Member Info for TopFCA

Prefs aren't the problem as by the time we get there they'll be able to refinance them due to (1) steady debt repayments taking quantum to negligible level (2) capital receipt of investment in Next Energy solar vehicle.

The worry is the low IRR and high value NAV - or more succinctly that NAV is overvalued.

The only upside here is that the Farage wheels are coming off his bus so the odds of a Reform Windfall tax are reducing.

Top FCA

Have been steadily buying down the £7s. What an opportunity this is..

Fill your boots..

TF

6% drop in share price says the market feels the same way as me.

All other renewables are at least 10% above their floor but NESF is right back there.

That underperformance is thoroughly deserved and this company needs to be sold now.

TF

1.3p, or £7.7m of the NAV reduction relates to one development asset they've agreed to sell. Why don't they (1) say how much that has reduced in% terms? (2) if it's a development asset it clearly wasn't held at cost - so they've previously revalued it ahead of its effective market value (3) if of that's the case then what else have they overvalued (4) what a conflict of interest as I believe the IM fee is 50% on NAV - so are we going to backdate the write down and reduce the fee (5) These NAV policies explain why NESF only makes 9% IRR v 11% at UKW and TRIG. (6) Therefore we cannot unwind all the discount to NAV as a chunk is illusory (7) The NAV butchering trashes the Strategic Review logic of unwinding the discount - as there is no grip on NAV and it's disappearing all over the place (they have reduced the discount - but by reducing the NAV not increasing the share price!)(8) Sell up now, who on earth would back these guys over several years to get the uplift that BSIF have delivered in 6 months (9) Drax have spare funds to buy this and strip it of synergies which in part get transfered to NESF shareholders. (10) why is there no NESF CFO given the size of the fee? (11) I have a raft of governance concerns (12) This is just a two minute review whilst looking on my phone - apologies for typos..

Top FCA

Jim

Better than the market believes as (1) I believe the yield returns to normal at Q3, tho enog shy away from affirming (2) the future yield, ie 2027+, factors in production growth and uplifted prices. This is what the company should guide to, but haven't the nous to do so.

In the meantime I have accumulated a load more at £7.7 this morning.

Top FCA

The other reason this share is lagging is the really poor guidance at q1.

Ie, what will the divi be assuming no more shutdowns? Not clear. Will the q1 divi cut be rolled forward to q2 as the shutdown did effect the start of q2? Not clear. What assumptions on the remaining divi are included in the year end net debt forecast? Not clear. Are we giving divi investors a reason to go elsewhere? Yes. What is the CFO doing? No idea.

All of the above is poor. However, I believe I am cutting through this so have bought again and again. I have made a pile on enog before, at much higher entry points (before crisis) and I expect to do so again.

In the mean time I will sit on a better yield than the market believes it to be..

TF

I tipped these to get to 60p a few weeks back and they are creeping up.

There's big news flow in June with the expected, but not yet announced, annual results plus next year's divi announcement.

I'd pencilled in a big divi cut but this may now be less pronounced as we start to see capital returns come through. I'd want these to be via buybacks to avoid dividend tax premia to CGT whilst being further accretive whilst the discount persists. If they do come in the form of capital based dividends it will prop up the yield and could increase the share price.

Also there was excellent news on further shareholders consolidation via Saba and Jeffries. These guys are a path to a higher share price in the short term as they mop up shares.

On a final point, we should remember that SEIT avoids the Reform risk of Windfall tax on renewable profits as the vast majority of earnings sit outside UK. No premium for SEIT - which is interesting as TRIG has re rated over the last month given, I believe, its majority of European earnings.

Fascinating time next month..

Top FCA

Have added further today, great buying opportunity.

Well I bought a load before close last night for all the reasons I have said on my posts before.

Also, I do not believe that the Iran conflict will end soon, as for Iran, time is their friend. The more they string it out the better their result will be.

I think think the market under prices this risk to the detriment of the enog price.

We shall see.

Top FCA

DividendNomad

Key points.

- The quality of the guidance from the board is very poor. They should have disentangled the production outage and legacy q1 pricing from the 2026 annual outlook.ie, what is the enduring forecast based on run date from H2 for normalised output and improved pricing.

- The net debt forecast includes 2026 revenue less costs less remaining dividends. They can't have assumed remaining dividends being chopped as otherwise they would have made that clear. So we should assume this dividend chip is one quarter only

- The fact that the board have not prepared information well presents a buying opportunity. I traded out a wedge at £9 and plan to buy back

- Indeed, the board haven't even bothered to issue an additional slide pack that teases out the above. That's a schoolboy error and I do not know what the CFO has been doing..

- We need to appreciate that Ithaca, Harbour and Serica are still up 80% in the last year and Enog is flat. Whilst it has less exposure to wholesale prices this discount is undeserved

So, the ongoing businesses is materially improved and will throw off very good cashflow. That's not priced in, nor is the likelihood of further value enhancing acquisitions (reducing concentration risk) nor the fact enog is a bid target at this price.

Top FCA

Shareholder base is slowly consolidating.

Saba are today up from 18% to 19%. Jeffries were up from 8.3% to 8.6% on Tuesday.

The increased concentration should help with getting a deal done.

Still no RNS on year end trading update which is surprising - they're generally fairly bland so not sure why they couldn't be bothered. I'd have thought that would be a kpi in their management agreement..

I was looking for their next updates but there is no financial calendar on their website. Why isn't this maintained - it's sloppy and shows poor attention to detail - what else are they not doing that they should be?

