Foresight Solar H2 2025 Earnings Report

Foresight Solar EPS Results

• Actual EPS: -GBX 5.83
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Foresight Solar Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Foresight Solar Announcement Details

• Quarter: H2 2025
• Date: 3/24/2026
• Time: Before Market Opens
• Conference Call Date: Friday, March 27, 2026
• Conference Call Time: 7:00AM ET

Foresight Solar (LON:FSFL) Fund Limited (“FSFL”) is a Jersey-registered, closed-end investment company investing in a diversified portfolio of ground-based solar PV and battery storage assets in the UK and internationally. The Company aims to deliver sustainable investment returns alongside strong environmental, social and governance (“ESG”) benefits.

Foresight Solar H2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Independent technical review raised the portfolio's expected energy yield by 2.8%, validated consistent UK outperformance (UK +3.4% vs budget) and concluded assets are technically capable of ~40 years of operation, supporting higher reporting benchmarks going forward.
• Positive Sentiment: The fund delivered 1.3x dividend cover in 2025 and is holding the dividend at 8.1p for 2026, with ~87% of 2026 revenues contracted and an expected ~1.1x cover from contracted cashflows (plus 13% merchant exposure that could add upside given recent market volatility).
• Negative Sentiment: NAV fell ~11% to £0.992 per share, driven by lower long-term power price assumptions, a write-down of the Australian portfolio due to curtailment and a concluded HMRC tax review that reduces interest deductibility and raises near-term cash tax liabilities (to be settled from reserves).
• Positive Sentiment: The £60m share buyback program (largest relative to fund size) is ~£55m executed and management says it has been accretive (~3p NAV per share) and helped build dividend cover, though buybacks reduce absolute cash on the balance sheet.
• Neutral Sentiment: The board is actively pursuing asset recycling (targeting 75MW sales), development opportunities (CFD pipeline, storage and hybridisation to mitigate curtailment) and a range of corporate options including private-market solutions or M&A, but outcomes and timing remain uncertain.

Presentation

[Operator]

Good morning, and welcome to the Foresight Solar Fund Limited investor presentation. Throughout this recorded presentation, investors will be in a listen only mode. Questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'll now hand over to the management team. Toby, good morning, sir.

[Toby Virno, Associate Investment Director at Foresight Group]

Thank you very much, Lily, and good morning to everyone who's dialed in. Thank you very much for your time today. We're here to talk about the annual results for Foresight Solar Fund Limited. I am Toby Virno. I'm a Fund Manager for Foresight Solar and have been fully dedicated to the management of the fund for these past three years. I'm joined today by David Goodwin. David, if you wouldn't mind just providing a quick introduction.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

Good morning, everyone. I'm David Goodwin, the Head of Fund Finance at Foresight Group, and I am the Acting Finance Director for Foresight Solar Fund Limited.

[Toby Virno, Associate Investment Director at Foresight Group]

Cool. Fantastic. Thank you, David. We are also joined by Matheus Fierro, our Head of Investor Relations, and he'll be helping mediate questions and steering the slideshow for us today. Without further ado, I would also like to start with some new news as of our annual results by introducing a new team member that will be joining the Foresight Solar Fund management team. We are very much looking forward to Will Morgan joining the team from mid-April. Will Morgan brings a wealth of experience. He has over 20 years in investment management experience, and this primarily in the infrastructure and renewable sectors. The start of his career was actually in Spain.

[Toby Virno, Associate Investment Director at Foresight Group]

He's a fluent Spanish speaker and knows the market very well, and there's clearly good alignment there with our own operations and development activity in that market. That would be, you know, a valuable set of experience to work closely with our Madrid office. The bulk of his career has more recently been in the U.K. renewables market, where he has spent, you know, much of the past 20 years building teams and delivering on investment strategies in the core markets that Foresight Solar itself is targeting of battery storage and importantly, solar. We, of course, look forward to being able to introduce him to investors in due course and welcome him to the Foresight Solar team. Moving now to Foresight Solar's highlights for 2025.

[Toby Virno, Associate Investment Director at Foresight Group]

It's been a strong year for operational performance, and that's especially in our home market of the U.K., which saw a 3.4% generation outperformance. This offset underperformance in Spain and Australia, which were hampered by curtailment. Australia continuing to be plagued by outsized economic curtailment and Spain seeing some increased instances of negative pricing periods throughout the year. We're going to go on into some detail later on as to how we've reflected our consistent budget outperformance in the U.K. into revised budgets moving forwards.

[Toby Virno, Associate Investment Director at Foresight Group]

We hope to give a view under the bonnet as to some of the technical jargon that is banded around when we talk about our valuation to give you a real feel as to what that means in practice for operating our solar funds going forwards and how that has been reflected in our net asset valuation at the Q4 NAV. Both our production and our revenue strategy have contributed to the company meeting its 1.3 times dividend cover target for 2025. We feel this is a really great result, delivering on what was an ambitious target at the start of the year, and a good outcome for our shareholders. Looking ahead to 2026, we are very pleased to say that we are maintaining the attractive dividend at 8.1 pence per share.

