REG - Foresight Envr - Annual Report for the Year Ended 31 March 2025
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RNS Number : 0758O Foresight Environmental Infrastruct 24 June 2025
Tuesday 24 June 2025
FORESIGHT ENVIRONMENTAL INFRASTRUCTURE LIMITED
("FGEN" or the "Company")
Annual Report and Accounts for the Year Ended 31 March 2025
Robust portfolio performance and a refocused investment strategy, underpinning
consistent year-on-year dividend increases
FGEN, a leading investor in private environmental infrastructure assets
driving stable returns, decarbonisation and sustainable resource management,
announces its Annual Report and Accounts for the financial year ended 31 March
2025 (the "Annual Report").
Ed Warner, Chair of FGEN, said:
"Despite a challenging geopolitical and macroeconomic backdrop, FGEN has
demonstrated resilience over the period, with strong distributions from the
portfolio which have provided a firm foundation to the 2.1% uplift in the
dividend target from 7.80 pence to 7.96 pence.
"Our performance continues to be centred on disciplined capital allocation,
robust income growth, and value accretive asset management. Our tenth
consecutive year of record cash distribution, underpinning sustainable
dividend coverage, reflects the strength and resilience of our portfolio.
"As announced earlier this month, the Board has conducted a rigorous review of
the Company's future strategy following consultation with independent external
advisors and shareholders to deliver the best possible value in the long term.
The Board concluded that shareholders are best served by the proactive
management of the existing portfolio with a refocused investment strategy that
reflects the structural changes in macroeconomic conditions in recent years.
Looking ahead, the Company will prioritise stable, long-term cash flows from
core environmental infrastructure assets to deliver predictable income to our
shareholders, alongside fresh opportunities for growth.
"We continue to believe that our investment strategy - investing across
renewable energy generation, other energy infrastructure and sustainable
resource management - offers the best opportunities for investors while
contributing significantly to the energy transition in our priority markets.
Environmental infrastructure continues to be one of the most significant
investment opportunities of this generation and FGEN's strategic mandate
ensures it is uniquely placed to capitalise on this."
Highlights
Record cash generation from underlying assets:
· Tenth consecutive year of record cash receipts from investments
· 1.32x dividend cover - FGEN's second highest since IPO
· Dividend cover forecast to remain at comfortable levels
· 61% of revenues benefiting from contractual inflation linkage
Clear and effective capital allocation strategy:
· £88.6m raised from sale of 10% of the portfolio¹
· 28.7% gearing, one of the lowest across the peer group
· £30m share buyback programme underway (extended by £10m in
March 2025 from £20m); of which £24.3 million returned to shareholders to
date²
Strategic review:
· Selective approach to new investment, prioritising core
environmental infrastructure
· Targeting investments offering long term stable cash flows,
secured revenues and inflation linkage, and an attractive balance between
income and growth
· Growth assets expected to be divested in the medium-term to
maximise shareholder value
Earnings and Net Asset Value ("NAV"):
· NAV per share of 106.5 pence following payment of dividends to
shareholders in line with targets
· Flat NAV Total Return of 0.6% in the period
· Annualised NAV total return of 7.3% since IPO
· FY26 dividend target increased to 7.96 pence
· Dividend target represents yield of 10.0% on the closing share
price at 23 June 2025³
Proposed new adjusted fee structure:
· Proposal for existing tiers to be applied to an equal blend of
NAV and market capitalisation
1. Based on an opening portfolio valuation of £891.9 million.
2. Buybacks completed at the time of publication, 23 June 2025.
3. Based on closing share price at the time of publication, 23 June
2025.
Summary of changes in NAV
NAV per share
NAV at 31 March 2024 113.6p
Dividends paid in the year -7.7p
Power price forecasts +1.3p
Portfolio performance -2.2p
Profit from asset sales +1.3p
Uplift from share buyback programme +1.1p
Other movements -0.9p
NAV at 31 March 2025 106.5p
Key investment metrics
All amounts presented in £million (except as noted) Year ended Year ended
31 March 2025 31 March 2024
Net assets¹ 678.7 751.2
Portfolio value² 765.7 891.9
Operating income and gains on fair value of investments 6.0 (3.8)
Net Asset Value per share³ 106.5p 113.6p
Distributions, repayments and fees from portfolio 90.4 87.0
Loss before tax (2.8) (13.9)
Gross asset value³ 951.3 1,091.8
Market capitalisation 457.0 619.9
Share price³ 71.7p 93.7p
Annualised NAV total return 0.6% (1.6)%
NAV total return since inception³ 7.3% 8.0%
Total Shareholder Return since inception³ 41.0% 68.4%
Annualised total shareholder return ³ 3.2% 5.4%
1. Also referred to as "NAV".
2. Classified as investments at fair value through profit or loss in the
statement of financial position.
3. Net Asset Value per share, share price, market capitalization, gross
asset value, total shareholder return and annualized shareholder return are
alternative performance measures ("APMs"). The APMs withing the accounts are
defined on pages 182 and 183 in the 2025 Annual Report.
Annual report
The Annual Report is available on the Company's website at:
https://www.fgen.com/investors/reports-and-publications
(https://www.fgen.com/investors/reports-and-publications)
A copy of the annual report has been submitted to the National Storage
Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
Annual results presentation to equity analysts
A webinar and in-person event for the annual results will be held at 10:00 am
(UK time) today, 24 June 2025, hosted by Chris Tanner, Edward Mountney and
Charlie Wright, Investment Managers to FGEN. To register for the webinar,
please contact SEC Newgate by email at fgen@secnewgate.co.uk.
Retail Investor Webinar
On 26 June 2025, Chris Tanner, Edward Mountney and Charlie Wright will also
provide a live presentation via Investor Meet Company at 12:00 p.m. BST.
Investors can sign up to Investor Meet Company for free, follow FGEN and gain
access to the meeting via:
https://www.investormeetcompany.com/foresight-environmental-infrastructure-limited/register-investor
Contacts
For further information, please visit www.fgen.com or contact:
Foresight
Group
+44(0)20 3667 8100
Chris Tanner
fgenir@foresightgroup.eu
Edward Mountney
Charlie Wright
Wilna de
Villiers
Winterflood Securities
Limited
+44(0)20 3100 0000
Neil Langford
SEC Newgate
+44 (0)20 3757 6882
Clotilde
Gros
fgen@secnewgate.co.uk
Alice Cho
Harry Handyside
Apex Fund and Corporate Services (Guernsey)Limited +44 (0)20
3530 3600
Matt
Lihou
fgen@apexgroup.com
About FGEN
FGEN invests into environmental infrastructure to deliver stable returns, long
term predictable income and opportunities for growth, whilst driving
decarbonisation and sustainability.
Investing across renewable generation, other energy infrastructure and
sustainable resource management, it targets projects and businesses with an
emphasis on long term stable cash flows, secured revenues, inflation linkage
and the delivery of essential services. FGEN's aim is to provide investors
with a sustainable, progressive dividend per share, paid quarterly, alongside
the potential for capital growth.
The target dividend for the year to 31 March 2026 is 7.96 pence per share¹.
FGEN is an Article 9 fund under the EU Sustainable Finance Disclosure
Regulation and has a transparent and award-winning approach to ESG.
Further details can be found on FGEN's website www.fgen.com and LinkedIn page.
1. These are targets only and not profit forecasts. There can be no assurance
that these targets will be met or that the Company will make any distributions
at all.
Foresight Environmental Infrastructure Limited
Annual Report 2025
About FGEN
Foresight Environmental Infrastructure Limited ("FGEN" or the "Company") is an
investment company, investing in a diversified portfolio of private
infrastructure assets that deliver stable returns, long-term predictable
income and opportunities for growth whilst supporting the drive towards
decarbonisation and sustainable resource management.
The Company's portfolio includes 40 assets located across the UK and mainland
Europe. FGEN is a Guernsey-registered company with a premium listing on the
London Stock Exchange and is a proud constituent of the FTSE 250 index.
Our track record
FGEN has a long-term track record of delivering stable, progressive dividends
with sustainable dividend coverage, providing investors with an opportunity to
invest in a high‑quality stock.
Weighted average discount rate and gearing
FGEN has one of the highest weighted average discount rates ("WADR") with one
of the lowest gearing rates as compared to its peer group:
9.7%
Weighted average discount rate
28.7%
Gearing
Gearing is an alternative performance measure ("APM"). The APMs within the
accounts are defined in the Annual Report 2025.
Dividend progression
FGEN has an uninterrupted dividend growth track record since IPO in 2014,
underpinned by sustainable dividend coverage.
1. This is a target only, there can be no guarantee this target will be
met.
Consistent growth in income generated from investments
FGEN's dividend cover is underpinned by unbroken growth in cash receipts from
portfolio assets every year since IPO
- a testament to the strength and resilience of our investment strategy.
OUR MISSION STATEMENT
At FGEN we believe that investors shouldn't have to choose between earning
attractive returns and delivering a real‑world positive environmental
impact.
FGEN invests into private environmental infrastructure to deliver stable
returns, long-term predictable income and opportunities for growth. Our
approach covers renewable energy generation, such as wind farms, solar parks
and anaerobic digestion ("AD") plants, other energy infrastructure such as
energy storage, cleaner transportation and heat, and sustainable resource
management initiatives across the waste and water sectors. As a result, we're
able to offer investors a balanced portfolio that is substantially de-risked
from exposure to fluctuations in weather patterns and that contributes to the
delivery of essential infrastructure services while also delivering on the
financial characteristics of traditional infrastructure funds: long-term
stable cash flows, secured revenues and inflation linkage.
We pursue this diversified investment strategy so as to fully participate in
the transition to a low-carbon economy which we regard as one of the most
compelling investment opportunities of our generation. Our focus is on
well-established sectors driven by the need to address climate change and
societal demand for sustainability. Our mandate also enables us to leverage
sectors within environmental infrastructure, once sufficiently mature, to
unlock a broader array of income and growth opportunities across mature
environmental infrastructure technologies.
We invest across three key pillars of environmental infrastructure:
Renewable energy generation
The bedrock of FGEN's portfolio which includes wind, solar, anaerobic
digestion, biomass, energy-from-waste and hydro. With an established income
generation profile, these assets provide diversification across different
forms of resource and deliver attractive risk-adjusted returns.
73%
Share of portfolio value
Other energy infrastructure
Non-energy generating assets that support the transition towards net zero,
driven by increased demand for electrification and supported by legislation.
This segment includes our battery storage units and low-carbon transport.
10%
Share of portfolio value
Sustainable resource management
Sustainable resource management means applying sustainable practices to ensure
that resources benefit both current and future generations. This includes
areas such as waste and wastewater treatment, as well as sustainability
enhanced agriculture and aquaculture activities.
17%
Share of portfolio value
"Our portfolio is thoughtfully diversified across mature environmental
infrastructure technologies and geographies. We have constructed a resilient
portfolio designed to deliver stable returns and long-term, predictable
income, while also offering the potential for capital growth. By providing
investors with access to scarce yet highly sought-after assets, we are
aligning financial performance with meaningful environmental impact. The Board
remains strongly aligned with the Company's purpose and is confident in the
strength and long-term potential of our strategy."
Ed Warner
Chair
PERFORMANCE HIGHLIGHTS
Our results summary for the full year ended 31 March 2025.
40 assets £765.7m £678.7m 106.5p
Diversified portfolio Portfolio value Net Asset Value ("NAV") NAV per share(1)
FY24: 42 assets FY24: £891.9m FY24: £751.2m FY24: 113.6p
7.3% 28.7% 1.32x 7.96p (+2.1% increase)
Annualised NAV total return(1) Gearing Dividend cover(1,2) 2026 dividend target(3)
FY24: 8.0% FY24: 31.2% FY24: 1.30x FY25: 7.80p (+3% increase)
1,272GWh 193,663 tCO(2)e 703,470 £587,440
Renewable energy generated GHG emissions avoided Tonnes of waste diverted from landfill Contributed to community funds
FY24: 1,358GWh FY24: 212,917 tCO(2)e FY24: 680,825 FY24: £655,076
Record cash generation from underlying assets:
· Tenth consecutive year of record cash receipts from investments
· 1.32x dividend cover - FGEN's second highest since IPO
· Dividend cover forecast to remain at comfortable levels
· 61% of revenues benefiting from contractual inflation linkage
Clear and effective capital allocation strategy:
· £88.6 million raised from sale of 10% of the portfolio(4)
· 28.7% gearing, one of the lowest across the peer group
· £30 million share buyback programme underway (extended by £10
million in March 2025 from £20 million); of which £24.3 million returned to
shareholders to date(5)
Strategic review:
· Selective approach to new investment, prioritising core
environmental infrastructure
· Targeting investments offering long-term stable cash flows, secured
revenues and inflation linkage, and an attractive balance between income and
growth
· Growth assets expected to be divested in the medium term to
maximise shareholder value
Earnings and Net Asset Value ("NAV"):
· NAV per share of 106.5 pence following payment of dividends to
shareholders in line with targets
· Flat NAV total return of 0.6% in the period
· Annualised NAV total return of 7.3% since IPO
· FY26 dividend target increased to 7.96 pence
· Dividend target represents yield of 10.0% on the closing share
price at 23 June 2025(6)
Proposed new adjusted fee structure:
· Proposal for existing tiers to be applied to an equal blend of NAV
and market capitalisation
1. Annualised NAV total return, Net Asset Value per share and dividend
cover are alternative performance measures ("APMs"). The APMs within the
Annual Report are defined in the Annual Report 2025.
2. On a paid basis.
3. This is a target only, there can be no guarantee this target will be
met.
4. Based on an opening portfolio valuation of £891.9 million.
5. Buybacks completed at the time of publication, 23 June 2025.
6. Based on closing share price at the time of publication, 23 June
2025.
CHAIR'S STATEMENT
"Our overriding objective in reviewing FGEN's strategy has been to strike the
right balance between the continuing generation of income to support a
progressive dividend, and delivering net asset growth in the medium to longer
term."
I'm pleased to present the Annual Report for FGEN for the year ended 31 March
2025. During the past year, listed environmental infrastructure companies,
including FGEN, have continued to face a number of headwinds. Inflation has
remained stubbornly high, and interest rates have fallen more slowly than
generally anticipated. The shock engendered by US policy pronouncements in
recent weeks suggests that these economic conditions are unlikely to be
alleviated soon. One consequence is that shares in our sector have continued
to trade at wide discounts to NAV, placing even greater scrutiny on capital
allocation strategies.
