Consisting of:
New Energy Solar Limited
ACN 609 396 983
New Energy Solar Fund
ARSN 609 154 298
ANNUAL REPORT
31 December 2019
Renewable energy.
Sustainable investments.
N E W E N E R G Y S O L A R
Annual Report
CONTENTS
Chairmans’ Letter ........................................................................................ i
Business Highlights ................................................................................. vii
Investment Manager’s Report ................................................................. xii
Corporate Governance Statement .............................................................. 1
Directors’ Report ....................................................................................... 12
Auditor’s Independence Declaration ....................................................... 29
Financial Statements................................................................................. 31
Statement of Profit or Loss and Other Comprehensive Income ............ 32
Statement of Financial Position ............................................................... 33
Statement of Changes in Equity ............................................................... 34
Statement of Cash Flows ........................................................................... 37
Notes to the Financial Statements ............................................................ 39
Directors’ Declaration ............................................................................... 87
Independent Auditor’s Report .................................................................. 88
Stock Exchange Information .................................................................... 92
Additional Disclosures .............................................................................. 95
Directory .................................................................................................... 97
Chairmans’ Letter
NC-31 south side aerial
view – March 2017
NC-47 aerial view – June 2017
i
Chairmans’ Letter
FOR THE YE AR ENDED 31 DECEMBER 2019
On behalf of New Energy Solar Limited and Walsh & Company Investments Limited (Responsible Entity
or Walsh & Company), it is our pleasure to present the Annual Report for New Energy Solar1 (NEW or the
Business) for the year ended 31 December 2019.
During the year to 31 December 2019 NEW’s portfolio became fully operational. From the initial public
offering (IPO) of the Business at the end of 2017, NEW now has 16 utility-scale solar plants operating in the
United States and Australia (the Portfolio). Accordingly, NEW begins 2020 with a 772 megawatt (MWDC)
Portfolio expected to generate over 1.5 terawatt hours (TWh) in the next 12 months. NEW is well-positioned
in the transition to renewable energy technology and supportive of increasing awareness of the impacts of
climate change through its operations while delivering stable returns to investors.
Key milestones achieved by NEW during 2019 included:
•
•
•
•
•
•
•
Successfully completing three solar plants and increasing the Portfolio’s generation capacity by 70%.
Generating over 1TWh2 of renewable power, equivalent to displacing 692,000 tonnes of CO23
Announcing distributions of 7.9 cents per Stapled Security for the 12-month period, representing a
distribution yield of 5.8%4.
Growing investor distributions, distributing more than $27.6 million to investors over the year.
Generating an ‘environmental dividend’ equivalent to a reduction in CO2 emissions of 1.68 kilograms of
CO2 per Stapled Security for the year5.
Signing a long-term corporate power purchase agreement (PPA) with Kellogg’s for the majority of
remaining uncontracted electricity generated at the Beryl solar plant. For the year ended 31 December
2019, 99% of NEW’s revenue was earned through long-term PPAs with investment grade counterparties.
Reducing NEW’s Base Asset Management Fee by 7.5 basis points to recognise the economies of scale
available to NEW’s Investment Manager after the successful launch of US Solar Fund, a US$200 million
solar investment vehicle listed on the London Stock Exchange in April 2019.
•
Exploring an asset sale process to reinforce the net asset value of the Portfolio.
1. New Energy Solar refers to the stapled entity comprised of ordinary shares in New Energy Solar Limited (Company) and units in the
New Energy Solar Fund (Stapled Security).
2. Generation accounts for solar plants on a 100% ownership basis. NEW’s proportionate share of generation was 874 GWh.
3. Calculated using the United States Environmental Protection Agency’s “Avoided Emissions and Generation Tool”, data from the
Australian Department of the Environment and Energy.
4. Based upon the closing NEW Stapled Security price of $1.36 on 31 December 2019.
5. Calculated using the United States Environmental Protection Agency’s “Avoided Emissions and Generation Tool”, data from the
Australian Department of the Environment and Energy, NEW’s proportional interest in each plant, and 351,059,886 securities
outstanding as at 31 December 2019.
ii
NEW ENERGY SOLARAnnual Report FULLY OPERATIONAL PORTFOLIO
NEW’s operating portfolio increased to 16 plants during the year ended 31 December 2019, representing
772MWDC of generation capacity. This compares to the operating portfolio at 31 December 2018, which
comprised 13 plants representing 454MWDC of generation capacity. During the year, the Business developed
the Portfolio through:
•
•
•
•
the commissioning of the 110.9MWDC Beryl solar plant located in New South Wales (Beryl);
the commissioning of the 7.5MWDC Organ Church solar plant located in North Carolina (Organ Church);
the commissioning of NEW’s final solar plant under construction, the 199.6MWDC Mount Signal 2 solar
plant, located in California (MS2); and
electing not to proceed with the acquisition of six remaining projects totaling 73.8MWDC from Cypress
Creek Renewables (CCR) following delays in achieving permitting for the projects.
We are delighted to have commissioned Beryl, Organ Church, and MS2 over the 12-month period.
The addition of these three plants will grow and diversify NEW’s revenue streams and underpin
investor distributions.
Beryl commenced operations in June 2019, immediately selling a large portion of its electricity and large-
scale generation certificates to the NSW Government’s Sydney Metro Northwest under a long-term PPA. A
month later, Beryl secured a long-term PPA with Kellogg (Aust.) Pty. Ltd for the majority of its uncontracted
electricity generation. With respect to Organ Church, similar to the seven other operating projects in the Rigel
Portfolio, it immediately began selling 100% of its generated electricity to a subsidiary of Duke Energy under
a long-term PPA. Finally, MS2 will sell electricity into the Californian wholesale market at the prevailing
spot price pending the commencement in June 2020 of its 20-year PPA with Southern California Edison. The
revenue generated from Substantial Completion until June 2020 will accrue to NEW.
During the year NEW elected not to proceed to acquire six projects from CCR. These projects were part of an
agreement, dated 5 October 2017, to acquire projects subject to reaching development milestones within a
specified timeframe. Since the original agreement, NEW successfully acquired four alternative projects with
a combined capacity of 491.2MWDC. In accordance with the contract, NEW had not committed funds to the
remaining CCR projects and when they did not meet the development milestones in the timeframe specified,
NEW declined to proceed.
With construction activities complete, the Business looks forward to entering 2020 with a fully operational
portfolio. With the support of investors like yourself, NEW now operates a globally significant solar portfolio
with a portfolio value of $1.3 billion6.
6. Gross asset value as at 31 December 2019 was A$1,271.2 million.
iii
NEW ENERGY SOLARAnnual Report ASSET SALE PROCESS
The NEW share price is currently trading at a significant discount to net tangible asset backing. This is of
great concern to the Boards who are of the view that the share price does not reflect the value of the assets
or the operational performance of NEW. As a first step towards demonstrating the value of the assets and
closing the gap between the share price and net tangible asset valuation, NEW announced in November
2019 that it had commenced an asset sale process for interests in two of its assets. During the process on
20 January 2020, NEW announced that it had been asked by potential acquirors to consider the sale of up
to a 50% interest in NEW’s US and/or Australian portfolio holding companies. Expanding the process to
accommodate these requests meant that any sale transaction would be unlikely to be formalised before the
end of the second quarter of 2020. However, there is no guarantee that the process will result in a larger
portfolio transaction, or in any transaction. Any decision to sell assets will be dependent on it continuing to
be in the best interest of securityholders and there being no material change in market conditions.
ENVIRONMENTAL AND SOCIAL IMPACT
NEW is proud to contribute to better managing the world’s resources for present and future generations
and remains the largest listed Australian owner of solar generation. The Business’ dedication to supporting
sustainable practices is outlined in its second Sustainability Report published in November 2019. The
report details the ways in which NEW contributes to 12 out of the 17 Sustainability Goals set by the United
Nations, primarily through its SolarBuddy partnership, community engagement, industry innovation and
development and investments.
During the 12-month period ended 31 December 2019, the Portfolio generated over 1TWh of electricity7. This
production is equivalent to displacing 692,000 tonnes of CO28 emission, powering 132,000 US and Australian
equivalent homes9, or removing 189,000 cars from the road10.
FINANCIAL RESULTS
Underlying earnings
The operating portfolio performed largely in line with the Investment Manager’s expectations during the 12
months ended 31 December 2019, generating total underlying revenues of US$54.3 million, with earnings
before interest, tax, depreciation and amortisation (EBITDA) of US$40.2 million, of which US$29.5 million
was attributable to NEW. In line with the Investment Entity accounting policy adopted by NEW, these
earnings are not reflected directly in the Statutory Earnings described below. Underlying earnings are in-
stead captured as part of the assessment of fair value of the solar power plants.
7. Generation accounts for solar plants on a 100% ownership basis. NEW’s proportionate share of generation was 874 GWh.
8. Calculated using the United States Environmental Protection Agency’s “Avoided Emissions and Generation Tool”, data from the
Australian Department of the Environment and Energy.
9 Calculated using the US Energy Information Administration (principal agency of the US Federal Statistical System) and the
Australian Energy Regulator.
10. Calculated using data from the US Energy Protection Agency and the Australian Bureau of Statistics.
iv
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
Statutory earnings
During the year ended 31 December 2019, the Business generated total income of $0.4 million, while
operating expenses totalled $5.7 million, and an income tax benefit of $1.1 million arose, resulting in a net
loss after tax of $4.2 million.
Given the large number of US dollar denominated assets, statutory earnings are also influenced by the
movement in the US dollar/Australian dollar exchange rate. During the year ended 31 December 2019 the US
dollar was largely unchanged against the Australian dollar resulting in a small foreign exchange gain of $1.3
million recognised in the total net income.
As at 31 December 2019, the Business had net assets of $529.5 million (31 December 2018: $555.7 million),
representing a net asset value (NAV) of $1.51 per stapled security (31 December 2018: $1.60), a decrease of 9
cents per stapled security from 31 December 2018. The principle movements in the NAV reflect the payment
of distributions throughout the year, and operating costs. To corroborate the Investment Manager’s valuation
assessment, every three years the Business changes the valuer appointed to undertake the six-monthly asset
valuations in order to ensure the process is subject to different market views and perspectives.
The fund paid a 7.9 cent per Stapled Security distribution over this period.
GEARING
NEW targets a long-term gearing level of 50% of gross assets. As at 31 December 2019, NEW’s external ‘look-
through’ gearing11 was 58.3%. With the completion of plant construction, this is expected to represent the
high point of the Business’ gearing. The debt is scheduled to be progressively repaid over time and the long-
term average gearing is expected to stabilise toward the 50% target.
NEW’s weighted average debt maturity of 8.1 years as at 31 December 2019 reflects the long-term contracted
nature of the PPAs underpinning its plants and the diversified nature of its funding base.
11. Gearing = gross debt / gross asset value.
v
BUSINESS OUTLOOK
The outlook for the Business remains strong with the continued price competitiveness of solar energy in
our key markets, the United States of America and Australia. Sustainability was a prevalent theme across
markets during 2019 and NEW is delighted to contribute to the evident shift towards clean energy generation
and investment.
The Business has grown its distribution from 7.75 cents per Stapled Security to 7.90 cents per Stapled Security
for the year ended 31 December 2019.
On behalf of the Boards, we would like to thank you, our securityholders, for your ongoing support of
the Business, and we look forward to continued success. We would also like to thank the Investment
Management team for its significant contribution to the success of NEW during 2019.
Yours faithfully,
STUART NISBETT
Chairman of the Responsible Entity
JEFFREY WHALAN
Chairman of the Company
19 February 2020
vi
Business Highlights
TID array – close up –
September 2017
TID array – September 2017
vii
N E W E N E R G Y S O L A R
Annual Report
Business Highlights
FOR THE YE AR ENDED 31 DECEMBER 2019
KEY MILESTONES
NEW’s Business Objectives:
• To acquire attractive large-scale solar power plants
and associated assets, with contracted cash flows
and creditworthy offtakers.
• To help investors generate financial returns and
positive social impacts through these investments.
Figure 1: New Energy Solar’s key milestones
November
• Establishment of NEW
January
• Initial equity raising completed
March
• Acquisition of NC-31 solar plant
June
• Announced distribution reinvestment plan
• Announced first distribution
December
• A$202m equity raise and listing on the ASX
February
• Committed to acquire 200MWDC Mount Signal 2 plant
• Acquired interest in 125MWDC Boulder Solar I plant
June
• Agreement to acquire 56MWDC Manildra, NEW’s first Australian plant
• NEW & Clean Energy Finance Corporation sign binding agreements
for $50m facility
August
• Construction commences at 200MWDC Mount Signal 2 plant
February
• Completion of construction and commissioning of the eight Rigel
portfolio plants in North Carolina and Oregon
June
• Beryl solar plant commences commercial operations
• Recapitalised existing debt into US$35m senior secured
term loan and credit support
November
• Announcement of proposed asset sales to reinforce portfolio net
asset value
• Release of NEW’s 2019 Sustainability Report
viii
2
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9
New Energy Solar is an award-winning sustainable
investment business focused on investing in large-
scale solar power plants that generate emissions-
free power. As Australia’s first ASX-listed solar
infrastructure business, since its establishment
NEW has acquired a portfolio of 16 solar power
plants, representing a portfolio value of $1.3 billion
and total capacity of 772MWDC. The key events in
New Energy Solar’s history are set out below.
December
• Second equity raising completed
• Acquisition of Stanford solar plant and TID solar plant
May
• NEW establishes permanent US office
• Acquisition of NC-47 solar plant
October
• US debt private placement completed
• Committed to acquire 130MWDC Rigel Portfolio
May
Committed to acquire minority interests in NC-31 and NC-47
July
• Agreement to acquire 111MWDC Beryl plant, NEW’s second
Australian plant
• Issuance of 18.5-year US private placement notes
May
• Announcement of a US$23m senior secured term loan
July
• Beryl solar plant executed its second PPA with Kellogg’s
December
• Commissioning of the Mount Signal 2 solar plant, transitioning to a
fully operational portfolio
NEW
• 2 offices, over 20 staff members
• 772MWDC solar power plant portfolio valued at $1.3bn
BUSINESS ACHIEVEMENTS
To deliver on its objectives, and produce its key investment benefits, the Business has a well-defined investment
strategy and clear criteria on which to measure success. The Business made further progress towards its objectives
during 2019 and looks forward to ongoing success and growth in returns to stapled securityholders.
Table 1: New Energy Solar’s business achievements to date
Global portfolio across
16 solar power plants
Total portfolio capacity of
over 772MWDC
*
Fully operational portfolio
of 16 sites
Capacity-weighted average
PPA term of 15.8 years
Distributions totalling A$67m
to investors since IPO
Generating more than
1,500,000 MWh of
electricity annually12
Displacing an estimated
1,000,000 tonnes of CO2
12,13
Equivalent to removing
277,000 US & Australian
cars from the road 12,14
...or powering 224,000 US
and Australian homes 12,15
12. Estimates utilise the first year of each plant’s electricity production once operational or acquired by the Investment Manager.
Assumes all plants are owned by NEW on a 100% basis.
13. Calculated using the United States Environmental Protection Agency’s “Avoided Emissions and Generation Tool”, data from the
Australian Department of the Environment and Energy.
14. Calculated using the US Energy Information Administration (principal agency of the US Federal Statistical System) and the
Australian Energy Regulator.
15. Calculated using data from the US Energy Protection Agency and the Australian Bureau of Statistics.
ix
NEW ENERGY SOLARAnnual Report
NEW ENERGY SOLAR STRUCTURE
The following diagram is provided to assist with understanding the financial statements set out in this annual
financial report.
Figure 2: New Energy Solar structure
Stapled Securityholders
1 Share
1 Unit
New Energy Solar
Manager Pty Limited
(Investment Manager)
New Energy Solar
Limited (Company)
New Energy
Solar
(Fund)
New Energy Solar
Fund (Trust)
Walsh & Company
Investments Limited
(Responsible Entity)
Equity Investment
New Energy Solar Australia
HoldCo #1 Pty Ltd
Distributions
Underlying Subsidiaries1
Australia
United States of America
Dividends
Equity
Investment
Interest
Loan
New Energy Solar US Corp
Distributions
Underlying Subsidiaries1
1. Underlying plants are held by subsidiaries via various structures including trusts and partnerships.
The financial statements of both entities in the stapled structure are shown alongside one another as permitted by
ASIC Corporations (Stapled Group Reports) Instrument 2015/838. The column headed “Fund” has been shown
to reflect the combined financial statements of the Company and its subsidiaries and the Trust and its subsidiaries,
together representing the Fund. It reflects the stapled securityholders’ combined interest in the Company and the
Trust by combining the Company and the Trust financial information after eliminating transactions and balances
between the Company and the Trust.
The Company and the Trust invest in solar plants via the Company’s wholly owned subsidiaries New Energy Solar
US Corp (NES US Corp) and New Energy Solar Australia HoldCo #1 Pty Limited (NESAH1). NES US Corp is funded
by a combination of equity from the Company and a loan from the Trust, both of which are denominated in US
dollars. NESAH1 is funded by equity and a loan from the Company.
As the Company and the Trust are considered to meet the definition of an ‘Investment Entity’ (refer ‘Summary of
significant accounting policies’ in the annual financial report), NES US Corp and NESAH1 are not consolidated and
are required to be held at fair value in the Company’s financial statements. Furthermore, as the combined accounts
reflect the net investment of the Company and the Trust in the underlying subsidiaries via equity investment and
loans receivable, the loans receivable are also shown at fair value. The total investment (equity investment and loans
receivable together) in NES US Corp and NESAH1 is presented on the statement of financial position as “financial
assets held at fair value through profit or loss”.
x
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
The impact of this “Investment Entity” classification on the presentation of the financial statements is that the main
operating revenues of the Fund consist of either dividends from NES US Corp and NESAH1, fair value movements
in the value of the Company’s equity holding in NES US Corp and NESAH1 and the Trust’s loan receivable to NES
US Corp, and interest income on the loan from the Trust to NES US Corp. Underlying subsidiaries net operating
income and other expenses are ultimately reflected through distribution income or the fair value movement of
financial assets in the profit or loss statement.
The underlying earnings of solar plants, being revenues from the sale of energy under the PPA less operating
expenses, are distributed on a periodic basis from the underlying plants through to NES US Corp and NESAH1, and
underpin the ability to pay interest on the loan to the Trust and dividends to the Company as noted above. These
funds ultimately underpin the Fund’s distributions/dividends to securityholders.
Additionally, as the Company’s equity investment in NES US Corp and the Trust loan to NES US Corp are
denominated in US dollars, the Fund is also exposed to valuation movements associated with foreign exchange
rate movements.
xi
NEW ENERGY SOLARAnnual Report Investment Manager’s Report
FOR THE YE AR ENDED 31 DECEMBER 2019
Investment Manager’s
Report
NC-47 aerial view –
June 2017
xii
NC-31 site inspection – October 2017
NEW ENERGY SOLARAnnual Report
Investment Manager’s Report
FOR THE YE AR ENDED 31 DECEMBER 2019
OVERVIEW OF THE NEW PORTFOLIO
INTERESTS IN 16 OPERATING PLANTS WITH 772MWDC CAPACITY AS AT
31 DECEMBER 2019
NEW’s portfolio as at 31 December 2019 comprised 16 operating solar power plants in the US and Australia, which
are described below.
Figure 3: NEW portfolio summary: Over 772MWDC operating solar plants across two continents16
16. Includes plants that are wholly or partly owned by NEW.
xiii
NEW ENERGY SOLARAnnual Report Figure 4: NEW portfolio composition (772MWDC) as at 31 December 201917,18
2%
16%
Rigel
(OR)
2%
Boulder Solar I
16%
Beryl
14%
22%
Manildra
7%
17%
Rigel
(NC)
5% NC-31
6%
NC-47
6%
Stanford
9%
TID
9%
Oregon
North Carolina
California
NSW
Nevada
Mount Signal 2
26%
43%
s
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14
12
10
8
6
4
2
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16
13
4
Listing – Nov-2017
FY18
FY19
NEW’S OPERATING PORTFOLIO PERFORMANCE
INTERESTS IN 16 PLANTS WITH 772MWDC CAPACITY AS AT 31 DECEMBER 2019
Figure 5: Operating Portfolio generation19
h
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G
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P
100
80
60
40
20
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2,500
2,000
1,500
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500
-
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NC-31
TID
Beryl
Cumulative Generation - Expected
NC-47
Boulder Solar I
Rigel Portfolio
Stanford
Manildra
Cumulative Generation - Actual
NEW’s portfolio progressed to become fully operational as at 31 December 2019. The Mount Signal 2 solar plant
was commissioned in late December and is expected to increase the Portfolio’s generation to over 1.5TWh over the
next 12 months.
17. Includes plants that are wholly or partly owned by NEW and accounts for capacity on a 100% ownership basis.
18. Rigel portfolio refers to the eight solar plants – Arthur, Bonanza, Church Road, County Home, Hanover, Heedeh, Organ Church,
and Pendleton – that NEW acquired from CCR.
19. Production included for all solar power plants on a NEW proportionate interest basis.
xiv
NEW ENERGY SOLARAnnual Report
OPERATING PORTFOLIO PERFORMANCE
Table 2 shows the underlying generation and financial performance of the operating projects in NEW’s Portfolio
for the 12 months ended 31 December 2019, which have increased from prior periods due to the commissioning
of Beryl and Organ Church. Mount Signal 2 was commissioned in late December 2019 and is expected to increase
generation and profits from the next period onwards.
Table 2: NEW portfolio
PLANT CAPACITY
(MWDC)
2019
GENERATION
(GWH)
PPA
TERM
REMAINING
(YEARS)
PPA
EXPIRY
DATE
NEW
PROPORTIONATE
SHARE21
GROSS 20
43.2
47.6
67.4
67.4
124.8
55.9
110.9
55.6
199.6
772.4
53.0
70.6
150.2
149.8
271.0
108.8
133.8
74.7
-
1,011.9
53.0
70.6
150.2
149.8
132.8
108.8
133.8
74.7
-
873.7
7.2
7.4
22.0
17.2
17.0
11.022
13.123
13.2
20.0
15.825
2027
2027
2041
2037
2036
2030
2034
2033
2040
PLANT
NC-31
NC-47
Stanford
TID
Boulder Solar 1
Manildra
Beryl
Rigel Portfolio
Mount Signal 2
Total24
20. Generation calculated on a 100% ownership basis.
21. Generation attributed to NEW’s proportionate interest in each plant.
22. Assumes the option to extend the Manildra PPA is exercised.
23. Weighted average of the PPA with Sydney Metro for 69% of Beryl’s generation and the PPA with Kellogg’s for 29% of Beryl’s
generation. Assumes that Kellogg’s exercises their PPA extension option and the option expires on 31 December 2029.
24. Totals may not be additive due to rounding.
25. Total average PPA term remaining is the capacity weighted term.
xv
NEW ENERGY SOLARAnnual Report The attractive margins and profit generating characteristics of the Portfolio are illustrated by its underlying
earnings shown in Table 3 below.
Table 3: Portfolio underlying financial performance for the year to 31 December 2019. Comparison to
prior periods26
YEAR ENDED
31 DECEMBER 2019
YEAR ENDED
31 DECEMBER 2018
YEAR ENDED
31 DECEMBER 2017
Revenue
US$54.3m
US$42.0m
US$21.7m
Less: Operating expenses
(US$14.1m)
(US$9.4m)
(US$4.4m)
EBITDA
US$40.2m
US$32.6m
US$17.3m
Less: Distributions to tax equity investors
and EBITDA attributable to co-investors
(US$10.7m)
(US$10.3m)
(US$5.5m)
EBITDA attributable to NEW
US$29.5m
US$22.3m
US$11.9m
The Business grew its underlying revenues by US$12.3 million (29%) and EBITDA attributable to it by
US$7.2 million (32%) during the year ended 31 December 2019 compared to the prior year.
While there was variability at an individual solar plant level due to major weather events and commissioning phases,
generation and availability of the Portfolio as a whole was consistent with the Investment Manager’s expectations
during the year. Production during the period was 1,012 gigawatt hours (GWh), compared to 768GWh for the prior
year27. This result represented an increase in generation of 244GWh or 32% from the prior corresponding period,
with the increase attributable to:
• a full period of operations from Manildra and the majority of the Rigel Portfolio.
• commencement of operations of Beryl and Organ Church during the period.
The additional plants have materially increased the positive environmental impact of the NEW Portfolio, with
electricity generation from the Operating Portfolio during the year ended 31 December 2019:
• displacing an estimated 692,000 tonnes of carbon emissions28.
•
removing nearly 189,000 US and Australian equivalent cars from the road29.
• powering almost 132,000 US and Australian equivalent houses30.
26. Underlying earnings calculated based on unaudited financial statements and management reports. Manildra and Beryl underlying
earnings converted from AUD to USD at FX rate of 1AUD:0.7021USD.
27. Generation calculated on a 100% ownership basis.
28. US C02 emissions displacement is calculated using data from the US Environmental Protection Agency’s “Avoid Emissions and
generation Tool” (AVERT). Australian C02 emissions displacement is calculated using data from the Australian Government –
Department of the Environment and Energy.
29. Calculated using data from the US Energy Information Administration (principal agency of the US Federal Statistical System) and
the Australian Energy Regulator.
30. Calculated using data from the US Environmental Protection Agency and the Australian Bureau of Statistics.
xvi
NEW ENERGY SOLARAnnual Report INVESTMENTS & GEARING
NE T A SSE T VALUE
Over the 12-month period to 31 December 2019, NEW’s NAV declined A$26.2 million, equivalent to 7 cents per
stapled security. When added to the 2 cent dilutionary impact of the issuance of stapled securities through the
dividend reinvestment plan, the NAV per stapled security decreased 9 cents per stapled security. The following
movements, in aggregate, were the main factors contributing to the change are listed below (and summarised in
Figures 6 and 7):
• A A$0.8 million decline in the fair value of NEW’s solar power plants. To corroborate the valuation assessment
of the Investment Manager, the Business has a policy of changing asset valuers every three years to ensure the
valuations are subject to different market views and perspectives. As at 31 December 2019, Duff and Phelps, a
multinational consulting firm based in New York, performed the valuations which were subsequently adopted by
the Investment Manager and, while certain elements of the methodology have changed, the overall values are
broadly consistent with those reported at the end of the twelve-month period to 31 December 2018.
• As we had flagged at the June 2019 results presentation, recognising the long-term and stable returns from
equity, typical of the highly contracted revenues and stable cashflows characterising infrastructure assets,
could be better achieved by discounting using after tax cost of equity rather than pre-tax weighted average
cost of capital (WACC). Duff and Phelps has endorsed this change and accordingly, the principle difference in
the discounted cashflow (DCF) methodology applied this period is the use of the cost of equity in the place of
a WACC. In addition to the change in discounting approach, a number of other changes to assumptions were
adopted which are set out in Figure 7 and include:
– The change in discounting methodology increased the fair value of solar plants by $22.3 million;
– The use of lower merchant power price forecasts in the United States for the periods beyond the end of
each asset’s power purchase agreement (PPA) decreased the fair value of solar plants by $49.4 million;
– The recognition of a lower cost of equity reflecting the continued decline in long-term bond rates and a
reduction in asset specific risk resulting from the completion of construction on Beryl and on Mount Signal 2
increased the fair value of solar power plants by $37.6 million; and
– The fair value of solar power plants was reduced by $17.7 million due to a change in the fair market value of
debt. Now a cost of equity discounting approach has been adopted this should have less influence on fair
market values going forward.