[Toby Virno, Associate Investment Director at Foresight Group]

Now, based on performance year to date, plus expected contracted revenues alone, we anticipate that this will, on its own, deliver a 1x dividend cover for 2026. On top of this, we have meaningful merchant exposure, which at this time, and in light of the volatility and uncertainty in the midst of the conflict in the Middle East, presents meaningful exposure to upside risk. We note that our projections have been based on power price forecasts that were compiled as of Q4, and that was prior to the current conflict. We do anticipate that there's a reasonable expectation that there'll be upward pressure in those curves going forwards. That's certainly reflected in the forward curves that we see when we're participating in the energy markets. Our balance sheet remains stable, with gearing well within targeted levels and affording flexibility in our capital allocation strategy.

[Toby Virno, Associate Investment Director at Foresight Group]

We have been continuing to deliver on a sector-leading buyback program with a budget of GBP 60 million, representing the largest relative to fund size for the sector. We are GBP 55 million into that budget, and it has been most helpful in both being accretive on a NAV per share basis for our shareholders, but also by building dividend cover for futures ahead. We calculate or estimate that we have saved ten years' worth of dividend budget by acquiring shares at, you know, the current depressed prices, and utilizing our headroom from cash generation to do so. We think this has been a helpful strategy.

[Toby Virno, Associate Investment Director at Foresight Group]

It's not been a silver bullet in terms of dealing with the share price, but it does afford greater revenue visibility, greater cash flow visibility for our shareholders, who are continuing to be attracted by the attractive yield proposition that Foresight Solar represents. Touching now on the Q4 valuation, we have recently released the Q4 NAV, and that was reaffirmed in the annual accounts. We particularly call out the U.K. valuation, which at 0.97 million per megawatt benchmarks comfortably against the peer group. We're going to go into some further detail as to some of the movements that have gone through. I've already talked about the independent technical analysis that has supported some of the key updates to this valuation.

[Toby Virno, Associate Investment Director at Foresight Group]

We will also touch on some of the detractors from the valuation in a year that did see a material downside in terms of NAV performance. Finally, we're going to provide an update in terms of corporate initiatives. The FSFL board continue to be extremely proactive in exploring options to promote shareholder value. We're fully aware of the scale of the challenge with sector share and the performance continuing to suffer greatly. We call out a few key metrics on this slide that show just how, you know, low the share price currently is. The EV to EBITDA ratio of just 6x on a share price basis and the dividend yield of 13% on a fully covered basis for what is ostensibly a stably operating and de-risked global solar portfolio.

[Toby Virno, Associate Investment Director at Foresight Group]

It is clear that the market is crying out for valuation certainty, and we remain absolutely focused on delivering on our investment objective, going forwards. Key to that will be efficient asset cycling, and we hope to be able to deliver updates in due course with regards to performance against our divestment targets, where we are targeting 75 MW of operational sales as announced last year. The board themselves are being very proactive in putting shareholder value first. It was in the market last year that an approach was made to acquire. Unfortunately, that conversation was rebuffed quite quickly, and that gives an idea as to some of the hurdles that are faced in the sector, with the challenges and vested interests that there are.

[Toby Virno, Associate Investment Director at Foresight Group]

Nonetheless, we hope that this evidences the proactive nature that the board is taking and their continued aim to promote shareholder value and good and to deliver the best possible outcome. We're going to turn over now and going to start to get into some of the detail of the results, and we're going to start with a focus on operational performance. On this slide, we set out the production performance for the year, and we're pleased to say that solar resource has greatly improved versus 2024.

[Toby Virno, Associate Investment Director at Foresight Group]

I think we all noticed the benefits here in the U.K. versus what was a particularly lower irradiance year in 2024, what we would describe as a P90 year, where we expect 90% of the time irradiation to exceed levels that there were in 2024, and we've been pleased to see outperformance of irradiance budgets by up to 10% in 2025. As we can see, the U.K. outperformance, 3.4% above budget for the year, was offset by that underperformance in the overseas portfolios, which was driven by curtailment, with the global portfolio finishing 1.3% below budget. Now, not all funds present this performance in the same way, and so we want to make sure that there is comparability in figures when looking across the sector.

[Toby Virno, Associate Investment Director at Foresight Group]

If we were to add back the extent to which curtailment was driven by grid outages, and that's due to the grid operators doing reinforcement works on the network to promote the energy transition, we would have finished 2.6% higher than our final published figures. That provides some comparability against how some of the peer group present these numbers. We are particularly pleased with the U.K. performance, which has now outperformed budget in 9 of the past 12 reporting periods since IPO. As reported at the Q4 NAV, we took the opportunity in the second half of 2025 to engage an independent technical advisor to revise our performance assumptions, and this raised the bar for future budgets.

[Toby Virno, Associate Investment Director at Foresight Group]

If we turn over the slide, we're going to give a bit more detail on exactly what that technical advisor has looked at and what that means for the valuation of our portfolio and how we'll be reporting our performance going forward. First and foremost, energy yield assumption for the portfolio has been updated. The technical advisor has looked at how much energy the portfolio has actually generated over the multiple years of actual performance data that we have available. Now, bearing in mind that in most cases the existing assumption was based on energy yield analysis that was done at acquisition, which primarily was done shortly after operations. That means that there was not operational data available to input into that forecast, and it was largely based on simulation alone.

[Toby Virno, Associate Investment Director at Foresight Group]

What our technical advisor has been able to do is to look at the actual performance of our well-optimized and well-operated portfolio and form a view as to the expected level of generation going forwards. Put simply, this is how much energy the portfolio is expected to generate based on the solar resource that we have in the U.K. and the technical efficiency of the projects, how efficiently they convert that sunlight into electricity that's then exported to the grid. We've been very pleased to see a validation of what we have known ourselves, that the portfolio has been outperforming against its initial investment case assumptions, and the expected generation has been increased by 2.8% as of the Q4 NAV, which we think is a great result, and that is the target that we'll be reporting against going forwards.

