an investment entity, as set out in the
standard, the entity should satisfy all three of the following
tests:
I. Obtains funds from one or more investors for the purposeof
providing those investors with investment management services;
and
II. Commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income, or both (including having an exit strategy for
investments); and
III. Measure and evaluate the performance of substantially all
of its investments on a fair value basis.
In assessing whether the Company meets the definition of an
investment entity set out in IFRS 10 the Directors note that:
I. the Company has multiple investors and obtains funds from a
diverse group of shareholders who would otherwise not have access
individually to investing in solar energy infrastructure due to
high barriers to entry and capital requirements;
II. the Company's purpose is to invest funds for both investment
income and capital appreciation. The Company's investments have
indefinite lives however the underlying assets do not have an
unlimited life and therefore minimal residual value and therefore
will not be held indefinitely; and
III. the Company measures and evaluates the performance of all
of its investments on a fair value basis which is the most relevant
for investors in the Company. Management use fair value information
as a primary measurement to evaluate the performance of all of the
investments and in decision making.
The Directors are of the opinion that the Company has all the
typical characteristics of an investment entity and therefore meet
the definition set out in IFRS 10.
The Directors believe the treatment outlined above provides the
most relevant information to investors.
d) 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 is not subject to any further
tax in Guernsey, although these investments will bear tax in the
individual jurisdictions in which they operate.
e) Segmental Reporting
The Chief Operating Decision Maker, which is the Board, is of
the opinion that the Company is engaged in a single segment of
business, being investment in solar power, in a single economic
environment, being the United Kingdom. The financial information
used by the Chief Operating Decision Maker to manage the Company
presents the business as a single segment.
f) Dividends
Dividends to the Company's shareholders are recognised when they
become legally payable. In the case of interim dividends, this is
when paid. In the case of final dividends, this is when approved at
the Annual General Meeting.
g) Income
Dividend income from financial assets at fair value through
profit or loss is recognised in the Statement of
Comprehensive Income within dividend income when the Company's
right to receive payments is established.
h) Expenses
All expenses are accounted for on an accruals basis.
i) Cash and Cash Equivalents
Cash and cash equivalents includes deposits held at call with
banks and other short-term deposits with original maturities of
three months or less.
j) Trade and Other Payables
Trade and other payables are initially recognised at fair value,
and subsequently where necessary re-measured at amortised cost
using the effective interest method.
k) Reimbursed Expenses
The Investment Advisor agreed to meet all of the expenses of the
initial share issue. These expenses have been not been recognised
in the Statement of Comprehensive Income and have been reimbursed
by the Investment Advisor. See note 14 for further details.
l) Finance Income
Finance income comprises interest earned on cash held on
deposit. Finance income is recognised on an accruals basis.
m) Financial Instruments
Financial assets and liabilities are recognised in the Company's
Statement of Financial Position when the Company becomes a party to
the contractual provisions of the instrument. Financial assets are
derecognised when the contractual rights to the cash flows from the
instrument expire or the asset is transferred and the transfer
qualifies for derecognition in accordance with IAS 39 Financial
instruments: Recognition and measurement.
Investments
The costs of investments are recognised when they become
contractually payable. Investments are designated upon initial
recognition to be accounted for at fair value through profit or
loss in accordance with IFRS 13. After initial recognition,
investments at fair value through profit or loss are measured at
fair value with changes recognised in the Statement of
Comprehensive Income.
3. New and Revised Standards
The Company has early adopted Investment Entities (Amendments to
IFRS 10, IFRS 12 and IAS 27) with a date of initial application of
20 December 2013. Management concluded that the Company meets the
definition of an investment entity (see note 2c).
The following accounting Standards and Interpretations which
have not been applied in these financial statements were in issue
but not yet effective:
IFRS 9 (amendments) Financial Instruments
IFRS 11 (amendments) Joint arrangements
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
IAS 36 (amendments) Recoverable amount disclosures for non-financial assets
IAS 39 (amendments) Novation of derivatives and continuation of hedge accounting
IFRIC Interpretation 21 Levies
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.