• An increase of A$74.1 million reflecting the completion of the acquisition of the Beryl solar power plant and the
US$15 million stake in US Solar Fund plc (USF);
• An increase of A$1.4 million reflecting mark to market revaluation gains and foreign exchange gains attributable
to the investment in USF;
• A decline of A$19.4 million reflecting the cash distributions to investors net of distribution reinvestment;
• A decline of A$14.6 million comprising the operating costs of the Business, including fees paid to the Investment
Manager and legal and other costs;
• A decline of A$2.2 million expended to undertake buybacks in the first half of the 2019 year; and
• A decline of A$64.7 million in working capital movements reflecting the use of cash and financing to
complete the acquisition of the Beryl solar plant and the movement of funds from the assets to the separate
holding companies.
xvii
NEW ENERGY SOLARAnnual Report Table 4: NEW NAV as at 31 December 201931
ASSET
US PLANTS
Stanford
TID
NC-31
NC-47
Boulder Solar I
Rigel Portfolio
Mount Signal 2
Subtotal (US$)
EQUITY
DEBT (FAIR
VALUE)
DEBT
(OUTSTANDING
BALANCE)
ENTERPRISE
VALUE32
US$73.0m
US$66.0m
US$62.4m
US$139.0m
US$68.7m
US$25.3m
US$25.1m
US$94.0m
US$42.0m
US$26.0m
US$24.9m
US$23.8m
US$22.7m
US$22.3m
US$66.9m
US$49.8m
US$100.5m
US$238.4m
US$209.3m
US$338.9m
US$310.2m
US$378.4m
US$341.8m
US$688.6m
Subtotal (A$ equivalent)
A$441.8m
A$538.9m
A$486.8m
A$980.8m
AUS PLANTS
Manildra33
Beryl34
Subtotal
Subtotal All Plants
US Solar Fund Stake
Corporate Debt
Working Capital
Total (Net Asset Value)
A$67.3m
A$75.2m
A$142.5m
A$584.4m
A$22.4m
(A$59.5m)
(A$17.7m)
A$529.5m
A$77.1m
A$139.6m
A$216.7m
A$755.6m
-
A$70.7m
A$124.6m
A$195.3m
A$144.4m
A$214.8m
A$359.2m
A$682.1m
A$1,340.0m
-
A$22.4m
A$59.5m
A$59.5m
-
-
-
(A$17.7m)
A$815.1m
A$741.7m
A$1,344.7m
Refer to Note 10 of the Financial statements for further information on NEW’s financial assets held at fair value
through profit or loss.
31. US$ figures converted to A$ at US$:A$ exchange rate of 0.7021 as at 31 December 2019. Figures may not add due to rounding.
32. Enterprise Value = Equity + Debt (Fair Value).
33. Manildra equity balance includes working capital residing in project entities of A$8.8 million.
34. Beryl equity balance includes working capital residing in project entities of A$6.1 million.
xviii
NEW ENERGY SOLARAnnual Report Figure 6: Change in NAV since 31 December 2018
74.1
1.4
(19.4)
(14.6)
(2.2)
m
$
A
640
620
600
580
560
540
520
500
555.7
(0.8)
529.5
(64.7)
Opening
NAV (31
Dec 2018)
Change in
Fair Value
– Plants35
Acquisitions36
USF
revaluation37
Cash
distributions
to investors
Operating
costs38
Buybacks
Cash/
working
capital39
Closing
NAV (31
Dec 2019)
Figure 7: Change in Fair Value of Solar Plants since 31 December 2018
585.2
1.9
22.3
(17.7)
(0.8)
13.1
(12.0)
m
$
A
640
620
600
580
560
540
520
500
37.6
584.4
3.4
(49.4)
31 Dec
2018
Valuation40
FX gain/
(loss)41
FV debt
movement42
Method-
ology
change
Valuation
roll
forward
Change in
operating
assumptions
Updated
merchant
curve
Updated
debt rate
Updated
discount
rates
31 Dec
2019
Valuation
35. Change in fair value attributable to operating solar plants over the period, including the change in fair value of debt
attributable to outstanding debt facilities.
36. Includes the portion of Beryl that was funded during the year ending 31 December 2019 and the US$15 million investment
into the US Solar Fund plc, also managed by the Investment Manager, in April 2019.
37. Increase in the value of the US Solar Fund plc.
38. Operating costs of the fund including Investment Manager fee, legal and other advisor fees. Operating costs do not include
operating expenditure of the solar power plants.
39. Working capital movements include receipt of distributions and excess debt financing proceeds from solar power plants and
interest expense of corporate debt.
40. Includes purchase price of Beryl A$53.1 million.
41. Foreign exchange gains on the A$ value of operating plants over the period, and fair value loss of forward foreign
currency derivatives.
42. Change in fair value of debt attributable to outstanding debt facilities over the period.
xix
NEW ENERGY SOLARAnnual Report GE ARING
NEW had gross external look through debt outstanding of $741.7 million as at 31 December 2019, equivalent to
a gearing ratio of 58.3%43 as at 31 December 2019 (NEW has a target long-term gearing ratio of 50% of gross
assets). With the completion of construction, this is expected to represent the high point of the Business’ gearing. It
is scheduled to be progressively repaid over time – bringing long-term average gearing below 50%.
NEW’s weighted average debt maturity of 8.1 years as at 31 December 2019 reflects the long-term contracted
nature of the PPA underpinning its solar power plants and the diversified sources from which it has sourced its
debt funding.
NEW’s group debt facilities outstanding as at 31 December 2019 are set out in Table 5 below:
Table 5: NEW debt facilities outstanding as at 31 December 2019
FACILITY
North Carolina Facility
US Private Placement 1
TYPE
Loan
Bond
FACILITY SIZE
DRAWN
SECURITY
US$27.3m
US$25.1m NC-31 & NC-47
US$62.5m
US$62.4m Stanford & TID
Mount Signal 2 Facility44
Construction loan
US$209.3m
US$209.3m Mount Signal 2
Loan
Bond
Loan
Loan
Loan
Loan
US Revolving Credit Facility
US Private Placement 2
Rigel Facility
US Facilities Subtotal
US Facilities Subtotal
(A$ equivalent)45
Manildra Facility
Beryl Facility
CEFC Facility
Australian Facilities Subtotal
Total Debt
Gross assets
Gross Look Through Gearing (%)
US$45.0m
US$41.8m
Corporate
US$22.7m
US$22.7m Boulder Solar I
US$22.6m
US$22.3m
Rigel plants
US$389.4m
US$383.6m
A$554.6m
A$546.4m
A$71.5m
A$70.7m
Manildra
A$125.4m
A$124.6m
Beryl
A$50.0m
-
Corporate
A$246.9m
A$195.3m
A$801.5m
A$741.7m
A$1,271.2m
58.3%
Refer to Note 10 of the financial statements for further information on NEW’s group debt facilities.
43. Gearing = total debt / Gross Asset Value.
44. Excludes US$8.5 million Mount Signal 2 revolving loan facility which was undrawn as at 31 December 2019. Facility excluded as
interest payments are capitalising over the construction period.
45. US$ values converted to A$ using 31 December 2019 FX rate of 1AUD:0.7021USD.
xx
NEW ENERGY SOLARAnnual Report NEW ENERGY SOLAR’S INVESTMENTS
OPER ATING SOL AR POWER PL ANTS – UNITED STATES
Stanford Solar Power Plant (Stanford)
Stanford Aerial View – October 2017
Stanford Aerial View – October 2017
Turlock Irrigation District Power Plant (TID)
TID Aerial View – October 2017
Location
Generating
Capacity
Commercial
Operation Date
(COD)
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
Rosamond, Kern County, California, USA
67.4 MWDC/54 MWAC
December 2016
25 years from COD
Stanford University
SunPower Corporation, Systems
Stanford is located on a 242-acre leased site in
Rosamond, Kern County, California, approximately
120 kilometres north of Los Angeles. Stanford
is located next to the TID solar power plant and
commenced operations in December 2016. NEW
acquired its substantial majority interest in Stanford
in December 2016.
Location
Generating Capacity 67.4 MWDC/54 MWAC
COD
December 2016
Rosamond, Kern County, California, USA
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
20 years from COD
Turlock Irrigation District
SunPower Corporation, Systems
TID is located on a 265-acre leased site in
Rosamond, Kern County, California, approximately
120 kilometres north of Los Angeles. TID is located
next to Stanford solar power plant and commenced
operations in December 2016. NEW acquired its
substantial majority interest in TID in December
2016.
TID Aerial View – October 2017
xxi
NEW ENERGY SOLARAnnual Report North Carolina 43 MWDC Solar Power Plant (NC-31)
Location
Generating Capacity 43.2 MWDC/34.2 MWAC
COD
March 2017
Bladenboro, Bladen County, North Carolina, USA
NC-31 Aerial View – May 2017
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
10 years from COD
Duke Energy Progress, Inc.
Miller Bros. Solar LLC
NC-31 is located on a 196-acre leased site in
Bladenboro, Bladen County, North Carolina,
approximately 232 kilometres east of Charlotte, North
Carolina. The plant commenced commercial operations
in March 2017. NEW committed to acquiring a majority
interest in NC-31 in August 2016 and acquired its
interest in the plant in March 2017. NEW acquired the
minority interests in NC-31 in July 2018.
NC-31 Aerial View – October 2017`
North Carolina 48 MWDC Solar Power Plant (NC-47)
Location
Generating Capacity 47.6 MWDC/33.8 MWAC
COD
May 2017
Maxton, Robeson County, North Carolina, USA
PPA Term
10 years from COD
PPA Offtaker
Duke Energy Progress, Inc.
O&M Service
Provider
DEPCOM Power, Inc.
NC-47 Aerial View – May 2017
Asset Description
NC-47 is located on a 260-acre leased site in Maxton,
Robeson County, North Carolina, approximately 166
kilometres east of Charlotte. NC-47 commenced
commercial operations in May 2017. NEW committed
to acquiring a majority interest in the plant in October
2016 and acquired its interest in May 2017. NEW
acquired the minority interests in NC-47 in July 2018.
NC-47 Aerial View – May 2017
xxii
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
Location
Generating Capacity 124.8MWDC / 100MWAC
Boulder City, Nevada, USA
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
December 2016
20 years from 1 January 2017
NV Energy (owned by Berkshire Hathaway)
SunPower Corporation, Systems
Boulder Solar 1 is located on a 542-acre leased site in
Boulder City, Clark County, Nevada, approximately 50
kilometres south of Las Vegas. The plant commenced
commercial operations in December 2016. NEW
acquired a 49% minority interest in Boulder Solar 1 in
February 2018.
Boulder Solar 1 Power Plant (Boulder Solar 1)
Boulder Solar 1 Ground View – January 2018
Boulder Solar 1 Aerial View – January 2018
Arthur Solar Power Plant (Arthur)
Location
Generating Capacity 7.5MWDC / 5.0MWAC
COD
July 2018
Tabor City, North Carolina, USA
Arthur Ground View – August 2018
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
15 years from COD
Duke Energy Progress, Inc.
Cypress Creek Renewables O&M (CCR O&M)
Arthur is located on a 35-acre leased site in Tabor
City, North Carolina. The plant commenced
commercial operations in July 2018.
Arthur Ground View – August 2018
xxiii
N E W E N E R G Y S O L A R
Annual Report
Bonanza Solar Power Plant (Bonanza)
Bonanza Aerial View – April 2019
Location
Bonanza, Oregon, USA
Generating Capacity 6.8MWDC / 4.8 MWAC
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
December 2018
12.9 years from COD
PacifiCorp
CCR O&M
Bonanza is located on a 57-acre leased site located
30 kilometres east of Klamath Falls, Oregon.
The plant commenced commercial operations in
December 2018.
Location
Generating Capacity 5.2MWDC / 5.0MWAC
Angier, North Carolina, USA
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
August 2018
15 years from COD
Duke Energy Progress, Inc.
CCR O&M
Church Road is located on a 21-acre leased site
in Angier, North Carolina. The plant commenced
commercial operations in August 2018.
Bonanza Aerial View – April 2019
Church Road Solar Power Plant (Church Road)
Church Road Ground View – May 2018
NC-47 Aerial View – May 2017
Church Road Ground View – May 2018
xxiv
N E W E N E R G Y S O L A R
Annual Report
County Home Solar Power Plant (County Home)
Location
Generating Capacity 7.5MWDC / 5.0 MWAC
COD
September 2018
Rockingham, North Carolina, USA
County Home Ground View – August 2018
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
15 years from COD
Duke Energy Progress, Inc.
CCR O&M
County Home is located on a 30-acre leased site
located 5 kilometres southeast of Rockingham,
North Carolina. The plant commenced commercial
operations in September 2018.
County Home Ground View – August 2018
TID Aerial View – October 2017
Hanover Solar Power Plant (Hanover)
Hanover Ground View – April 2018
Location
Generating Capacity 7.5MWDC / 5.0MWAC
Maysville, North Carolina, USA
COD
PPA Term
April 2018
15 years from COD
PPA Offtaker
Duke Energy Progress, Inc.
O&M Service
Provider
Asset Description
CCR O&M
Hanover is located on a 45-acre leased site in
Maysville, North Carolina. The plant commenced
commercial operations in April 2018
Hanover Ground View – April 2018
xxv
N E W E N E R G Y S O L A R
Annual Report
Heedeh Solar Power Plant (Heedeh)
Heedeh Ground View – August 2018
Location
Generating Capacity 5.4MWDC / 4.5MWAC
Delco, North Carolina, USA
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
July 2018
15 years from COD
Duke Energy Progress, Inc.
CCR O&M
Heedeh is located on a 21-acre leased site in Delco,
North Carolina. The plant commenced commercial
operations in July 2018.
Location
Generating Capacity 7.5MWDC / 5.0 MWAC
Organ Church, North Carolina, USA
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
February 2019
15.0 years from COD
Duke Energy Carolinas
CCR O&M
Organ Church is located a 45-acre leased site
located 15 kilometres northwest of Kannapolis,
North Carolina. The plant commenced commercial
operations in February 2019.
Heedeh Ground View – August 2018
Organ Church Solar Power Plant (Organ Church)
Organ Church Ground View – August 2018
Organ Church Ground View – August 2018
xxvi
N E W E N E R G Y S O L A R
Annual Report
Pendleton Solar Power Plant (Pendleton)
Pendleton Ground View – October 2018
Location
Generating
Capacity
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
Pendleton, Oregon, USA
8.4MWDC / 6.0 MWAC
September 2018
13.2 years from COD
PacifiCorp
CCR O&M
Pendleton is located on a 44-acre leased site
5 kilometres west of Pendleton, Oregon. The
plant commenced commercial operations in
September 2018.
Pendleton Ground View – October 2018
Mount Signal 2 Solar Power Plant (MS2)
MS2 Aerial View – December 2019
Location
Generating
Capacity
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Imperial Valley, California, USA
199.6MWDC / 153.5MWAC
December 2019
20 years from June 2020
Southern California Edison
First Solar
Asset Description MS2 is located on a 1,314 acre leased site in the
Imperial Valley, California. The plant commenced
commercial operations in December 2019. MS2
will sell electricity to the wholesale market until the
commencement of its 20-year PPA in June 2020.
MS2 Aerial View – December 2019
xxvii
OPER ATING SOL AR POWER PL ANTS – AUSTR ALIA
Manildra Solar Power Plant (Manildra)
Manildra Aerial View – July 2018
Manildra Ground View – July 2018
Beryl Solar Power Plant (Beryl)
Beryl Ground View – February 2019
Location
Generating
Capacity
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Manildra, New South Wales, Australia
55.9MWDC / 46.7MWAC
December 2018
10 years from COD, with an option to extend
to 2030
EnergyAustralia
First Solar
Asset Description Manildra is located on a 120-hectare leased site 1.5
kilometres north east of Manildra, NSW. The plant
commenced commercial operations in December
2018. NEW announced its agreement to acquire
Manildra in June 2018.
Location
Generating
Capacity
COD
PPA Term
PPA Offtaker
O&M Service
Provider
Asset Description
Beryl, New South Wales, Australia
110.9MWDC / 87MWAC
June 2019
15 (Sydney Metro)46
c. 7.5 years with an option to extend to
December 2029 (Kellogg’s)47
Sydney Metro (69% of generation)
Kellogg’s (29% of generation)
First Solar Australia
Beryl is located in Central West NSW,
approximately 5 kilometres west of Gulgong. The
plant commenced commercial operations in June
2019. NEW announced its agreement to acquire
Beryl in June 2018.
Beryl Aerial View – March 2019
46. The Sydney Metro PPA represents approximately 69% of Beryl’s generation during the 15-year term.
47. The Kellogg’s PPA represents approximately 29% of Beryl’s generation during the ~7.5-year initial term. Kellogg’s has an
option to extend the term for three years until 31 December 2029.
xxviii
N E W E N E R G Y S O L A R
Annual Report
INFORMATION ON THE INVESTMENT MANAGER
SENIOR MANAGEMENT TE AM
The senior members of the Investment Manager who are responsible for the management of New Energy Solar are
set out below.
Each of the members of the senior management team are employed by a member of the Evans Dixon Group and
provide services for the benefit of the Business. Further information on the Investment Manager team is provided
at www.newenergysolar.com.au
JOHN MARTIN BEcon (USYD)
CEO, NEW ENERGY SOLAR
John was appointed as New Energy Solar’s Managing Director and CEO in May 2017. John
brings a wealth of experience and capability to the role after more than two decades in
corporate advisory and investment banking with a focus on the infrastructure, energy and
utility sectors.
John previously led the Infrastructure and Utilities business at corporate advisory firm
Aquasia where he advised on more than $10 billion of infrastructure and utility M&A
and financing transactions. Prior to this John held various investment bank management
positions including the Head of National Australia Bank Advisory and the Joint Head of Credit Markets and Head of
Structured Finance at RBS/ABN AMRO.
During his time at ABN AMRO, John managed the Infrastructure Capital business which was viewed as a market
leader in the development and financing of infrastructure and utility projects in Australia. John started his career
as an economist with the Reserve Bank of Australia and then worked in various treasury and risk management
positions, before moving to PwC as the partner responsible for financial risk management. At PwC John advised
some of Australia’s largest corporations on the management and valuation of currency, interest rate and commodity
exposures – with a focus on advising energy companies trading in the Australian National Electricity Market.
John has a Bachelor of Economics (Honours) from the University of Sydney. John is a member of the Advisory
Board for the Cordish Dixon Private Equity Fund III (ASX:CD3), and is a past board member of Infrastructure
Partnerships Australia.
xxix
N E W E N E R G Y S O L A R
Annual Report
LIAM THOMAS BAgribus (Curtin), MSc (Curtin), MBA (MELB)
CHIEF INVESTMENT OFFICER
Liam joined New Energy Solar in March 2016 to lead transaction origination and
execution activities. Liam has over 14 years’ experience in M&A, corporate and business
development, projects, and commercial management in the energy, infrastructure, mining
and agribusiness sectors.
Prior to joining the Investment Manager, Liam was a senior member of the International
Development team at Origin Energy focused on the investment and development strategy
for utility scale solar, hydro, and geothermal projects in Latin America and South-East
Asia. Liam’s previous roles have included General Manager of Commercial Development at Aurizon, Commercial
Manager for the Northwest Infrastructure iron ore port joint venture, and Project Manager at Orica, focusing on
large-scale mining-related infrastructure and manufacturing projects. Earlier in Liam’s career, he worked in the
agricultural commodities sector with AWB Limited.
Liam has a Bachelor of Agribusiness and Master of Science from Curtin University, and a Master of Business
Administration from the University of Melbourne.
MICHAEL VAN DER VLIES BAcc (UTS), CA
CHIEF FINANCIAL OFFICER
Michael is responsible for the finance activities of the Investment Manager, including
business planning, budgeting, forecasting, financial reporting, taxation, treasury, balance
sheet management and risk management.
Michael has over 16 years’ experience working in Finance, Infrastructure and Investment
Management. Michael previously led a team responsible for the financial reporting, fund
administration, regulatory and compliance reporting globally across AMP Capital’s $15bn
Infrastructure Equity funds. Prior to this, Michael held various finance roles including
General Manager of Finance and Group Financial Controller at BAI Communications, a Communications
Infrastructure business owned by CPPIB and Senior Manager at Macquarie. While at Macquarie, Michael worked
across a range of listed and unlisted infrastructure funds in sectors including airports and communications.
Michael holds a Bachelor of Accounting from the University of Technology, Sydney and is a member of the
Chartered Accountants Australia and New Zealand.
xxx
Corporate Governance
Statement
TID aerial view –
September 2017
Stanford & TID site at sunset – September 2017
1
NEW ENERGY SOLARAnnual Report
Corporate Governance Statement
FOR THE YE AR ENDED 31 DECEMBER 2019
New Energy Solar Limited (the Company) and Walsh & Company Investments Limited, as Responsible Entity of
New Energy Solar Fund (the Trust) (Responsible Entity), together form New Energy Solar (the Fund), a stapled
entity group, whose securities are traded on the Australian Securities Exchange (ASX). The Fund has no employees
and its day-to-day functions and investment activities are managed by the Responsible Entity of the Trust (Walsh &
Company Investments Limited) and New Energy Solar Manager Pty Limited (Investment Manager), in accordance
with the relevant management agreements.
The directors of the Company and the directors of the Responsible Entity recognise the importance of good
corporate governance.
The Fund’s corporate governance charter (Corporate Governance Charter), which incorporates the Fund’s
policies referred to below, is designed to ensure the effective management and operation of the Fund and
will remain under regular review. The Corporate Governance Charter is available on the Fund’s website
newenergysolar.com.au.
A description of the Fund’s adopted practices in respect of the eight Principles and Recommendations from the
Third Edition of the ASX Corporate Governance Principles and Recommendations (ASX Recommendations) is set out
below. All these practices, unless otherwise stated, were in place throughout the year and to the date of this report.
1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
BOARD ROLES AND RESPONSIBILITIES
The board of the Company (Company Board) and the board of the Responsible Entity (RE Board) (together, the
Boards) are responsible for the overall operation, strategic direction, leadership and integrity of the Fund and in
particular, are responsible for the Fund’s growth and success. In meeting its responsibilities, the Boards undertake
the following functions:
• Providing and implementing the Fund’s strategic direction;
• Reviewing and overseeing the operation of systems of risk management ensuring that the significant risks facing
the Fund are identified, that appropriate control, monitoring and reporting mechanisms are in place and that risk
is appropriately dealt with;
• Overseeing the integrity of the Fund’s accounting and corporate reporting systems, including the external audit;
• Ensuring the Board is comprised of individuals who are best able to discharge the responsibilities of directors
having regard to the law and the best standards of governance;
• Reviewing and overseeing internal compliance and legal regulatory compliance;
• Ensuring compliance with the Company and the Trust’s constitutions and with the continuous disclosure
requirements of the ASX Listing Rules and the Corporations Act 2001 (Cth) (Corporations Act);
• Overseeing the Fund’s process for making timely and balanced disclosures of all material information concerning
the Fund, and
• Communicating with and protecting the rights and interests of all securityholders.
2
NEW ENERGY SOLARAnnual Report The Boards have established a formal policy which sets out its functions and responsibilities (Board Policy). The
Board Policy is set out in section 2 of the Fund’s Corporate Governance Charter. A review of the Board Policy is
conducted annually.
The responsibility for the operation and administration of the Fund is delegated, by the Boards, to the Investment
Manager as set out in the relevant management agreement. The Boards ensure the Investment Manager
is appropriately qualified and experienced to discharge its responsibilities. The Investment Manager will be
responsible for implementing the Fund’s strategic objectives and operating within the risk appetite as set out within
the Risk Appetite Statement which was approved by the Boards on 20 November 2019.
APPOINTMENT OF DIRECTORS
The Company has adopted a formal process to ensure that appropriate checks are undertaken before appointing a
person, or putting forward to securityholders a candidate for election as a director. The Company has outsourced
part of this function to an external service provider, which specialises in completing background checks, to verify the
candidate’s experience, education, criminal record and bankruptcy history.
Upon proposing a candidate for election or re-election as a director, the Company provides security holders with
all the relevant material information in its possession to allow securityholders to make an informed decision on
whether or not to elect or re-elect the candidate. The information will generally include:
• biographical details of the candidate, including their qualifications, experience and skills which may be relevant
to the board of the Company; and
• details of any current or past directorships held by the candidate.
Each director of the Company receives a formal appointment letter outlining their terms of employment,
responsibilities, conditions and expectations of their engagement.
ROLE OF THE COMPANY SECRE TARY
The company secretary of the Company (Company Secretary) is directly accountable to the Company Board,
through the Chairperson of the Company Board on all matters to do with the proper functioning of the Company
Board. This includes:
• advising the Company Board on governance matters;
• circulating to the Company Board all board papers in advance of any proposed meeting;
• ensuring that the business at board meetings is accurately captured in the minutes; and
•
facilitating the induction and professional development of directors.
DIVERSIT Y
The Company currently does not have any employees and therefore has adopted a diversity policy which is
applicable only to the Company Board. A copy of the policy setting out its objectives and reporting practices can be
found on the Company’s website.
3
NEW ENERGY SOLARAnnual Report As required by the policy, at the commencement of each financial year, the Company Board is required to set
measurable objectives to allow it to achieve and maintain diversity on the board. The measurable objective for
gender diversity, as agreed by the Company’s Board for FY2019, is set out below:
• At least one female director representation on the Company Board.
The outcome for the year, as reported by the Company Board, is set out below:
• As at 31 December 2019, there was one female and five male directors; and
• The Company Board was satisfied it had achieved its measurable objectives for FY2019.
2. STRUCTURE THE BOARD TO ADD VALUE
BOARD COMPOSITION
The Company and the Responsible Entity seek to maintain Boards with a broad range of skills. The Company
maintains a skills matrix below which lists the skills that have been identified as the ideal attributes the Company
seeks to achieve across its board membership:
• Leadership
•
Industry Knowledge
• Understanding of Solar Infrastructure
• Government Policy
• Communications
• Financial & Accounting
• Funds Management
• Risk Based Auditing & Risk Management
• Capital Raising
• Legal
The composition of the Boards is structured to maintain a mix of directors from different backgrounds with
complementary skills and experience. Details of each director at the date of this report are given in the Directors’
Report, including the period in office, skills, experience, and expertise relevant to the position of director.
The directors of the Company during the 2019 financial year and as at the date of this report are:
Jeffrey Whalan
Independent, Non-Executive Chairperson
Maxine McKew
Independent, Non-Executive Director
Independent, Non-Executive Director
Independent, Non-Executive Director
Non-Independent, Non-Executive Director
Non-Independent, Director
James Davies
John Holland
Alan Dixon
John Martin
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NEW ENERGY SOLARAnnual Report
The directors of the Responsible Entity during the 2019 financial year and as at the date of this report are:
Stuart Nisbett
Independent, Non-Executive Chairperson (appointed on 19 December 2019)
Alex MacLachlan
Non-Independent, Executive Chairperson (resigned on 19 December 2019)
Warwick Keneally
Non-Independent, Executive Director
Mike Adams
Peter Shear
Non-Independent, Non-Executive Director
Independent, Non-Executive Director (appointed on 19 December 2019)
The company secretaries of the Company and the Responsible Entity during the 2019 financial year and as at the
date of this report are:
Hannah Chan
Caroline Purtell
The Company Board comprises four independent non-executive directors, Jeffrey Whalan, Maxine McKew, James
Davies and John Holland. An independent non-executive director is a non-executive director who is independent of
the Investment Manager and free of any business or other relationship that could materially interfere with, or could
reasonably be perceived to materially interfere with, the exercise of their judgement.
The Company is committed to diversity in the composition of its Board. The directors will continue to monitor the
composition of the Company Board.
The RE Board comprises two independent directors, Stuart Nisbett and Peter Shear and two non-independent
directors, Warwick Keneally and Mike Adams with the independent Chairperson holding the casting vote. The RE
Board however has established a compliance committee (Compliance Committee) with a majority of independent
members who are responsible for; monitoring the extent to which the Responsible Entity complies with the Trust’s
relevant regulations, compliance plan, constitution and reporting the findings to the RE Board, reporting to the
Australian Securities & Investments Commission (ASIC) if the Compliance Committee is of the view that the
Responsible Entity has not complied with the compliance plan or any relevant laws, and to assess at regular intervals
whether the Trust’s compliance plan is adequate and make recommendations to RE Board about any changes that
the Compliance Committee considers should be made to the compliance plan.
