NextEnergy Solar Fund Ltd (LSE:NESF) has seen its net asset value per share rise, driven by an increase in power price forecast assumptions.
The renewable energy investment company released its results for the year to 31 March 2022 in which it revealed net asset value (NAV) per share rose roughly 15% to 113.5p from 98.9p a year earlier.
The main contributor to the change in the company's NAV during the year was an increase in power price forecast assumptions (+9.5p per ordinary share) driven by an uplift in the short to medium-term power forecasts provided by the company's three independent advisers and power purchase agreements. Other changes included updating short-term inflation assumptions (+6.1p per ordinary share).
Shareholders’ NAV jumped to £668.5mln from £580.8mln, giving an annualised total return for the year for shareholders of 11%, compared to a return of 5.1% the year before.
During the year, total group portfolio revenue increased by around 19% to £114mln from £96mln a year earlier while underlying earnings (EBITDA) increased by around 22% to £90mln from £74mln in the prior fiscal year.
The portfolio performed strongly and expanded through acquisitions in international solar assets and battery storage, the company told shareholders. These acquisitions help the company enhance revenues and add potential future NAV growth, it added.
Gearing eased to 42% from 43% the previous year. NextEnergy (NESF) said it has the capital to pursue its short-term immediate pipeline, including bringing online a secured battery storage project and completing the construction of its post-subsidy solar. Out of the total £145mln revolving credit facilities available to the company, £49mln remains undrawn and available for deployment. The company advised it may look to raise capital in the near future to fund attractive growth opportunities it has identified and is pursuing.
Dividends have been hiked to 7.16p from 7.05p with the board indicating a target dividend of 7.52p for the current fiscal year.
"The twelve months to 31 March 2022 marked the second year of living with COVID-19, alongside macroeconomic and geopolitical uncertainty, and rising inflation. Despite these challenges, NESF has generated a steady revenue stream and provided investors with a reliable attractive dividend, with the company's portfolio performing strongly throughout the year,” said Kevin Lyon, the chair of NextEnergy Solar Fund.
“Having underwritten a commitment to NextPower III (NPIII), a private solar infrastructure fund, NESF made its first international solar co-investments in Spain and Portugal alongside NPIII and finalised its first stand-alone investment into the battery storage sector.
“NESF weathered the turbulence that the past year has thrown at it and capitalised on rising power prices, with ordinary shareholders' NAV at £668.5m compared to 2021's figure of £580.8m, a significant uplift,” he added.
Michael Bonte-Friedheim, the chief executive officer and founder of NESF, said there has been a dynamic shift in the UK and other power markets over the last 12 months.
“We saw exceptional support from COP26 promoting the continued roll-out of renewable technology, alongside increased market volatility, and record power prices in the UK and abroad,” he said.
“NESF's portfolio continues to outperform technically, financially and operationally, providing vital low-cost of production power generation to the UK, in an environment of rising inflationary pressure, with increased focus on energy security. NESF remains well placed to deliver shareholders an attractive, inflation-protected income, while pursuing more of the exciting growth prospects the sector offers. NESF continues to build new solar projects in the UK, which will contribute to the decarbonisation of the power generation sector and the reduction of imported hydrocarbons,” Bonte-Friedheim asserted.