4. Critical Accounting Judgments and Key Sources of Estimation
Uncertainty
The Company makes estimates and assumptions that affect the
reported amounts of assets and liabilities within the next
financial year. Estimates and judgments are continually evaluated
and based on historic experience and other factors believed to be
reasonable under the circumstances.
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 through Special
Purpose Vehicles, a list of subsidiaries is included in note 6.
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 discount rate applied in
the 30 September 2014 valuation was 7.8%. 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 which 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 GBP55,884,088 and consist of seven
investments. The Company utilises discounted cash flow forecasts in
arriving at the valuation of the investments. Level 3 valuations
are reviewed on a monthly basis by the Manager who reports to the
Board of Directors on a periodic basis. The Investment Manager
considers the appropriateness of the valuation model and inputs, as
well as the valuation result.
The table below sets out information about significant
unobservable inputs used at 30 September 2014 in measuring
financial instruments categorised as Level 3 in the fair
valuehierarchy.
Fair value at
30 Sensitivity to
change
September Valuation Unobservable in significant
Description 2014 GBP technique input Input value unobservable inputs
------------ --------------------------- --------------------- ------------ ----------------------
Unlisted 36,648,138 Discounted Discount rate 7.80% The estimated fair
investments cash flows value
would increase
if the
discount rate was
lower and vice
versa.
Unlisted 19,235,950 Price per Share purchase N/A N/A
investments recent transaction agreement
5. Investments at Fair Value Through Profit or Loss
Period ended
30 September 2014
Level 3 investments GBP
Purchases during the period 52,708,760
-------------------------------------- -------------------
Closing cost 52,708,760
-------------------------------------- -------------------
Unrealised gains during the period 3,175,328
-------------------------------------- -------------------
Closing valuation 55,884,088
-------------------------------------- -------------------
6. Subsidiaries
The Company holds investments through subsidiary companies which
have not been consolidated as a result of the early adoption of
IFRS 10: Investment entities exemption to consolidation. The
following subsidiaries have not been consolidated.
Name Country Ownership
NextEnergy Solar Holding Limited UK 100%
Hive Solar Charlie Ltd UK 100%
Luminance Energy Ltd UK 100%
Ellough Solar LLP UK 100%
NESF - Ellough LTD UK 100%
B L Solar 2 Limited UK 100%
Blaze Energy Limited UK 100%
Sunglow Power Limited UK 100%
Glorious Energy Limited UK 100%
7. Share Capital
The authorised share capital is unlimited and there are
85,600,001 shares in issue. The table below outlines the movement
of shares in the year.
Issued on 20 December 2013 1
Issued on 25 April 2014 85,600,000
---------------------------------- ----------
Total issued at 30 September 2014 85,600,001
---------------------------------- ----------
The Company currently has one class of ordinary shares in
issue.
8. Earnings per Share
Period ended
30 September 2014
------------------------------------- -------------------
Net profit - GBP 2,672,967
Weighted average number of ordinary
shares 47,755,790
Earnings per ordinary share - pence 5.6p
------------------------------------- -------------------
9. Net Assets per Ordinary Share
As at
30 September 2014
-------------------------------------- -------------------
Shareholders' equity at 30 September
- GBP 88,272,968
Number of shares at 30 September 85,600,001
Net assets per ordinary share at 30
September - pence 103.1p
-------------------------------------- -------------------
10. Financial Risk Management
Capital Management
The Company manages its capital to ensure that it will be able
to continue as a going concern while maximising the return to
shareholders. In accordance with the Company's investment policy,
the Company's principal use of cash (including the proceeds of the
IPO) has been to fund investments as well as ongoing operational
expenses.
The Board with the assistance of the Investment Manager monitors
and reviews the broad structure of the Company's capital on an
ongoing basis. The capital structure of the Company consists
entirely of equity (comprising issued capital, reserves and
retained earnings).
The Company is not subject to any externally imposed capital
requirements.
Financial Risk Management Objectives
The Board with the assistance of the Investment Manager monitors
and manages the financial risks relating to the operations of the
Company through internal risk reports which analyse exposures by
degree and magnitude of risk. These risks include market risk
(including price risk, interest rate risk and currency risk),
credit risk and liquidity risk.
