REG - NextEnergy Solar Fnd - Full Year Results & Annual Report

NextEnergy Solar FundAnnouncement

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RNS Number : 8675M  NextEnergy Solar Fund Limited  16 June 2025

LEI: 213800ZPHCBDDSQH5447

16 June 2025

NextEnergy Solar Fund Limited

("NESF" or "the Company")

 

 

 Full Year Results & Annual Report

 

NextEnergy Solar Fund, a leading specialist investor in solar energy and
energy storage, is pleased to announce it has today published its full year
results and annual report as at year ended 31 March 2025.

 

Key Highlights (reconfirmed from Q4 NAV & Operating update
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=7490274&lang=en-GB&companycode=gg-nesf&v=)
)

 

Financial:

·     Net Asset Value ("NAV") per Ordinary Share of 95.1p (31 March 2024:
104.7p).

·     Ordinary Shareholders' NAV of £547.4m (31 March 2024: £618.6m).

·    Gross Asset Value of £1,061m (31 March 2024: £1,155m).

·    Income generated of c.£73.2m (31 March 2024: c.£80m).

·     Financial debt gearing (excluding Preference Shares) of 29.7% (31
March 2024: 29.3%).

·     Total gearing (including Preference Shares and total look-through
debt) of 48.4% (1) (31 March 2024: 46.4% (1)).

·     Weighted average cost of debt (including Preference Shares) of 4.9%
(31 March 2024: 4.5%).

·     Weighted average cost of capital of 6.6% (31 March 2024: 6.4%).

·     Weighted average discount rate across the portfolio of 8.0% (31
March 2024: 8.1%).

 

Dividend:

·    Total dividends declared of 8.43p per Ordinary Share for the twelve
months ended 31 March 2025 (31 March 2024: 8.35p).

·     Dividend cover for the twelve months ended 31 March 2025 was 1.1x
(31 March 2024: 1.3x).

·    The Board is pleased to reconfirm its full-year dividend target
guidance for the year ending 31 March 2026 of 8.43p per Ordinary Share (31
March 2025: 8.43p).

·     As at 13 June 2025, the Company offers an attractive dividend yield
of c.12%.

·     The full-year dividend target per Ordinary Share for the year
ending 31 March 2026 is forecast to be covered in a range of 1.1x - 1.3x by
earnings post-debt amortisation.

·     As at 31 March 2025, the Company had declared total Ordinary Share
dividends of £395m since inception, the equivalent to 76.26p per Ordinary
Share.

 

Portfolio:

·     101 (2) operating assets (31 March 2024: 103 (2)).

·     Total installed capacity of 937MW (2) (31 March 2024: 1,015MW (2)).

·     Total electricity generation for the year ended 31 March 2025 of
830GWh (31 March 2024: 852GWh).

·     Generation against budget for the year ended 31 March 2025 of -5.3%
(3) (31 March 2024: 0.3%).

·     Irradiation against budget for the year ended 31 March 2025 of 0.1%
(31 March 2024: 2.6%).

·     Remaining weighted asset life of 24.8 years (31 March 2024: 26.6
years).

·     Since inception the Company has generated 6.6TWh of electricity (31
March 2024: 5.8TWh).

 

Share Buyback Programme:

·    As at 31 March 2025, the Company had purchased 15,125,342 Ordinary
Shares for a total consideration of £11.2m through its up to £20m Share
Buyback Programme, delivering a NAV uplift of 0.5p per Ordinary Share.

·     As at 13 June 2025, 15,621,142 Ordinary Shares have been purchased
for a total consideration of £11.5m.

·     Shares purchased under the Share Buyback Programme are being held
in the Company's treasury account.

 

Capital Recycling Programme:

·    The remaining 100MW of the Capital Recycling Programme is progressing
through a competitive sales process to third-party buyers.  The Company will
publish further updates about Phase IV of the Programme in due course.

