Member Info for TimBob

Personally dont think Andy B as a PM will be much differant than Keir TBH. Labour's biggest stumbling block has been the wider party/MPs who seem to have differant goals/objectives then the Leader; Andy doesnt seem to be much differant, having jumpped between differant Labour philosophy's depending on who was leading the party at the time... only plus side, is he seems a more likable and relateable person, so might be able to pusuade more of the MPs to back him...

As for impact on NESF, regardless of it being Conservative, Reform, Labour, Greens or coalition, i dont think the next Govt. or PM to that, will impact NESF greatly. 50% of rev. is already driven by open market revenues and as more schemes come of the old grants, much more revenue will be from the market. As for ripping up the old grants, i think this is mostly posturing by Reform and now Cons.; the recent changes in the indexation was only "legal" as the framework was in place... ripping up agreements halfway through their lifespan would be highy controversial, most likely illegal and would most likely be challenged in the high courts. It would also undermine the governments ability to back "ANYTHING" and shock the market too much...

Think the reality is less or stop of on subsidies for new projects and more support for the historic carbon based system (which whilst more volitile) is still typically cheaper for end useres...

PaulC,

Whilst Drax will have some fire power post BSIF, not sure they'll have enough to buy another Trust outright; but the Drax Quinlan connection could be a massive help to both via the NESF asset recycling programme; Drax more likely will want to buy oven ready schemes which they can do from NESF rather than go though the hassel of finding scheme to buy and develop...

TopFCA, Im not worried by the NAV, if anything, i think the board might have gone heavy on the write downs, getting as much out and NAV down as low as possible to improve the upsides and make them and the asset managers look like they are doing a great job down the line. Quinlan has a track record of transparency and deliverying on what has been promised to share holders...

Agree with BPm1... the USS pref shares are a 10yr problem...

But useful seeing other peoples views on them and the potential impacts to NESF.

I personally think NESF wont pay them down... when they mature, NESF & USS will come to some new long term agreement, potentially at a higher rate; USS wont want to take on the risk with the shares (either as Ord. or B class) unless the SP is above NAV - but thats highly unlikely... and NESF wont want to give USS the power of roughly 30% of the voting rights...

Douvrey. if the Pref share are optioned, the debt goes from £198.50m to £0... So "total" NAV would increase, but obviously the "New" shares would mean dilute the NAV/Share... I've done a few rough calcs and the NAV/Share dosent look like it would change at all...

ManyHappyReturns

USS can convert unpaid debt to either Ord. or B Class shares if the debt remains unpaid in 2036.... regardless of NAV.

The share conversion is based on the O/S debt / the NAV per Share.

So if ot was today, £198.5m / £0.761 = 261m shares...

Jerry,

my understanding is from 2036 USS can convert to either Ord. Shares or B Class Shares - both taking a dividend which as it stands whould be greater than the current 4.75% return, but would then carry SP risk.

Guess it all comes doen to there exposeure risk and what value they put on the pref shares in their balance sheets...

ToD - Im with Jerry on the Pref shares... from a finance point of view they offer a great cheap debt. and good for Shareholders as long as they can be redeemed by 2036...

Jerry - Interesting point on the "Fair Value" of the Debt. hadnt thought about that... 1st tranche agreement - BoE base rate was at 0.75% and gilts at 1.44%... 2nd tranch agreement - BoE base rate was still at 0.75% but gilts had dropped to 0.67%. So based on this, if NESF switched from a Carry Value to a Fair Value approach - the debt would be valued at between £115m to £135m... putting between £63m & £83m back onto Nav = 11p-15.5p per share, So a Fair Market NAV of about 87p-91p... Obviously the £198.5m would still be the real debt owed... but its interesting how playing with accountancy valuations can two totally differant answers to the same question!

BSIF NAV is based of the Carry Value too, so the 90% valuation could be applied to NESF if someone wanted to buy out. So still think £0.684 is the realistic SP here...

Hoping the drop in SP today is more from people takeing profit from BSIF Bump rather than the NAV Drop... potentially a little of both; but we'll have to wait and see on that!

