TIDMNESF
RNS Number : 9928G
NextEnergy Solar Fund Limited
26 November 2015
26 November 2015
NextEnergy Solar Fund Limited
HALF YEAR RESULTS
A period of strong progress
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 six months to 30
September 2015.
Highlights for the period
-- Investment portfolio at 30 September 2015 of 19 solar
Photovoltaic ("PV") plants for a total of c.240MW installed
capacity in operation
-- Energy generated from the portfolio amounted to 147.5GWh - 5.7% higher than budgeted
-- Successful completion of further capital raising for total proceeds of GBP38.8m
-- Net Assets grew from GBP248.4m to GBP289.0m. NAV per share
increased from 103.3p on 31 March 2015 to 104.0p(1)
-- Reported profit for the period to 30 September 2015 was
GBP8.6m and earnings per share were 3.56p
-- First interim dividend of 3.125p per share for the period due to be paid in December 2015
-- Total shareholder return of 6.3%, NAV total return of 6.4%
-- Revolving Credit Facility of GBP31.5m and additional
short-term financings of GBP22.7m fully drawn
Post period end
-- Investment portfolio expanded to 25 solar PV plants for a
total of c.276MW and investment value of c.GBP320 million
-- NESF is on track to achieve target of 6.25p per share
dividend distribution for the full year ending 31 March 2016
-- Revolving Credit Facility increased to GBP100m, of which GBP68.5m yet to be drawn
-- Strong pipeline of c.250MW short-term acquisition targets and
further opportunities under consideration
Financial highlights
As at 30 September 2015
Total capital raised GBP285.4m
NAV GBP289.0m
NAV per share 104.0p
Share price at 30 Sept 2015 103.8p
Number of shares 278.0m
Market capitalization GBP288.4m
Total shareholder return 6.3%
(Based on dividends paid and share price)
Kevin Lyon, Chairman of NESF, commented:
"NESF has made significant financial and operational progress
during the first half of the year.
In line with our principal objectives, we have raised and
deployed further equity capital and debt to grow our investment
portfolio, delivered portfolio outperformance, grown our net asset
value, and are due to pay our first interim dividend for the year
of 3.125p per share.
Our strong pipeline of short-term acquisition targets, which we
will finance via further equity issuance and increased debt
facilities, gives us a strong platform for incremental growth. We
remain on track to deliver our dividend target of 6.25p per share
for the full year."
Dividend declaration
A first interim dividend of 3.125p per Ordinary Share declared
on 26 November 2015, totaling GBP8.7m for payment on 18 December
2015 to all shareholders on the register on 3 December 2015.
Timetable
Ex-dividend date: 3 December 2015
Record date: 4 December 2015
Payment date: 18 December 2015
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 / Gina Bell
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 more than GBP285.4m since its
initial public offering on the main market of the London Stock
Exchange in April 2014. Its credit facilities comprise the GBP100m
RCF from Macquarie and a GBP22.7 million facility from NIBC.
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 1,200 utility-scale solar power plants with an
installed capacity in excess of 1.5 GW.
Further information on NESF, NEC Group and WiseEnergy is
available at www.nextenergysolarfund.com, www.nextenergycapital.com
and www.wise-energy.eu.
NOTES
1. Net of the negative impact of the removal of LECs further to
the Summer Budget which represented a reduction in NAV of c.3.2p
per share.
Corporate Summary
NextEnergy Solar Fund Limited 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 Commissions
(the "GFSC") pursuant to the Protection of Investors (Bailiwick of
Guernsey) Law 1987, as amended ("POI Law").
The Company's 277,957,105 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
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 for the period ended 30
September 2015.
The Company acquires and owns operating solar power projects
exclusively in the UK. Our investment strategy is driven by the
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.
Capital Raising and Financing
The Company continued to raise new capital during the period. In
late September, we raised an additional c.GBP38.8 million in new
equity capital from existing and new shareholders. As a result, the
Company has now raised new equity of c. GBP200 million (excluding
its IPO of GBP85.6 million), more than trebling its shares in issue
since its IPO in April 2014.
In addition, we have secured credit facilities of GBP54.2
million to allow the Company to rapidly close acquisitions from its
portfolio of investment opportunities. After the end of the period,
the Company entered into an agreement to extend its credit lines up
to GBP122.7 million.
Portfolio Growth
The Company's portfolio of solar power plants grew during the
period from 217MW at 31 March to 240MW at 30 September 2015, and
subsequently expanded to 276MW. The Company focused on completing
the acquisitions announced in the previous period, and at the end
of the period fully owned 19 individual power plants compared to
ten at 31 March; nearly a doubling in number of assets in the
operating portfolio.
All the recently completed acquisitions were successfully
integrated into the Company, with the transitions being planned and
managed to avoid any noticeable impact on asset operation and
performance. We are very pleased with our ability to manage such
rapid growth in an efficient and effective manner.
Portfolio Operating Performance
During the period, the portfolio of operating solar power
projects performed satisfactorily. Overall generation was c.6%
above the expectations at time of acquisition of each asset and
amounted to 147.5GWh. The electricity generated by our portfolio is
equivalent to c.70,000 households' consumption of electricity per
year, avoiding c.70,000 tonnes of carbon emissions.
(MORE TO FOLLOW) Dow Jones Newswires
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We are particularly pleased with these operating results as they
include the start-up and integration phase of a large number of
acquisitions. We expect the outperformance to be sustainable over
the long term and add significant value to the portfolio.
Financial Results and Net Asset Value
At the period end, the Company's NAV was GBP289.0 million,
equivalent to 104.0p per share. This is an increase from the NAV at
31 March 2015 of GBP248.4 million, equivalent to 103.3p per share.
The reported profit for the same period was GBP8.6m and the
earnings per share was 3.56p.
Several factors impacted the Company's NAV over the period. The
Company paid its second interim dividend of 2.625p per share on 30
July. The positive operating performance of the portfolio
contributed to the increase in NAV per share. On the other hand,
the Government's announcements in the Summer Budget 2015
(concerning LECs and corporate tax rates) during July resulted in
an overall reduction of c.3.2p per share. We have also revised our
power price forecasts downwards again to reflect current conditions
and prospects in the UK energy market.
Dividends
The Company intends to pay an annual dividend for the current
financial year of 6.25p per share. A first interim dividend of
3.125p per share is due to be paid in December 2015, with a second
interim dividend of an equal amount expected to be paid in July
2016. Thereafter, the Company's yearly dividend is envisaged to
increase annually in line with RPI.
The Company aims to provide investors with a sustainable and
attractive dividend as well as reinvesting excess returns generated
by its portfolio in order to sustain its capital base over time.
The Company is well-positioned to deliver this dividend objective
given the low operating and financing risks associated with solar
power plants combined with NEC's investment and operating asset
management expertise.
Outlook
The measures recently introduced by the Government to reduce or
remove the public support for future renewable energy deployment in
the UK have led to an increased uncertainty around the growth
prospects of the UK solar PV market. However, the significant
increase in installed solar capacity achieved to date and the
incremental growth expected by the end of March 2016 represent a
considerable growth opportunity for the Company.