[Toby Virno, Associate Investment Director at Foresight Group]

Secondly, looking at site availability, and this is how much our projects are available to generate electricity when the sun shines. Site-specific availability studies have been undertaken by the technical advisor, and that has looked at historic downtime for the portfolio. Now, it's important to note that this was a downward only revision to the previous assumption as we capped the outputs at the previous assumption of 99%. We've been very pleased to see that the weighted average availability for the portfolio has fallen by just a fraction of a percent relative to that previous assumption.

[Toby Virno, Associate Investment Director at Foresight Group]

This was done on a site-specific basis and gives us a high degree of confidence in how much availability our portfolio will continue to benefit from going forwards. Looking now to the life cycle investments that we forecast for our portfolio, this is the expected investment that's required over the life of the portfolio to maintain good operations for the targeted asset life. Again, the technical advisor has looked at this on a site-specific basis, taking into account failure rates of the specific components installed on sites and local environmental conditions, local environmental factors. What they've done is to look at our previous forecasts for the expected capital that's required to invest in the projects to maintain good operations, and they've refined these on a site-specific basis.

[Toby Virno, Associate Investment Director at Foresight Group]

They actually identified that our initial assumptions were on the conservative side, and so this fed through as an uplift evaluation as we target the 40-year asset lives. Finally, they gave an opinion on the technical useful life of the portfolio, and this is the expected longevity of the sites from a technical perspective. Now, it is not so long ago in the grand scheme of things, probably 10 years ago, when it wasn't considered that solar farms would last longer than 20 or 25 years. This has demonstrably not been the case, and sites continue to perform better and rates of degradation are lower than originally anticipated.

[Toby Virno, Associate Investment Director at Foresight Group]

This has been borne out by our technical advisors' analysis, and they have concluded that our portfolio is no exception, and that we should expect these assets to be technically capable of operating for at least the next 40 years from commercial operations. Overall, we think that this has been a very robust exercise. It's been supportive of our investment plans as well, and we think that it should give shareholders and the market a higher degree of confidence in our own technical performance assumptions at a time when there have been questions around the sustainability of assumptions from some of the other technologies in the sector, most notably wind, which has faced criticism for under-delivering against budgets in recent years. We've directly combated this with this independent analysis.

[Toby Virno, Associate Investment Director at Foresight Group]

I'm going to move now to the next slide, where we look at our revenue strategy and most importantly our hedging strategy as well. Looking at the forecast revenue composition on this slide, we can see that based on subsidies and long-term PPAs alone, representing the teal band at the bottom for subsidies and the black band, which is the bar above that on the chart, that FSFL maintains a solid base of contracted revenues at around 60%. If you look at the next two-year horizon, we can see that this is augmented by our active hedging strategy, and this is where we lock in prices for electricity production to support dividend cover in the near term periods.

[Toby Virno, Associate Investment Director at Foresight Group]

2026 is a brilliant case study, and you'll have seen over the last few reporting periods that we have steadily increased hedged volumes and capitalized on market volatility, building our hedge capacity such that we get good visibility over cash flow to underpin the dividend. We have then more recently, in the wake of the conflict of the Middle East, secured further hedges at extremely attractive prices, again, capitalizing on peaks in the market that have come to pass in what is a very headline-driven market, with energy markets reacting to news coming out of the U.S. and of course, the practical realities of the conflict on the ground. As of this juncture, we have around 87% contracted revenues for the year, which gives us a very high degree of revenue visibility.

[Toby Virno, Associate Investment Director at Foresight Group]

Significantly, as I mentioned in the highlights, when you look at just the contracted revenues alone and then adding what we have actually delivered in the months of January and February, we are already expecting to achieve 1x dividend cover from those cash flows alone. That is before you get to the meaningful merchant exposure that we have over and above this, with 13% of our revenues uncontracted currently and offering exposure to upside volatility in the wake of the conflict in the Middle East. This pattern of building our hedge position for 2026 is one that we expect to replicate into 2027 and 2028, and we are already actively doing so. Our strategy is focused on revenue visibility to support a sustainable and predictable dividend for our shareholders. It is working.

[Toby Virno, Associate Investment Director at Foresight Group]

I'm going to hand over to David now, and he's going to talk through to you what this has meant for our dividend cover past and what it means for our expected dividend cover looking forwards. Over to you, David.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

Thanks, Toby. Dividend cover was a clear highlight of 2025. We delivered 1.3 times cover, which is exactly what we set out to achieve. This great result reflects both excellent operational performance and disciplined financial management. Strong asset performance in the U.K., the hedging strategy Toby described earlier, and the reduction in investment management fees following the change of fee structure all contributed to achieving the 1.3 times result. We wanted to make the components behind that outcome clearer, which is why we've added this slide. In the annual report, we bridge from the accruals-based financial performance to the actual cash distributed from the underlying assets, and that cash figure is what you can see as B in this table. It provides a more intuitive picture of how the business converts accounting profit into real cash available for dividends.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

