Member Info for Senator1

The single most important question is to have them run you through the consolidated P&L account at the level of the subs and Hold Co. Total Rev, Gross profit, EBITDA, EBIT and PBT. When you have that you can estimate the numbers back to NESF. Related to this how do they use the NESF equity money and Pref shares to downstream to the Hold Co/Subs, is this loans/equity. Precise mix. Or you can ask is there a definitive cflo back up to NESF every year from downstream loans and what is this amount. They probably wont answer any of this or be very "wooly" with their replies. You will need a solid understanding of accounting and structuring to get in to a 2-way conversation on this stuff. If you have it great, if you dont I could lose you with little effort.

It's more serious than bumps. They can only pay it because of asset sales. The fact that the two remaining sales have stalled tells you why they have stopped the buybacks. Moreover, the last 2 sales were to the broader next Energy Group or more correctly funds they set up. This is just a mess!

They tell you in the accounts how the cover is achieved. Cash income £73.2M (including £30.$m sales proceeds). Cash expenses £16.8M leaves £56.4M and the DVD cost was £49.2M so 1.14 cover. Without the sales proceeds of £30.4M, couldnt have paid it and maintain cover of min 1.1. Honestly, if you cant figure this out yourseld you should not be in this share, the accounting is tricky as you cant see the real cashflows down where it matters in the subs. How they are authorised to sell this share to retail is beyond me. They see the DVD yield and jump on it, big mistake!

The Investment Advisor, Asset Manager and Investment Manager are all part of Next Energy Group and this is the only entity getting rich on NESF plc. In 2025, the Investment Advisor got £176,000 for ESG. The investment manager £4.9M from NESF as their fee based on Nav at that time and then hidden in the notes (note 26), the Asset Manager was paid £9.4M by the subs, the accounts of which we dont see because of the way NESF accounts for the investments., thats a total of £14.5M. That is totally ridiculous and is payment for failure on a massive scale. Even though I have never met him, from the results presentation, the Chairman comes across as timid and afraid of his own shadow. The Next team are making the board look like mugs, this level of renumeration is a disgrace. Next Group are using the plc as their own private gold mine, while shareholders in NESF have seen nothing but declines. This share will not make any progress because the institutions can see this and unfortunately it is retail investors that are bearing these costs and are not being protected by a Board that is unable to stand up to Next Energy Group and the exorbitant fees they are taking. The thing I really despise is the £9.4M is only visible if you bother to go through the notes as it is levied at the subsidiary level on which we have limited visibility. This share should not be touched by retail unless they have an advanced understanding of accounting. If it seems to good to be true, there is always a reason. The reason they have stopped the buyback is they are very close to the 50% leverage limit. By my calculations, after the Q2 DVD is paid in December it only requires another £18.9M fall in asset values and they are at 50.04% gearing. Net assets fell £20.2M between March and June 2025 so another £18.9M is not unthinkable and then depending on what the lending agreements say, the cashflow up to NESF gets cut off or that is the risk. Thats why it has a DVD yield of 14%! Without the cash from the subs, NESF cant do anything!

They approved a £20M buyback in June 2024 and as most of their Rev is fixed for 2025/26 they must have known they could do the £20M buyback. At May think they were at c.£12M done, so why are they holding on the £8M?

Does anyone know how many Renewable Obligation Certificates NESF get per MWh, generally its between 1.2-1.6 and for 2025/6 they have a value of £67.06 per RoC. At the lower end this means they have guaranteed Rev of £66.7 m from this source alone (at1.2RoCs per MWh). When do RoCs stop, 2027?

You can only trade beer money on this stock, its just too illiquid, so thats a total waste of time.

