Nextenergy Solar Share Discussion Threads

[gateside] 12/5/2023 17:07

Added at 103p for the 8% dividends

[marktime1231] 12/5/2023 16:35

I am not sure I am over-reacting, misled in to paying 3p over the odds for my holding, but I take the point. Since we are about to lose another couple of pennies to ex-div I will wait out, and maybe watch further to see what comes of trying to sell off assets.

Are you happy you understand where the other 4-5p of fair value disappeared, because I would be guessing.

[masurenguy] 12/5/2023 16:13

Dividend increased by 11%, which is just ahead of current inflation. At todays price of 103p the yield is now 8.1% and the discount to NAV is now virtually 10%. Consequently I have added this afternoon.

[keyno] 12/5/2023 14:59

Just out of interest, anybody any clue as to what a "reporting module" is? Bit lame I suppose blaming it on the software. As the old saying goes, cr&p in cr&p out but I'd still like to know.

[woodhawk] 12/5/2023 14:29

Me too. 8% prospective divi. Nice.

[tuftymatt] 12/5/2023 14:07

Agree and while embarrassing for those concerned I was happy adding this morning and bringing my average down a touch.

[scrwal] 12/5/2023 12:43

A major error not picked up by anyone including auditors.
The market now has doubts about the robustness of the financial controls and reported figures.
Personally I would have made sure that the error was identified and fixed and would be reporting that fact stating all was now sorted not an ongoing situation as implied by the rns.

[marktime1231] 12/5/2023 12:31

What a dreadful kicking to the share price this morning, the cynical duplicate announcement of future dividend rise not saving the day.

A furious email dashed off to IR demanding an apology and an explanation of how a FTSE350 company can dismiss such a significant error as the ongoing need to improve internal controls. Someone really badly messed up and needs to be replaced, and actually how about a discount on the fee we pay you to do these things correctly?

Not just a 2.7p VAT accounting error, a further 4-5p fall in underlying "fair value" has not been spelled out and we should not have to hunt for an explanation. Let's have direct detail on the biggest movement.

Viewing with anticipation the attempt to close discount through "capital recycling" somewhat undermined if value is falling, and not helped if we can't trust what is being reported. No wonder the gap from share price to NAV has widened to 10%.

I don't agree with CCs extra-negative view but it is hard to summon the confidence to conclude that NESF now looks like an Add even at this knocked down price.

Gee thanks NextEnergy.

[cc2014] 12/5/2023 12:19

#575

And that's part of my issue. And I guess part of the reason my earlier post is a little over the top.

Word salad. Lol. I like that phrase.


An excess of working capital. Um, what I think it means is that we booked the VAT on stuff we bought to the WIP and inflated the assets when we should not have done.

It seems to be a basic accounting error and lacks appreciation of the difference between reclaiming VAT and booking it in the accounts.

Normally VAT (receivables and payables or input and output) is booked to two accounts, input and output VAT. I'm not sure what it was doing going anywhere near the WIP although I have seen so many accounting systems where things are done in a non-standard way but still end up with the correct overall outcome that nothing will astonish me any longer.

[marksp2011] 12/5/2023 11:16

"As part of the Company's continual improvement of internal systems, the Company identified that the reporting module within its accounting software included an excess of working capita.

" The Company continues to work closely with external advisers on its programme to strengthen controls, processes, and reporting."

I have written to them and asked 2 questions

WTF does the first para mean? It is word salad. The system was doing this on its own?

What else do you need to tell us?

[cc2014] 12/5/2023 09:59

"The fund manager needs to force the NAV below 100p in time for the preference shareholders to convert to ordinary shareholders and make a killing."

It means what it says. It is my cyncial view of how things work in the City. IIRC and I'm sure I do these are either convertible preference shares or prefernce shares with warrants attached entitling a conversion to ords. It's all in the annual accounts. It's imho a very strange debt financing setup for an IT and there's a reason for it which I don't think is likely to be in the best interests of the ord holders.

The inflation RPI forecasts look way out to me, designed to keep the NAV up
The inflation forecast of over 3% going out to 2029 seems to be out of alignment with BOE forecasts. Why would that be unless it's to enhance the NAV?


"But the company want to argue the NAV should be much higher."
The fund manager and the board of directors are fighting each other
The Board are puppets... Like so many Boards on these IT's

[ammons] 12/5/2023 09:31

What does this mean?

"The fund manager needs to force the NAV below 100p in time for the preference shareholders to convert to ordinary shareholders and make a killing."

and

"The inflation RPI forecasts look way out to me, designed to keep the NAV up"

and

"But the company want to argue the NAV should be much higher."

The fund manager and the board of directors are fighting each other?

[cc2014] 12/5/2023 09:07

Hmm. I think they are trying to bribe the market with the dividend increase.

Once again I return to the gearing at 45% and NESF's inability to get this back to a number the city is happy with. This has now been going on and on and on and NESF keep ignoring it.

