Foresight Solar Fund Limited (FSFL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Foresight Solar Fund Limited Full Year Results Investor Presentation. [Operator Instructions] 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 will publish responses where it's appropriate to do so on the Investor Meet Company platform. And before we begin, as usual, we would just like to submit the following poll. And if you could give that your kind attention, I'm sure the company would be most grateful. And I would now like to hand you over to the team from Foresight Solar Fund Limited. Ross, good morning sir.

Good morning, and thank you for the introduction, and welcome to everybody on the call. So we're here to run through the full year results for 2024 for Foresight Solar Fund. And we just flip to the opening slides here. Yes, so you've got myself, Ross Driver, Toby Virno. We also have available David Goodwin, our Finance Director; and you've got Matheus Fierro, Investor Relations lead on the call as well. We'll kick off with the highlights or the key headlines for the year in terms of here because there's a number of key themes that I think we will dive into in a lot more detail, but to sort of to run through these for the year. I think -- for those of you living in the U.K. at the moment, we'll -- it won't be a big surprise that 2024 was not the sunniest year on record. And in fact, actually, it was the worst year for sun hours for about the last 20 years since those detailed records began. So in terms of that, though, the -- we would say that actually, overall, the budget was 7% below budget, predominantly due to this lower solar resource and about 6% down for the U.K. out of that. And we'll go through and we'll talk through this in a bit more detail because we see this as a sort of one in 10-year event, not within the realms -- outside the realms of possibility for our budgets and within the normal level of standard deviations. So it was a bad year for the resource for the company. But on the back of that, it really didn't have an impact on the company at all. We've finished the year 1.4x cash cover on our dividend target of 8p per share. And if that's the impact of one of the worst years we've gone on record, we think it actually speaks to the resilience of solar as an asset class and also our budgets that we'll go through in a bit more detail to show you that actually we've outperformed our budget 8 of the 11 years that we've been in operation. Another key item here is the divestment program that's ongoing. So we have the sale process for Australia. That process has commenced. However, it has slipped slightly due to third-party inputs into that process, and we're now targeting a deal there in Q3 of 2025. We'll go into this in a bit more detail. And along with the Board, we have announced a further divestment program, 75-plus megawatts of sales targets with the proceeds from that being prioritized for capital repayment back to investors. We'll go through this in a bit more detail as well because this is following engagement with -- across the investor base at the moment. And that focus on capital returns to investors at this point where not just ourselves, but the entire market is trading at significant discounts, predominantly, I would say, due to macroeconomic circumstances is that there is that focus on the share buybacks, the dividends and returning as much capital to investors as possible throughout 2024. You will probably have noticed that we, as manager, have agreed a revised fee structure with the Board of Directors, and that is now based on an equal weighting between market cap and NAV. We've also dropped the fee tiers alongside that. That has provided a circa 19% saving at the time that, that was implemented and also aligns us much more closely with the investors given that our fees are determined we can only get back to the same level by pushing forward a re-rating of the share price to the extent that we can control that. We do want to touch -- we very much want to look to the future as well. So we want to touch on the burgeoning development pipeline that we've got coming through, particularly in Spain at the moment, where we've signed a further deal for -- to develop around 400 megawatts of BESS in Spain. We think that's going to be a very interesting market from a development perspective. And we're also targeting opportunities in the U.K., just being careful to navigate at the moment around the potential changes to the grid and how that will impact projects coming through. The Board has made some quite clear statements as well in terms of what they see as the strategic direction, not just of this fund, but the market as a whole. And so we'll talk to that and how we as the investment manager are supporting them in that because there is undoubtedly going to be change coming within this sector this year and probably through to next as well. Just 2 points that we're really focusing on here on this opening slide. First of all is our U.K. -- the valuation of our U.K. portfolio and our assets, the ROC backed subsidy projects that we've got in the U.K. Our valuation is GBP 1.10 million per megawatt on there. That is a comparable number against the rest of the peer group as well. We do have questions around our discount rates and whether they should be changed at the current time, given the higher for longer rate environment. I think we also look at the other -- the flip side of this is what goes through our cash flows, and we are quite comfortable in terms of that and that pricing at the moment. And only other point to pick up from there in terms of the general news is that we do still expect the dividend for 2025 for this year to be 1.3x covered. We think that really the conversation we have no concern about this year or next year. It's the rest of this decade and how you actually lock into those good power prices and fix at those levels in order to give the dividend cover going forward. I'll just pause at that point and hand over to Toby, who will take us through the operational performance and budget.