·     As at 13 June 2025, the Capital Recycling Programme has:

o  Sold three asset sales totalling c.145MW of capacity from the 245MW
Programme.

o  Raised £72.5m total capital.

o  Added a total estimated Net Asset Value uplift of 2.76p per Ordinary
Share.

 

Capital Structure:

·     As announced on 12 March 2025
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=7357099&lang=en-GB&companycode=gg-nesf&v=)
, the Company consolidated and reduced the cost of its short-term Revolving
Credit Facilities into one facility (the "RCF") at an attractive rate of
120bps over SONIA ("Sterling Overnight Index Average").

·     As at 31 March 2025:

 Debt facilities            Original size (£m)   Amount outstanding (£m)
 Long-term amortising debt  £212.5m              £147.2m
 Short-term RCF             £205.0m              £144.9m
 Total financial debt                            £292.1m
 Preference shares          £200.0m              £198.5m
 Total debt                                      £490.6m (4)

 

·     Short-term RCF drawn of £144.9m (31 March 2024: £135.0m).

·     Long-term amortising debt paid down by £62.2m (31 March 2024:
£60.2m).  The remaining outstanding long-term debt of £147.2m is on track
to fully amortise in line with the remaining subsidy life of the portfolio's
inflation linked government subsidies.

·     Of the Company's total debt of £490.6m (4):

o  70% remains at a fixed rate of interest (including the Preference Shares).

o  30% remains at a floating rate of interest via the short-term RCF.

·     Total look-through debt of £23.5m (31 March 2024: £12.6m).  This
represents the total combined short and long-term debt in the Company's
investment into NextPower III LP, and its two co-investments (Agenor and
Santarem) on a look-through equivalent basis. This is included in the
Company's total gearing ratio of 48.4%.

 

ESG & Sustainability:

·     The Company continued to maintain its Article 9 Fund classification
under the EU Sustainable Finance Disclosure Regulation and EU Taxonomy
Regulation.

·     The Company and its Investment Adviser continue to implement
activities in support of its Approach to Nature strategy benefiting
biodiversity across NESF sites and continue to support industry action on
supply chain sustainability, including the Solar Stewardship Initiative.

 

Strategic Options Framework:

·     The Board of NESF are committed to driving value for shareholders
and apply a robust framework in assessing all strategic options.

·     NESF continues to explore multiple strategic options for the
future.

·     The Board hires appropriate independent advisers to ensure the
Company receives tailored advice on all potential options.  If a strategic
option presents value, the Board will consult major shareholders on material
developments.

·     The Board are in active discussion with the Company's Investment
Adviser regarding revising the IM fee to align with shareholders.

 

Annual Report:

·      The Company's Annual Report for the year ended 31 March 2025 is
now available on the Reports & Publications section of the Company's
website here (https://www.nextenergysolarfund.com/reports-and-publications/)
.

·      A copy of the Annual Report has also been submitted to the
FCA's National Storage Mechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .

 

Full Year Results Presentation:

·     The Company will livestream its full year results presentation via
webcast for both investors and analysts and will be followed by a Q&A
session.

o  Time: 10:00am (BST)

o  Date: Monday 16 June 2025

o  Webcast link: NextEnergy Solar Fund Full Year Results Presentation
(https://sparklive.lseg.com/NextEnergySolarFundLtd/events/74882e6e-09d6-4222-874a-48d2e5d63cf1/nextenergy-solar-fund-full-year-results-presentation)

·      The presentation will be hosted by:

o  Paul Le Page (Interim Chairman, NextEnergy Solar Fund)

o  Ross Grier (Chief Investment Officer, NextEnergy Capital, Investment
Adviser)

o  Stephen Rosser (Investment Director, NextEnergy Capital, Investment
Adviser)

·      A recording of the presentation will be made available on the
Company's website shortly after the event.

 

 

Paul Le Page, Interim Chairman of NextEnergy Solar Fund Limited, commented:

"This year has not been easy for NESF, our shareholders, and the wider
investment company sector. We have seen continued pressure on our share price
discount to Net Asset Value ("NAV") which averaged c.27% throughout the
12-month period but we are pleased to see the start of a recovery since the
Company's discount hit an all-time high in January 2025.  The sustained
discount has been driven by multiple macroeconomic factors which are outside
of the Company's immediate control; this has resulted in negative sentiment
towards the entire alternative investment company sector.