The pipeline we are pursuing is in excess of c.250MWp for an
estimated investment value of c. GBP200 million. We intend to
finance this growth via further equity issuance and increased debt
facilities. We expect to increasingly deploy debt capital to
flexibly grow the portfolio and improve the portfolio's financial
returns.
Equity issues will be undertaken at prices based on the latest
published NAV (which may be updated to coincide with the equity
issue) plus a premium to cover issue costs and take into account
any estimated incremental changes to the NAV following the date at
which the latest NAV was published.
In parallel, continued focus will be placed on the operational
performance of the Company's existing assets and plants to be
acquired. We aim to continue to achieve portfolio outperformance,
differentiate ourselves from our peers and strive to be the
investment of choice in the solar market for investors seeking
attractive risk-weighted opportunities.
Kevin Lyon
Chairman of the Board of Directors
Investment Manager's Report
About NextEnergy Capital
NextEnergy Capital IM Limited (the Investment Manager) and
NextEnergy Capital Limited (the 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 40-strong team of which
20 are focused on the UK solar market. Through its operating asset
management division, WiseEnergy, the NextEnergy Capital Group
manages and monitors over 1,200 solar power plants (comprising an
installed capacity of approximately 1.5GWp and an estimated GBP3.0
billion asset value) for a client base which includes leading
European banks and equity investors (including private equity
funds, listed funds and institutional investors).
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. Investments
by the Company in solar PV plants may be either by way of equity or
a mix of equity and shareholder loans.
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, again, 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 a secured
loan 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 monetisation of renewable obligation
certificates ("ROC"), other regulated benefits and the sale of
electricity to energy consumers and energy suppliers. Within this
context, the Investment Manager expects to conclude PPAs with
creditworthy counterparties at the appropriate time.
The Company will continue to carefully select its third party
suppliers, service providers and other commercial counterparties,
such as developers, engineering and procurement contractors,
technical component manufacturers, PPA providers and landlords. The
Company diversifies its universe of counterparts appropriately to
balance its risk exposure.
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 Hold Co or Investment Company level. There will be 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 (arising in excess of
that required to meet the Company's dividend target and ongoing
operating expenses) in further investments, thereby sustaining its
long-term net asset value.
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 Performances
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At 30 September 2015, the Company has announced the acquisition
of 19 separate solar PV plants for a total investment value of up
to c.GBP281m, representing 98% of the equity proceeds raised. The
19 solar PV plants amount to an installed capacity of some 240MWp
in operation.
During the interim period, the Company focused on completing the
acquisition of assets that had been previously announced and made
selected additional acquisitions. At 31 March 2015, the Company had
announced 16 acquisitions and completed ten. At 30 September 2015,
the Company had completed all remaining six acquisitions and had
also announced and completed three further acquisitions.
The NextEnergy Capital Group has actively led the completion of
all the acquisitions made by the Company. Such completion process
is subject to the satisfaction of several conditions set in the
interests of the Company, including the plant satisfactorily
passing selected strict 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 large 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.
Overall the 19 solar PV plants are demonstrating very good
operational performance. This report provides the details of the
actual performances vs. expectations at the time of acquisition for
all those assets that have completed the technical acceptance
testing period (and for which a Provisional Acceptance Certificate
or PAC has been issued and accepted). As of 30 September 2015 two
recently completed power plants (Park View and Bowerhouse) were
still undergoing this rigorous testing period. The portfolio of
solar PV plants generated a total amount of electricity of 147.5GWh
during the period showing an average over-performance of 5.7% above
the generation values expected at time of acquisition. This is
driven by the Company's operating asset management strategy and due
in part to the solar irradiation measured on the various sites
being higher than the conservative estimates used at the time of
acquisition by 2.9%.
The out-performance during the period confirmed the positive
track record trend of the individual assets since each plant's
acquisition date, with an overall portfolio technical
out-performance of 6.2%.
Investment Portfolio
The Investment Manager achieved a high level of diversification
in the Company's portfolio: the 19 solar PV plants are located
across 13 different counties of England and Wales, the largest one
(Glebe Farm) represents 14% of the total installed capacity and the
four largest solar PV plants represent together 39% of the total
installed capacity. In addition the portfolio is diversified across
eight non-connected contractors, nine different Tier 1 solar panel
manufacturers and six Tier 1 inverter manufacturers, effectively
diversifying the Company's key counterparty risks.
Below is a summary of the overall investment portfolio with
various relevant breakdown analysis:
Power Location Announcement Regulatory Status Plant Investment % of
Plant Date Regime(1) Capacity (GBPm) equity
(MWp) Proceeds
Higher
Hatherleigh Somerset 01/05/2014 1.6 Completed 6.1 7.3 2.6%
Shacks
Barn Northants 09/05/2014 2.0 Completed 6.3 8.2 2.9%
Gover
Farm Cornwall 23/06/2014 1.4 Completed 9.4 11.1 3.9%
Bilsham Sussex 03/07/2014 1.4 Completed 15.2 18.9 6.6%
Brickyard Warwickshire 14/07/2014 1.4 Completed 3.8 4.1 1.4%
Ellough Suffolk 28/07/2014 1.6 Completed 14.9 20.0 7.0%
Poulshot Wiltshire 09/09/2014 1.4 Completed 14.5 15.7 5.5%
Condover Shropshire 29/10/2014 1.4 Completed 10.2 11.7 4.1%
Llwyndu Ceredigion 22/12/2014 1.4 Completed 8.0 9.4 3.3%
Cock
Hill
Farm Wiltshire 22/12/2014 1.4 Completed 20.0 23.3 8.2%
Boxted
Airfield Essex 31/12/2014 1.4 Completed 18.8 20.6 7.2%
Langenhoe Essex 12/03/2015 1.4 Completed 21.2 22.9 8.0%
Park
View Devon 19/03/2015 1.4 Completed 6.5 7.7 2.7%
Croydon Cambridgeshire 27/03/2015 1.4 Completed 16.5 17.8 6.2%
Hawkers
Farm Somerset 13/04/2015 1.4 Completed 11.9 14.5 5.1%
Glebe
Farm Bedfordshire 13/04/2015 1.4 Completed 33.7 40.5 14.2%
Bowerhouse Somerset 18/06/2015 1.4 Completed 9.3 11.1 3.9%
Wellingborough Northants 18/06/2015 1.6 Completed 8.5 10.8 3.8%
Birch
Farm Essex 21/10/2015 FiT(2) Completed 5.0 5.3 1.9%
Total 239.7 281.0 98.5%
(1) An explanation of the ROC (Renewable Obligation Certificate) regime is available at www.ofgem.gov.uk/environmental-programmes/renewables-obligation-ro
(2) An explanation of FiT (Feed in Tariff) is available at www.ofgem.gov.uk/environmental-programmes/feed-tariff-fit-scheme
Higher Hatherleigh
Higher Hatherleigh was the Company's first acquisition, which
took place in May 2014. The site is located near Wincanton in
Somerset and has a capacity of 6.1MWp. The site has performed well
since it became operational in April 2013 and during the period
from acquisition to 30 September 2015 the plant produced c.10.3GWh
(+7.7% vs. budget). The acquisition cost was GBP7.3m and the
investment value at period end was GBP8.9m, which is 3.1% of the
portfolio value.