Thank you very much, Ross, and good morning, everyone. In this first slide, we take a look at our energy yield performance track record. Forecast energy yield is arguably the most important underlying assumption for the valuation of a generation assets and rightly so, at this time, there is a lot of focus in the market on energy yield forecast in particular, in the wind sector, where recent years of underperformance have led to several funds revising down their budgets. What we're seeking to do on this slide and in the annual report is to present our track record in terms of variance versus budget when it comes to the production of our U.K. solar projects, which have now been in operation for over 11 years to demonstrate the confidence that we have in our underlying assumptions. As you can see in this table, we have outperformed our production targets by -- in 8 of the 11 years and in some cases, quite substantially. We also show our irradiation budget, which in broad terms is the underlying solar resource, the incident solar energy that falls on the panels and from which we generate electricity. And that has been above budget in 9 of the 11 years. We've presented a couple of different plots to illustrate this on this chart in this presentation. If you look at the box plot on the right-hand side, you can see a relatively narrow interquartile range that evidences the reliability and low uncertainty with regards to year-on-year solar production and also the mean and median positions comfortably sitting above 0% variance. That means a positive variance versus budget. Overall, we're extremely confident and proud of our track record in maintaining uptime for our sites and continuing to generate electricity when the sun shines. As we say, 2024 was somewhat gloomier than average. We would describe it as a P90 year, meaning that 90% of the time, we would expect reagents to be higher than that. Our base case assumption is based on what we call P50, where we assume that 50% of the time the level of reagents would be exceeded. If we move now to the next slide, we can look at the performance of the global portfolio. And I'm afraid to say that the lower irradiation resource was not just a phenomenon in the U.K., but we also saw below budget irradiation in both Spain and Australia. We've already discussed the U.K. performance to a degree. So we'll touch on the other geographies. Spain bucked the trend by actually outperforming budgeted production with high availability, meaning that we were able to capitalize on generation when the sun was shining. In Australia, the projects continue to suffer from high levels of economic curtailment. This is a result of high levels of coal generation still being present on the grid, having not wound down as quickly as it was originally forecast. There has also been a proliferation of rooftop solar, and it is the utility scale renewable generators that get squeezed in the middle as these are the projects that the grid operators are able to dial down. We do anticipate that the economic curtailment situation should improve in years to come as coal projects start to be decommissioned, those connected to the Australian grid and further flexible storage assets are connected, including those that are being developed by our own team out in Australia. Overall, in spite of the poor weather conditions, the portfolio still generated over a terawatt hour of electricity throughout the year. That's enough to power 360,000 U.K. homes, a city's worth of consumption, which is an incredible contribution to the decarbonization of the electricity network. Just to put it in terms of carbon for those who are interested, that's avoided carbon emissions of over 350 kilotonnes of CO2. So in terms of delivering on our sustainability targets, we're very proud of the contribution that Foresight Solar continues to make in transitioning to a lower carbon economy. If we can move to the next slide, we're going to move away from production and look now at the revenue outlook for the funds over the coming 3 years. This is something that we've conventionally presented to demonstrate the high-quality revenue stack that Foresight Solar enjoys. Now the charts here tell a tale of 2 stories really. Just to give a bit of an overview as to how to read these charts, we're looking at the total contracted revenue position for the global portfolio. The green band at the bottom represents subsidy income, primarily ROC income for our U.K. assets, but also subsidies that we enjoy in the Australian market. On top of that, we have a black band that represents our hedged or fixed electricity sales. That may be fixed forward prices with PPA offtakers. It may be long-term contracted offtake from corporate PPAs in Spain or similarly, financial hedges, which the company can now put in place to manage its risk exposure following a structuring in the last year. On top of that, the yellow band represents our merchant electricity price exposure. Now the reason why I say this is a tale of 2 stories is because you can see a clear difference in terms of the total contracted revenues in 2025 versus 2026 and 2027. The reason for that is that following the invasion of Ukraine by Russia, we were able to enter into a high volume of forward power price fixes at extremely attractive levels amidst the European energy crisis. We saw this as an opportunity to secure very attractive pricing at unsustainably high levels, and we rightly filled our boots at this time. The reason why we're only able to do so out to 2025 and the start of 2026 was due to liquidity that was available in the market at the time. As we can see, we have extremely high levels of contracted revenues for 2025 at circa 88%, and this is a good pricing in terms of our average electricity sales price. This gives us a high degree of certainty behind the 1.3x dividend cover target for 2025. Looking now to 2026 and 2027, we can see the outlook for power prices in the U.K. and other markets is normalizing. And this means also that our approach to risk management returns to more normal levels also. Typically, as a matter of policy, we target total contracted revenues of circa 75%. This means we retain an appropriate level of merchant exposure so that we don't miss out on volatility spikes to the upside for which there is a skewed basis in terms of the risk exposure of the fund. What we do, however, do is continue to build our hedge position from years ahead until a 2-year horizon where we aim to meet our policy targets. And that can clearly be seen in these charts. For 2026, we are currently hedged to the tune of 69% of total revenues -- total contracted revenues that is. And we continue to opportunistically add to this at levels that are accretive to NAV and dividend cover. We have been able to continue to do this in spite of a softening backdrop of power prices by including further avenues for hedging our power price exposure, whereas historically, we have managed our exposure with single traditional PPA offtakers who have both acquired our renewable obligation certificates, REGOs and also purchased our power offering at times attractive forward prices. We have since become dissatisfied with the level of liquidity and pricing that they were able to offer and have sought to expand this further by introducing financial hedging counterparties into the U.K. portfolio. Through these relationships in the first quarter of this year, we have been able to execute accretive and attractive hedges on a baseload basis and also on our traditional PPA pays produced basis. And this means we continue to build our hedge positions going forward. This is the same strategy we have followed for years, and it represents an evolution of our approach and an increased number of tools to manage our risk exposure, overall, allowing us to optimize our revenue stack going forward. We're now going to move on to the next slide to look at the financial gearing position for the fund. And really versus the half year, there is not too much to report out of the ordinary. We've continued to pay down our debt in the regular amortization of our long-term facilities, which are fully hedged against interest rate movements and amortized with terms coinciding with the end of the long-term contracted revenues such as our subsidies or corporate PPA offtake in Spain. We will continue to target repayment of the RCF. This will likely happen in chunks, funded out of proceeds from disposals, some of which we'll come on to talk a bit more about in the coming slides. One initiative that we do want to flag to the market at this time is the translation of a portion of our RCF borrowings to euros. This is to take advantage of the lower interest cost where the base rate of Euribor is circa 2% below that of SONIA, and this has generated a little under GBP 0.5 million of savings in the year. As we continue to hold this position, which represents over half of our RCF borrowings, we will continue to enjoy these savings going forward. There also is a natural capital hedge for those euro-denominated drawings versus our euro-denominated holdings, meaning that this euro-denominated debt does not create an additional unwanted exposure for us. For the first time, we are presenting on the left-hand side of the screen, our amortization profile alongside the revenue projections for the current portfolio. What we're aiming to demonstrate here is that by design, we have taken a prudent approach in our capital structuring where you can clearly see that debt is fully repaid at the point at which our subsidy revenues and long-term contracted revenues roll off. This means that in the absence of any reinvestment, the portfolio would -- at the point which it is fully merchant in terms of its revenue characteristics would be unlevered, providing maximum flexibility for us to look to reconfigure and optimize the portfolio, whether that's through repowerings or looking to target further long-term contracted revenues. The assumption that we emphasize here is that these charts do not assume any recycling of capital or reinvestment in the portfolio, which is clearly critical to sustain the valuation of the portfolio and to generate capital growth and is a core part of the Foresight Solar strategy. I'm going to move on now, and I'm going to hand back over to Ross, who is going to walk us through the NAV bridge for the period.

