Shareholder Information

Preference shares simplify the capital structure by reducing the exposure to secured debt financing

Preference Shares

On 8 November 2018, the Shareholders approved the issuance of £200m of Preference Shares. The Company issued the first tranche of £100m in November 2018, and the second tranche of £100m Preference Shares were issued in August 2019.

Value accretive features:

  • lower issue cost of 1.1% compared to other capital raising avenues
  • lower cash cost with a fixed preferred dividend of 4.75% and no redemption requirements
  • option to redeem at nominal value starting from 1 April 2030 for six years at sole discretion of the Company
  • non-redeemable / non voting shares(1) with holder’s conversion right starting from 1 April 2036 at nominal value (plus unpaid dividend if any) relative to NAV per Ordinary Share at the date of conversion (thus no refinancing risk)

Why Preference Shares:

  • The issuance of £200m preference shares is expected to increase dividend cover by 0.15x and returns by 1.09% for ordinary shareholders (2)
  • Preference shares simplify the capital structure by reducing the exposure to secured debt financing
  • Preference shares provide protection against diminishing power prices compared to traditional debt financing used by peers and have no refinancing risk
  • Issuance of £200m preference estimated to have increased cashflows by £6.0m during the year compared to a proforma debt financing

Footnote:

(1) Redemption rights in the event of delisting or change of control of the Company – Voting rights in the event of detrimental changes to the Investment Policy or Articles.

(2) Estimates only based on a typical UK solar portfolio and when compared to issuance of new ordinary shares.

Financial debt outstanding (30 September 2022)

Financial Debt Gearing: 27%

Total gearing (5): 42%

 

Table Footnote:

  1. NESF has 326MW under long-term debt financing, 326MW under short-term debt financing and 214MW without debt financing (excludes NPIII look through debt).
  2. Loan to Value defined as ‘Debt outstanding / GAV’.
  3. Long-term debt is fully amortised over the period secured assets receive subsidies (ROCs and others).
  4. Applicable rate represents the swap rate.
  5. Represents the “real” outstanding debt balance. The “nominal” outstanding debt balances are included in the debt balances provided in Note 23b to the financial statements
  6. The total combined short and long-term debt in relation to NESF’s commitment into NPIII (on a look through equivalent basis).

ESG integration into the NESF investment process

  • ESG factors are considered throughout the investment process, from potential excluded activities during the project selection phase, to initial screening and full due diligence during the pre-acquisition phase
  • ESG clauses are included in key contracts with our counterparties, including EPC and O&M contractors, and an action Plan to fill in any gaps between a project, its contractors and the standards which NEC seeks to uphold is agreed during the negotiation phase
  • NEC ensure that the action plan is implemented, and that NESF report on its ESG performance
  • Please see the NEC sustainable investment policy on the website for more details: nextenergycapital.com/sustainability/sustainable-investing/

EU Taxonomy and Sustainable Finance Disclosure Regulation

  • The Sustainable Finance Disclosure Regulation (SFDR) is a European regulation introduced to improve transparency in the market for sustainable investment products, to prevent greenwashing and to increase transparency around sustainability claims made by financial market participants
  • NESF complies with the requirements of the EU Taxonomy and Sustainable Finance Disclosure Regulation (“SFDR”)
  • The Company’s legal adviser has confirmed that NESF is classified under Art. 9 of the SFDR, as the Company is marketed in the EU and has sustainable investment as its objective.
  • The Company’s sustainable investment objectives arise from its focus on investments in solar PV and battery storage assets and its investment decision making processes.
  • In light of this classification, NextEnergy Group has made the relevant disclosures for NESF in its annual report for the year ended 31 March 2022