 

Despite this backdrop, the Company's large portfolio of operating assets has
continued to demonstrate resilience, adaptability, and strength under the
stewardship of both the Board and the Company's Investment Adviser, NextEnergy
Capital.

 

I understand that this has been a particularly frustrating time for our
shareholders whom I would personally like to thank for their continued
long-term support to the Company as demonstrated by the overwhelming vote
'Against' discontinuation at last year's AGM, and I would like to reassure
that both the Board and the Investment Adviser remain committed to returning
long-term value to NESF shareholders.

 

The Board continue to apply strategic rigour and a clearly defined assessment
criteria to evaluate new growth opportunities for total shareholder return.
Each opportunity is assessed on its merits, with a focus on shareholder value,
strategic fit, and alignment with NESF's portfolio and long-term growth
objectives. This includes engaging with the Board's independent external
advisers, as appropriate, to ensure a robust, well-informed and value
approach, which is applied to all potential strategic initiatives. Impacts to
the Company's NAV, portfolio composition, investment limits, and gearing
position are also considered in detail to maximise the returns delivered to
Shareholders. If sufficient positive synergies and compelling value accretion
are identified, the Board will agree to pursue further.

 

The Company maintains an acute focus on delivering long-term shareholder value
and return through disciplined decision-making and a resilient strategic
framework.  The Board are in active discussion with the Company's investment
adviser regarding revising the Company's investment management fee to further
align with shareholder interests and I remain optimistic about the path ahead
for the Company as we look forward to making tangible progress across the
Company's long-term strategy over this new financial year.

 

In May this year Helen Mahy stepped down as director of the Company to pursue
other interests. The Board and I would like to thank Helen for her hard work
and contributions and wish her the very best with her future endeavours. Helen
leaves NextEnergy Solar Fund and the Board well positioned to take advantage
of the opportunities that lie ahead."

 

Ross Grier, Chief Investment Officer of NextEnergy Capital said:

"Over the year, NESF made solid progress, including executing the Capital
Recycling Programme, launching the share buyback programme, paying a fully
covered FY dividend of 8.43p per ordinary share, re-investing back into the
health of the portfolio and setting the stage for onward growth of the
platform. The Board has approved a sustained dividend target of 8.43p per
Ordinary Share for the year ending 31 March 2026 which it considers
appropriately balances the interests of the Company, investors and other
stakeholders in the current macroeconomic climate. Such a decision
demonstrates continued discipline and will allow for continued access to NAV
accretive opportunities, aiming to reduce the discount to NAV whilst providing
shareholders with a total return via share price appreciation and a sector
leading dividend yield in the FTSE 350 of c.12% as at 31 March 2025.

 

NESF has delivered an attractive, cash covered dividend in the face of
operational challenges and continued macroeconomic pressures and volatility
across the UK equity markets.  The Company's ordinary share price continues
to trade at a material discount to its Net Asset Value per share which is
frustrating given this progress but with oversight from the Board, the team
has taken action to narrow this discount through a combination of strategic
activities and continues this work actively.

 

Having been part of the NESF journey since IPO in 2014, I am extremely proud
of the impact, momentum and value it has provided since its listing on the
London Stock Exchange eleven years ago. Having delivered a portfolio of 1GW
capacity of solar energy and energy storage assets, against a total of c.18GW
of solar currently deployed across the UK NESF has been a key contributor to
the progress made to date on energy security and net zero and is well
positioned to play a key role in the next phase of this growth with CP30. We
will continue to deliver long-term value via total return as we ramp up for
growth, narrow the discount to NAV and continue to pay cash covered dividends.
Thank you to all our shareholders, past, current, and prospective for
supporting NESF and preparing for our next phase together."