The Fund recognises the ASX Recommendations with respect to establishing remuneration and nomination
committees as good corporate governance. However, considering the size and structure of the Fund, the functions
that would be performed by these committees are best undertaken by the Boards.
The Boards will review their view on committees in line with the ASX Recommendations and in light of any
changes to the size or structure of the Fund, and if required may establish committees to assist them in carrying
out their functions. At that time the Boards will adopt a charter for such committees in accordance with the ASX
Recommendations and industry best practice.
It is the Company Board’s policy to determine the terms and conditions relating to the appointment and retirement
of non-executive directors on a case-by-case basis and in conformity with the requirements of the ASX listing rules
(Listing Rules) and the Corporations Act. In accordance with the Corporate Governance Charter, directors are
entitled to seek independent advice at the expense of the Fund. Written approval must be obtained from the chair
prior to incurring any expense on behalf of the Fund.
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NEW ENERGY SOLARAnnual Report
PERFORMANCE E VALUATION
The Company Board conducts a review of its collective performance and the performance of its directors annually.
This process includes consideration of feedback provided by directors via a questionnaire. The Company Board
and individual directors, including the chairperson, were evaluated during the year ending 31 December 2019 in
accordance with these processes.
INDUCTION AND ONGOING PROFESSIONAL DE VELOPMENT
On appointment, the directors are individually briefed by the Investment Manager. Directors are entitled to receive
appropriate professional development opportunities to develop and maintain the skills and knowledge needed to
perform their role as directors effectively. The Company’s induction program is structured to enable a new director
to gain an understanding of the Company’s investments, financial, strategic, operational and risk management
position, and their rights, duties and responsibilities.
The Company Secretary is responsible for facilitating the induction and ongoing development of all directors, and
where necessary, from time to time, will recommend relevant courses and industry seminars which may assist
directors in discharging their duties.
3. ACT ETHICALLY AND RESPONSIBLY
CODE OF CONDUCT
The Boards are committed to maintaining ethical standards in the conduct of its business activities. The Boards
reputation as an ethical business organisation is important to its ongoing success and it expects all its officers to be
familiar with and have a personal commitment to meeting these standards. In this regard the directors have adopted
a code of conduct (Code of Conduct) to define basic principles of business conduct. The Code of Conduct requires
officers and employees to abide by the policies of the Fund and the law. The Code of Conduct is a set of principles
giving direction and reflecting the Fund’s approach to business conduct and is not a prescriptive list of rules for
business behaviour. The Code of Conduct covers ethical operations, compliance with laws, dealings with customers
and public officials, conflicts of interest, confidential and proprietary information and insider trading.
The Code of Conduct is set out in section 5 of the Fund’s Corporate Governance Charter.
SECURIT Y TR ADING POLICY
The Boards have established a security trading policy (Security Trading Policy) to apply to trading in the Fund’s
securities on the ASX. This policy outlines the permissible dealing of the Fund’s securities while in possession of price
sensitive information and applies to all directors of the Company, the Responsible Entity and the Investment Manager.
The Security Trading Policy imposes restrictions and notification requirements, including the imposition of blackout
periods, trading windows and the need to obtain pre-trade approval.
The Security Trading Policy is set out in section 6 of the Fund’s Corporate Governance Charter.
6
NEW ENERGY SOLARAnnual Report INSIDER TR ADING POLICY
The Boards have established an insider trading policy (Insider Trading Policy) to apply to trading in the Fund’s
securities. This policy applies to all directors, executives and employees of the Company, Responsible Entity and the
Investment Manager. All directors, executives and employees of the Company, Responsible Entity and Investment
Manager must not deal in the Fund’s securities while in possession of price sensitive information. In addition, the
Security Trading Policy sets out additional restrictions which apply to directors and executives of the Company, the
Responsible Entity and the Investment Manager.
The Insider Trading Policy is set out in section 7 of the Fund’s Corporate Governance Charter.
4. SAFEGUARD INTEGRIT Y IN CORPORATE REPORTING
COMPLIANCE COMMIT TEE
As a registered managed investment scheme, the Trust has a compliance plan that has been lodged with ASIC
(Compliance Plan). The Compliance Plan is reviewed comprehensively every year to ensure that the way in
which the Trust operates protects the rights and interests of securityholders and that major compliance risks are
identified and properly managed.
The Responsible Entity has formed a Compliance Committee to ensure the Trust complies with the relevant
regulations, its Compliance Plan and its constitution. The Compliance Committee meets and reports to the RE
Board on a quarterly basis.
The Compliance Committee is structured with three members, the majority of which are independent. Details of
the Compliance Committee members are as follows:
Michael Britton (Independent Member) (Chairperson)
Michael is one of two independent members of the Compliance Committee. He is a member of the compliance
committee for the Fort Street Real Estate Capital Fund Series, the Cordish Dixon Private Equity Fund Series,
the Evans & Partners Global Flagship Fund and the Evans & Partners Global Disruption Fund. Michael has
over 36 years of commercial and financial services experience, initially with Boral Limited and culminating in 13
years as General Manager of the corporate businesses of The Trust Company Limited (now part of Perpetual
Limited) (The Trust Company) where he established the company’s reputation as a leader in the delivery of
independent responsible entity services. He has represented The Trust Company as a director on the boards of
both domestic and offshore operating subsidiary companies and a large number of special purpose companies
delivering the responsible entity function in both conventional and stapled, ASX listed and unlisted managed
investment schemes. Michael has acted as a Responsible Manager (as recognised by ASIC), a member of
committees of inspection in relation to large insolvency administrations and as an independent compliance
committee member for substantial investment managers with portfolios of managed investment schemes.
Currently Michael is an independent director on the boards of the now unlisted Westfield Corporation Limited,
Westfield America Management Limited (following Unibail Rodamco absorbing the Westfield offshore Shopping
Malls). He is an independent director of the unlisted Knights Capital Group Limited, a Perth-based investor and
property manager. He is sole independent director of two special purpose companies involved in high profile
wholesale debt capital and securitisation transactions in the aviation and motor vehicle industries and is also a panel
member for the Australian Financial Complaints Authority (formerly Financial Ombudsman Service Limited).
Michael holds degrees in Jurisprudence and Law from the University of New South Wales and is a Graduate
Member of the Australian Institute of Company Directors and a Fellow of the Governance Institute of Australia.
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NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
Barry Sechos (Independent Member)
Barry is one of two independent members of the Compliance Committee. Barry is a member of the Compliance
Committee for the US Masters Residential Property Fund, the Australian Governance & Ethical Index Fund, the
Evans & Partners Global Disruption Fund, the Evans & Partners Australian Flagship Fund, the Evans & Partners
Asia Fund, the Evans & Partners Global Flagship Fund, the Cordish Dixon Private Equity Fund Series, the Venture
Capital Opportunities Fund and the Fort Street Real Estate Capital Fund Series. Barry is a Director of Sherman
Group Pty Limited, a privately-owned investment company, and is responsible for managing the legal, financial and
operational affairs of Sherman Group of companies. Barry has 31 years’ experience in corporate law and finance
having spent seven years as a banking and finance lawyer at Allen Allen & Hemsley (Sydney, Singapore and London),
and eight years as a Director of EquitiLink Funds Management and Aberdeen Asset Management Australia. Barry
is also a Director of Paddington St Finance Pty Ltd, a specialist structured finance company, See Saw Films, a film
production and finance group and winner of the 2011 Academy Award for Best Picture, Concentrated Leaders
Fund Limited, an investment company listed on the ASX, Regeneus Limited, an ASX listed biotech company and a
Director of Sherman Centre for Culture and Ideas, a charitable cultural organisation.
Mike Adams (Internal Member)
Refer to information on directors on page 19.
AUDIT & RISK COMMIT TEE
The Fund has established a joint Audit & Risk Committee. The members of the Audit & Risk Committee during the
year were:
James Davies
Barry Sechos
Independent Member (Chairperson)
Independent Member
Jeffrey Whalan
Independent Member
John Holland
Independent Member
Warwick Keneally
Internal Member
The chairperson of the Audit & Risk Committee is an independent non-executive director and is not the
chairperson of the Company Board or the RE Board. The Committee consists of three independent non-executive
directors of the Company, one non-independent executive director of the RE Board and one independent advisor.
The primary function of the Audit & Risk Committee is to assist the Boards in discharging their responsibility to
exercise due care, diligence and skill in relation to the following areas:
• Application of accounting policies to the Fund’s financial reports and statements;
• Monitoring the integrity of the financial information provided to security holders, regulators and the
general public;
• Corporate conduct and business ethics, including auditor independence and ongoing compliance with laws
and regulations;
• Maintenance of an effective and efficient audit;
• Appointment, compensation and oversight of the external auditor, and ensuring that the external auditor meets
the required standards for auditor independence;
• Assess the adequacy of the Fund’s process for managing risk;
• Regularly monitoring and reviewing corporate governance policies and codes of conduct.
8
The Audit & Risk Committee meets four times a year. The Audit & Risk Committee will report to the Boards at a
minimum of two times a year.
A copy of the Audit & Risk Committee Charter is available on the Fund’s website.
5. MAKING TIMELY AND BALANCED DISCLOSURE
The Boards are committed to complying with their continuous disclosure obligations under the Corporations Act, as
well as releasing relevant information to the market and securityholders in a timely and direct manner to promote
investor confidence in the Fund and its securities.
The Fund has adopted a continuous disclosure policy (Continuous Disclosure Policy) to ensure the Fund complies
with its continuous disclosure obligations under the Corporations Act and the Listing Rules.
The Continuous Disclosure Policy is set out in section 4 of the Fund’s Corporate Governance Charter.
This policy is administered by the Boards and the Investment Manager as follows:
•
•
the Boards are involved in reviewing significant ASX announcements and ensuring and monitoring compliance
with this policy;
the Company Secretary is responsible for the overall administration of this policy and all communications with
the ASX; and
• senior management of the Investment Manager are responsible for reporting any material price sensitive
information to the Company Secretary and observing the Fund’s no comments policy.
6. RESPECT THE RIGHTS OF SECURIT YHOLDERS
RIGHTS OF SECURIT YHOLDERS
The Fund promotes effective communication with security holders. The Boards have developed a strategy within
its Continuous Disclosure Policy to ensure that securityholders are informed of all major developments affecting
the Fund’s performance, governance, activities and state of affairs. This includes using a website to facilitate
communication with securityholders. Each securityholder is also provided online access to Link Market Services
Limited (the Registry) to allow them to receive communications from, and send communication to, the Fund and
the Registry. Information is communicated through announcements published on the Fund website, releases
to the media and the dispatch of financial reports. Securityholders are provided with an opportunity to access
such reports and releases electronically. Copies of all announcements are available on the Fund’s website at
newenergysolar.com.au.
These include:
• weekly Net Asset Value estimates;
• quarterly investment updates;
•
•
•
the half-year report;
the annual report;
the notice of annual general meeting, explanatory memorandum and the Chairperson’s address;
• announcements made to comply with the Fund’s continuous disclosure requirements; and
• correspondence sent to securityholders on matters of significance to the Fund.
9
NEW ENERGY SOLARAnnual Report The Boards encourage full participation of securityholders at the general meetings to ensure a high level of
accountability and identification with the Fund’s strategy. Securityholders who are unable to attend the general
meeting are given the opportunity to provide questions or comments in relation to the audit of the Fund ahead
of the meeting and where appropriate, these questions are answered at the meeting. The external auditor is also
invited to attend the annual general meeting of the Fund and is available to answer any questions concerning the
conduct, preparation and content of the auditor’s report.
7. RECOGNISE AND MANAGE RISK
The Boards are responsible for identifying, assessing, monitoring and managing the significant areas of risk
applicable to the Fund and its operations. The Boards have established an Audit & Risk Committee to deal with
these matters. The Boards monitor and appraise financial performance, including the approval of annual and half-
year financial reports and liaising with the Fund’s auditors.
In order to evaluate and continually improve the effectiveness of its risk management and internal control
processes, the RE Board has adopted a Risk Management Framework (RMF). The RE Board conducts an annual
review of the RMF to satisfy itself that the framework continues to be sound. The last review took place on 16
December 2019.
The Boards are responsible for maintaining proper financial records. In addition, the Boards receive a letter
half yearly from the Fund’s external auditor regarding their procedures and reporting that the financial records
have been properly maintained and the financial statements comply with the Australian accounting standards
(Accounting Standards).
The Fund does not have a material exposure to environmental, economic and social sustainability risks. For further
information, please see the 2019 Sustainability Report which is available on the Fund’s website.
The Boards provide declarations required by Section 295A of the Corporations Act for all financial periods and
confirms that in its opinion the financial records of the Fund have been properly maintained and that the financial
statements and accompanying notes comply with the Accounting Standards and give a true and fair view of the
financial position and performance of the Fund, based on its review of the internal control systems, management of
risk, the financial statements and the letter from the Fund’s external auditor.
10
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
8. REMUNERATE FAIRLY AND RESPONSIBLY
REMUNER ATION POLICIES
Due to the relatively small size of the Fund and its operations, the Company Board does not consider it appropriate,
at this time, to form a separate committee to deal with the remuneration of the directors.
In accordance with the Company’s constitution, each director may be paid remuneration for ordinary services
performed as a director. Under the Listing Rules, the maximum fees payable to directors may not be increased
without the prior approval from securityholders at a general meeting of the Company. Directors will seek approval
from time to time as deemed appropriate. The Company does not intend to remunerate its directors through an
equity-based remuneration scheme.
The maximum total remuneration of the directors of the Company has been set at $400,000 per annum to be
divided among them in such proportions as they agree. However, Alan Dixon and John Martin have agreed not to
be paid any remuneration for the services they performed as directors. Total directors’ fees for the year ended 31
December 2019 were $274,000.
No director of the Responsible Entity receives any direct remuneration from the Fund. In accordance with the
Responsible Entity’s constitution, the Responsible Entity is entitled to a management fee for services rendered.
Details of the Fund's related party transactions are set out in the notes to the financial statements in the
Annual Report.
11
NEW ENERGY SOLARAnnual Report Directors’ Report
FOR THE YE AR ENDED 31 DECEMBER 2019
Directors’ Report
TID ground view – October 2017
12
TID overhead view
NEW ENERGY SOLARAnnual Report
Directors’ Report
FOR THE YE AR ENDED 31 DECEMBER 2019
The directors of New Energy Solar Limited (the Company) and Walsh & Company Investments Limited, as
Responsible Entity of New Energy Solar Fund (the Trust), together forming New Energy Solar, a listed stapled
group, present their report together with the annual financial report for New Energy Solar Limited and New Energy
Solar Fund, (collectively referred to as the Fund), for the year ended 31 December 2019.
DIRECTORS
The directors of New Energy Solar Limited at any time during or since the end of the financial year are listed below:
Jeffrey Whalan
Non-Executive Chairperson
Maxine McKew
Non-Executive Director
James Davies
John Holland
Alan Dixon
John Martin
Non-Executive Director
Non-Executive Director
Non-Executive Director
The directors of Walsh & Company Investments Limited at any time during or since the end of the financial year are
listed below:
Stuart Nisbett
(appointed on 19 December 2019)
Warwick Keneally
Mike Adams
Peter Shear
(appointed on 19 December 2019)
Alex MacLachlan
(resigned on 19 December 2019)
Directors were in office from the start of the year to the date of this report, unless otherwise stated.
13
NEW ENERGY SOLARAnnual Report
INFORMATION ON THE DIRECTORS OF
NEW ENERGY SOLAR LIMITED
JEFFREY WHALAN AO, BA (UNSW), FAICD, FAIM
NON-EXECUTIVE CHAIRPERSON (Company)
Jeffrey is an Independent Director of New Energy Solar Limited. He is Managing Director
of the Jeff Whalan Learning Group, a specialist human resources company. He was a senior
executive officer in the Australian Public Service from 1990 to 2008.
Jeffrey was appointed an Officer in the Order of Australia in 2008 for his work as chief
executive officer of Centrelink. Among other things, the award recognised his achievements
in ‘the development of corporate accountability processes’.
Jeffrey is a Fellow of the Australian Institute of Company Directors and a Fellow of the
Australian Institute of Management. As CEO of Centrelink, Jeffrey was responsible for the largest agency of the
Australian Public Service, $70 billion of government outlays and 27,000 staff. Prior to joining Centrelink, he was
chief executive officer of Medicare Australia. Jeffrey has held Deputy Secretary positions in the Departments of
Prime Minister and Cabinet, Defence and the then Department of Family and Community Services. He has also
held senior executive positions in the Transport and Health departments.
During the past three years Jeff has acted as a non-executive director or director of the responsible entity of the
following Australian listed public entity:
• Australian Governance Masters Index Fund Limited (since 2010, delisted on 16 July 2018)
MAXINE MCKEW MAICD
NON-EXECUTIVE DIRECTOR (Company)
Maxine is an author and Honorary Enterprise Professor of the Melbourne Graduate School
of Education at the University of Melbourne. Her most recent book, published by Melbourne
University Press in 2014, is Class Act, a study of the key challenges in Australian schooling.
This publication followed the success of her memoir, Tales From the Political Trenches, an
account of her brief but tumultuous time in the Federal Parliament.
Maxine’s background traverses both journalism and politics. For many years she was a
familiar face to ABC TV viewers and was anchor of prestigious programs such as the 7.30
Report and Lateline. Her work has been recognised by her peers with both Walkley and Logie awards.
When she left journalism to enter politics, Maxine wrote herself into the Australian history books by defeating
Prime Minister John Howard in the Sydney seat of Bennelong. In government she was both parliamentary secretary
for early childhood and later, for regional development and local government.
Maxine serves as director of the State Library of Victoria and has served on the boards of numerous not for profits,
including Per Capita John Cain Foundation and Playgroup Australia.
During the past three years Maxine has not acted as director of any Australian listed public entity.
14
NEW ENERGY SOLARAnnual Report JAMES DAVIES BCS (UNE), MBA (LBS)
NON-EXECUTIVE DIRECTOR (Company)
James has over 30 years of experience in investment management across real estate, private
equity, infrastructure, natural resources and special situations. Most recently he was Head
of Funds Management at New Forests Asset Management, overseeing $2.5 billion worth
of investments in broad acre real estate, forestry assets and environmental markets. Prior
to that he held Director roles at Hastings Funds Management Limited and Royal Bank of
Scotland’s Strategic Investments Group. He has sat on numerous Investment Committees
and Boards including as Chairman of Timberlink Australia and Forico.
James holds a Bachelor of Computer Science from the University of New England, a Masters of Business
Administration from London Business School and is a Graduate of the Australian Institute of Company Directors.
During the past three years James has acted as a director of the following Australian listed public entity:
• Eildon Capital Limited (since 2016)
JOHN HOLLAND MA (Hons) (Oxford)
NON-EXECUTIVE DIRECTOR (Company)
John holds a portfolio of complementary non-executive board roles. In particular, he chairs
KCG Europe, a brokerage business which is part of the Virtu Financial group, and Open Door
Capital Management (a Greater China Asset Management company), as well as acting as
Non-Executive Director of sQuidcard Limited (a UK and African Payments business in the
Education and Aid Sectors).
Prior to his current roles, John was Managing Director and Member of UBS Investment
Bank Board. Over the course of his 24-year career at UBS and its predecessor banks, John
helped to build and then led UBS’ leading Asian Equities and banking business based in Hong Kong, before returning
to London to assume various senior management roles in the Global Equities business.
Throughout his career, John has had significant experience working with a wide range of Financial Regulators,
including a three-year stint as a member of the European Securities Markets Experts Group advising the European
Commission on new regulation.
John holds a Master of Arts (Hon) from Oriel College, Oxford University, majoring in Philosophy, Politics
and Economics.
During the past three years John has acted as a non-executive director of the following Australian listed
public entity:
• Asian Masters Fund Limited (since 2010, delisted on 17 May 2018)
15
NEW ENERGY SOLARAnnual Report ALAN DIXON BComm (ANU), CA
NON-EXECUTIVE DIRECTOR (Company)
Alan is a Non-Executive Director of New Energy Solar Limited and also a Non-Executive
Director of Evans Dixon Limited.
Alan joined Dixon Advisory in January 2001 as Managing Director. He ran Dixon Advisory
until its merger with Evans & Partners in early 2017. Alan was the Managing Director & CEO
of Evans Dixon Limited from 2017 until June 2019.
Prior to joining Dixon Advisory, Alan worked in Chartered Accountancy and Investment
Banking roles in Australia.
Alan holds a Bachelor of Commerce majoring in Accounting and Finance from the Australian National University
and is a member of the Institute of Chartered Accountants in Australia.
During the past three years Alan has acted as a non-executive director of the following Australian listed
public entity:
• Evans Dixon Limited (since October 2019)
During the past three years Alan has acted as an executive director of the following Australian listed public entity:
• Evans Dixon Limited (since May 2018, became non-executive director in October 2019)
JOHN MARTIN BEcon (Hons) (USYD)
DIRECTOR (Company)
John was appointed as New Energy Solar’s Managing Director and CEO in May 2017. John
brings a wealth of experience and capability to the role after more than two decades of
experience in corporate advisory and investment banking with a focus on the infrastructure,
energy and utility sectors.
John previously led the Infrastructure and Utilities business at corporate advisory firm
Aquasia where he advised on more than $10 billion of infrastructure and utility M&A
and financing transactions. Prior to this John held various investment bank management
positions including the Head of National Australia Bank Advisory and the Joint Head of Credit Markets and Head of
Structured Finance at RBS/ABN AMRO.
During his time at ABN AMRO, John managed the Infrastructure Capital business which was viewed as a market
leader in the development and financing of infrastructure and utility projects in Australia. John started his career
as an economist with the Reserve Bank of Australia and then worked in various treasury and risk management
positions, before moving to PwC as the partner responsible for financial risk management. At PwC John advised
some of Australia’s largest corporations on the management and valuation of currency, interest rate and commodity
exposures – with a focus on advising energy companies trading in the Australian National Electricity Market.
John has a Bachelor of Economics (Honours) from the University of Sydney. John is a member of the Advisory
Board for the Cordish Dixon Private Equity Fund III (ASX:CD3), and is a past board member of Infrastructure
Partnerships Australia.
During the past three years John has not acted as director of any Australian listed public entity.
16
NEW ENERGY SOLARAnnual Report INFORMATION ON THE DIRECTORS OF
WALSH & COMPANY INVESTMENTS LIMITED
STUART NISBETT BCom, MCom (UNSW)
CHAIRMAN (Responsible Entity) (appointed on 19 December 2019)
Stuart is currently Executive Director and Principal at Archerfield Capital Partners,
a boutique corporate advisory firm specialising in real estate, which he established in
2008. He has more than 30 years’ experience in property development, property funds
management, equity and debt raising, corporate advisory and project finance.
Previously, Stuart was Executive Director, Head of Property Funds at ANZ Investment
Bank. He was also the Managing Director, Head of Property Banking & Property Investment
Banking at N M Rothschild & Sons (Australia) Limited. Stuart has also held senior roles
at director level at Macquarie Bank Property Investment Banking Division and at Lend Lease Corporation in its
development and commercial asset management divisions.
Stuart is a Chartered Accountant and holds a Bachelor of Commerce with Merit and a Masters of Commerce from
the University of NSW, and in 2005 was appointed a Fellow of the Australian Property Institute.
During the past three years Stuart has acted as a non-executive director or director of the responsible entity of the
following Australian listed public entities:
• Cordish Dixon Private Equity Fund I (since 19 December 2019)
• Cordish Dixon Private Equity Fund II (since 19 December 2019)
• Cordish Dixon Private Equity Fund III (since 19 December 2019)
• Evans & Partners Asia Fund (since 19 December 2019)
• Evans & Partners Global Flagship Fund (since 19 December 2019)
• US Masters Residential Property Fund (since 19 December 2019)
• Australian Governance & Ethical Index Fund (since 19 December 2019)
• Evans & Partners Australian Flagship Fund (since 19 December 2019)
• Evans & Partners Global Disruption Fund (since 19 December 2019)
17
NEW ENERGY SOLARAnnual Report
WARWICK KENEALLY BEc, BComm (ANU), CA
DIRECTOR (Responsible Entity)
Head of Finance, Evans Dixon
Warwick is currently the Head of Finance at Walsh & Company, the Funds Management
division of Evans Dixon. Before joining Evans Dixon, Warwick worked in chartered
accounting firms specialising in turnaround and restructuring. Warwick started his career
with KPMG, working in their Canberra, Sydney and London offices – and has undertaken
a range of complex restructuring and insolvency engagements across Europe, UK and
Australia, for a range of Australian, UK, European and USA banks.
Warwick has worked with companies and lenders to develop and implement strategic business options, provide
advice in relation to continuous disclosure requirements, develop cash forecasting training for national firms, and
lectured on cash management. Among his former roles, Warwick worked on the initial stages of the HIH insolvency
as part of the key management group tasked with the wind-down of the global estate.
Warwick has a Bachelor of Economics and Bachelor of Commerce from Australian National University and is a
Chartered Accountant.
During the past three years Warwick has acted as a non-executive director or director of the responsible entity of
the following Australian listed public entities:
• Australian Masters Yield Fund No 4 Limited (since 2017, delisted 27 November 2019)
• Australian Masters Yield Fund No 5 Limited (since 2017, delisted 27 November 2019)
• Cordish Dixon Private Equity Fund I (since 2017)
• Cordish Dixon Private Equity Fund II (since 2017)
• Cordish Dixon Private Equity Fund III (since 2017)
• Evans & Partners Global Disruption Fund (since 2017)
• Evans & Partners Global Flagship Fund (since 2017)
• US Masters Residential Property Fund (since 2017)
• Australian Governance & Ethical Index Fund (since 2018)
• Evans & Partners Asia Fund (since 2018)
• Evans & Partners Australian Flagship Fund (since 2018)
• Asian Masters Fund Limited (since 11 May 2018, delisted on 17 May 2018)
• Australian Governance Masters Index Fund Limited (since 6 July 2018, delisted 16 July 2018)
18
NEW ENERGY SOLARAnnual Report MIKE ADAMS LLB (Otago)
DIRECTOR (Responsible Entity)
Legal Consultant
Mike has extensive experience across a broad range of corporate, commercial and private
client sectors. His core practice areas involve the provision of advice and transactional
expertise in relation to new and existing retail financial products and the regulatory
framework within which they operate, as well as debt and equity financing, intellectual
property, and film and television media law among others.
Mike has previously worked in private practice, public sector and in-house roles in Australia,
New Zealand and the United Kingdom, acting across multiple industries for a variety of clients, including high-
networth individuals, banks and financial institutions, as well as numerous listed and unlisted corporate entities.
Mike is also a director of MA Law, a Sydney-based financial services legal consultancy, and is admitted as a solicitor
of the Supreme Court of NSW. He has a Bachelor of Laws from the University of Otago.
During the past three years Mike has acted as a non-executive director or director of the responsible entity of the
following Australian listed public entities:
• Australian Governance & Ethical Index Fund (since 2018)
• Cordish Dixon Private Equity Fund I (since 2018)
• Cordish Dixon Private Equity Fund II (since 2018)
• Cordish Dixon Private Equity Fund III (since 2018)
• Evans & Partners Asia Fund (since 2018)
• Evans & Partners Australian Flagship Fund (since 2018)
• Evans & Partners Global Disruption Fund (since 2018)
• Evans & Partners Global Flagship Fund (since 2018)
• US Masters Residential Property Fund (since 2018)
19
NEW ENERGY SOLARAnnual Report PETER SHEAR BBus, MBA (Exec), GAICD
DIRECTOR (Responsible Entity) (appointed on 19 December 2019)
Peter has significant expertise in funds management, financial advisory and complex lending
arrangements including leveraged finance, property development and debt workout
situations. Peter was most recently Co-Managing Partner of Opportunistic Lending and
Special Situations at LIM Advisors. Prior to this role, Peter held the positions of Chief Risk
Officer and Managing Director & Head of Corporate and Structured Finance at Lloyds
Banking Group (and its predecessor HBOS plc) in Australia. Peter was also previously a
Partner in Corporate Finance & Restructuring at Ernst & Young.
