Foresight Solar Fund Limited (FSFLL.XC) Earnings Call Transcript & Summary

Good morning, and welcome to the Foresight Solar Fund Limited Interim Results Investor Presentation. [Operator Instructions] I'd like to submit the following poll. I'd now like to hand you over to Ross Driver, Managing Director. Good morning to you, sir.

Good morning, and thanks for the introduction. If we just flick on to the next slide, the agenda there of everything that we're going to talk you through in terms of the interim results for the fund. And you have myself and Toby Virno. Myself, Ross Driver, Managing Director and Fund Leader for Foresight Solar; and Toby Virno, who works me on the fund team here as well, along with Matheus Fierro, IR Manager. We'll kick off. We've got the sort of highlights that summarize everything that we're going to talk you through on this page here in terms of where we are at sort of H1 2025. Overall, high level in terms of performance, it has been a good year in terms of generation for the fund. As many of you have noticed, the summer, particularly here in the U.K., has been a lot better than it was last year when generation levels were below target, but we're global production 4% above budget, radiation a bit higher than that at 8.5%. We can go into the reasons why that doesn't complete entirely wreck between the 2 because some -- there were a level of D&O outages there in the U.K. that brought back down. Without those, the U.K. generation -- well, the U.K. generation itself was about 9% above budget. We'll go through that in a bit more detail. We have been continuing our active power price hedging. We think this is absolutely critical at the moment because many of those -- many of the funds ourselves included have benefited very highly from the high power prices that we saw following the pandemic and then the Russian invasion of Ukraine. A lot of those are now starting to roll off. We've still been benefiting from those. Dividend cover, we are expecting to be 1.3x for this full year. The question is where does it go to after this? It will moderate down slightly, but we'll talk you through why we are still confident of 1x plus dividend 1 to 1.1x dividend cover more of a normalized basis in the years going forward. Then a focus on capital returns. We already some questions in about this that we'll try to address during the presentation and at the end as well. In terms of capital returns and monies paid back to shareholders, the buyback itself is now at GBP 60 million. It was increased by a further GBP 10 million, one of the largest in the sector. But it's fair to say there are questions around whether that should -- the extent to which that should continue versus ongoing investment in the portfolio itself. And there's a real balance there in discussions that we're having with the Board. But FSFL itself returned around GBP 29 million of -- GBP 29 million to investors during the first half of the year. In terms of cost control, balance sheet management, we have resized and extended the RCF for the fund on favorable terms. That should save us around GBP 1 million over the remaining few years of that facility itself. Our development pipeline is continuing to move forward. We've got BESS capacity secured over 100 megawatts awarded in the Spanish market. We're working through with our development team now to see which of those projects are probably the best to take forward. And also on the divestment side, investments are moving forward. May be fair to say that some of those are taking longer than expected in certain markets. It is more of a buyer's market at the moment. And we are dealing with some challenging conditions in some of those, but remain committed to looking to recycle capital out of the portfolio that's part of the longer-term strategy there. So just a couple of numbers to point through out in terms of we always publish the valuation of our U.K. portfolio, which is about GBP 1.09 million per megawatt. We think that compares favorably to peers in the sector. And also what we're starting to -- some of the reporting that we're starting to put out here is the EV-to-EBITDA ratio 7.5x. That's more comparable versus operating companies, developers and operating platforms that trade publicly to show that there is a bit of a differential there between what the investment trusts trade at and similar peers that are more of an operating company basis. There's obviously a key question at the moment is what is dragging on the share price at the moment, we will look to address. Just popping over to the next slide in terms of operational performance there. We do break this down. This is from the report itself and broken down by geography. You'll see that actually radiation for the U.K. itself was nearly 17% above budget. The actual generation itself came out about 9% up, and we are about 10% up in terms of EBITDA for the portfolio as a whole. Main reason why we always present our figures for this inclusive of the D&O outages. It's fair to say that those have been higher in this year. There have been more sort of large network trunk events as the grid is being upgraded. Usually when they're more localized or affecting directly our sites as opposed to the broader network, but we do work very closely through our asset managers to try to limit the times of those outages or to shift them to evening or to shift them to the winter or lower months of production. But there has been a larger amount. We're looking at that as a trend. We're very careful on how we're considering that within our budgets going forward because we've -- with the 12 going on for 13 years of data that we've now got for the U.K., we've outperformed our budgets 9 of the 12 years. So we always like to keep the budgets there sort of realistic and tend to outperform rather than underperform, which we think is a key -- a key differentiator versus many. The way that we put our numbers out is they're completely straight that. We are not stripping anything out of these numbers that is outside of our control. The only point we would make is where we do get compensation for events through insurance and others that, that is added back in because that is what we claim. So the U.K., a very good year there and particularly versus where things were last year. Obviously, there was quite a bit of downside. We saw that as a sort of 1 in 10 year on the production side. And I think that is very important. We are comfortable with our budgets. It's not -- there has been a lot of questions about the wind sector and other sectors where perennially coming in below. We do think that our yields and our budgets are reasonable. And last year was one of those sort of P90, 1 in 10 years that you get from time to time that kind of proves the case. Outside of that, it's fair to say Spain, there has been a lower production in Spain during the year. This is -- it's connected. There has been more levels of economic curtailment and negative pricing. These are factored into the budgets going forward, but it's fair to say that some of this has probably happened a little bit sooner rather than later in terms of that. I mean you can see there that Spain itself accounts for about sort of 8% to 9% of the circa 8% of the overall generation. In terms of that are -- there's a number of programs that we can put our sites there into in terms of prioritization for the grid, and we're also looking at retrofitting batteries on those portfolios. Spain will come on to in a little bit more detail, is one of those markets at the moment where connected in a way, connected to the outages that we're seeing there early in the year, but there's a huge now penetration of solar and wind. What the country does need is a lot more storage. And it doesn't have interconnectors to other countries there, doesn't have a huge amount of hydroelectric. It is going to be reliant on the batteries for helping to balance the grid there. One of the reasons why we're investing in that market, and we're seeing a huge amount of interest in there to build out BESS. It's probably at a stage where it's about 5 years behind the U.K. in terms of the development and rollout of battery storage, but we're going to see that ramping up significantly. And you probably will see in different geographies bit of fits and starts between this as the balancing -- the grid balancing catches up with the levels of generation that are being developed. So then on Australia, having reset the budgets there, despite the fact that the irradiation was lower, in terms of generation, the portfolio has come in on budget itself, which is helpful as we're looking at it in terms of the divestment program that we've got ongoing there. I'll just pause there for a second and then hand over to Toby for the next slide.

