NextEnergy Solar Fund (LSE:NESF) — FY Results

0:00 Good afternoon, and welcome to the NEXTENERGY SOLAR FUND LIMITED investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to the management team. Ross, good afternoon, sir.

0:32 Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us online today. This is NESF's twelfth full year results presentation covering the year ended 03/31/2026. If we can move on with the next slide, please. As usual, please take a moment to refamiliarize yourself with the disclaimer. Any forward looking statements from today are based on current expectations, and actual outcomes may materially differ. We aim to be as transparent as possible so you're able to grasp the risk factors and limitations through the detail we're presenting across our suite of reports. On again with the slides, please. My name is Ross Greer. I am chief investment officer at NEXTENERGY Capital.

1:17 I'm joined today by Steven Rosser, who is investment director and looks after NESF for the NEXTENERGY Capital business. On to the next slide. Thank you. So the last twelve months were not simply a reporting period for us. They were a year of decisive action. We reset the dividend framework. We completed the initial capital recycling program. We paid back debt. We've improved operating performance, and also we have lowered the cost base. We announced and implemented a strategic reset in March 2026, including the move to a 75% cash flow based dividend policy and the establishment of a clear capital allocation framework.

2:09 We completed the initial capital recycling program with 245 megawatts disposed, representing about 30% of today's operating installed capacity within the portfolio, which raised a £119,000,000 in capital and resulted in approximately 2.44p of NAV uplift delivered. Importantly, these disposals demonstrate that there is realizable value within the portfolio even where public market pricing is not currently recognizing that value. We've repaid £30,000,000 worth of both long and short term debt. The portfolio outperformed in the period and generated 844 gigawatt hours, which was plus 2% ahead of budget, supported by active asset management and inverter replacements across 10 sites representing 62 megawatts of capacity.

3:02 We also looked at reducing costs across the structure and secured a 23% reduction in asset management fees, delivered approximately 10% O and M savings across renewed contracts and recovered £3,300,000 through insurance claims. On to the next slide.

3:21 NESF has declared £443,000,000 of ordinary dividends since IPO, demonstrating the strength and long term cash generative nature of the platform. The indicative dividend guidance range presented today of 4.5 to 5.1p for FY 2627 is above the range we set at the March strategic seminar. The new 75% payout policy is designed to be sustainable and cash covered while freeing approximately £40,000,000 of cash flow over five years for debt reduction and over time reinvestment. We recognize that a lower dividend is a significant change for shareholders. However, the previous policy constrained capital flexibility. The new policy is intended to ensure the dividend is covered by cash generation while retaining capital to reduce debt and reinvest where that can enhance long term value.

4:16 At this point, I'll hand over to my colleague, Steven, to take us through the full year results. Thanks, Steven. Thank you, Ross. Good afternoon, everybody. So for those of you who might be new to NESF, I'm Steven Rosser, and as Ross has said, I'm investment director for NESF. Over the last year, the team and I have been laser focused on maximizing the performance of the portfolio, progressing our capital recycling program, which you've heard a little bit about just now, and crystallizing our plans to drive further value for investors over the longer term. I'm gonna take you through the full year results for the period ended March 2026, providing updates on portfolio performance, which has outperformed budget, and the balance sheet and the progress we have made down paying debt.

5:04 I'll also walk through the net asset value movements over the year where we have seen impacts from changes to power price forecasts and government subsidies, and I'll share the progress we're making on delivering the road map. There is a lot of ground to cover, so I'll put out the key points as I go through, and I'm sure we'll pick up any other topics of interest to you during the q and a session. If we move on to the next slide then, please. Thank you. So let's look at the key financial headlines. NESF delivered a resilient full year financial performance with total income increasing to £141,300,000 from £135,500,000 in the prior year. Portfolio and Holdco EBITDA improved to £104,500,000 up from £96,900,000 in prior year, which demonstrates stronger operating profitability.

6:02 Cash generation remains robust with £56,200,000 available for ordinary shareholder distributions, up from £50,300,000 in the prior year. We achieved our dividend target of 8.43 p per share for the last financial year, delivering dividend cover of 1.2 times.

6:27 Gross asset value reduced to £922,000,000, and ordinary shareholders' NAV declined to £437,500,000, or a NAV per ordinary share of 76.1p, reflecting the valuation pressures NESF has faced despite its strong operating performance. I'll walk through the key drivers of these valuation movements shortly, but in the meantime, in year income, EBITDA, and distribution capacity remained strong. If we can move on to the next slide, please. Thank you. So let's look more closely at NESF's underlying portfolio. Composition remains healthy with 99 operating assets and eight thirty eight megawatts of installed capacity.