Peter has a Bachelor of Business from the University of Technology Sydney, an Executive MBA from AGSM, is a
member of Chartered Accountants Australia and New Zealand, a Fellow of FINSIA and a Graduate Member of the
Australian Institute of Company Directors.
During the past three years Peter has acted as a non-executive director or director of the responsible entity of the
following Australian listed public entities:
• Cordish Dixon Private Equity Fund I (since 19 December 2019)
• Cordish Dixon Private Equity Fund II (since 19 December 2019)
• Cordish Dixon Private Equity Fund III (since 19 December 2019)
• Evans & Partners Asia Fund (since 19 December 2019)
• Evans & Partners Global Flagship Fund (since 19 December 2019)
• US Masters Residential Property Fund (since 19 December 2019)
• Australian Governance & Ethical Index Fund (since 19 December 2019)
• Evans & Partners Australian Flagship Fund (since 19 December 2019)
• Evans & Partners Global Disruption Fund (since 19 December 2019)
20
NEW ENERGY SOLARAnnual Report ALEX MACLACHLAN BA (Cornell), MBA (Wharton)
CHAIRMAN (Responsible Entity) (resigned on 19 December 2019)
CEO, Walsh & Company
Alex joined Dixon Advisory in 2008 to lead the then newly formed Funds Management
division, which later became Walsh & Company. From funds under management of under
$100 million at the time of his start, Alex has grown Walsh & Company Group to over
$5 billion of assets under management today, with investments across residential and
commercial property, fixed income, private equity, listed equities and renewable energy.
Prior to joining the firm, Alex was an investment banker at UBS AG, where he rose to Head
of Energy for Australasia. During his tenure in investment banking, Alex worked on more than $100 billion in
mergers and acquisitions and capital markets transactions, advising some of the world’s leading companies.
Alex has a Bachelor of Arts from Cornell University and a Masters of Business Administration from The Wharton
School, University of Pennsylvania.
During the past three years Alex has acted as a non-executive director or director of the responsible entity of the
following Australian listed public entities:
• Asian Masters Fund Limited (since 2009, delisted on 17 May 2018)
• Australian Governance Masters Index Fund Limited (since 6 July 2018, delisted 16 July 2018)
• Australian Masters Corporate Bond Fund No 5 Limited (since 2009, delisted 26 August 2016)
• Australian Masters Yield Fund No 1 Limited (since 2010, delisted 28 July 2017)
• Australian Masters Yield Fund No 2 Limited (since 2010, delisted 28 July 2017)
• Australian Masters Yield Fund No 3 Limited (since 2011, delisted 13 April 2018)
• Australian Masters Yield Fund No 4 Limited (since 2011, delisted 27 November 2019)
• Australian Masters Yield Fund No 5 Limited (since 2012, delisted 27 November 2019)
• US Masters Residential Property Fund (since 2011)
• Evans & Partners Global Flagship Fund (since 2012)
• Global Resource Masters Fund Limited (since 2008, delisted 11 March 2016)
• Cordish Dixon Private Equity Fund I (since 2012)
• Cordish Dixon Private Equity Fund II (since 2013)
• Cordish Dixon Private Equity Fund III (since 2016)
• Evans & Partners Global Disruption Fund (since 2017)
• Australian Governance & Ethical Index Fund (since 2018)
• Evans & Partners Asia Fund (since 2018)
• Evans & Partners Australian Flagship Fund (since 2018)
21
NEW ENERGY SOLARAnnual Report INFORMATION ON THE COMPANY SECRETARIES
HANNAH CHAN BCom, MCom, CA
Hannah has a Bachelor of Commerce degree in Finance from the University of NSW and a Master of Commerce
degree in Accounting from the University of Sydney. She is also a Chartered Accountant with Chartered
Accountants Australia and New Zealand. Prior to joining Walsh & Company, Hannah gained extensive audit
experience while working with Deloitte Touche Tohmatsu and Ernst & Young.
Hannah is also the joint Company Secretary of Walsh & Company Investments Limited. Hannah is a director of
Australian Fund Accounting Services Pty Limited.
Hannah was appointed as Company Secretary on 19 November 2015.
CAROLINE PURTELL BA, LLB, LLM
Caroline provides corporate governance and corporate secretariat services to the management, boards of directors
and committees for a portfolio of entities within the Walsh & Company group. Prior to joining Walsh & Company,
Caroline has worked in top tier legal firms including King & Wood Mallesons, Sydney and Clifford Chance, London
specialising in banking, finance and corporate law.
Caroline has a Bachelor of Arts, Bachelor of Laws and Master of Laws (Honours) all from Sydney University. She is
also qualified to practice as a solicitor in both NSW and England. Caroline is a Fellow of the Governance Institute
of Australia.
Caroline is also the joint Company Secretary of Walsh & Company Investments Limited. Caroline was appointed as
Company Secretary on 20 November 2018.
DIRECTORS’ MEETINGS
The number of Directors’ meetings of the Company held during the year ended 31 December 2019, and the
number of meetings attended by each director were:
Jeff Whalan
John Holland
Maxine McKew
James Davies
Alan Dixon
John Martin
NEW ENERGY SOLAR
LIMITED BOARD
No. of
meetings attended
No. of
meetings eligible
10
10
10
10
10
9
10
10
10
10
10
10
Eligible: represents the number of meetings held during the time the director held office.
22
NEW ENERGY SOLARAnnual Report AUDIT AND RISK COMMITTEE MEETINGS
The number of joint Audit and Risk Committee meetings of the Company and the Trust held during the year ended
31 December 2019, and the number of meetings attended by each member were:
James Davies
Jeff Whalan
John Holland
Barry Sechos
Warwick Keneally
JOINT AUDIT AND
RISK COMMITTEE
No. of
meetings attended
No. of
meetings eligible
4
4
4
4
4
4
4
4
4
4
Eligible: represents the number of meetings held during the time the member held office.
REMUNERATION REPORT – NEW ENERGY SOLAR LIMITED
(A) REMUNER ATION POLICY
Under ASX Listing Rules, the maximum fees payable to directors may not be increased without the prior approval
from the Company in general meeting. Directors will seek approval from time to time as deemed appropriate.
Under the Company’s constitution, each director may be paid remuneration for ordinary services performed as a
director. However, Alan Dixon and John Martin have agreed not to be paid any remuneration for the services they
performed as directors. John Martin who acts as CEO of the Fund is remunerated by the Investment Manager
(or related entities of the Investment Manager). Investment Management fees are set out in note 20 to the
financial statements.
The independent directors, John Holland, James Davies and Maxine McKew each are entitled to receive $50,000
per annum respectively. As an independent chairperson, Jeffrey Whalan is entitled to receive $75,000 per annum.
These fees exclude any additional fee for any service-based agreement which may be agreed upon from time to time
and also excludes reimbursement of out of pocket expenses. These fees are inclusive of statutory superannuation,
where appropriate.
In addition to the above, as members of the Audit and Risk Committee, John Holland and Jeff Whalan each are
entitled to receive $10,000 per annum, and as chairperson, James Davies is entitled to receive $15,000 per annum.
(B) KE Y MANAGEMENT PERSONNEL REMUNER ATION
Key management personnel include the directors who have authority and responsibility for planning, directing
and controlling the activities of the Company. No other executive personnel are employed or remunerated by
the Company.
23
NEW ENERGY SOLARAnnual Report Details of remuneration paid during the year to key management personnel are set out in the table below.
2019
Directors
Jeffrey Whalan
John Holland
Maxine McKew
James Davies
Alan Dixon
John Martin
2018
Directors
Jeffrey Whalan
John Holland
Maxine McKew
James Davies
Alan Dixon
John Martin
SALARY,
FEES AND
COMMISSION
SUPERANNUATION
CONTRIBUTIONS
CASH
BONUS
$
$
68,493
50,000
45,662
45,662
–
–
6,507
–
4338
4338
–
–
209,817
15,183
$
–
–
–
–
–
–
–
AUDIT
AND RISK
COMMITTEE
(i)
$
10,000
10,000
–
OTHER
(i)
TOTAL
$
–
–
–
$
85,000
60,000
50,000
15,000
14,000
79,000
–
–
–
–
–
–
35,000
14,000
274,000
SALARY,
FEES AND
COMMISSION
SUPERANNUATION
CONTRIBUTIONS
CASH
BONUS
AUDIT
AND RISK
COMMITTEE
(i),(ii)
OTHER
$
$
68,493
50,000
45,662
45,662
–
–
6,507
–
4338
4338
–
–
209,817
15,183
$
–
–
–
–
–
–
–
$
5,000
5,000
–
7,500
–
–
17,500
$
–
–
–
–
–
–
–
TOTAL
$
80,000
55,000
50,000
57,500
–
–
242,500
(i) Audit and risk committee fees and other service fees are subject to GST. For the portion that was paid by the Trust, the Trust
qualifies for reduced input tax credits at a minimum rate of 55% as a recognised trust scheme under specific provisions in the
GST legislation.
(ii) Audit and risk committee fees represents the period since appointment on 5 July 2018.
(C) SERVICE AGREEMENTS
The Company does not presently have formal service agreements or employment contracts with any key
management personnel.
The Directors remuneration is not linked to the performance of the Company or Trust.
24
NEW ENERGY SOLARAnnual Report (D) DIRECTORS’ PROTECTION DEEDS
The Company has agreed to provide access to board papers and minutes to current and former directors of the
Company while they are directors and for a period of seven years after they cease to be directors.
The Company has agreed to indemnify, to the extent permitted by the Corporations Act 2001, each officer in respect
of certain liabilities, which the director may incur as a result of, or by reason of (whether solely or in part), being
or acting as a Director of the Company. The Company has also agreed to maintain in favour of each director a
directors’ and officers’ policy of insurance for the period that he or she is a director and for a period of seven years
after the officer ceases to be a director.
(E) BENEFICIAL AND RELE VANT INTEREST OF DIRECTORS IN SHARES
As at the date of this report, details of directors who hold shares for their own benefit or who have an interest in
holdings through a third party and the total number of such shares held are listed as follows:
DIRECTOR OF THE COMPANY
Jeffrey Whalan
John Holland
James Davies
Maxine McKew
Alan Dixon
John Martin
DIRECTOR OF THE RESPONSIBLE ENTITY OF THE TRUST
Warwick Keneally
Mike Adams
Stuart Nisbett (appointed 19 December 2019)
Peter Shear (appointed 19 December 2019)
NO. OF
SECURITIES
541,552
241,418
40,445
66,666
7,394,935
618,493
42,366
–
–
–
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN NATURE
OF ACTIVITIES
The principal activities of the Company and the Trust during the year were pursuing and investing in large-
scale solar plants that generate emissions-free power. There were no significant changes in the nature of these
activities during the year.
25
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
DISTRIBUTIONS
Distributions paid or declared to securityholders during, or since the end of, the year were as follows:
• 3.90 cents per stapled security for the six months ended 30 June 2019 paid on 15 August 2019 amounting to
$13,596,522.
• 4.00 cents per stapled security for the six months ended 31 December 2019 announced on 18 December 2019,
paid on 14 February 2020 amounting to $14,042,395.
REVIEW AND RESULTS OF OPERATIONS
Please refer to the Investment Manager’s Report for details relating to the operations during the financial year.
For the year ended 31 December 2019, on a combined basis, the Fund’s loss was $4.2 million (31 December
2018: $80.2 million profit). The Company reported a loss of $31.5 million (31 December 2018: $45.7 million
profit) and the Trust reported a profit of $27.3 million (31 December 2018: $34.5 million profit).
The 2019 loss, on a combined basis, is driven by the fair value loss of financial assets at fair value of $11.3 million
and operating expenses of the fund of $5.7 million partially offset by finance income of $10.2 million received
by NESF in the form of interest payments on NESF’s loan to New US Corp. The Company’s loss of $31.5
million is largely due to the ‘movement in fair value’ decrement amount of $28.8 million which is comprised of a
$51.9 million decrease in New Energy Solar US Corp net asset value, offset by an unrealised foreign exchange
translation gain of $1.1 million, and a $22.0 million increase in New Energy Solar HoldCo #1 net asset value. The
Trust’s profit of $27.3 million is largely due to the $17.5 million loan fair value increase based on a revaluation
at balance date with reference to prevailing referable market interest rates for comparable external debt as a
proxy for market pricing of the loan receivables, $1.1 million increase in investment in US Solar Fund plc, and
$0.3 million of foreign exchange gains during the period in relation to the US dollar denominated loan provided
by the Trust to New Energy Solar US Corp and the investment in US Solar Fund plc.
At 31 December 2019, on a combined basis, the Fund's net assets are $529.5 million (31 December 2018:
$555.7 million), representing a net asset value per stapled security of $1.51 (31 December 2018: $1.6).The
Company’s net assets are $356.7 million (31 December 2018: $301.1 million), representing a net asset value
per stapled security of $1.02 (31 December 2018: $0.87) and the Trust's net assets are $172.8 million (31
December 2018: $254.6 million), representing a net asset value per stapled security of $0.49 (31 December
2018: $0.73).
On 26 June 2019, the Fund reallocated capital from the Trust to the Company. This was achieved by a capital
return by the Trust of $0.2398 per issued unit in the Trust, which was compulsorily applied as a capital
contribution for existing shares in the Company. The total number of stapled securities on issue did not change
and the combined net asset value of the stapled securities remained the same before and immediately after the
capital reallocation.
The purpose for undertaking the capital reallocation was to simplify inter-entity arrangements and allocate
available capital so that it resides in the entity which provides the best outcome to Securityholders. The capital
reallocation mechanism has been previously approved by Securityholders at the Annual General Meeting held
on 3 May 2017.
26
EVENTS SUBSEQUENT TO THE REPORTING PERIOD
A distribution of 4.0 cents per stapled security totaling $14,042,395 which was declared on 18 December 2019
and paid to securityholders on 14 February 2020. 2,282,068 stapled securities were issued under the Fund’s
Distribution Reinvestment Plan.
Post balance date additional working capital was put in place to provide additional liquidity in case of delays in
reaching substantial completion and conversion of debt facilities to term funding on the MS2 project. As part of this
the Keybank corporate facility limit was increased by US$10m for six months and a short-term facility of US$15
million was put in place with Kendrick Cerry Inc. The loan has a term of 150 days from the date of initial draw
down and carries an interest rate of three percent. Substantial completion on the MS2 project was achieved on
17 January 2020.
Other than the matters discussed above, no matter or circumstance has arisen since 31 December 2019 that
has significantly affected, or may significantly affect the Company or the Trust's operations, the results of those
operations, or the Company or the Trust's state of affairs in future financial years.
FUTURE DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Company and the Trust will continue to undertake their activities described in this report. The Report
to Stapled Securityholders which forms part of this financial report includes details of the outlook for solar
markets in which the Company and the Trust invests. Further details are included in the Report to Stapled
Securityholders and Manager’s Report which forms part of this financial report.
ENVIRONMENTAL REGULATION
Subsidiaries of the Company are subject to a range of environmental laws and regulations as well as project and
site- specific environmental permits and approvals issued at both the Federal and State Government levels. The
Company is not aware of any breaches of these laws and regulations.
OTHER RELEVANT INFORMATION
The following lists other relevant information required under the Corporations Act 2001:
• details of fees paid to the Responsible Entity during the financial year – refer to note 20 to the financial statements
•
the Responsible Entity did not hold any interests in the Company or the Trust at the end of the financial year
• details of issued interests in the Company and the Trust during the financial year – refer to note 6 to the
financial statements.
INDEMNIT Y AND INSURANCE
Indemnities have been given and insurance premiums paid, during or since the end of the financial year, for all of
the Directors of the Company. The contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
Under the Trust’s constitution, the Responsible Entity, including its officers and employees, is indemnified out
of the Trust’s assets for any loss, damage expense or other liability incurred by it in properly performing or
exercising any of its powers, duties or rights in relation to the Trust.
27
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
Insurance premiums have been paid, during or since the end of the financial year, for all of the directors of the
Responsible Entity of the Trust. The contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for the
auditor of the Company and the Trust.
NON-AUDIT SERVICES
Details of the amounts paid or payable to the auditor, Deloitte Touche Tohmatsu, for non-audit services are outlined
in note 21 to the financial statements.
The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or
by another person or firm on the auditor’s behalf), is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 21 to the financial statements do
not compromise the external auditor’s independence requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services are reviewed and approved prior to commencement to ensure they do not adversely
affect the integrity and objectivity of the auditor; and
• none of the services undermine the general principles relating to auditor independence as set out in APES 110
Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board,
including reviewing or auditing the auditor’s own work, acting in a management or decision-making capacity for
the Fund, acting as advocate for the Fund or jointly sharing economic risks and rewards.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001
is set out on the following page.
This report is made in accordance with a resolution of directors, pursuant to section 306(3) of the Corporations
Act 2001.
On behalf of the directors
STUART NISBETT
Chairman of the Responsible Entity
19 February 2020
28
JEFFREY WHALAN
Chairman of the Company
Auditor’s Independence
Declaration
Stanford at sunset
– September 2017
TID ground view – September 2017
29
N E W E N E R G Y S O L A R
Annual Report
Auditor’s Independence Declaration
FOR THE YE AR ENDED 31 DECEMBER 2019
30
Financial Statements
TID PV module closeup –
September 2017
TID ground view – September 2017
31
Statement of Profit or Loss
and Other Comprehensive Income
Statement of Financial Position
FOR THE YE AR ENDED 31 DECEMBER 2019
A S AT 31 DECEMBER 2019
NEW ENERGY SOLAR
NEW ENERGY SOLAR
FUND (COMBINED
LIMITED (COMPANY)
FUND (TRUST)
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
Notes
9
20
20
Net income
Fair value gain of assets
classified as held for sale
Fair value (loss)/gain of
financial assets at fair value
through profit or loss
Foreign exchange gain/(loss)
Finance income
Dividend income
Total net (loss)/income
Fair value loss of forward
foreign currency
derivatives
Finance expenses
Responsible entity fees
Investment management
fees
Accounting and audit fees
Legal and advisory
expenses
Director fees
Marketing expenses
Listing and registry
expenses
Other operating expenses
Total expenses
(Loss)/profit before tax
Income tax benefit
(Loss)/profit after tax for
the year
Other comprehensive
income, net of income tax
Total comprehensive (loss)/
income for the year
Earnings per security
Basic and diluted (loss)/
earnings (cents per security) 5
4
$
–
$
$
$
$
–
1,377,116
–
1,377,116
10 (28,772,101)
2
23,718
–
(28,748,381)
3
6,068
47,237,536 17,454,008 23,096,495 (11,318,093)
(17,857)
10,245,139
87,594
373,899
352,114
(17,859)
108,775 10,221,421 14,998,127
87,594
–
38,446,736
29,122,280
–
47,352,379
$
–
70,334,031
358,182
15,106,902
–
85,799,115
–
(956,002)
–
–
(497,745)
–
– (1,559,881)
(749)
(225,770)
(763)
(180,899)
–
(956,765)
(180,899)
(1,559,881)
(498,494)
(225,770)
(1,456,872)
(269,332)
(1,153,544)
(190,130)
(800,621)
(154,917)
(1,189,938)
(193,372)
(2,257,493)
(424,249)
(2,343,482)
(383,502)
(473,723)
(254,190)
(118,291)
(314,504)
(234,371)
(170,899)
(225,260)
(20,779)
(170,967)
(226,733)
(8,768)
(247,021)
(698,983)
(274,969)
(289,258)
(541,237)
(243,139)
(417,920)
(113,502)
(213,188)
(3,855,100)
(32,603,481)
1,149,414
(121,945)
(111,324)
(127,464)
(198,292)
(180,901)
(132,901)
(2,821,558)
(3,972,469)
(1,846,431)
44,530,821 27,275,849 34,474,267
–
1,173,015
–
(224,826)
(394,089)
(5,701,531)
(5,327,632)
1,149,414
(249,409)
(331,193)
(6,794,027)
79,005,088
1,173,015
(31,454,067)
45,703,836 27,275,849 34,474,267
(4,178,218)
80,178,103
–
–
–
–
–
–
(31,454,067)
45,703,836
27,275,849
34,474,267
(4,178,218)
80,178,103
(9.00)
13.60
7.80
10.25
(1.20)
23.85
The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
32
NEW ENERGY SOLARAnnual Report
Statement of Financial Position
A S AT 31 DECEMBER 2019
NEW ENERGY SOLAR
NEW ENERGY SOLAR
FUND (COMBINED
LIMITED (COMPANY)
FUND (TRUST)
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
ASSETS
Notes
$
$
$
$
$
$
7
8
9
10
11
12
14
Current assets
Cash and cash
equivalents
Trade and other
receivables
Assets classified as
held for sale
Total current assets
Non-current assets
Financial assets held
at fair value through
profit or loss
Deferred tax assets
Other assets -
deferred borrowing
costs
Total non-current
assets
Total assets
LIABILITIES
Current liabilities
Trade and other
payables
Current tax payable
Derivative financial
liabilities
Distribution payable
Total current
liabilities
Total liabilities
Net assets
EQUITY
Issued capital
6
Retained earnings
Total equity
4,542
6,475,915
1,610,618 16,554,264
1,615,160 23,030,179
516,262
69,290
5,008,594
1,160,421
5,047,334
983,241
–
520,804
–
6,545,205
22,432,702
29,051,914
–
17,714,685
22,432,702
–
29,095,196 24,013,420
353,178,601 292,263,917 158,514,967 252,846,452 511,693,568 545,110,369
1,774,728
1,774,728
2,934,918
2,934,918
–
–
1,067,649
1,398,177
–
–
1,067,649
1,398,177
357,181,168 295,436,822 158,514,967 252,846,452 515,696,135 548,283,274
357,701,972 301,982,027 187,566,881 270,561,137 544,791,331 572,296,694
910,690
54,713
812,766
59,379
755,883
–
571,027
–
1,189,051
54,713
1,137,323
59,379
–
–
–
1,559,881
–
– 14,042,395 13,863,888
1,559,881
14,042,395 13,863,888
–
965,403
965,403
15,286,159 16,620,471
15,286,159 16,620,471
356,736,569 301,109,882 172,768,603 254,566,341 529,505,172 555,676,223
872,145 14,798,278
872,145 14,798,278
15,994,796
15,994,796
339,372,774 252,292,020 134,313,666 233,667,317 473,686,440 485,959,337
69,716,886
356,736,569 301,109,882 172,768,603 254,566,341 529,505,172 555,676,223
48,817,862 38,454,937
20,899,024
55,818,732
17,363,795
The above statement of financial position should be read in conjunction with the accompanying notes.
33
NEW ENERGY SOLARAnnual Report Statement of Changes in Equity
Statement of Changes in Equity
FOR THE YE AR ENDED 31 DECEMBER 2019
FOR THE YE AR ENDED 31 DECEMBER 2019
Balance at 1 January 2018
Profit after tax for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Issue of securities
Capitalised issue costs, net of income tax
Deferred tax asset recognised in current year in
connection with prior year issue costs
Share buybacks
Buyback costs, net of income tax
Capital reallocation
NEW ENERGY SOLAR LIMITED (COMPANY)
Issued
capital
$
Retained
earnings
$
Total
$
207,418,305
3,114,026
210,532,331
Notes
–
–
–
15,647,874
(26,305)
595,919
(1,497,814)
(2,687)
30,156,728
45,703,836
45,703,836
–
–
45,703,836
45,703,836
–
–
–
–
–
15,647,874
(26,305)
595,919
(1,497,814)
(2,687)
–
30,156,728
Balance at 31 December 2018
6
252,292,020
48,817,862
301,109,882
Balance at 1 January 2019
Loss after tax for the year
Other comprehensive income, net of income tax
Total comprehensive loss for the year
Issue of securities
Capitalised issue costs, net of income tax
Share buybacks
Buyback costs, net of income tax
Capital reallocation
NEW ENERGY SOLAR LIMITED (COMPANY)
Issued
capital
$
Retained
earnings
$
Total
$
252,292,020
48,817,862
301,109,882
–
–
–
(31,454,067)
(31,454,067)
–
–
(31,454,067)
(31,454,067)
4,734,209
(55,928)
(1,179,359)
(2,115)
83,583,947
–
–
–
–
–
4,734,209
(55,928)
(1,179,359)
(2,115)
83,583,947
Balance at 31 December 2019
6
339,372,774
17,363,795
356,736,569
The above statement of changes in equity should be read in conjunction with the accompanying notes.
34
NEW ENERGY SOLARAnnual Report
Statement of Changes in Equity
Continued
FOR THE YE AR ENDED 31 DECEMBER 2019
Balance at 1 January 2018
Profit after tax for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Issue of securities
Capitalised issue costs, net of income tax
Unit buybacks
Buyback costs, net of income tax
Capital reallocation
Distributions
Balance at 31 December 2018
Balance at 1 January 2019
Profit after tax for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Issue of securities
Capitalised issue costs, net of income tax
Unit buybacks
Buyback costs, net of income tax
Capital reallocation
Distributions
Balance at 31 December 2019
NEW ENERGY SOLAR FUND (TRUST)
Issued
capital
$
Retained
earnings
$
Total
$
264,999,858
(3,192,049)
261,807,809
Notes
–
–
–
34,474,267
34,474,267
–
–
34,474,267
34,474,267
16,163,972
(30,153)
(1,454,914)
(3,728)
(30,156,728)
(15,850,990)
233,667,317
–
–
–
–
–
16,163,972
(30,153)
(1,454,914)
(3,728)
(30,156,728)
(10,383,194)
(26,234,184)
20,899,024
254,566,341
NEW ENERGY SOLAR FUND (TRUST)
Issued
capital
$
Retained
earnings
$
Total
$
233,667,317
20,899,024 254,566,341
–
–
–
27,275,849
27,275,849
–
–
27,275,849
27,275,849
3,299,947
(59,241)
(1,088,639)
(2,790)
(83,583,947)
(17,918,981)
134,313,666
–
–
–
–
–
3,299,947
(59,241)
(1,088,639)
(2,790)
(83,583,947)
(9,719,936)
(27,638,917)
38,454,937
172,768,603
14
6
14
6
The above statement of changes in equity should be read in conjunction with the accompanying notes.
35
NEW ENERGY SOLARAnnual Report Statement of Changes in Equity
Continued
FOR THE YE AR ENDED 31 DECEMBER 2019
Statement Of Cash Flows
FOR THE YE AR ENDED 31 DECEMBER 2019
FUND (COMBINED COMPANY AND TRUST)
Issued
capital
$
Retained
earnings
$
Total
$
472,418,163
(78,023)
472,340,140
Notes
–
–
–
31,811,846
(56,458)
595,919
(2,952,728)
(6,415)
(15,850,990)
485,959,337
80,178,103
80,178,103
–
–
80,178,103
80,178,103
–
–
–
–
–
31,811,846
(56,458)
595,919
(2,952,728)
(6,415)
(10,383,194)
(26,234,184)
69,716,886
555,676,223
FUND (COMBINED COMPANY AND TRUST)
Issued
capital
$
Retained
earnings
$
Total
$
485,959,337
69,716,886 555,676,223
–
–
–
8,034,156
(115,169)
(2,267,998)
(4,905)
(4,178,218)
(4,178,218)
–
–
(4,178,218)
(4,178,218)
–
–
–
–
8,034,156
(115,169)
(2,267,998)
(4,905)
Balance at 1 January 2018
Profit after tax for the year
Other comprehensive income, net of income tax
Total comprehensive income for the year
Issue of securities
Capitalised issue costs, net of income tax
Deferred tax asset recognised in current year in
connection with prior year issue costs
Securities buybacks
Buyback costs, net of income tax
Distributions
Balance at 31 December 2018
14
6
Balance at 1 January 2019
Loss after tax for the year
Other comprehensive income, net of income tax
Total comprehensive loss for the year
Issue of securities
Capitalised issue costs, net of income tax
Securities buybacks
Buyback costs, net of income tax
Distributions
Balance at 31 December 2019
14
6
(17,918,981)
473,686,440
(9,719,936)
(27,638,917)
55,818,732
529,505,172
The above statement of changes in equity should be read in conjunction with the accompanying notes.