To confirm, dividend cover is calculated as cash flow from operations divided by dividends paid to shareholders in the period, marked C and D respectively. Looking ahead, based on what we know today, we expect the 2026 dividend target of 8.1 pence per share to be around 1.1 times covered. That remains a comfortable level and reflects the visibility we have through contracted revenues. At around 1.1 times, dividend cover is also returning to pre-pandemic levels, which is where we would normally expect to sit. The higher levels seen in more recent years are not sustainable in the longer term. Moving on to gearing and the balance sheets. Balance sheet management is one of the key ways we aim to deliver value for shareholders.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

During 2025, we resized and extended our revolving credit facility, which is expected to save around GBP 1 million in interest over its life. That is a straightforward benefit for investors. Our long-term gearing continues to amortize steadily in line with project subsidies and has a low weighted average cost of just 3.6% per annum. Overall gearing stands at just over 41%, which keeps us well within the 50% investment policy limit and provides flexibility. You may have noticed on the previous slide, financing costs have reduced. This is largely a factor of the multicurrency RCF, which allows us to draw on euro-denominated financing and gives us a natural hedge against our Spanish portfolio. Looking more broadly, we continue to explore opportunities to optimize the capital structure.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

If we release cash through financing steps, disposals, or other levers, we can allocate it where it has the most impact, whether that's returning capital, paying down debt, or reinvesting to enhance long-term revenues.

[Toby Virno, Associate Investment Director at Foresight Group]

The NAV bridge, I can see that we've got a couple of questions that have come in regarding the dividend strategy for the fund and in particular referencing some of the announcements that have come out of the closed peer group in recent months. Most notably, NESF is called out as having cut their dividend and of course the various movements that were announced by Bluefield over the similar period have all been queried here. What we are aiming to reassure the market at this point in time is that the board is committed to continuing to deliver the sustainable progressive dividend yield for Foresight Solar.

[Toby Virno, Associate Investment Director at Foresight Group]

We hope that the decision to hold the dividend flat for 2026 is understood and recognized as being a step in the right direction for delivering on this progressive dividend on a sustainable basis. Now, I think it's important to distinguish our position versus that of some of our peers. We've touched on some of these points in the highlights already, but it might be helpful for me to more explicitly call out the differences here. Firstly, in terms of our revenue strategy and visibility, we have continued to, in a very disciplined fashion, follow our hedging policy. We, when discussing with the board dividend strategy for the coming years, we form a view as to what the expected trajectory of the dividend will be.

[Toby Virno, Associate Investment Director at Foresight Group]

Absolutely the sustainability of delivering on that and maintaining compliance with our investment objective is front and center of our minds as we do so. What we have recognized this period is this would not be sustainable to put through a big increase in the dividend, and it is actually more appropriate to start to build further levels of dividend cover so that we can continue to deliver a sustainable and progressive dividend in the years to come as energy markets normalize and dividend cover levels return to a more normalized level also, similar to those seen before the pandemic. Of course, in the midst of most recent news flow in these last couple of weeks, we are anticipating elevated prices to remain for quite some time.

[Toby Virno, Associate Investment Director at Foresight Group]

The structural impact of the damage to LNG facilities in Qatar and the continued blockade of the Strait of Hormuz will have a you know an impact for many months to come in terms of supply of LNG. Gas pricing continues to be the marginal rate setter for electricity prices, which is of course underpinning a big portion of our revenues. Based on these discussions with the board, we feel that it's been the right decision to hold the dividend flat for this year, and we think that the revenue visibility that we can give the market demonstrates a higher degree of confidence in being able to pay the dividend on a sustainable basis going forwards.

[Toby Virno, Associate Investment Director at Foresight Group]

We do want to differentiate ourselves from the peer group in terms of some of the more drastic cuts that have come through. I would also add that at least one of our peers has less flexibility in this regard. It's you know, a matter of public record that Next is currently in breach of debt covenants under its pref shares, and that may well have an impact on their ability to distribute to their shareholders as per the terms set out. We want to emphasize that we have a differentiated capital structure which does not have any of those limitations, and hopefully that provides a bit of color to the questions here.

[Toby Virno, Associate Investment Director at Foresight Group]

Moving on now to the NAV results for the year and the NAV bridge that was presented both in the Q4 NAV and then reaffirmed in our annual results. Now, it has been commented that this is one of the longer waterfall charts that FSFL has published for a while. As ever, we do not shy away from transparent disclosure of movements in our valuation. Unfortunately, 2025 has seen a significant fall in portfolio NAV, falling to GBP 0.992 per share at the year-end, and that was an 11% reduction over the year. We fully recognize that this is a very disappointing result over the period.

[Toby Virno, Associate Investment Director at Foresight Group]

Now, the key drivers and factors that have applied downward pressure include a moderation of long-term power price forecasts as these forecasts have moved beyond the shock of the invasion of Ukraine on the European energy markets. Admittedly, we're now amidst a possibly even greater shock in supply, which will likely lead to increases in power curves moving forwards. I don't think it's unreasonable to speculate that there will be upward pressure there. We have also written down the value of the Australian portfolio, as this market continues to suffer from challenges of curtailment and reduced investor appetite. We were disappointed not to deliver on a sale last year as that remained a strategic priority.

[Toby Virno, Associate Investment Director at Foresight Group]

However, buyers continue to be very selective in that market, and so we have to be quite opportunistic in delivering a transaction that best recovers value for shareholders as we seek to exit that market, which remains a strategic objective as we refocus on the U.K. and European markets. There was also the material negative impact arising from the tax review, which was announced at the Q3 and then concluded at the Q4 NAV update. Now, just to touch on this point in particular, we know that this has been extremely disappointing for shareholders, and we are keen to reaffirm that this issue is now concluded with no further impacts expected. In a second, we've got some further disclosure in this presentation to touch on some of the details and build on the disclosure that's already been put out there.