7:19 The portfolio is predominantly operational with 95% of assets operational and only 5% in construction or development. Our geographic exposure remains mainly UK focused at 83%, supported by diversification into Italy, Iberia, and international exposure through the investment in NEXTENERGY three. The portfolio is still primarily solar, representing 97% of the technology exposure, with battery energy storage now contributing 3% through our Camilla asset in Scotland. We can have the next slide. We'll look at operational performance. Solar irradiation over the year was 6.7% above forecast, creating a supportive backdrop for generation.

8:15 Despite some network unavailability over the year, portfolio generation was strong at 2% above forecast. That's a significant improvement versus the prior year's minus 5.3%. This demonstrates better asset performance and improved operational resilience, which is a product of the work we've been doing across the portfolio to enhance and maintain asset health. Let's take a closer look at that on the next slide, please. NESF is actively protecting and enhancing portfolio value through its well established asset health, performance optimization, and cost discipline programs. Our focus is on maximizing asset availability, reducing the impact of unexpected downtime, and extending asset life through targeted technical upgrades.

9:12 Repowering is already delivering progress. Module and inverter replacements have been completed across key sites with almost five megawatts of modules and 26 megawatts of inverter capacity replaced during this last year alone. Further inverter work covering up to 65 megawatts is planned over the next two years. Warranty recovery is also helping to reduce costs. For example, at Knockworthy, where a systemic module defect was resolved through a warranty claim. Cost optimization is translating directly into shareholder value. Asset management cost forecasts were reduced by 23%, increasing NAV by £7,400,000.

10:03 Operation and maintenance contract renegotiations have delivered 10.4% savings across 67 contracts so far, equivalent to over £450,000 a year and around 2,300,000 over five years. Our strategic approach to spare parts management also helps to mitigate the risk of component failure, reducing lead times for replacements and supporting more reliable generation performance. We saw that to good effect during the year where we were able to source key switchgear from within the NEXTENERGY group and supply that to one of the network operators, reducing downtime on that part of the DNO network by around two thirds. Let's move on then to the next slide.

10:54 We can talk about hedging. So around 58% of NESF's portfolio revenues are derived from government subsidies, which are now linked to CPI rather than RPI. Although this has changed over recent months impacting the NAV, the subsidies still provide a strong underpinning for revenue stability. To manage revenue volatility and enhance cash flow visibility, NESF locks in short term PPAs over a rolling thirty six month period through its hedging strategy. The power sales team supporting NESF actually... Actively seeks contracts above adviser forecasts to maximize value and typically aims to be around 90 to 100 hedged for the year ahead with flexibility further out to take advantage of pricing opportunities as they arise in the market.

11:48 A good example of this is the near term power price uplifts we experienced as a result of the conflict in The Middle East, where we were able to capture additional value for the year ahead and upgrade our dividend guidance as you will have seen from our recent announcements and as Ross mentioned earlier on. So if we move on to the next slide, we can look at how we convert that portfolio performance into value for shareholders.

12:14 So NESF converted that operational performance into cash income of £71,900,000 for the year. Portfolio generation of 844 gigawatt hours was supported by additional distributions from NEXTENERGY three and the international co investments. Asset sales generated £46,200,000 as part of our capital recycling program. After costs, NESF delivered £56,200,000 of net cash income available for distribution to ordinary shareholders. That cash was allocated across shareholder value priorities, £48,500,000 in ordinary dividends, £18,000,000 of net repayment of short term debt, continued investment into asset health, and some share buybacks at the beginning of the year.

13:08 Can have the next slide, please?

13:13 NESF maintains its disciplined capital structure with debt repayment remaining a clear priority. Over the year, NESF actively reduced its total borrowings by around £31,000,000 to 460,000,000, including the preference shares. This includes net down payment of £18,000,000 against revolving credit facilities using the proceeds from capital recycling. As a result of movements in the NAV and despite the net reduction in borrowings, total gearing is currently 51.2% of gross asset value, slightly above the 50% limit, which reinforces our focus on further deleveraging. The company currently has around £127,000,000 of short term debt outstanding, plus around 134,000,000 of long term debt.