Higher Hatherleigh
Location Somerset
Capacity 6.1MWp
ROCs 1.6
EPC Moser Baer
Panels JA Solar
Inverter Power-One
Operational Since Apr-13
MWh Produced since
acquisition 10,295
Solar Irradiation
vs Expectations +2.4%
Energy Generation
vs Budget +7.7%
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 6.3MWp plant has been
operational since March 2013, giving the asset a 2.0 ROC
accreditation. Since acquisition to 30 September 2015, the site has
produced c.10.3GWh (+11.7% vs budget). The acquisition cost was
GBP8.2m and the investment value at period end was GBP9.8m, which
is 3.4% of the portfolio value.
Shacks Barn
Location Northants
Capacity 6.3MWp
ROCs 2.0
EPC Moser Baer
Panels JA Solar
Inverter Power-One
Operational Since Mar-13
MWh Produced since
acquisition 10,333
Solar Irradiation
vs Expectations +4.1%
Energy Generation
vs Budget +11.7%
Gover Farm
Gover Farm is the Company's most south-westerly asset, located
in Truro, Cornwall. The acquisition was announced at 9.4MWp in June
2014. From acquisition to 30 September 2015, the plant produced
9.2GWh (+12.1% vs. budget). The acquisition cost was GBP11.1m and
the investment value at period end was GBP11.8m, which is 4.0% of
the portfolio value. As part of the Company's commitment to
biodiversity, the site is being grazed by sheep to ensure that it
stays employed in food production.
Gover Farm
Location Cornwall
Capacity 9.4MWp
ROCs 1.4
EPC Moser Baer
Panels BYD
Inverter ABB
Operational Since Oct-14
MWh Produced since
acquisition 9,155
Solar Irradiation
vs Expectations +4.7%
Energy Generation
vs Budget +12.1%
Bilsham
Bilsham is located near Bognor Regis in Sussex and is very close
to the southern coast of the UK and is expected to benefit from the
combination of strong irradiance and coastal breeze keeping
operating temperatures within their optimum parameters. The plant
was delivered to the Company in two phases with an initial phase of
12.7MWp followed by an extension of 2.6MWp in March 2015. The site
produced 13.7GWh since acquisition to 30 September 2015 (+3.0% vs
budget). The acquisition cost was GBP18.9m and the investment value
at period end was GBP19.7m, which is 6.8% of the portfolio
value.
Bilsham
Location Sussex
Capacity 15.2MWp
ROCs 1.4
EPC GDF Suez
Panels Renesola
Inverter ABB
Operational Since Nov-14
MWh Produced since
acquisition 13,714
Solar Irradiation
vs Expectations +1.3%
Energy Generation
vs Budget +3.0%
Brickyard
(MORE TO FOLLOW) Dow Jones Newswires
November 26, 2015 02:00 ET (07:00 GMT)
Brickyard is a site located near Leamington Spa in Warwickshire
has a capacity of 3.8MWp. During the winter period from 1 January
to 31 March, Brickyard produced 3.3GWh (+7.9% vs budget). In the
previous period ending March '15 the plant experienced some minor
technical issues which were then resolved and during the period it
performed above expectations. The acquisition cost was GBP4.1m and
the investment value at period end was GBP4.3m, which is 1.5% of
the portfolio value.
Brickyard
Location Warwickshire
Capacity 3.8MWp
ROCs 1.4
EPC Moser Baer
Panels BYD
Inverter ABB
Operational Since Nov-14
MWh Produced since
acquisition 3,346
Solar Irradiation
vs Expectations +4.3%
Energy Generation
vs Budget +7.9%
Ellough
Ellough is a solar plant located on a disused airfield near
Ellough in Suffolk. The 14.9MWp site has produced 18.8GWh (+5.7%
vs. budget) from August 2014 to 30 September 2015. The acquisition
cost was GBP20.0m and the investment value at period end was
GBP20.1m, which is 6.9% of the portfolio value.
Ellough
Location Suffolk
Capacity 14.9MWp
ROCs 1.6
EPC Lark Energy
Panels Hanwha
Inverter Free Sun
Operational Since Mar-14
MWh Produced since
acquisition 18,802
Solar Irradiation
vs Expectations (0.5%)
Energy Generation
vs Budget +5.7%
Poulshot
The Poulshot plant is located near Trowbridge in Wiltshire and
has a capacity of 14.5MWp. The plant was acquired in September 2014
and has been operational since March 2015. The site has produced
10.1GWh (+1.8% vs. budget) since acquisition to 30 September 2015.
The acquisition cost was GBP15.7m and the investment value at
period end was GBP17.3m, which is 5.9% of the portfolio value.
Poulshot
Location Wiltshire
Capacity 14.5MWp
ROCs 1.4
EPC Moser Baer
Panels BYD
Inverter ABB
Operational Since Mar-15
MWh Produced since
acquisition 10,134
Solar Irradiation
vs Expectations +2.4%
Energy Generation
vs Budget +1.8%
Condover
Condover is located near Shrewsbury in Shropshire and has a
capacity of 10.2MWp. The plant was acquired in October 2014 has
been operational since March 2015. The site has produced 6.3GWh
(+6.7% vs. budget) since acquisition to 30 September 2015. The
acquisition cost was GBP11.7m and the investment value at period
end was GBP11.7m, which is 4.0% of the portfolio value. The site
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 10.2MWp
ROCs 1.4
EPC Zaragoza Group
Panels Canadian Solar
Inverter Free Sun
Operational Since Mar-15
MWh Produced since
acquisition 6,265
Solar Irradiation
vs Expectations (2.1%)
Energy Generation
vs Budget +6.7%
Llwyndu
Currently Llwyndu is the only asset owned by the Company that is
not in England. This site is located in Mid-West Wales and has a
capacity of 8.0MWp. The plant was acquired in December 2014 and has
been operational since February 2015. This site has produced 4.9GWh
(+4.9% vs. budget) since acquisition to 30 September 2015. The
acquisition cost was GBP9.4m and the investment value at period end
was GBP9.3m, which is 3.2% 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 8.0MWp
ROCs 1.4
EPC Greencells
Panels BYD
Inverter Huawei
Operational Since Feb-15
MWh Produced since
acquisition 4,944
Solar Irradiation
vs Expectations (1.4%)
Energy Generation
vs Budget +4.9%
Cock Hill Farm
Cock Hill Farm is located near Trowbridge in Wiltshire and has a
capacity of just over 20.0MWp. The plant was acquired in December
2014 and has been operational since March 2015. The site has
produced 12.0GWh (+1.6% vs. budget) since acquisition to 30
September 2015. The acquisition cost was GBP23.3m and the
investment value at period end was GBP23.5m, which is 8.1% of the
portfolio value.