[Toby Virno, Associate Investment Director at Foresight Group]

Before I do, I will just flag that there has been some positive impacts in the NAV also, and we've already gone into some detail around the positive operational impacts, which have mitigated some of the downside in the NAV through the period. Similarly, we have seen macroeconomic outperformance with inflation being slightly higher than expected and that our valuation and our portfolio returns remain positively correlated to inflation and the inflation hedge that it offers our investors continues to be attractive. I'm now going to hand over to David, who's going to talk through in some further detail the key messages regarding the tax review, as we know that this has been a priority matter for our shareholders.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

Thanks, Toby. We're obviously very disappointed with the overall impact. It's certainly not the outcome we wanted to deliver. However, we felt it was important to provide more detail so everyone has a better understanding of what has happened and why. Between the Q3 and Q4 announcements, we continued to conduct a thorough review of the group's tax structure alongside our advisors to ensure the analysis was robust and complete. During the whole tax review process, we have engaged with HMRC. That engagement has now concluded, and we've reached an agreement that covers both historic tax submissions and the methodology we will be applying going forward. This gives us greater clarity and certainty around thin capitalization, transfer pricing and ultimately future cash tax payments.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

One of the adjustments made in respect to the forecast largely reflect a reduction in interest deductibility, partly because the company's financing structure in the future periods has effectively reached its debt capacity under thin capitalization rules and the bespoke principles we have agreed with HMRC. As interest deductibility falls, taxable income has increased and consequently the amount of cash tax we need to pay has also increased. The review also confirmed that tax payable for some prior years was higher than previously paid on account. These historical liabilities will be settled through existing cash reserves and normal operational cash flows. Importantly, dividends remain fully covered, including the historical periods, and the Q4 update now draws a line under the issue.

[Toby Virno, Associate Investment Director at Foresight Group]

Before we just move on from the NAV bridge, I can see there's a few questions that have come in around the reflection of share buybacks in the NAV bridge and questioning why this is negative. So just to be clear, when we're buying back shares in the market, that is cash that is leaving the structure and, you know, strictly is reducing the value of the portfolio. However, by buying at share prices that are less than the value per share on a NAV basis, this is accretive to shareholders on a NAV per share basis.

[Toby Virno, Associate Investment Director at Foresight Group]

If you look at the NAV bridge, you will see that while it is a negative impact in terms of absolute NAV value, on a per share basis, there is a positive accretion there and we have generated over 3 pence per share of accretion since the buyback program first started. Moving now to one of the key positive impacts within the NAV bridge for the period, and this was the commissioning of our first battery storage project at Sandridge. In spite of the delays, costs were really well controlled and this has resulted in a positive NAV impact of 0.4 pence per share as we move to a DCF valuation. This project is now in commercial operations and is contributing to portfolio cash generation. The revenue strategy of this portfolio...

[Toby Virno, Associate Investment Director at Foresight Group]

of this, asset is primarily a merchant one, which naturally complements the market exposure of our U.K. generation portfolio. This is a great example of the value that can be added through well-managed execution of development and construction assets and the benefits of targeted strategic revenue augmentation going forwards. We think that this builds on the track record of past construction assets such as Lorca, which we exited in 2023 at a 21% premium to the holding value at the time, and that was having already added value by bringing that project through construction over and above cost. Moving now to our development strategy, and we've included within the accounts this year a simplified illustration of the development and construction cycle for a generic solar asset to demonstrate how value is added and what capital is at risk at each stage.

[Toby Virno, Associate Investment Director at Foresight Group]

Now, this highlights a number of things. If we look to the left-hand side, we can see that it is possible to generate really attractive multiples by flipping development assets once they reach ready to build. However, this is of course only ever for relatively small volumes of capital which are put at risk. With our clever deal structuring, we typically back-end payments to developers that we work with, and we look to protect against downside through cross-collateralization and by you know, being prudent upfront with our estimations as to what a realistic success rate is going to be for any given pipeline. Now, the real prize of development is in fact to be able to bring through projects with a higher level of returns and generating shareholder value as these are de-risked through construction.

[Toby Virno, Associate Investment Director at Foresight Group]

Case in point, the examples of Lorca and also Sandridge BESS that I've just talked about. These then enhance portfolio revenues going forward, particularly if it gives exposure to longer term contracted revenues. A great example here is the current U.K. CFD regime, where new greenfield assets in many cases expect to benefit from 20 years of CPI-linked revenue support. That is extremely attractive for investors such as ourselves, who are aiming to deliver clear visibility to our investors to support the dividend strategy going forward. The key to delivering on Foresight Solar's investment objective is systematic execution of asset cycling, targeting select divestments, such as the 75 MW that we announced last year and hope to provide an update on in due course, and then efficiently reinvesting this into new projects. If we can now go over the slide please, Matheus.