Against this backdrop, I am pleased to be able to report that FGEN has once
again displayed strong resilience rooted in the quality of its diverse
portfolio of environmental technologies. The total NAV return for the past
year was 0.6%, with NAV per share reducing from 113.6 pence to 106.5 pence
(-6.3%) being counterbalanced by a total declared dividend of 7.80 pence per
share. FGEN's NAV performance during the year reflected several factors,
including the write-down of our investment in HH2E in the first half of the
year. The dividend reached a record high, prolonging an uninterrupted track
record of growth since IPO in 2014, and together with share buybacks resulted
in record distributions to shareholders. The dividend was also covered 1.32
times, supported by record cash distributions from the portfolio and providing
a firm foundation for the 2.1% uplift in the Board's dividend target to 7.96p
per share for the new financial year.
The Investment Manager's report provides detailed commentary on the
performance of each of the key assets within FGEN's portfolio. What is clear
is the value of our diverse mix of technologies, as well as the overall
strengths of environmental infrastructure as an asset class.
Stable, long-‑term cash flows, often underpinned by government subsidies,
have particular appeal in uncertain times, especially when they are propelled
by social tailwinds such as growing environmental awareness. FGEN not only
provides those stable returns, but does so through diversification that
mitigates the risk of exposure to a single weather pattern or regulatory
regime.
While the Board is reassured by the quality and resilience of FGEN's
investments, we are acutely aware of the wide discount to NAV at which its
shares currently trade, nor do we take any comfort from this being the
experience of our peers.
In response, the Board has placed significant emphasis on capital discipline,
which has been core to the actions undertaken on behalf of shareholders. As
previously reported, asset sales, at or above NAV, amounting to approximately
10% of FGEN's overall portfolio, have taken place in the past year. These
sales have enabled both a material reduction in outstanding debt and,
significantly, an extension to our ongoing £30 million share buyback
programme to take advantage of the NAV accretion opportunity that a wide share
price discount represents. Where investment has taken place, it has been
disciplined and focused on value enhancement projects at core operating assets
and the buildout of FGEN's construction‑stage investments.
In recent months, with the assistance of independent external advisers and
extensive engagement with shareholders, the Board has conducted a rigorous,
granular analysis of a wide range of options for FGEN's future strategy. These
included a managed wind-down of the Company, targeted disposals, possible
mergers and acquisitions, and refinements to the current investment approach.
Our overriding objective in reviewing FGEN's strategy has been to strike the
right balance between the continuing generation of income to support a
progressive dividend, and delivering net asset growth in the medium to longer
term. The Board was unanimous in concluding that shareholders are best served
by the proactive management of the existing portfolio, with a refocused
investment strategy that reflects the structural changes in macroeconomic
conditions in recent years.
FGEN's growth projects have made encouraging progress in the past year. Sales
from the Glasshouse are ramping up, Rjukan is approaching its first harvest in
July and CNG Fuels is increasing its fuel dispensed within a newly
consolidated structure that better positions the business for future growth.
The continued development of these operations is a strategic priority for FGEN
and represents a material opportunity for medium‑term capital appreciation.
Our asset disposal strategy is focused on delivering exits from these growth
assets but only at material premiums to current carrying value, when they are
sufficiently mature and valued accordingly. While we actively engaged in sales
processes to recycle capital earlier this year, the review of strategic
options concluded that further material asset disposals in the short term
would not be beneficial to shareholders. Instead, through prudent balance
sheet management and the continued use of buybacks and dividends to generate
returns for shareholders, the Board will focus on successful disposals in the
longer term. This will enable the recycling of capital, prioritising core
environmental infrastructure assets with long-term stable cash flows
delivering predictable income, alongside fresh opportunities for growth via
technologies closely adjacent to FGEN's core assets.
The Board has a continuing duty to ensure that FGEN delivers the best possible
value for investors. To that end, for the second year running, we have secured
a change to the terms of our Investment Management Agreement with Foresight
Group. From a proposed date of 1 October 2025, management fees will no longer
be based entirely on net assets under management, but instead will be
calculated 50% on net assets and the other 50% on market capitalisation -
with the whole capped at NAV. The latest proposed amendment to our Investment
Management Agreement, when implemented, provides clearer alignment between
Foresight and the interests of our shareholders. The Board will continue to
explore all possible ways to reduce overall operating costs and ensure fee
arrangements are aligned with shareholders' interests.
As a Board, we remain committed to adhering to the highest possible standards
of corporate governance. At the forthcoming AGM, shareholders will have the
opportunity to vote to discontinue FGEN. This is a special resolution,
requiring 75% of those voting for it to pass. The discontinuation vote is
being proposed at the AGM because FGEN's shares have traded at a discount of
greater than 10% to NAV on average over the past year.
The Board recommends shareholders vote against this resolution so that FGEN is
able to deliver on its refocused investment strategy, prioritising a core
portfolio of environmental infrastructure assets with long-term stable cash
flows delivering predictable income alongside opportunities for growth.
We do, though, acknowledge that a 75% threshold for a vote of this
significance is not optimal in terms of ensuring shareholder views are
equitably considered. In line with our commitment to meaningful engagement
with shareholders and corporate governance best practice, from the 2026 AGM
onwards, we will replace the existing discontinuation resolution with a simple
ordinary resolution, based on the same triggering mechanism and requiring only
50% of those voting to pass. A resolution at the 2025 AGM will propose
amendments to the Company's articles of association to effect this change. The
Board recommends shareholders vote in favour of this resolution. Ahead of the
AGM in September, I will once again engage with shareholders to ensure they
have a clear understanding of our refocused strategy and our plans to deliver
returns in the years ahead.
Environmental infrastructure continues to be one of the most significant
investment opportunities of this generation. FGEN's strategic mandate ensures
it is uniquely placed to capitalise across the full suite of renewable
generation, other energy infrastructure and sustainable resource management
technologies, delivering continued stable returns with an overlay of exciting
growth assets. While the past two years have been challenging, the Board
believes the current share price materially undervalues the Company, given
its high-income profile and the significant growth opportunity ahead.
I would like to thank all shareholders for your continued support and
feedback, which have been invaluable in helping us steward FGEN on your
behalf.
Ed Warner
Chair
23 June 2025
OUR INVESTMENT PROPOSITION
01. Delivering stable returns, predictable income and opportunities for growth
Providing exposure to scarce but highly sought‑after private environmental
infrastructure assets, targeting projects and businesses characterised by
long‑term stable cash flows, secured revenues, inflation linkage and
delivery of essential infrastructure services.
Our carefully constructed portfolio is focused primarily on delivering income,
alongside the potential for capital growth. We invest across stable and mature
European markets, with a primary focus on the UK.
02. Investing across environmental infrastructure, one of the most significant
megatrends of this generation
Investing in decarbonisation presents a rare convergence of financial
opportunity and global impact. With over c.£25(1) trillion in capital
required for Europe's energy transition by 2030, the sector offers strong
long-term return potential, supported by regulatory momentum, technological
maturity and growing demand for sustainable solutions.
Our strategy principally targets high quality, mature assets that not only
deliver predictable income alongside opportunities for growth, but also
contribute meaningfully to climate goals.
03. Differentiated offering providing diversification across mature
environmental infrastructure technologies
The Company is diversified across complementary sectors, technologies and
geographies to deliver robust and attractive risk-adjusted returns. It invests
across three key pillars of environmental infrastructure: renewable energy
generation, other energy infrastructure and sustainable resource management.
The Company's mandate allows it to invest in emerging areas of environmental
infrastructure, provided they are sufficiently mature and display strong
infrastructure characteristics.
04. A resilient and attractive return profile with 11 years of uninterrupted
dividend growth
FGEN is targeting an 11th consecutive year of dividend growth, backed by
sustainable coverage. Since IPO, we've returned £370.4(2) million to
shareholders through dividends and buybacks. We maintain one of the highest
WADRs among peers, the lowest gearing and a strong pipeline of risk-adjusted
opportunities across sectors.
Our income-led strategy is complemented by selective growth investments at
both construction and operational stage, supported by targeted exits and
capital recycling.
05. A high‑quality manager with 40 years of investment experience
Foresight Group LLP ("Foresight") is the Investment Manager for the Company.
Foresight manages £13.2 billion of assets under management across
infrastructure, real assets and private equity. Foresight Infrastructure is a
leading investment management platform with an established track record in
developing investment strategies that support the energy transition.
The infrastructure team of c.190 people across investment, portfolio
management and related functions manages 437 assets across the UK, Europe and
Australia representing 4.7GW of green technology capacity.
06. Robust governance framework, providing strong manager oversight, alignment
and accountability
Fully independent Board providing ongoing oversight of investment strategy and
asset management under a simple, well aligned management and governance
framework. The framework is underpinned by a competitive fee structure, with
strong alignment between the Investment Manager and shareholders.
The Company's governance structure includes a discontinuation vote allowing
shareholders a clear say on the Company's future.
1. Source:
https://www.pwc.com/gx/en/issues/business-model-reinvention/how-we-fuel-and-power/de-risking-the-energy-transition-in-europe.html.
2. Buybacks completed at the time of publication, 23 June 2025.
OUR TOP 10 ASSETS BY PORTFOLIO VALUE
1. Cramlington
Sector: Renewable energy generation - Biomass
Location: UK
% of portfolio: 10%
2. Rjukan
Sector: Sustainable resource management - Controlled environment
Location: Norway
% of portfolio: 6%
3. Amber
Sector: Renewable energy generation - Solar
Location: UK
% of portfolio: 5%
4. Llynfi
Sector: Renewable energy generation - Wind
Location: UK
% of portfolio: 5%
5. Dungavel
Sector: Renewable energy generation - Wind
Location: UK
% of portfolio: 5%
6. ELWA
Sector: Sustainable resource management - Waste management
Location: UK
% of portfolio: 5%
7. Glasshouse
Sector: Sustainable resource management - Controlled environment
Location: UK
% of portfolio: 5%
8. CNG Fuels
Sector: Other energy infrastructure - CNG
Location: UK
% of portfolio: 5%
9. Vulcan
Sector: Renewable energy generation - AD
Location: UK
% of portfolio: 4%
10. Bio Collectors
Sector: Renewable energy generation - Waste AD
Location: UK
% of portfolio: 3%
Sector split(1)
Split by portfolio value
40 assets
Renewable energy generation 73%
Sustainable resource management 17%
Other energy infrastructure 10%
Asset concentration
Split by portfolio value
Cramlington 10%
Rjukan 6%
Amber 5%
Llynfi 5%
Dungavel 5%
ELWA 5%
Glasshouse 5%
CNG Fuels 5%
Vulcan 4%
Bio Collectors 3%
Other 47%
1. See Annual Report 2025 for further information on our underlying
technologies.
THE INVESTMENT MANAGER
FGEN is managed by Foresight Group LLP ("Foresight" or "Foresight Group") as
its external Alternative Investment Fund Manager ("AIFM") with discretionary
investment management authority for the Company.
About Foresight Group
Founded in 1984, Foresight is a FTSE 250 listed investment manager with a
focus on infrastructure, private equity and capital for growth. It manages a
range of private and public funds, including products tailored for retail
investors. The firm develops investment strategies aimed at supporting the
energy transition, industrial decarbonisation, nature recovery and the growth
of high-potential businesses. Its approach combines financial and operational
expertise to enhance asset value and deliver competitive returns.
Foresight's platform
£13.2bn¹ 10 4.7GW(2)
Assets under management Countries across the UK, Europe and Australia Renewable energy generation
Foresight Group divisions
Infrastructure Private Equity Capital Management
81% 13% 6%
of assets under management of assets under management of assets under management
437 250+ 7
Infrastructure assets Portfolio companies Investment vehicles
Foresight Infrastructure division
1,000+² 190+ 16
Investment opportunities reviewed Infrastructure professionals Year track record
1. AUM as per Foresight Group trading update released on 10 April 2025,
all other figures as at 30 September 2024.
2. For the period 1 April 2024 - 31 March 2025.
The Infrastructure division manages 437 infrastructure assets with a focus on
renewable energy generation (including wind and solar power, bioenergy,
hydropower and geothermal energy), energy storage and grid infrastructure, as
well as sustainable resource management, social and transport infrastructure
projects and sustainable forestry assets.
The Foresight Infrastructure team includes 190 investment, commercial and
technical professionals operating from offices in the UK, Italy, Spain and
Australia, and collectively speaking over 10 languages.
The Foresight Infrastructure broader strategy is focused on the following:
· making good, consistent returns for investors;
· satisfying the strong demand for ESG and alternative long‑term
investment strategies from its institutional and retail investor base;
· building on its ability to execute complex clean energy and other
sustainability-led infrastructure investments in order to capitalise on the
projected market growth arising from government and societal objectives to
decarbonise economies; and
· tapping into the in-house team's multi-national/disciplinary
expertise which provides full lifecycle support from investment to exit in
order to generate sustainable long‑term asset operation and economic
benefits.
A team of 190 dedicated professionals, bringing a diverse and comprehensive
skillset.
The infrastructure investment team
· The infrastructure investment team consists of 48 professionals
with broad sector experience
· The team leverages established UK and international networks to
access emerging market opportunities
· Equipped to deploy and manage capital across a wide range of
infrastructure sectors and asset life stages
· Bringing extensive investment origination and execution
capabilities to FGEN
· Over 1,000 investment opportunities have been reviewed in 2024/25
across all strategies
The portfolio team
· The portfolio team comprises 113 professionals, including
engineers, commercial managers and accountants
· Equipped to manage assets across development, construction and
operational stages
· The team uses integrated management systems to ensure effective
oversight and co‑ordination of assets
· Focus on asset management and optimisation, particularly in
identifying and delivering value enhancement opportunities
Other support functions
· A team of seven dedicated infrastructure Investor Relations ("IR")
professionals managing reporting requirements for institutional investors and
overseeing all aspects of communication and engagement with all relevant
stakeholders
· A team of five experienced sustainability professionals integrating
sustainable practices across investment, portfolio management and IR utilising
proprietary sustainability systems to support decision-making, portfolio
oversight and reporting
· Other support functions include finance, marketing, administration
and compliance
Foresight's experience and reputation gives a competitive edge in the
origination of deal flow.