 

 

12-Month NAV Bridge Breakdown:

                                                       NAV p/share  NAV
 At 31 March 2024                                      104.7p       £618.6m
 Time value                                            8.2p         £48.3m
 Project actuals                                       (2.4p)       (£14.1m)
 Power price forecasts                                 (4.2p)       (£25.1m)
 Changes in short-term inflation                       1.1p         £6.7m
 Revaluation of NextPower III LP & Co-investments      (0.5p)       (£3.1m)
 Cash dividends paid                                   (9.9p)       (£58.7m)
 Sale of Whitecross                                    0.6p         £3.3m
 Sale of Staughton                                     0.9p         £5.4m
 Share buyback                                         0.5p         (£11.2m)
 Capital movements (no net NAV impact)
 -       New assets at cost                            2.5p         £14.6m
 -       Repayment of RCF using cash on hand           3.5p         £20.7m
 -       Cash on hand, used to fund investments        (6.0p)       (£35.3m)
 Other movements in residual value                     (3.9p)       (£22.7m)
 At 31 March 2025                                      95.1p        £547.4m

 

The movement in the NAV over the period was driven primarily by the following
factors.

NAV accretive movements:

·     Time Value: The time value reflects the change in the valuation as
a result of changing the valuation date, prior to adjusting for any outflows
of the Company.  The increase in value is attributable to the unwinding of
the discount applied to cash flows for the period when calculating the
discounted cash flow.

·     Share Buyback Programme: Shares purchased in the period as part of
the Company's Share Buyback Programme of up to £20m. The Programme used
£11.2m of cash on hand to purchase 15,125,342 Ordinary Shares in the period,
resulting in an increase in the NAV per Ordinary Share of 0.5p.

·     Inflation Forecasts: A slight increase in short-term inflation
assumptions from 2025 to 2026 - now assuming 3.8% UK RPI for calendar year
2025-26. The Company continues to take a consistent approach to its inflation
assumptions, using external third-party, independent inflation data from HM
Treasury Forecasts and long-term implied rates from the Bank of England for
its UK assets.  For international assets, IMF forecasts are used.  Long-term
assumptions are aligned with market consensus including transition to CPI from
2030.  See breakdown of UK inflation assumptions below.

 

NAV deductive movements:

·     Cash Dividends Paid: The dividends paid during the period,
including both Ordinary and Preference Share dividend payments.

·    Power Price Forecasts: A decrease in short-term (2025-2030) UK power
price forecasts provided by third-party consultants. This is due to a
downwards revision of gas price forecasts, driven by an expected increase to
the global gas supply from new liquefaction capacity, particularly in the US
and Qatar.  Medium and long-term prices have increased due to increased power
demand forecasts compared to the December 2024 update.  See power curve
assumptions graph below.

·     Project Actuals: The project actuals figure was driven by
generation performance, which was impacted by lower-than-expected irradiance
levels in January and February that was offset by higher-than-expected
irradiance levels in March, network outages and higher operating expenses.
 NESF reports individual generation figures twice a year in its interim and
full-year results.

·     Revaluation of NextPower III LP & Co-investments: Movements in
the fair value of the holding in NextPower III LP and the two co-investments
reflecting operational and macroeconomic updates.

·     Other Residual Value Movements: Includes changes in FX rates, fund
operating expenses, capital expenditure provisions for asset health, such as
repowering inverters and module replacements, and other non-material
movements.

 

 

Inflation Rate (UK RPI) Assumptions

 Calendar Year    31 March 2025  31 March 2024
 2025/26          3.80%          2.90%
 2026/27          3.10%          2.90%
 2027/28          3.30%          3.50%
 2028/29          3.40%          3.60%
 2029/30          unchanged      3.00%
 2030/31 onwards  unchanged      2.25%

 

 