Thanks very much, Ross, and good morning, everyone. On this slide's, we set out a chart that shows the contracted revenue position for the next 3 years as we've done in the last few rounds of reporting. And the reason we do this is to show the stability of our revenue stack and the confidence that gives us in terms of servicing the dividend and the potential for extra cash generation to fuel growth going forward. This chart tells 2 stories really. In 2025, as Ross mentioned earlier, we continue to benefit from the very attractive forward fixes that we entered into in the aftermath of the invasion of Ukraine by Russia. Those high prices, whilst very attractive, were unsustainable, and we rightly filled our boots and hedged a very high proportion of our electricity price exposure for this year. Combined with the strong operational performance, we remain extremely confident about delivering on our 1.3x dividend cover target for the year. That we think is a great message to the market and a good degree of confidence in that forecast. Looking ahead to 2026 and 2027, in these years, there was limited liquidity to enter into those same highly priced forward fixes in the immediate aftermath of the Ukraine war. And so what we are seeing here as power prices return to a more normalized level is a normalization of our hedging strategy as well. By policy, we tend to target total contracted revenues proportion of around 75%, leaving circa 25% of upside of exposure to the electricity market to capitalize on potential upside from volatility in the electricity markets. That contracted revenue position is made up of our subsidies, which are about half of the total revenues and then hedges that we implement for our electricity price exposure from our electricity sales from our global generation portfolio. What we have done in the period is to expand our toolkit of instruments that are available to hedge our electricity price exposure. Previously, we had used somewhat of a one-stop shop relying on PPA offtakers who buy our physical electricity to also provide that hedging alongside paying us for the certificates and other various revenue streams that we tap into. What we have done in the period is to onboard 3 new hedging counterparties, all household names with excellent credit and well known in the energy markets to provide wholesale electricity price hedging services. And by disaggregating our risk management in this way, we've been able to optimize and go to the best party for the best deal. And what you will have seen is us continuing to consistently deliver on our hedging policy, building up 2026 to levels of hedging around our policy target of 75%. And we are continuing to chip away at 2027 and the years beyond. The reason we're able to do that is because we're very actively managing this position, and we're taking advantage of spikes in volatility in spite of a bearish electricity backdrop and outlook, driven by dampened prospects for global economic growth and increased LNG outputs from the likes of the United States and other producers around the world. Regardless, we continue to consistently deliver on our hedging policy and we'll continue to do so going forward. If I could ask please that we move to the next slide. I'll then touch on our gearing position. And this has been stable in the period, remaining at around 40% relative to the annual results announced earlier this year. We have continued to pay down our long-term debt through the continuous amortization of those facilities that, as a reminder to the market, are fully amortizing and typically aligned to the duration of subsidies or other long-term contracted revenues that our projects benefit from. And they're also fully swapped out against interest rate exposures. One significant initiative in the period was to shrink the size of our RCF. We reduced the commitment size from GBP 150 million down to GBP 100 million. This reduction in the commitment size means we're charged lower levels of fees by the lenders, and that is more cost efficient for FSFL, saving fees over the duration. And as Ross mentioned earlier, we expect to save around GBP 1 million compared to what the previous facility would have incurred. At the same time, as shrinking the facility, we have also renegotiated the terms and the limits on that so that it remains relevant and useful in terms of the near-term strategic goals and priorities of the Board. It continues to be an extremely useful facility for FSFL, albeit slightly less utilized than we were -- than it was being when we were deploying into material investments more readily a few years ago. In terms of opportunities to materially pay down the RCF, that will continue to be dependent on proceeds from sales and investment dividend cover. That decision, whether to pay down debt versus other capital allocation decisions will continue to be kind of governed by our capital allocation policy, which we continue to follow very on a disciplined basis. I think that is everything we want to cover on the financial gearing position...