Strong origination capabilities
· Size and breadth of team allows for significant deal origination
volume
· A strong track record of execution enables us to unlock relative
value
· Bilateral transactions avoid competitive auction processes
· Co-ordinated origination strategy ensures optimal pipeline
selection
Foresight pipeline analysis
1,053
Infrastructure investment opportunities reviewed
654
Aligned with Foresight Funds criteria
416
Further action taken
FGEN's dedicated investment management team with over 50 years of collective
experience.
Chris Tanner
Investment Manager
Chris has been an Investment Manager(1) to FGEN since IPO in 2014. He joined
Foresight in 2019 as a Partner and has over 25 years of industry experience.
Chris is a Member of the Institute of Chartered Accountants in England and
Wales and has an MA in Politics, Philosophy and Economics from Oxford
University. Chris also serves as Chair of the Finance Forum for The
Association of Renewable Energy and Clean Technology ("REA").
1. Prior to January 2022, FGEN engaged Foresight in an investment
advisory capacity rather than as the Investment Manager.
Edward Mountney
Investment Manager
Edward has been a part of FGEN since 2016 and joined the senior management
team in 2022. Before this, he served as Head of Valuations at Foresight Group
and John Laing Capital Management. With over 15 years of experience in
infrastructure and renewables, Edward is a Member of the Institute of
Chartered Accountants in England and Wales. He holds a BA (Hons) in Business
and Management from Oxford Brookes University.
Charlie Wright
Investment Manager
Charlie has been at Foresight Group since 2017, recently joining the senior
management team for FGEN. He has over 18 years of experience in infrastructure
and renewables as an adviser, equity investor and project director, and has
overseen a wide range of investments across Europe. He was previously at John
Laing Group and KPMG. Charlie holds a BA in History from Exeter University and
an ICAEW & CISI Diploma in Corporate Finance.
MARKETS AND OPPORTUNITIES
Overview
Environmental infrastructure assets represent one of the most significant
investment opportunities of this generation. The market for environmental
infrastructure continues to grow rapidly, both in respect of renewable
generation and infrastructure assets with environmental benefits outside of
low-carbon electricity.
It is estimated that $47 trillion of new energy investment is required by 2030
to reach net zero, representing a 3x increase in low-carbon investment
annually to 2030 over the $1.8 trillion invested in 2023, and also 4.5x
required investment in low-carbon energy supply by 2030 for every dollar
invested in fossil fuel supply(1). This is driven by the increased demand for
electrification and the cost competitiveness of renewables.
In addition to clean power generation and the supporting infrastructure
required to deliver that clean power efficiently, governments are also
addressing a wider range of environmental challenges faced by society than
just generation of low-carbon electricity. As the charts show,
decarbonisation consists of many facets, and the electrification of transport
and heat is an integral part of the route to net zero.
And finally, the wider governmental and societal push for more sustainable
practices is further resulting in a broad opportunity set across sustainable
resource management, for example water and waste.
FGEN's objective is to leverage this massive investment opportunity set by
investing across three key themes of environmental infrastructure - renewable
energy generation, other energy infrastructure and sustainable resource
management - to help address a wider range of environmental challenges faced
by society than just generation of low-carbon electricity.
This is strongly supported by market and regulatory tailwinds that are
supercharging the transition to net zero and improved sustainable resource
management - for example, in the UK, the Energy Act 2023, Simpler Recycling
legislation, and Ofwat's Asset Management Period 8 ("AMP 8") with a £104
billion(2) investment requirement between 2025 and 2030, and in the EU, the
Net-Zero Industry Act and the REPowerEU Plan.
Global electricity generation by technology
Energy transition investment - actual vs required
1. Source: BNEF New Energy Outlook 2024 and 2025.
2. Source: Ofwat AMP8.
3. Combined Cycle Gas Turbine.
4. Carbon Capture and Storage.
Renewable energy generation
FGEN has been investing into renewable generation since its inception in 2014.
The portfolio comprised seven assets spanning traditional renewables, then
such as wind and solar as well as waste and wastewater management projects.
Over time it diversified its scope into other forms of generation including
anaerobic digestion, biomass, hydro and energy‑from-waste as those
technologies matured and offered attractive, risk‑adjusted returns that were
driven by different dynamics beyond simply wind and solar.
Whilst wind and solar will likely continue to form the backbone of
decarbonisation, whether that be providing power directly to grid or to other
downstream contributors such as green hydrogen, other forms of generation will
play a meaningful role as well and serve as a diversifier of risk away from
weather resource and technology‑specific power price dynamics.
Renewable energy generation presents a compelling case from an income
perspective, characterised by stable, predictable cash flows, inflation
linkage and often supported by government subsidies or other regulatory
mechanisms given their criticality to the decarbonisation agenda. Whilst
European jurisdictions have generally moved away from the feed-in tariff model
that drove the buildout of renewables from the early 2000s, this has been
replaced in most instances by auction-based systems (such as Contract for
Difference ("CfD") in the UK, the Renewable Energy Sources Act ("EEG") in
Germany and the SDE++ subsidy scheme in the Netherlands) with secured revenues
still a dominant feature.
Renewables also offer the opportunity for meaningful growth via investment
into capital hungry development platforms that are looking to build out
pipelines of assets supported by strong regulatory tailwinds. This is
particularly the case where there is visibility over the long-term revenue
case, for example the UK or Germany, and where the regulatory framework
underpinning development is appropriately mature. Foresight as a platform has
significant experience in funding such development platforms across a range of
technologies and jurisdictions, and FGEN can draw on this capability.
In addition to renewable power generation, other forms of energy such as
biogas and biomethane will play a critical role in the path to net zero,
particularly given challenges in decarbonising heat supply and other
hard‑to‑abate industries. The production of biogas and biomethane via
FGEN's anaerobic digestion facilities is an area in which the Company has
proven credentials and capability, and it will continue to capitalise on this
going forward, not just in the UK but in other mature European markets where
the regulatory frameworks and feedstock/demand dynamics are sufficiently
robust. The Labour government in the UK has indicated that it is working
towards a formal biomethane strategy and the EU has continued to make progress
towards its ambition of producing 35 billion cubic metres of biomethane by
2030 under the REPowerEU plan(1).
Asset classes
· Wind
· Solar
· Hydro
· Biomass
· Anaerobic digestion
· Geothermal
· Energy-from-waste
"Between 2023 and 2050, the total installed capacity of solar PV power
globally is forecast to rise from 1,559GW to 16,887GW, representing a 983%
increase, and the total installed capacity of wind power globally is forecast
to increase from 1,044GW to 11,382GW, an increase of 990%."(2)
1. Source: REPowerEU Plan, May 2022.
2. Source: BNEF New Energy Outlook 2022.
Other energy infrastructure
In order to achieve the stated ambitions of UK and European governments across
clean energy, economic growth, digital transformation and to maintain the pace
of renewable buildout, evolution of wider grid infrastructure is required in
order to accommodate the changing nature of power supply from centralised,
gigawatt scale power generators to distributed renewable energy generation.
Over the last decade or so, investment in expanding and modernising grids has
lagged behind the pace of the renewable energy buildout, with queues to
connect new projects growing to record sizes as the deadlines to decarbonise
the energy system become ever closer. In 2023, Europe was estimated to have a
600GW(1) backlog of solar and wind projects in grid connection queues across
France, Italy, Spain and the UK (with the UK accounting for one-third of this
as one of the worst connection queues in Europe), acting as an impediment to
the energy transition.
Governments are taking steps to address this, for example the Great Grid
Upgrade initiative in England and Wales and the EU Grid Action Plan, requiring
significant investment. The UK has been a leading global market for energy
storage, with 19GW(2) of cumulative installed capacity expected by 2030,
driven by the limited levels of interconnection with Europe. European markets
are now catching up and we have seen a large number of opportunities across
Italy, Germany, Spain, the Netherlands and the Nordics. Whilst the
technological solutions will differ by region, different forms of energy
storage and greater interconnection between power markets are critical, with
significant investment required, encompassing a range of technologies and
sectors such as Battery Energy Storage Systems ("BESS"), pumped hydro storage
and interconnectors.
FGEN has invested in BESS assets in the UK, but will likely not make further
investments in that sector unless backed by greater certainty of revenue, for
example in the form of tolling agreements or capacity payments. Pumped hydro
and interconnectors are examples of asset classes within wider grid
infrastructure that can offer greater certainty of revenue via participation
in Ofgem's cap and floor pricing regime and are sectors within which Foresight
is already active.
In addition to grid infrastructure, other forms of low‑carbon energy
infrastructure such as heat and cleaner transport also present real
opportunity, with significant investment required over the coming decades.
FGEN has already invested into low‑carbon transportation via the CNG Fuels
platform, and we see similar opportunities across other European markets as
well.
The decarbonisation of residential and commercial heating is an increasing
priority in both the UK and the EU, given the current reliance on fossil
fuels. Foresight has invested into district heating and heating networks in
both the UK and the EU, and we expect to see significant growth in this sector
supported by regulatory tailwinds - for example, the UK Government aiming to
have district heating provide approximately 20% of the country's heat demand
by 2050, and the EU's Energy Efficiency Directive ("EED") requiring
municipalities with over 45,000 inhabitants to develop local heating and
cooling plans(3).
Asset classes
· Short and long duration storage
· Interconnectors and transmission assets
· Cleaner transportation
· Decarbonisation of heat
"Globally, heat accounts for nearly half of all energy consumption and 40% of
energy-related carbon emissions."(4)
1. Source: BNEF New Energy Outlook Grids 2023.
2. Source: BNEF 1H 2023 Energy Storage Market Outlook.
3. Source: EU Energy Efficiency Directive 2023.
4.
https://www.carbontrust.com/what-we-do/market-transformation/heat‑decarbonisation.
Sustainable resource management
Sustainable resource management means managing resources with the future in
mind, and it is an area with increasing societal and political tailwinds
driving investment opportunities. The primary legislation governing
sustainable resource management in the UK is the Environment Act 2021, which
sets long-term environmental targets and provides a framework for protecting
nature, air and water quality, and waste reduction.
Investments into sustainable resource management will likely be on a more
opportunistic basis for FGEN compared to the core themes of renewable
generation and other energy infrastructure, but it is an allocation which has
the potential to generate attractive returns and diversification away from
energy. For FGEN, this would be primarily within water and waste, as mature
sectors that typically can benefit from supporting regulatory frameworks,
monopolistic positions and long‑term security of revenue, with the
mid-market particularly representing opportunities for growth and scaling up.
Water scarcity and stress are important challenges being faced by the water
sector, illustrated by the recent announcement of Ofwat's AMP8
record‑breaking £104 billion investment to improve and modernise the water
network, addressing issues like sewage overflows, and enhance water supply
resilience, with specific targets for reducing pollution and improving water
quality. Whilst at the larger end much of this will be procured via the Direct
Procurement for Customers ("DPC") model for major infrastructure upgrades, we
are seeing smaller ancillary opportunities across the ecosystem such as last
mile delivery, water metering and localised water treatment.
FGEN has a track record in waste management across its portfolio and looking
forward we see investment opportunities arising from the need to deal with
different types of waste (such as municipal waste, biosolids and hazardous
waste) and recycling technologies and other businesses along the value chain
which should be driven by the UK's new "Simpler Recycling" regulations,
requiring all workplaces in England to separate food waste from other waste
streams.
Alternative agriculture and aquaculture are other sectors within the wider
sustainable resource management theme that FGEN is currently invested in via
the Glasshouse and Rjukan. Whilst there is significant potential in those
assets, and we continue to see interesting opportunities within those sectors,
FGEN will not make any further investments into such controlled environment
assets in the future due to the more disciplined forward looking focus on core
renewable and environmental infrastructure.
Asset classes
· Waste collection and processing
· Recycling
· Last mile water
· Wastewater solutions
"A significant increase in investment is needed to enable the water sector to
address current and future challenges… almost £290 billion of additional
spending will be needed over the next 25 years."(1)
1. National Audit Office, April 2025.
Consistently delivering on our strategic priorities
"Our performance this year was underpinned by disciplined capital allocation,
robust income growth and value‑accretive asset management. Our tenth
consecutive year of record cash distribution and a well‑covered dividend
reflect the strength and resilience of our portfolio. Looking ahead,
we remain focused on sustaining this momentum through a progressive dividend
policy, proactive portfolio management and a refocused investment approach.
By prioritising long-term, stable and inflation‑linked cash flows, we are
well positioned to continue delivering attractive returns for our shareholders
while supporting the transition to a more sustainable future."
Ed Warner
Chair
Strategic objectives delivered in 2024/25
· Deliver income growth for shareholders · Disciplined capital allocation · Complete programme of asset sales
· Target dividend of 7.80 pence per share healthily covered 1.32x · Successfully reduced gearing to maintain our position as one of the · Value accretive disposals totalling £89.1 million, representing
lowest‑geared investment companies in the sector 10% of the portfolio(1)
· Tenth consecutive year of record cash distribution from the
portfolio · Returned £19.2 million to shareholders over the financial year via · All disposals completed at, or above, the prevailing valuation
the Company's share buyback programme
Strategic priorities for 2025/26
· Continuation of the progressive dividend · Proactive management of existing portfolio · Disciplined investment focus
· 2026 dividend target increased by 2.1% to 7.96 pence per share(2) · Proactive management of operating portfolio, alongside ongoing · Highly selective approach to new investment, prioritising core
value enhancement initiatives environmental infrastructure assets and businesses
· Target dividend represents a yield of 10.0% on the closing share
price prior to announcement(3) · Operational and revenue ramp‑up across the growth‑stage assets · Targeting investments offering long‑term stable cash flows,
to deliver meaningful capital appreciation in the medium term secured revenues and inflation linkage, and an attractive balance between
· Dividend cover forecast to remain at comfortable levels income and growth
1. Based on an opening portfolio valuation of £891.9 million.
2. This is a target only, there can be no guarantee this target will be met.
3. Based on closing share price at the time of publication, 23 June 2025.
KEY PERFORMANCE INDICATORS
NAV total return (annualised)
7.3%
2025 7.3%
2024 8.0%
2023 9.3%
2022 8.7%
2021 5.5%
Definition and rationale
Measure of financial performance of the Company since IPO, on an annualised
basis and after taking into account dividends paid to shareholders and net of
management fees, operating expenses and finance costs.