36
NEW ENERGY SOLARAnnual Report
Statement Of Cash Flows
FOR THE YE AR ENDED 31 DECEMBER 2019
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
Notes
$
$
$
$
$
$
Cash flows from operating activities
Interest income
received
Other income
Payments to
suppliers
Income tax paid
Net cash flow
from operating
activities
23,718
108,775 10,743,000
15,253,634
10,766,718
15,362,409
–
492,680
–
–
–
492,680
(2,946,461)
(2,000,273)
(2,115,627)
(1,711,508)
(5,062,088)
(3,711,781)
(4,666)
(26,264)
–
–
(4,666)
(26,264)
7
(2,927,409)
(1,425,082)
8,627,373
13,542,126
5,699,964
12,117,044
Cash flows from investing activities
Payments for
investments
Repayments from/
(loans to) related
parties
Net cash flow
from investing
activities
10
(100,217,060)
(32,621,447)
(21,055,586)
– (121,272,646)
(32,621,447)
10
10,952,108 (10,530,274) 107,654,217
10,163,873 118,606,325
(366,401)
(89,264,952)
(43,151,721)
86,598,631
10,163,873
(2,666,321)
(32,987,848)
Cash flows from financing activities
4,734,209
15,647,874
3,299,948
16,163,972
8,034,157
31,811,846
(1,179,359)
(1,497,814)
(1,088,639)
(1,454,914)
(2,267,998)
(2,952,728)
(68,819)
(34,786)
(62,031)
(33,881)
(130,850)
(68,667)
Proceeds from
issue of securities
6
Payments
for securities
buybacks
Payment of issue
and buyback costs
Proceeds from/
(payment
of) capital
reallocation
The above statement of cash flows should be read in conjunction with the accompanying notes.
83,583,947
30,156,728 (83,583,947)
(30,156,728)
–
–
37
NEW ENERGY SOLARAnnual Report Statement Of Cash Flows Continued
FOR THE YE AR ENDED 31 DECEMBER 2019
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
Notes
$
$
(625,000)
(1,570,232)
$
–
$
$
$
–
(625,000)
(1,570,232)
–
(2,000,327)
–
(2,000,327)
(723,992)
246,470
723,992
(246,470)
–
–
–
–
–
(27,460,411)
(25,422,203)
(27,460,411)
(25,422,203)
85,720,986
42,948,240 (110,171,415)
(41,150,224)
(24,450,429)
1,798,016
(6,471,375)
(1,628,563)
(14,945,411)
(17,444,225)
(21,416,786)
(19,072,788)
6,475,915
8,105,112
16,554,264
34,021,450
23,030,179
42,126,562
2
(634)
1,765
(22,961)
1,767
(23,595)
4,542
6,475,915
1,610,618
16,554,264
1,615,160
23,030,179
Payments of
transaction costs
relating to loans
Payment of
forward foreign
currency
derivatives
Proceeds/
(repayment) of
loans from New
Energy Solar Fund
to New Energy
Solar Limited
Distributions paid
Net cash flow
from financing
activities
Net (decrease)
in cash and cash
equivalents
Cash at the
beginning of
the year
Effect of exchange
rate changes
Cash and cash
equivalents at the
end of the year
The above statement of cash flows should be read in conjunction with the accompanying notes.
38
NEW ENERGY SOLARAnnual Report Notes to the Financial
Statements
NC-31 Blocks 9 and 12 –
February 2017
Stanford at sunset – September 2017
39
Notes to the Financial Statements
FOR THE YE AR ENDED 31 DECEMBER 2019
1. GENERAL INFORMATION
The financial statements comprise:
• New Energy Solar Limited (Company), a listed public company incorporated in Australia;
• New Energy Solar Fund (Trust), a listed managed investment scheme registered and domiciled in Australia, with
Walsh & Company Investments Limited acting as Responsible Entity;
on a combined basis referred to as New Energy Solar (the Fund).
One share in the Company and one unit in the Trust have been stapled together to form a listed single stapled
security (Stapled Security). These securities are publicly traded on the Australian Securities Exchange
Limited (ASX).
The principal activity of the Company and the Trust is indirectly investing (through provision of equity and debt to
underlying investment entities) in large-scale solar plants that generate emissions-free power.
REVENUE AND EXPENSES
New Energy Solar is indirectly investing in utility scale solar power plants that generate emissions free power via the
Company’s wholly owned Australian subsidiary, New Energy Solar Australia HoldCo #1 Pty Limited, and its wholly
owned US subsidiary, New Energy Solar US Corp.
New Energy Solar Australia HoldCo #1 Pty Limited is funded by equity and/or debt from the Company. New
Energy Solar US Corp is funded by a combination of equity from the Company and a loan from the Trust, both of
which are denominated in US dollars.
As the Company and the Trust are both considered to meet the definition of an ‘investment entity’ for accounting
purposes (see below), New Energy Solar Australia HoldCo #1 Pty Limited and New Energy Solar US Corp are
not consolidated in the Company’s financial statements, rather they are required to be held at fair value in the
financial statements.
The impact of this on the financial statements is that the main operating revenues of the Fund consist of dividends
from New Energy Solar Australia HoldCo #1 Pty Limited and New Energy Solar US Corp, fair value movements
in the value of the Company’s investment in New Energy Solar Australia HoldCo #1 Pty Limited and New Energy
Solar US Corp, and interest on the loan from the Trust to New Energy Solar US Corp. Net operating income from
underlying solar assets held in Australia and the US and all underlying subsidiary expenses are reflected through the
movement in the fair value of investments in the profit or loss statement.
The underlying cash flows of solar power plants, being revenues from the sale of electricity and renewable energy
certificates less expenses, are distributed on a periodic basis from underlying projects through to New Energy Solar
Australia HoldCo #1 Pty Limited and New Energy Solar US Corp, and underpin the ability to pay interest on the
loan to the Trust and dividends to the Company as noted above.
40
NEW ENERGY SOLARAnnual Report Additionally, as both the Company’s equity investment in New Energy Solar US Corp and the Trust’s loan to New
Energy Solar US Corp are denominated in US dollars, and the Company and the Responsible Entity do not currently
intend to hedge its exposure to foreign currencies, the Fund is also exposed to valuation movements associated with
changes in the US dollar/Australian dollar exchange rate.
BASIS OF PREPARATION
The financial statements have been prepared on an accrual basis and are based on historical cost with the exception
of financial assets held at fair value through profit or loss, which are measured at fair value. All amounts are
presented in Australian dollars unless otherwise noted.
STATEMENT OF COMPLIANCE
The financial statements are general purpose financial statements which have been prepared in accordance with
Australian Accounting Standards issued by the Australian Accounting Standards Board (AASB) and the Corporations
Act 2001. Compliance with Australian Accounting Standards ensures the financial statements and notes to the
financial statements of the Company and the Trust comply with the International Reporting Standards (IFRS) issued
by the International Accounting Standards Board (IASB).
The financial statements were authorised for issue by the directors of the Company and the Responsible Entity
of the Trust, Walsh & Company Investments Limited, on 19 February 2020. For the purposes of preparing the
financial statements, the Company and the Trust are for-profit entities.
The Company and the Trust have each applied ASIC Corporations (Stapled Group Reports) Instrument 2015/838
and therefore include the financial statements of the other entity in their financial report in adjacent columns to
their own financial statements.
AMENDMENTS TO ACCOUNTING STANDARDS THAT ARE
MANDATORILY EFFECTIVE FOR THE CURRENT YEAR
The Company and the Trust have adopted all of the new and revised Standards and Interpretations issued by
the AASB that are relevant to their operations and effective for an accounting period that begins on or after
1 January 2019.
New and revised Standards and amendments thereof and Interpretations effective for the current year that are
relevant to the Company and the Trust include:
• AASB 16 Leases
• AASB 2017-6 ‘Amendments to Australian Accounting Standards –Prepayment Features with Negative
compensation’
• AASB 2017-7 ‘Amendments to Australian Accounting Standards – Long-term Interests in Associates and
Joint Ventures’
• AASB 2018-1 Amendments to Australian Accounting Standards – Annual Improvement 2015-2017 Cycle
•
Interpretation 23 ‘Uncertainty over Income Tax Treatments’
Their adoption has not had any material impact on the disclosures or on the amounts reported in these
financial statements.
41
NEW ENERGY SOLARAnnual Report ACCOUNTING STANDARDS AND INTERPRETATIONS ISSUED BUT
NOT YET EFFECTIVE
At the date of authorisation of the financial statements, the Standards and Interpretations listed below were
in issue but not yet effective. The potential impact of the new or revised Standards and Interpretations which
will be applied in the financial year ending 31 December 2020 are not expected to be material. The potential
impact of the new or revised Standards and Interpretations that will be effective for years ending on or after 31
December 2021 have not yet been determined.
STANDARD/INTERPRETATION
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE INITIALLY
APPLIED IN THE FINANCIAL
YEAR ENDING
AASB 2014-10 ‘Amendments to Australian Accounting
1 January 2022
31 December 2022
Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture’ [AASB 10 &
AASB 128], AASB 2015-10 ‘Amendments to Australian
Accounting Standards – Effective Date of Amendments to
AASB 10 and AASB 128’ and AASB 2017-5 ‘Amendments
to Australian Accounting Standards – Effective Date
of Amendments to AASB 10 and AASB 128 and
Editorial Corrections’
(Editorial corrections in
AASB 2017-5 apply from
1 January 2018)
AASB 2018-6 ‘Amendments to Australian Accounting
1 January 2020
31 December 2020
Standards - Definition of a Business’
AASB 2018-7 ‘Amendments to Australian Accounting
1 January 2020
31 December 2020
Standards – Definition of Material’
AASB 2019-1 ‘Amendments to Australian Accounting
1 January 2020
31 December 2020
Standards – References to the Conceptual Framework’
AASB 2019-3 ‘Amendments to Australian Accounting
1 January 2020
31 December 2020
Standards – Interest Rate Benchmark Reform’
In addition, at the date of authorisation of the financial statements the following IASB Standards and IFRIC
Interpretations were on issue but not yet effective, but for which Australian equivalent Standards and
Interpretations have not yet been issued.
STANDARD/INTERPRETATION
EFFECTIVE FOR ANNUAL
REPORTING PERIODS
BEGINNING ON OR AFTER
EXPECTED TO BE INITIALLY
APPLIED IN THE FINANCIAL
YEAR ENDING
AASB 2019-5 ‘Amendments to Australian Accounting
1 January 2020
31 December 2020
Standards – Disclosure of the Effect of New IFRS Standards
Not Yet Issued in Australia
42
NEW ENERGY SOLARAnnual Report 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been adopted in the preparation and presentation of the financial report.
A) BA SIS FOR NON- CONSOLIDATION
New Energy Solar (or the Fund) comprises New Energy Solar Limited (the Company) and New Energy Solar Fund
(the Trust). The equity securities of the Company and the Trust are stapled and cannot be traded separately.
The parent entity of the stapled group has been determined to be the Company. The Company holds investments,
directly or indirectly, through subsidiaries or other underlying entities including the Trust which is considered to be
a subsidiary of the Company under the accounting standards.
The Company and the Trust are considered to meet the definition of an ‘Investment Entity’ as described in AASB
10 ‘Consolidated Financial Statements’ (refer below). Under AASB 10 an Investment Entity is required to hold its
subsidiaries at fair value through the profit and loss rather than consolidate them. Subsidiaries are entities over
which control is exercised. Control exists when the entity is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.
As noted above the Trust is considered to be a subsidiary of the Company under accounting standards and is
therefore required to be recorded by the Company at its fair value. However, the fair value of the Company’s
investment in the Trust as reflected in the Company’s financial statements is considered to be nil as a result of the
Company holding no direct interest in this subsidiary. The Company financial statements therefore include all of its
own direct and indirect interest in subsidiaries at fair value, but do not reflect any value attributable to the Trust
except for loans made between the Company and the Trust.
The financial statements of the Trust are shown separately under the heading “New Energy Solar Fund (Trust)”. As
noted above because the Trust is considered to be an investment entity, its financial statements reflect its financial
assets, including loan receivables and its investment in direct and indirect subsidiaries, at fair value. The Trust had
no subsidiaries as at the reporting date.
The column headed “Fund” in the financial statements represents non-IFRS financial information (Fund financial
statements) which has been included to reflect the combined financial statements of the Company and the
Trust, together representing the Fund. The Fund financial statements have been prepared to reflect the stapled
securityholders’ combined interest in the Company and the Trust by aggregating the Company and the Trust
financial information after eliminating transactions and balances between the Company and the Trust. The
accounting policies adopted in the preparation of the Fund financial statements is consistent with that adopted in
respect of the Company and the Trust financial statements.
The Company, Trust and Fund financial information disclosures in the format presented in the financial statements
is in accordance with an ASIC Order 17-1127 issued on 14 December 2017.
Investment Entity Classification
Under the definition of an Investment Entity, as set out in AASB 10, an entity must satisfy all of the following
three tests:
• Obtains funds from one or more investors for the purpose of providing those investors with investment
management services; and
• Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation,
investment income, or both; and
• Measures and evaluates the performance of substantially all of its investments on a fair value basis.
43
NEW ENERGY SOLARAnnual Report The Company and the Trust satisfy the above three tests in consideration of the following factors:
• The Company and the Trust have multiple investors, having obtained funds from a diverse group
of securityholders that would not otherwise have access individually to invest in renewable power
generation assets;
• The business purpose of the Company and the Trust, is to invest funds for investment income and potential
capital growth. The intended underlying assets, including those held directly or indirectly by the Company and
the Trust, will have limited operational lives and therefore minimal residual value and so will not be expected to
be held indefinitely; and
• The Company and Trust measure and evaluate performance of their existing and intended future underlying
investments on a fair value basis which is most relevant for its securityholders.
The directors have also assessed that the Company and the Trust meet the typical characteristics of an Investment
Entity described in AASB 10 in that:
• They are separate legal entities;
• Ownership interests in the entities are held by a wide pool of investors who are not related parties; and
• Directly or through their subsidiaries, they hold a portfolio of investments.
B) FUNCTIONAL AND PRESENTATION CURRENCY
The functional and presentation currency of the Company and the Trust is Australian dollars.
Transactions in foreign currencies are initially recorded in Australian dollars by applying the exchange rates at the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies that are outstanding at the
reporting date are retranslated at the rate of exchange at the Statement of Financial Position date. Non-monetary
items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date
when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign
currency are not translated.
C) FINANCIAL INSTRUMENTS
Financial Instruments, incorporating financial assets and financial liabilities, are recognised when the Company and
the Trust become a party to the contractual provisions of the instrument.
i. Financial assets
Being “Investment Entities”, the financial assets of both the Company and the Trust are measured initially and
(except for trade receivables and other short term financial assets) on an ongoing basis at fair value through profit
or loss. Financial assets of the Company and the Trust measured at fair value includes investments in subsidiaries,
loan receivables and investments in listed equity instruments.
ii. Financial liabilities
Financial liabilities are classified as derivative and non-derivative instruments as appropriate. The Company and
the Trust determines the classification of its financial liabilities at initial recognition. All financial liabilities are
recognised initially at fair value.
Non-derivative instruments are subsequently measured at amortised cost using the effective interest rate
method. Derivative instruments are subsequently measured at fair value, with movements recorded through
profit or loss.
44
NEW ENERGY SOLARAnnual Report iii. Derivative financial instruments
Derivative financial instruments may be utilised to manage exposure to foreign exchange rate risks (foreign
currency forward contracts) and interest rate risks (interest rate swap contracts).
Derivatives are recognised initially at fair value at the date a derivative contract is entered into and are
subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit
or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the nature of the hedge relationship.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair
value is recognised as a financial liability. Derivatives are not offset in the financial statements unless the Company
and/or the Trust have both legal right and intention to offset. A derivative is presented as a non-current asset or a
non-current liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be
realised or settled within 12 months. Other derivatives are presented as current assets or current liabilities.
iv. Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is
transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and
benefits associated with the asset. Financial liabilities are derecognised where the related obligations are discharged
or cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred
to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities
assumed, is recognised in profit or loss.
v. Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants under current market conditions at the measurement date. The Responsible Entity
of the Trust and the directors of the Company determine the fair value of subsidiary investments based on
underlying assets information received from the Investment Manager. The Investment Manager’s assessment of
fair value of underlying investments is determined in accordance with “AASB 13 – Fair Value Measurement”, using
discounted cash flow principles unless a more appropriate methodology is applied. The Investment Manager may
at its discretion source independent valuers to undertake these valuations, or to corroborate the results of its own
valuations.
vi. Non-current assets held for sale
Non-current financial assets classified as held for sale are measured in accordance with the measurement
requirements of AASB 9 at fair value through profit or loss. Non-current assets and disposal groups are classified
as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate
sale in its present condition. Management must be committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
45
NEW ENERGY SOLARAnnual Report D) IMPAIRMENT OF A SSE TS
The directors of the Company and Responsible Entity assess at each reporting date whether there is an
indication that an asset may be impaired. If any such indication exists, an estimate is made of the expected loss
which is recognised in profit or loss.
Debt instruments carried at amortised cost (principally trade receivable balances) are assessed on a forward-
looking basis for any lifetime expected credit losses. The impairment methodology applied depends on whether
there has been a significant increase in credit risk.
For trade receivables and interest receivable, the Company applies the simplified approach permitted by AASB 9,
which requires expected lifetime losses to be recognised from initial recognition of the receivables.
No impairment assessment is performed in respect of financial assets where fair value changes are recorded in
profit or loss.
E) WORKING CAPITAL DEFICIENCY
The statement of financial position of the Company reflects working capital deficit position at 31 December 2019
of $0.5 million. After excluding current classified available for sale assets totaling $22.4 million, the statement of
financial position of the Trust reflects a working capital deficit position of $8.2 million.
The directors have considered in respect of the Fund’s overall working capital position the following:
• Cash balances on a look-through basis within the overall Fund structure totaling $9 million at
31 December 2019;
• Reserved funds at 31 December 2019 at the Australian operating level which were distributed post year end
totaling $8.5 million;
• Available but undrawn amounts under a facility residing in a subsidiary of the Company totaling US$1.6 million
at 31 December 2019;
• Expected future distribution income flowing up from subsidiaries of the Company from their solar
operations; and
• Holdings of US Solar Fund plc securities available for sale of A$22.4 million.
Based on the above, the directors are satisfied that the Company and the Trust will be able to meet their working
capital requirements and other obligations for a period of at least 12 months from the date of the financial
statements.
F) CA SH AND CA SH EQUIVALENTS
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of
three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value.
G) TR ADE RECEIVABLES AND OTHER SHORT TERM FINANCIAL A SSE TS
Short term trade receivables and other financial assets are recorded at amortised cost if the following conditions
are met, otherwise they are measured at fair value:
• where the financial asset is held within a business model with the objective to collect contractual cash flows; and
• contractual terms of the financial asset give rise on specific dates to cashflows that are solely repayment of
principal and interest on the principal amount outstanding.
46
NEW ENERGY SOLARAnnual Report H) INTERESTS IN A SSOCIATES AND JOINT VENTURES
An associate is an entity over which the Company or the Trust has significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the investee but is not control or joint control
over those policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties
sharing control.
Pursuant to “AASB 128 Investments in Associates and Joint Ventures”, the Company and the Trust, as Investment
Entities, have elected to measure investments in associates and joint ventures at fair value through profit or loss.
I) TR ADE AND OTHER PAYABLES
Trade and other payables are recognised when the Company and the Trust becomes obliged to make payments
resulting from the purchase of goods or services. The balance is unsecured and is recognised as a current liability
with the amount being normally paid within 30 days of the recognition of the liability.
J) PROVISIONS
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it
is probable an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
K) BORROWINGS
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently
measured at amortised cost using the effective interest method, with interest expense recognised on an effective
yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition.
Borrowings are classified as current liabilities unless there is an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date.
L) TA XES
i. Income tax
Australian Trust
Under current Australian income tax laws, the Responsible Entity (as trustee of the Trust) is not liable to
pay income tax on the net (taxable) income of the Trust, provided the Trust is not a corporate unit trust or a
public trading trust and its distributable income (taxable income) for each income year is fully distributed to
securityholders, by way of cash or reinvestment.
47
NEW ENERGY SOLARAnnual Report Australian Company
Under current Australian income tax laws, the Company is liable to pay income tax at the prevailing corporate tax
rate, currently 30%.
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences
between the tax base of an asset or liability and its carrying amount in the statement of financial position. The tax
base of an asset or liability is the amount attributed to that asset or liability for tax purposes.
In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible
temporary differences or unused tax losses can be utilised. However, deferred tax assets and liabilities are not
recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities
(other than as a result of a business combination) which affects neither taxable income nor accounting profit.
Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from the
initial recognition of goodwill.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when the
asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted
or substantively enacted by the reporting date. The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the company expects, at the reporting date, to
recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority
and the company intends to settle its current tax assets and liabilities on a net basis.
ii. Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except to the extent the amount of GST
incurred is not recoverable from the Australian Taxation Office. In these circumstances, the unrecoverable GST is
recognised as part of the cost of acquisition of the asset or as part of an item of expense.
Where fees are stated to be exclusive of GST and GST is payable on any fee, the fee will be increased by an amount
equal to the GST payable. Cash flows are included in the Statement of Cash Flows on a gross basis, except for
the GST component of cash flows arising from investing and financing activities which are disclosed as operating
cash flows.
The Trust qualifies for reduced input tax credits at a minimum rate of 55% as a recognised trust scheme under
specific provisions in the GST legislation.
M) RE VENUE RECOGNITION
i. Interest income
Interest income is recognised in profit or loss using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective
interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
ii. Dividend/distribution income
Dividend/distribution income is recognised on the date that the Company and the Trust’s right to receive the
dividend/distribution is established.
48
NEW ENERGY SOLARAnnual Report N) E ARNINGS PER SECURIT Y
Basic earnings per security is calculated by dividing the profit or loss attributable to securityholders by the weighted
average number of securities outstanding during the financial year. Diluted earnings per security is the same as
there are no potential dilutive ordinary securities as at reporting date.
O) OPER ATING SEGMENTS
The Company and the Trust currently operate in a single operating segment, being in the business of investing in
solar asset plants. Presently these solar asset plants are owned in the United States of America and Australia.
P) COMPAR ATIVES
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
Q) SHARE /UNIT CAPITAL
i. Ordinary shares, units and options
Ordinary shares, units and options are classified as equity. Issued capital is recognised at the fair value of
consideration received by the Company and the Trust. Incremental costs directly attributable to the issue of
ordinary shares/units are recognised as a deduction from equity.
ii. Dividend/distribution to securityholders
Dividends/distributions are recognised in the reporting period in which they are declared, determined, or publicly
recommended by the board of the Company and/or the Responsible Entity.
R) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
In the application of the Company and the Trust’s accounting policies, management is required to make judgements,
estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from
other sources.
Estimates and judgements are continually evaluated and based on historic experience and other factors believed to
be reasonable under the circumstances.
Investment entity classification
The directors have assessed that both the Company and the Trust continue to meet the definition of an Investment
Entity. This assessment includes judgement of the factors supporting Investment Entity classification as set out in
note 2(a).
Fair value recognition
As the definition of an ‘investment entity’ under AASB 10 is met, the Company and the Trust account for their
subsidiaries at fair value through profit or loss, rather than consolidating them. In performing this fair value
assessment equity interests are therefore measured at fair value for financial reporting purposes. Once an
underlying operating solar asset held by a subsidiary has been owned for a period of no more than twelve months,
the Board and the Responsible Entity will appoint the Investment Manager to produce formal investment valuations
on an appropriate basis. Such valuations will be performed at least annually thereafter. The valuations of the
solar asset equity interests are based on discounted post tax equity cash flow models which are subject to key
estimates and assumptions relating to cost of equity, electricity prices, electricity production, operating expenses,
gearing levels and taxation. The valuations include unobservable inputs and will therefore be categorised as Level
3 investments. The Investment Manager may at its discretion source independent valuers to undertake these
valuations. Refer note 9, note 10 and note 17 for further information relating to fair value assessments.
49
NEW ENERGY SOLARAnnual Report 3. FINANCE INCOME
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
$
$
$
$
23,718
108,775
118,459
219,030
142,177
327,805
–
–
10,102,962
14,779,097
10,102,962
14,779,097
23,718
108,775
10,221,421
14,998,127
10,245,139
15,106,902
Interest income on cash
at bank
Interest income on loan
to New Energy Solar US
Corp (subsidiary of the
Company)
4. INCOME TA X
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18 31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
Income tax benefit
Current tax
Deferred tax – in respect of
$
–
$
–
current year
(1,149,414)
(789,989)
Deferred tax – in respect of
prior years
-
(383,026)
Aggregate income tax benefit
(1,149,414)
(1,173,015)
$
–
–
–
–
$
–
$
–
$
–
–
(1,149,414)
(789,989)
–
–
-
(383,026)
(1,149,414)
(1,173,015)
Numerical reconciliation of income tax expense and tax at the statutory rate
(Loss)/Profit before tax
(32,603,481)
44,530,821
27,275,849
34,474,267 (5,327,632)
79,005,088
Tax at the statutory Australian
tax rate of 30%
(9,781,044)
13,359,246
–
–
(9,781,044)
13,359,246
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Fair value losses/(gains) not
assessable
8,631,630 (14,171,261)
Non-deductible expenses
Deferred tax asset on loss not
recognised
Deferred tax asset from prior
–
–
22,026
–
year recognised in current year
–
(383,026)
Income tax benefit
(1,149,414)
(1,173,015)
50
–
–
–
–
–
–
–
–
–
8,631,630 (14,171,261)
–
–
–
22,026
–
(383,026)
– (1,149,414)
(1,173,015)
NEW ENERGY SOLARAnnual Report NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18 31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
Income tax recognised directly in equity
Current tax – share buy-back
costs
Deferred tax – equity issue
costs in respect of current year
$
$
(907)
(1,152)
(9,870)
(4,642)
(595,919)
–
Deferred tax – equity issue
costs in respect of prior years
Total income tax recognised
directly in equity
Deferred tax assets recognised at balance date comprises
Tax losses (revenue)
Deductible temporary
differences
Total
408,745
2,934,918
2,526,173
(10,777)
540,281
1,774,728
1,234,447
(601,713)
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
$
$
(907)
(1,152)
(9,870)
(4,642)
–
(595,919)
(10,777)
(601,713)
2,526,173
1,234,447
408,745
2,934,918
540,281
1,774,728
5. EARNINGS PER SECURIT Y
(i) Calculated earnings per security
NEW ENERGY SOLAR
LIMITED (COMPANY)
31-Dec-18
31-Dec-19
NEW ENERGY SOLAR
FUND (TRUST)
31-Dec-18
31-Dec-19
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-18
31-Dec-19
cents
cents
cents
cents
cents
cents
Basic and diluted (loss)/
earnings per security
(ii) Earnings used to calculate basic and diluted earnings per security
13.60
(9.00)
7.80
10.25
(1.20)
23.85
$
$
$
$
$
$
(Loss)/Profit from continued
operations used to calculate
basic and diluted (loss)/
earnings per security
(iii) Weighted average number of securities
(31,454,067)
45,703,836
27,275,849 34,474,267 (4,178,218)
80,178,103
No.
No.
No.
No.
No.
No.
Weighted average number of
securities outstanding used
to calculate basic earnings per
security
Weighted average number
of securities outstanding
used to calculate diluted
earnings per security
349,457,518 336,171,810
349,457,518 336,171,810
349,457,518 336,171,810
349,457,518 336,171,810
349,457,518 336,171,810
349,457,518 336,171,810
There are no transactions that would significantly change the number of securities at the end of the
reporting period.