Cock Hill Farm
Location Wiltshire
Capacity 20.0MWp
ROCs 1.4
EPC Greencells
Panels Jinko
Inverter Huawei
Operational Since Mar-15
MWh Produced since
acquisition 12,001
Solar Irradiation
vs Expectations +1.0%
Energy Generation
vs Budget +1.6%
Boxted Airfield
Boxted site is located north of Colchester in Essex on the now
disused Boxted Airfield. Boxted has a capacity of 18.8MWp and was
acquired in March 2015, after it became operational. The site has
produced 14.1GWh (+4.1% vs. budget) since acquisition to 30
September 2015. The acquisition cost was GBP20.6m and the
investment value at period end was GBP22.2m, which is 7.6% 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 18.8MWp
ROCs 1.4
EPC Push Energy
Panels Yingli
Inverter SMA
Operational Since Mar-15
MWh Produced since
acquisition 14,083
Solar Irradiation
vs Expectations +1.7%
Energy Generation
vs Budget +4.1%
Langenhoe
Langenhoe is located near Colchester in Essex and has a capacity
of 21.2MWp. The plant was acquired and has been operational since
March 2015. The site has produced 16.5GWh (+7.4% vs. budget) since
acquisition to 30 September 2015. The acquisition cost was GBP22.9m
and the investment value at period end was GBP24.1m, which is 8.3%
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 21.2MWp
ROCs 1.4
EPC Push Energy
Panels Yingli
Inverter SMA
Operational Since Mar-15
MWh Produced since
acquisition 16,489
Solar Irradiation
vs Expectations +5.5%
Energy Generation
vs Budget +7.4%
Park View
Park View is located near Ashburton in Devon, situated at the
top edge of a valley and is the second most southerly site owned by
the Company. This 6.5MWp site is expected to generate in the region
of 6.6GWh per year of renewable energy. 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 GBP7.9m, which
is 2.7% of the portfolio value.
Park View
Location Devon
Capacity 6.5MWp
ROCs 1.4
EPC Ethical
Panels Astronergy
Inverter SMA
Operational Since Mar-15
MWh Produced since
acquisition N/A
Solar Irradiation
vs Expectations N/A
Energy Generation
vs Budget N/A
As of 30 September 2015 Park View was still undergoing the
operational testing period.
Croydon
Croydon is a plant located in South Cambridgeshire and has a
capacity of 16.5MWp. The plant was acquired and has been
operational since March 2015. The site has produced 11.7GWh (+6.2%
vs. budget) since acquisition to 30 September 2015. The acquisition
cost was GBP17.8m and the investment value at period end was
GBP18.6m, which is 6.4% 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 16.5MWp
ROCs 1.4
EPC Push Energy
Panels Yingli
Inverter SMA
Operational Since Mar-15
MWh Produced since
acquisition 11,675
Solar Irradiation
vs Expectations +6.1%
Energy Generation
vs Budget +6.2%
Hawkers Farm
Hawkers Farm is a site located near Theale in Somerset with a
capacity of 11.9MWp. The plant was acquired in April 2015 and has
been operational since March 2015. The site has produced 8.9GWh
(+2.8% vs. budget) since acquisition to 30 September 2015. 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 GBP14.7m, which is 5.0% of the portfolio value.
Hawkers Farm
Location Somerset
Capacity 11.9MWp
ROCs 1.4
EPC Greencells
Panels Jinko
Inverter Huawei
Operational Since Mar-15
MWh Produced since
acquisition 8,919
Solar Irradiation
vs Expectations +0.8%
Energy Generation
vs Budget +2.8%
Glebe Farm
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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 the largest solar plant acquired by the Company (through
novation of the original purchase agreement with the Developer
without any additional cost to the Company) with a capacity of
33.7MWp. The acquisition was completed in May 2015. The plant has
been operational since March 2015. The site has produced 16.9GWh
(+11.3% vs. budget) since acquisition to 30 September 2015. The
acquisition cost was GBP40.5m and the investment value at period
end was GBP39.2m, which is 13.4% of the portfolio value.
Glebe Farm
Location Bedfordshire
Capacity 33.7MWp
ROCs 1.4
EPC Bejulo
Panels Canadian Solar
Inverter SMA
Operational Since Mar-15
MWh Produced since
acquisition 16,895
Solar Irradiation
vs Expectations +9.4%
Energy Generation
vs Budget +11.3%
Bowerhouse
Bowerhouse is located near Banwell in Somerset and has a
capacity of 9.3MWp. The plant was acquired in June 2015 and has
been operational since March 2015. The acquisition cost was
GBP11.1m and the investment value at period end was GBP11.2m, which
is 3.8% of the portfolio value.
Bowerhouse
Location Somerset
Capacity 9.3MWp
ROCs 1.4
EPC Ethical
Panels LDK
Inverter SMA
Operational Since Mar-15
MWh Produced since
acquisition N/A
Solar Irradiation
vs Expectations N/A
Energy Generation
vs Budget N/A
As of 30 September 2015 Bowerhouse was still undergoing the
operational testing period.
Wellingborough
Wellingborough is located near Wellingborough in
Northamptonshire and a capacity of 8.5MWp. The plant was acquired
in June 2015 and has been operational since March 2015. The site
has produced 3.4GWh (+2.8% vs. budget) from March 2015 to 30
September 2015. The acquisition cost was GBP10.8m and the
investment value at period end was GBP11.4m, which is 3.9% of the
portfolio value.
Wellingborough
Location Northants
Capacity 8.5MWp
ROCs 1.6
EPC Lark Energy
Panels LDK
Inverter Free Sun
Operational Since Mar-15
MWh Produced since acquisition 3,357
Solar Irradiation vs Expectations (1.0%)
Energy Generation vs Budget +2.8%
Birch Farm
Birch Farm is a 5.0MWp site located near Colchester in Essex.
The plant was acquired in September 2015 and has been operational
since June 2015. The acquisition cost was GBP5.3m and the
investment value at period end was GBP5.8m, which is 2.0% of the
portfolio value.
Birch Farm
Location Essex
Capacity 5.0MWp
Feed in Tariff GBP62/MWh
EPC Push Energy
Panels Yingli
Inverter Ingeteam
Operational Since Jun-15
MWh Produced since acquisition N/A
Solar Irradiation vs Expectations N/A
Energy Generation vs Budget N/A
As of 30 September 2015 Birch Farm was still undergoing the
operational testing period.
Current and Long-term Power Prices
During the interim period ending 30 September 2015, the
wholesale power market in the UK continued the downward trend that
the Company experienced in the previous financial year. This trend
has reduced the economic benefit derived by the portfolio's
operational over-performance, in terms of revenues as well as NAV.
As a result of, inter alia, lower-than-average winter temperatures
and declining commodity prices, both short and medium-term
electricity prices moved downwards. Electricity spot prices fell
from GBP43.6/MWh in September 2014 to GBP42.3/MWh in September 2015
(UK baseload - day ahead). The Investment Manager continuously
reviews multiple inputs from various market contributors as well as
an appointed independent energy market advisor and adjusts the
Company's power price forecasts periodically.