Just pick up on -- I might try and do a few of these questions that I see as we go along to kind of make it a little bit interactive. I see there's a question there about how does the company feel about the debt levels and durations on the debt coming up for renewal. I think it's fair to say the vast majority of our debt is fully -- well, all our debt is fully amortizing. The only -- as we know, it's the RCF that needs extending every now and again. All the other portfolio debt on the U.K. portfolio is fully swapped out and amortizing. We have no need to refinance any of that. The only reason we would look at any of it is if we thought there was a benefit from going into to restructure it to either release further capital or get it. But we do have very good rates on there. So we'd have to look at some kind of extension of the facilities to be sort of NAV neutral. The only other area where we do need to refinance debt from time to time, and it does factor into the sales process is in Australia. And that's sort of part of the normal course sort of mini-perm financing a little bit equivalent to sort of mortgages on a house where you have a notional tenor of a long life, but tend to refinance those every 5 years or so. So I think debt levels at the moment are about 40% of GAV there. We are very comfortable with that. The main point is looking to pay down debt, particularly around the RCF to just save interest costs, and we're constantly looking to do that. So hopefully, that's just a bit of -- hopefully, that picks up one of the questions as we're going along.

Ross, we also had a question about the impact to NAV and this generally on the capital allocation between reducing debt and choosing buybacks. So how do we consider that and what the potential impact to NAV that would be?

Yes. Well, we've done -- if we pick that up now, we've done both. And I think in terms of the capital allocation policy that the Board has signed up to currently looks. I think it's fair to say, if you think about it, it's sort of 95% is either going towards debt reductions, which we do in big chunks as we get sales away. What the bulk have been since we did the last investment, the bulk has been focused on the buyback, which has been generally well supported throughout shareholders. I think the question now -- and you've got a small allocation there, which I'd probably put in around the sort of 5% that we've been putting into new development projects. I think part of the question now is, given the length of time that this is -- this market has been going on, despite the fact that it's still trading at a large discount, is there benefit between sort of flexing that capital allocation policy at the moment to look at more growth and further investments as well to try to drive the returns. Otherwise, over time -- otherwise, the NAV will start to decline over time, but we've always know if you don't continue to invest in it. So there's a bit of a balance there. It's a discussion that's not only taking place in our place, is happening across the Board. And I think I'd just say at this point, it's a live discussion between ourselves and the Board over what level of reinvestment is right. We are doing investment in the development stage projects that we think can drive good returns even above what you'd get from buying back your own shares at the current market rate. The NAV and the NAV chart, this has all been preannounced, and I see there's another question around this that we'll try to tackle. I mean the main driver of the NAV falling at the moment has been the power price forecasts that have been coming down from those peaks. It's fair to say we had a very large upswing in terms of those power prices at around 2021 in terms of -- and what Toby has just been speaking to you about in terms of the hedging strategy. They have been falling regularly since then. However, they are still at elevated levels versus where we were pre-pandemic. So it does feed through in sort of -- on the NAV. It has fallen fed through on a sort of quarterly basis and are looking to that point where this sort of really bottoms out. We do -- as most of the market do, we are -- we have our own view on what the near-term forward rates look like, and they do seem to be coming more in line with what the consultants. We all base our valuations and NAVs on a blend of consultant curves that are out there that are specialists in terms of forecasting power prices. Those do now seem to be coming closer to the forward rates that we're seeing. And if anything, there could be some push upward in forward rates at the moment, but appreciate that, that has been a downward trend since the -- over the last year or 2. Outside that, the question specifically, though, is what can be done to sort of stabilize this? Well, we are at -- there is merchant electricity exposure there. It does have an impact. So we are sort of at the mercy of power prices to an extent. Part of what we can do is the hedging that Toby took you through in terms of what we do in the short term is looking to protect that dividend cover. And one of the ways that maybe for people who are not quite as familiar with it, the buyback does protect returning cash to investors and shrinking to an extent the size of the fund does have a positive impact on the NAV per share as well. So the buybacks that we've been carrying out have delivered the equivalent of about 3p per share of NAV accretion since those purchases started over -- going on for 2.5 years ago now. But it's fair to say that the other things that would drive that are internal enhancement that we're looking at, extension of leases, other factors, but also potentially looking to put more into growth and new investments as well that would drive that upside. The key thing is where does that capital come from at a time when you can't necessarily raise it in the market? Do you need to bring it in through the recycling of assets? So I just pause on that. I think if we jump over to the next slide, really what we've got to focus on, and there are a few questions here about update on divestments. We do have the ongoing divestment, which is the Australia portfolio. That's our 4 operational sites there and the battery storage that we are developing alongside it. That has been going on. We do have -- the update that we can give is that we have had a small number of indicative offers on that site. We are currently working through with our local team and the advisers on the deliverability of those. The timing of the Australian market, there is quite a bit in the market at the moment. Buyers are being quite selective and the teams can only do so many deals at a time. So what we're working through is discussions with the adviser to make sure we're getting enough bids as possible. I think it's fair to say they are within a sort of acceptable range. The key thing is looking at whether we can get those, whether we can push those deals through to an acceptable close with the counterparties. And it may be that, that needs to take a little bit longer. It may be that we need to be able to get a couple more parties into that process in order to drive some competitive tension. But it is a process that is continuing. It is just the fact that the market conditions are somewhat more challenging at the moment. It is very much live. So that's probably as much as I can say on that at the moment without wanting to prejudice too much, albeit we're happy to be more transparent on Australia because we don't forget anything that we say here to investors or the market in the U.K. has necessarily a direct read across into that market over there. In terms of the further divestments and the 75 megawatts that we've outlined, we don't think it's -- we're keeping options open there. We may be running a couple of processes in terms of the other operational assets we're looking to sell down. We don't want to name those publicly because we don't think it's as helpful from a sales perspective if people are seeing that you put actual names on which assets you're trying to sell. I just say that those processes kicked off during the summer. We're in the process of getting information back from those, and we'll just have to be flexible in the markets with that feedback we're getting, but hopeful of getting some offers in sort of in the next quarter on some assets there. And it's fair to say that also the other point on there is that the Board is working very closely with the Board is playing a hands-on role and the decision making of all of that. And at the moment, those -- any proceeds from those sales will feed into the existing capital allocation policy, paying down debt, returning investment -- returning capital to shareholders and looking at those development opportunities. That's the question around. It's that balance between those going forward that I think is the light point of debate at the moment. Okay. I'll just hand back to Toby to take you through the section on the pipeline and where we see that coming through and the benefits of that.