51
NEW ENERGY SOLARAnnual Report 6. EQUITY – ISSUED CAPITAL
(i) Movements in issued capital
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
$
$
$
$
Balance at beginning of year
252,292,020
207,418,305 233,667,317 264,999,858 485,959,337
472,418,163
Issue of securities –
February 2018
Capital reallocation –
June 2018
Issue of securities –
August 2018
Issue of securities –
February 2019
Capital reallocation –
June 2019
Issue of securities –
August 2019
Issue costs
Deferred tax asset recognised
in current year in connection
with prior year issue costs
Buybacks
Buyback costs
Distributions –
June 2018
Distributions –
December 2018
Distributions –
June 2019
Distributions –
December 2019
–
2,364,708
–
2,973,234
–
5,337,942
–
30,156,728
– (30,156,728)
–
–
–
13,283,166
–
13,190,738
–
26,473,904
2,695,085
–
2,295,674
–
4,990,759
83,583,947
– (83,583,947)
–
–
2,039,124
–
1,004,273
–
3,043,397
–
–
–
(55,928)
(26,305)
(59,241)
(30,154)
(115,169)
(56,459)
–
595,919
–
–
–
595,919
(1,179,359)
(1,497,814)
(1,088,639)
(1,454,914)
(2,267,998)
(2,952,728)
(2,115)
(2,687)
(2,790)
(3,728)
(4,905)
(6,415)
–
–
–
–
–
–
–
(7,317,082)
–
(7,317,082)
–
(8,533,907)
–
(8,533,907)
–
(7,194,846)
–
(7,194,846)
– (10,724,135)
– (10,724,135)
–
–
Balance at the end of year
339,372,774 252,292,020 134,313,666 233,667,317 473,686,440
485,959,337
52
NEW ENERGY SOLARAnnual Report (ii) Movements in stapled securities
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
No.
No.
No.
No.
No.
No.
Balance at beginning of year
346,597,195 326,297,684 346,597,195 326,297,684 346,597,195
326,297,684
Issue of securities –
February 2018
Issue of securities –
Augusts 2018
Issue of securities –
February 2019
Issue of securities –
August 2019
–
3,657,035
–
3,657,035
–
3,657,035
–
18,710,596
–
18,710,596
–
18,710,596
3,693,961
–
3,693,961
–
3,693,961
2,431,124
–
2,431,124
–
2,431,124
–
–
Buybacks
(1,662,394)
(2,068,120)
(1,662,394)
(2,068,120)
(1,662,394)
(2,068,120)
Balance at the end of year
351,059,886
346,597,195 351,059,886
346,597,195 351,059,886
346,597,195
All issued stapled securities are fully paid. The holders of stapled share/unit securities are entitled to one vote per
security at meetings of the Company and the Trust and are entitled to receive dividends/distributions declared from
time to time by the Company and the Trust.
25,497 Class A Options were exercised at $1.55 per security on 8 February 2019, and the balance of 67,319,235
were cancelled on expiry. 14,998 Class B Options were exercised at $1.60 per security on 8 August 2019, and the
balance of 67,329,734 were cancelled on expiry.
Security buyback
The Company and the Trust announced an on-market security buyback program on 3 May 2019 of up to 10 million
securities over a 12-month period commencing 17 May 2019 and expiring 16 May 2020. The buybacks are being
undertaken as an active capital management tool to provide liquidity to existing securityholders should they seek to
exit their investment at a discount to net asset value.
During the year ended 31 December 2019, the Company and the Trust acquired stapled securities from
securityholders for a total consideration of $2,267,998 as part of the buyback program announced on 2 May 2018
and 3 May 2019. 1,662,394 securities acquired under the program have been cancelled resulting in a reduction of
fully paid ordinary stapled securities on issue.
The Company and the Trust remain committed to active capital management to provide liquidity for investors as
well as enhancing shareholder returns.
53
NEW ENERGY SOLARAnnual Report 7. CURRENT ASSETS – CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks. Cash
and cash equivalents at the end of the reporting period as shown in the statement of cash flows can be reconciled to
the related items in the statement of financial position as follows:
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
$
$
$
$
Cash and bank balances
4,542
6,475,915
1,610,618 16,554,264
1,615,160
23,030,179
Reconciliation of (loss)/profit after income tax to net cash used in operating activities:
(Loss)/profit after income tax
expense for the year
Adjustments for:
Fair value movement of assets
classified as held for sale
Fair value movement of financial
assets at fair value through
profit or loss
Net foreign exchange (gains)/
losses
Fair value movement of forward
foreign currency derivatives
Amortisation of deferred
borrowing costs
Payments of transaction costs
relating to loans and borrowings
(31,454,067)
45,703,836
27,275,849
34,474,267
(4,178,218)
80,178,103
–
–
(1,377,116)
–
(1,377,116)
–
28,772,101 (47,237,536)
(17,454,008) (23,096,495) 11,318,093
(70,334,031)
634
115,981
(59,184)
115,979
(58,550)
(2)
–
–
330,528
172,055
625,000
–
–
–
–
1,559,881
-
1,559,881
–
–
330,528
172,055
625,000
–
Change in operating assets and liabilities:
Decrease in receivables
30,550
730,788
359,333
316,964
389,883
1,047,752
Increase in deferred tax assets
(1,149,413)
(1,173,015)
–
–
(1,149,413)
(1,173,015)
Increase/(decrease) in payables
(77,440)
404,420
(292,666)
346,693
(370,106)
751,113
Decrease in provision for income
tax
Net cash flow from operating
activities
(4,666)
(26,264)
–
–
(4,666)
(26,264)
(2,927,409)
(1,425,082)
8,627,373 13,542,126
5,699,964 12,117,044
54
NEW ENERGY SOLARAnnual Report
Reconciliation of liabilities arising from financing activities:
COMPANY
Other liabilities - New Energy Solar Fund
COMPANY
Other liabilities - New Energy Solar Fund
TRUST
Other liabilities - New Energy Solar Limited
TRUST
Other liabilities - New Energy Solar Limited
1-JAN-19
$
246,470
246,470
NON-CASH
TRANSACTIONS
FINANCING CASH
MOVEMENTS
31-DEC-19
$
477,522
477,522
$
(723,992)
(723,992)
$
–
–
1-JAN-18
NON-CASH
TRANSACTIONS
FINANCING CASH
MOVEMENTS
31-DEC-18
$
–
–
1-JAN-19
$
(246,470)
(246,470)
$
–
–
$
$
246,470
246,470
246,470
246,470
NON-CASH
TRANSACTIONS
FINANCING CASH
MOVEMENTS
$
–
–
$
723,992
723,992
1-JAN-18
NON-CASH
TRANSACTIONS
FINANCING CASH
MOVEMENTS
$
–
–
$
–
–
$
–
–
31-DEC-19
$
477,522
477,522
31-DEC-18
$
–
–
8. CURRENT ASSETS – TRADE AND OTHER RECEIVABLES
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
$
31-Dec-18
$
31-Dec-19
$
31-Dec-18
$
31-Dec-19
$
31-Dec-18
$
Interest receivable – New
Energy Solar US Corp
–
–
447,718
871,175
447,718
871,175
GST receivable
26,490
29,538
19,306
42,776
45,796
72,314
Other receivables – subsidiary
entity, New Energy Solar US Corp
Other receivables – subsidiary
entity, New Energy Solar
Australia HoldCo#1 Pty Ltd
Other receivables – New
Energy Solar Limited
Other receivables – New
Energy Solar Fund
Other receivables
Dividend receivables
12,250
12,250
–
–
12,250
12,250
–
–
477,522
–
–
–
–
–
27,502
4,453,976
–
4,453,976
–
246,470
–
–
–
87,594
–
–
–
–
–
87,594
–
–
–
27,502
–
516,262
69,290
5,008,594
1,160,421
5,047,334
983,241
55
NEW ENERGY SOLARAnnual Report There are no receivables in respect of which a credit loss provision is considered to be required at 31 December
2019. The receivables are recorded at carrying amounts that are considered to represent reasonable
approximations of fair value.
9. CURRENT ASSETS – ASSETS CLASSIFIED AS HELD FOR SALE
Investment in US Solar Fund plc
(LSE:USF) – Equity
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
–
–
$
$
$
$
– 22,432,702
–
22,432,702
–
22,432,702
–
22,432,702
$
–
–
At balance date, New Energy Solar Fund (Trust) has recorded its investment in US Solar Fund Plc at fair value
(as required under AASB 9) and classified the investment as an asset classified as held for sale. The asset was
considered by the Board of Directors to be immediately available for sale and its disposal was assessed as being
highly probable to occur within 12 months from balance date.
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
–
–
–
–
$
–
$
–
$
–
$
–
– 21,055,586
– 21,055,586
–
1,377,116
–
1,377,116
–
22,432,702
–
22,432,702
$
–
–
–
–
Assets classified as held for
sale opening balance
Total funds invested
during the year in US
Solar Fund
Unrealised
movement in fair
value through profit
or loss (ii)
Assets classified
as held for sale
closing balance
10. NON-CURRENT ASSETS – FINANCIAL ASSETS HELD AT FAIR
VALUE THROUGH PROFIT OR LOSS
The Fund owns its existing underlying solar asset portfolio through the Company’s immediate subsidiary
companies. The Fund’s investment in its immediate subsidiaries consists of a combination of equity and debt
provided by the Company and debt provided by the Trust. As an ‘investment entity’ the Company records its
equity investment at fair value, which comprises the assessed fair value of the underlying solar asset portfolio and
associated debt and the residual net assets of the company and its controlled entities. Similarly, the Trust as an
‘investment entity’ records its loan receivable at fair value.
56
NEW ENERGY SOLARAnnual Report
At balance date, the fair value of the Company and Trust’s combined total investment in immediate subsidiaries and
its controlled entities comprises the following:
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
Investment in
New Energy Solar
– Equity 122,203,744
$
$
10
Australia HoldCo #1
Pty Limited
Investment in New
Energy Solar US
– Loans
–
10,530,274
– Equity 230,974,857
281,733,633
$
–
–
–
$
$
– 122,203,744
$
10
–
–
10,530,274
– 230,974,857
281,733,633
Corp
– Loans
–
–
158,514,967 252,846,452
158,514,967
252,846,452
353,178,601 292,263,917 158,514,967 252,846,452 511,693,568
545,110,369
The investment in subsidiaries comprises on a ‘look-through’ basis the following:
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
1,325,115,050
1,063,338,929
9,049,323
31,040,663
–
–
25,248,529
9,221,280
$
–
–
–
–
$
$
$
– 1,325,115,050
1,063,338,929
–
–
–
9,049,323
31,040,663
–
25,248,529
–
9,221,280
(158,514,967) (252,846,452)
158,514,967 252,846,452
–
–
(1,034,124,352) (608,902,780)
–
– (1,034,124,352) (608,902,780)
Fair value of
underlying solar
asset interests held (i)
Cash or cash
equivalents
Construction loans
to underlying solar
project entities (ii)
Funds on deposit
as security for
guarantees (iii)
Loan funding
provided by New
Energy Solar Fund
to New Energy Solar
US Corp (iv)
3rd party loan
funding provided (v)
57
NEW ENERGY SOLARAnnual Report
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED COMPANY
AND TRUST)
31-Dec-19
$
31-Dec-18
$
31-Dec-19
$
31-Dec-18
$
31-Dec-19
$
31-Dec-18
$
284,295,616
88,740,256
(65,322,318)
(16,003,700)
-
(54,965,536)
(7,134,834)
(8,583,605)
(184,917)
15,976,333
–
–
–
–
–
–
284,295,616
88,740,256
–
–
–
–
(65,322,318)
(16,003,700)
-
(54,965,536)
(7,134,834)
(8,583,605)
(184,917)
15,976,333
Converting 3rd
party funding to tax
equity interest (ITC
Bridge Loan) (v)*
Fair value of Interest
rate swaps on 3rd
party loan funding
provided (v)
Asset acquisition
liabilities
Deferred tax
liabilities
Other net assets/
(liabilities)**
353,178,601
292,263,917 158,514,967 252,846,452
511,693,568
545,110,369
*A bridging loan amount of A$284.3 million (US$199.6 million) will be substantially satisfied by a minority interest contribution
in February 2020 shortly after the substantial completion of MS2. The fair value of the MS2 asset interest has been calculated
based on post minority interest cashflows.
** Includes A$8.8 million of cash retained in the Manildra solar plants and a A$6.1 million cash retained in the Beryl solar plants at
31 December 2019 which was distributed to New Energy Solar Australia Holdco #1 Pty Limited in February 2020.
(i) The balance recorded at 31 December 2019 relates to the company’s interest in the NC-31, NC-47, Stanford,
TID, Boulder, Rigel, MS2, Cypress Creek portfolio, Manildra and Beryl solar asset plants. The fair value of
these assets totaling $1,325.1 million is based on a discounted cash flow valuation as further described in
note 17.
(ii) This 2018 balance represents loans provided in connection with the solar asset plants acquired from
Cypress Creek which were under construction. The loans were interest bearing and provided on commercial
terms and are repayable at the earlier of the occurrence of specific construction milestones or pre-defined
maturity dates.
(iii) This 2018 balance represents short-term term deposits held by the Company’s wholly owned subsidiary,
New Energy Solar Australia HoldCo #1 Pty Limited, as a cash-backed guarantee relating to completion of its
acquisition of the Manildra and Beryl solar farms located in New South Wales.
(iv) As at 31 December 2019, the fair value of Note Purchase Agreements with New Energy Solar US Corp
that New Energy Solar Fund invested into in the amount of US$47,035,530 (face value US$42,699,678,
effective 9 December 2016) and US$64,257,828 (face value US$57,803,480, effective 15 December
2017) has been converted to Australian dollars at the prevailing A$:US$ spot rate of 0.7021 (31 December
2018 spot rate 0.7049). The loans to New Energy Solar US Corp have a seven-year loan term from
inception and a fixed interest rate of 6%. These loans are unsecured. The fair value of these loan receivables
is based on a revaluation at balance date with reference to prevailing referable market interest rates for
comparable external debt as a proxy for market pricing of these loan receivables.
58
NEW ENERGY SOLARAnnual Report (v) 3rd party loan funding is comprised of the following:
DRAWN
FACE
VALUE
(BASE
CURRENCY
$M)
FACILITY
SIZE (BASE
CURRENCY
$M)
DRAWN
FAIR
VALUE
(BASE
CURRENCY
$M)
DRAWN
FACE
VALUE
(A$M)
31 DEC
2019 FX
RATE
31 DEC
2019 FX
RATE
DRAWN
FAIR
VALUE
(A$M)
USD 27.3
USD 25.1
0.7021
35.7
USD 25.1
0.7021
USD 62.5
USD 62.4
0.7021
88.9
USD 66.0
0.7021
USD 22.7
USD 22.7
0.7021
32.4
USD 24.9
0.7021
35.7
94.0
35.4
USD 209.3 USD 209.3
0.7021
298.1 USD 209.3
0.7021
298.1
USD 248.5 USD 199.6
0.7021
284.3 USD 199.6
0.7021
284.3
HELD BY:
NES US Funding 1
LLC (a)
NES Antares HoldCo
LLC (b)
NES Perseus HoldCo
LLC (c)
NES Hercules Class
B Member LLC &
NES Hercules Project
Holdings LLC (d)
NES Hercules Class
B Member LLC &
NES Hercules Project
Holdings LLC (d)
NES Hercules Class
B Member LLC &
NES Hercules Project
Holdings LLC (d)
NES Galaxy LLC (e)
USD 45.0
USD 41.8
USD 8.5
USD 0.0
0.7021
0.7021
–
–
59.5
USD 41.8
0.7021
0.7021
NES Orion HoldCo
LLC (f)
Manildra Finco
Pty Ltd (g)
FS NSW Project No 1
Finco Pty Ltd (h)
USD 22.6
USD 22.3
0.7021
31.7
USD 22.3
0.7021
AUD 71.5
AUD 70.7
AUD 125.4 AUD 124.6
n/a
n/a
70.7
AUD 70.7
124.6 AUD 124.6
1,025.9
n/a
n/a
–
59.5
31.7
70.7
124.6
1,034.1
(a) In June 2019, New Energy Solar refinanced the existing term credit facility held by NES US Funding 1 LLC, a
wholly owned indirect subsidiary of the Company, with KeyBank National Association (Keybank) to increase
the term facility to US$27.3 million. The refinanced term facility is fully amortising and matures in March 2027.
The facility with an underlying LIBOR rate is hedged with a fixed interest rate swap for the full duration of the
Loan. As part of the refinancing agreement, KeyBank National Association hold a charge over the NC-31 and
NC-47 solar plant assets.
(b) US$62.5 million senior secured fixed rate notes issued in October 2017 by NES Antares HoldCo LLC, a wholly
owned indirect subsidiary of the Company, to notes purchasers via the United States private placement market.
The notes are amortising over 24 years maturing 30 September 2041. As part of the note purchase agreements,
the noteholders hold a charge over the Stanford SGS and TID SGS asset interests held.
(c) US$22.7 million senior secured fixed rate notes issued in July 2018 by NES Perseus HoldCo LLC, a wholly
owned indirect subsidiary of the Company, to notes purchasers via the United States private placement market.
59
NEW ENERGY SOLARAnnual Report The notes are amortising over 18.5 years maturing 28 February 2037. As part of the note purchase agreements,
the noteholders hold a charge over NES Perseus HoldCo LLC, the entity which owns the underlying
membership interest in the Boulder solar asset.
(d) MS2 has two non-recourse construction financing facilities, comprising a Construction Loan facility and a ITC
Bridge Loan facility totaling US$457.8 million established on 19 March 2018 held by NES Hercules Class B
Member LLC and NES Hercules Project Holdings LLC, both currently wholly-owned indirect subsidiaries of the
Company. These facilities are provided by HSBC Bank USA N.A., Santander Bank N.A., Cobank ACB, CIT Bank
N.A., Société Générale, Canadian Imperial Bank of Commerce – New York Branch and KeyBank.
The Construction Loan is a US$209.3 million facility, most of which will convert to a Term Loan at the Term Loan
Conversion Date, expected to be February 2020. The loan matures on the 8th anniversary of the Term Loan
Conversion Date. As at 31 December 2019, the construction loan was fully drawn.
The ITC Bridge Loan is a US$248.5 million facility sized to provide a bridge to the equity investment of the tax
equity investor, which occurs in two stages based on construction progress. The ITC Bridge Loan is repaid at
construction completion largely with the proceeds of the tax equity investors initial and final equity capital
contributions. As at 31 December 2019, the ITC Bridge Loan was drawn to US$199.6 million.
MS2 also has a US$8.5 million revolving loan facility which will become available at the Term Loan Conversion
Date. The purpose of this facility is to provide short-term liquidity for the payment of Debt Service and O&M
Expense as required by the project.
The Construction Loan, ITC Bridge Loan and Revolving Loan are secured by the assets of the borrowers NES
Hercules Class B Member LLC and NES Hercules Project Holdings LLC with collateral pledges relating to the
tax equity investor’s future equity capital contributions, as well as various collateral pledges of material project
documents. Once the tax equity investor has made their initial investment, the security pool will include the assets
of the tax equity partnership owned by NES Hercules Class B Member LLC and the tax equity investor.
Post balance date additional working capital was put in place to provide additional liquidity in case of delays in
reaching substantial completion and conversion of debt facilities to term funding on the MS2 project. As part of
this the Keybank corporate facility limit was increased by US$10 million for six months and a short-term facility
of US$15m was put in place with Kendrick Cerry Inc. The loan has a term of 150 days from the date of initial draw
down and carries an interest rate of three percent.
(e) US$45.0 million revolving loan and letter of credit facility established in June 2018 held by NES Galaxy LLC, a
subsidiary of the Company, with KeyBank, repayable no later than 5 June 2021. As at 31 December 2019, the
revolving loan was drawn down to US$41.8 million and a letter of credit was issued for the value of A$2.3 million
to the Commonwealth Bank of Australia (CBA). CBA has in turn provided a Letter of Credit to Manildra Prop
Pty Ltd to the value of A$2.3 million expiring on 28 November 2020. The Keybank letter of credit reduced the
revolving loan facility limit by the same value of A$2.3 million. This loan is secured by a first lien on cash flows
from underlying subsidiaries of NES Galaxy LLC.
(f) In February 2019, NES Orion HoldCo LLC, a wholly owned subsidiary of the Company, entered into a US$22.6
million Corporate Revolving Credit Facility with KeyBank. The amortising loan is repayable no later than
February 2026. As at 31 December 2019, the loan was drawdown to US$22.3 million. As part of the financing
agreement, KeyBank National Association hold a charge over the Cypress Creek solar plant assets.
60
NEW ENERGY SOLARAnnual Report
(g) $71.5 million term loan facility held by Manildra Finco Pty Ltd, a wholly owned indirect subsidiary of the
Company, with Société Générale and MUFG Bank, Ltd as lenders. As at 31 December 2019, $70.7 million has
been drawn down. The loan amortises over the term with a final payment of A$62.1 million due when the facility
expires March 2022. It is secured by a charge over the assets and equity interest in the Manildra solar plant. In
May 2019, all subsisting default events were cured and the construction facility was converted to a term facility,
which also resulted in the cancellation of the GST facility.
(h) $125.4 million term facility held by FS NSW Project No1 Finco Pty Ltd, a wholly owned indirect subsidiary of
the Company, with MUFG Bank, Ltd, Bank of the Philippines, Société Générale and Mizuho Bank, Ltd. As at 31
December 2019, $124.6 million has been drawn down. The loan amortises over the term with a final payment of
A$106.5 million due when the facility expires in May 2023. It is secured by a charge over the assets and equity
interest in the Beryl solar plant. In November 2019 the GST facility was voluntarily cancelled.
First Solar FE Holdings Pte. Ltd. (First solar) has security over the shares and units that NES Australia HoldCo #1
holds in the Manildra and Beryl entities, the security is expected to be released later in February 2020 following the
completion of all payments to First Solar on 13 February 2020.
In addition to the above, the following Letters of Credit have been issued:
• KeyBank National Association has provided Letter of Credit to both NES US Funding 1 LLC and NES Antares
HoldCo LLC to the value of US$7.4 million and US$19.7 million respectively, expiring on 5 June 2027.
• HSBC Bank USA N.A. has provided a Letter of Credit to NES Hercules Class B Member LLC and NES Hercules
Project Holdings LLC to the value of US$17.1 million expiring in December 2027.
• KeyBank National Association has provided a Letter of Credit to NES Perseus HoldCo LLC to the value of
US$8.3 million expiring on 25 July 2028.
• KeyBank National Association has provided a Letter of Credit to NES Orion HoldCo LLC to the value of US$1.7
million expiring on 14 February 2020.
• MUFG Bank, Ltd has provided a Letter of Credit to FS NSW Project No1 Finco Pty Ltd to the value of A$3.875
million expiring in on 30 May 2020.
61
NEW ENERGY SOLARAnnual Report Movement in the equity and debt investments associated with the Company and the Trust’s investment in
immediate subsidiaries during the year were as follows:
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
$
$
$
$
Investment in
financial assets held
at fair value through
profit or loss opening
balance
Total funds invested
during the year in
New Energy Solar
Australia HoldCo #1
Pty Limited
Total funds (repaid)/
invested during the
year in New Energy
Solar US Corp
Unrealised movement
in fair value through
profit or loss (i) (ii)
Investment in
financial assets held
at fair value through
profit or loss closing
balance
292,263,917
201,874,660
252,846,452
239,831,684
545,110,369
441,706,344
89,686,785
10,530,284
–
–
89,686,785
10,530,284
–
32,621,437 (111,785,493)
(10,081,727) (111,785,493)
22,539,710
(28,772,101)
47,237,536
17,454,008
23,096,495
(11,318,093)
70,334,031
353,178,601
292,263,917
158,514,967
252,846,452
511,693,568
545,110,369
(i) The Company’s ‘movement in fair value’ decrement amount of $28.8 million is comprised of a $51.9 million decrease in the value
of its investment in its immediate subsidiary New Energy Solar US Corp (NES US), offset by an unrealised foreign exchange
translation gain of $1.1 million, and a $22.0 million increase in the value of its investment in its immediate subsidiary New
Energy Solar HoldCo #1 (NESAH#1). As at 31 December 2019, the fair value of the Company’s US dollar investment in NES US
has been converted to Australian dollars at the prevailing A$:US$ spot rate of 0.7021 (31 December 2018 spot rate 0.7049)
resulting in the unrealised foreign exchange gain noted of $1.1 million.
The $51.9 million decrease in the value of its investment in NES US includes a fair value loss impact relating to NES US’s
investment in entities holding its underlying solar assets, loss impacts relating to interest bearing loans from the Trust, including
a $17.6 million loan fair value adjustment (offsetting an equivalent gain recognised by the Trust) and interest expense on the loan
totalling $10.2 million (offsetting equivalent interest income earned by the Trust), and net of distribution income earned, other
expenses incurred and associated tax benefits.
The $22.0 million increase in the value of its investment in NESAH#1 is mainly attributable to an increase in the fair value of
NESAH#1’s investment in entities holding its underlying Australian solar assets.
62
NEW ENERGY SOLARAnnual Report
Trade payables
Accrued liabilities
Other liabilities
Other liabilities – New
Energy Solar Fund
Other liabilities – New
Energy Solar Limited
Other liabilities – New
Energy Solar Australia
(ii) The Trust’s ‘movement in fair value’ amount of $18.8 million is comprised of $17.6 million fair value gain in respect of its US
denominated loan to NES US, valued with reference to prevailing referable market interest rates for comparable external
debt as a proxy for market pricing of the loan receivables and $0.1 million of foreign exchange losses. The increase is further
attributable to the $1.1 million increase in the fair value of its investment in US Solar Fund plc, and $0.3 foreign exchange gain
during the year in relation to this investment.
11. CURRENT LIABILITIES – TRADE AND OTHER PAYABLES
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
6,600
102,756
$
–
$
$
$
57,859
6,600
160,615
470,100
451,384
273,900
508,703
744,000
960,087
12,156
12,156
4,461
4,465
16,617
16,621
–
–
246,470
–
477,522
–
–
–
–
–
–
–
–
–
HoldCo#1 Pty Limited
421,834
–
–
421,834
910,690
812,766
755,883
571,027
1,189,051
1,137,323
The average credit period for trade payables is generally 30 days. No interest is charged on trade payables from the date
of invoice. The Company and the Trust have risk management policies to ensure payables are paid within credit terms.
12. CURRENT LIABILITIES – DERIVATIVE FINANCIAL LIABILITIES
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
–
$
–
$
$
–
1,559,881
$
–
$
1,559,881
Foreign exchange
forward contracts
Foreign exchange forward contracts are used to mitigate exchange rate exposure arising from US dollar cash
flows. No forward contracts are outstanding at balance date (31 December 2018: $57.0 million). These contracts
were entered into to hedge anticipated US dollar cash receipts expected over the same time period.
US-dollar forward contracts have not been designated as hedging instruments in cash flow hedges. The fair
values at the reporting date are set out above.
63
NEW ENERGY SOLARAnnual Report
13. BORROWINGS
The Company has a loan facility with Clean Energy Finance Corporation (CEFC) to provide bridge funding for the
acquisition of solar assets. The total available amount under the facility is $50.0 million. As at 31 December 2019,
no amount has been drawn down under this facility (31 December 2018: nil).
The CEFC facility is not able to be drawn until the payments to First Solar as per Note 10(v)(g) are fully made. The
facility termination date is the fifth anniversary of the agreement. Drawn amounts are repayable 12 months after
the date of drawing or earlier if a capital raising is undertaken during that equivalent period. The loan is a fixed rate,
Australian-dollar denominated loan. Interest is payable at the end of each calendar quarter, or where repayment is
due, on the repayment due date.
The loan is secured by the Company’s assets, including shares in its immediate subsidiaries, subject to other security
and subordination arrangements for existing project and corporate debt facilities.
All other borrowings have been undertaken by subsidiaries of the Company and are shown in note 10.
14. DISTRIBUTIONS
Distributions paid or declared to securityholders during or since the end of the year were as follows:
• 3.90 cents per stapled security for the six months ended 30 June 2019 paid on 15 August 2019 amounting to
$13,596,522 (30 June 2018: $12,370,286).