Discount Rate Assumptions

                                                  31 March 2025  31 March 2024
 Solar           UK unlevered                     unchanged      7.50%
                 UK levered                       unchanged      8.20% - 8.50%
                 Italy unlevered (5)              unchanged      9.00%
                 Subsidy-free (uncontracted) (6)  unchanged      8.50%
                 Life extensions (7)              unchanged      8.50% - 9.50%
 Energy Storage  Uncontracted                     unchanged      10.00%
                 Contracted                       unchanged      7.00%

 

Power Curve Assumptions

31 March 2025: Blended Power Curves (Capture Price)

 

 

For the UK portfolio, the Company uses multiple sources for UK power price
forecasts.  Where power has been sold at a fixed price under a Power Purchase
Agreement ("PPA") (a hedge), these known prices are used. For periods where no
PPA hedge is in place, short-term market forward prices are used. After two
years, the Company integrates a rolling blended average of leading independent
energy market consultants' long-term central case projections.  Recognising
the increased potential for power price uncertainties driven by policy
developments such as Clean Power 2030 (CP30), the ongoing Review of
Electricity Market Arrangements (REMA) and other factors influencing the
forward price projections produced by independent consultants generally, the
Company has incorporated the projections of a fourth independent,
industry-leading consultant within its long-term central case methodology. The
blend of forecasts reduces volatility, presenting a fair and balanced outlook
consistent with pricing methodologies used for successfully divested assets
and power price assumptions across broader peer group.

 

For the Italian portfolio, PPAs are used in the forecast where these have been
secured. In the absence of hedges, a leading independent energy market
consultant's long-term projections are used to derive the power curve adopted
in the valuation.

 

Power Purchase Agreement Strategy

c.50% of NextEnergy Solar Fund's revenues come from RPI-linked
government-backed subsidies.  The remaining c.50% of revenues are secured
through NextEnergy Solar Fund's PPA strategy where the Company secures PPAs
over a rolling 36-month period. This proactive risk mitigation helps secure
and underpin both dividend commitments and dividend cover whilst reducing
volatility and increasing the visibility of cash flows.

 

Forecasted Total Revenue Breakdown (8):

 

 

 

Available Capital

Out of the total £205m immediate Revolving Credit Facility available to the
Company, c.£60.1m remained undrawn and available for deployment as at 31
March 2025.  The Company had c.£3.2m immediate cash balance available at
the Company level as at 31 March 2025 (this is separate from the cash
currently held at Holdco/SPV level).

 

Future Pipeline

The Company owns the project rights for, or has exclusivity over, a carefully
selected £500m pipeline of development projects in utility-scale solar
(>400MW UK & OECD target markets) and UK energy storage (>250MW UK
BESS).  In addition to this proprietary £500m pipeline, the Company benefits
from the right of first offer on relevant assets across both the NextEnergy
Capital and Starlight development pipelines as and when projects in that
pipeline have progressed to the necessary stage.  The Company will evaluate
future investments into the pipeline relative to the returns available from
all alternative capital uses, including paying down debt and additional share
buybacks.

 

 

 

 

 

Footnotes:

 

1.    Includes total look-through debt of £23.5m (31 December 2024:
£23.6m).  This represents the total combined short and long-term debt in the
Company's investment into NextPower III LP (NPIII), and its two co-investments
(Agenor and Santarém) on a look-through equivalent basis.

2.    On a look-through MW equivalent basis, this includes investment
NPIII, where it owns 6.21%, ownership in the international co-investments
(13.6% of Santarém (210MW in Portugal) and 24.5% of Agenor (50MW in Spain)),
and 70% ownership of the Company's standalone energy storage asset Camilla
through its joint venture partnership.

3.    Excludes performance of private equity vehicle (NPIII) and
co-investments. Figures have been adjusted, where relevant, for events outside
of the Company's control, such as distribution network operator outages, and
for events in which compensation has been or will be received, such as
warranty claims.

4.    Excludes total look-through debt of £23.5m.

5.    Unlevered discount rate for Italian operating assets implying 1.50%
country risk premium to 7.50%.

6.    Unlevered discount rate for subsidy-free uncontracted operating
assets implying 1.0% risk premium to 7.50%.

7.    1.0% risk premium added to UK unlevered (7.50%) and UK levered assets
(8.20% - 8.50%) for cash flows after 30 years where leases have been extended.