Absolutely. Ross has already touched on in addressing some of those Q&A items, how we are balancing that capital allocation between new investments and repayment of debt and returning capital to shareholders through the buyback. And the development pipeline is exactly that first point, how we are continuing to reinvest for future growth and to stabilize the NAV going forward. For those who haven't seen this diagram before, we aim to set out our aspiration to grow our rolling pipeline to between 2 gigawatts and 3 gigawatts of development stage projects. Now that sounds like an enormous amount of capacity, and it is. And what we would emphasize is that we don't expect to be 100% successful in taking every megawatt through successfully to ready build much in the same way as development of real estate or any other development carries risk. There will be attrition in this pipeline, and that's why that scale and those numbers matter. What we do want to do is ensure that we continue to partner with excellent development partners in the local markets where we are developing our assets, which very much aligned to our core market exposures of the U.K. and Spain currently. There have been some exciting updates in the course of this year in the progress of our first 2 development partnerships that we've established in Spain. We can see them here listed on the slide. We have the 467 megawatts solar partnership with Cuerva in Spain and the leading project from that pipeline, project Muel is steadily progressing through its consenting process. It's already secured its full environmental permit and is working towards its full construction permit, at which point it will be ready to build as the term would be coined. And at that point in time, we would have a bit of an option to either construct the project ourselves, deploying capital to derisk that project further, potentially either selling or holding to maturity or even crystallizing the value uplift that's been achieved by taking that project through development and selling that project and recycling those proceeds back into the fund to generate future growth for shareholders. And it's that optionality that's illustrated on the right-hand side of the chart that is so valuable with these development pipelines that FSFL holds proprietary. So they gain 100% of the benefit of that upside, save for the success payments that are backdated and paid to our development partners and gives us opportunity to either crystallize value uplift or take these projects through to generate further yield to service the dividends to our shareholders. Moving over to the BESS pipeline with Chelion, and this is a 400-megawatt framework agreement. And the main focus of the year has been to submit bids in for grid capacity. And we're very pleased to say that after a lot of work in this area, we have been quite successful in securing circa 100 megawatts of grid capacity across 5 different projects. We're working with Chelion, our local development partner and also with Foresight's dedicated development team out in our Madrid office to review those projects and decide which of those are most feasible and best placed to be progressed while still applying for further grid capacity to build out that full 400-megawatt pipeline in due course. So some really exciting projects that are already starting to come through from our development pipeline. In addition to this, we have our proprietary developments in Australia, where we are looking to co-locate battery storage with several of our solar projects, and that is to enhance the investability of those projects and increase value as well. So on the development side of things. Ross, do you want to explain...

[indiscernible] with some of the questions that I think are coming through some were pre-submitted, so I can give this maybe I pose it across to you in terms of. But the question here around are we seeing attractive opportunities for capital deployment in the current market. I think I'd just start off by saying, well, these development pipelines are absolutely that, the BESS in Spain there and the solar projects that we've got coming through. I think the way to -- I'll just give Toby -- Toby can come up with the sign of it because we look -- we are very keen on doing the same thing in the U.K. The difference between here at earlier stage in the development pipeline, you're looking to deploy small amounts. So for the Spanish portfolio development so far, we're talking single-digit million euros into this. You can make very good returns. You can potentially make multiples, so very high IRRs out of these by bringing them through to the ready-to-build stage, as Toby says. The question then is, actually, do we have the capital? Do we -- would we like to capitalize on that sell and recycle that capital? It would be a good multiple, but on a small amount of capital invested. If you're then looking to bring those through the solar projects to look to bring them through to build them out, we would need the capital for that. We're probably looking at high single-digit returns for solar and maybe into -- well, into the teams for BESS here. So Toby, just anything else to add on that? I think it's fair to say we see a lot of attractive opportunities for deployment in the market at the moment. It's mainly allocating the capital to be fair, isn't?