• 4.00 cents per stapled security for the six months ended 31 December 2019 announced on 18 December 2019,
paid on 14 February 2020 amounting to $14,042,395 (31 December 2018: $13,863,888).
15. OPERATING SEGMENTS
The Company and the Trust currently operate solely in a single segment being investing in solar assets. Solar assets
are in Australia and the United States of America. Revenue, profit/(loss), net assets and other financial information
reported to and monitored by the Chief Operating Decision Maker (CODM) for the single identified operating
segment are the amounts reflected in the Condensed Statement of Profit & Loss and Other Comprehensive
Income, Condensed Statement of Financial Position, Condensed Statement of Changes in Equity and Condensed
Statement of Cash Flows.
The board of directors of the Company and the Responsible Entity of the Trust, together are considered to
represent the CODM for the purposes of assessing performance and determining the allocation of resources.
Geographical information
The Fund operates in two principal geographic areas – Australia (country of domicile) and the United States
of America.
64
NEW ENERGY SOLARAnnual Report The Fund’s revenue and information about its segment assets (non-current assets excluding financial instruments,
deferred tax assets and other financial assets) by geographical location are detailed below:
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
$
$
$
$
22,010,393
108,775
118,459
219,030
22,128,852
327,805
(50,758,774)
47,243,604
29,003,821
38,227,706
(21,754,953)
85,471,310
(28,748,381)
47,352,379
29,122,280
38,446,736
373,899
85,799,115
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
FUND (COMBINED
COMPANY AND TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
123,271,393
11,928,461
$
–
$
$
$
– 123,271,393
11,928,461
230,974,857
281,733,633
158,514,967
252,846,452
389,489,824
534,580,085
354,246,250
293,662,094
158,514,967
252,846,452
512,761,217
546,508,546
Revenue
Australia
United States of
America
Non-current assets
Australia
United States of
America
16. FINANCIAL INSTRUMENTS
CAPITAL MANAGEMENT
The Company and the Trust manage their capital to ensure that they will be able to continue as going concerns,
while maximising the return to securityholders. The Company and the Trust’s principal use of cash raised is to fund
investments as well as ongoing operational expenses.
The directors monitor and review the broad structure of the Company and the Trust’s capital on an ongoing basis.
At balance date, the capital structure consists of equity only. There are no externally imposed capital requirements.
FINANCIAL RISK MANAGEMENT OBJECTIVES
The Company and the Trust are exposed to the following risks from its use of financial instruments:
• market risk (market price risk, foreign exchange risk and interest rate risk)
• credit risk
•
liquidity risk.
The directors of the Company and the Responsible Entity of the Trust have overall responsibility for the
establishment and oversight of the risk management framework, including developing and monitoring risk
management policies.
65
NEW ENERGY SOLARAnnual Report A) MARKE T RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of
changes in market prices, such as foreign exchange rates, interest rates and equity prices. The Company and the
Trust are primarily exposed to market risks arising from fluctuations in market prices, foreign currency and interest
rates. Refer to note 17 for further details of market price risk relating to the Company’s investment portfolio.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters while optimising the return.
Foreign exchange risk
Foreign exchange risk arises on financial instruments that are denominated in a foreign currency. Foreign exchange
rate movements will impact on the Australian dollar value of the Company’s and the Trust’s financial assets and
liabilities denominated in a currency that is not the Company’s or Trust’s functional currency.
The Company and the Trust are exposed to US$ foreign exchange risk through their US$ denominated cash and
receivable balances, their investment activities and income derived from these activities.
The table below details the carrying amounts of the Company’s and the Trust’s foreign currency denominated
assets and liabilities (US$) at the reporting date that are denominated in a currency different to the functional
currency. This represents the Australian dollar exposure, converted at an exchange rate of 0.7021 (31 December
2018 rate 0.7049).
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
31-Dec-19
31-Dec-19
31-Dec-19
$
485
–
$
18,665
87,594
$
19,150
87,594
230,974,857
–
230,974,857
–
–
–
22,432,702
22,432,702
158,514,967
158,514,967
447,718
447,718
230,975,342
181,501,646
412,476,988
31 DECEMBER 2019
Cash and cash equivalents
Dividend receivables
Financial assets (equity investments)
Assets held for sale (equity investments)
Financial assets (loan receivables)
Financial assets (other receivables)
66
NEW ENERGY SOLARAnnual Report 31 DECEMBER 2018
Cash and cash equivalents
Financial assets (equity investments)
Financial assets (loan receivables)
Financial assets (other receivables)
Sensitivity Analysis
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
31-Dec-18
31-Dec-18
31-Dec-18
$
472
$
566
$
1,038
281,733,633
–
281,733,633
–
–
252,846,452
252,846,452
871,175
871,175
281,734,105
253,718,193
535,452,298
The effect of the foreign exchange risk relating to equity investments (investment in New Energy Solar US Corp and
investment in US Solar Fund plc) is recorded in profit or loss as part of the overall fair value movement in the assets
classified as held for sale and financial assets (refer to notes 9 and 10). The effect of foreign exchange risk relating to
cash and cash equivalents, loans receivable and other receivables is recorded in profit or loss as a foreign exchange
gain or loss.
The Company and the Trust considers a 5% movement in the A$ against US$ as at 31 December 2019 to be a
reasonable possibility at the end of the reporting period. The impact of the strengthening and weakening of A$
against US$ in profit or loss is shown by the amounts below as it relates to cash and cash equivalents, equity
investments, debt investments and other receivables. This analysis assumes that all other variables remain constant.
31 DECEMBER 2019
AUD strengthened +5%
Cash and cash equivalents
Dividend receivables
Financial assets (equity investments)
Assets held for sale (equity investments)
Financial assets (loan receivables)
Financial assets (other receivables)
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
Effect
Effect
Effect
on profit
on profit
on profit
before tax
before tax
before tax
$
(23)
–
$
(889)
(4,171)
$
(912)
(4,171)
(10,998,803)
–
(10,998,803)
–
–
–
(1,068,224)
(1,068,224)
(7,548,332)
(7,548,332)
(21,320)
(21,320)
(10,998,826)
(8,642,936)
(19,641,762)
67
NEW ENERGY SOLARAnnual Report AUD weakened –5%
Cash and cash equivalents
Dividend receivables
Financial assets (equity investments)
Assets held for sale (equity investments)
Financial assets (loan receivables)
Financial assets (other receivables)
31 DECEMBER 2018
AUD strengthened +5%
Cash and cash equivalents
Financial assets (equity investments)
Financial assets (loan receivables)
Financial assets (other receivables)
AUD weakened –5%
Cash and cash equivalents
Financial assets (equity investments)
Financial assets (loan receivables)
Financial assets (other receivables)
Effect
Effect
Effect
on profit
on profit
on profit
before tax
before tax
before tax
$
26
–
$
982
4,610
$
1,008
4,610
12,156,571
–
12,156,571
–
–
–
1,180,669
1,180,669
8,342,893
8,342,893
23,564
23,564
12,156,597
9,552,718
21,709,315
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
Effect
Effect
Effect
on profit
on profit
on profit
before tax
before tax
before tax
$
(23)
$
(27)
$
(50)
(13,415,887)
–
(13,415,887)
– (12,040,307)
(12,040,307)
–
(41,485)
(41,485)
(13,415,910)
(12,081,819)
(25,497,729)
Effect
Effect
Effect
on profit
on profit
on profit
before tax
before tax
before tax
$
25
14,828,086
$
30
–
$
55
14,828,086
–
–
13,307,708
13,307,708
45,851
45,851
14,828,111
13,353,589
28,181,700
In management’s opinion the above sensitivity analysis is not representative of the inherent foreign exchange risk,
as the year end exposure does not necessarily reflect the exposure during the course of the entire year.
68
NEW ENERGY SOLARAnnual Report Forward foreign exchange contracts
The Company and the Trust may enter into forward foreign exchange contracts to manage the risk associated with
foreign currency cash movements associated with its investment activities.
The following table details the foreign currency forward contracts outstanding at the end of the reporting period.
NEW ENERGY SOLAR LIMITED (COMPANY)
No outstanding contracts
NEW ENERGY SOLAR FUND (TRUST)
Outstanding contracts
AVERAGE
EXCHANGE RATE
FOREIGN
CURRENCY
NATIONAL
VALUE
FAIR VALUE ASSETS/
(LIABILITIES)
31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18
Cash flow
hedges
Sell USD
Less than 3
months
$
–
$
$
$
$
$
$
$
0.724
– 41,278,860
– 57,000,000
– (1,559,881)
– (1,559,881)
FUND (COMBINED COMPANY AND TRUST)
Outstanding contracts
AVERAGE
EXCHANGE RATE
FOREIGN
CURRENCY
NATIONAL
VALUE
FAIR VALUE ASSETS/
(LIABILITIES)
31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18 31-Dec-19 31-Dec-18
Cash flow
hedges
Sell USD
Less than 3
months
$
–
$
$
$
$
$
$
$
0.724
– 41,278,860
– 57,000,000
– (1,559,881)
– (1,559,881)
US-dollar forward exchange contracts have not been designated as hedging instruments in cash flow hedges.
Interest rate risk
Interest rate risk is the risk that cash flows associated with financial instruments will fluctuate due to changes in
market interest rates.
The Company and the Trust are directly exposed to interest rate risk on their variable rate bank deposits and
currently do not hedge against this exposure. The Trust does not bear interest rate risk on its loan funding provided
to New Energy Solar US Corp as the loan interest rate is fixed for the duration of the loan facility.
69
NEW ENERGY SOLARAnnual Report Sensitivity analysis
The Company and the Trust consider a 50 basis point increase or decrease to be a reasonably possible change in
interest rates. The impact of a 50 basis point movement in interest rates on profit or loss and equity is shown in the
table below.
31 DECEMBER 2019
Variable rate deposits
+50 basis points
Variable rate deposits
-50 basis points
31 DECEMBER 2018
Variable rate deposits
+50 basis points
Variable rate deposits
-50 basis points
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
Effect
Effect
Effect
on profit
on profit
on profit
before tax
before tax
before tax
$
23
$
$
8,053
8,076
(23)
(8,053)
(8,076)
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
Effect
Effect
Effect
on profit
on profit
on profit
before tax
before tax
before tax
$
$
$
32,380
82,771
115,151
(32,380)
(82,771)
(115,151)
B) CREDIT RISK
Credit risk is the risk that contracting parties to a financial instrument will cause a financial loss for the Company or
the Trust by failing to discharge an obligation. The Company and the Trust manage credit risk by ensuring deposits
are made with reputable financial institutions. The majority of funds of the Company and the Trust at reporting date
were deposited with Australia and New Zealand Banking Group Limited and Macquarie Bank Limited (Australia).
70
NEW ENERGY SOLARAnnual Report The carrying amount of financial assets that represents the maximum credit risk exposure at the reporting date are
detailed below:
31 DECEMBER 2019
Summary of exposure
Cash and cash equivalents
Loans receivable
Interest receivable
GST receivable
Dividend receivables
Other receivables – related party
31 DECEMBER 2018
Summary of exposure
Cash and cash equivalents
Loans receivable *
Interest receivable
GST receivable
Other receivables – related party
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
31-Dec-19
31-Dec-19
31-Dec-19
$
$
$
4,542
1,610,618
1,615,160
–
–
26,490
–
158,514,967
158,514,967
447,718
447,718
19,306
87,594
45,796
87,594
489,772
4,453,976
4,943,748
520,804
165,134,179
165,654,983
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
NEW
ENERGY
SOLAR
FUND
(TRUST)
FUND
(COMBINED
COMPANY
AND TRUST)
31-Dec-18
31-Dec-18
31-Dec-18
$
$
$
6,475,915
16,554,264
23,030,179
10,530,274
252,846,452
263,376,726
–
871,176
871,176
29,538
39,752
42,776
–
72,314
39,752
17,075,479
270,314,668
287,390,147
* Loans receivable represent loans to New Energy Solar US Corp and New Energy Solar Australia HoldCo #1 Pty Limited.
C) LIQUIDIT Y RISK
Liquidity risk is the risk that the Company or the Trust will encounter difficulty in meeting the obligations associated
with their financial liabilities that are settled by delivering cash or another financial asset. The Company’s and the
Trust’s approach to managing liquidity is to ensure, as far as possible, that they will always have sufficient liquidity to
meet their liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or
risking damage to the Company’s and the Trust’s reputation.
The Company’s and the Trust’s liquidity primarily comprises cash at bank totaling $4,542 and $1,610,618
respectively at 31 December 2019 ($6,475,915 and $16,554,264 respectively at 31 December 2018) which is held
to cover their day-to- day running costs and expenditures.
71
NEW ENERGY SOLARAnnual Report The following is the contractual maturity of financial liabilities. The table has been drawn based on the undiscounted
cash flows of liabilities based on the earliest date on which the Company and the Trust can be required to settle
the liability.
31 DECEMBER 2019
Less than
Remaining
On call
12 months
contractual maturities
NEW ENERGY SOLAR LIMITED (COMPANY)
Trade and other payables
NEW ENERGY SOLAR FUND (TRUST)
Trade and other payables
FUND (COMBINED COMPANY AND TRUST)
Trade and other payables
31 DECEMBER 2018
NEW ENERGY SOLAR LIMITED (COMPANY)
Trade and other payables
NEW ENERGY SOLAR FUND (TRUST)
Trade and other payables
Derivative financial liabilities
FUND (COMBINED COMPANY AND TRUST)
Trade and other payables
Derivative financial liabilities
$
–
–
–
$
910,690
755,883
1,189,051
$
–
–
–
On call
$
Less than
Remaining
12 months
$
contractual maturities
$
–
–
–
–
–
–
–
812,766
571,027
1,559,881
2,130,908
1,137,323
1,559,881
2,697,204
–
–
–
–
–
–
–
17. FAIR VALUE MEASUREMENT
The Company and Trust are exposed to market price risk based on investments in underlying solar assets and on
loan receivable balances and listed equity investments which are measured on a fair value basis.
FAIR VALUE
The fair value of financial assets and financial liabilities approximate their carrying values at the reporting date.
The table below analyses recurring fair value measurements for financial assets. The fair value measurements are
categorised into different levels in the fair value hierarchy based on the inputs to the valuation techniques used. The
different levels are defined as follows:
• Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices)
• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
72
NEW ENERGY SOLARAnnual Report 31 DECEMBER 2019
NEW ENERGY SOLAR LIMITED (COMPANY)
Level 1
Financial assets held at fair value through
profit or loss
NEW ENERGY SOLAR FUND (TRUST)
Assets classified as held for sale
Loans receivable at fair value
FUND (COMBINED COMPANY AND TRUST)
Assets classified as held for sale
Financial assets held at fair value through
profit or loss
Loans receivable at fair value
31 DECEMBER 2018
$
–
Level 1
$
22,432,702
Level 1
$
22,432,702
–
–
Level 2
$
Level 3
$
Total
$
–
353,178,601
353,178,601
Level 2
Level 3
–
158,514,967
Level 2
Level 3
353,178,601
353,178,601
158,514,967
–
158,514,967
Total
$
22,432,702
158,514,967
Total
$
22,432,702
Total
$
$
–
–
$
–
$
$
–
$
–
–
$
–
NEW ENERGY SOLAR LIMITED (COMPANY)
Level 1
Level 2
Level 3
Financial assets held at fair value through
profit or loss
Loans receivable at fair value
NEW ENERGY SOLAR FUND (TRUST)
Loans receivable at fair value
$
–
–
Level 1
$
–
FUND (COMBINED COMPANY AND TRUST)
Level 1
Financial assets held at fair value through
profit or loss
Loans receivable at fair value
$
–
–
281,733,643
281,733,643
10,530,274
–
10,530,274
Level 2
$
252,846,452
Level 2
$
Level 3
$
–
Level 3
$
Total
$
252,846,452
Total
$
–
281,733,644
281,733,644
263,376,726
–
263,376,726
Refer below for a description of the valuation basis adopted for the fair value determination of the equity interest in
the entities holding the underlying solar assets and associated debt.
The fair value of loan advances to New Energy Solar US Corp was assessed at balance date with reference to
prevailing referable market interest rates for comparable external debt as a proxy for market pricing of the
loan receivables.
The fair value of the Trust’s investment in US Solar Fund plc was assessed at balance date with reference to quoted
prices in the London Stock Exchange.
73
NEW ENERGY SOLARAnnual Report
TR ANSFERS DURING THE YE AR
The Company and the Trust recognises transfers between levels of the fair value hierarchy during the reporting
period which the transfer has occurred. Transfers between levels during the financial period are shown in the
table below.
Reconciliation of level 3 fair value measurements
31 DECEMBER 2019
Opening balance
Transfers into level 3 (loan capitalised)
Total gains or losses:
– in profit or loss
Total funds invested during the year in New Energy Solar Australia HoldCo #1
Pty Limited
Closing balance
NEW
ENERGY
SOLAR
LIMITED
(COMPANY)
FUND
(COMBINED
COMPANY
AND TRUST)
Investments
Investments
held at fair
held at fair
value through
value through
profit or loss
profit or loss
$
$
281,733,643
281,733,643
10,530,274
10,530,274
(28,772,101)
(28,772,101)
89,686,785
89,686,785
353,178,601
353,178,601
SOL AR A SSE T VALUATION ME THODOLOGY AND PROCESS
For investments in underlying investment entities holding solar assets which are operational at balance date (except
for assets either acquired or otherwise becoming operational within 12 months of balance date), the Directors base
the fair value of the investments on valuation information received from the Investment Manager. At a minimum,
valuations will be performed annually and otherwise as determined by the Directors. The investment Manager
engages suitably qualified independent valuation firms to assist in its assessment of fair value.
The Directors review and consider the fair value arrived at by the Investment Manager, including any independent
external valuation obtained, before making their assessment of the fair value of the investments. Fair value is
calculated with reference to a discounted cash flow (DCF) methodology.
In a DCF analysis, the underlying investment entity valuation is derived using discounted post tax equity cash flows
that are comprised of cash flows from the underlying solar assets after allowing for debt. The future cash flows
incorporate a range of operating assumptions for revenues, costs and gearing, and an appropriate post tax cost of
equity range. Given the long-term nature of the solar asset investments, the valuation inputs are assessed using
long-term historical data to reflect the asset’s life. Where possible, assumptions are based on observable market
and externally sourced technical data. The Investment Manager uses technical experts such as long-term electricity
price forecasters to provide reliable long-term data for use in its valuations.
In 2019, the Investment Manager has engaged an independent external valuer to assist it in determining an
appropriate post tax equity discount rate for use in its valuation models.
74
NEW ENERGY SOLARAnnual Report For investments in solar plants under construction or otherwise becoming operational within 12 months of balance
date, the Directors may assess, subject to consideration by the Investment Manager of relevant market and other
factors between bid date and balance date, that the total construction and other costs incurred based on its
acquisition bid models, materially represents the assets fair value at balance date. In this regard it is noted that the
investment entities holding the operating assets during the past 12 months, including the Manildra and Beryl assets
in Australia and the Rigel portfolio and MS2 asset in USA were subject to full DCF valuations at balance date.
Over the period, NEW transitioned from a combination of pre-tax unlevered valuations for plants with back-
leverage debt and pre-tax equity valuations for plants with project-level debt to post-tax equity valuations for all
plants. The result of this transition is a movement to post-tax cost of equity discount rates for all assets, rather than
pre-tax WACC used in previous periods. Additionally, NEW now applies different discount rates to contracted and
uncontracted cashflows, reflecting their different risk profiles. The purpose of these enhancements was to more
accurately value the equity interests in NEW’s plants taking into account the debt instruments currently in place
and the highly-contracted nature of cashflows.
FAIR VALUE OF SOL AR A SSE T INVES TMENTS
As at 31 December 2019, the fair value of underlying operating solar asset investments was assessed at $1,325.1
million (US$688.6 million and A$344.3 million), comprising:
PLANT
Stanford/TID
NC-31/NC-47
Boulder Solar I
Rigel
MS2
Subtotal US plants (US$)
A$ to US$ foreign exchange rate at balance date
Subtotal US plants (A$)
Manildra
Beryl
Subtotal AUS plants (US$)
TOTAL (A$)
FAIR VALUE AS AT
31 DECEMBER 2019 ($million)
FAIR VALUE AS AT
31 DECEMBER 2018 ($million)
US$139.0
US$94.0
US$66.9
US$49.8
US$338.9
US$688.6
0.7021
A$980.8
A$135.6
A$208.7
A$344.3
A$1,325.1
US$145.8
US$105.2
US$66.9
–
–
US$317.9
0.7049
A$450.9
–
–
–
A$450.9*
*This excludes the fair value of the Rigel, MS2 and Manildra solar asset investments under construction or recently completed at
31 December 2018 balance date totaling A$612.4 million (US$344.2 million and A$124.1 million).
The fair value of the Fund’s renewable energy asset investments as at 31 December 2019 were derived
by aggregating the debt and equity values relating to each asset. The equity values were determined as
described above, using a cost of equity range of 5.00% to 8.00% for contracted cashflows, and 6.00% to
8.75% for uncontracted cashflows. The fair value of debt was determined based on generally accepted debt
valuation methodologies.
For comparison purposes to 31 December 2018 valuations, the single-rate pre-tax WACC range implied by the 31
December 2019 post-tax equity discount rates is 5.75% to 7.00% (versus 5.9% to 7.4% at 31 December 2018).
75
NEW ENERGY SOLARAnnual Report The Company and the Trust have established a control framework with respect to measurement and assessment
of fair values. The Board of Directors of the Company and the responsible entity of the Trust have overall
responsibility for analysing the performance and fair value movements of underlying US investments during each
reporting period.
SENSITIVIT Y ANALYSIS
Set out below are the key assumptions the Directors believe would have a material impact upon the fair value
of NEW’s solar asset investments and NAV per Stapled Security should they change. The following sensitivities
assume the relevant input is changed over the entire useful life of each of the underlying renewable energy assets,
while all other variables remain constant. All sensitivities have been calculated independently of each other.
The Directors consider the changes in inputs to be within a reasonable expected range based on their
understanding of market transactions. This is not intended to imply that the likelihood of change or that possible
changes in value would be restricted to this range.
31 DECEMBER 2019
31 DECEMBER 2018
Change in
Change in fair
Input
A$/US$ foreign
exchange rate
Discount rate
Electricity production
(change from P50)
Merchant Period
Electricity Prices
Operations and
maintenance expenses
input
+ 5.0%
- 5.0%
+ 0.5%
- 0.5%
P90
P10
- 10.0%
+ 10.0%
+ 10.0%
10.0%
value (A$ million)
(21.1)
23.3
(42.4)
47.3
(106.3)
104.6
(50.4)
50.5
(36.4)
34.9
Change in NAV
per Stapled
Security
(A$ cents)
(6.0)
Change in
fair value
(A$ million)*
(21.5)
Change in NAV
per Stapled
Security
(A$ cents)*
(6.2)
6.6
(12.1)
13.5
(30.3)
29.8
(14.4)
14.4
(10.4)
9.9
23.7
(28.3)
31.3
(50.6)
42.9
(26.9)
26.9
(16.1)
16.1
6.8
(8.2)
9.0
(14.6)
12.4
(7.8)
7.8
(4.7)
4.6
FOREIGN E XCHANGE R ATE
The fair value of NEW’s solar asset investments located in the United States of America are first determined in US$
for financial reporting purposes. The sensitivity shown looks at the impact of a change in the A$ to US$ exchange
rate. A 5% appreciation and 5% depreciation of the assumed US$ to A$ exchange rate (of A$: US$0.7021 as at 31
December 2019) has been considered to determine the resultant impact on NEW’s fair value of investments and
NAV per Stapled Security.
DISCOUNT R ATE
As at 31 December 2019, the fair value of the underlying solar asset investments were determined using a post-
tax cost of equity approach based on the Capital Asset Pricing Model. This approach takes into account long-term
assumptions regarding risk-free rates, market risk premia, gearing, counterparty quality and asset specific items.
The post-tax cost of equity range used is 5.00% to 8.00% for contracted cashflows, and 6.00% to 8.75% for
uncontracted cashflows.
76
NEW ENERGY SOLARAnnual Report The sensitivity demonstrates the impact of a change in the post-tax cost of equity applied to the equity interest
of all of NEW’s renewable energy asset investments as at 31 December 2019. A range of + / - 0.5% has been
considered to determine the resultant impact on NEW’s NAV per Stapled Security and the fair value of its solar
asset investments.
As at 31 December 2018, the fair value of the underlying solar asset investments were determined using a pre-tax
WACC approach based on the Capital Asset Pricing Model. The pre-tax WACC range used was in the range of 5.9%
to 7.4%. For comparison purposes, the single-rate pre-tax WACC range implied by the 31 December 2019 post-tax
equity discount rates is 5.75% to 7.00%.
The sensitivity demonstrated the impact of a change in the pre-tax WACC applied to all of NEW’ renewable energy
asset investments as at 31 December 2018. A range of + / - 0.5% was considered to determine the resultant impact
on NEW’s NAV per Stapled Security and the fair value of its solar asset investments.
ELECTRICIT Y PRODUCTION
NEW’s solar asset investments are valued based upon a forecast P50 solar energy generation profile (being a 50%
probability that this generation estimate will be met or exceeded). A technical adviser has derived this generation
estimate by taking into account a range of irradiation datasets, satellite and ground-based measurements, and site-
specific loss factors including module performance degradation, module mismatch and inverter losses. These items
are then considered in deriving the anticipated production of the individual solar asset (MWh per annum) based
upon a 50% probability of exceedance.
The sensitivity shown looks at the impact on the fair value of solar asset investments and NAV per Stapled Security
of a change of production estimates to P90 (90% likely probability of exceedance) and a P10 generation estimate
(10% probability of exceedance).
As P10 generation estimates were not independently obtained for each solar asset on or about the time of the asset
acquisition, the Directors have determined a proxy P10 estimate for those assets by assessing the relationship
between the independently determined P50 and P90 generation estimates for each of the assets in the Operating
Portfolio (e.g. a one-year P90 generation estimate might be 92.5% of a one-year P50 generation estimate, implying
that it is 7.5% lower than the P50 generation estimate).
In determining the proxy P10 generation estimate, the Directors have assumed that the relationship between a P50
generation estimate and a P10 generation estimate is the same as that between a P50 generation estimate and a
P90 generation estimate in absolute terms. Therefore, a one-year P10 generation estimate by this methodology
would be 107.5% (i.e. 100% + 7.5%) of the asset’s P50 generation estimate.
MERCHANT PERIOD ELECTRICIT Y PRICES
Each of the assets underlying NEW’s solar asset investments have long-term PPAs in place with creditworthy
energy purchasers and thus the PPA prices are not impacted by energy price changes during this period. For the
post-PPA period of each solar asset, the Directors use long-term electricity price forecasts that have been prepared
by a market consultant in their determination of the fair value of NEW’s operating solar asset investments.
The sensitivities show the impact of an increase/decrease in power prices for each year of the power price curve for
each plant over the plant’s remaining economic life after the conclusion of the existing PPAs. A flat 10% increase/
decrease in market electricity prices from forecasted levels over the remaining asset life of all plants have been used
in the sensitivity analysis.
77
NEW ENERGY SOLARAnnual Report OPER ATING E XPENSES
The operating costs of the assets underlying NEW’s solar asset investments include annual operations and
maintenance (O&M), asset management (AM), insurance expenses, land lease expenses, major maintenance and
general administration expenses.
The sensitivity above assumes a 10% increase/decrease in annual operating costs for all underlying assets and
the resultant impact on NEW’s fair value of investments and NAV per Stapled Security.
LOAN FAIR VALUE SENSITIVIT Y ANALYSIS
The Directors have also assessed the impact of a change in interest rate environment on the fair value of the loan
receivable to New Energy Solar US Corp held by the Trust as set out below.