Link to Fund objectives:
Long-term predictable income growth for shareholders
Potential for capital growth
KPI performance
· Annualised NAV total return since IPO of 7.3%. The portfolio
continues to show good levels of resilience, with dividend target being
comfortably met for the year and underlying assets performing well.
Objectives for 2026
· Continue to apply a disciplined approach to capital allocation,
that includes selective investment in opportunities that are accretive to the
Company on a risk-adjusted basis.
Dividend
7.80p
2026 target 7.96p(1)
2025 7.80p
2024 7.57p
2023 7.14p
2022 6.80p
1. This is a target only, there can be no guarantee this target will be
met. Past performance is not indicative of future performance and is not
guaranteed.
Definition and rationale
Aggregate dividends declared per share in respect of the financial year, with
provision of income to shareholders being a key element of the Company's
business plan.
Link to Fund objectives:
Long-term predictable income growth for shareholders
KPI performance
· 7.80 pence dividend declared for the year, in line with the stated
target, and comfortably covered by cash received from the portfolio.
Objectives for 2026
· Target dividend for the next financial year of 7.96 pence, up 2.1%
from 2025.
Dividend cover
1.32x
2025 1.32x
2024 1.30x
2023 1.51x
2022 1.10x
2021 1.07x
Definition and rationale
Operational cash flow divided by dividends paid to shareholders during the
year, being a key measure of performance of underlying investments from year
to year.
Link to Fund objectives:
Long-term predictable income growth for shareholders
KPI performance
· 1.32x dividend cover for the year.
Objectives for 2026
· Continue to deliver growth in income from underlying investments in
order to maintain a well‑covered dividend for the financial year.
NAV per share
106.5p
2025 106.5p
2024 113.6p
2023 123.1p
2022 115.3p
2021 92.2p
Definition and rationale
Reflects the net assets of the portfolio divided by the closing number of
shares in issuance at the reporting date, enabling investors to gauge whether
shares are trading at a premium or a discount by comparing the Net Asset Value
per share with the share price.
Link to Fund objectives:
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
KPI performance
· NAV £678.7 million, down from £751.2 million at 31 March 2024,
following dividend, new investment, disposals and share buybacks.
· NAV per share 106.5 pence, down 6.25% compared to 31 March 2024.
· 0.6% NAV total return for the 12 months ended 31 March 2025.
Objectives for 2026
· Prioritise progress in construction-stage and early-stage
operational assets to drive NAV growth.
· Continue to progress value‑enhancement initiatives.
· Share buybacks considered as NAV accretive option as part of
overall capital allocation strategy.
Past performance is not indicative of future performance and is not
guaranteed.
Gearing
28.7%
2025 28.7%
2024 31.2%
2023 27.3%
2022 23.7%
2021 36.1%
Definition and rationale
An illustration of the Company's exposure to project and fund‑level debt as
a proportion of overall gross asset value, allowing investors to ascertain
financial risk in the Group's balance sheet.
Link to Fund objectives:
Long-term predictable income growth for shareholders
Potential for capital growth
KPI performance
· Managing floating rate debt remains a key priority for the Company,
and gearing has been successfully reduced in the year - supported by record
levels of cash received from investments and sales of assets.
Objectives for 2026
· The Company will continue to carefully manage its debt facilities
in a prudent manner and to balance opportunities to further reduce floating
rate debt against other capital allocation priorities.
Cash yields
£90.4m
2025 £90.4m
2024 £87.0m
2023 £83.6m
2022 £56.5m
2021 £48.2m
Definition and rationale
A key measure of performance from the underlying portfolio.
Link to Fund objectives:
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
KPI performance
· Tenth successive year of increasing cash received from investments
since IPO, comfortably covering the dividend and funding both repayment of
floating rate debt and the Company's share buyback programme.
Objectives for 2026
· To continue to distribute available cash from underlying projects
in line with financial budgets set at the start of the year, in support of the
Company's capital allocation objectives.
THE INVESTMENT MANAGER'S REPORT
THE YEAR IN REVIEW
Introduction
Throughout the year, FGEN has continued to benefit from the broader strengths
of Foresight Group's Infrastructure platform, consisting of 190 people working
in investment, portfolio management, finance, valuations, sustainability and
investor relations, from offices in the UK, Italy, Spain and Germany.
This breadth, across both capability and geography, meets FGEN's broad
environmental infrastructure mandate and is critical in pursuing opportunities
that are diversified beyond simply wind and solar. It also stands behind
Foresight's proven origination capabilities across Europe, with over 1,000
opportunities reviewed during the year by the wider team with nearly half of
those aligned with FGEN's mandate.
Foresight's construction management capabilities are also of great value to
FGEN in bringing development and construction-stage assets through to
operations and providing the potential for capital appreciation. The team is
also experienced in managing exits, having carried out several such
transactions in the last 12 months alone.
A large, in‑house Portfolio Management team is also something that we
believe sets Foresight's platform apart, with 113 people dedicated to managing
a total of 437 infrastructure assets, including engineers, commercial managers
and accountants.
This structure enables a more proactive approach to asset management with
constant and sustained efforts focused on value enhancements, revenue
optimisation and cost efficiency.
Strategic direction
As set out by the Chair, during the period the Board has undertaken a rigorous
evaluation of a full range of strategic alternatives for the Company. It
concluded that the proactive management of the existing portfolio and a
refocused investment strategy, reflective of the structural changes in
macroeconomic conditions since 2022 characterised by increased levels of
market volatility and higher return expectations in an elevated rate
environment, is the course of action that best serves long‑term shareholder
interests. This is a conclusion that the Investment Manager fully supports
and which it is committed to delivering.
We will continue to drive as much value as possible from the existing
portfolio, with ongoing value enhancement initiatives across the operational
portfolio and, importantly, ramp‑up across FGEN's three growth assets -
Rjukan, CNG and the Glasshouse.
Future investment activity will prioritise core infrastructure assets and
businesses that offer long‑term stable cash flows, secured revenues and
inflation linkage. FGEN will invest across three pillars of environmental
infrastructure - renewable energy generation, other energy infrastructure and
sustainable resource management across the waste and water sectors, targeting
the delivery of an attractive balance of income and growth across development,
construction and operational‑stage investments.
Similarly, as detailed earlier in the Annual Report, the Investment Manager
has simplified the categorisation of its portfolio across those three pillars
in order to ensure that the diversification across a range of sectors and
technologies is more easily understood.
Diversification and focus
FGEN has always prioritised diversification from its outset, given the
benefits of a lower concentration of risk and a wider set of opportunities. We
also recognise that some of the most recent investment activity has been into
assets that are not as familiar as more traditional renewable and
infrastructure sectors, for example the Rjukan aquaculture facility and the
Glasshouse project.
Whilst these investments present real opportunity for capital growth within
the Fund over the near term as they progress through operational ramp‑up,
the Board and the Investment Manager recognise that in the changed
macroeconomic environment, any new investment should retain a disciplined
focus on core infrastructure fundamentals. Therefore, looking forward, whilst
diversification across sectors and technologies will remain a central tenet,
FGEN will not make any further standalone investments into controlled
environment. Indeed, as previously stated, FGEN will look to exit from its
growth assets once sufficiently mature and valued as such, expected to be in
circa two to three years.
Performance summary
NAV per ordinary share at 31 March 2025 was 106.5 pence (31 March 2024: 113.6
pence). The analysis of the Group's net assets at 31 March 2025 is set out on
page 111 of the 2025 Annual Report. The Company's portfolio valuation was
£765.7 million (31 March 2024: £891.9 million). Detailed information on the
portfolio valuation is available on pages 28 to 37 of the 2025 Annual Report.
We have continued to manage the portfolio prudently, with the aim of
generating consistent and predictable cash flows that provide inflation
protection to our investors. It has been another record year of cash
distributions, with £90.4 million generated across the portfolio which has
contributed to a comfortable dividend cover of 1.32x.
This is whilst maintaining a position of being one of the lowest geared across
the peer group, something that we put great value on given the wider
volatility across debt markets.
This performance has been underpinned by the Company's diversification
strategy, generating revenues across the sale of power, heat and non-energy
output. Whilst the HH2E impairment was an obvious disappointment for the
Investment Manager, the Board and, most importantly, shareholders, value
enhancements across the portfolio and progress on the growth assets have
helped to offset some of this value loss and endorses the diversification
strategy.
Investment activity
Investment activity during the period has been disciplined and limited to
opportunities with a direct connection to the existing portfolio, for example
the ongoing funding of commitments to Rjukan and the Glasshouse, and value
enhancement opportunities at Vulcan AD. Including capital to meet existing
commitments to construction-stage assets, the Company has deployed £30.7
million into the portfolio during the year.
Given the disciplined focus on capital allocation throughout the year, the
Investment Manager has completed two value‑accretive asset disposals
totalling close to £90m, generating proceeds that have been used to both
repay debt and return capital to shareholders. Other investment activity to
note includes the restructuring and consolidation of the CNG structure, the
HH2E impairment and further investments into FEIP; see pages 44 and 45 of the
2025 Annual Report for more information.
Outlook
As set out in the markets and opportunities section, environmental
infrastructure continues to be one of the most significant investment
opportunities of this generation, with FGEN's strategic mandate making it
uniquely placed to capitalise across the full suite of renewable generation,
other energy infrastructure and sustainable resource management technologies.
Whilst there has been some notable political turbulence over the period,
including the Trump Administration's tariff policies and the heightened
geopolitical tensions due to the ongoing events in Ukraine and the Middle
East, we retain an optimistic outlook for the wider environmental
infrastructure opportunity with decarbonisation and the path to net zero
underpinned by robust social and economic winds.
Whilst new investment activity has been limited in the listed infrastructure
sector over the last few years, Foresight's investment activity across its
private funds means that the broader Infrastructure team has continued to
deploy and manage capital across a wide range of infrastructure sectors at all
stages of the investment lifecycle, including development and platforms,
construction and operations. Therefore, the core FGEN investment management
team remains close to new investment activity, with the Company well placed to
leverage on this activity when the conditions are suitable.
Clearly, any new investment activity during the year will need to be highly
selective. However, the Investment Manager, supported by the wider Foresight
infrastructure division, is currently monitoring opportunities well aligned
with FGEN's mandate with the capacity to deliver attractive, risk‑adjusted
returns and, subject to Board support and approval, will consider pursuing
such opportunities if considered the best use of capital against other
allocation options.
OUR PORTFOLIO AT A GLANCE
Renewable energy generation
The bedrock of FGEN's portfolio in established
income‑generating assets focused on diversification
across technologies to support the delivery of attractive
risk‑adjusted returns.
Renewable energy generation 73%
Wind 27%
Solar 12%
Anaerobic digestion - crop 14%
Anaerobic digestion - food waste 6%
Biomass 10%
Energy‑from‑waste 3%
Hydro 1%
Technologies(1):
Baseload generators:
· Anaerobic digestion
· Biomass
· Energy-from-waste
Intermittent generators:
· Wind
· Solar
· Hydro
Investment attractions:
· Government‑backed incentives across a range of mechanisms,
including ROCs, RHI and FITs
· Mature technologies with low operating risk and stable production
profiles
· Explicit and implicit inflation linkage
· Diversification of resource risk across different weather patterns,
forms of feedstock, and power and gas pricing
· Delivering a complementary mix of intermittent and baseload power
generation
Potential risks:
· Merchant electricity and gas prices
· Wind and solar resource
· Cost and supply of feedstock
· Operational issues
· REMA/regulatory change
1. Excludes FEIP. See page 37 of the 2025 Annual Report for a full list
of FEIP assets.
Capacity
Asset Location Ownership (MW) Commercial operations date
Wind
Bilsthorpe England 100% 10.2 Mar 2013
Burton Wold Extension England 100% 14.4 Sep 2014
Carscreugh Scotland 100% 15.3 Jun 2014
Castle Pill Wales 100% 3.2 Oct 2009
Dungavel Scotland 100% 26.0 Oct 2015
Ferndale Wales 100% 6.4 Sep 2011
Hall Farm England 100% 24.6 Apr 2013
Llynfi Afan Wales 100% 24.0 Mar 2017
Moel Moelogan Wales 100% 14.3 Jan 2003 & Sep 2008
New Albion England 100% 14.4 Jan 2016
Wear Point Wales 100% 8.2 Jun 2014
Solar
Amber England 100% 9.8 Jul 2012
Branden England 100% 14.7 Jul 2013
CSGH England 100% 33.5 Mar 2014 & Mar 2015
Monksham England 100% 10.7 Mar 2014
Pylle Southern England 100% 5.0 Dec 2015
Anaerobic digestion: agricultural crop
Biogas Meden England 49% 5.0(1) Mar 2016
Egmere Energy England 49% 5.0(2) Nov 2014
Grange Farm England 49% 5.0(2) Sep 2014
Icknield Farm England 53% 5.0(1) Dec 2014
Merlin Renewables England 49% 5.0(2) Dec 2013
Peacehill Farm Scotland 49% 5.0(3) Dec 2015
Rainworth Energy England 100% 5.0(4) Sep 2016
Vulcan Renewables England 49% 5.0(2) Oct 2013
Warren Energy England 49% 5.0(2) Dec 2015
Anaerobic digestion: food waste
Codford Biogas waste management England 100% 3.8(4) 2014
Bio Collectors waste management England 100% 11.7(5) Dec 2013
Biomass
Cramlington biomass combined heat and power England 100% 32.0(6) 2018
Energy-from-waste
Energie Tecnologie Ambiente ("ETA") Italy 45%(7) 16.8 2012
Hydro
Northern Hydropower England 100% 2.0(8) Oct 2011 & Oct 2017
Yorkshire Hydropower England 100% 1.8(8) Oct 2015 & Nov 2016
Total 353.0
1. MWth (thermal) and an additional 0.4MWe CHP engine for on-site power
provision.
2. MWth (thermal) and an additional 0.5MWe CHP engine for on-site power
provision.
3. MWth (thermal) and an additional 0.25MWe CHP engine for on-site
power provision.
4. Electrical exporting plant measured as MWe.
5. 10MWth and an additional 1.7MWe capacity through two CHP engines.
6. 26MWe (electrical) and 6MWth (thermal).
7. Not including FEIP's 45% ownership. See page 37 of the 2025 Annual
Report for a full list of FEIP investments.
8. Includes a 1.2MW battery storage.
Other energy infrastructure
Non-energy generating assets that support the transition towards net zero,
driven by increased demand for electrification and supercharged by
government-backed legislation. This segment includes our battery storage
units and our low‑carbon transport investment.
