Nextenergy Solar Share Discussion Threads

[wallywoo] 22/5/2025 08:29

Xd today for 2.11p. Expect the shares to be weak for a few weeks.

[wskill] 21/5/2025 20:01

Reading the latest news from FSFL seems they had an offer but not enough to tempt them they talk of consolidation in the sector .

[jellypbean] 16/5/2025 20:26

I am on agreement with you chucko.
I see many negative comments on here frustrated with the falling NAV. However the chart semms fairly well aligned, all be it delayed, with INXG (17 year UK index linked Gilts) which surely is to be expected as this will feed into discount rates.

I know this is only one factor that affects the NAV (though probably one of biggest ones during thevending of QE), and I'm not sure a duration as long as 17 years should be applied, but to discuss NAV degradation without appearing to factor this in seems to me to be missing a most important point.

[fram7] 16/5/2025 15:47

So should we sell?......at least the share price seems holding for now?

[marktime1231] 16/5/2025 14:13

If the financials are fine why don't they print them? The calculations would be pretty simple, kWh x rates achieved + subsidies received etc.

In their own words to say the dividend across the whole year is cash covered about 1.1x after amortising subsidiary debt (which has to mean before non-amortising rcf interest costs, pref share payments, buybacks and management fees, together adding up to tens of millions) means that the cash from operating companies does NOT cover central business costs. Not on an annual basis and certainly not in Q3 and Q4. Those central costs are being accumulated as debt or paid for by NAV erosion. Where you have found comfort or something to say otherwise, it is not in the annual report from last year. We had this debate at interim report and discovered there was a fudge to the numbers by moving debt attribution between operating spvs, hold cos and group. That it is not clear in unarguable black and white in itself should be a warning something is wrong.

Nothing weak or lazy in concluding that the business is loss making, now. Actually the opposite, nothing passive about challenging the headlines and digging in to the detail. I used to want to believe them but now I feel conned, we all should. If what you say about forward prices is inevitable then the problems are set to get even worse.

So why was the dividend still being increased going in to this situation, why has it been held now, why has the chair left abruptly, why are they blaming low irradiance when it was so sunny in March it more than compensated for dull Jan-Feb. But most of all why don't trading reports illuminate operational and financial performance, and why is that information hidden away in annual reports presented with fudges so we can't agree the true picture?

What answer is there to all this I wonder. Asset sales or a wind up at close to estimated NAV so we can exit with the chance of getting some of our money back? Holding on expecting things to improve on their own won't do it.

[nickrl] 16/5/2025 09:38

Its a sound move not increasing the divi as merchant power prices have dropped back considerably and the trend isn't good. Merchant power sales are a high proportion of the divi income as the bulk of the ROC / FiT income is being used for the mandatory annual amortisation of the loans which are increasing over the next few years.

Historically there were plenty of companies that were happy to sign upto long term PPAs to burnish their green credentials as well as give then certainty. However, the price of gas fallen back and power prices have stabilised so have PPAs. Also as other posters have commented solar is becoming saturated and driving the prices down during the day when production is at its highest and this is only going to worsen. Wind back 3yrs and NESF had a high level of forward capture but every update since you can see the level of unsold generation has been worsening at each update leaving them exposed to selling in the day ahead market im surmising.

Further sales will help with getting rid of the RCF although if rates continue to fall that will be less of a burden.

Ultimately these need to merge with someone even FGEN would bring economies of scale and the BoDs should be onto that now before the divi gets further squeezed

[cc2014] 16/5/2025 09:31

I taken a quick look at this today (again)

1. I disagree with other posters that there is anything funny going on with the dividend cover calculation. Reference to page 49 of the 2024 annual report evidences this

2. NESF is running gearing of 48.4% vs the prospectus (and all amended prospectus') limit of 50%. imho as I have said before this is out of order and the Board should not be running a buy-back program in advance of receipts from the disposal program. I cannot understand how the Board or fund manager feel comfortable with this. It would not take much to tip the gearing over 50% from external factors beyond their control such as falling long term power prices or rising interest rates or a tax on the industry.