14:07 Preference shares represent around 200,000,000 with a fixed preferred dividend of 4.75% per annum. The company's weighted average cost of debt remains at 4.8%, while the weighted average cost of capital has increased slightly to 6.9, reflecting the current financing environment. We'll have the next slide, please. We'll talk about that debt position on the USS preference share restrictions particularly. NESF is currently above both of its gearing thresholds. As I said, debt to GAV is 51.2% against a 50% limit, and USS preference share EV gearing is 61.8% versus a 50% threshold.

14:55 Importantly, exceeding the 50% debt to gap ratio does not impact debt facility covenants, but it does restrict further borrowing that would increase gearing. The share buyback program was paused in May 2025 to help manage the gearing position. Under the USS preference share agreement, the elevated EV gearing ratio triggers restrictions requiring USS approval for share buybacks, special dividends, or additional debt. The expansion of the capital recycling program that we announced as part of the strategic seminar is explicitly targeted at addressing this position in the near term. The company is already well advanced with its first disposal under the... Under that program, the process of which will be used to further down payment of revolving credit facilities in due course.

15:50 We can have the next slide, please.

15:54 NESF is targeting a long term total gearing range of 40% to 45% of GAV, and then we've set out an integrated deliverable plan to achieve this through expansion of the capital recycling program and the realization of the investment in NEXTENERGY three when that matures around 2028. As I've touched on already, the company reduced its borrowings by around £31,000,000 in the period with around 13,000,000 of long term debt repaid in line with its amortization profile, as well as the £18,000,000 down payment of revolving credit facilities. NESF also reduced the commitment limit under the revolving credit facility to 170,000,000, which also helps to improve treasury efficiency. Continuing that trajectory of reducing debt is a core focus.

16:44 The amortization profile of the company's long term debt is already aligned with the residual life of the rock and feed in tariff subsidies. Further down payment of revolving credit facilities is a clear priority under the capital allocation framework as we work to bring the gearing ratio within the investment policy limit. So if we move on to the next slide, we can look at movements in the company's valuation, which as I mentioned, has been impacted by a number of forward looking factors. And if you can have the next slide again, please. Thank you. Over the period, net asset value declined to £437,500,000, which is equivalent to 76.1p per ordinary share.

17:34 As we'll see, as we walk through the NAV bridge on this slide, the movement is largely attributable to external valuation factors. The underlying operation and portfolio remains robust and resilient. So if you look at the bridge, after preferred and ordinary dividend payments of £58,000,000, the single largest movement was driven by a reduction in long term solar power price forecasts from the independent power price consultants that the company uses. Over the period, this reduced NAV by around £40,000,000 or 7p per ordinary share. The company experienced additional valuation pressure from changes to indexation on the rock and feed in tariff subsidies, which reduced NAV by almost £12,000,000 or 2p per ordinary share.

18:29 At the end of the period, the company also increased its discount rate, reflecting the shifting macroeconomic outlook, reducing NAV by around £9,000,000 or 1.6p per ordinary share. Together, changes in short term inflation and cost savings through future reductions in the asset management fees, which were successfully negotiated over the period, made a positive contribution of £13,000,000 or 2.4p per ordinary share, offsetting but not negating some of the downward pressure. Let's look at power price forecasts in a little more detail on on the next slide, please. NESF uses a blended average of curves produced by leading third party consultants.

19:16 Importantly, management does not apply its own overlay to these power price assumptions. As you can see from the chart, short term UK power price averages are forecast to remain broadly stable at £64.20 per megawatt hour for twenty twenty six to 2030 compared to £64.60 meg... Per megawatt hour for last year. However, long... Longer term UK power price forecasts declined to £54.30 per megawatt hour for 2031 to '45, down from £60.60.

19:54 This movement has been primarily driven by changes in near term gas price assumptions, reductions in forecast electricity demand compared to previous projections, and forecast growth in solar capacity over the forecast horizon. Medium term prices and solar capture rates remain broadly consistent. We move on to the next slide.

20:20 NESF updates its valuation quarterly and provides valuation sensitivities at six monthly intervals to illustrate for investors how NAV per share would respond to movements in key valuation assumptions. The valuation process is supported by an independent third party financial modeling firm, providing additional governance and objectivity in the formation of the NAV. Key sensitivities are shown on screen now and included in the presentation pack, which is on our website. And these include the effect of upside and downside movements in key areas such as discount rates, power price forecasts, inflation, generation, asset life, and energy storage.