Market Risk
The value of the investments held by the Company is affected by
the discount rate of their expected future cash flows and as such
will vary with movements in interest rates, market prices and
competition for these assets.
Interest Rate Risk
The Company is exposed to interest rate risk as it holds
significant cash in short term deposits. If interest rates decrease
the finance income of the Company would decrease. The Company is
not exposed to interest rate risk on investments as all investments
are made via equity rather than loans. The Company has no loan
borrowings drawn at 30 September 2014. See note 17 for details of
the Revolving creditfacility.
Currency Risk
The Company operates in the UK and invests solely in the UK and
therefore is not exposed to currency risk as all assets and
liabilities are in Pounds Sterling, the Company's functional and
presentational currency.
Credit Risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in a financial loss to the
Company.
The Company does not have any significant credit risk exposure
to any single counterparty in relation to trade and other
receivables. On-going credit evaluation is performed on the
financial condition of accounts receivable. As at 30 September 2014
there were no receivables considered impaired.
At investment level, the credit risk relating to significant
counterparties is reviewed on a regular basis and adjustments to
the discount rate are applied to recognise changes to these risks
where applicable.
The Company maintains its cash and cash equivalents across two
separate banks to diversify credit risk. These are subject to the
Company's credit monitoring policies including the monitoring of
the credit ratings issued by recognised credit rating agencies.
Cash Short term
GBP fixed deposits Total as at
GBP 30 September
2014
------------------ --------- ------------------- -----------------
Barclays Bank PLC 4,014,708 - 4,014,708
------------------ --------- ------------------- -----------------
Lloyds Bank PLC 31,318 28,506,833 28,538,151
------------------ --------- ------------------- -----------------
Total 4,046,026 28,506,833 32,552,859
------------------ --------- ------------------- -----------------
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they fall due. The board of
directors has established an appropriate liquidity risk management
framework for the management of the Company's short, medium and
long-term fundingand liquidity management requirements. The Company
manages liquidity risk by maintaining adequate reserves by
monitoring forecast and actual cash flows and by matching the
maturity profiles of assets and liabilities.
The table below shows the maturity of the Company's
non-derivative financial assets and liabilities. The amounts
disclosed are contractual, undiscounted cash flows and may differ
from the actual cash flows received or paid in the future as a
result of early repayments.
Between 3 Between 1
Up to 3 months and and 5 years Total
GBP 12 months GBP GBP
GBP
----------------------------- ----------------- ----------- ------------- -----------
Assets
Cash and cash equivalents 32,552,859 - - 32,552,859
Trade and other receivables 1,368 - - 1,368
Liabilities
Trade and other payables (165,347) - - (165,347)
----------------------------- ----------------- ----------- ------------- -----------
32,388,880 - - 32,388,880
Level 3 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 operational investments are at fair value through
profit or loss and are valued using a discounted cash flow
methodology. Investments which are not yet operational 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:
Period ending Weighted Average
------------------- -----------------
30 September 2014 7.80%
------------------- -----------------
A change to the weighted average rate of 7.8% by plus or minus
0.5% has the following effect on the valuation.
Total Portfolio
Discount rate +0.5% change Value -0.5% change
--------------------- --------------- ---------------- ---------------
Director's valuation (GBP1.42m) GBP55.9m GBP1.51m
--------------------- --------------- ---------------- ---------------
Power Price
Management continuously reviews multiple inputs from market
contributors and leading consultants and adjust 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% in real terms and a long
term inflation rate of 2.5%.
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
--------------------- -------------- ---------------- --------------
Director's valuation (GBP1.90m) GBP55.9m GBP1.90m
--------------------- -------------- ---------------- --------------
Energy Yield
The Portfolio's aggregate production outcome for a 10 year
period would be expected to fall somewhere between a P90 10 year
underperformance (downside case) and a P1010 year outperformance
(upside case).
The effect of a P90 10 year underperformance and of a P10 10
year outperformance would have the following effect on the
valuation.