Thanks, Toby. And I can see a couple of questions coming in that we'll try to address as we go through this as well. So yes, it's fair to say that the NAV has fallen quite a bit from where it was at the end of 2023. But if we look at the sort of key drivers of that, if you take out the normal movements in terms of the dividend and the time value of money that will generally set each other off outside of a lot of those, really, what has happened, there are 2 -- the power forecast has been a key part of that. And I see a question in here about the NAV falling quite a bit over the last year or so or the last couple of years quite consistently. Will that be arrested at some point? I think it's fair to say that one of the biggest drivers here of the reduction in the NAV has been the power price forecast. So ourselves, along with the rest of the market use a blend of 3 consultant curves for the -- especially the focus on the mid to the long term. It's less relevant in the very near term because as Toby has just taken you through, we are generally quite well hedged in those areas. What is fair to say is that those -- as the prices have reached astronomical levels over the last couple of years, they're probably quite a bit slow and lag on the way up and also lag a bit on the way down. But I think prices have got back to a much more normalized level. And actually, if you saw our last NAV, the impact from the quarterly NAV, it was pretty flat. I think it comes down to now the -- where we are hedging into versus what the market says. The question is this will be driven by these geopolitical events as well and what is happening to the gas price and the energy price. So it's incredibly important that we do hedge out that position in the medium term as far as to the extent that we can. I think all I can say is that in the last set of power price curves that we saw coming in, there was actually a bit of an increase in the medium and the long term. So I think these kind of large step-downs of where the prices have gone from the beginning of the year of about GBP 100 a megawatt hour or higher through to where they dropped, they overcorrected and now they've come back slightly. But I'm not going to see such short of another event, and it's always -- I don't want that to be famous last words, but we see more of a normalization and not such -- the risk for such a drop in the power prices there as well. There has been another factor on top of that, which is also shown there in terms of the project actuals, and that is the impact of this being a low solar resource year. And that's just because we had lower generation than forecast and the power prices were slightly lower at times for the merchant element of that. So those are really 2 of the biggest drivers that are there. You'll also note that overall, the other part that actually brings down the NAV slightly is the -- on a NAV -- a total NAV basis is the share buyback, which is reducing the size of the fund as well. However, on a pence per share basis, it is absolutely supportive as you're taking out and taking those shares out of and has added 1.1p per share back on a pence per share basis as well. I was going to add there was another question in there. I'd just like to see if we -- we had a question here as well is, which is more important? Is it energy prices or interest rates? It's a very good question because they're both very important at the moment. And I think the one thing that we would say is we've not changed our discount rates. The Bank of England base rate and what's happening with the 10-year gilt really feeds into a view of our valuations. And it's probably the fact that there's not much of a route down from there is what is impacting the sector from a macro perspective and likely depressing the value of the whole sector and the whole alternative sector that we're still seeing a 10-year gilt of just around 4.7%. And there wasn't much that helped that from the news coming out of the Chancellor yesterday either. We have to be very clear in terms of our pricing and the valuation of our projects and sort of see like in a higher for longer environment, does that lead through to a drop in asset values. I think it's fair to say in terms of our ability to transact on the projects that we've got at the moment. We don't believe so. But could that -- could you start to see that in a higher for longer rate environment? Potentially so. But we do see it attractive, particularly for our U.K. assets. We feel pretty confident from discussions in the market that we could trade at those values, the U.K., the Spanish assets, absolutely as well. So that is true, but energy prices as well are equally important. You can see by the fluctuations in the NAV just of this year. But I guess the question is, with everything happening in the depression and the softening of power prices as Toby has taken you through in the recent years, is there still that significant risk to the downside? Or is there potentially more risk to the upside? I think we're in a much more balanced position now than we were sort of coming into this year, I think it's fair to say. And the hedging strategy that we've got will allow us to sort of hedge forward into those markets and offer those in. So in short, it's a very good question, each equally important to renewables funds in general. I'm just going to run through a quick update on the divestment program. We sold down the first stake in the Lorca project over a year ago now, 50% sold there at a 21% premium to NAV. We have ongoing, we have the sale of our Australian portfolio that includes 170 megawatts of operational projects and the development stage BESS that we've built through there. That is a busy market. You do have to do a lot more in terms of getting third-party input from consultants in that market in terms of site-specific power curve studies, site-specific yield assessments to go through just because of the high levels of economic curtailment there. I'd just say we are in a process. We have several dozen investors interested in these assets, but it's getting those outputs from the advisers fully optimized. It is a strategic sale that we want to move forward, and it's just balancing off making sure that we've optimized the sale case along versus time. And it's a function of that and the number of transactions going on in the market and the availability of consultants to be doing work at the moment. So it is ongoing, and we don't see any specific risks to that process. It's just time at the moment. Then the -- we have also announced the sale of a further 75 megawatts from across the portfolio that we have said that, that will be operational projects, and that leaves us the -- both the Spanish and the U.K. portfolio. [Technical Difficulty]