I also continue to wonder at length whether two things are going on here.

1. The fund manager needs to force the NAV below 100p in time for the preference shareholders to convert to ordinary shareholders and make a killing. I cannot find out who owns the pref shares. If and when this happens this is going to cause significant dilution to the ords. Plenty of time before this happens.
2. The disposal of the assets has nothing to do with getting the gearing down and buying back shares but more to do with the money made on the construction projects.


Why do we have to put up with this sort of statement. They make is sound like it's a good thing the accounts weren't right in the first place. It's pretty basic stuff. I'm not even sure I like the explanation. It coudld have been written far better.
As part of the Company's continual improvement of internal systems, the Company identified that the reporting module within its accounting software included an excess of working capital. This created an omission of certain VAT payable accounts from the report which feeds into the calculation of the Company's NAV.

The inflation RPI forecasts look way out to me, designed to keep the NAV up. RPI forecast not to fall to 3% in any year till 2029/30. Do they know the difference between CPI and RPI?
And I see they've chosen not to move the discount rate despite the moves in the base rate

Oh well, this is the all the same problem for me. The fund is trading on a discount because it's probably the price it should be. But the company want to argue the NAV should be much higher. Nice for their fee.

I think the City sees through it all.

[spectoacc] 12/5/2023 08:45

Tricky one - down by more than the NAV error but wonder if they've opened themselves up to shareholder action. Anyone buying has been doing so on a false NAV, as per the RNS table.

Edit - actually, they're down by about the NAV drop from last qtr, including the error. 118.2p to 114.3p.

[cruelladeville] 12/5/2023 08:35

Looks like a good morning to buy more shares here.

[spectoacc] 12/5/2023 08:32

@spoole5 - fair point. Just not sure it was unexpected, the divi, even tho they're desperately trying to cover for the shocker with the VAT.

Wonder who found that error, and the mood in the boardroom when it was reported..

[ammons] 12/5/2023 08:22

The increased dividend, covered, will do me fine, thanks.

[spoole5] 12/5/2023 08:10

Only inflation......more than most are managing!

[tuftymatt] 12/5/2023 08:06

Yeah they give in one hand and take with the other sort of.

Still think there is some modest share price growth to come short term and a decent divi too so am happy to add more today.

Good luck all 👍🏻

[spectoacc] 12/5/2023 08:05

Blimey, missed that NAV error at the end. No wonder they've twice RNS'd the divi increase (which is only inflation).

[spoole5] 12/5/2023 08:05

Looked positive, market disagrees!

[masurenguy] 12/5/2023 08:00

Unaudited Quarterly NAV and Operational Update

NextEnergy Solar Fund announces its unaudited Net Asset Value as at 31 March 2023, and its latest operational update.

Financial Highlights

-- 11% dividend target increase to 8.35p per ordinary share for the financial year ending 31 March 2024.

-- Forecasted target dividend cover of 1.3x-1.5x for the financial year ending 31 March 2024 based on high visibility of future cash flows.

-- Total dividend of 7.52p per ordinary share declared for the financial year ended 31 March 2023.

-- Total dividends declared since IPO of GBP305.8m or 55.72p per share.
-- Net Asset Value ("NAV") per ordinary share of 114.3p.
-- Ordinary shareholders' NAV of GBP674.4m.
-- Total gearing (including preference shares) of 45 %.

Portfolio & Operational Highlights

-- Total installed capacity of 865MW.

-- 99 operating solar assets.

-- Portfolio generation outperformance of +3.8% against budget for twelve months ended 31 March 2023, translating into additional revenues of c.GBP4.8m.

-- Capital Recycling Programme announced on 27 April 2023, aiming to capture significant value from the divestment of a 236MW portfolio of subsidy-free UK solar assets, the proceeds from which will be used to:

o Reduce gearing;

o Invest in future long-term growth opportunities; and

o Buy back shares

Dividend Target

The Board of NESF has approved a dividend target of 8.35p per ordinary share for the financial year ending 31 March 2024, representing an 11% increase from the previous year's dividend of 7.52p per ordinary share. The dividend target is forecasted to be 1.3x-1.5x covered, supported by the high degree of visibility of the Company's revenues. The dividend target increase is not dependent on completion of the Company's recently announced Capital Recycling Programme and dividend cover forecasts do not assume revenues from, or sale proceeds connected with, the Capital Recycling Programme .

NAV Correction

As part of the Company's continual improvement of internal systems, the Company identified that the reporting module within its accounting software included an excess of working capital. This created an omission of certain VAT payable accounts from the report which feeds into the calculation of the Company's NAV. This resulted in an overstatement of NAV of GBP15.9m at 31 December 2022 and the Company has made a correcting adjustment of (2.7p) per share or (GBP15.9m) to the Company's 31 March 2023 unaudited NAV. This has no impact on the cash flow generated by the business or on its dividend cover. The Company continues to work closely with external advisers on its programme to strengthen controls, processes, and reporting.