[Toby Virno, Associate Investment Director at Foresight Group]

I'm going to touch on corporate actions and activity that the board is undertaking to promote shareholder value. Taking these in turn, we have a very clear capital allocation strategy. I've already talked about the fact that we have the largest share buyback program relative to fund size, and that has been made possible by our prudent approach to balance sheet management and the sustainable level of debt that we currently have in the portfolio. We do have a focus on repaying floating rate debt, and expect that the allocation of proceeds from material asset sales will likely be weighted towards this allocation. Albeit we know that the cost is actually extremely well managed, having renegotiated our RCF just earlier this year, and as David described earlier, we've taken advantage of the multicurrency nature of that to reduce the cost of the RCF to what are quite attractive levels.

[Toby Virno, Associate Investment Director at Foresight Group]

As just flagged, we do have a close eye on the U.K. pipeline of CFD projects, and we do anticipate a wave of attractive opportunities coming through, both from the recent auction round 7 and the accelerated auction round 8. That upcoming auction round has been accelerated in the wake of the clear need to build further energy security for the United Kingdom and target further deployment of solar in an accelerated fashion, supported by the attractive CFD revenues. For investors such as ourselves, we expect this is going to present buying opportunities, and that's something that we have our ear very close to the ground, and we benefit from Foresight Group's wider pipeline there also.

[Toby Virno, Associate Investment Director at Foresight Group]

As a reminder of initiatives that the board pushed through proactively last year, Foresight Solar was extremely quick in securing a revised fee deal for its investors relative to the market. Working closely together with the manager, we moved to a 50/50 weighting of NAV and market capitalization value as the fee basis going forwards, and that promotes greater alignment between the manager and shareholders. The board continues to appraise a vast number of options available to promote shareholder value. It emerged in the market last year that an approach was made to another fund, and as I described earlier, unfortunately that was quickly rebuffed. We would flag that this was done with the support of the manager.

[Toby Virno, Associate Investment Director at Foresight Group]

We ourselves were not afraid to be pitted against another manager in order to try and take on the management mandate for a larger merged fund. However, there are clearly barriers to this within the sector. The board is also considering potential private market solutions, and that could take a number of different shapes and forms, and it has been very helpful for us to be actively in the market in pursuit of our investment program in identifying potentially suitable capital that could be used to release value from our portfolio. That's enough that I can say on that for now, but we hope to be able to provide updates in due course.

[Toby Virno, Associate Investment Director at Foresight Group]

Now we are conscious that the fund will face a further discontinuation vote at the upcoming AGM, and in the Chair's statement, you can see discussion of this in the recent annual accounts. I'd urge investors to all read that, as I feel that Tony has been very clear in the Board's priorities to promote shareholder value, but also clear around the consequences for that vote that is upcoming. At the end of the day, the Board are absolutely focused on delivering the best outcome for shareholders. They are a very robust and independent Board, and they absolutely have shareholders' considerations front and center of their mind at all times.

[Toby Virno, Associate Investment Director at Foresight Group]

Going to move now to the outlook, and David's going to talk us through some of the tailwinds and headwinds for the sector in light of recent macro economic and geopolitical issues.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

Thanks, Toby. Finally, a word on the broader environment. We remain very positive about the outlook for Foresight Solar. Energy security and affordability have returned to the top of policy agendas, and solar remains one of the cheapest and quickest to deploy sources of power generation. U.K. policy signals have been mixed. On one hand, the conclusions of REMA were practical. On the other, the ROC and FITs consultation were less helpful, and we are monitoring the upcoming Fixed Price Certificate consultation closely. However, as Toby has touched on, there are strong positives. Allocation Round 7 awarded 5 GW of solar capacity at attractive prices, and allocation Round 8 has been accelerated. These auctions create a steady flow of new projects and opportunities to recycle capital to enhance the long-term revenue quality of Foresight Solar. The conflict in the Middle East has also created volatility in natural gas prices.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

Beyond the broader implications of war, the unpredictability in energy markets adds uncertainty to midterm price expectations. We've responded by hedging production at dividend accretive prices. On a P50 basis, the quarter production and contracted revenues alone give us around 1x dividend cover for 2026, and we still remain some merchant exposure that could provide further upside. In Europe, particularly Spain, the renewable market continues to mature. Demand is growing, storage integration is advancing, and the revenue framework for battery assets is improving. Our development pipeline positions us well to benefit from these trends and gives us valuable optionality in the future.

[Toby Virno, Associate Investment Director at Foresight Group]

Okay. Thank you very much, David. We now turn to the summary slide where we aim to pull out the key messages from this presentation today. In short, 2025 was another strong year for performance for the UK portfolio in particular. We've outperformed budget in nine of the last 12 years, and we have gone through a comprehensive exercise to update our technical assumptions, and we'll be reporting against a higher bar going forwards with regards to technical performance. Our active power price hedging strategy has really contributed to revenue visibility, and that helped us achieve the 1.3x dividend cover for 2025. Looking forwards, we are projecting a 1.1x dividend cover for 2026 with the announced dividend of GBP 0.081 per share.

[Toby Virno, Associate Investment Director at Foresight Group]

We have of course noted the risk to the upside due to the current conflict in the Middle East. We have very clear priorities going forwards. Our balance sheet is under control. However, we do want to do more to pay down the debt or potentially term it out to better match our liabilities against the assets of our portfolio. We have a laser focus on executing our investment program, and we look forward to providing updates on this soon.

