Member Info for TimBob

PaulCurtis - agree the article doesnt tell us anything we havent already heard, or has already been factored in...

Regading Divi, as pointed our number of times by diff. people, NESF is required to re-distribute 85% net income to shareholders. this is part of its trust status, so Divi cant be cut.

The Preference Debt - they are also shareholders, so already have equity... Also the load interest rate is considered a low % in this sector (attractive to some)...

As for a merger... Not sure on your comment that they "Need" to merge... NESF recent proposal to merge with its manager and abolish its investment trust status was scrapped in November 2025 following shareholder resistance. Lots of Solar trusts are managed by differant organizations, so trust mergers are unlikely unless they are managed by the same company or without the managing organizations merging too...

NESF is a Trust registered in Guernsey - as part of the Trusts Status - 85% of net income needs to be re-distributed to shareholders (both normal and preference shares).

Aim at inception, was to provide dividend growth - through a combination of Asset Management and share buybacks.

NESF headges alot of its energy sales and whilst this tends to mean they dont get top dollar, they also arent hit as hard by sudden drops! I beleive something like 90% of revenue is pre-sold for the next three years.

And as they were re-investing and carrying out share buy backs (before the Gearing Ration covernant issue), i doubt that the divi distribution was significantly more than the 85% requirement.

Based on the above, I cant see a reduction in the Divi in the next few years! Thought it may ultimately come in the future...

Spot on Jerry004...

Also Dividend payment is linked to the trust status, so that cant be "reduced" to buy back shares...

Some confidence seems to be coming back to the sector and re-inforcing the share price - this will also aid with covenants and potentially enable NESF to re-new buy backs.

Zebbo,

NESF is a trust... the only way to "sell" NESF is to either; A - gain shareholder approval to convert from a Trust and then sell.

or

B - sell off individual assets and return funds to shareholders.

On the point of the Divi, as others have pointed out in the past - again, as a Trust 85% of profit/taxable income HAS TO be distributed to Shareholders. This is a fundamental not an option. If you bought into NESF thinking it was an "opperational business" without the constraints of a Trust, you might want to reconsider your investment.

In response to TheTrotsky

points of interest from the Podcast, i've also picked up on the following

https://www.ii.co.uk/analysis-commentary/unpicking-curveball-thats-rocked-trusts-10-plus-yields-ii537457

Worth a read... raises some flags with NESF's revenue stream with the FiT, but having done some digging myself, most of the 25yrs NESF has FiTs agreed for, the guarenteed FiT is not much more than the Wholesale Prices...

So whilst worrying that the Fits might be cut, its certainly not as bad as it appears that the markets have taken it...

Think alot of institutions are currently SPOOKED by Trump and the potential of a Reform government in the UK! Both very negative on Renewables...

And until their concerns are sorted, they'll be wary of Renewables as a whole.

Interesting point from MrG123. The cost of Panels, inverters and batteries are all coming down. New installs are going to be less viable if subsidies are reduced. So NESF and other generators with sites with planning and infrastructure in place wont need the same level of funding to deliver upgrades as new installs...

With Douvrey on where power prices are going to be over the next few years. So think its reasonable to assume NESF will have no issue covering the Divi. Though i suspect that the divi will still take a trim, increasing the divi cover and giving the board something to be able to play with to hopefully improve asset value and close the discount to NAV. Be that paying down debt, or investing in upgrades to improve generating capacity or even buying distressed assets from others needing to sell...

Sounds like the SEIT Chairman is trying to kill the shares... then probably work with anouther fund for them to buy SEIT and he walks away with a massive bonus from the sale...

Yes Temple, your right, if both parties wanted it, then they can make it happen....

BUT, in this situation, the only benifit to NESF is that they could then borrow more money from other sources and they can re-start that share buy back, so not really worth it... its cheap debt...

With wholesale electricity prices forcast to increase in 2026 and BoE interest rates predicted to drop; this will swing the calculations on the Asset Debt ratio and resolve the problem the Preferencial Share Covenants.

Big issue is what can and will the board do to close the discount to NAV... For me, thats a combination of reducing the RCF and long term re-investment to provide more shareholder value. Which to do effectively, means a reduction in the Divi... 1p reduction would still give a healthy dividend return and double the annual cash surplus...

The preference shares cant be "bought" back from 2030-2036... at face value! So thats not really a "Choice" at the moment.

Part of the current Debt to Asset issue relates to "Perceived" future electricity prices and Floating interest rates.

This is regardless of the companies Fixed price contracts on both electricity and debt... in real terms it doesnt effect the opperation or profitability of the company. Just what the company can do with "surplus" cash... they cant even force a "CUT" to regular dividends if they are covered by revenue; which they currently are.

But... personally, i think a cut to the divi would give the company the oppitunity to pay down the RCF release the loan covernants and give more opperational flex to the management.

Really wouldnt want the preference shares to be paid off...

Preference shares get paid 4.75% per annum... thats it! with the floating loans at 6.6% it would effectively cost NESF an extra £4m a year in interest payments...