I have now listened quite a bit to the CEO and one of the things he himself acknowledges is that yes they are growing but not generating much cash and then I listened to the CFO explain something called contract asset. Putting all this together I think this growth all has to do with accounting. I will illustrate with a simple example. Suppose they win an Exchange Cloud contract worth, say £10M but to execute it they have to spend 30%, £3M and the contract is 5 years. I assume they would get some amount upfront in cash, say £1M (I dont know what this is, exactly) but fair enough they credit sales £1M and debit cash £1M but of course are down £2M because of the £3M cost, less if thery get higher than £1M. They then book a contact asset of £4M, thats a debit and the credit is turnover. They argue that the accountabts force this treatment and they have no choice ( now to be clear the £4M, might be £3m, £2m, whatever but my sense is they book to revenue a total of 50% of the contract value between cash and contract asset. Obviously this is way ahead of cash as the contract asset amounts comes in over the life of the contract with the booking of the additional 50% when certain things are achieved. The upshot of all this is turnover is running way ahead of cash and this explains why they show growth in the 20 percents but its not matched by cash. The real issue comes when they dont get new contracts because growth drops off a cliff for obvious rreasons, so eventually this front loading catches up with you. In my opinion thats why the CEO is public about his desire to sell because he knows this cliff wall is coming. To even suggest you value this business as a multiple of turnover is just too ridiculous for words as the most basic accounting knowledge can see the issue. In reality this is not, by my definition, a growth co. It is because of the way the accounting apparently works or at least that is the position of management. My guess is that they are matching rev recognition to costs and the timing of work by Beeks which I understand will be all upfront. I have no problem with the co. good luck to them but to classify a co. going from 6 custiomers to 10 as growth, well it makes no sense to me. If the Rev is an accounting number then this feeds to an accounting eps and then you apply 25-30 times to that. There is a lot of misinformed commentary on this company and I have never heard anyone directly ask the company to explain their accounting on say a £10M contract. They have said it typically costs them about 30% but the issue of how they book revenue is so critical here and so misunderstood by so many "expert" talking heads. I wisk Beeks all the best but this share, imo, isnt worth anything near 25-30x earnings based on what i presently know. You might differ on my cash estimate and even the contract asset amount but the framework is there to have revenue reflect front loading of the actual cash and the problems this creates.

The main signalling question is why they have been absent from the market since May 1. Is cash too tight? The calculations I have done says its a little tight. They need £56.7M net (after taking account of treasury bal) to pay pref DVD and maintain ordinary at 8.43p. They can do it by running down cash further or increasing drawings on RCF. A 14% DVD yield bizarrely sends the wrong market signal as it scares those that have a basic understanding of the share. Also they need to vastly upgrade the quality of Board, it is seriously light weight. Is this on agenda.

International net flows -23% and -4% performance year to date. When you are trying to handle that level of redemptions it isnt easy to manage the book. Fixed income is now the biggest AUM area in terms of AUM reporting division, equities still bigger overall when Uk and International combined. This means fees will continue to fall as you just cant charge the same fee on bond portfolios compared to equites. International is still in free fall in Q4 and so while this is undoubtedly cheap if the outflows stopped, it gets less cheap every day they continue. Its very hard to reverse this decline when the momentum picks up as the PMs are constantly downsizing and the market scans what they own and gets a feel for when they are in the market. No wonder they are looking for a partner but the power will be with the other side and it needs to be a Name that instills faith and allows time. Not a great advertisement for the "funnymental" approach to investing. The master of this art made sure he had permanent capital and so didnt have to watch the back gate and he had recurring funds from insurance premiums paid in advance of claims. It was smart to recognise this in the 50's or was it luck, who knows!

The new CEO has guided to adj ebitda for the FY of £510-560M. They did £198M in first half so its easy to see they are expecting £312-362M for the 2H. In the 1H 25 they did £274M so they are down 27% from 1H 25. However the 2H guidance implies being down 10% at low end from the same period last year (346M) to being up 5%. Going from down 27% in the first half to down 10% (worst case) in 2H is quite an improvement. So I think he has kitchen sinked the first half so as to make sure he delivers near the top end in the 2H. If he didnt do this he is an amateur and until we get an update I will give him the benefit of the doubt. Even if they only deliver £510M for the full year thats a lot of operating cashflow because the adjustment is after the lease payments. They have about £1bn net debt and even at say 8% they can easily service the debt, it just isnt an issue. Take the 510, take off tax (110), PPE (130M), int (80) that leaves 190M and 240M if he delivers on the high end. The DVD last year cost 300M so with a small increase in leverage if he sees business improving the DVD can be maintained. The thing about this bisiness is it throws off a lot of cash. If you take off the interest and tax from the 510M you have the gross cflo to equity, that leaves £320M and so market valuing it at 7.5x, thats cheap and thats taking the low end of guidance. The CEO would be a fool, with his first guidance, if he didnt deliver and as I said I think he has built this flexibility in to the first half numbers. Thats what I would have done. This share therefore all about whether you think the new CEO is smart and has been around the block and knows that his credibility is now on the line because this is his guidance. He cant blame the last lot anymore. That assessment of him is subjective and different people will have different views. For me his secong half guidance wasnt a disaster even worst case, £510M after lease payments is still a lot of cash. All the talk of this being in terminal decline is just uninformed rubbish. When you have excess cash you have the instrument to fix a lot of stuff.

I just looked at the Board and it is incredibly light weight so that wont work. They really have a huge communication void, they would be well served by upping the quality here. If they were to make one single change that is where i would start.

I think they have to totally revise their communication strategy. They need an older, wiser head leading the communication rather than the very technical messaging they do at the moment.. They have proven over and over their Nav methodology is right by selling at premiums but market still doesnt trust them. Banging your head of the wall and expecting a different outcome is a poor strategy. Change it up. Who is the Chair. If he/she can communicate they need to take more of a lead.