Other energy infrastructure 10%
Battery energy storage 5%
Low‑carbon transport 5%
Technologies(1):
· Battery Energy Storage Systems ("BESS")
· Low‑carbon transport
Investment attractions:
· Strong cash yield expected from sites once established
· Merchant revenues from the storage assets with a degree of inverse
correlation with renewable capture prices, alongside "sticky" revenues across
CNG
· Diversification of revenue sources away from power generation
· Capital growth potential
Potential risks:
· Construction risk
· Merchant nature of trading revenue streams
· Evolving market and increased competition
· Shorter track record of operations than for other technologies
Capacity
Asset Location Ownership (MW) Commercial operations date
Battery energy storage
West Gourdie battery storage Scotland 100% n/a May 2023
Clayfords battery storage Scotland 50% n/a Pre-construction
Lunanhead battery storage Scotland 50% n/a Pre-construction
Sandridge battery storage England 50% n/a Under construction
Low‑carbon transport
CNG Fuels England Minority stake(2) n/a Various
1. Excludes FEIP. See page 37 of the 2025 Annual Report for a full list
of FEIP assets.
2. FGEN holds 25% of CNG Foresight Holdings Ltd, which owns 60% of the
shares in CNG Fuels Ltd and holds £150.15 million in 10% preferred return
investments issued by CNG Fuels.
Sustainable resource management
Sustainable resource management means using resources with the future in mind.
It involves applying sustainable practices to ensure that resources benefit
both current and future generations. This includes areas such as waste and
wastewater concessions, as well as controlled environments for agriculture and
aquaculture.
Sustainable resource management 17%
Controlled environment 11%
Waste and wastewater concessions 6%
Technologies(1):
· Controlled environment - agriculture and aquaculture
· Waste and water management
Investment attractions:
· Long‑term government contracts from the concession‑based
projects
· Controlled environment investments in well‑established
technologies with deep revenue markets
· Potential for capital growth across Rjukan and the Glasshouse
· Diversification of revenue sources away from power generation
Potential risks:
· Merchant revenues and operational ramp‑up at Rjukan and the
Glasshouse
· Handback risk at end of ELWA and Tay concessions
Capacity
Asset Location Ownership (MW) Commercial operations date
Controlled environment
Glasshouse England 10% n/a March 2025
Rjukan aquaculture system Norway 25% n/a Under construction
Waste and wastewater concessions
ELWA waste management England 80%(2) n/a 2006
Tay wastewater treatment Scotland 33% n/a Nov 2001
1. Excludes FEIP. See page 37 of the 2025 Annual Report for a full list
of FEIP assets.
2. 80% of ordinary share capital plus 100% of outstanding loan notes.
INVESTMENT PORTFOLIO AND VALUATION
Investment portfolio
Diversification is a key factor for the Company, reducing dependency on a
single market, technology type or set of climatic conditions, whilst allowing
exposure to a wide opportunity set, as illustrated in the analysis below at 31
March 2025, according to share of portfolio value:
Sector split
Wind 27%
Anaerobic digestion - crop 14%
Solar 12%
Biomass 10%
Controlled environment 11%
Anaerobic digestion - food waste 6%
Waste and wastewater concessions 6%
Low‑carbon transport 5%
Energy storage 5%
Energy‑from‑waste 3%
Hydro 1%
Geography
UK 89%
Rest of Europe 11%
Remaining asset life
Up to 10 years 22%
11 to 20 years 52%
More than 20 years 26%
Weighted average remaining asset life of the portfolio is 16.3 years.
Operational status
Operational 92%
Construction 8%
Operator exposure
SGRE 16%
Future Biogas 10%
BWSC 10%
Brighter Green Engineering 7%
Hima Seafood AS 6%
Other 51%
Asset concentration
Cramlington (biomass) 10%
Rjukan (CE aq) 6%
Amber (solar) 5%
Llynfi (wind) 5%
Dungavel (wind) 5%
Top 6-10 22%
Other 47%
Valuation method
Discounted cash flow ("DCF") 90%
Cost 10%
Portfolio valuation
The Investment Manager is responsible for carrying out the fair market
valuation of the Company's investments, which is presented to the Directors
for their approval and adoption. The valuation is carried out on a quarterly
basis as at 30 June, 30 September, 31 December and 31 March each year.
The valuation is predominantly based on a discounted cash flow analysis of the
future expected equity and loan note cash flows accruing to the Group from
each operational portfolio investment. Where assets are under construction or
not yet operational, they are valued at cost until such time as the risks
associated with construction have substantially passed. For some technologies
with more complex construction activities, this will be when the asset reaches
the start of commercial operations, while for others this may be during
late-stage construction. Following the corporate restructuring of CNG Fuels
announced on 20 March 2025 that created a fully integrated biomethane
sourcing, station ownership and Renewable Transport Fuel Certificate business,
the Investment Manager has included an assumption around a future exit of
FGEN's ownership in 2028 within the DCF valuation. The exit proceeds are based
on a multiple of EBITDA, informed by transactional evidence and benchmarked
against alternative valuation approaches. The amendment to the valuation
approach resulted in no meaningful change in valuation.
This valuation uses key assumptions which are recommended by Foresight using
its experience and judgement, having considered available comparable market
transactions and financial market data in order to arrive at a fair market
value. An independent verification exercise of the methodology and assumptions
applied by Foresight is performed by a leading accountancy firm and an opinion
is provided to the Directors. The Directors have satisfied themselves as to
the methodology used and the assumptions adopted and have approved the
valuation.
The Directors' valuation of the portfolio at 31 March 2025 was £765.7
million, compared to £891.9 million at 31 March 2024. The decrease of £126.2
million is the net impact of divestments, new acquisitions, cash received from
investments, changes in macroeconomic, power price and discount rate
assumptions, and underlying growth in the portfolio. A reconciliation of the
factors contributing to the change in the portfolio during the period is shown
in the chart below.
The movement in value of investments during the year ended 31 March 2025 is
shown in the table below:
2025 2024
£m £m
Valuation of portfolio at opening balance 891.9 898.5
Acquisitions in the year (including follow-on investments) 30.7 69.2
Divestments (89.1) -
Cash distributions from portfolio (90.4) (87.0)
Rebased opening valuation of portfolio 743.1 880.7
Changes in forecast power prices 8.8 (36.0)
Changes in economic assumptions 1.7 8.6
Changes in discount rates - (29.0)
Changes in exchange rates (0.9) (0.5)
Balance of portfolio return 13.0 68.1
Valuation of portfolio at 31 March 765.7 891.9
Fair value of intermediate holding companies (87.0) (138.3)
Investments at fair value through profit or loss 678.7 753.6
Allowing for investments of £30.7 million (including follow-on investments
and payment of deferred consideration), divestments of £89.1 million and cash
receipts from investments of £90.4 million, the rebased valuation is £743.1
million. The portfolio valuation at 31 March 2025 is £765.7 million (31 March
2024: £891.9 million), representing an increase over the rebased valuation of
3% during the year.
Valuation assumptions
Each movement between the rebased valuation and the 31 March 2025 valuation is
considered below:
Forecast power prices
The project cash flows used in the portfolio valuation at 31 March 2025
reflect contractual fixed price arrangements under PPAs, where they exist, and
short‑term market forward prices for the next two years where they do not.
After the initial two year period, the project cash flows assume future
electricity and gas prices in line with a blended curve informed by the
central forecasts from three established market consultants, adjusted by the
Investment Manager for project-specific arrangements and price
cannibalisation.
For the Italian investment, project cash flows assume future electricity
prices informed by a leading independent market consultant's long‑term
projections.
The overall change in forecasts for future electricity and gas prices compared
to forecasts at 31 March 2024, net of the Electricity Generator Levy ("EGL"),
has increased the valuation of the portfolio by £8.8 million.
The graph below represents the blended weighted power curve used by the
Company, reflecting the forecast of three leading market consultants, adjusted
by the Investment Manager to reflect its judgement of capture discounts and a
normalised view across the portfolio of expectations of future price
cannibalisation resulting from increased penetration of low marginal cost,
intermittent generators on the GB network. The solid line represents the
weighted average realised price forecast - including short-term price fixes
under PPAs - whereas the dotted line shows the equivalent merchant price for
unhedged generation.
Illustrative blended power price curve
Guarantees of origin certificates
As the portfolio includes a number of renewable energy generation projects, it
is able to generate revenue from the sale of Renewable Energy Certificates in
addition to income from the sale of gas and electricity. A certificate is
issued by Ofgem or the Green Gas Certification Scheme for each unit of
renewable electricity or gas generated respectively, and can be sold as part
of, or separately from, the offtake contracts in place for the wholesale
electricity and/or gas. The certificates received for UK projects are
Renewable Energy Guarantee of Origin ("REGO") and Renewable Gas Guarantee of
Origin ("RGGO") for electricity and gas, respectively. Being traded on the
open market, the price is variable and subject to typical demand and supply
dynamics.
As with forecast power prices, valuations reflect contractual fixed price
arrangements where they exist, or the following assumptions informed by
forecasts provided from a range of independent market consultants where they
do not:
Year 2025 2026-28 2029+
REGO £5/MWh £5/MWh £2/MWh
RGGO £9.5/MWh £9/MWh £9/MWh
Following a sustained increase in RGGO pricing achieved by the Investment
Manager, modelled assumptions have been increased by £2/MWh.
Revenue analysis
The graph below shows the way in which the revenue mix of the portfolio
changes over time for future financial years, given the assumptions made
regarding future power prices set out earlier in the document. As expected,
the proportion of merchant revenues increases in later years as the subsidies
that projects currently benefit from expire.
On a net present value ("NPV") basis (using the discount rate applicable to
each project), the relative significance of each revenue category illustrated
above is as follows:
Revenue NPV
Subsidy 49%
Merchant power 30%
Long-term contracts 11%
Flexible generation 2%
Other merchant revenues 8%
Subsidy revenues, long-term contracts and revenues from CNG Fuels that sit
within other merchant revenues in the pie chart, all retain contractual
inflation linkage, leading to 61% of total revenues featuring contractual
inflation linkage.
Renewable generation portfolio
FGEN's renewable energy generation portfolio includes a combination of
intermittent generating wind and solar investments, alongside baseload
generating anaerobic digestion, biomass, energy-from-waste ("EfW") and
hydropower investments. Revenues in these projects typically consist of a
combination of government-backed inflation-linked subsidies, short-term price
fixes contracted under a PPA/GPA, merchant revenue or other revenues such as
those earned from private wire contracts.
The Company seeks to minimise the impact of power price volatility through its
carefully constructed portfolio of diversified asset types, as well as by
maintaining a programme of rolling price fixes for energy it generates,
typically having the majority of projects on fixed price arrangements in the
near term.
At 31 March 2025, 53% of the renewable energy portfolio's electricity and gas
price exposure was subject to fixed prices for the summer 2025 season and 55%
for the winter 2025/26 season. See the power price hedging section in the
operational review on page 39 of the 2025 Annual Report for more detail about
the price fixes in place across the portfolio at the year end.
Taking the proportion of merchant revenues hedged under fixed price
short‑term PPAs, along with subsidy revenues and revenues from long-term
contracts outside of the energy generating assets, 68% of total revenues have
fixed prices for the financial year to 31 March 2026. This demonstrates
that merchant revenue remains a low proportion and reflects the broader
diversification of FGEN's portfolio.
Other energy infrastructure
The desire to mitigate the effects of climate change stimulates not only
opportunities connected to energy generation, but also in supporting and
enabling energy infrastructure where significant investment is needed in the
coming years in order to further decarbonise the economy. This is reflected
in FGEN's diversified portfolio, which includes grid-scale batteries and
low‑carbon transportation refuelling alternatives for heavy goods vehicles.
Batteries
FGEN's portfolio includes one operational and three c.50MW Battery Energy
Storage Systems ("BESS") at varying stages of construction at 31 March 2025.
Whilst the portfolio currently includes only one operational asset, lower
revenue projections had previously impacted pricing and valuations across the
market for BESS assets at all lifecycle stages. However, revenue performance
improved throughout 2024 and into 2025. Independent market analysis continues
to support a positive outlook, with strong fundamentals expected to underpin
long-term sector growth.
Revenues for BESS assets are generated through multiple channels. Third-party
consultants continue to highlight the importance of prioritising the capture
of trading margins over the more limited opportunities from grid service
revenues. As a result, merchant revenues are expected to form the largest
component of the revenue model for these assets.
While the sector does not currently benefit from long-term contractual
inflation linkage, revenues are typically driven by a margin over costs, which
is expected to be sustained regardless of inflationary pressures. Notably,
recent losses from record high balancing mechanism volumes are being offset by
higher wholesale market prices. This rebound in wholesale revenues is
anticipated to positively impact asset performance, particularly for
West Gourdie.
Low-carbon transport
In the case of FGEN's investment into CNG Fuels, an integrated business owning
and operating CNG refuelling stations that also sources biomethane for those
stations and generates Renewable Transport Fuel Certificates ("RTFCs") in the
process, revenues are generated from CNG dispensed and trading activity in
biomethane and RTFCs.
Per the terms of the fuel supply contracts, CNG reserves the right to revise
pricing to reflect changes in the wholesale price of natural gas and fuel
duty, and will annually adjust prices (upwards only) in line with CPI
inflation. Trading revenues flow from the buying and selling of biomethane
across European markets and the sale of RTFCs created by the use of biomethane
as a transport fuel.
Sustainable resource management
Sustainable resource management means using resources with the future in mind.
It involves applying sustainable practices to ensure that resources benefit
both current and future generations. This includes areas such as waste and
wastewater treatment, as well as controlled environment for agriculture and
aquaculture.
Waste and wastewater treatment
This category currently consists of availability-based assets structured under
the Private Finance Initiative ("PFI")/Public Private Partnership ("PPP")
procurement models, whereby revenue is derived from long-term contracts with
local authorities.
Controlled environment
Controlled environment ("CE") projects typically face a greater level of
market risk than environmental infrastructure projects with subsidy support or
with long-term contracts. Therefore, the Company has only invested in projects
that enjoy a privileged market position over competitors, for example due to
physical location, technology or product differentiation.