Absolutely. Whilst we continue to see a disconnect between the private markets and the public markets in terms of project valuations, most notably here in the U.K., where greenfield projects, which do not yet have subsidies secured in the form of CfDs have not yet been constructed and have not even secured construction contracts and have not been financed or had any sort of inroads made down that avenue. Those continue to trade for extremely attractive valuations, and that's driven by continued interest from investors in the U.K. market and in particular, the prospect of potentially securing CfDs for those projects where they haven't secured those already. And we see those actually trading at IRRs at or below our holding value for our long-standing operational stable portfolio, which is well optimized in terms of its financing structure and with secured offtakes and subsidized with inflation-linked subsidies that won't be seen again. So we do think there continues to be a bit of a disconnect between the public and private markets. That being said, there is a huge market opportunity, and there's a great deal of development both in the U.K. and in Spain. And these projects will need to be funded and taken through construction and then put into operation. So there's very significant buying opportunity. There's never -- I'd say the opportunity to invest in solar has never been greater. And it is unfortunate that at this time, we do find ourselves capital constrained due to the share price rating in many ways. However, we do recognize that we need to react to the market and deliver on that increased return model against the increased returns backdrop.

Thanks for that. And I'll try -- it might make it a little bit clunky, but I'll try and answer a few of these questions around this because if we go on the corporate actions, I think the message here is ongoing actions to address the share price discount. I think we've got a couple of questions on that and sort of seeing, so really, given what would take the share price back to where it was 3 years ago? Is it a question of lower interest rates, higher parities for power, more subsidies? It's not directly related to the power prices. They may have -- what you've seen in terms of the fall of power prices may have weighed on sentiment a little bit in terms of that, but those power prices are actually still above where we were pre-pandemic when the share price was much higher. We can jump into this a little bit in more detail. I think that one of the biggest things is the higher rate environment at the moment. We are still -- if you look where gilt yields are, I mean, we are at a high level. We are even above where we were during the trust -- short-lived trust administration a few years ago now. And that does weigh on sentiment, particularly we know it's a different dynamic between retail investors who are really in us for the yield on this, and we think there's a great yield opportunity there that's covered. Institutional investors, if they're looking at this and thinking, can we be getting -- what can we be getting on long-term gilts? What is the risk spread that these funds are delivering versus that could be looking for higher levels of return. And that's part of the strategy because whilst it is a fantastic -- we think it's a fantastic investment for retail. We want to be growing our retail portfolio. We do think that it's a great one to stick in the ice for ongoing well-covered income. We also need to drive those capital flows from large investors as well because that's the sentiment that turns the market. I don't think that we are any different to the rest of the peer group. Everybody is in a position where we're trading at large discounts. I think the thing that we need to look at is how can we push that returns element whilst continuing to give a very good level of yield on the portfolio, how can we actually offer a level of capital growth out of it as well. And that's explicitly what the development stage process is there to do. I think, Matheus, just for the benefit of -- before I jump on this, can you just jump to Slide 20 -- jump to Slide 23, and I'll push it along as well. Because this is what we've said, we said at our Capital Markets Day back a year and a bit ago now that if you were there on what the current yield is at the moment based on NAV, you'd be looking around a 7% yield, which is still great. I think for any of us just looking to put our personal savings in a 7% yield is not bad compared to what you get if you're able to put it in most effectively is not bad compared to what you could get in most places. And if you buy at the share price currently, which has weakened a bit since then, it's going to be north of a 10% yield. But in order to give an attractive yield at NAV, what we're looking to do is push forward, push through the development through the upside of trading in and out of assets, another 1% to 2% in terms of that. And that would make a real difference. If we're able to offer a rolling sort of average of around 8% to 9%, given where gilt yields are, that's the sort of thing that will make a difference for all investors and a number of large institutional investors as well in terms of making that look attractive versus the alternatives of either looking at corporate bonds or the gilt markets as well. So there is a lot of that. The macro backdrop has been more challenging. I think it comes down to a lot of that decision-making about how do you continue to deploy capital at times when markets are challenging. There's no clear way of a reduction in gilt yields that is the comparable at the moment. If we just jump back to Slide 14 to take them through. So the -- in terms of the corporate actions and what's ongoing, there is the capital allocation there. So share buyback, returning GBP 60 million to shareholders, paying down debt, focused on unlocking that capital from the portfolio and those opportunities to invest in higher-yielding development assets. I think the point comes at which at what point do we balance that live discussion at the moment into tipping more into the -- more into the redeployment. We've had a number of meetings following the interims. I think the sentiment within investors more generally and the institutional investor class is turning a little bit. There's been quite a lot of change in the register, which has been positive from that point of view. And I think we've