In this market environment, we have advised the Board to reduce
the power price forecasts used in calculating the NAV as at 30
September of each individual asset. As a result, since 31 March
2015 the long-term power price forecast used by the Company has
been revised three times resulting in a total reduction of c.5 %
compared to the assumptions employed at the beginning of the
financial year. This reduction follows the previous three downward
revisions made in the previous financial year and represents a
cumulative reduction of c.20% compared to the assumptions employed
at the time of the IPO in April 2014. The Investment Manager
estimates that, should the Company's power price forecasts have
remained stable since IPO the Company's NAV as of 30 September 2015
would be c.14% higher (at c.118.5p per share).
The Company's current long-term power price forecast implies an
average growth rate of approximately 2% in real terms between 30
September 2015 and 2035. The financial performance of the Company
and its NAV are sensitive to further positive and negative
movements in the short-, medium- and long-term power prices.
Detailed sensitivities are provided in the financial section of the
Annual Report. It is worth noting that this exposure is
significantly mitigated by the balanced mix of revenues which for
the twelve months starting on 30 September 2015 are estimated to
comprise c.59% of regulated revenues (ROCs and embedded benefits,
mainly linked to RPI) and c.41% of sale of electricity through
PPAs.
Dividends
During the financial year ended 31 March 2015 the Company
achieved its target for total dividend of 5.25p over two
semi-annual distributions, the second of which was paid in July
2015.
For the current financial year ending 31 March 2016, the Company
has an increased target dividend of 6.25p, in line with the target
set at the time of the IPO. The first of the two semi-annual
distributions of 3.125p is due to be paid in December 2015.
The operating costs of the Company were GBP1.8m, in line with
expectations. The profit before tax for the period ended 30
September 2015 was GBP8.6m and the earnings per share was
3.56p.
The Association of Investment Companies' ("AIC") guidance on
Investment Fund Expense Reporting (Published in April 2012)
recommended the disclosure of the annual Ongoing Charges Ratio in
place of the previously used Total Expense Ratio ("TER"). In line
with this guidance the budgeted ongoing charge for the period
ending 31 March 2016 is 1.3%.
At 30 September 2015 total shareholders' return based on share
price and annualised since IPO (in accordance with AIC guidance)
was 6.3%, NAV total return was 6.4%.
Valuation of the Portfolio
The Investment Manager is responsible for carrying out the fair
market valuation of the Company's underlying investment portfolio
which is subsequently presented to the Company's Board of Directors
for their review and approval.
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. The fair market value for
each operating asset is derived from various inputs, including
observed asset prices paid by acquirers for operating solar
projects in the UK and 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.
The Board reviews the operating and financial assumptions as
well as discount rates used in the valuation of the Company's
underlying portfolio and approves them based on the recommendation
of the Investment Manager. These operating and financial
assumptions, including the discount rate, are reviewed by
PricewaterhouseCoopers CI Limited (PwC) as part of their year end
statutory audit.
The Company continues to employ a 7.5% discount rate for valuing
unlevered operating solar assets, unchanged versus the value used
previously.
As of 30 September 2015, the Net Asset Value of the Company was
GBP289.0m, up from GBP248.4m as at 31 March 2015 mainly as
consequence of issuance of capital. Over the same period, NAV per
share increased from 103.3p to 104.0p.
The change in NAV per share in the period was mainly driven by
the following factors:
-- The operating results of the solar PV plants owned by the
Company, which was retained at the individual SPV level
-- The cash dividend paid in July 2015 and the Company's operating costs
-- The negative impact on valuations due to the removal of LECs
further to the July 2015 Summer Budget and downward revisions of
the power curve estimates
These factors can be viewed alongside the other drivers in the
NAV bridge on the following page.
Movement (GBPm)
NAV Bridge
Opening NAV (March '15) 248.4
Further Capital Raising 38.8
Capital Raising Costs (0.5)
Dividends (6.3)
Income from Investments 6.3
Change in Fair Value of Investments 3.9
Net fund Costs (1.6)
NAV movement 40.6
Closing NAV (September '15) 289.0
Change in Fair Value of Investments
Opening Valuation (March '15) 158.2
New Assets at Cost 140.6
Drawdown of Debt Facilities (54.2)
Operating Results 20.5
Reduction in Power Price Forecasts (8.0)
Impact of Summer Budget 2015 (7.7)
Balance of DCF Valuation (0.9)
Fair Value of Investment Movement 90.3
Final Valuation (September '15) 248.5
Investment Portfolio
As at 30 September 2015
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The Company's investment portfolio was valued at GBP291.3m with
all the 19 solar PV assets valued through discounted cash flow
methodology.
Directors' Investment Directors'
Valuation Movements Valuation
31 March during 30 September
2015 the period 2015
Investment (GBP) (GBP) (GBP)
Higher Hatherleigh 8,957,377 - 8,896,941
Shacks Barn 9,711,376 - 9,833,410
Gover Farm 12,459,841 - 11,762,802
Bilsham 19,993,448 - 19,723,247
Brickyard 4,308,890 - 4,274,030
Ellough 20,987,800 - 20,098,720
Poulshot 16,254,521 - 17,265,704
Boxted Airfield 21,932,788 - 22,180,782
Langenhoe 24,619,753 - 24,058,966
Croydon 18,460,754 - 18,597,824
Condover - 11,738,624 11,676,182
Llwyndu - 9,383,685 9,253,348
Cock Hill Farm - 23,336,957 23,493,377
Hawkers Farm - 14,465,961 14,657,004
Glebe Farm - 40,507,323 39,162,163
Park View - 7,675,725 7,919,928
Bowerhouse - 11,140,707 11,171,769
Wellingborough - 10,842,840 11,391,106
Birch Farm - 5,333,000 5,840,419
Total Investment Portfolio 157,686,548 134,424,822 291,257,722
Residual Net Assets
of NESH 474,324 (25,310,432) (20,128,788)
Residual Net Assets
of NESH II - (22,680,330) (22,638,265)
Residual Net Assets
of NESH III - - -
Total Investments 158,160,872 86,434,060 248,490,669
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. The
sensitivity analysis highlights a) the percentage change in the
Total Investment Portfolio valuation of GBP291.3m resulting from a
change in the underlying variables; and b) the consequential impact
of such change in the portfolio valuation on the NAV per share as
at 30 September 2015.
Summary of Capital Raising and Capital Deployment
The Company completed a further capital raising during the
period ended on 30 September 2015, issuing 37,607,105 shares at a
price of 103.3p.
Share Price Development
During the period the share price increased from 103.25p to
103.75p. The NAV per share versus share price chart below
highlights the share price performance during the period, which
predominantly traded at a premium over NAV.