[Toby Virno, Associate Investment Director at Foresight Group]

As we've described, the strategy to continue to deliver a sustainable progressive dividend is very much dependent on the ability to efficiently cycle assets, selling assets from our ROC portfolio, where the weighted average duration is approaching the nearer term as the ROCs have got about 8-9 years left, and then recycling into rejuvenated assets, hopefully with longer dated contracted revenues such as the UK CFD 20-year support. In terms of capital returns, we continue to execute what we understand to be the largest program relative to fund size in the sector, and that has demonstrably been accretive from a NAV per share basis and has continued to improve dividend cover for periods to come, again, adding to the sustainability of our income proposition.

[Toby Virno, Associate Investment Director at Foresight Group]

In terms of long-term solutions for the sector, the directors continue to analyze all options to deliver the best outcome for shareholders, and we've alluded to some of the things they've been thinking about there, and we hope that, as has been, seen in the market, there is evidence of the proactive approach that our board has taken as supported by the investment manager. We're aiming to deliver a consistent strategy. This is in, you know, stark contrast to some of the peer group. We are mandated to deliver an attractive yield alongside modest long-term NAV growth or protection of the NAV as the case may be.

[Toby Virno, Associate Investment Director at Foresight Group]

The operational portfolio is supported by our robust revenue strategy, and our proprietary development pipeline will contribute to further investment opportunities going forwards in addition to the wave of new projects we expect to be coming to the U.K. market this year. Overall, we feel that the fund is very well placed to continue to deliver on its investment objective on a sustainable basis, and we very much look forward to providing updates in due course. Now, I'm conscious throughout the course of this meeting, there's been a few other questions that have filtered in, and we can probably take the opportunity now to address some of those. So starting in no particular order, just from the top, there's a question around dividend cover for 2026 and 2027.

[Toby Virno, Associate Investment Director at Foresight Group]

Now, we don't publish our dividend cover targets out past the year of the announced dividend. Just to reiterate, for 2026, based on forecasts that were available as of the year-end, we're anticipating a dividend cover of 1.1x for 2026, which we think is a sensible level for the solar asset class. Looking now to the next questions, and I can see there's a question to ask, what is Project Muel that we referenced partway through the slides. Project Muel, we're pleased to say, is the most advanced of our development projects in Spain, and we anticipate that reaching fully consented status in the near future. It and that would be a great case study when it comes through of our development strategy in that market.

[Toby Virno, Associate Investment Director at Foresight Group]

Staying in Spain, there's some questions here against protections against negative pricing that has occurred in the last period, and we noted that this was one of the reasons for underperformance during the year. Now, a key differentiator for our projects in Spain are the attractive PPAs that they hold. These are 10-year fixed price PPAs, which offer protections for 70% of the generation against negative pricing and provide some revenue visibility. Clearly, we do have exposure in the 30% that is not hedged through these PPAs, and that is where, you know, it has driven some of the underperformance in the market there.

[Toby Virno, Associate Investment Director at Foresight Group]

In terms of how we can best protect against that going forwards, what we are very much focused on doing alongside developing standalone battery storage assets is looking at hybridization of our existing portfolio, and that means co-locating batteries, installing them behind the meter with our solar projects, and that would allow any curtailed generation to be stored and then deployed into the grid at a later date, helping to mitigate the risk of lost generation potential where it is a country with such good solar resource. That remains an area of focus in terms of our development activities. In terms of our debt, just touching a question here on how much of the debt is at fixed rates. The entirety of our debt pile outside of the RCF is fully hedged or fixed with regards to interest rate exposure.

[Toby Virno, Associate Investment Director at Foresight Group]

We would also add that it is fully amortizing. In many cases, or in most cases, the amortization period is aligned to the period of contracted revenues. In the U.K., that would be the ROCs, and in Spain, that would be the PPAs. The RCF is floating rate exposure, and this does remain a priority to target paying that down, or otherwise turning out and potentially locking in some of that interest rate risk that we hold. However, as we've described in this presentation, we have done well to manage the cost of that, particularly taking advantage of the SONIA-EURIBOR spread, which also offers a natural capital hedge to FX movements for our Euro denominated assets. A very efficient use of balance sheet there. Touching on directors' fees.

[Toby Virno, Associate Investment Director at Foresight Group]

There was an increase in directors' fees for this year. This was an inflationary increase and this is clearly a decision by the Remuneration Committee of the board, as recommended to the board. From my own perspective, I think it is a fair increase in light of the inflationary pressures on the market, and noting, of course, that they held their fees flat in years prior.

[David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group]

Toby, just to add as well, 2025 was a transitional year for the board. There were periods where Tony Roper had joined and Alex was rotating off the board.

[Toby Virno, Associate Investment Director at Foresight Group]

That's an excellent point. Thank you, David. Yeah, there was probably, you know, a bit of overlap there that would have resulted in a slightly higher director fee budget compared to normal. Looking at other questions that we've received, there's a question just to confirm exactly how the generation budgets have been adjusted. Just to reiterate, the U.K. portfolio was looked at by the independent technical advisor, and the energy yield has been increased, the energy yield budget has been increased by 2.8% on average across that portfolio. With regards to the follow-up question around the uncertainty in energy yield expectations for newly commissioned projects.

[Toby Virno, Associate Investment Director at Foresight Group]

Now, it's a well-solved problem, you know, potential generation from newly constructed energy assets, and there are sophisticated models that technical advisors use to do so. There is a wealth of irradiance data, so effectively how sunny it's been for the past many decades, particularly in the U.K., but also globally. What I would say is, however, that can only ever be a simulation when you haven't yet built the project. The exercise that we've gone through is to look at actual operational data, and that doesn't capture just how well the site's been built. It also captures how well it's been operated. It's those good operations that have helped contribute towards the outperformance of that budget over these past 12 years.