Based on last year we can expect the fourth quarterly divi announcement around 5 June and annual results around 23 June. Surely they will issue a trading statement before the fourth quarterly dividend - as it historically mentions the extent the divi is covered by earnings....

I'd have thought the investment manager would want to come across as more proactive to ensure continuation. Compare this approach to TRIG in their very thorough capital market presentation earlier this month..

TF

Crossley

In a wind down you'd build out the phases you'd started on and sell off the remaining parcels after getting utility connections sorted along with access. Other developers are interested as they buy margin to keep their regional offices overhead 'sweated' as some of their sites will be delayed in planning and they need to hit their volumes.

Your point on the balance sheet intra year is erroneous. If debt is higher it means wip is also higher. Debt comes down at year end as wip reduces as the sales volume are typically skewed towards the end of half year and full year end.

You also don't understand the cash flow of each completion. Each Vistry completion at c £500k will have c £250k build and sales costs, £125k land allocation cost with £125k profit. The direct cash inflow is £250k which is in excess of the £125k accounting profit. Payments to land creditors will generally be less In aggregate than the £125k charged to the P&L so each sale is cash flow accretive in a wind down. if you're growing, your land payments are in excess of that charged to the P&L so your cash flow reduces as all increases.

I guess I know more than the average bear having worked in the sector for 10 years.

TF

Hi Crossley

The net assets figure I quoted is after the deduction of all liabilities - that's what net assets are.

I disregarded goodwill and intangibles from net assets as they are 'fresh air' assets stemming from acquisitions where I'd ascribe no value to them.

So the business could absolutely be wound down and run for cash.

And by doing so you'd double the share price.

TF

Benrumpson

Golden brick still exists. HA deals involve selling the land, zero rated for vat, when the foundations are in.

Developers take about 35% of the contract value to profit at that point with the balance taken to profit on an application basis when it is built out.

As to my other post, the point I am making is that the relatively moderate balance sheet should put a floor to the valuation. Ie, if the returns fall to an unacceptable level then trade it out and return the capital to shareholders.

TF

Net assets at Dec 25 were £3.3bn or £2.2bn when deducting intangibles and goodwill.

£2.2bn of tangible net assets is about £5.70 a share.

Most of the net assets are in inventory which is valued at cost. That inventory will actually be shifted at a margin of at least 8%.

Therefore my plan A would be to put this in to run off, I don't have any confidence in this business to trade it out.

The 8% margin is a sufficient buffer to pay for all termination costs.

Expect private equity to get on the shareholder register when they've woken up to the opportunity.

Top FCA

W is valued at cost

Adjusted profit before tax down to c£200m down from > £269m at annual results 2 months ago.

Year end cash balance to be c £100m v net positive 2 months ago.

My views are:

(1) The business model doesn't work as there is still too much open market in the mix that they can't sell and then have to give away. By not selling they pause the build out which is the entire logic of partnerships - build out everything and give subbies certainty of work. Subbies won't want to work for them in my view

(2) The CFO has to go. Is that the fourth profit warning he has presided over?.

(3) A 25% reduction in profit in 2 months is evidence the business is weak. Berkeley wouldn't be anywhere near this reduction and are the best run company in the sector by miles.

(4) The share price has already halved so how much this falls at open is anyone's guess

(5) They should have appointed an industry heavyweight as chair and as CEO, not the promotion of senior independent director and an internal youngster as CEO.

TF

Really excellent update today.

Totally agree with the strategy of capital being used for incremental investments, with disposals and buybacks. It would be madness to build new stuff for it to be worth 30% less than market value - so let's sell what we can at par and buy back shares at a 30% discount. Happy if we end up with my shares being the only ones left and worth £2 each ..

My only caveat is why we are in a hurry to pay back the RCF.

Have been reducing my holding here as an ongoing yield of c 9% feels like fair value. I swapped a load for TRIG at 64p which got me out of jail. I imagine the final quarterly payment of last year's dividend is propping the share up and the price will fall back again soon.

I'd argue there should be a material discount to UKW and TRIG for scale whilst I believe the corporate governance has been wanting. They have no CFO and I believe it shows - until the new chair came along they were still quoting the 'attractive yield' in quarterly news flow. How can you promote the quality of the yield when it is then hacked back the following year? Attractive should mean recurring, not short lived. The reduction is not about choice, but about necessity as the earnings are falling back.

I also do not approve of the divi terminology changing. They have, and do, talk of the dividend being covered 1.1x but the new policy is couched as being 75% of earnings- which is effectively 1.3x.

If they used the same terminology it is more apparent that a 50% cut to a dividend does not move it from 1.1x to 1.3x covered. .

If folk look back on early quarterly announcements last year, the future years income is only narrated in the currency of proportions by mix not absolute amounts in £. So how did that help investors understand the quality of forecast earnings?.

The other elephant in the room is that the new strategy was designed to reduce the discount with an unwind being forecast each year - as justification of the new returns shareholders can expect to receive. However, the share price has tanked 20% since the announcement so surely the strategic review's conclusions are wrong and they need to rethink???

It would be interesting to get the board's view of the cause of the £50m reduction in market cap following the strategic review. Was it due to the implied profit warning or was it due to the markets rejection of the quality of the strategic review? I don't see any way how this business should survive on a standalone basis and I think the most likely route to value is a consolidation from the buyer of BSIF or if UKW use their free cash flow to diversify.

Booked some profits on TRIG to top up here on Friday. It's an educated punt but am enthused by another top up from Jeffries who I expect to be better informed than me..

Bought more at sub 840 on Friday. Happy to hold or will bolt for a quick profit at some point over £9. Am expecting a positive outlook when the results are out in a couple of weeks.