Thanks Jerry004 i was under the impression that the Pref.share option date was a backstop for a re-payment, but just checked and you are 100%...

Think we are both on the same page with USS - no point paying off unless they have to.

On the dilution - i was refering more to the reduction in Dividend if Pref.shares became Ord.shares - by my calculations, £198.6m O/S Pref Shares at todays NAV (£0.761) = 260.9m additional shares... + 575.2m = 836.1m Ord.Shares

Current Divi @ 4.4p = £25.3m/yr. +£9.4m debt saving = £34.7m divided by 836.1m = £0.04155p A potential 5.5% reduction in divi for existing share holders... Again, no reason for NESF to pay off USS unless they have to...

Looking back at the BSIF situation, even at todays reduced NAV a 90% bid = £0.684/share... a 47% uplift on today £0.465 price!

and £0.08p more than my avg. buy in. So still think there is some real SP growth here...

Converting or redeeming the preference shares now for both ordinary shareholders and the preference shareholders is a bad option.

Ord shareholders, conversion of pref. shares to ord.shares would result in significant dilution. This would dilute earnings & dividends at a time when NAV has already been under pressure. Existing shareholders would therefore potentially receive a lower dividend per share.

For the pref. shareholders (USS), conversion into ord.shares would also be difficult to justify. Pref.shares currently get 4.75% annual return together with the expectation of full capital repayment at maturity. Converting into ord.shares would expose holders to market volatility, reduce the certainty of future returns, and could require a material write-down in value if the conversion took place at a discount to the preference shares' redemption value. Which they would right now!

Most logical outcome for both parties is for the pref.shares to remain in place until their scheduled redemption in 2036.

Preference shareholders continue to receive their guaranteed 4.75% income & are repaid their capital at maturity.

Ordinary shareholders avoid dilution and retain full participation in any future recovery in NAV and earnings.

How would the £198.5m be paid - either a new USS deal... from the £20m/yr divi.savings from the new stratagy... a new Long term amortised debt agreement (the current one will be paid back in full by 2036)... or a combination of them all...

Sorry ToD you are correct, was looking at the wrong info.

Pref Shares are valued at £1.00 for redemption... interest on that is 4.75%. Redemtion can begin in 2030, and if not redeemed by 2036, USS have option to convert to Ord. shares,

If this happended today! based on £198,500,000 outstanding = 261m shares (as USS ord. shares received would be based on NAV/ord share)... BUT would wipe out the £200m in debt...

Current Shares = 575m + New Shares = 836m shares. NAV would go from £438m to £636m. NAV/Share would actually remain unchanged...

BUT would impact Dividend returns as currently NESF pays out £9,428,750 to service the debt, which equates to only £0.0361/share...

Still cant see USS opting for this, they'd sooner have there £198.5m back...

Wonder if some of the NAV drop is artificial "accountancy" to give more "upside" on sales down the line and make the board & investment managers look like they are doing a better job than they are!?

USS Pref shares - As Jerry004 has pointed out - If USS opt to take the option when they come due, they have to pay 76p for them... they wont do it... they're more likely force a sale and redeem there investments... leaving ord. share holders with whatever is left! Thats assuming NESF stratagy hasnt worked and they havent paid them off at that point!

Important to remember - at the current moment, the Pref shares are still very cheap debt... so why pay off!?

Interesting to see most people commenting on the Drop in NAV and not many picking up that the Divi forcast for 26/27 has increased from 4.0p-4.6p to 4.5p-5.1p... 10%-12% increase!

The BSIF bid gives a good amount of confidence to the NAV for the Sector. Hopefully this translates into a sustained rise with NESF. In the short term, hopefully this will help support a new "bottom" in the price (48p?) and hopefully positive updates from the board over the next 3mths push it over 50p.

My average buy in is still around 60p so if someone in the market wanted to buy NESF at 90% of NAV (approx 70-72p), think i'd take the gain and move on...

Am expecting NAV to be somewhat unchanged for Q4...