In the case of FGEN's Glasshouse, the investment is primarily built around the
debt service on its senior secured shareholder loan, with potential for
further uplift from the Company's minority equity investment over time as the
business' operations reach maturity. The Glasshouse is co-located with an
existing FGEN anaerobic digestion facility, which itself will receive an
additional source of revenue via a private wire supplying low-carbon heat and
power to the Glasshouse. In the future, wastage from the Glasshouse produce
may also be returned to the AD digester, creating a circular ecosystem.
For more information on the Glasshouse, see the asset spotlight on page 49 of
the 2025 Annual Report.
In the case of CE Rjukan, revenues will primarily be generated from the
production and sale of approximately 8,000 tonnes of trout annually, once the
site is fully ramped up in 2027. This will be sold to European and
international salmonid markets via an offtake agreement with an established
Norwegian seafood distribution company with global reach.
The Rjukan investment case is built on the premise of achieving average
historic prices evidenced by the Fish Pool Index; however, our experienced
operational partner is targeting sales at levels between c.5% and 50% higher
than this; underpinned by the higher quality of fish production at Rjukan
versus the typical fish sold in commodity-based markets.
Whilst these investments do not currently have long-term contractual inflation
linkage, the projects retain pricing power and are able to increase prices to
maintain margins as the underlying cost base inflates. For more information
on Rjukan, see the asset spotlight on page 51 of the 2025 Annual Report.
The degree of contractual inflation linkage of each category illustrated above
is as follows:
The Company's diversification strategy ensures the portfolio benefits from a
significant proportion of contracted revenues and revenues earned by
non-energy generating assets. Under current forecasts, dividend cover is
expected to be healthily covered for the years ahead.
Useful economic lives
Useful economic lives of assets are based on the Investment Manager's
estimates of the period over which the assets will generate revenue and are
periodically reviewed for continued appropriateness. The assumption used for
the useful life of investments is the lower of lease duration and 35 years for
solar assets, 30 years for wind farms and 20 years for anaerobic digestion
facilities - being the life of the RHI subsidy, after which point the
Investment Manager conservatively assumes that facilities will cease to
operate.
In light of growing evidence to suggest AD facilities may be able to
successfully operate for longer durations, the Investment Manager has provided
a sensitivity on page 35 of the 2025 Annual Report to illustrate the potential
impact on extending the lives of FGEN's AD investments.
Economic assumptions
The valuation reflects an update in inflation assumptions based on a
combination of actual historic inflation and recent independent economic
forecasts.
Valuation assumptions for operational assets are set out below:
Economic assumptions used in the portfolio valuation (31 March 2024 figures
shown in brackets)
2025 2026-2030 2031+
UK
RPI 3.5% 3.0% 2.25%
(3.0%) (3.0%) (2.25%)
CPI 2.75% 2.25% 2.25%
(2.25%) (2.25%) (2.25%)
Deposit rates 2.0% 2.0% 2.0%
(2.0%) (2.0%) (2.0%)
Corporation tax 25.0% 25.0% 25.0%
(25.0%) (25.0%) (25.0%)
Italy
Inflation 2.0% 2.0% 2.0%
(2.0%) (2.0%) (2.0%)
Deposit rates -% -% -%
(-%) (-%) (-%)
Corporation tax (IRES) 24.0% 24.0% 24.0%
(24.0%) (24.0%) (24.0%)
Regional tax (IRAP) 4.8% 4.8% 4.8%
(4.8%) (4.8%) (4.8%)
The euro/sterling exchange rate used to value euro-denominated investments was
€1.19/£1 and the rate for Norwegian krone-denominated investments was
NOK13.55/£1 at 31 March 2025 (€1.17/£1 and NOK13.66/£1 at 31 March 2024).
The total net increase in value resulting from changes to inflation rates,
deposit rates and foreign exchange rates in the year is £0.8 million.
Discount rates
The discount rates used in the valuation exercise represent the Investment
Manager's and the Board's assessment of the rate of return in the market for
assets with similar characteristics and risk profile. The discount rates are
reviewed on a regular basis and updated to reflect changes in the market and
in the project risk characteristics.
UK gilt yields have remained at elevated levels consistent to those prevalent
at the start of the year and transactional activity continues to indicate
support for the Company's valuation assumptions, therefore no changes have
been made to discount rates this year.
In addition to macro-driven changes, the Investment Manager also considers
project-specific changes - such as the completion of major milestones on
construction phase investments. Whilst progress continues at these projects,
no changes have been made to discount rates this period.
Taking the above into account and including an increase in the value of assets
in construction, the overall weighted average discount rate ("WADR") of the
portfolio is 9.7% at 31 March 2025 (31 March 2024: 9.4%).
The WADR applied to each of the principal operational sectors within the
portfolio is displayed in the following table, noting this represents a blend
of levered and unlevered investments and therefore the relevant gearing of
each sector is also shown.
Unlevered Levered
discount rate discount rate Sector WADRs Gearing
Wind 8.0% 8.8% 8.7% 36%
Solar 7.2% 8.0% 7.3% 18%
Anaerobic digestion - crop fed 8.6% - 8.6% -
Anaerobic digestion - food waste 9.8% - 9.8% -
Biomass 10.3% - 10.3% -
Energy-from-waste 10.0% - 10.0% -
Hydropower - 8.0% 8.0% 41%
Waste and wastewater concessions - 8.9% 8.9% 24%
Battery storage 10.3% - 10.3% -
Weighted average 9.7% 18.5%
Sectors in which the Investment Manager retains proprietary information, such
as controlled environment and low-carbon transport, are not disclosed in the
table above, although discount rates used in these sectors feed into the
portfolio WADR of 9.7%.
As in previous valuations, the discount rate used for energy generating asset
cash flows which have received lease extensions beyond the initial investment
period of 25 years retains a premium of 1% for subsequent years, reflecting
the merchant risk of the expected cash flows beyond the initial 25-year
period.
No changes have been made to discount rates during this period, therefore the
overall change in value resulting from changes to discount rates in the year
is £nil.
Balance of portfolio return
This represents the balance of valuation movements in the year, excluding the
factors noted above. The balance of the portfolio return mostly reflects the
impact on the rebased portfolio value, all other measures remaining constant,
of the effect of the discount rate unwinding and also some additional
valuation adjustments from updates to individual project assumptions.
The total represents an uplift of £13.0 million.
Of this, the key positive item is the uplift of £60.2 million from discount
rate unwind, partially offset by a combination of the £19.3 million
write-down to the value of FGEN's investment in HH2E that was already
recognised in the 30 September 2024 interim results, along with an £8.1
million reduction in value resulting from the downward revision in wind yield
assumptions recognised at the 31 December 2024 valuation. The remaining
downward revision in valuation is largely attributable to asset performance
across the portfolio - reflecting uncharacteristic period of low wind speeds,
low solar irradiance, disruption caused by severe weather events such as Storm
Darragh and increases in planned maintenance programme expenditure.
Despite operational challenges across the portfolio, the underlying assets
remain highly cash generative - illustrated by the 10th consecutive period of
record cash flows received from investments.
Valuation sensitivities
The Net Asset Value ("NAV") of the Company is the sum of the discounted value
of the future cash flows of the underlying asset financial models,
construction and development spend, the cash balances of the Company and UK
HoldCo, and the other assets and liabilities of the Group less Group debt.
The portfolio valuation is the largest component of the NAV and the key
sensitivities are considered to be the discount rate applied in the valuation
of future cash flows and the principal assumptions used in respect of future
revenues and costs.
A broad range of assumptions is used in our valuation models. These
assumptions are based on long‑term forecasts and are not affected by
short‑term fluctuations in inputs, whether economic or technical. The
Investment Manager exercises its judgement in assessing both the expected
future cash flows from each investment based on the project's life and the
financial models produced for each project company and the appropriate
discount rate to apply.
The key assumptions are as follows:
Discount rate
The WADR of the portfolio at 31 March 2025 was 9.7% (31 March 2024: 9.4%). A
variance of plus or minus 0.5% is considered to be a reasonable range of
alternative assumptions for discount rates.
An increase in the discount rate of 0.5% would result in a downward movement
in the portfolio valuation of £17.2 million (2.7 pence per share) compared to
an uplift in value of £18.0 million (2.8 pence per share) if discount rates
were reduced by the same amount.
Volumes
Base case forecasts for intermittent renewable energy projects assume a "P50"
level of electricity output based on reports by technical consultants. The P50
output is the estimated annual amount of electricity generation (in MWh) that
has a 50% probability of being exceeded - both in any single year and over
the long term - and a 50% probability of being underachieved. Hence the P50 is
the expected level of generation over the long term.
The P90 (90% probability of exceedance over a 10‑year period) and P10 (10%
probability of exceedance over a 10‑year period) sensitivities reflect the
future variability of wind, hydropower and solar irradiation and the
uncertainty associated with the long‑term data source being representative
of the long‑term mean.
Separate P10 and P90 sensitivities are determined for each asset and
historically the results are presented on the basis that they are applied in
full to all wind, hydro and solar assets. This implies individual project
uncertainties are completely dependent on one another; however, a portfolio
uncertainty benefit analysis performed by a third-party technical adviser
identified a positive portfolio effect from investing in a diversified asset
base.
That is to say that the lack of correlation between wind, hydro and solar
variability means P10 and P90 sensitivity results should be considered
independent. Therefore, whilst the overall P90 sensitivity decreases NAV by
4.8 pence, the impact from wind, solar and hydro separately is 3.4 pence per
share, 1.2 pence per share and 0.2 pence per share respectively, as shown in
the chart on page 37 of the 2025 Annual Report.
Anaerobic digestion facilities do not suffer from similar deviations as their
feedstock input volumes (and consequently biogas production) are controlled by
the site operator.
Biomass and EfW forecasts are based on projections of future input volumes and
are informed by both forecasts and independent studies where appropriate.
Revenues in the PPP projects are generally not very sensitive to changes in
volumes due to the nature of their payment mechanisms.
Electricity and gas prices
Electricity and gas price assumptions are based on the following: for the
first two years, cash flows for each project use forward electricity and gas
prices based on market rates unless a contractual fixed price exists, in which
case the model reflects the fixed price followed by the forward price for the
remainder of the two‑year period. For the remainder of the project life, a
long‑term blend of central case forecasts from three established market
consultants and other relevant information is used, and adjusted by the
Investment Manager for project‑specific arrangements and price
cannibalisation.
The sensitivity assumes a 10% increase or decrease in power prices relative to
the base case for each year of the asset life after the first two‑year
period. While power markets can experience movements in excess of +/-10% on a
short‑term basis, as has been the case recently, the sensitivity is intended
to provide insight into the effect on the NAV of persistently higher or lower
power prices over the whole life of the portfolio. The Directors feel that
+/-10% remains a realistic range of outcomes over this very long time horizon,
notwithstanding that significant movements will occur from time to time.
An increase in electricity and gas prices of 10% would result in an uplift in
the portfolio valuation of £35.9 million (5.6 pence per share) compared to a
downward movement in value of £35.3 million (5.5 pence per share) if prices
were reduced by the same amount.
Assuming all other factors remain constant, if electricity prices were to fall
to £50/MWh, with a corresponding decline in gas prices, the Company would
continue to maintain a resilient level of dividend cover over the next three
financial years. Even in a more conservative scenario, where prices fall to
£40/MWh, the portfolio is still expected to generate sufficient cash flows to
cover the dividend, though with a reduced margin of headroom.
Useful economic lives
In line with FGEN's original investment case for anaerobic digestion, the
Company continues to apply the conservative valuation assumption that
facilities will simply cease to operate beyond the life of their RHI tariff.
In recent periods, the Investment Manager has seen a growing case of evidence,
including several transactional datapoints, pointing towards a positive change
in market sentiment for valuing these assets - including the potential to run
anaerobic digestion facilities on an unsubsidised basis.
In light of this change, the Investment Manager has provided the following
scenarios illustrating a range of possible avenues to extend the lives of its
AD portfolio:
· Scenario 1: either an extension to the existing RHI or an
equivalent alternative subsidy mechanism on the same terms as the current RHI
for a period of five years - capped at the duration of land rights already in
place. Such an extension would result in an uplift in the portfolio valuation
of £21.3 million (3.3 pence per share).
· Scenario 2: in line with the Investment Manager's understanding
that some investors are considering AD facilities to run into perpetuity, due
to the scarcity and valuable nature of UK green gas, an alternative scenario
has been produced that assumes a permanent new market opens that provides
sufficient incentive for asset owners to continue to run their plants. Under
this scenario, the Investment Manager would expect revenues to be derived
through a combination of corporate offtake, green certificates (such as RTFCs)
and potentially a lower level of government support mechanism. On this basis,
the Investment Manager considers a realistic result would be to provide a
value uplift of c.£10 million (1.6 pence per share) and significantly extend
the weighted average life of the Company.
The UK government is currently developing a future policy framework for
biomethane production, and these sensitivities will be refined as more
information is released.
Uncontracted revenues on non-energy generating portfolio
Non-energy generating assets, such as batteries and controlled environment
agriculture and aquaculture, are not materially affected by either scarcity of
natural resource or power price markets. Therefore, the Investment Manager has
presented an alternative sensitivity illustrating an assumed 10% increase or
decrease on all uncontracted revenues for each year of the asset lives.
An increase in uncontracted revenues of 10% would result in an upward movement
in the portfolio valuation of £23.6 million (3.7 pence per share) compared to
a decrease in value of £23.4 million (3.7 pence per share) if those revenues
were reduced by the same amount.
Feedstock prices
Feedstock accounts for over half of the operating costs of running an AD
plant. As feedstocks used for AD are predominantly crops grown within existing
farming rotation, they are exposed to the same growing risks as any
agricultural product. The sensitivity assumes a 10% increase or decrease in
feedstock prices relative to the base case for each year of the asset life.
An increase in the feedstock prices of 10% would result in a downward movement
in the portfolio valuation of £6.5 million (1.0 pence per share) compared to
an uplift in value of £6.8 million (1.1 pence per share) if prices were
reduced by the same amount.
No such sensitivity is applicable to FGEN's biomass investment, where fuel
costs are tied under long-term contracts.
Inflation
Most projects in the portfolio receive a revenue stream which is either fully
or partially inflation‑linked. The inflation assumptions are described in
the macroeconomic section on page 32 of the 2025 Annual Report. The
sensitivity assumes a 0.5% increase or decrease in inflation relative to the
base case for each year of the asset life.