31 DECEMBER 2019
31 DECEMBER 2018
Change in
fair value of
investments
(A$ thousands)
(3,121)
3,196
Change in NAV
per Stapled
Security
(A$ cents)
(0.89)
0.91
Change in
fair value of
investments
(A$ thousands)
(5,285)
5,422
Change in NAV
per Stapled
Security
(A$ cents)
(1.52)
1.56
Change
in input
+ 0.5%
- 0.5%
Input
US interest rates
18. CONTROLLED AND JOINTLY CONTROLLED ENTITIES
As ‘Investment Entities’ the Company and the Trust recognise all underlying investments in their direct and indirect
subsidiaries and jointly controlled entities at fair value through profit or loss. Below is the legal name for the Holding
Company and the remaining legal entities controlled or jointly controlled through the investment in the HoldCo
entities at reporting date.
COMPANY
Name of entity
Place of registration
and operation
Direct or
Indirect
Holding
Principal
Activity
Economic
interest
31 Dec 2019
Economic
interest
31 Dec 2018
New Energy Solar US Corp.
United States of America
Direct HoldCo
NES Rosamond 1S, LLC
United States of America
Indirect
SSCA XLI Class B Member HoldCo, LLC United States of America
Indirect
SSCA XLI Class B Member, LLC
United States of America
Indirect
NES Rosamond 2T, LLC
United States of America
Indirect
GFS I Class B Member HoldCo, LLC
United States of America
Indirect
GFS I Class B Member, LLC
United States of America
Indirect
NES US NC-31 LLC
NES US NC-47 LLC
United States of America
Indirect
United States of America
Indirect
NES US Funding 1, LLC
United States of America
Indirect
NES Antares HoldCo, LLC
United States of America
Indirect
NES Orion HoldCo, LLC
NES Callisto Lender, LLC
United States of America
Indirect
United States of America
Indirect
SSCA XLI Holding Company, LLC
United States of America
Indirect
GFS I Holding Company, LLC
United States of America
Indirect
US-NC-31 Sponsor, LLC
United States of America
Indirect
78
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
100.00%
100.00%
99.90%
99.90%
100.00%
100.00%
99.90%
99.90%
100.00%
100.00%
99.90%
99.90%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
(i)
(i)
99.90%
99.90%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
(i)
(i)
100.00%
100.00%
NEW ENERGY SOLARAnnual Report Place of registration
and operation
Direct or
Indirect
Holding
Principal
Activity
Economic
interest
31 Dec 2019
Economic
interest
31 Dec 2018
Name of entity
IS-31 Holdings, LLC
Innovative Solar 31, LLC
US-NC-47 Sponsor, LLC
IS-47 Holdings, LLC
Innovative Solar 47, LLC
NES Rigel HoldCo, LLC
NES Rigel MM, LLC
NES Rigel Tenant, LLC
NES Rigel Lessor, LLC
New Energy Solar Australia HoldCo #1
Pty Limited
NES Galaxy, LLC
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
Australia
Direct HoldCo
United States of America
Indirect
NES Perseus HoldCo, LLC
United States of America
Indirect
BSPCB Class B Member, LLC
United States of America
Indirect
BSP Class B Member Holdco, LLC
United States of America
Indirect
BSP Class B Member, LLC
United States of America
Indirect
BSP Holding Company, LLC
United States of America
Indirect
NES Hercules HoldCo, LLC
United States of America
Indirect
NES Hercules Class B Member, LLC
United States of America
Indirect
NES Hercules Buyer, LLC
United States of America
Indirect
NES Hercules TE Holdings, LLC
United States of America
Indirect
NES Hercules Project Holdings, LLC
United States of America
Indirect
NES Hercules ProjectCo, LLC
United States of America
Indirect
Imperial Valley Solar 2, LLC
United States of America
Indirect
NES IVS Holdings, LLC
NES SREC Holdco, LLC
VivoRex, LLC
Manildra Hold Trust
Manildra Prop Hold Pty Limited
Manildra Asset Trust
Manilda Prop Pty Limited
Manildra Finco Pty Limited
Manildra Solar Farm Pty Limited
FS NSW Project No 1 Hold Trust
FS NSW Project No 1 HT Pty Limited
FS NSW Project No 1 Asset Trust
FS NSW Project No 1 AT Pty Limited
FS NSW Project No 1 Finco Pty Limited
United States of America
Indirect
United States of America
Indirect
United States of America
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
Australia
Indirect
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
SPV
(i)
(i)
(i)
(i)
100.00%
100.00%
(i)
(i)
100.00%
100.00%
(i)
(i)
100.00%
100.00%
100.00%
100.00%
(i)
(i)
(i)
100.00%
100.00%
100.00%
(i)
(i)
(i)
(i)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
(i)
(i)
99.00%
99.00%
(i)
(i)
100.00%
100.00%
100.00%
100.00%
(i)
(i)
(i)
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
n/a
n/a
n/a
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
n/a
n/a
n/a
n/a
n/a
79
NEW ENERGY SOLARAnnual Report TRUST
–
N/A
N/A
N/A
N/A
N/A
(i) The economic interest percentage held is not readily determinable since the investors have different classes of shares with
entitlements which change over time, including preferential entitlements and entitlements to tax losses.
All Special Purpose Vehicle (SPV) activities relate to ownership and operation of solar energy assets.
19. KEY MANAGEMENT PERSONNEL
DIRECTORS
The following persons were directors of New Energy Solar Limited during the financial year:
Jeffrey Whalan – Non-Executive Chairperson
James Davies – Non-Executive Director
John Holland – Non-Executive Director
Maxine McKew – Non-Executive Director
Alan Dixon – Non-Executive Director
John Martin
The following persons were directors of Walsh & Company Investments Limited during the financial year:
Stuart Nisbett (appointed 19 December 2019)
Peter Shear (appointed 19 December 2019)
Warwick Keneally
Mike Adams
Alex MacLachlan (resigned 19 December 2019)
John Martin and Alex MacLachlan are also directors of the Investment Manager, New Energy Solar Manager
Pty Limited.
KE Y MANAGEMENT PERSONNEL REMUNER ATION
The remuneration of directors and other members of key management personnel during the year was as follows:
Short-term benefits
Superannuation
Post-employment benefits
Other long-term benefits
Share-based payments
Termination benefits
Other services
80
31 DEC 2019
$
244,817
15,183
–
–
–
–
14,000
274,000
31 DEC 2018
$
227,317
15,183
–
–
–
–
–
242,500
NEW ENERGY SOLARAnnual Report As at the reporting date, details of directors who hold securities for their own benefit or who have an interest in
holdings through a third party and the total number of such securities held are listed as follows:
DIRECTOR OF THE COMPANY
NO. OF SECURITIES
Jeffrey Whalan
John Holland
James Davies
Maxine McKew
Alan Dixon
John Martin
DIRECTOR OF THE RESPONSIBLE ENTITY OF THE TRUST
Warwick Keneally
Mike Adams
Stuart Nisbett
Peter Shear
541,552
234,264
39,246
66,666
7,371,874
600,310
42,098
–
–
–
20. RELATED PART Y DISCLOSURES
KE Y MANAGEMENT PERSONNEL
Disclosures relating to key management personnel are set out in note 19 and the remuneration report included in
the directors’ report.
REL ATED PART Y INVES TMENTS IN THE FUND
The Responsible Entity or its associates does not hold any investments in the Company or the Trust.
RESPONSIBLE ENTIT Y FEE
Walsh & Company Investments Limited, as Responsible Entity of the Trust receives a Responsible Entity Fee for
the performance of its duties under the constitution of the Trust. The Responsible Entity Fee is 0.08% per annum
(exclusive of GST) calculated on the gross asset value of the Trust and payable monthly in arrears by the Trust.
For the year ended 31 December 2019, $172,298 (31 December 2018: $215,207), exclusive of GST, was paid or
payable to the Responsible Entity.
Total Responsible Entity fee included in trade and other payables of the Trust at 31 December 2019 is $37,500 (31
December 2018: $54,700).
INVES TMENT MANAGER FEE
New Energy Solar Manager Pty Limited, as Investment Manager of the Fund receives an Investment Manager Fee
based on the sliding scale fee structure as set out below. Fees are calculated on the Enterprise Value of the Fund,
payable quarterly in arrears. Fees are allocated to the Company, Trust or Controlled Entities depending on the
recipient of investment manager services.
81
NEW ENERGY SOLARAnnual Report Table 1
MANAGEMENT FEE STRUCTURE
Fees (excluding GST) – up to 30 June 2018
Revised Fees for EV
within each band1
(excluding GST) –
from 1 July 2018
Enterprise Value band
Less than or equal to
A$1.0 billion
Greater than
A$1.0 billion to A$2.0 billion
Greater than A$2.0 billion
BASE MANAGEMENT FEE
(% OF ENTERPRISE VALUE
(EV))
ACQUISITION AND
DISPOSAL FEE (% OF PURCHASE
PRICE OR NET SALE PROCEEDS)
0.70%
0.70%
0.55%
0.40%
1.50%
1.50%
0.90%
0.40%
1. These Fees are applied on a marginal basis to each EV band. For example, the revised Base Management Fee for an EV of A$1,500
million would be A$9.75m (excluding GST) which is the sum of (A$1,000 million multiplied by 0.70%) plus (A$500 million multiplied
by 0.55%).
Effective 16 April 2019, the investment manager waived payment of part of the Base Management Fee that’s
otherwise payable by the Fund in respect of its investment in US Solar Fund plc (USF). The Enterprise Value used to
calculate the Base Management Fee is reduced by the Fund’s investment in USF of $22.4 million (US$15.75 million).
In addition, a lower Base Management Fee structure was established as set out in the following table:
Table 2
THRESHOLD VALUE
Threshold Value
< A$1.0bn
A$1.0bn to A$1.5bn
A$1.5bn to A$2.0bn
> A$2.0bn
Threshold Value means:
BASE MANAGEMENT FEE
(% OF ENTERPRISE VALUE
(EV))
ACQUISITION AND
DISPOSAL FEE (% OF PURCHASE
PRICE OR NET SALE PROCEEDS)
0.625%
0.55%
0.40%
0.40%
1.50%
0.90%
0.90%
0.40%
Base Management Fee – Percentage of Enterprise Value: Enterprise Value is calculated as the total of the
Fund’s market capitalisation, external borrowing, debt or hybrid instruments issued by the Fund as defined in the
Investment Management Agreement.
All fees are applied on a marginal basis to each Threshold Value band and calculated at the end of each quarter.
For example, the revised Base Management Fee for a Threshold Value of A$1,500 million would be A$9.0 million
(excluding GST) which is the sum of (A$1,000 million multiplied by 0.625%) and (A$500 million multiplied
by 0.55%).
Acquisition and Disposal Fee – Percentage of Cumulative Purchase Price or Net Sale Proceeds: Purchase
Price and Sale price as defined in the Investment Management Agreement and assessed in A$ at the time the
purchase or sale takes effect where purchases add to the cumulative total and sales reduce the cumulative total.
All fees are applied on a marginal basis to each Cumulative Purchase Price or Net Sale Proceeds band. Gross
purchase price and gross sale price as they are referred to in the definitions of Purchase Price and Net Sale
Proceeds respectively mean the value of the equity and debt of an Asset acquired or disposed.
82
NEW ENERGY SOLARAnnual Report For the year ended 31 December 2019, $1,420,728 (31 December 2018: $1,133,570), exclusive of GST, was paid
or payable to the Investment Manager by the Company, $773,166 (31 December 2018: $1,168,529), exclusive of
GST, was paid or payable by the Trust and $5,226,565 (31 December 2018: $4,221,864), exclusive of GST, was
paid or payable by New Energy Solar US Corp, a controlled entity of the Company.
Total Investment Manager fee included in trade and other payables at 31 December 2019 is $339,000
(31 December 2018: $364,000) for the Company and $160,000 (31 December 2018: $349,000) for the Trust.
ACQUISITION FEE
New Energy Solar Manager Pty Limited, in its capacity as Investment Manager, is responsible for sourcing,
undertaking due diligence investigations, recommending solar energy asset acquisitions as well as advising,
providing recommendations, and executing investment exit strategies to the Fund.
The Investment Manager receives an Acquisition fee based on the sliding scale fee structure in Table 1 under
“Investment Manager Fee” above. The fees are calculated on the purchase price (excluding acquisition costs)
of assets acquired by the Company and the Trust or their respective Controlled Entities. The Acquisition Fee is
payable to the Investment Manager upon completion of the acquisition of any asset by the Company and the Trust
or their respective Controlled Entities, and prorated fee payment in the case of an acquisition by instalments/
part payments.
From 16 April 2019, the Investment Manager waived part of its fees as set out in Table 2 included under
“Investment Manager Fee” above.
For the year ended 31 December 2019, Acquisition Fees of $nil (31 December 2018: $7,886,111), exclusive of GST,
was paid or payable to the Investment Manager by New Energy Solar US Corp, a Controlled Entity of the Company,
and $2,004,196 (31 December 2018: $1,640,466), exclusive of GST, was paid or payable to the Investment
Manager by New Energy Australia HoldCo #1 Pty Limited, a Controlled Entity of the Company. For the year ended
31 December 2019, no acquisition fees (31 December 2018: nil), exclusive of GST, was paid or payable to the
Investment Manager directly by the Company.
Total Acquisition Fees included in trade and other payables of the Company at 31 December 2019 is nil (31
December 2018: nil).
BROKER AGE FEE
Dixon Advisory & Superannuation Services Limited, a related party of the Responsible Entity, was engaged as
a broker by the Fund, receives brokerage of 0.25% on all transactions undertaken as part of the Fund’s buy-
back program.
Total brokerage fee paid or payable to the related party of the Responsible Entity for the year ended 31 December
2019 was $5,670 (31 December 2018: $7,382), exclusive of GST.
FUND ADMINIS TR ATION FEES
Australian Fund Accounting Services Pty Limited, a wholly-owned subsidiary of ED Operations Pty Limited, the
parent of the Responsible Entity, provides fund administration services to the Company and the Trust under an
agreement with the Investment Manager. Time spent by staff is charged to the Company and the Trust at agreed
rates up to an annual cap. These services include net asset valuation, management accounting, statutory reporting,
capital management and taxation. Total fund administration fees paid or payable for the year ended 31 December
2019 were $72,900 (31 December 2018: $57,000), exclusive of GST, by the Company and $47,100 (31 December
2018: $63,000), exclusive of GST, by the Trust.
Total fund administration fees included in trade and other payables at 31 December 2019 is nil (31 December
2018: $15,300) for the Company and nil (31 December 2018: $14,700) for the Trust.
83
NEW ENERGY SOLARAnnual Report DEBT ARR ANGING FEES
Walsh & Company Corporate Advisory, a division of Walsh & Company Asset Management Pty Limited which is a
wholly-owned subsidiary of ED Operations Pty Limited, the parent of the Responsible Entity, was engaged on 21
June 2017 to provide debt arranging services to the Fund, including contacting and liaising with capital providers,
negotiating borrowing terms, obtaining credit ratings, implementing interest rate hedging strategies and executing
documentation. Walsh & Company Corporate Advisory were successful in securing debt, interest rate hedging and
letter of credit facilities at competitive terms for the Fund, providing diversification to the Fund’s capital sources.
For this service, Walsh & Company Corporate Advisory receives debt arranging fees ranging from 0.5%-2.0% of the
face value of new third-party debt and letter of credit facilities.
During the year ended 31 December 2019, Walsh & Company Corporate Advisory successfully negotiated new
debt and banking facilities totaling $71.6 million (US$50.3 million).
For the year ended 31 December 2019, debt arranging fees of $nil (31 December 2018: $500,000) was paid
or payable to Walsh & Company Corporate Advisory by the Company, and $528,472 (31 December 2018:
$3,530,357) was paid or payable to Walsh & Company Corporate Advisory by wholly owned subsidiaries of NES
US Corp.
Total debt arranging fees included in trade and other payables of the Company and the Trust at 31 December 2019
is nil (31 December 2018: nil).
PROJECT SERVICES AGREEMENT
New Energy Solar US Corp, a subsidiary of the Company, entered into a non-exclusive arrangement dated 27
October 2017 with NES Project Services, LLC for the provision of asset management, operations and maintenance
services and/or construction management services (Services). The agreement is for an initial one-year term, with
rolling one year extensions if the agreement has not been terminated. The Services will be provided upon request
by NES US Corp. at market rates.
The primary focus of these activities is to ensure that construction service providers successfully deliver projects
on time and cost. Key tasks include construction project management, regular site visits, contract supervision,
identification and resolution of potential issues and construction payment approvals.
For the year ended 31 December 2019, project managers completed 15 site visits to the MS2 project in California.
This project incurred construction expenditures of $195.27 million (US$137.1 million) during the year. Project
services fees of $352,330 were paid or payable by New Energy Solar US Corp, a Controlled Entity of the Company
for the year for the year ended 31 December 2019 (31 December 2018: $1,889,508).
A SSE T MANAGEMENT SERVICES AGREEMENT
New Energy Solar US Corp, a subsidiary of the Company, entered into a non-exclusive arrangement dated 17
September 2018 with NES Project Services, LLC for the provision of asset management services in relation to
construction and operation of solar farms. The Services will be provided upon request by NES US Corp. at an
hourly rate.
Key tasks include facility development and operations services, insurance, government approvals, reporting
and inspections.
Asset management fees of $519,316 were paid or payable by New Energy Solar US Corp, a Controlled Entity of the
Company for the year for the year ended 31 December 2019 (31 December 2018: nil).
84
NEW ENERGY SOLARAnnual Report INVES TMENT IN OTHER ENTIT Y MANAGED BY THE INVES TMENT MANAGER
During the year, the Trust invested $21.1 million (US$15.0 million) in US Solar Fund plc. US Solar Fund plc is a
$US denominated investment vehicle listed on the London Stock Exchange (LSE). New Energy Solar Manager Pty
Limited (the Investment Manager of the Company and Trust) is the Investment Manager of US Solar Fund plc. As at
31 December 2019, the fair value of the Fund’s holding in USF is $22.4 million (US$15.8 million). The fair value of
the investment is disclosed in note 9.
SIGNAGE
The Trust Company (Australia) Limited as custodian and agent for Walsh & Company Investment Services Pty Ltd
(ACN 163 814 346) as trustee for APOT III No. 1 Trust, a related party of the Fund, has a contractual agreement
with the Trust, to provide a non-exclusive licence for the use of the signage at the property of Level 11, 241
O’Riordan Street, Mascot New South Wales, under the terms of the signage licence agreement. Total signage
licence fees paid or payable for the year ended 31 December 2019 were $17,646 (31 December 2018: $16,806),
exclusive of GST by the Trust.
21. REMUNERATION OF AUDITORS
During the financial year the following fees were paid or payable for services provided by Deloitte Touche
Tohmatsu, the auditor of the Company and the Trust:
Auditors of the Company and the Trust
Deloitte Touche Tohmatsu
Audit and review of the Company and
the Trust financial statements
Other advisory services
Taxation services
NEW ENERGY SOLAR
LIMITED (COMPANY)
NEW ENERGY SOLAR
FUND (TRUST)
31-Dec-19
31-Dec-18
31-Dec-19
31-Dec-18
$
$
$
$
165,680
112,200
95,820
107,800
28,000
9,000
–
79,465
12,000
6,850
–
76,349
202,680
191,665
114,670
184,149
Fees were also paid by subsidiaries of the Company to Deloitte Touche Tohmatsu as follows:
Audit of subsidiary financial statements
$115,000
Taxation services
$65,963
Fees were also paid by subsidiaries of the Company to other audit firms, including Deloitte Tax LLP as follows:
Taxation services
$77,907
22. CAPITAL COMMITMENTS
As at 31 December 2019, the Company and the Trust do not have any direct outstanding capital commitments.
85
NEW ENERGY SOLARAnnual Report
Directors’ Declaration
FOR THE YE AR ENDED 31 DECEMBER 2019
23. CONTINGENT LIABILITIES
Other than as disclosed in the financial statements, the directors of the Company and Responsible Entity
are not aware of any other potential liabilities or claims against the Company or the Trust as at the end of the
reporting period.
24. EVENTS AFTER THE REPORTING PERIOD
A distribution of 4.0 cents per stapled security totaling $14,042,395 was declared on 18 December 2019 and
was paid to securityholders on 14 February 2020. 2,282,068 stapled securities were issued under the Fund’s
Distribution Reinvestment Plan.
Post balance date additional working capital was put in place to provide additional liquidity in case of delays in
reaching substantial completion and conversion of debt facilities to term funding on the MS2 project. As part of
this the Keybank corporate facility limit was increased by US$10 million for six months and a short-term facility of
US$15 million was put in place with Kendrick Cerry Inc. The loan has a term of 150 days from the date of initial draw
down and carries an interest rate of three percent. Substantial completion on the MS2 project was achieved on 17
January 2020.
No other matter or circumstance has arisen since 31 December 2019 that has significantly affected, or may
significantly affect the Company or the Trust's operations, the results of those operations, or the Company or the
Trust's state of affairs in future financial years.
86
NEW ENERGY SOLARAnnual Report Directors’ Declaration
FOR THE YE AR ENDED 31 DECEMBER 2019
The directors of the Company and directors of the Responsible Entity of the Trust declare that, in the
directors’ opinion:
•
•
•
•
the financial statements and notes thereto are in accordance with the Corporations Act 2001, including
compliance with the Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001;
the financial statements are in compliance with International Financial Reporting Standards as stated in the
notes to the financial statements;
the attached financial statements and notes give a true and fair view of the Company and the Trust’s financial
position as at 31 December 2019 and of their performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company and the Trust will be able to pay their debts as and
when they become due and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors made pursuant to section 295(5) of the
Corporations Act 2001.
On behalf of the directors
STUART NISBETT
Chairman of the Responsible Entity
JEFFREY WHALAN
Chairman of the Company
19 February 2020
87
NEW ENERGY SOLARAnnual Report
Independent Auditor’s Report
FOR THE YE AR ENDED 31 DECEMBER 2019
88
NEW ENERGY SOLARAnnual Report 89
NEW ENERGY SOLARAnnual Report 90
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
91
NEW ENERGY SOLARAnnual Report Stock Exchange Information
Stock Exchange
Information
TID PV modules – ground
view – September 2017
92
TID panel rows closeup – September 2017
NEW ENERGY SOLARAnnual Report
N E W E N E R G Y S O L A R
Annual Report
Stock Exchange Information
STATEMENT OF QUOTED SECURITIES AS AT 31 JANUARY 2020
• There are 6,096 unitholders holding a total 351,059,886 ordinary securities.
• The 20 largest unitholders between them hold 9.72% of the total securities on issue.
DISTRIBUTION OF QUOTED SECURITIES AS AT 31 JANUARY 2020
DISTRIBUTION OF SECURITYHOLDERS
CATEGORY (SIZE OF HOLDING)
NUMBER OF
SECURITYHOLDERS
PERCENTAGE
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Totals
Holding less than marketable parcel
371
500
444
3,899
882
6,096
127
0.06%
0.39%
0.98%
47.78%
50.79%
100%
0.01%
SUBSTANTIAL SECURIT YHOLDINGS AS AT 31 JANUARY 2020
There are no substantial unitholders pursuant to the provisions of section 671B of the Corporations Act 2001.
DIRECTORS’ SECURIT YHOLDINGS
As at 31 January 2020 directors of the Fund held a relevant interest in the following securities on issue by the Fund.
DIRECTOR OF THE COMPANY
ORDINARY SECURITIES
Jeffrey Whalan
John Holland
James Davies
Maxine McKew
Alan Dixon
John Martin
DIRECTOR OF THE RESPONSIBLE ENTITY OF THE TRUST
Warwick Keneally
Mike Adams
Stuart Nisbett
Peter Shear
541,552
234,264
39,246
66,666
7,371,874
600,310
42,098
–
–
–
93
NEW ENERGY SOLARAnnual Report RESTRICTED SECURITIES
There are no restricted securities on issue by the Fund.
TOP 20 HOLDERS OF ORDINARY SECURITIES AT 31 JANUARY 2020
SECURITYHOLDER NAME
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
MR ORANGE PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
PJA INVESTMENTS AUSTRALIA PTY LTD
CITICORP NOMINEES PTY LIMITED
ZONDA CAPITAL PTY LTD
NETWEALTH INVESTMENTS LIMITED
MR DAMIEN JOSEPH KENNEALLY & MRS CANDACE LYNN KENNEALLY
J & V KING PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD DRP
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
KATDAR PTY LTD
THEROPOD PTY LTD
ROSENSHUL SMSF INVESTMENTS PTY LTD
CRIMSON PERMANENT ASSURANCE COMPANY PTY LTD
ALDACK PTY LTD
MR DANIEL GEZA BEDO & MRS CATHERINE BEDO
MR NEIL CLIFFORD BARRETT & MRS HEATHER MAEVE BARRETT
MRS LORRAINE MARY HAWES & MR DAVID CHARLES HAWES
NUMBER OF
SECURITIES HELD
8,125,684
6,616,660
4,643,158
2,666,666
1,846,875
% OF
TOTAL
2.315%
1.885%
1.323%
0.760%
0.526%
1,333,334
0.380%
1,331,229
849,863
775,878
747,906
0.379%
0.242%
0.221%
0.213%
713,934
0.203%
583,820
563,198
539,720
507,675
459,011
458,787
458,040
455,509
454,715
0.166%
0.160%
0.154%
0.145%
0.131%
0.131%
0.130%
0.130%
0.130%
9.722%
Total held by top 20 holders of ordinary securities
34,131,662
94
NEW ENERGY SOLARAnnual Report Additional Disclosures
Stanford at sunset
– September 2017
TID ground view – September 2017
95
NEW ENERGY SOLARAnnual Report
N E W E N E R G Y S O L A R
Annual Report
Additional Disclosures
FOR THE YE AR ENDED 31 DECEMBER 2019
OTHER
Since admission to the ASX on 4 December 2017 to the date of the financial report, the Company and the Trust has
used the cash assets at the time of admission in a way consistent with its business objectives.
Directory
31 DECEMBER 2019
96
Directory
31 DECEMBER 2019
The Fund’s securities are quoted on the official list of the Australian Securities Exchange Limited (ASX).
ASX Code is NEW.
NEW ENERGY SOLAR
New Energy Solar Limited (ACN 609 396 983)
New Energy Solar Fund (ARSN 609 154 298)
Level 15, 100 Pacific Highway
NORTH SYDNEY NSW 2060
T 1300 454 801
F 1300 883 159
E info@newenergysolar.com.au
www.newenergysolar.com.au
RESPONSIBLE ENTIT Y
Walsh & Company Investments Limited
(ACN 152 367 649) (AFSL 410 433)
Level 15, 100 Pacific Highway
NORTH SYDNEY NSW 2060
T 1300 454 801
F 1300 883 159
E info@walshandco.com.au
www.walshandco.com.au
DIRECTORS – NEW ENERGY
SOLAR LIMITED
Jeff Whalan (Non-Executive Chairman)
John Holland (Non-Executive Director)
Maxine McKew (Non-Executive Director)
James Davies (Non-Executive Director)
Alan Dixon
John Martin
SECRETARIES
Hannah Chan
Caroline Purtell
DIRECTORS – WALSH & COMPANY
INVESTMENTS LIMITED
Stuart Nisbett
Warwick Keneally
Mike Adams
Peter Shear
SECRETARIES
Hannah Chan
Caroline Purtell
INVESTMENT MANAGER
New Energy Solar Manager Pty Limited
(ACN 609 166 645)
Level 15, 100 Pacific Highway
NORTH SYDNEY NSW 2060
T 1300 454 801
F 1300 883 159
AUDITOR
Deloitte Touche Tohmatsu
Grosvenor Place, 225 George Street
SYDNEY NSW 2000
T +61 2 9322 7000
F +61 2 9322 7001
www.deloitte.com.au
SHARE REGISTR AR
Link Market Services Limited
Level 12, 680 George Street
SYDNEY NSW 2000
97
NEW ENERGY SOLARAnnual Report N E W E N E R G Y S O L A R
Annual Report
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NEW ENERGY SOLARAnnual Report