We appear to have lost Ross temporarily. You might be back now, Ross, can you hear us?

Can you hear me at the moment?

I can confirm you're both live.

You're back again now.

Yes. If I cut out to that point talking about the further divestments. So we have -- yes, it's 75 megawatts from across the portfolio. It will be operational projects. It leaves either U.K. or Spain. We're preparing those projects to take to market in Q2 2025. So in the next quarter. We're not going to specifically say which assets they are short of -- there is potentially a couple of ways of getting there, but it's a decision that the Board is taking now specifically to be looking to return further liquidity to shareholders that are seeking it out of that process as well. So that is something we will be taking forward and we'll report on. Just flip to the -- if we flip to the next slide. Toby, do you want to just run through the development pipeline? [Technical Difficulty]

It looks like we may have just lost Toby. Let me just reconnect him through.

Yes. I can pick this up in the first instance. So talking through here is we're showing the outline of our development hopper as we see it. And we've currently got -- 2 pipelines there now in Spain. We've got our solar pipeline of just under 0.5 gigawatt, 6 projects across -- in the East and the South of the country. The first project we see coming out of that project [indiscernible] we will hopefully be getting there later this year in terms of being brought to a ready-to-build stage. And we've got another site that's currently seeking its grid connection. Earlier in the year, we signed a framework agreement with a battery developer, a JV to take forward, and we're currently bidding into that market. We have about 10 projects in the pipeline. We'll be continuing to bid into that to secure capacity. The regulator is looking through provisions to take forward a capacity market into the -- later in this year as well. I think what we'd say is we are looking at that as pretty much a pure development play at the moment. We're not saying that we are going to be necessarily building out those projects in the Spanish market, we would want to know more about how that capacity market forms. But from the entry point of what we've got into that pipeline with the developer to where we believe the value of projects are in a consented and ready-to-build basis, we think there's a development flip to be made there in terms of doing that. And this is all about providing optionality to the fund in terms of being able to bring forward projects where we get to a point that the funds are going to need to continue to invest in assets as we go forward as well. Otherwise, the NAV will decline over time. But we're also very conscious and realistic that we don't have short of bringing in third-party capital that we are considering as well that we don't have the capital to build these projects out. But we want that optionality. The reality is at the moment that as these projects come through, we would probably be selling the project rights in the market and returning that capital into the capital allocation program that we probably see either enhanced buybacks or pay down of debt at the moment. Let me just move forward from that. I'll just carry on with this at this stage. There's been some quite specific messaging here from the Board, and we want to run through it in terms of what that means for investors as well. So both the Board and the investment manager working together in terms of this. There is a keen focus on capital allocation at the moment. So we have announced a further sales process with the capital from that being targeted on returning money to investors, but also reducing debt at the moment remains a critical part of that. And we have said previously that proceeds from the Australian portfolio would go towards that. As studies mentioned already, we are looking -- we've converted a significant proportion of our RCF, the only variable rate debt that we got into euros to take advantage of the difference between the savings on being in Euribor versus SONIA at the moment. In terms of capital returns, we bought back 24.5 million shares in 2024 and I think there's a sort of question there about what is the buyback program for the moment. Well, we're committed to carrying on that buyback program through to the GBP 50 million. You also see that there's a view there that we will take a view alongside the board as to whether to extend that in its own right, but there is this new bunch of divestments here, the 75 megawatts plus that is earmarked for return of capital as well. So we do see the continuing benefits in buybacks, talking to many of our investors. The view is if you can buy your own shares back at circa 30% discount in the market, there's only a few things that can actually outbeat that. We do think modest levels going into development stage projects have the ability to sort of at least compare with that. But we're talking very small amounts of money in the grand scheme of things. In terms of governance as well, the Board has renegotiated the investment management fee with us. And as we said, that was a circa 19% saving at the time. There is a very clear succession plan now. We -- Board we've had Tony Roper appointed to the Board who will become the future Chair and will take over later in the year, which is the plan. And we've also brought a gentleman Paul Masterton on board, who is the [indiscernible] and will pick up that role as well. So I think we've got -- these are challenging times in the markets, and I think we're bringing some very high-quality people on to support the existing directors and to pick up from when others are stepping down, which is the right thing to do. And I'd just say there's a very good cohesion between the Board at the moment in terms of everybody working together on that and wanting to push forward a number of shareholder governance meetings. And probably just flip to the next slide because I just want to explain to everyone on the call. There were some specific statements out there the Chair made in his statement this year as well. And there's been a lot of -- particularly more for the retail investors as well to get a sense of this. There's been a lot of more meetings with shareholders and stakeholders particularly the institutional asset managers, the wealth managers, everybody that we sort of throughout the top 50 of the register that we meet with on a regular basis. We've also done a shareholder perception study and there's continued engagement. I think for us specifically, in terms of our shareholder register, there is quite a -- there's a difference of views of people in that. There are people that are sort of long term in this sector. The large managers as well who are very happy in this and want to see the -- in it for the yield. They realize that they -- obviously, the discount that the shares are trading at, at the moment is not ideal, but sort of sympathetic. And in fact, a lot of this is down to the macro environment, and there's only so much that can be done until things turn around in that sector. And they do want that exposure. If there's more point though, that they would probably like to see this in a larger, more liquid vehicle as well, but there are other -- there are a certain number of investors that would just like to see liquidity and see money return to them at the moment, not necessarily everything, but are taking the view that look in the good times, you guys have grown and we supported you. These are tougher times now, you need to shrink for the time being and return money to investors as well. And