got a lot -- the portfolio -- there has been a number of investors that have left and taken money out. But the good thing is that they've been replaced by long-term capital as well and those that are in it for -- in the fund for the long term and believe in the sector. So when you're looking at it with a longer-term time horizon, it is helpful because people are looking at it and thinking about the NAV and would like you to reinvest for the longer term while market conditions change. And if you can offer that additional level of growth out of it, they would be happy with that. And then just, Toby, on the capital returns, yes, 53 million shares purchased and return so far. That is helping to prop up the NAV to an extent. So 3p per share on the NAV from that, GBP 22.5 million paid out during H1, and we have confidence in the dividend cover of 1.3x for this year. We will flag that these levels of dividend cover are quite high versus what has historically been achieved. The solar sector, even if you go back to pre-pandemic, was probably at about 1 to 1.1x. But we think that that's quite normal for this kind of asset class in terms of it is less volatile than others. Day tends to follow night in terms of this, even on what is a relatively gray day today down here in the South England, our sites will be working and we will be generating electricity. It doesn't need to be bright blazing sunshine. And we do think the solar funds are less volatile necessarily in the wind, where they've come in under budget quite a few times. So actually getting to that point of 1 to 1.1x cover, we think it's more normalized and investors should be comfortable with going forward. What we think is the differentiator for ourselves is that hedging strategy that Toby was talking you through earlier, which will allow us to go into deeper, more liquid markets in order to drive that. We have been continuing to hedge our positions forward over '26, '27 because of that -- those new sort of strings to our bow there. We don't think that many others have because we don't think the prices are necessarily at a point where they'd be wanting to lock in through more traditional offtakers. Just a quick touch on representing the Board and where they stand in all that. There has been continued shareholder engagement and feedback. The Board is always interested to hear the views. We'll be taking through views and comments through this, the sort of feedback to them and particularly what's coming up from retail and retail engagements as well. The phase succession plan has completed with our new Chair, Tony Roper literally taking over last week on from Alex Olson, who departed after 12 years. And we've got a new sit in Paul Masterton. So Tony Roper himself, very experienced, was a fund manager set up the HICL fund for those that know and was a fund manager for that for many years, helped launch TRIG, has been -- since he left the manager Infrared Capital Partners has become a non-Exec Chair. And Ned, he is also on the CDL Chair of the [indiscernible] fund, hugely experienced and 30, 35 years of experience in investment infrastructure and renewables. We think he's a great addition to get on place and very -- he will look after shareholders' interest. I have no doubt having known him for a long time as well. And Paul Masterton joins us from 3iN. So I think we brought on 2 very strong directors there to take key roles within the Board. And I'll just say, look, the directors acknowledge the AGM -- results of the AGM vote. We passed with a much stronger backing for continuation this year, but aware of the task ahead in terms of doing everything that we can within our control to try to narrow the discount here. In terms of -- in terms of other strategic options, I saw a question come through on this. We did -- it's -- the Board did make a proposal through to another investment trust in May that was -- what became public. We proposed that. We don't think necessarily just a bigger vehicle or a bigger solar vehicle in its own right is panacea to all the problems or will drive a discount re-rating. But that we were supportive of as the manager because we saw the opportunity to drive some significant synergies there, particularly from the costs that are charged below in the SPVs, not necessarily just the investment management fee. But you could have the benefits of scale, you could have the benefits of being able to recycle capital and return some to investors out of that and shareholders and put in a leaner structure that we think could offer a lot of upside to investors as well. What are the challenges of seeing some of that? Well, in that one, we were robust by the Board at the time who felt that there were other options. So I think it does come back to what do each of the boards think is the right thing for their own shareholders. It is not the easiest thing to get mergers to progress. There are what you could argue is vested interests on the side of this. I think I'd just say from -- on behalf of our Board and us as a manager, we are very much open to that. The Board will look at it from both ways, either incoming or either incoming or us going out there. And as a manager, we will back ourselves because we think we do a good job at a good price and good efficient cost through to investors at the end. We do benchmark our fees against the market and especially what we charge for asset management services and others. So hopefully, that goes towards answering that question. Is the -- I've just got another one here in terms of the share buyback, canceling the shares or held in treasury to be placed back in the later date? At the moment, those shares that are being -- they're not being canceled at the moment, they are being held in treasury. I think that's an ongoing discussion point there as to -- as to whether we think at some point, the market gets to a point where we could release those back to the market for additional income. So they've not been canceled off as yet to answer that. And I think just on the strategic options, the only other point to make there is that we're exploring all ways to release capital from throughout the structure, looking at the vehicle structure itself and the Board is absolutely focused on the best possible outcome for shareholders. I'll hand back to Toby who will summarize, and then I'll just have a look through to see if we can cover off as many of the other questions as possible.