21:11 Let's move on then to the next slide, and on to the next one again. Thank you. We'll we'll look at progress and momentum against the road map we announced in March. So as a brief reminder, the strategic reset NESF announced in March focuses on driving total shareholder return over the long term with immediate focus on adjusting the dividend policy, recycling further capital, and paying down debt. NESF is making tangible progress against these objectives, which I'll briefly step through now. The new 75% dividend payout policy is now in effect. And as we've mentioned, we've upgraded our guidance for the current financial year to a payout range of four point five to five point one pence.

21:57 The next phase of capital recycling is already underway with active discussions ongoing with potential buyers for the first 45 megawatts of the 120 megawatt program we announced. We're also at an advanced stage of negotiations for disposal of a development asset with proceeds from that expected to support further RCF down payment. Overall borrowings, as I mentioned, have been reduced by £31,000,000, and the commitment limit under the revolving credit facility has also been reduced to £170,000,000 as part of efficient treasury management.

22:36 We move on to the next slide. So beyond those activities, the company is also making solid progress towards delivering the NAV growth and energy storage elements of the roadmap we set out. Lease extensions have concluded successfully at four additional assets, with further negotiations in flight across around a third of the portfolio. Through these extensions, the company is targeting asset rights of up to fifty years, supporting long term value creation. The pilot repowering and hybridization project is progressing on track with engineering design and procurement underway in preparation for a potential investment decision within the current financial year, subject, of course, to the company's capital allocation priorities.

23:27 The company has also restructured arrangements around one of its development projects, which is expected to result in savings of around £10,000,000 over that project life cycle. On energy storage, company plans to seek shareholder approval at the AGM to increase the policy limit from 10% to 30%, providing flexibility to pursue the value creation outlined in the road map in line with the company's capital allocation priorities over the coming years. Through a combination of these initiatives, we see potential to unlock between 60 and £100,000,000 of additional value across the portfolio over time. We can have the next slide.

24:17 Disciplined capital allocation remains key, and NESF operates a dynamic capital allocation framework to remain flexible as market conditions change. Decisions are guided by five key principles, returns based prioritization, optionality value, capital efficiency, strategic alignment, and stakeholder balance. The framework combines external market conditions with NESF's investment objectives to deliver an effective balance. The hierarchy prioritizes mandatory obligations first, including debt service, committed development expenditure, and regulatory requirements. Maintaining a healthy ordinary dividend in line with the current policy remains a core priority, followed by committed growth capital and balance sheet optimization.

25:13 More discretionary uses of capital, including new investments, share buybacks, special dividends, and cash reserves are all assessed through this framework. We move on to the next I think we may have lost Steven's Internet connection there. So let me try and pick up where he has left off.

25:51 Here we go. So NESF's near term capital allocation priority is debt repayment, as we have said. The plan is to continue amortizing long term debt, repaying the RCF through capital recycling and also through the exit of the NEXTENERGY three private fund investment that NESF has on the books. Capital allocation remains dynamic and linked to the share price discount, and reinvestment remains important. NESF will reinvest income into the health of the existing portfolio that supports ongoing asset performance and ultimately through the the delivery of of dividends as well. The company also sees scope to operational best exposure, as we've said, and and that includes both standalone batteries and and hybridization with return of capital to shareholders, such as tender offers or buybacks remaining a a potential use of capital, but it's currently restricted by by policy and other limits. The dividend policy is clearly defined and is aimed to distribute 75% of income to shareholders That closely aligns us with the right operations of the platform in today's energy market dynamic.

27:10 If we can move on to the next slide, please.

27:15 Thank you. The new policy distributes 75% of earnings, as we've said. This helps to ensure that dividends are covered by income generated by the portfolio. The policy change is intended to unlock capital for use under capital allocation framework that we've chatted through already, and it's also designed to give that long term dividend guidance and and comfort around how we are operating the platform in the current market conditions and based on the current NAV as of the 03/31/2026. Near term, the guidance incorporates the impact of further capital recycling. Medium to longer term, dividends are expected to benefit from repowering energy storage as we work our way through the the road map that we've set out.