8.    As at 31 March 2025, fixed revenues include subsidy income, figures
are stated to the nearest 0.1% which may lead to rounding differences.
NextEnergy Solar Fund minimises its merchant exposure through its active
rolling PPA Programme.  The Programme locks in PPAs in the liquid market to
ensure maximum contracted revenues are achieved. Fixed prices (£/MWh) covers
83% (776MW) of the total portfolio as at 31 March 2025. Excludes Solis
portfolio.

 

 For further information:

 NextEnergy Capital

                                               020 3746 0700

 Michael Bonte-Friedheim                       ir@nextenergysolarfund.com (mailto:ir@nextenergysolarfund.com)
 Ross Grier
 Stephen Rosser
 Peter Hamid (Investor Relations)
                                               020 7653 4000

 RBC Capital Markets
 Matthew Coakes
 Kathryn Deegan
                                               020 7908 6000

 Cavendish
 Robert Peel
                                               020 7379 5151

 H/Advisors Maitland
 Neil Bennett
 Finlay Donaldson
                                               01481 742642

 Ocorian Administration (Guernsey) Limited
 Kevin Smith

 

 

Notes to Editors (1):

About NextEnergy Solar Fund

NextEnergy Solar Fund is a specialist solar energy and energy storage
investment company that is listed on the Main Market of the London Stock
Exchange.

 

NextEnergy Solar Fund's investment objective is to provide Ordinary
Shareholders with attractive risk-adjusted returns, principally in the form of
regular dividends, by investing in a diversified portfolio of utility-scale
solar energy and energy storage infrastructure assets.  The majority of
NESF's long-term cash flows are inflation-linked via UK government subsidies.

 

As at 31 March 2025, the Company had an audited gross asset value of
£1,061m.  For further information please visit www.nextenergysolarfund.com
(http://nextenergysolarfund.com/)

 

Article 9 Fund

NextEnergy Solar Fund is classified under Article 9 of the EU Sustainable
Finance Disclosure Regulation and EU Taxonomy Regulation.  NextEnergy Solar
Fund's sustainability-related disclosures in the financial services sector are
in accordance with Regulation (EU) 2019/2088 and can be accessed on the ESG
section of both the NextEnergy Solar Fund and NextEnergy Capital websites.

 

About NextEnergy Group

NextEnergy Solar Fund is managed by NextEnergy Capital, part of the NextEnergy
Group.  NextEnergy Group was founded in 2007 to become a leading market
participant in the international solar sector which now employs over 380
professionals.  Since its inception, NextEnergy Group has been active in the
development, construction, and ownership of solar assets across multiple
jurisdictions.  NextEnergy Group operates via its three business units:
NextEnergy Capital (Investment Management), WiseEnergy (Operating Asset
Management), and Starlight (Asset Development).

 

·      NextEnergy Capital: has over 18 years of specialist solar
expertise having invested in over 530 individual solar plants across the
world.  NextEnergy Capital currently manages four institutional funds with a
total capacity in excess of 3GW+ and has funds under management of c.$4.4bn.
More information is available at www.nextenergycapital.com
(https://www.nextenergycapital.com/)

·      WiseEnergy®:  is a leading specialist operating asset manager
in the solar sector.  Since its founding, WiseEnergy has provided solar asset
management, monitoring and technical due diligence services to over 1,600
utility-scale solar power plants with an installed capacity in excess of
3.5GW.  More information is available at www.wise-energy.com
(https://www.wise-energy.com/)

·      Starlight: has developed over 100 utility-scale projects
internationally and continues to progress a large pipeline of c.10GW of both
green and brownfield project developments across global geographies.  More
information is available at www.starlight-energy.com
(https://www.starlight-energy.com/)

 

Notes:

(1:) All financial data is audited at 31 March 2025, being the latest date in
respect of which NextEnergy Solar Fund has published financial information.

 

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