[Toby Virno, Associate Investment Director at Foresight Group]

Just scrolling through to see if there's any further questions that we're able to address on this call. There's a question here around dividend stability and the requirements to reinvest in the business to maintain NAV going forwards. I think this is a really good and insightful question here, because clearly for fixed term assets, if you don't reinvest in the portfolio, there is going to be a run off of the NAV as cash is paid out to investors through dividends and those asset lives you know gradually erode over time. Clearly, as we've demonstrated, there is the potential for asset lives to be extended. However, we don't price in anything past the expected useful life at the moment, for instance, looking at repowering opportunities and making good use of grid connections that are there.

[Toby Virno, Associate Investment Director at Foresight Group]

Nonetheless, it's important to flag that in order to deliver on our investment objective on a sustainable basis, that will require reinvestment into new assets to rejuvenate the cash flows and increase levels of contracted revenue to provide that revenue stability and visibility going forwards. Whilst others have signaled that cutting the dividend might be a route to do that, in reality, a saving of GBP 2 million in dividend spend is not going to produce the capital that's required to invest in new assets. What is necessary to do so is to efficiently recycle assets, and that's absolutely what we're focused on, is delivering on good sales at attractive levels and then efficiently recycling that capital into new construction projects.

[Toby Virno, Associate Investment Director at Foresight Group]

In the meantime, of course, saving some money by paying down our higher cost debt or our floating rate exposure debt as the case may be. It is by investing in new material assets that have exposure to attractive long-term contracted revenues that we will be able to deliver the dividend sustainably for decades to come, as we have done since IPO. Just looking at the rest of the questions, or the few remaining questions that are left. There is a question on the ability to extend asset lives further through negotiating lease extensions with landowners, and it's worth giving a bit of color here, and look at how this works in practice.

[Toby Virno, Associate Investment Director at Foresight Group]

Now, we've got a really good track record of extending leases across the portfolio, with over half of our assets already having leases in excess of 30 years. The engagements with landowners and the relationship we have with them is a multi-decadal relationship. You know, we've had over, well, 12 years of relationship now with the majority of our landowners, and we manage those relationships well, and we get on very well with those that host our projects. Obviously, there's the reciprocal benefit for those landowners where solar farms offer great revenue diversification from their land, and typically this is the, you know, one of the higher revenue-generating things that they can do with that land, which is typically lower quality farmland.

[Toby Virno, Associate Investment Director at Foresight Group]

As such, the economic interests of the parties are very well-aligned when it comes to seeking lease extensions, and that's been demonstrated through our successful track record to date. What remains the case though is clearly that these are individuals, and they have their own financial planning, they have their own tax planning, they have their own familial considerations. With that in mind, you know, the timing of those discussions, you know, it is not always possible to push through those discussions, you know, immediately. What we have seen is that, you know, when you engage at the right time with landlords, there's very much a willingness to engage because these continue to offer great value to them as you know, owners of that land.

[Toby Virno, Associate Investment Director at Foresight Group]

I'm looking now just at the couple of remaining questions that there are, and if there's any further detail that we're able to provide on any of these. There's a question around discount rate here and whether this is appropriate in light of the discount to NAV at which our shares are currently trading. This goes to the heart of the question of, you know, shareholders' belief in valuations for you know for our solar portfolio. Now, we obviously benefit as a manager and as a fund from significant insights into, you know, where these assets are trading at in the private market.

[Toby Virno, Associate Investment Director at Foresight Group]

We're pleased to say, you know, we've been publicly disclosing this, that assets continue to just trade at attractive levels, you know, both greenfield assets and assets with similar characteristics to our own. Clearly, the market is looking for greater transactional evidence to validate valuations, and it is fair to say that there's been a bit of a dearth of activity, and that's been a function of a couple of things. The macroeconomic backdrop has made slightly less competition for these assets than in past years. That's meant that on average, transactions have taken longer, and that's been seen both by ourselves and by the peers. What's also important to consider is that, you know, we are consistently aiming to deliver on our dividend.

[Toby Virno, Associate Investment Director at Foresight Group]

If you sell high-yielding assets, you need to have the ability to efficiently reinvest into new projects to then you know generate cash to support the dividend going forwards. We firmly believe that our valuation represents a fair and balanced view of the fair value you know for our assets, and we think that it comfortably benchmarks against the peer group as well. Now, I don't think that there are any further questions that I'm able to answer on this call. Clearly we can only say so much about corporate initiatives you know that are currently underway or are currently being looked at or have been considered in the past. I think we'll probably just wrap it up there.

[Toby Virno, Associate Investment Director at Foresight Group]

I would just like to take this opportunity to thank everyone, you know, particularly those who are already investors for your ongoing support. To all of you know, for your time this morning in hearing us present our results, the engagement is much appreciated, and we hope we've been able to answer, you know, the questions that you've posed. I'll close off there just by saying that we remain absolutely focused as a manager on delivering on the investment strategy, for Foresight Solar, and we look forward to providing further updates in the periods to come. Thank you very much all, and have a good day.

[Operator]

That's great. Thank you for updating investors today. Can I please ask investors not to close the session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Participants

Analysts

• David Goodwin, Head of Fund Finance and Acting Finance Director at Foresight Group
• Toby Virno, Associate Investment Director at Foresight Group