NextEnergy Solar Fund (NESF) H2 2025 earnings summary

Executive summary

• Portfolio consists of 101 operating solar and battery storage assets, with a $50m investment in a private solar infrastructure fund, supporting diversification and international expansion.

• Achieved 1GW milestone of installed net capacity, powering approximately 254,000 homes annually.

• Delivered 11 consecutive years of fully cash-covered dividends, returning £395m to shareholders, with a maintained dividend target of 8.43p per share for FY26.

• Board is actively exploring all strategic options to enhance shareholder value, including capital recycling, share buybacks, and potential corporate transactions.

• Share price trades at a 27% discount to NAV, reflecting sector-wide trends, but offers a 12% yield, among the highest in the FTSE 350.

Financial highlights

• Gross asset value stands at £1,061m as of 31 March 2025, with NAV per share at 95.1p, down from 104.7p year-over-year.

• Portfolio generated £73.2m in cash income, with a 1.1x cash dividend cover.

• Dividend yield stands at approximately 12%, fully covered by earnings.

• Total gearing (including preference shares) is 48.4%; 70% of debt is fixed rate, providing interest rate stability.

• £59.5m debt reduction achieved, including £46.8m in short-term facilities and £12.7m in long-term debt.

Outlook and guidance

• Dividend target of 8.43p per share maintained for FY26, with forecast cover of 1.1–1.3x post-debt amortization.

• Optimism for long-term growth in UK solar and storage, supported by government plans to triple solar capacity and increase storage fivefold by 2030.

• Clean Power 2030 plan targets 50GW solar and 23-27GW battery storage by 2030, up from 17.8GW and 4-5GW currently.

• Ongoing focus on discount management, capital recycling, and portfolio optimisation to drive NAV growth.

• Anticipated lower interest rates and regulatory reforms expected to benefit infrastructure valuations.