An increase in the inflation rates of 0.5% would result in an uplift in the
portfolio valuation of £20.6 million (3.2 pence per share) compared to a
decrease in value of £20.4 million (3.2 pence per share) if rates were
reduced by the same amount.
Euro/sterling and NOK/sterling exchange rates
The proportion of the portfolio assets with cash flows denominated in foreign
currency represents 10% of the portfolio value at 31 March 2025. If foreign
currency strengthens by 5%, the value uplift will be £3.4 million (0.5 pence
per share) compared to a £3.3 million (0.5 pence per share) decrease in value
if FX weakens by the same amount.
Corporation tax
The UK corporation tax assumptions applied in the portfolio valuation are
outlined in the notes to the accounts on page 172 of the 2025 Annual Report.
The sensitivity below assumes a 2% increase or decrease in the rate of UK
corporation tax relative to the base case for each year of the asset life.
An increase in the UK corporation tax rate of 2% would result in a downward
movement in the portfolio valuation of £11.1 million (1.7 pence per share)
compared to an uplift in value of £11.2 million (1.8 pence per share) if
rates were reduced by the same amount.
Sensitivities - impact on NAV at 31 March 2025
The following chart shows the impact of the key sensitivities on NAV per
share, with the £ labels indicating the impact of the sensitivities on
portfolio value.
FEIP investment portfolio
Below is a list of investments into several European opportunities through the
Company's co‑investment in Foresight Energy Infrastructure Partners
("FEIP").
Capacity Commercial
Asset Location (MW) operations date
FEIP: FGEN has committed €25 million to FEIP
Avalon solar and green hydrogen Spain 137MWp Development
Carna pumped storage hydro and co‑located wind Scotland 210MW Under construction
Consortium solar Greece 267MW Under construction
ETA Manfredonia EfW Italy 16.8MW 2012
Inca pumped storage hydro Ireland 300MW Development
Kölvallen wind Sweden 277MW Under construction
MaresConnect interconnector Republic of Ireland 750MW Development and under construction
Puskakorpi wind Finland 88MW Dec 2022
Quartz battery storage England 106.5MW Development
Skaftåsen Vindkraft AB wind Sweden 231MW June 2023
Torozos wind Spain 93.5MW Dec 2019
85 Degrees geothermal heat Netherlands 53MW Operational/under construction
Beleolico offshore wind Italy 30MW July 2022
Blue Jay battery storage Scotland 99.3MW Development and under construction
OPERATIONAL REVIEW
Investment performance
The NAV per share at 31 March 2025 was 106.5 pence, down from 113.6 pence at
31 March 2024.
FGEN has announced an interim dividend of 1.95 pence per share for the quarter
ended 31 March 2025, payable on 27 June 2025, in line with the full‑year
target of 7.80 pence per share for the year ended 31 March 2025.
Financial performance
The Company's operating assets delivered strong cash earnings of £90.4
million (31 March 2024: £87 million), making this another strong period of
earnings, driving a dividend cover of 1.32x, up from 1.30x in the prior year.
The chart below shows the budgeted proportion of cash distributions forecast
to be received from underlying investments at the start of the financial year,
versus the relative sector-level over or under-performance against this target
during the year.
The 7.7% under‑performance versus budget is largely attributable to low wind
and solar resource, as well as the bringing forward of some capex works on our
bioenergy assets.
See below for the equivalent chart showing generation performance of the
energy generating assets versus budget.
Across the portfolio companies, total revenue generated was £284.8 million
and total EBITDA was £131.6 million. The Company operates a diversified
portfolio of assets across multiple sectors which supports diversification of
the operating risk profile across the portfolio - with both revenues and
corresponding margins varying based on the underlying operations of each. For
example, wind and solar assets generate electricity through the use of a free
natural resource and therefore typically have a lower cost base than an
anaerobic digestion facility, which requires a feedstock as part of its energy
generation process. To compensate, these anaerobic digestion facilities will
also typically have a higher revenue base - as can be seen by the average
all-in energy price table below.
Financial performance: budget vs actual project distributions
The average all-in price received by the differing technology classes in the
UK for their energy volumes generated in the year ended 31 March 2025 is shown
in the table below:
Year ended Year ended
Average all‑in energy price 31 Mar 2025 31 Mar 2024
Wind £201per MWhe £148 per MWhe
AD electric £262 per MWhe £317 per MWhe
AD gas-to-grid £152 per MWhth £148 per MWhth
Biomass £184 per MWhe £205 per MWhe
Energy-from-waste €133 per MWhe €109 per MWhe
Solar £313 per MWhe £217 per MWhe
Hydro £295 per MWhe £308 per MWhe
Operational performance
Overall, the operating performance of the environmental infrastructure
portfolio was satisfactory. The renewables segment of the portfolio produced
1,272GWh (2024: 1,358GWh) of green energy, 9.7% below the generational target.
While the drop in generation compared to 2024 was partly due to the sale of
the rooftop solar portfolio in 2025, the negative deviation against the annual
target was primarily due to low wind resource, an unplanned outage at
Cramlington in Q1 and a biological issue at Bio Collectors in Q3. When grid
outages and compensation (insurance and warranty claims) are taken into
consideration, the equivalent portfolio generation was 1,322GWh, 6.1% below
the target for the year.
The concession-based projects, other bioenergy assets and agri-AD portfolios
performed in line with their respective targets.
Renewable energy generation
Power price hedging
FGEN's exposure to wholesale power prices is mitigated by the practice of
having a substantial proportion of generation for both electricity and gas on
fixed price arrangements for durations ranging from six months out to two
years. The extent of generation subject to fixes at 31 March 2025 is as
follows:
Summer 2025 Winter 2025 Summer 2026 Winter 2026
Wind 59% 69% - -
Solar 54% 54% 7% 7%
Biomass - - - -
Energy-from-waste - - - -
AD - electric 100% 96% - -
AD - gas 80% 76% 2% 2%
Weighted average 53% 55% 1% 1%
The Investment Manager continues to monitor the market beyond March 2026 for
opportunities to fix prices to mitigate risk across the portfolio, but
presently sees more value in having a higher proportion than usual unfixed as
prices stabilise.
Renewable energy: 1,272GWh generated, -9.7% below budget
Baseload generators
Anaerobic digestion
The AD portfolio is the largest producer of energy on a GWh basis and
generated 37% of the energy produced by the FGEN portfolio. Gas generation
(measured in GWh thermal generated) was 476GWh(1), 0.1% ahead of its sector
target (2024 variance was 3.6% favourable).
Seven of the nine plants outperformed their generation targets, notably strong
performances coming from Grange Farm, Rainworth and Peacehill, which performed
>5% above their generation targets. Vulcan's negative variance (-5.6%)
against its generational target was due to the commissioning of two different
value enhancement projects, while the prolonged ramp-up period following a
digester degrit at Merlin Renewables resulted in it finishing the year 11.5%
below its target.
1. When FGEN's ownership % is taken into account, the generation by the
AD portfolio was 244GWh, 0.4% above the equivalent sector target.
All AD plants have had access to sufficient feedstock throughout the year
despite a poor rye harvest in July 2024. Maize and rye costs remain stable
with no real fluctuations compared to the previous year. The conditions for
digestate spreading in early 2025 have been optimal, resulting in reduced
storage requirements and therefore cost. Despite this positive year, more
clamp extension and additional lagoon projects are being developed to enhance
climate change resilience.
Wholesale gas and power prices gradually increased from March 2024, peaking in
February 2025. Though political tensions in Europe and the Middle East
contributed to this, the impact was mitigated by LNG supplies throughout the
year.
The Investment Manager has taken the opportunity to hedge 75%+ of the gas grid
capacity for summer and winter 2025, while opportunities to hedge in summer
and winter 2026 are being monitored, as seen in the table on page 39 of the
2025 Annual Report.
Waste & bioenergy
The renewable energy generation segment of the waste & bioenergy portfolio
is the second largest producer of energy on a GWh basis and generated 30% of
the energy produced by the portfolio. The waste & bioenergy portfolio
generated 377GWh(1), this was, 12.5% below the sector target; when
compensation from insurance claims and liquidated damages are considered, the
negative variance is reduced to 4.5%.
Despite Cramlington meeting or exceeding its generational target for six
months of the year, an outage spanning May and June 2024 to address corrosion
issues discovered within the asset's ID fan meant generation was 14% below the
annual target. Compensation for this event has been received from the O&M
contractor while further improvements to the flue gas treatment line have been
made to ensure a long-term solution is in place.
1. When FGEN's ownership % is taken into account, the generation by the
bioenergy portfolio was 371GWh, -14.4% below the equivalent sector target.
Bio Collectors has unfortunately had a challenging year (28% below the
generational target) following consistent gas grid curtailments, technical
issues and a digester foaming incident towards the end of 2024. In reaction to
this, the Investment Manager has identified an expert in the AD industry to
develop and initiate improvement works at Bio Collectors. Improvements are
expected to be realised midway through the next financial year; to date, the
degritting of both digesters has been initiated and key process upgrades
identified, allowing increased generation and availability.
Both Codford Biogas and ETA Manfredonia met their generational targets for the
year.
Following the year end, ETA Manfredonia suffered an unplanned outage as a
result of a short circuit within the turbine's alternator. Analysis of the
work required to repair the turbine indicates a prolonged period of downtime,
with a plan being worked through by the site's operator. Conversations are
ongoing with loss adjusters, and it is believed that a significant proportion
of losses will be recoverable through the site's insurance. Works remain
ongoing, and an estimate of the remaining downtime and insurance
recoverability has been recognised within the asset's valuation.
Hydro
The hydro portfolio generated 4GWh, which was 29% below target (31 March 2024:
5GWh). This is a very small part of FGEN's portfolio and represents less than
1% of the total energy generation for the year. Though rainfall levels were in
line with expectation, mechanical issues at two of the sites brought overall
generation below the target for the year.
An insurance claim for one of the mechanical downtime events is ongoing and
is expected to ensure the plant is compensated for the loss of revenue.
Intermittent generators
Wind
The wind portfolio generated 350GWh (31 March 2024: 390GWh), representing 27%
of the total energy generated by the portfolio. This was 17.8% below the
sector target. The negative variance in production was partly the result of
low wind resource but also availability issues at various sites.
Although a majority of the assets performed as expected, there were six that
experienced significant downtime events which resulted in the gross
availability being 4.6% below anticipated levels.
Four of the events will be compensated via the O&M performance mechanism
at the conclusion of their respective contractual years. When these estimated
compensation payments (insurance and warranty claims) are taken into
consideration, the equivalent wind generation for the year was 362GWh, 15%
below the target.
The average power price realised for the wind assets was 112% above the
average variable price through FY25 due to the high level of fixes in place
across the portfolio. 50%+ of the wind generational capacity is now hedged
until March 2026, as seen in the table on page 39 of the 2025 Annual Report.
Solar
The solar portfolio generated 65GWh, which was 7.6% below the sector target;
this represents 5.1% of the total energy generated by the portfolio. The
negative variance was primarily due to irradiation levels across the financial
year being 4.2% below expectations.
In addition, inverter issues at the Amber and Branden sites and a number of
significant grid constraints at CSGH Shoals Hook also contributed to this. To
ensure the inverter issues do not reoccur, increased investment in the
necessary spare parts, training and optimisation of the inverter units has
been conducted.
A new asset manager has now been appointed at eight of the 10 sites, the
remaining two are expected to move over in July 2025.
Over 50% of the solar portfolio capacity is now fixed until March 2026, as
seen in the table on page 39 of the 2025 Annual Report.
Other energy infrastructure
CNG Fuels (in construction phase)
The CNG refuelling stations achieved a 21% increase in fuel dispensed
year-on-year as customers brought new vehicles into service and new stations
became established.
During this financial year, following completion of construction, two sites
were commissioned at Aylesford and Doncaster. Construction of a new station in
Livingston commenced and became operational in late May. Following the CNG
Fuels restructuring, a further operational site, Crewe, is now within the
portfolio.
FGEN invested £2.4 million into CNG during the year. As at 31 March 2025, CNG
held 16 natural gas refuelling stations, including the site under
construction. FGEN invested a total of £27.8 million as at the balance sheet
date.
Battery storage assets
West Gourdie, FGEN's operational 50MW battery asset in Dundee, Scotland, has
been participating in various services including Dynamic Containment ("DC"),
wholesale day‑ahead, intraday, balancing mechanism and capacity markets. The
primary source of revenue is the DC frequency balancing service, which
accounts for over 50% of earnings. The remainder comes from wholesale
electricity trading and capacity market services.
The availability across the year was 94%, which was 4% below the O&M
contractual target. Many of the downtime events contributing to this are
expected to be compensated for via the performance mechanism in the O&M
contract. A majority of the incidents related to planned outages for
maintenance activities and checks to be conducted.
Based on publicly available data for the last 12 months, the West Gourdie site
has ranked first or second among comparable peers in Scotland for one-hour
index sites.
Other battery storage assets (in construction phase)
FGEN currently owns three 50MW battery storage assets in the UK. The Sandridge
project has made significant progress, with all onsite works related to the
battery installation successfully completed. Despite challenges with the
distribution network operator ("DNO") causing prolonged delays, these issues
have been resolved. Energisation and takeover are now expected in the second
half of 2025.
The Investment Manager is actively pursuing the sale of both Lunanhead and
Clayfords. Lunanhead remains under exclusivity, with completion targeted for
late 2025. Further options are being explored for Clayfords. These assets
represent 0.5% of total portfolio value.
Sustainable resource management
Waste and wastewater concessions
The ELWA waste project continues to deliver operational and financial
performance in line with expectations. Operational performance targets were
again exceeded with diversion from landfill at 99.98%, substantially ahead of
the 67% contract target, and recycling at 32.2%, also ahead of the 22%
contract target. Waste tonnages delivered remained stable throughout the year
and were in line with expectations.
Preparations for the handback of this project to the authority in 2027 have
been initiated. All changes and requests following the sale of Renewi's UK
business to Biffa have been addressed and no issues are foreseen in the long
term.
The Tay wastewater project had another stable year operationally, with no
availability or performance deductions in the period.
Controlled environment - Glasshouse project (in ramp-up phase)
The Glasshouse is currently in the operational ramp‑up phase with full sales
anticipated by 2026/27. Whilst onboarding customers has been slower than
expected, prices and margins remain encouraging.
Controlled environment - Rjukan project (in construction phase)
The project is now 30 months into construction and c.90% complete with the
first harvest anticipated by July 2025. There are currently over 2 million
trout in the facility with the largest fish now over 2.5kg in size.