28:01 What's key is is... As we've said already, is that the... At the front end of the... Of this cycle, our our dividend guidance for the next financial year is obviously at a higher level to what we set out in the strategic reset, which gives good comfort around the direction of travel of the platform itself. On to the next slide, please. So as we've said, the road map is designed to create long term shareholder value. Management expects to reset to increase total NAV returns over time while maintaining an attractive dividend under the new policy. It was key for us that we continued to drive the right level of yield from the platform on a sustainable basis as well as to robustly continue to manage that NAV and the growth opportunity that the market conditions present for the platform, really putting the platform on the right footing for the future.

28:57 There is a short term opportunity cost, of course, but this is expected to be outweighed by the long term benefit. And we do believe it was absolutely the right thing to do for the platform. Indictive guidance shows long term total NAV return of about plus 3.6% CAGR. And the comparison versus a no action scenario really does highlight the value that we've created through the the the the execution of the road map that Steven and team have been setting amongst. Steven, if your Internet connection is settled, do you wanna jump back in from slide 28? Yeah. Sorry. It's obviously melting down in the in the heat here. 28.

29:43 Where are we here?

29:46 So if we can move on to the next slide as well, please, Lily. Yeah. I think you've actually covered this. I covered this one. Let's move on to the next slide. So Steven, we're just gonna take your camera down. Your connection speeds are quite low, sir. So we're just gonna take the camera off for now, if that's okay. Yeah. Sure.

30:19 But please go ahead. I'll be let me keep running, Steven. If your if your connection is struggling, I'll keep going in the interest of everybody's time. So the company is targeting long term total returns of nine to 11% gross. Base portfolio return is is between 79%, reflecting the underlying yield of our existing assets. We are actively managing the portfolio, as we've said, through recycling, repowering, and also energy storage. This adds 1% to 1.5% to really bring about an optimized return in that range of kind of 8% to 10.5%. Share price discount reduction over time, we're targeting a move from the current 40% discount to something in the region of 10% discount, which adds a further kind of 0.5% to 0.8% to that overall stack of nine to 11%.

31:18 If we can move on to the next slide, Alan, again, please. Big picture, the driver for continued progress in the energy transition is evolving. It's moving away from net zero ambition towards how critical it is to have domestic energy generation as part of not only our energy security agenda, but also in terms of protecting national security and remaining competitive on the global stage. Solar and energy storage have a pivotal role in delivering this energy future, providing scalable generation and power flexibility solutions with tried and tested technology. Power demand is expected to grow significantly with AI and data center demand still not fully quantified as well as continued progress towards the wider electrification of GDP.

32:07 We see that this will positively influence power price over time and actually particularly over the next decade in relative terms to the long term power price forecasting that is currently built in to the NAV assumptions. We use only those external data points. At the moment, we are very positive as a platform and personally around how power price will outturn relative to those long term forecasts at the moment. We clearly take a more conservative approach to how we build out the NAV. Policy tailwinds, including the Clean Power 2013 net zero targets continue to underpin and support the sector. And investment companies, as a vehicle, do provide that liquid access to diversified long life renewable infrastructure portfolios.

32:52 So they remain an excellent way for investors to gain exposure to the energy transition itself. On to the next slide, please.

33:06 Thank you. NESF has faced sector headwinds, but the strategic reset is supported by strong market tailwinds with structural demand for existing and future renewables clear. Headwinds include elevated interest rates, government consultations that continue to create uncertainty, lower power price forecasts as noted already by Steven, and constrained capital raising and share price discount pressure.

33:34 Tailwinds include expected UK electricity demand growth, those clear Clean Power 2030 delivery targets, domestic energy security focus, the need for large scale renewable investment, and the higher inflation environment, which we know benefits NESF as 58% of its revenues come from those long term inflation linked sources. Alongside this, the power price forecasting market has matured with greater consultant consensus and a tighter long term forecast range, which gives increased confidence on the sources of revenue on a look forward basis. This is paired with a resilient portfolio that the team continue to actively manage, generating robust generational performance.

34:22 Moving on to the next slide, and on again, please. So looking forward wrapping up just prior to the q and a, the board and the investment adviser are aligned and really focused on narrowing the discount to NAV that the share price is running at. Key focus, as you've heard, remains on reducing total debt, then realizing value and optimizing operational performance through maintaining the discipline of the capital allocation process and procedure that we have detailed through the reset. The team continue their work on delivery of the strategic roadmap, which we believe is central to rebuilding confidence and unlocking value over time, and it targets, as we've said, the long term total returns of nine to 11%.