The current dip in SP is more than likely down to the last lot of people selling off at the end of the old dividen policy.

I think the Q1 update will be more meaningful and hopefully be the start of a progressive increase in NAV. and in turn support a SP recovery.

Dadean,

Q4 NAV & Operating RNS: May/June 2026... As stated on LSE, so not overdue till the end of june...

Imagine they are holding off reporting this as a seperate RSN and will release the figures along with Annual Report or Full Year report.

Also anticipate that they are delaying as long as possible to maximise any uplift in Energy prices will have on the NAV.

With you DaDean / Jerry004, i always try to look at the base figures rather than the "Spin" % and ratios that alot of updates throw out there.

Whilst i was happy with the old dividend policy, i also knew it was only sustainable by selling off developed assets at a premium over cost and then re-invest in new assets. I personally thought they wouldnt be able to sustaine that model... and that there would be changes...

We will have to wait and see if the new policy works out - other big issues at play at the min with Iran and uncertainty of a potentially an anti Green government in the future...

But as holders in GSF have seen, 6-12mths after a similar dividend policy change, after activist instutional investore involvement, they have reverted back to there old model/dividend policy!

I think we might see better than expected results with the Iran war pushing up energy prices. NESF are mostly sheilded from this gain with there headging deals, but it will play into new deals they'll be working on now, so will help forward sales forcasts.

Hopefully the Kitchen sink was included in the March update and there are only upsides to come - think the markets have fully priced in the negatives, so hopefully an upward trajectory for NESF over the medium and long term

Still not dropped for me... all info says should have been paid today!

Based on the NAV in Dec, a 0.8p-1.9p reduction is between 0.94% to 2.25% reduction to NAV... so minimal impact in real terms.

Think the announcement in combination with recent SP bounce has potentially seen some who have bought in recently selling off and taking profit...

Just more uncertainty scarying the markets!

BPm1...

They won’t adjust the Strategy now... still looks like a lot of volatility in the SP as the board completely misjudged the share holder sentiment and % of dividend investors, which really hasnt helped, shafting the SP further!

I get the feeling from the new strategy, the board don’t see the asset managers being able to recycle assets effectively, So have instead, decided to focused on using surplus revenue to reduce debt and upgrade existing assets... see this to get them in a position to pay down the shorter term debts and also be in a position to refinance to avoid having to issue real shares to the "Preference Shares" in 2036... which will certainly add value to the Trust...

But i think there could/should have been more of a transition period that would have protected the SP from all the Dividend Investors bailing out all in one go!

Hopefully we’ll start to see some upward movement from now on…

Agreed Da,

NESF have done a good job at headging the energy prices - so whilst they might not have maximised revenue, they have always had a decent amount of cover. With about 50% of revenue guarenteed under FiTs & ROCs for a weighted average for 10yrs and the investment in 2hr battery storeage increasing spot prices, i think revenue will fall slightly, but not drastically. I can see revenue dropping back to around the £80m mark seen in 2024/25... and then hold there until the FiTs & ROCs roll off... at which time the Long Term Amortised debt will have been paid off...

With current assets with a weighted average asset life of 24yrs, and the new straergy, hopefully we'll see a progressive reduction on the discount to NAV. Share buy backs will aid this too as well as reduce number of shares in circulation and enable some future increases in dividend payments.

With you on this one dadean...

maths not adding up - or at least from what we have been told... Current Divi is 1.1-1.3x covered, so assuming no sell offs of assets, 75% would equate to 6.9p to 8.1p divi!!!

Paul,

Divi cut is massively unlilely... 50% of revenue is gaurenteed for the next 10 to 12 yrs...

As an gurnsey based trust 80% of net revenue needs to be returned to shareholders.

So for the dividen to half, the open market energy sales would need to be effectively given away!

NESF is investing in battery storage to help maximise the prive per MW they can acheive...

So whilst the SP is low, this is one to top up on in my opinion.

Divi may drop in the future, but with the drive from green power, i cant see it being a massive drop...