there's some very strong voices for that. So it's fair to say that ourselves and the Board are trying to look through and get to what is a route forward that's in the best interest of the majority of shareholders in terms of this currently. So where the Board are and the statement that they put forward is that, look, they want to be seeing us being proactive and taking a proactive approach to these challenges because the situation in the market has been going on for a couple of years now, and there isn't an easy and obvious route out of this. As I said earlier, I don't think we can rely on the gilt rates necessarily coming down in the short term at least to an extent that they're going to trigger a full-scale rerating of the sector. There is going to be a necessity to return capital out of the funds, but that will also shrink the sector as well. I think what I would say is that we work very closely with the Board in terms of the divestments that we've outlined and earmarked at the moment. We think even with selling those that we would retain our position within the FTSE 250, which is important for liquidity in the shares as well. You don't want to be selling off so much that you just become a smaller illiquid vehicle. However, there is a reality of it, that a lot of investors want to see those bigger vehicles. And therefore, that the board has put out the message there that they do see consolidation will play a key role within this and it's a critical part of their strategic considerations and are currently actively considering all options available to provide the best outcome for shareholders. And I can just say that the -- from our perspective is the investment manager. Look, we do very much believe, as I think, Toby delivered. We believe that our investment thesis is that we need to be giving a greater -- the company will continue to give a strong yield, I have no doubt about that in terms of the performance of the operational portfolio at the moment. It's how do we give that level of capital growth at the moment? Because investors are looking at it and saying, even with your yields where they are, it's sort of 7% of your trading at NAV, we're currently giving a sort of 10% yield as the analysts would say you are paid to wait at the moment. But is that enough for investors when they look at what they can get through putting money into yields -- sorry, into gilts and other more fixed income products. So we do very much think that there is a necessity there to drive another sort of 1% to 2% increase over our base at NAV to try and give an element of capital growth in here as well. And that's very much what the development pipeline is designed to do. and that we think we can add that level. If we have a conveyor belt, we probably need to get that development pipeline up to 2 to 3 gigawatts. And then you've got a conveyor belt of projects coming off every year that initially, we may be having to sell those rights and recycle them back in. We could become -- we can get to a point there where we're actually a self-funding model and could take cash from some of those to put into new projects to continue to grow the fund. We absolutely believe that, that is the right model for the sector. The question is, are the markets going to give us sufficient time on a stand-alone basis to do that. And that is the question that we've got here. So there is -- if you want my personal view in it, I think we've seen elements. I will touch on a couple of questions that we got in to the extent that I can because I think there's some very good points being made in the Q&A here. I think we probably will see more consolidation in this sector later in the year. I think the Board is right to be on the front foot of that because you are better being proactive than simply having things happen to you and look to be on the front foot in terms of having these discussions. As the investment manager, clearly that is both a risk to us, but also we would see it as an opportunity. So we're aligned with the Board and providing them our support to look forward to see what options can be achieved and what can be done to help drive the rerating of the sector. We're going to prepare those further divestments and we're proactively providing the board with market inputs and options from ourselves as the manager, but this is a -- this will be a board-led process at the end of the day. We feel we are very much aligned with shareholders to drive share price rerating as well. I'll just have a quick look through because there were a couple of questions there that I'll try to answer. I think there's one I can see here around -- yes. Could you picking up, I think, some bids that have been in the market? Could you put a number of funds together as the manager? I think there's been management about other funds that we manage as well, other funds that may be bid for. I think there's really a question here about what it will come down to what do the majority of investors want? Would they be happy with a more mixed vehicle? I think there are obvious things that we could do when we can present as manager or they -- would investors on the whole prefer to stay in more pure-play vehicles. That has differing views throughout the shareholder base as well. Some things are easier to achieve than others. I think it's fair to say that a lot of things are being looked at in terms of that regard. There are the options that we can put forward from the manager. And the view ultimately the rest of the Board in terms of what they think is in the best interest of shareholders. But a lot of those things are being considered. We can just say that. Just another -- just trying to see the questions that are directly related to this point as well. Are you looking at mergers to increase the size and liquidity? Well, I think you can't say specifically at this point of those things. I think all options are on the table in terms of that. I think the statement there of what a lot of shareholders are looking for themselves is like the exposure to the sector. However, would like to see this in a bigger, more liquid vehicle. There's exactly that. And that is forefront of the board's mind in terms of their thinking of it really. A question there between the percentage between institutional and retail investors? Retail is a very important part of our book at the moment, and this is why we like to have these questions. I'm looking through these. And we'll try to answer as many of them as we can this afternoon, but I encourage you to send more through on the system or through to Matheus as well. Retail is getting up to about -- I think it's around 15% to 16% of our book at the moment. There's a lot of large platforms out there between the large ones. But when you tally everyone up, retail is a very important part of our book. We know it is attractive. I, myself, have invested in the sector, encouraged family members do over the periods as well as long as you look at it as a long-term investment because I think, especially at the moment, you can get some absolutely fantastic yields out there, but it's the same point. You need to be looking at this as a long-term investment that's giving you that yield. And it may be that you have to stay in it for a while at the moment to enjoy that. But like I say, as the analysts say you are paid to wait out of that. I think we'll circle back on some of these at the end because they are probably less relevant to that. We'll just talk to the outlook. I'll just hand back to Toby for a minute to run through some of the key points that we see sort of on the regulatory perspective and on the consultations as well.

