NextEnergy Solar Fund optimistic on roadmap amid NAV decline
NextEnergy Solar Fund Ltd on Monday urged shareholders to vote against a wind-up at its forthcoming annual general meeting, as it reported a decline in its net asset value.
The Guernsey-based specialist investor in solar energy and energy storage said net asset value per share fell 20% to 76.1 pence at March 31, from 95.1p a year earlier.
Gross asset value declined 13% to £922 million from £1.06 billion, but with total income improving 4.3% to £141.3 million from £135.5 million.
The decline in NAV was owed to several factors, most notably dividends paid, other movements in residual value and solar power price forecasts.
Chair Tony Quinlan described the past financial year of trading as ‘tough’ for shareholders, as the sector ‘continues to suffer from share prices trading at persistent discounts to reported NAV’.
Shares in the company were down 1.9% at 46.30 pence on Monday morning in London.
Back in March, NextEnergy Solar announced the outcome of a comprehensive review and strategic reset, with the company establishing a roadmap focused on ‘capturing the intrinsic value of its high-quality, cash-generative portfolio, with a clear objective of stabilising and growing NAV over the long term while strengthening the balance sheet.’
NextEnergy Solar said the roadmap is anticipated to deliver ‘material value creation’ over time, with initial estimates showing potential to generate around £60 million to £100 million of additional value through initiatives.
These, said the company, include ‘further asset-life extensions, hybridisation of a proportion of the portfolio and realisation of the value embedded in the company’s development pipeline.’
NextEnergy Solar said shareholders will be given a continuation vote at the forthcoming annual general meeting, and urged holders to recommend voting against a discontinuation.
‘A discontinuation of the company would involve a forced sale of assets, which the board believes is likely to be value-destructive in the current market and would not be in shareholders’ best interests,’ noted Chair Tony Quinlan.
The company added that it has paused the remaining £8.5 million balance from its ongoing up to £20 million share buyback programme to prioritise debt repayment.
NextEnergy’s total dividends for the financial year amounted to 8.43p, flat with the prior year.
‘It has been a challenging year for the company’s share price, with the discount to NAV widening,’ said NextEnergy Capital Chief Investment Officer Ross Grier.
‘The strategic reset and new roadmap are focused on reducing gearing, narrowing the discount and positioning the platform for sustainable growth when appropriate. Whilst we believe these actions are firmly in shareholders’ best interests and provide a clear path to delivering improved momentum and long-term total returns, this will take time to implement as we continue to work in partnership with the board in delivering value for shareholders.’
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