NextEnergy Solar Regulatory News (NESF)

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15 January 2015

NextEnergy Solar Fund Limited (the "Company")

Quarterly Trading Statement

Highlights

Three Months Ended 31 December 2014

· Placing programme established in November 2014 to issue up to 250,000,000 shares; 95,000,000 ordinary shares subsequently issued raising gross proceeds of £99.6m.

· Net assets increased from £88.3m to £181.2m as at 31 December 2014, resulting in NAV per ordinary share of 100.3p (30 September 2014: 103.1p, or 100.5p excluding interim dividend).

· Interim dividend of 2.625p per ordinary share for period ended 30 September 2014 declared in November 2014 and paid on 17 December 2014.

· Conditional agreements entered into to acquire four solar power plants with aggregate energy capacity of 57 Megawatts Peak ("MWp") and total acquisition value of up to £65.0m, with all plants expected to be accredited under 1.4 Renewable Obligation Certificate ("ROC") regime.

· At 31 December 2014, portfolio comprised eleven assets with aggregate capacity of c.124MWp and total investment value of c.£145m (c.79% of equity proceeds raised since IPO).

Post 31 December 2014

· Completed acquisition of Gover Farm and acquisitions of Bilsham and Brickyard expected to complete during January 2015. These assets have, in aggregate, capacity of 25.7MWp and acquisition value of £29.9m (as these assets are operational at completion, they will be valued based on discounted cash flows, rather than cost, which is expected to be incremental to NAV per ordinary share as at 31 January 2015).

· Board is pursuing a further issue of new ordinary shares under the previously announced Placing Programme to take advantage of its large pipeline of attractive investment opportunities, with share issue expected to take place in February 2015 and issue price based on the NAV per ordinary share as at 31 January 2015. 

Outlook

· On course to deliver target dividend of 5.25p per ordinary share in respect of its first financial year ending 31 March 2015 and, thereafter, annual dividends of, in aggregate, 6.25p per ordinary share (adjusted subsequently on an annual basis in direct proportion to variations in RPI).

· Strong pipeline of assets available for acquisition: total capacity of c.174MWp with investment value of c.£237m secured (through letters of intent giving Company exclusivity for defined period), the majority of which are expected to be accredited under 1.4 ROC regime.

Financial Information (As at 31 December 2014)

At 31 December 2014, including cash on hand and the Revolving Credit Facility, NESF had available liquidity of £128.0m, of which £79.4m was allocated to announced investments. The Company had no financial debt outstanding as at 31 December 2014. 

Investment Activity and Performance

During the quarter ended 31 December 2014, the Company entered into agreements to purchase four solar power plants (Condover, Cock Hill, Llwyndu and Boxted Airfield) with an aggregate capacity of 57.6MWp and an aggregate consideration of up to £65.0m. Construction of each of these plants is underway and they are all expected to become operational by 31 March 2015. Accordingly, these plants are expected to be accredited under the 1.4 ROC regime. The Company has the right to withdraw, without incurring any financial penalties, from acquiring any plant in the event that it is not eligible for the contracted ROC regime.

In addition, during the period share purchase agreements covering two projects amounting to a total of 32.9MWp and £37.1m were signed by NextPower Development Limited (the "Developer"). The Company has the right to acquire the two plants at unchanged terms and conditions, with no consideration payable to the Developer.

The Company's operational portfolio performed satisfactorily over the course of 2014. Irradiation was significantly lower than expected during the months of October and November. However, overall, recorded solar irradiation was 2.1% above predicted levels and recorded electricity generation was 3.4% above expectations. Revenues were also above expectations.

The Investment Manager continues to carefully monitor developments in the UK power market, in particular as it pertains to the market price of electricity. Recent factors influencing the electricity market prices include, inter alia, the warmer-than-usual weather conditions, declining hydrocarbon (oil and gas) prices in the UK and beyond, regulatory developments as well as changes to the country-wide portfolio of electricity-generating power plants. The Investment Manager has noted the recent weakening in the spot and forward electricity prices, and continues to design the Company's electricity sales strategy to secure the highest prices achievable while maintaining adequate flexibility.

Portfolio at 31 December 2014

Operating Assets

1Including acquisition price paid to 31 December 2014, expenses and working capital requirements.

Assets in Construction for, or Secured by, the Company1

1Projects secured by the Company through executed share purchase agreements. Completion of acquisitions is subject to contractual conditions, including, inter alia, on-time completion of construction.

2Target.