Send a msg to ir and ask why they are out of market. The market likes strong signals and their absence is notable.

The last buyback notice was May 1. Why have NESF been absent from the market since then. At the half year they were £11.5M done out of £20m. Strange that they are not filling the remaining £8.5m at these prices? The DVD yield now is nearly 14%. There is a huge disconnect between what co. presentand the market's assessment. Who is right? Generally it tends to be the market but this is an illiquid stock and maybe the answer is there is just no interest. That is management's problem as it is a good part of their job to communicate well and consistently to generate interest. Maybe they should change the way they communicate as it clearly isnt working.

Wrong, it is a measure of cash profit to the Enterprise Value (Debt and Equity holders). So it definitely is a cash profit measure, the clue is in the E. In many ways it is far more useful than the accounting net profit, paricularly after IFRS 16 as it has too many made up numbers. Hard to make up a pre tax and interest cash profit. Because of the made up stuff with IFRS 16, BME, together with many other asset heavy retailers, report adjusted EBITDA. Unfortunately the modern accounting standards REQUIRE the accounts are prepared under IFRS 16 to satisfy the accountants desire to stop the off balance sheet leverage. This has resulted in a nonsense where the P&L charge of lease payments are replaced by somewhat arbitrary interest and depreciation charges. It means you have to be relly careful taking the net profit number of any retailer with substantial leases as the capitalisation to arrive at a debt and corresponding asset are full of assumptions and worst of all does not account for breaks in the lease, so typically overstates. If this is all totally meaningless to you and you dont understand this in detail, do not put serious money in this stock or any like it. Thee is a high probability you will loose, if not on BME some other retailer

The annualised vol of Beeks over last 252 trading days is 53.83%. The option value given they are nil cost is essentially the intinsic value and at time of accounts the weighted average price was £2.62. Multiply by 7.3M options outstanding that is a cost of £19M and divide by 3 year vesting thats £6.3M p.a. The accounts have a cost of £2.6M p.a. They will argue there are P&L targets on the vesting of these options but without details i can't value this aspect so until they are clearer on these barriers, I think the true cost to shareholders is £3.7m higher. Would love to question auditors Haysmacintyre LLP in more detail on how they got to £2.6M annual cost. This company uses options extensively to reward staff, it is an important issue and woefully overlooked by investors, probably out of ignorance or it just being too hard to get detail on but it has a real impact on existing shareholders. I believe, nil cost options should only be used in truly exceptional circumstances, not on an annual basis as part of regular renumeration. Need far more detail from company before I would consider a long position. They are lucky they are too illiquid to be short.

Its much higher than that when you include a more defensible option cost. They used 5% volatility in the B-S which is totally ridiculous. I dont think there is a single equity with reasonable liquidity that has a 5% annualised vega, that is just not realistic. Second, they capitalised £2.4M of development costs, so even forgetting about th3e 5% vega the statutory PBT was £0.4M. Normally I would accept a level of capitalisation but for any co. using a 5% vol figure says everything to me so I will restate the P&L harshly. In reality, with a true option cost this co. did not make any money for shareholders in the year to June. Effective nil cost options are just ridiculous, as this is taking "value" directly from existing shareholders. They use it because most dont understand implication. Grossly over-valued, 7% isnt anywhere near enough of a fall.

Shareholders are excluded and no online coverage. Obviously the CFO of Creo is not the most dynamic so he needs a wake up call to let him know that most quality cos arrange this online coverage. Send an email to info@walbrookpr.com noting your objection and asking why there is no IR contact contact on the new website even if this bounces you to a walbrook address. The CFO needs a good kick up the backside to get him engaged and doing his part of the job. The more emails sent the stronger the message. There is no reason on gods earth that shareholders should be disenfranchised particularly as the quality of the research on this name is so terrible. littered with basic errors on valuation.

It's going to have a go at £2 again, will it hold again? Will we get a profit warning, as brokers are way out of line with the share price performance. As always Im going to side with the market, the market has it right and the "scribblers" have it wrong. If it goes through £2, then £1.80 ish is what I will be watching. What I like about this share is Im not with concensus, being with concensus is not a good place to be, hard to make money with the crowd. So I want more bulls on this one, if there are any still standing.

I wasnt arguing about whether they needed to raise money or not as I was arguing against the imbecile who thinks ANY Co. selling shares at 2x and buying back at x is a sign of great management. It's a sh..tty thing to do as it is generally their incompetence that drives it to x in the first place. Shareholders should be very wary of management doing this on any sort of regular basis. UK investment trusts are a great ex. of this sort of carry on, no wonder no one has any interest in the sector and it is dying a death of a thousand cuts.