Financing and Cash Management
As of 30 September 2015, the Company had a total of GBP54.2m
debt outstanding, resulting from the following:
-- GBP31.5m under the two-year revolving credit facility ("RCF")
advanced by Macquarie Bank Limited on 17 September 2014 and fully
drawn down
-- GBP22.7m under the debt facility advanced by NIBC Bank B.V
("NIBC") on 21 July 2015 to finance the acquisition of two assets
(Cock Hill and Llwyndu). NIBC previously financed the construction
of the two projects for the vendor. The upfront costs to the
Company favourably reflect 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. The NIBC
Facility has a 12-month duration, with a further 12-month extension
available (which is not to be unreasonably withheld).
It is intended that these facilities will be repaid through one
or a combination of the following: rollover of the same short-term
facilities, refinancing with a long-term debt facility and/or
further equity issuance.
The Investment Manager is actively working on the extension of
the Company's current credit facilities with a number of lending
counterparties to provide additional funding flexibility on both a
short and long term basis to finance the acquisition of further
assets. Following the period end the Investment Manager has entered
into agreements to extend the RCF to GBP100m through an additional
tranche of GBP68.5m available up to 30 April 2017. The Investment
Manager is also exploring the opportunity to enter into a long-term
debt facility that would allow the Company to refinance the amounts
drawn under its short-term facilities and optimise its capital
structure to maximise the profitability and liquidity of the equity
investment of its shareholders, through the use of fixed rate
and/or inflation linked debt.
As at 30 September 2015 the Company's total assets included a
cash balance of GBP29.5m held with Barclays Bank PLC and Lloyds
Bank PLC and receivables of GBP11.3m which includes the balance of
the proceeds from the GBP38.8m capital raising fund closed on the
last day of the period and not yet received from the Company's
brokers.
Outlook and Regulatory Changes
The UK solar PV market continued to experience exceptional
growth during the period ended 30 September 2015, reaching a total
installed capacity of 8.2GW, an increase of 73% over the last
twelve months. In addition, the announcement of regulatory changes
that introduced a phase-out of the ROC and FiT regimes for new
solar installations after 31 March 2016 caused a further
acceleration in the rate of new installations expected to be
commissioned before this deadline.
Over the remaining six months of the year ending 31 March 2016,
the Company is expected to benefit from the pipeline of
opportunities identified by the NextEnergy Capital Group totalling
c.250MW of secured acquisition targets and further
opportunities.
During the period ended 30 September 2015 the regulatory
framework for UK solar PV underwent significant changes:
On 8 July 2015 the Chancellor of the Exchequer introduced as
part of the Summer Budget 2015 the removal of the Climate Change
Levy exemption for renewable electricity generation, effective 1
August 2015. This has negatively impacted the valuation of the
portfolio and the Company's NAV (by an estimated 4p per share,
partly offset by a reduction in corporate tax rates introduced in
the same Summer Budget 2015, resulting in total impact of 3.2p per
share). The Company's subsidiaries have subsequently filed a claim
under the Judicial Review procedure to seek damages for the
unexpected removal of the Levy Exemption Certificates on the
grounds of insufficient advance notice and unreasonableness of the
measure and expects to receive preliminary indication of the
procedure by February 2016.
On 22 July 2015 The Department of Energy and Climate Change
("DECC") announced consultations on proposed changes to the
Renewable Obligations ("RO") and Feed-in-Tariff ("FIT") support
schemes for sub-5MW solar assets (the "Consultations") which were
still underway at 30 September 2015. The proposals under the
Consultations would have no impact on the 19 projects in the
portfolio or on the Company's target dividend policy. In addition,
the Company's pipeline of growth opportunities includes a
significant number of projects that would not be impacted by the
proposed changes, or that would qualify for a Grace Period under
the Consultations.
The Company believes that there remains a material pipeline of
opportunities for growth. 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 subsidy and no-subsidy market
in the future.
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.
-- External and Market Risks
-- Investment Strategy
-- Investment Process and Management of Assets
-- Monitoring Process
-- Valuation 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 unlikely 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
-- 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 fuelled by
investors with aggressive financial structures seeking lower
unlevered returns than the Company for the same solar PV assets
-- Exposure to the wholesale energy market for revenues
generated in prices received for energy generated and in price
forecasts by the operating assets of the Company, and risk of
further reductions in forward price curves
Post period-end update
Since 30 September 2015, the following relevant events
occurred:
-- On 21 October 2015 the Company acquired Thurlestone and North
Farm solar PV plants for GBP2.3m and GBP14.5m, respectively
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-- On 3 November 2015 the Company acquired Decoy Farm, Hall Farm
and Ellough 2 solar PV plants for GBP5.2m, GBP5.0m and GBP8.0m
respectively
-- On 6 November 2015 the Company entered into an agreement to
extend its Revolving Credit Facility with Macquarie Bank Limited
from GBP31.5m to GBP100m
-- On 9 November 2015, the Company has issued 30,850,000 New
Ordinary Shares to Cantor Fitzgerald at a price of 104.0p per Share
under the Placing Programme (which was expiring on 10 November
2015). On the same day, the New Ordinary Shares have been
repurchased by the Company, at the same price, to be held in
treasury. The NAV per Share and the net cash position of the
Company have not been affected by this transaction
This issuance and repurchase transaction was undertaken to
provide the Company with flexibility to raise additional capital in
an efficient and cost-effective manner in due course. The shares
purchased have been placed in treasury and will be available to be
sold out of treasury on a non-pre-emptive basis, subject to
shareholder approval, to meet future market demand. The net
proceeds of any sales of Shares out of treasury will provide the
Company with additional capital to enable it to take advantage of
new investment opportunities. Shares will only be sold out of
treasury at a premium to the then prevailing NAV per Ordinary
Share
Following the repurchase, the Company's issued share capital
will comprise 308,807,105 Ordinary Shares and the total number of
voting rights in the Company will be 277,957,105. This figure 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
-- On 19 November 2015 the Company acquired Green Farm Solar PV plant for GBP5.8m
NextEnergy Capital IM Limited
25 November 2015
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 1 April 2015 to 30 September 2015 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 1 April 2015 to 30 September 2015 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 11 to the Annual Report and financial statements for
the year ended 31 March 2015 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 Kevin Lyon
Director Director
25 November 2015
Condensed Financial Statements
Condensed Statement of Comprehensive Income
For the period ended 30 September 2015
Unaudited Unaudited
1 April 20 December
2015 to Audited 2013
20 December
2013 to to 30
30 September 31 March September
2015 2015 2014
Notes (GBP) (GBP) (GBP)
Income
Dividend income 6,400,000 - -
Net changes in fair value
of financial assets
at fair value through
profit or loss 5 3,895,737 10,570,553 3,175,328
Total net income 10,295,737 10,570,553 3,175,328
Expenditure
Management fees 14 1,242,304 1,210,566 369,759
Legal and professional
fees 287,242 515,130 2,448
Administration fees 120,752 152,500 52,500
Directors' fees 17 61,500 176,575 85,075
Audit fees 42,637 50,000 18,750
Regulatory fees 42,074 70,638 5,741
Insurance 31,194 14,134 14,134
Sundry expenses 2,736 73,375 37,709
Marketing and Advertising - 30,917 -
Total expenses 1,830,439 2,293,835 586,116
Operating profit 8,465,298 8,276,718 2,589,212
Finance income 93,888 257,931 83,755
Profit and comprehensive
income for the period 8,559,186 8,534,649 2,672,967
Earnings per share -
Basic - (pence) 3.56p 9.13p 5.60p
There were no potentially dilutive instruments in issue at 30
September 2015.