35:10 Thank you for listening to our presentation. I apologize for the technical issues, the heat getting the better of some of the systems that we're using. I will now work through the Q and A that have been submitted. If you've not managed to submit a question yet, do please feel free to add one onto the system now. Steven, can I check if I've got you on?

35:34 Steven is... I I I think, Steven, I've sent you the dial in details. So if you would... Let me just see if I can just bring you on here. It's okay. I'll I'll just step through the steps. Are you are you sure, Steven? Can you hear us? Yes. I can hear you. Can you hear me? Okay. Lovely. I have put the dial in details at the bottom in the chat there. If you if you struggle again, just please feel free just to dial in, and we can hear you from there. It seems to have stabilized now. Lovely. Thank you very... I've I've kept both of your cameras off as well just for for for clarity. Thank you. Over to you, Greg. Thank you. Thank you. So first question very aptly, Steven, is... And actually, a a number of these are are temperature related, so, obviously, everybody is feeling the heat. We... Is there a maximum ambient operating temperature for NESF's solar panels, and does efficiency drop at very high temperature?

36:27 So, I mean, solar panels are designed to operate safely across a wide variety of temperature ranges, particularly, you know, what we would expect to experience normally in in The UK and and Southern... Well, across Europe, particularly Southern Europe. So there isn't a practical maximum ambient temperature in in a sense, but there is a degree of degradation in in performance and and performance efficiency as as the temperatures get a bit hotter. So, you know, maybe maybe up to half a percent against standard test conditions. So so really hot weather can slightly reduce efficiency and performance. But, you know, in in terms of what we would expect to experience in The UK, even what we're experiencing right now, they're absolutely fine.

37:14 Great. Thank you. A second question has come in as well, heat related, so I'll I'll I'll add that in now. Do the battery energy storage systems have mechanisms to detect and deal with any unintended thermal events, and and how do they protect the assets. So safety is the core of a design priority of everything that we do across our systems. The batteries that we deploy have inbuilt fire detection and suppression systems, and they are layers of protection around how thermal control of the assets is managed. They are also twenty four seven monitored and and also air conditioned units as well. So they are well versed in in operating. The development process that we go through, we also ensure has has had consultation with local fire as well, fire brigades to to ensure that, you know, should an event happen, the design methodology mitigates as much as possible any thermal runaway risk, but also that we have every check and balance in place in terms of how we might control such an event in in due course.

38:19 Moving away from heat related questions, Steven, if I may pass this one to you as well. So how confident are you that the new current 4.5 to 5.1p dividend guidance can be maintained for the longer term outlook we've detailed, I e ten plus years and beyond? And since the current dividend is around 10%, isn't company's target of a total return of around nine to 11% overly conservative? Do you have confidence this may be exceeded if the battery expansion and asset improvement plans go ahead as you've suggested? Yeah. It's a great great question. So the dividend is linked now to 75% of operational cash flows, so that's rather than a fixed or a progressive target.

39:06 So that means it's better aligned with underlying earnings, and that sort of improves resilience then across different market cycles. So as we've talked about, the portfolio benefits from benefits from a a high proportion of inflation linked contracted revenues through the the subsidies plus the active power price hedging and then strong and consistent operational performance and and, you know, certainly over the... Over the history of the fund outperformance of of the assets. The road map that we've set out supports sustainability through that reduction of debt that we talked about, lowering financing costs over time, react... Reinvesting in the asset health and asset performance and repowering, adding energy storage, also provides new and a more diversified revenue income stream.

39:57 So whilst, you know, nobody could guarantee a dividend over a ten year period, The current policy is specifically designed to be deliverable through different cycles with opportunities to the upside as we as we add in those additional... That additional capacity and additional performance through the work that we have have already outlined.

40:20 In terms of whether, you know, is nine to 11% too conservative, it's... I suppose it's based on, you know, current market assumptions and and the independently informed forecast that we have. Importantly, it reflects a combination of income and NAV growth, not just the dividend yield, which obviously is a component of it. So while the current dividend yield is high at around 10%, you know, not all of the return will come from income every year in terms of the nine to 11. And the future returns depend on factors like power prices, as we've talked about, discount rates, and and obviously the execution of of the strategy. I think that probably covers covers that ground. Anything you would add, Ross?