3. The dividend is covered for 2025/26 but probably is not covered for 2026/7, 2027/8 and future years because the hedged PPA price falls from £80Mwh to £50Mwh. Page 43 of the interim report refers.

4. I tried to work out how much the revenue falls in 2026/7 but kind of became frustrated as I need to go through the precise information of when assets came on line and where sold but my broad calculation is as follows

Looking at page 43 it looks like hedged PPA revenues fall in 2025/6 due to asset sales as the percentage income from this stream goes down. In 2026/7 the revenue must fall by about 17.5% because of lower power prices. I think this knocks about £14m off the income which brings income down to £66m, income after costs down to £49m and leaves the dividend 1.0x covered if you ignore further loss of income from asset sales.

Longer term from 2035 all the FIT revenues collapse on shown on page 53 of the interim report. You are left with a bunch of hopefully amortised debt paid off but also a bunch of convertible pref shares, which if they convert will be from paying around 4.5% as debt to 8.43p as dividend

Even my goldfish can work out that the numbers won't stack up because at that point the revenue has fallen from £140m a year to £60m a year as shown in the chart on page 53



More than anything I absolutely cannot get my head round why the Board are insisting on running the gearing so close to the limit. This is a choice they have made. It would take so little for the limit to be breached. Of course the problem would be easily resolvable by cutting the dividend

[skinny] 16/5/2025 09:17

"When both Alistair and Helen Mahy step down from the Board at the conclusion of the AGM on 17 July 2025, the Board of SSE plc will comprise the Chair, two Executive Directors and eight independent non-Executive Directors; and will comprise six men and five women."

[garbetklb] 16/5/2025 09:05

Tag - where did you see that re Mahy / SSE? she's still listed on their website as Senior Independent Director. And I can't see an RNS

[tag57] 16/5/2025 08:40

Mahy has stepped down from the SSE Board too although more due to the 9year tenure.
Maybe she is just prepping for retirement / maybe poor health, who knows but it is concerning that it is with immediate effect.

[18sprice] 16/5/2025 08:32

CC2014, liquidity is a major problem for the majority of these renewable/infra ITs. With a market cap just shy of £400million NESF isn’t even on the radar of large institutions, the trust is simply too small. As many of the renewable trusts have alluded to recently, there needs to be strategic M&A to enable the trusts to get bigger, without corporate activity the smallest players will be bought out in piecemeal fashion leaving only the likes of INPP, HICL and a few others.

[cc2014] 16/5/2025 07:55

The Chair leaving immediately and not making it through to the AGM or providing 3 months for succession planning is not a good message. There's something uncomfortable there.

The discount to NAV has always been too high as well and the shares have been shunned by some of the large institutions. When the third largest investor is HL and the eight Interactive Investor that's sending a message as you don't see that elsewhere in the same way.


I am off now to unravel the puzzle as to whether the dividend is really covered or not. I suspect it is but I am puzzled by the statement that the dividend is covered 1.1-1.3x now up from 1.1x from as recently as y/e 31/03/25. I'm not sure given 95% of their revenues are fixed how the range can be so wide (or rather I can construct a way it is but it implies NESF's production might vary far more than I thought or seems likely)

[chucko1] 15/5/2025 22:35

There is some especially weak/lazy thought going into some of these posts.

The evidence that "NESF is eating itself", using the idea that dividends = NAV atrophy the past two years is in contrast to this: the sum of dividends and NAV atrophy over a much longer period annualises at circa +7.5%. You will find that a rapid ratcheting up of discount rate those past two years is a more appropriate place to look. Still, 7.5% is less than the average dividend yield, so further detailed analysis to reconcile this is required (you are certainly not going to find it in the past 100 posts).

Furthermore, the certitude expressed by some relative to the guesswork is absurd: NESF is extremely volatile owing to the inherent leverage incurred by the long time frames involved in valuations. A key driver is the spread between discount rate and inflation, very much the same as drives the valuation of long linker Gilts. Take a look at the movement in price of those the past two years and you will find that NESF is an oasis of calm by comparison!