3 Including expenses and working capital requirements

Since 31 December 2014, the Company has completed the acquisition of Gover Farm and expects to complete the acquisitions of Bilsham and Brickyard during January 2015 with, in aggregate, capacity of 25.7MWp and acquisition value of £29.9m. NESF has contractual rights to all revenues generated by the three plants from their operational date. As these assets are operational at completion, they will be valued based on discounted cash flows (rather than cost), which is expected to be incremental to the NAV per ordinary share as at 31 January 2015.

Assets Secured by the Developer and Available to the Company1

1Projects secured by the Developer through executed share purchase agreements. Completion of acquisitions is subject to contractual conditions, including, inter alia, on-time completion of construction. The Company has the right to acquire these plants at unchanged terms and conditions, with no consideration payable to the Developer.

2Target.

Investment Pipeline

The Company's investment pipeline of opportunities secured by letters of intent amounts to ten projects, for a total capacity of c.174MWp (including the two transactions already signed by the Developer referred to above). The estimated investment value of the entire secured pipeline totals c.£237m.

This pipeline comprises assets secured from a variety of counterparts and located across southern England. The majority of assets is expected to be accredited under the 1.4 ROC regime, with one asset expected to be accredited under the 1.6 ROC regime. The secured assets also include a portfolio of operating commercial and residential rooftop sites accredited under the Feed-in-Tariff ("FiT") regime. Two other projects in the pipeline are operational. Construction activities are underway on most of the remaining projects in the pipeline.

Outlook

The Investment Adviser, NextEnergy Capital Ltd, continues to evaluate a broad set of incremental investment opportunities for the Company. These investment opportunities mainly comprise assets accredited or expected to be accredited under regimes including ROC (1.6, 1.4 and 1.3 ROCs), FiT and Contracts for Difference ("CfD"). 

These new-build opportunities include ground-based projects below 5MWp which can qualify for ROC or FiT accreditation, as well as rooftop portfolios qualifying for FiT treatment. The Company is also in discussions with partners seeking to accredit and construct large-scale projects under the new CfD regime.

The Company is also pursuing utility-scale operating projects constructed previously under the ROC and FiT regimes as well as presently being constructed under current regulation.

Considering the number and overall size of projects pursued and on-going developments in the market, the Board believes the Company will continue to expand its portfolio of assets acquired after March 2015.

Placing Programme

Shareholders approved the establishment of a placing programme to issue up to 250,000,000 shares at a general meeting of the Company held on 4 November 2014. 95,000,000 ordinary shares have been issued under the placing programme, raising gross proceeds of £99.6m.

The Board is pursuing a further issue of new ordinary shares to allow the Company to take advantage of its large pipeline of attractive investment opportunities. It is expected that this issue will take place in February 2015 and that the issue price will be based on the unaudited NAV per ordinary share as at 31 January 2015. A further announcement will be made in due course.

Enquiries:

Notes

This announcement does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any securities in the Company in any jurisdiction, nor shall it (or any part of it or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor or investment decision is respect of any such securities. Without prejudice to the foregoing generality, this announcement does not constitute a recommendation regarding any securities. Any decision to purchase or subscribe for shares in the Company must be made exclusively on the basis of the prospectus published by the Company on 10 November 2014 (and any supplement thereto) in connection with its placing programme.

Unless otherwise noted, the financial information contained in this announcement is unaudited. The information contained in this announcement is subject to updating and amendment, and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement in connection with the Company or the purchase of any securities in the Company.

The potential acquisition by the Company of any of the investments referred to in this announcement is subject, among other things, to those projects reaching legal completion and to the Company having conducted satisfactory due diligence in relation to such investments. There is therefore no guarantee that any of the investments will be acquired and, if they are, on what terms. 

This IMS contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. Forward-looking statements are not guarantees of future performance. The Company's actual investment performance, results of operations, financial condition, liquidity, distribution policy and the development of its financing strategies may differ materially from the impression created by the forward-looking statements contained in this document. Subject to their legal and regulatory obligations, the Company and its Investment Manager expressly disclaim any obligations to update or revise any forward-looking statement contained in this announcement to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.

Notes to Editors:

NextEnergy Solar Fund

NextEnergy Solar Fund (www.nextenergysolarfund.com) is a specialist investment fund focused on operational solar photovoltaic assets located in the UK. The Company intends to provide investors with a sustainable and attractive dividend that increases in line with RPI over the long term and an element of capital growth through the re-investment of net cash generated in excess of the target dividend.

Further information on NextEnergy Capital and WiseEnergy is available at www.nextenergycapital.com and www.wise-energy.eu.