Thanks, Ross. On this slide, we look to give a bit of flavor for the regulatory landscape that we're operating within in our core markets. And we've chosen 3 key themes here to talk to as they adversely impact our portfolio. So the first one is the U.K. Review of Electricity Market Arrangements, otherwise known as REMA. And we were pleased to see in formal updates earlier this year that the proposed move to zonal pricing has been dismissed now. Whilst our portfolio didn't stand to particularly gain or lose from such a movement to zonal pricing, we do think that the uncertainty was creating somewhat of a regulatory cloud over the sector, and that was deterring investment. And so that's not helpful for us in our home market. And so we think that the clarity on the direction of travel and the decision to simply or more simply reform the existing single national market is a positive outcome and should lead to greater certainty for investors coming into the market and help promote the number of people looking at U.K. solar and U.K. renewables more generally. Otherwise, in terms of U.K. regulation, there's been further legislative support for renewables through the contract for difference scheme. In AR7, which is the live auction that's currently ongoing, they have extended the term of CfD support from 15 years out to 20 years, increasing the level of -- or potentially increasing the level of contracted revenues that these new projects will benefit from and ultimately making them even more investable. And this is significant for Foresight Solar as this is our home market, and Ross has already described our aspirations to grow our pipeline of opportunities here in the U.K. And this will only accelerate our ability to do so by increasing the number of projects that will likely benefit from the CfD. We do consider that AR7 is likely to be quite a blockbuster event for solar in particular. That is partly due to the lower pricing in terms of the cost to the to energy users in the U.K. and the benefits to BESS, NESO in trying to hit their 2030 and 2035 targets. So we do feel that there's likely to be a substantial allocation of budget towards large-scale utility solar through the CfD mechanism this year. Moving on to battery storage, and we're moving across to Spain also. We've touched on blackout earlier this year, and we've touched on the high levels of intermittent generation, the penetration of wind and solar within the Spanish and the broader Iberian markets, coupled with the relatively low levels of hydro and the relatively low levels of interconnection to the rest of Europe, this is a prime market for battery storage to be deployed into. And from the Spanish regulator's perspective and the Spanish government's perspective, it's a technology that needs to be pushed and accelerated in its deployment rapidly. And that's been followed through with a number of supportive measures in the market. These include a capital subsidy for the construction of new projects, and it also includes lower hurdles for the permitting of new projects that will be co-located with existing solar and wind generation assets. The key thing here is for Foresight Solar that both our existing operational projects and our pipeline of both solar and stand-alone those projects that we're developing could stand to benefit from this focus from the regulator and the government in Spain on the deployment of battery storage. We do see investors targeting a blended portfolio of generation and flexible storage. And so that's very much influencing our strategy in terms of trying to build our exposure for the future with that roughly equal weighting in development pipelines between solar and battery storage, coupled, of course, with our stable operating operational portfolio. So yes, 3 key themes there to hopefully give you a bit of a flavor as to some of the regulatory tailwinds, which is nice for change that the solar sector is seeing both in the U.K. and our other core markets. I'll hand back to Ross to wrap up.

Thanks, Toby. So just in terms of the -- just in terms of summarizing here and everything, I think in terms of performance, the operational performance continues to build on a strong track record, especially in the long-dated U.K. portfolio that we've got here. I think it does go to show that our assumptions and our yields. What we've got in the budget is realistic. We've now had above budget production in 9 of the 12 years that the fund has been going. And there's good availability and dividend accretive power price hedging strategy that we're taking you through, a strong 1.3x dividend cover for 2025. That will come back down to more historic normal averages there as these -- I think the key thing to look at as investors in the sector is what happens by early 2026, a lot of those high power prices hedges that ourselves and others put in place back in 2021, '22 are rolling off. And those high power prices are not around. We're back to normalized levels. So see what people -- are people actually hedging in the market. That's where we see -- we have a key differentiator there. Corporate actions, we've been through a lot of this in terms of the buyback program, one of the largest in the sector, but we'll look at and discuss with the Board in terms of the allocation and where that is best suited down to investor sentiments at the moment. We're implementing initiatives there to cut financial costs, strengthen the balance sheet further. The sales processes are ongoing. We will just have to be flexible within potentially what could be more advisers markets to make sure we are achieving proper value for those projects. So we will -- that is a key consideration versus timing and rushing on those is making sure that we're getting the right value and protecting investment there for -- protecting value for investors. And the Board continues to analyze all options there to deliver best possible value for outcome. I can say that they are there and they are looking out for your interest in holding us to account and challenging us as well, but in exactly the right way that they should be doing. Toby has just taken you through the tailwinds there, but I'll probably just wrap up at that point. And just in the time left, just check that we can cover off all the questions that were submitted, which we usually like to try to be able to do. In terms of -- I've got one here. Toby, I'll just maybe try to do a few of these, bring you in if there's need to on any of them. A question here, AGM in the Channel Islands, any possibility of an Investors Day in London? We are -- well, we do have -- we are regularly at events. We can have a look at this in terms of discussions with the Board if there is an open one specifically for FSFL in terms of that and whether it's something open, but we are very regularly at retail investor events. I may not name necessarily all of them, but AJ Bell, M-ELO, these kind of presentations, and we are always up to meeting shareholders of those. We can discuss with the Board if there is interest in doing a sort of investor-specific day in London, sort of more in-person version of this, absolutely. We've had this -- we've probably covered this to its and how are you making the decision on trade-off between shareholder returns and capital investment? Are you concerned about long-term shrinkage of the company? And that's absolutely getting to the point of this because if we don't continue to invest, the fund will shrink and it is effectively in runoff. So I think that becomes a point in time, it is really down to sentiment of all investors and get the sense from more retail investors on these kind of calls and the questions that there are -- there is probably support for continued investment if it is coming in at the right point and it is accretive to the returns and hurdle rate that we need. We do see that out there. I think the challenge is really getting to it is at what scale can you do that and actually raising the capital. So we need to bring the capital in either it's very difficult or near impossible to sort of raise equity within the markets at the moment. So you need to see where you're getting that capital in either releasing other capital from the structure, releasing through divestments or bringing in third-party capital to sort of co-invest alongside. But we absolutely see those opportunities that are there to continue to invest to drive the long-term value for the fund. Another one there, are we looking at adding battery storage to the current sites along with upgrading solar panels? Retrofitting BESS is absolutely something we are looking at. The upgrading the solar panels to more higher efficiency ones is probably a longer-term solution in terms of this. The sites that we have there have already useful economic lives are going on for around 40 years, but it does become that balance of the trade-off. I'd say we are going through -- there's a couple of smaller sites that have actually shown a few issues in terms of the panels that have been known about for a while where we did hold money back from contractors for that likelihood. They probably would be fine if we left them for the next 10 years or so. But given that we've got money that we held back specifically for any issues, we are starting to repower those sites, and they're a good test case. I think the fair thing to say is if there are sites that are backed by subsidies, you cannot increase the capacity. You have to replace those sites exactly like-for-like in terms of the capacity. Otherwise, you risk in validating the subsidies. So it's not something you would sort of rush to do without there being a strong case. The fact that we've got the capital there for it and it has been withheld years ago makes them a good test case for this. I think what you look at is there's probably more of a business case there for doing these kind of things when the rocks roll off in the sort of early 2030s. And then a lot of that -- that value is not yet baked into the portfolio and something that we address as we look at more repowering more generally. Toby, just one you might want to come in on the improved ROI from reduced CapEx on solar and BESS costs. Well, I guess, in the private markets, we absolutely see driving down cost and CapEx on solar and BESS, haven't we? So that is helping the returns.