P90 10 year Total Portfolio P10 10 year outperformance
Energy Yield underperformance Value
--------------------- ------------------ ---------------- ---------------------------
Director's valuation (GBP2.01m) GBP55.9m GBP2.00m
--------------------- ------------------ ---------------- ---------------------------
Inflation Rates
The Portfolio valuation assumes long-term inflation of 2.50% 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 +5% change
--------------------- --------------- ---------------- -------------
Director's valuation (GBP1.29m) GBP55.9m GBP1.37m
--------------------- --------------- ---------------- -------------
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
--------------------- -------------- ---------------- --------------
Director's valuation (GBP0.52m) GBP55.9m GBP0.52m
--------------------- -------------- ---------------- --------------
Tax Rates
It has been noted that the UK Government has announced a
reduction in the rate of corporation tax to 21%
from 1 April 2014 and 20% from 1 April 2015.
The UK corporation tax assumption for the Portfolio valuation
was 21%, which was consistent with the approach in the IPO.
11. 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.
12. Auditor's Remuneration
The analysis of the auditor's remuneration is as follows:
Period ended
30 September 2014
GBP
Fees payable to the Company's auditor
for the audit of the
Company's financial statements 18,750
--------------------------------------- -------------------
Total audit fees 18,750
--------------------------------------- -------------------
Other services -
--------------------------------------- -------------------
Total non audit fees -
--------------------------------------- -------------------
13. 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 GBP200 million, 1
per cent of the Net Asset Value ("NAV") of the Company.
-- for the tranche of NAV above GBP200 million and up to and
including GBP300 million, 0.9 per cent of NAV.
-- for the tranche of NAV above GBP300 million, 0.8 per cent of NAV.
For the period ending 30 September 2014 the Company has incurred
GBP369,759 in management fees of which nil was outstanding at 30
September 2014.
14. 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. Management fee transactions with
the Investment Manager are disclosed in note 13.
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 Investment
Adviser agreed to meet all of the expenses of the initial share
issue. Costs in relation to the share issue of GBP1,081,749 have
been incurred by the Company in the period to 30 September 2014 of
which GBP1,081,749 has been reimbursed and GBPnil was outstanding
at 30
September 2014.
15. Controlling Party
In the opinion of the directors, on the basis of shareholdings
advised to them, the Company has no immediate nor ultimate
controlling party.
16. Remuneration of Key Management Personnel
The remuneration of the directors, who are the key management
personnel of the Company, was GBP85,075 for the period which
consisted solely of short-term employment benefits.
17. Revolving Credit Facility
On 17 September 2014 NextEnergy Solar Holding Limited, a
subsidiary of the Company, entered into a revolving credit facility
with Macquarie Bank Limited for up to GBP31.5m. As at30 September
2014 this facility had not been drawn upon.
18. Investment Commitments
The Company has the following commitments to its investments as
at 30 September 2014.
As at
30 September 2014
Investment GBP
------------------- -------------------
Bilsham 3,483,500
Gover Farm 4,893,396
Ellough 1,929,244
Brickyard 1,809,030
Poulshot 15,239,500
------------------- -------------------
Total Commitments 27,354,670
------------------- -------------------
The above contingent commitments become payable when their
respective contractual terms are met, usually when the asset
becomes fully operational and accredited. At period end, those
terms had not yet been met and as a result an agreement to buy
shares in the future is deemed to be a derivative contract under
IAS39. These forward share commitments are accounted for at fair
value, with gross assets and liabilities not recognised under
forward agreements. This has resulted in the forward share
commitments being fair valued at nil at period end as cost has been
used as an approximation of fair value as disclosed in Note 4.
19. Contingent Liabilities
As at 30 September 2014, the Company expected that the proposed
placing programme ("PPP") would have been approved and that certain
fees and costs become payable in relation to the PPP. However
approval of the programme and actual proceeds of the placing
programme were not yet certain at period end and as such those fees
have not been recognised.
20. Events After the Reporting Period
On 9 October 2014 the Company announced a proposed Placing
Programme in respect of 250m new shares.
On 29 October 2014 the Company announced the agreement to
acquire Condover: a 10.2MWp plant located in Shropshire for a total
acquisition price of GBP11.7 million assuming 1.4 ROC
accreditation. The purchase will be completed at commissioning.
There were no other material events after the reporting
period.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UGGAPGUPCUWC
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