41:06 No. I don't I don't think so. I think that was a a comprehensive response. We we do believe it was the right thing to do for the platform. We we obviously are very positive about the outcomes that we can deliver for the future of of NESF. We do believe it was the right thing for for investors in the platform. So, you know, it it it... You know, we've we've obviously based all of what you've seen in in the usual way that we do our numbers, which is based on as many external data points as possible to avoid any management assumption peculiarities in there. So so there is room for for us to continue to optimize the journey over over time. Yeah. Moving on to the revenue side. Next question is how secure are NESF's revenues given falling long term power prices?

41:52 So NESF's revenues are are highly resilient and and diversified.

41:59 We're only partially exposed to those long term power price forecasts. Significant proportion, as I said earlier in the presentation of our revenue comes from those long term inflation linked government subsidies, and that's about 58% of the overall revenue stack. And then the company also operates a proactive forward hedging strategy that locks in power prices over the next thirty six or so months. That gives us really good visibility over the the cash flows and and and stronger certainty about how we are going to outturn. There's obviously ongoing government consultation at the moment around transitioning existing renewables generators onto a wholesale CFD contracts, which is something we're obviously watching and interacting with with government on closely.

42:51 That could increase long term visibility over over power pricing and and provide further kind of long term stability in that power price over over the long term. Lots to work through in terms of that current. Hi, Ross. I think we've just lost you momentarily. I'm just gonna refresh your browser, just pull you back through.

43:45 Ladies and gentlemen, please do bear with us while we just reconnect, Ross. My apologies. I think I'm back on now. Lily, can you hear me? Yeah. We can hear you. Sorry. The heat getting to all of us clearly. Next question is given the large discount to NAV, which the company have suggested they feel is not justified given the quality of the assets and potential ahead, might some of the management and board see value and and buy into NESF shares themselves. We recognize a significant discount to NAV and share investors' frustration, and both the board and investment adviser are strongly aligned in the priorities to narrow the gap. Due to ongoing live conversations in relation to capital recycling program, board of directors have not been able to purchase shares as they have been in an ongoing closed period.

44:38 As a combined NEC employee group, we currently own around £3,000,000 worth of shares in platform itself. So we do already have that close alignment with the shareholder journey, but we do absolutely see the value that's ahead of the platform.

44:56 Next question. Are the planned expansions in energy storage colocated at company solar farms, or will there be some stand alone? Steven, if I've still got you, can I pass that to you? Yeah. Still still here. Yes. So the the expectation is that there'll be a combination of both colocated and stand alone energy storage as we as we transition the platform to that that sort of optimum 30% energy storage components as as we've touched on earlier on. Primary focus in terms of your near term opportunity there is around colocation, particularly coupled at an... At inverter level alongside the existing solar assets.

45:42 And we did set out in the strategic seminar early... Earlier in the year as a vague line of of why that has, you know, come into view as being, you know, attractive as we look to repower and hybridize the assets over the years ahead, you know, particularly taking advantage taking advantage of the evolution of some... Both solar technology and and reduction in the... In battery costs. That enables us to make better use of existing grid connections, you know, reduce cost and complexity, and fundamentally access parts of the revenue stack that a solar farm on its own wouldn't be able to access, which is all about, as we've talked about, you know, being being ready and in prime position to interface with the energy ecosystem as it evolves over the next ten years.

46:35 That said, stand alone battery projects, you know, are are still an important part of the mix, and we do expect to see some additional stand alone storage as part of the wider portfolio over the time horizon that we've set out. Great. Thank you. Clear. Next question is, what are your views on why power price forecasts are falling?

46:59 Should forecast rising demand affect the price? And do the forecast only cover periods where you don't have PPAs? So long term forecasts have come down. This is mainly due to to lower gas pricing and also to the significant amount of renewable generation that has made its way onto the grid. Demand is rising and is predicted to rise materially, but it is slower than was originally anticipated and is a fundamental component of of how how power price will evolve over time. So as we see more components of of of GDP being electrified, more adoption of electric vehicles, which continues to progress, more electrification of industry, more air conditioning, more heat pumps make their way onto the grid, all of which is anticipated alongside large growth centers such as AI, which their country needs in order to remain competitive.

48:00 All of those will bolster bolster that midterm power price at the moment. We do believe they're they're under forecasting that midterm in their current form. So it's a room to be optimistic, we believe, on on the power price side over time. The energy transition is far from linear. So that bumpiness generates opportunity for us to to to drive revenue, especially in in in in in the kind of global volatility that we we do see today. Importantly, these forecasts, they mainly apply to the the uncontracted periods. So most of our near term revenues are already locked in as we show you on the the hedging slides earlier in the in the presentation. Next question, and maybe one for you, Steven. When do your rocks and feed in tariffs finish?