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.
The accompanying Notes on pages 37 to 47 are an integral part of
these financial statements.
Condensed Statement of Financial Position
As at 30 September 2015
Unaudited Audited Unaudited
30 September 31 March 30 September
2015 2015 2014
Non-current assets Notes (GBP) (GBP) (GBP)
5,
Investments 12 248,490,669 158,160,872 55,884,088
Total non-current assets 248,490,669 158,160,872 55,884,088
Current assets
Cash and cash equivalents 29,503,244 90,217,126 32,552,859
Trade and other receivables 6 11,264,214 69,482 1,368
Total current assets 40,767,458 90,286,608 32,554,227
Total assets 289,258,127 248,447,480 88,438,315
Current liabilities
Trade and other payables 236,605 88,942 165,347
Total current liabilities 236,605 88,942 165,347
Net assets 289,021,522 248,358,538 88,272,968
Equity
Share Capital and Premium 8 282,872,625 244,459,639 85,600,001
Reserves 8 6,148,897 3,898,899 2,672,967
Total equity attributable
to shareholders 289,021,522 248,358,538 88,272,968
Net assets per share
- (pence) 11 104.0p 103.3p 103.1p
The accompanying notes on pages 37 to 47 are an integral part of
these financial statements.
The interim financial statements were approved and authorised
for issue by the Board of Directors on 25 November 2015, and signed
on its behalf by:
Kevin Lyon Patrick Firth
Director Director
Condensed Statement of Changes in Equity
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For the period ended 30 September 2015
Share
Capital Retained Total
and Premium earnings Equity
Notes (GBP) (GBP) (GBP)
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 8 38,412,986 - 38,412,986
Dividends paid 10 - (6,309,188) (6,309,188)
Shareholders' equity at 30
September 2015 282,872,625 6,148,897 289,021,522
For the period 20 December
2013 to 31 March 2015 (audited)
Shareholders' equity at 20
December 2013 - - -
Profit and comprehensive
income for the period - 8,534,649 8,534,649
Shares issued 8 244,459,639 - 244,459,639
Dividends paid 10 - (4,635,750) (4,635,750)
Shareholders' equity at 31
March 2015 244,459,639 3,898,899 248,358,538
For the period 20 December
2013 to 30 September 2014
(unaudited)
Shareholders' equity at 20
December 2013 - - -
Profit and comprehensive
income for the period - 2,672,967 2,672,967
Shares issued 8 85,600,001 - 85,600,001
Shareholders' equity at 30
September 2014 85,600,001 2,672,967 88,272,968
The accompanying notes on pages 37 to 47 are an integral part of
these financial statements.
Condensed Cash Flow Statement
For the period ended 30 September 2015
Unaudited
1 April
2015 to Audited Unaudited
20 December 20 December
2013 to 2013 to
30 September 31 March 30 September
2015 2015 2014
Cash flows from Notes
operating activities (GBP) (GBP) (GBP)
Profit and comprehensive
income for the period 8,559,186 8,534,649 - 2,672,967
Adjustments for:
Purchase of investments 5 (86,434,060) (147,590,319) (52,708,760)
Change in fair value
on investments 5 (3,895,737) (10,570,553) (3,175,328)
Finance income (93,888) (257,931) (83,755)
Operating cash flows
before movements
in working capital (81,864,499) (149,884,154) (53,294,876)
Changes in working
capital
Increase in trade
receivables 6 (11,194,732) (69,482) (1,368)
Increase in trade
payables 147,663 88,942 165,347
Net cash used in
operating activities (92,911,568) (149,864,694) (53,130,897)
Cash flows from investing
activities
Finance income 93,888 257,931 83,755
Net cash generated
from investing activities 93,888 257,931 83,755
Cash flows from financing
activities
Proceeds from issue
of shares 8 38,412,986 244,459,639 85,600,001
Dividends paid 10 (6,309,188) (4,635,750) -
Net cash generated
from financing activities 32,103,798 239,823,889 85,600,001
Net (decrease)/increase
in cash and cash
equivalents during
period (60,713,882) 90,217,126 32,552,859
Cash and cash equivalents
at the beginning
of the period 90,217,126 - -
Cash and cash equivalents
at the end of the
period 29,503,244 90,217,126 32,552,859
The accompanying notes on pages 37 to 47 are an integral part of
these financial statements.
Notes to the Unaudited Financial Statements
For the period ended 30 September 2015
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 fund raisings also took place on the 19 November 2014
raising GBP94.1m, 19 December 2014 raising GBP4.1m, 27 February
2015 raising GBP60.7m and 30 September 2015 raising GBP38.4m
increasing total equity to GBP282.9m as at 30 September 2015 (31
March 2015: GBP244.5m; 30 September 2014: GBP85.6m). Details 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 NextEnergy
Solar Holdings Limited and NextEnergy Solar Holdings II Limited
(together "the Holding Companies") and Special Purpose Vehicles,
which are wholly-owned by the Company. The Company has acquired
NextEnergy Solar Holdings III Limited for the purpose of holding
investments however it has no investment holdings as at 30
September 2015. 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
(Guernsey) Law, 2008, with registered number 57740 and is licensed
and regulated by the GFSC and is a member of the NEC Group. The
Investment Manager acts 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.
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 accounting in preparing the financial
statements.
2. Significant accounting policies
Basis of accounting
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 period ended 31 March 2015, which have been prepared in
accordance with International Financial Reporting Standards.
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
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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 loss 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.
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:
IAS 1 (amendments) Disclosure Initiative
IAS 34 (amendments) Disclosure of information 'elsewhere in the
interim financial report'
IFRS 7 (amendments) Servicing contracts
IFRS 9 Financial Instruments
IFRS 11 (amendments) Joint arrangements
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
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 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. 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 discount rate applied in
the 30 September 2015 valuation was 7.5% (31 March 2015: 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.
There are other critical accounting estimates discussed in note
12.
Level 3 investments amount to GBP291,257,722 (31 March 2015:
157,686,548) and consist of 19 investments in solar PV plants (31
March 2015: 14), all of which have been valued through discounted
cash flows (please refer to the portfolio statement in the IM
report on page 26). 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.
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 2015 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.
Fair value Valuation Unobservable Input Sensitivity
at technique input value to change
30 September in significant
2015 (GBP) unobservable
Description inputs
The estimated
fair value
would increase
if the discount
Unlisted Discounted Discount rate was lower
investments 291,257,722 cash flows rate 7.50% and vice versa.