That's absolutely right. I would say for battery storage, in particular, the falls in costs over the last couple of years have been fairly dramatic with battery cell costs themselves falling by 1/3 and depending on how competitive process you're running by even more. And that's just in a very short space of time, 18 months to 2 years. And that definitely supports the case and increases the returns on investment. Similarly, for solar, I would say that the fall in prices was quite significant a couple of years ago. We have moved into a market where there is quite significant oversupply of modules with weakening demand in certain markets. But as projects get bigger and bigger with new builds, particularly in the U.K., we're seeing project sizes increasing over time. The economies of set scale and the buying power that you have when building those projects is continuing to deliver cost advantages and bringing down those costs as well. So yes, a very significant reduction in costs continue to be seen across both of our core technologies.

And final question I can see here if we managed to cover off everything is around the discontinuation vote. Would it make more sense to switch it towards a continuation vote because of the way that a lot of the platforms are set up? We're absolutely cognizant of this. We've had many discussions about it. There is always the risk here that some investors, I think, in terms of -- particularly on retail where you're not able to contact, if we do feel that larger investors have voted the wrong way, there is always the chance of being able to pick up the phone to them to check that, that was actually the outcome. It goes sort of both ways in terms of this. There has been a focused amount of engagement now. I think a lot of investors are a lot more cued up on this given that there's been several years of it. We don't necessarily see that that's going to be the only thing that's going to tip voting either way. But absolutely, it's a fair point because there is a lot of effort goes into -- we've been mailing out shareholders directly that are on the register or signed up to us, particularly retail as well and helping guide on that, liaising with the platforms as well. It's something I'd say that we're looking at. But I think it's also at the same time, people are getting used to that dynamic now as well. I think unless there's anything else, I think hopefully, we got through all the questions as well.

That's great. Well, thanks very much for answering those questions from investors. Of course, the company can view the questions submitted today, and we will publish a response out on the Investor Meet Company platform. But just before redirecting investors to try to get their feedback, which is particularly important to you both. Ross, can I just ask you for a few closing comments?

Yes, absolutely. I think particularly for private investors, I think the fund continues to deliver what it always has done in terms of this -- in terms of offering a strong yield. There is that group that bothers us all in terms of the discount to NAV that the fund is trading at, at the moment, and that's absolutely what we are looking to address in terms of driving additional growth there. I'm not going to hide behind it and say that it's all the macro, but the macro is a large proportion of that. It's probably one of the largest factors in terms of where the gilt rates are, but there are things within our control that we can look to push through additional value creation for the fund and to help differentiate it to try to narrow that gap as well. But we do see that there is a strong well-covered dividend and investors are paid to wait while we are implementing that strategy as well. So I think look at it that we are thinking of everyone in terms of when we're doing this and looking to drive those returns for the fund.

That's great. Well, thank you once again for updating investors today. Can I please ask investors not to close the session as you will now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations of the management team of Foresight Solar Fund Limited. We'd like to thank you for attending today's presentation, and good afternoon to you all.