48:50 Is it a slow or quick fall off? How will it impact NAV? Will you pay down debt before it happens? Is there much of a market for selling solar?

49:01 Yeah. Great. So the subsidies roll off gradually through the twenty thirties with a step down then around 2035. All of that is already factored into our plans and already factored into and fully reflected in the NAV today. And obviously, we're through the... What we've set out in the road map, we're actively enhancing the value beyond that through storage, through repowering, through optimization of the assets as we've as we've talked about. The long term debt that exists within the portfolio is shaped particularly to amortize in line with the residual life of the subsidies. So as the subsidies roll off, so that final long term debt is is repaid.

49:48 In relation to the market for selling solar, importantly, I suppose over the last couple of years, we've already demonstrated strong demand for our assets through the successful disposals that we've already completed. It is a bit of a bumping market as we... As we've talked about, but I am buoyed by the... Certainly, the ongoing activity in in the current phase of the capital recycling program, know, the attraction and the interest that we're seeing in the assets that we have brought to market, slightly different class of assets this time or vintage of assets this time to previous, but nonetheless attracting healthy interest. So pleased with how those conversations are progressing so far. Also a potential or or rather a a key consideration as part of the wholesale CFD transition that that might be proposed as well because that that could give longer term revenue certainty on top of what's currently benefited from in terms of the the rock and feed in tariff. So so an interesting trade off for us to consider as part of the mix as we continue to consult with the... With government.

50:57 Next question is, I hear about new technologies like inter country connectors as well as hydrogen. How might the emergence of these and other similar technologies impact on the NESF business?

51:12 So globally, the, you know, energy systems are becoming increasingly intelligent, increasingly complex, increasingly interrelated. That's one of the reasons why we believe there is a strategic imperative to migrate away from just being a generator of solar electrons to being a more flexible manager of power. That means our portfolio fits more robustly into the future energy markets that we can already see unfolding ahead of us. There is lots of interesting opportunity to to interface the portfolio with those markets and to bring about robust revenue stacks from interfacing across all of the things that you've mentioned in your list and and and many more as well. Ultimately, we want to move towards a world where renewables penetration is is far more significant across the grid, and we're intelligently managing those electrons through both large grid scale storage, but also end user flexibility and storage through, you know, their electric vehicles and also in house batteries, for example, that allow both sides of the grids to to flex as is necessary to manage appropriate demand and generation signals as well as interconnectors to play into that mix as well. So I think not something to be be to be scared of to the downside, but certainly something that we as a business believe we should be embracing and and we are across our private funds because it is the natural next

52:42 step in the evolution of the markets in which we operate. Next question is, will the leases on your solar parks run out? Steven, one for you. The short answer is everything has a finite life. And in the back of the annual report, we do show the residual... The current residual life of of the assets as as we have them. So that's looking at the shorter of the lease life or the planning life, both of which are relevant to to understanding that picture.

53:14 Importantly, though, we run an active program of extending leases, and we have various lease extension negotiations ongoing at the moment. We've recently concluded four of those negotiations, as I think I mentioned earlier on, and we are in active discussions with landlord... Landlords around about a third of the portfolio at the at the moment. We... What we're targeting there is project rights of up to fifty years where we can where we can achieve that. So it did... It's definitely part of our of our active management of the of the portfolio and the lifetime of the of the assets. Clear. Thank you. And then what I think is the final question. In your future dividend forecast, are you assuming acquisition of more sites, and how might these be funded?

54:06 Again, short answer is yes. We are assuming acquisitions of more sites out into the future. It could be a combination of solar or storage or or hybrid sites. That would be funded by the sale of the existing assets, realization of the investment in NEXTENERGY three, which is our $50,000,000 investment into the private solar fund. Obviously, you know, the capital allocation framework that we stepped through during the the presentation earlier on, you know, guides us in terms of the timing of all of that. But we do see upside NAV growth potential through that type of activity out into the future.

54:49 Great. I'm being told we are out of time at that point. If there are any other questions we've not quite made it to, then we will obviously loop back directly. Thank you very much for bearing with us whilst we fought the technology today. I'm very grateful for you sticking with us. Lily, maybe I'll just hand back to you for any final housekeeping. That's great. Thank you for updating investors today. I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.