That said, let's see how the commented upon irradiance of April/May feeds through to future NAVs as at least that variable has a short duration and effectively accrues. And as for Mahy, who knows? Could mean anything, but worth keeping an eye on any clear reasons emerging.

[marktime1231] 15/5/2025 19:34

I see BSIF also reported today, similarly eroding NAV it seems because net earnings don't cover the dividend. But they confirmed that record sunshine in March more than made up for below budget performance in Jan-Feb. So NESF has had problems other than low irradiance to compound its woes, like outages and ...?

Unexpected abrupt departure of Helen Mahy the NESF Chairman this afternoon, something which couldn't wait and follow an orderly process eg publishing the FY result in mid June and the AGM to follow which presumably will include a continuation vote. Whoever drafted the rns was struggling to find resignation words which reflect positively on her tenure. Having a crisis of conscience, or suddenly keen to distance herself?

[robertspc1] 15/5/2025 15:34

Gonna happen in my view. BSIF leading the charge

[marktime1231] 15/5/2025 11:36

Another trading update without any operational or financial performance data, except to say that irradiance was below budget. And yet the headlines were for record March sunshine. And perpetuating the myth that the dividend is covered by using a gross income measure eg before accounting for all deductions. It is not covered net when you account for all the group costs eg buyback, management fees, perp share payments and interest on the rcf. Not covered by miles. NESF is accruing interest and in effect is borrowing to pay the high dividend and to buy back shares.

This is a scandal, a con which some punters are falling for, blinded by the 12% dividend and the board presenting NESF to be in continuing good financial health when it is hugely loss making. As a couple of posters have pointed out NESF is eating itself to sustain the distribution.

[stemis] 15/5/2025 10:24

That's exactly what is happening. Over the last 2 years NAV has fallen by 19.2p and dividends have been...19.6p.

[cousinit] 15/5/2025 10:09

CC - I think that underlines why this is finely balanced at this point. Especially when share buybacks and BESS could be accretive in terms of capital allocation, even if the market may really dislike the latter.

[cc2014] 15/5/2025 09:48

a) the NAV keeps falling, one can argue the Trust is handing back it's income stream as dividends to it's shareholders
b)the gearing is at 48.4% (and going up not down)

[cousinit] 15/5/2025 09:09

Agreed Specto.

Just a thought, as the dividend is a Board policy, could the hold be to turn up the pressure on the manager? The manager will clearly understand the expectation on divi increases and "marketing" the strategy they are trying to promote/grow.

[woodhawk] 15/5/2025 09:05

So a 12% yield at 70p! Going to look ever more attractive as bank rates drop below 4%.

[spectoacc] 15/5/2025 08:38

FSFL said they were looking for consolidation - they, NESF, BSIF: you'd think all 3 would roll up into the go-to, super-sized solar IT.

If two go together and one is left out, that wouldn't be good for the one remaining.

Something's got to give on the fees on all of them, and rolling them up seems the obvious thing. Too many snouts in the troughs.

[garbetklb] 15/5/2025 08:38

As they project divi cover to be 1.1-1.3 (mainly dependent on sunlight & outages?), I'd have thought a small increase in dividend would have appeared possible and not wildly imprudent.
As SpectoAcc says, not a v good look to simply hold. I'm a bit surprised the share price is effectively flat.

[cousinit] 15/5/2025 08:34

I get the sentiment when these trusts are not meant to be annuities but have divi growth as well.

I think they got a bit over confident in 2021/2 when they hedged at good levels and interest rates were lower. Clearly both of those have unwound and it seems that the forward power curves reflect more solar saturation, depressing the revenues that aren't subsidies. A partial answer would be co-located BESS, but there isn't the capital (on a standalone basis) to develop it.

Obviously M&A seems to make sense for shareholders here, at least to consolidate the sector. Any kind of JV (similar to SUPR) to develop BESS may stymie that.

[spectoacc] 15/5/2025 08:16

Guess it comes down to whether you believe the divi cover (in an accounting sense), but failing to put a few fractions of a penny onto the divi isn't a good look IMO. What will they do going forward?

Agree re management fees.