Fantastic. And hopefully, you can all hear me loudly and clearly now of some technical difficulties earlier. So we're pleased at this time to be able to provide some updates in terms of [indiscernible] particular. We've had a few periods with promises of consultation responses and updates from various regulators. But in the last 6 months, there's actually been some action and some reforms coming through. So we're going to start by talking about grid reform, and this is primarily around the grid queue connection process in the U.K. There's 2, I guess, terms that you may well have read about in the press. Firstly, was the Gate 2 criteria against which projects will be assessed those that are waiting in the grid connection queue and also Clean Power 2030 or CP 2030, as it's commonly known. The aim of these reforms is to change from a first come, first serve basis for those projects applying to connect to the grid to a first ready, first connect basis. This means that projects that are better progressed with a reasonable prospect of actually being delivered, will jump to the front of the queue, provided that they are aligned with the strategic direction for the U.K. And by that, I mean that the grid operator has nominated certain regions of the country for different technologies, allocating capacities essentially in buckets for those different parts of the network to connect to these new projects. From a Foresight Solar perspective, we have relatively limited exposure in terms of projects that are yet to connect to the grid in the U.K. However, those that we do have in the form of our preconstruction battery projects are incredibly well placed, having been very well progressed by our internal portfolio and construction management teams and we expect their positions in the connection queue to be protected under the shakeup that is due to happen in May of this year. We're going to touch also on the planning bill that's currently going through the house. The intention of the government is to remove some of the barriers to development, the critical infrastructure, and that should include renewable generation assets such as solar and battery storage. Clearly, as of yesterday, is a key goal for the government to try and drive economic growth, not just through building houses, but also through developing our energy infrastructure to mean that businesses can flourish and homes continue to benefit from the low-cost renewable generation that we are growing at home. We expect that the combination of these 2 reforms should see Foresight Solar as being a very well-placed partner for developers in this country who -- the very best developers will see a great opportunity to grow the delivery of their pipelines and they'll need funding partners to do that. And we are continuing to have a number of conversations with developers around structuring potential co-development models. Finally, we're going to touch on some of the open consultations that will impact the market, the most prominent being the review of electricity market arrangements, which has been in the market for some time now, we are promised that there will be feedback from this -- late this year in the late summer. And whilst they started with a wide range of possible outcomes for the operation of the U.K. electricity market, it seems like there is a direction of travel towards zonal pricing, the aim being to give greater locational signals to connect projects closer to demand and where were resource is best used. From a solar funds perspective in the U.K. particularly where our portfolio is located primarily in the South of England and in Wales close to demand centers. We actually see the impact of zonal pricing as being either neutral or perhaps skewed to the upside. The reason we are not more bullish here in terms of saying that our projects will benefit from being close to demand centers is that we anticipate that such a reform of the market could well see some uncertainty for investment, which could impact valuation projects. So we are a very much reserving judgment until we see the feedback from the consultation later this year. However, we do not see a material downside risk from any such reform. On a practical perspective, we think for the government to be able to hit its 2030 or 2050 targets, it pays to give investors the greater certainty possible. And we think that the most advantageous part of any reform will be improvements in the terms of CFDs for newly connecting projects in the U.K., and that should be supportive of our development strategy. There is also the outstanding fixed price certificates consultation, which will impact ROC backed projects. There has been no movement on that and there's been radio silence as far as we're aware in terms of progress there. Again, we do not expect a material downside. There is potential for improvement in pricing of ROCs to come through and great certainty of the levels of pricing. However, based on the levels of ROC still in the market, there isn't really a requirement for such a price stability initiative until the 2030 is based on our analysis. So we expect that, that may be the outcome of the consultation and the analysis that they are running. But as we say, we'll report more on that once we actually hear back from the regulator. I'm going to hand back over to Ross for some closing comments and the summary.