5. Investments
The Company owns the Investment Portfolio through its
investments in NextEnergy Solar Holdings Limited and NextEnergy
Solar Holdings II Limited. This is comprised of the Investment
Portfolio and the Residual Net Assets of the Holding Companies. The
Company has acquired NextEnergy Solar Holdings III Limited for the
purpose of holding investments however it has no investment
holdings as at 30 September 2015. The Total Investments at Fair
Value are recorded under Non-Current Assets in the Condensed
Statement of Financial Position on page 34.
Period
ended Period ended
31 March 30 September
Period ended 2015 2014
30 September
2015 (GBP) (GBP) (GBP)
Total Investments
Brought forward cost
of investments 147,590,319 - -
Total investment in
the period 86,434,060 147,590,319 52,708,760
Carried forward cost
of investments 234,024,379 147,590,319 52,708,760
Brought forward unrealised
gains on valuation 10,570,553 - -
Movement in unrealised
gains on valuation 3,895,737 10,570,553 3,175,328
Carried forward unrealised
gains on valuation 14,466,290 10,570,553 3,175,328
Total Investments at
Fair Value 248,490,669 158,160,872 55,884,088
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 on page 33.
As described in note 18 a total of GBP54,180,000 has been raised
through a revolving credit facility and a debt facility in the
Holding Companies. This has been reflected in the table above and
the Investment Portfolio in the Investment Manager's report as an
increase in the cost of the underlying investment portfolio and a
liability within the residual net assets of the Holding
Companies.
6. Trade and Other Receivables
As at
31 March
As at 2015 As at
30 September 30 September
2015 (GBP) (GBP) 2014 (GBP)
Proceeds of share issues
receivable from brokers 11,263,719 - -
Other receivables 495 69,482 1,368
Total trade and other
receivables 11,264,214 69,482 1,368
7. Subsidiaries
Following the Company's early adoption of the consolidation
exemption amendments to IFRS 10, the Company does not consolidate
its subsidiaries as it meets the definition of an investment
entity. Below are the legal entity names for the Holding Companies
and the remaining legal entities owned indirectly through the
investment in the holding companies.
Ownership Ownership
Direct at at
or Indirect 30 September 31 March
Name Country Holding 2015 2015
NextEnergy Solar
Holding Limited UK Direct 100% 100%
NextEnergy Solar
Holding II Limited UK Direct 100% 0%
NextEnergy Solar
Holding III Limited UK Direct 100% 0%
NextPower Shacks
Barn Ltd UK Indirect 100% 100%
NextPower Higher
Hatherleigh Ltd UK Indirect 100% 100%
NextPower Ellough
LLP UK Indirect 100% 100%
NESF - Ellough LTD UK Indirect 100% 100%
BL Solar 2 Limited UK Indirect 100% 100%
Sunglow Power Limited UK Indirect 100% 100%
Glorious Energy Limited UK Indirect 100% 100%
Push Energy (Boxted
Airfield) Ltd UK Indirect 100% 100%
Push Energy (Langenhoe)
Ltd UK Indirect 100% 100%
Push Energy (Croydon)
Ltd UK Indirect 100% 100%
NextPower Gover Farm
Ltd UK Indirect 100% 0%
Push Energy (Birch)
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Ltd UK Indirect 100% 0%
SSB Condover Ltd UK Indirect 100% 0%
Trowbridge PV Ltd UK Indirect 100% 0%
ESF Llwyndu Ltd UK Indirect 100% 0%
Wellingborough Solar
Limited UK Indirect 100% 0%
Bowerhouse Solar
Limited UK Indirect 100% 0%
Greenfields (A) Limited UK Indirect 100% 0%
ST Solarinvest Devon
1 Limited UK Indirect 100% 0%
Glebe Farm SPV Limited UK Indirect 100% 0%
8. Share capital and reserves
Gross
Number amount Issue Share
of raised Costs premium
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
Total issued at
30 September 2014 85,600,001 85,600,001 - 85,600,001
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
Total issued at
31 March 2015 240,350,000 246,584,075 (2,124,436) 244,459,639
Issued on 30 September
2015 37,607,105 38,848,139 (435,153) 38,412,986
Total issued at
30 September 2015 277,957,105 285,432,214 (2,559,589) 282,872,625
* Agreed as part of the IPO, the Investment Adviser paid all
issue costs on behalf of the Company. Please refer to note 15 for
further information.
The Company currently has one class of ordinary share in issue.
The holders of the 277,957,105 ordinary shares are entitled to
receive dividends as declared from time to time and are entitled to
one vote per share at general meetings of the Company.
Retained reserves
Retained reserves comprise the retained earnings as detailed in
the Condensed Statement of Changes in Equity.
9. Earnings per share
Period Period
Period ended ended ended
30 September 31 March 30 September
2015 2015 2014
Profit and comprehensive
income for the period
(GBP) 8,559,186 8,534,649 2,672,967
Weighted average number
of ordinary shares 240,555,503 93,525,375 47,755,790
Earnings per ordinary
share - pence 3.56p 9.13p 5.60p
10. Dividends
Period Period
ended ended
31 March 30 September
Period ended 2015 2014
30 September
2015 (GBP) (GBP) (GBP)
Amounts recognised as
distributions to equity
holders:
Interim dividend for the
period ended 30 September
2014 of 2.625p per share,
paid 17 December 2014 - 4,635,750 -
Interim dividend for the
period ended 31 March
2015 of 2.625p per share,
paid on 30 July 2015 6,309,188 - -
Total 6,309,188 4,635,750 -
11. Net assets per ordinary share
As at As at As at
30 September 31 March 30 September
2015 2015 2014
Shareholders' equity (GBP) 289,021,522 248,358,538 88,272,968
Number of ordinary shares 277,957,105 240,350,000 85,600,001
Net assets per ordinary
share - pence 104.0p 103.3p 103.1p
12. Financial instruments
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 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
2015
Weighted Average discount rate 7.50%
A change to the weighted average discount rate by plus or minus
0.5% has the following effect on the valuation.
+0.5% Total Portfolio
Discount rate change value -0.5% change
Directors' valuation at
30 September 2015 (GBP) (10.9m) 291.3m 11.6m
Directors' valuation -
percentage movement (3.7%) 4.0%
Power price
NEC Group continually 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
Directors' valuation at
30 September 2015 (GBP) (15.7m) 291.3m 15.6m
Directors' valuation -
percentage movement (5.4%) 5.4%
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 P10 10 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
Energy yield under-performance value year outperformance
Directors' valuation at
30 September 2015 (GBP) (20.3m) 291.3m 20.3m
Directors' valuation -
percentage movement (7.0%) 7.0%
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.
-0.5% Total Portfolio
Inflation yield change value +0.5% change
Directors' valuation at
30 September 2015 (GBP) (11.1m) 291.3m 11.7m
Directors' valuation -
percentage movement (3.8%) 4.0%
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 2015 (GBP) (3.9m) 291.3m 3.9m
Directors' valuation -
percentage movement (1.3%) 1.3%
Tax rates
The UK corporation tax assumption for the Portfolio valuation
was 20% to 2017, 19% to 2020, and 18% 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.
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