There are £200m worth of preference shares, that the compant would have to pay at full value for... as normal shareholders we couldnt force them to do anything other than that, they are not traded on the exchange like ordinary shares!

Best option, drop the divi a bit... pay down the short-term Revolving Credit Facility quicker, increases the NAV which gets the company out of the loan breach, start share buy back which hopefully will help reinforce the the SP and start a climb back towards NAV

Also Jefferies havent updated a target price on NESF!

Average of analyst consensus target prices = 78.50p which is 10p (10.8%) less than NAV... even if this was 25% of NAV = 66p, so 14p (26.9%) higher than todays price...

Its worrying that Jefferies have downgraded, but more worried with Jefferies, as the debt to asset breach has been common knowlage for some time!

The breach in Loan Covernats basically prevents "share buybacks, issuing special dividends or taking on additional debt."

Basically preventing the company giving cash back to shareholders without reducing debt first... Not necessarily a bad thing... and certainly not something the market didnt already know!

Suggest todays drop is Jefferies unloading shares, lots of price resistance at the 51.50/52.00p mark which also indicates the market in generally think the SP is already at rock bottom!

Can see a bounce back up in the next day or two...

Interesting report...

Wasnt expecting any change to the divi this year, but thought it interesting to see no comment on the forcast divi beyond 25/26 financial year. With share buy back on hold due to Debt to NAV ratio (Douvrey - they cant restart until this is addressed, its a condition of some of the loans) i suspect Divi will be held and additional surplus cash either used to pay down short term debt and/or invest in new assets and in turn increase NAV, which will hopefully give more reassurance to institutions and in turn, push the SP up...

Think there are a few reasons...

"Certainty" provided by the budget has put a solid floor to the share price. Investors have had more time to look at the RPI to CPI changes and impact on future revenue and probably dawned on them that the sector has been oversold. Add to that the increased likelyhood of another reduction in BoE base rates in Dec and potentially more in 2026, generally reducing debt / increasing profitability...

Think the half yr results are due on Tony Quinlan's first day! Hopefully as a respected Non-exec with a history in FTSE 250 and 100 business' it'll give the market more confidence in the BOD moving forward; and in turn a bit of a SP recovery/bounce.

As Sparhawk points out UK Sunshire hours are up from 2024, but i think £/GW is down slightly... but with most prices fixed, hopefully, the extra sun will out weigh the slightly lower price.

Divi has good cover, so not sure a reduction will be on the cards at the moment; tho can see it in the long term as the BOD is given some alternative growth "direction" from Tony; which i think funds will find more reassuring than keeping the "status quo" on dividend payments; so in turn helping a SP recovery.

The consultation on proposed changes to FIT indexation closes dosent close till December 12, with the results and final decisions to be announced "sometime" after that date. Once this has been finalized, NESF and markets will have a much better idea of the impact on Income and whatever the result. Not sure who said it the other day, but the markets just hate "uncertainty", and i think it'll give them certainty and inturn put some upward pressure on the SP regardless of the outcome...

100% Trek, Govt. really hasnt a clue! Feels like all the leaks were to "test the waters", rather than any meaningful insight for the markets. Which in turn underminds sentiment.

Looking forward to hopefully a positive RNS and a Xmas rally...

Really dont get the negativity with NESF at the min...

As others have suggested, it might still be the fallout from dropping out the 250... Some of it will most definately be LAB flip flopping about with the Budget and the review of the FiT is certainly sends an unsetteling message.

However, realistically changes to Fit will have little impact on the overall revenue, and with the divi current covered 1.1x and 50%+ of revenue pretty much guatenteed for the next 3 years, the SP decline seems bonkers...

Perviously had faith in the BoD and the direction the business was going.

Over the past few months i've completely lost any trust that i had in them. Im lucky to have bought in at a low price so have still made on the SP growth, but some investers have held out for the divi on the boards 7p min divi payment and have been completely shafted.

I potentially see the logic in doubling battery capacity in certain locations from 1h to 2h and the syergy in that rather than new sites (2h capacity tends to have higher price too), but none of this is being communicated and its the complete lack of communications and constant changing Divi stance has now driven me to cash out most my shares...

Still holding a few, but dont know where this will go now!

Therosy1 Think your being a bit harsh on TheTrotsky...

But TBH TheTrorsky, Therosy1 has a point about the dividend and the Board... the company has made a massive point of paying "at least" 7p dividend for some years (even tho cash flow couldnt support it), and it now appears they've changed policy against the wishes/support of the shareholders.

Some of this might be down to opperational cash flow not coming in as soon as anticipated, but the company has the cash reserves to do it, like they have in previous years.

So the question arises... why switch from an equal quarterly dividend to rear end loaded and then delay!? This might be as simple as trying to reduced reliance on credit facilities and reduce interest costs, or it might be down to trying to have a bigger cash reserve to be more nimble in an ever changing market... Who knows!? The Board hopefully do, but this needs to be fed down the the share holders so we can understand the benifits rather than becoming less trusting of them!