Yes. So just to summarize here in terms of the performance overall, yes, I'll come on to a couple of questions. But yes, look, 2024 was not a good year for solar resource. We are not going to hide from that. But I think it also shows the resilience of the portfolio. I mean the U.K. portfolio was down 6% in the worst year we've had so far. So if that's the worst year, I think we'll take that, to be honest. And I did see a question around this as well is, does that mean that we should be revisiting our yield assessments for the portfolio as you did. So I think if we go back to the slide that Toby took us through earlier. We don't think we're in the same position of the wind funds that have had several years of below budget performance. And I think the fact that our input resource, the irradiation, the level of solar, yes, it was down last year, but of 9 of the 11 years to date, we've actually outperformed. And I think this is a very key thing for the investments and investors to look at across the sector. is how are people performing versus their budgets on an annual basis. It's a key thing that drives the valuation. And if you're more aggressive on that, you might have a higher valuation, but you might be less likely to hit that yield target every year. We try to put out a balanced position. And in terms of overall production, we've been above 8 of the 11 years. So we think we're actually with those charts and the distribution charts there, we think we're in a balanced position. We'll obviously continue to monitor that over the next couple of years, but we do see the last year has been a sort of 1 in 10 year. I think it's fair to say that actually where we've started this year is more on a normalized basis. But it's absolutely -- that's why we've look to address that head on because it's the right question to be asking. I think we've continued outside of that. We can't control what level of sum there will be in each of our markets, but there is good availability across the portfolio and a value-accretive power price and hedging strategy here. I've talked you through the corporate actions. We're saying probably about as much as we can at the moment in terms of everything that the Board is considering at the moment, but there will be that additional liquidity. Board wants to be seen as taking a proactive approach to the current market challenges and being on the front foot of that. And I can just say as an investment manager, we're looking to support them because we don't think it's actually helpful to pretend that nothing is happening and keep your head in the sand. And there are -- as Toby just said, there's both industry tailwinds and strong support for renewables continuing here in the U.K. and Europe, but it's not without its risks as well in terms of some of these changes that we'd see coming through. I think what we would hope for sort of regulatory reform, especially in the U.K. and things like that, but it's a process of evolution as opposed to revolution because if you completely tear up the market and start again, the only thing that we will do will kill investments into the U.K. and it's not the time that I'm sure the government actually wants to do that.

So I'll leave it there in terms of the presentation. And I'm just looking back and I can see, look, we're just trying to answer here as many of the questions that we've seen come through as possible. I've just got a question there for how likely is it for the discount to narrow over the year? I think that's -- it's a really difficult one to answer because I think in terms of the macro side of things and where the gilts are, if there was a significant drop in the gilt rates, over the 10-year and 20-year, I think we would start to see the sector as a whole. It would lift all boats. Is there a key route through to that? I don't see that currently at the moment. I think things may moderate and drop over the next year or 2 slightly, but we're certainly not going back to the rock bottom gilt yields and bank rates that we've seen during the last decade. That's for sure. And that's one reason why you need to look at providing higher returns to investors to make this more attractive. I do think it's got to the point now where it will probably be down to more corporate action. We started to see elements of that. We started to see bids for other companies that are coming into the sector, the BESS portfolios that have been raised there. This is coming and I think this is going to happen. And that will be one probably more sector-wide factor that will help in some ways to show a rerating and make a case for the valuations. Question there in terms of how are we selecting the divestments in terms of looking at those? I think like we said, we've only got a couple of portfolios left to sell out. I think a key consideration for us is how easy those projects are to sell, unbundle from the existing portfolios, which is relatively straightforward to do and especially more if they're operating on a stand-alone basis. We also have quite a key -- we look over what the impact on dividend cover will be as well. But I think if you're saying one thing that we do note as well is if we are selling off those projects and actually using that to return capital and clear out shares from that, that has the ability to boost the share price depending on the point at which you're transacting. Because if you can buy back those shares in the market, at a lower price. I know a lot of investors want to see them coming back at NAV, but maybe you're somewhere between the current share price and NAV out of that. That will give a boost to the dividend cover as well. And I think there was questions around sort of expectations on levels of capital to be returned out of those suggestions. Look, we're not going to put specific numbers on them. I think us coming out at around NAV for these at the moment in terms of this market is a good result. We'll try to outperform that as we have before. But I think it's fair to say that, look, our expectation would be to materially be able to pay down the RCF whilst also returning capital to shareholders as well. That's probably about as much as I'll be pushed to say at the moment. Question -- sentiment is the softening of energy prices? Yes, the homeowners, yes, I don't see my electricity bills going down either as well at the moment. The cap went up. I think it's fair to say there's a lag on the cap in the market in terms of that, we all hope that the drive to the renewables and some of the softer pricing that we are seeing in the markets will feed through to that. I think the high power prices over the last couple of years have been helpful to the sector and the fact that we've been able to lock in at those prices has given us those -- that good dividend cover for the last few years. But we all knew that those were -- we would have traded those away for more certainty in the longer term. Those are completely unsustainable and they've hurt business, they've hurt everybody, and they hurt us in the longer run as well. I think the key thing is being able to -- as we see those softening power prices come through, that actually -- it will be interesting to see what moves the government do take in terms of being able to -- well, with a view to being able to lower bills for households as well. I think some of that's been factored into the current price forecasting. I think as long as we can see those kind of power prices that we want to get to around the sort of low to mid GBP 60 a megawatt hour, which is maybe just slightly above the historic average from pre-pandemic, although you have an inflationary impact there as well. We see ourselves as being in a pretty good place to continue to hedge and lock in our dividend cover for the rest of this decade. And just a question, maybe one more on process AGMs held in Jersey. I mean is where the fund is domiciled. Is there an opportunity for retail investors to meet Board manager? It's -- look, it's something we can pick up if there is demand for that and see if there is potential for doing a satellite at the time. U.K. reforms, you're increasing your U.K. development activity to take advantage. I think it's fair to say -- and Toby, you can touch on this slightly, if you like. I think we have multiple -- so we're really happy with our -- the development pipeline that we've got in Spain at the moment. The idea would be to replicate something similar in the U.K. of similar scale of around 1 gigawatt. We are just -- we've got multiple conversations going at the moment. I don't think finding partners for that is going to be an issue for us. It's a house and the number of relationships that we have. I think we're just being more selective given the -- I'm just conscious of our timing given the potential changes in the grid at the moment. Toby, do you want to add anything?

Yes. I mean in house on behalf of other funds under Foresight management, we work with a number of developers under similar style co-development models that have been very, very successful. We're very much looking to replicate those models for the benefit of Foresight Solar. And the U.K. home market continues to be a key target for us in terms of expanding our development activity. So yes, we've got very close to the ground and got a number of conversations ongoing with experienced developers in the U.K. market.

Yes. And then I think we're getting through this. So just a question, is there a point at which it becomes advantageous to start using latest technology to replace existing panels? Understanding that subsidies might be lost? Toby do you want to put that -- I mean, it's the big question about repowering, why doing it at the moment that the views do roll off. Do you want to take that?

No, absolutely. And the question is absolutely right that you are constrained in your ability to, I guess, further optimize the sites during the ROC accreditation period as you are capped in terms of your installed capacity and what you're allowed to replace, you're allowed to place like-like in terms of maintenance, but not allowed to significantly repower or power your projects. Otherwise, you wouldn't validate your subsidies. In practice, that means that any material repowerings are unlikely until you -- or unlikely to be economically viable until you get towards the end of the ROC regime. However, clearly, there is value in the grid connection infrastructure that's already been deployed at these sites and then the remaining term on the lease agreements. None of this is reflected in our valuation, but it's certainly something that as a house, we're very keen to continue to explore. We have excellent relationships with our landowners. And all parties fully recognize that these projects can well be optimized once we've got the flexibility to do so. So I'd say for solar, where projects are slightly younger on average and have got more time left to run on their subsidies, there's probably a few more years until kind of repowering activity and development really starts in earnest. However, it's definitely kind of front of mind for us when thinking about how to further optimize the value of our projects. We brought through to date about GBP 86 million of additional upside value. That's through lease extensions. It's through advantageous power price optimization and looking at all avenues for enhancing value for shareholders is something that our portfolio team works on day on day.

I think we pretty much managed to cover everything off there. And it was just a question about new technologies. We'd be looking to -- yes, I mean, we are absolutely when we're -- the wider group is sourcing panels elsewhere, we maybe source the panels ourselves and then hand them over to the contractors looking at the new types of technology there and more efficient. Yes, we are -- we would be looking to do that. So I think in all, I just note one comment actually that we take -- and I take that quite to heart is saying somebody saying there not a question, but thank you for your honesty and frankness. And look, that's something I think we try to do in all our reporting. We try to put things out in a straight bat. And we try to be as frank and honest and open as we can. We're not hiding from the fact that there's challenges in this market, but we want to be able to be as honest and open with shareholders as we can. So I think we'll wrap it up on that point, and I'll just hand back to Jake.

Perfect. Ross, Toby, that's great. Thank you for your presentation and for being so generous of your time and addressing all of those questions that came in this morning. But Ross, perhaps before really now just looking to redirect those on the call to provide you their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that would be great.

Absolutely. So I mean looking at it, last year was not a great year for generation, but I think we take the view of look where we've got our budgets and where there is -- if that's one of the worst years, we think that our technology and our budgets and our portfolio is pretty resilient, and we can get through that. That's not going to cause us an issue and speaks to the resilience of that. Overall, the portfolio is doing absolutely what it should be doing. and we've got a development pipeline coming through. I think a large part of it, we know we have to grow these divestments. We know we need to get Australia, that's a strategic move to exit out of there. We need to make these other divestments to return capital. But really, I think we are doing as much as we can here. The macro environment is very challenging. And there are going to be factors in that, that may move forward quicker than the strategy that we can deliver. But we do think ours is the right strategy. We will just have to see where that takes us and whatever. But we very much want to continue to be delivering value for investors out of this.

That's great. Ross, Toby, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you'll now be automatically redirected for the opportunity to provide your feedback in order of the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Foresight Solar Fund Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.