Green hydrogen
As announced on 8 November 2024, the Company's investment in the HH2E hydrogen
development was written down following HH2E's decision to file for insolvency
as a result of the failure to secure the further funding necessary to meet its
ongoing commitments. FGEN invested £19.3 million prior to the write-down and
currently considers it unlikely that there will be any recovery, given that
FGEN's claim on the company is subordinated to general creditors under German
law. Detailed information about the factors leading to the write-down of the
project can be found on page 28 of the Half-year Report 2024.
CRAMLINGTON CASE STUDY
Investment overview
In June 2021, FGEN acquired a 100% stake in Cramlington Renewable Energy
Developments Limited ("Cramlington") which owns a biomass plant and its
underlying contracts. The plant utilises proven technology to process a
diversified biomass fuel mix, creating up to 26MW of electrical power and 6MW
of heat.
Investment highlights
Sector: Renewable energy generation - Biomass
Location: Northumberland, UK
Ownership: 100%
Start of commercial operations: 2018
Operational status: Operational
Accreditation:
ROCs (electricity) 12 years' remaining life
RHI subsidy (heat) 13 years' remaining life
Percentage of portfolio by value: 10%
Invested: £51.5 million
Basis of FGEN valuation: Discounted cash flow ("DCF")
FGEN equity value: £77.1 million
Distributions: £51.2 million
Implied MOIC(1): 2.5x
Latest IRR: 25.8%
Payback period: 3.8 years
Cramlington sensitivities on NAV per share
1. Implied MOIC calculated as total cash consideration plus current
valuation, divided by cash invested.
What is biomass combined heat and power ("CHP")?
A CHP plant creates both electricity and heat from its fuel source, which in
Cramlington's case is a blend of woody biomass. The fuel is mixed, screened
and then fed onto a vibrating grate for combustion. This process produces a
hot flue gas which in turn raises water temperature inside a boiler to produce
superheated steam. This steam is then used in a turbine to generate
electricity and heat. All heat is exported along with some electricity to
adjacent industrial customers, with the remaining electricity production
exported to the national grid.
Investment attractions
· ROCs and RHI subsidy regimes expire in March 2037 and March 2038
respectively. The base investment case assumes operation until the end of the
ROC regime, with freehold rights in place to support potential asset
life extensions.
· Exporting both heat and power to two neighbouring private wire
customers, with potential to export higher levels to both existing customers
and new customers in the surrounding business parks.
· Long-term contracts for PPA, private wire, feedstock and O&M
services.
Origination
· The project was acquired out of an administration process that was
triggered by external lenders who had funded the previously levered structure.
A key priority for FGEN was to de‑risk its investment by buying out the
lenders, meaning that the project is now ungeared and free of restrictive loan
covenants.
· The project also required technical, contractual and feedstock
optimisation works, which Foresight/FGEN was uniquely placed to deliver.
Value creation
· Construction of a fuel processing area to reduce fuel costs and
double handling by allowing the supplier to process local forestry and
arboriculture residues on site. This area also enables blending of various
stocks to control fuel quality and moisture content. As a result, the plant's
monthly availability improved from the high 80s to over 95%.
· Prior to FGEN's acquisition, fuel was supplied by a large number of
suppliers, resulting in inconsistent quality and exposing the project to
market price fluctuations. In 2022, the project streamlined this structure by
securing a 12-year single-supplier agreement with Seras, leading to reduced
costs, price stability and enhanced fuel quality creating a significant
increase in the project's valuation.
· In our first year of ownership, we uncovered the key areas causing
downtime. To improve reliability, we implemented upgrades, such as a fuel
bypass chute, which allows for manual feeding of the boiler during equipment
failures in the fuel hall.
· Implementing strategic power price hedging during volatile periods
right after acquiring the project enabled Cramlington to seize the upside.
Coupled with enhanced availability, this strategy facilitated significant
early‑year dividends. We applied the same tactic to REGO certificates, and
with our current four-year fix, we are selling certificates at 20 times the
current market rate.
Sustainability credentials
· To reduce waste sent to landfill, the project tested and certified
its bottom ash as a soil enhancer for local farms. Each year, around 2,500
tonnes of ash provide essential minerals, significantly lowering costs for
farmers, while also allowing us to benefit from repurposing waste.
Cramlington revenue forecast split(1)
ROC 53%
PPA export 34%
PPA other (EB, Triads and REGO) 3%
Private wire electricity 7%
Private wire heat 1%
RHI 2%
1. Based on NPV of future forecast revenues over the remaining life of
the asset.
Divestments and restructuring
Disposal of 51% of six AD facilities
In August 2024, the Company announced the sale of 51% of a portfolio of six
gas‑to‑grid AD facilities to Future Biogas for a total consideration of
£68.1 million, equal to the NAV of the portfolio. Subsequently, further value
has been recognised through delivery of value enhancements and alignment of
operating assumptions, including the removal of operator profit sharing that
was agreed as part of the transaction which alone resulted in an additional 9%
uplift to valuation. FGEN will continue to own 49% of the AD portfolio, which
has a combined generating capacity of 38MW, as well as its interests in three
further agri-AD assets which are not operated by Future Biogas and not part of
the agreement.
The Company is optimistic about the partnership with Future Biogas as it
provides a greater alignment of interests between the parties, creating the
potential for further asset enhancements and life extensions beyond the
current Renewable Heat Incentive ("RHI") subsidy. These initiatives are
expected to deliver uplifts to the valuation of the Company's remaining
holding in the AD portfolio over time.
Disposal of 100% of rooftop solar portfolio
In December 2024, the Company announced the sale of 100% of a portfolio of
operational rooftop solar assets for a total consideration of
£21.2 million. This disposal recognised a premium to NAV and facilitated the
recycling of capital from a lower returning, non-core part of the portfolio.
A total of £20.5 million was payable upon completion with a further £0.7
million in deferred consideration linked to the satisfaction of certain
post-completion obligations which will likely result in a further £0.2
million in FY26.
CNG restructuring
Shortly after the year end, FGEN, together with another Foresight fund,
completed on a transaction to combine their investments in the CNG refuelling
station assets with the assets of ReFuels N.V. ("ReFuels"), a leading European
supplier of Bio-CNG for the decarbonisation of heavy goods vehicles. ReFuels
contributed its investments in CNG Fuels Ltd, the developer and operator of
the station assets, and 79.2% of a biomethane sourcing company, Renewable
Transport Fuel Services Ltd.
The combination creates a fully integrated biomethane sourcing, station
ownership and Renewable Transport Fuel Certificate business well placed to
build on its market leading position. The current network of stations in
operation has the capacity to serve 10,000 HGVs per day and has an annual
dispensing capacity of more than 310 million kg of Bio-CNG to customers
including Amazon, DHL and Marks & Spencer. The transaction provides a path
to further growth via a rollout of a further nine public access Bio-CNG
refuelling stations by the end of 2028.
Other investments
FEIP
FGEN has committed to investing €25 million in Foresight Energy
Infrastructure Partners SCSp ("FEIP"), a Luxembourg limited partnership
investment vehicle. At 31 March 2025, the Company has invested in 15
projects and is no longer seeking to make new investments.
The investment in FEIP allows FGEN to further diversify its geographic and
technology exposure, while also gaining an allocation to construction‑stage
assets which is expected to enhance returns.
Given construction-stage assets can only represent a small part of the
Company's portfolio, the FEIP investment allows a greater level of
diversification than would be possible with direct investments, providing for
a more attractive risk-adjusted return profile. FGEN is excused from any FEIP
investment that is not consistent with FGEN's investment policy. No management
fees are payable on the amounts invested by FGEN. FEIP also owns a 45% stake
in ETA, the Italian EfW plant, in which FGEN is also an investor. As at
31 March 2025, €22.5 million has been invested in FEIP.
Financing
On 25 April 2025, FGEN announced that it has reduced the size of its
multi-currency revolving credit facility ("RCF") from £200 million to £150
million. The downsizing of the RCF will result in an annual cost saving of
£367,500. The reduced RCF continues to provide ample headroom to cover
outstanding portfolio commitments, including the remaining payments for the
Company's well-progressed construction-stage investments.
The £150 million RCF has an uncommitted accordion facility of up to £30
million and an uncommitted option to extend for a further year.
As at 31 March 2025, drawings under the RCF were £99.3 million.
The RCF provides an increased source of flexible funding outside equity
raisings, with both sterling and euro drawdowns available on attractive terms.
The facility will principally be used to make future acquisitions of
environmental infrastructure investments to add to the current portfolio, as
well as covering any working capital requirements.
The interest charged in respect of the renewed RCF continues to be linked to
the Company's ESG performance, with FGEN incurring a 5 bps premium or discount
to its margin based on performance against defined targets. Those targets
include:
· environmental: increase coverage of independent biodiversity
assessments and implement initiatives to enhance biodiversity net gain across
the portfolio;
· social: increase volume of contributions to local communities; and
· governance: maintain a low number of work-related accidents, as
defined under the Reporting of Injuries, Diseases and Dangerous Occurrences
Regulations ("RIDDOR") by the Health and Safety Executive.
Performance against these targets will be measured annually, with the cost of
the RCF being amended in the following financial year. Lenders to the facility
include HSBC, ING, Clydesdale Bank, National Australia Bank and Royal Bank of
Scotland International. The margin can vary between 205 bps and 215 bps over
SONIA (Sterling Overnight Index Average) for sterling drawings and Euribor
(Euro Interbank Offered Rate) for euro drawings, depending on performance
against the ESG targets.
In addition to the RCF, several of the projects have underlying project-level
debt.
Project-level gearing at 31 March 2025 across the portfolio was 18.5% (31
March 2024: 16.9%). Taking into account the amount drawn down under the RCF of
£99.3 million, the overall fund gearing at 31 March 2025 was 28.7% (31 March
2024: 31.2%).
As at 31 March 2025, the Group, which comprises the Company and the
intermediate holding companies, had cash balances of £7.8 million (31 March
2024: £18.1 million).
Financing at 31 March 2025
£99.3m drawn on RCF
28.7% gearing(1)
1. Gearing is an alternative performance measure ("APM"). The APMs
within the accounts are defined on pages 182 and 183 of the 2025 Annual
Report.
RISKS AND RISK MANAGEMENT
FGEN has a comprehensive risk management framework overseen by the Risk
Committee, comprising independent non‑executive Directors.
Risk is the potential for events to occur that may result in damage, liability
or loss. Such occurrences could adversely impact the Company's business model,
reputation or financial standing. Alternatively, under a well‑formed risk
management framework, potential risks can be identified in advance and can
either be mitigated or possibly even converted into opportunities.
Pages 54 to 64 of the 2025 Annual Report detail the principal and emerging
risks that the Directors consider are material and which potentially could
impact the Company or occur in an environmental infrastructure project such as
those invested in by the Company.
In assessing these risks for the purposes of this report, the Directors
typically consider the next 12-18 months as being the critical window for
risks to materialise. Environmental infrastructure assets are long-term assets
and risks can crystallise throughout an asset's life; nevertheless, this
report is intended to give the reader an understanding of the current risk
outlook for the Company and the risks that the Board and the Investment
Manager feel have the most significance at the present time. This outlook is
updated regularly in the publications that the Company puts into the market
and so readers can get a sense of how the Board and the Investment Manager's
view of risks changes over time.
Given that the Company delegates certain activities to the Investment Manager
and Administrator, reliance is also placed on the controls of the Group's
service providers.
In the normal course of business, each project will have developed a rigorous
risk management framework, including a comprehensive risk register, that is
reviewed and updated regularly and approved by its board. The purpose of
FGEN's risk management policies and procedures is not to eliminate risk
completely, as this is neither possible nor commercially viable. Rather, it is
to reduce the consequence of occurrence and to ensure that FGEN is adequately
prepared to deal with risks so as to minimise their effect should they
materialise.
Risk identification and monitoring
Three lines of defence
First line of defence ("1LoD"): This consists of functions that manage the
risk gateway into the portfolio. They are accountable for and responsible to
perform or enable the identification, measurement, management, and reporting
of risks inherent to the investment activities. This includes the design,
operation and ensuring performance and effectiveness of controls.
Second line of defence ("2LoD"): This consists of independent risk management
and compliance functions which are responsible for establishing Foresight's
risk management framework and associated control standards, as well as
providing independent challenge over the activities, processes and controls
carried out by the first line. Additionally, where agreed with the First line
of Defence and the relevant governance forum, 2LoD can perform and complement
the responsibility of identification, measurement, management, and reporting
of risks, with 1LoD retaining the overall accountability for risk management
related to their activities.
Third line of Defence ("3LoD"): This provides independent risk assurance to
the Board and senior management about the adequacy of the overall risk and
control framework, and establishes a mechanism for assessing the effectiveness
of the risk management and control activities of the first and second lines.
FGEN has a separate Risk Committee, comprising five non‑executive Directors,
which is responsible for overseeing and advising the Board on the current and
potential risk exposures of the Company, with particular focus on the Group's
principal risks, being those with the greatest potential to influence
shareholders' economic decisions, and the controls in place to mitigate those
risks. The Board believes that the FGEN Risk Committee provides effective
challenge to the risk and compliance frameworks set in place by the Investment
Manager. The Board acknowledges that this is not equivalent to an independent
internal audit function but that it provides a sufficient and proportionate
approach. The Board feels they have a sufficient level of oversight of
the internal controls in place.
In the case of new and emerging risks, assessment occurs outside of the
quarterly cycle. These systems of internal control were in place for the year
under review and continue to be in operation.
Risk management framework
FGEN has a comprehensive risk management framework and risk register that
assesses: a) the probability of each identified risk materialising; and b) the
impact it may have on FGEN.
Mitigations and, where applicable, controls have been developed with respect
to each risk so as first to reduce the likelihood of such risk occurring and
secondly to minimise the severity of its impact in the case that it does
occur.
The risk register is a "live" document that is reviewed and updated regularly
by the Risk Committee as new risks emerge and existing risks change.
The principal risks faced by the Group are formally reviewed by the Risk
Committee at each quarterly meeting and the Committee reports to the Board in
respect of changes to the general risk environment and material developments
in already identified risks.
Each of the underlying projects is overseen by an experienced portfolio
manager who reports to their individual project board. The portfolio managers
maintain strong relationships between counterparties, contractors,
third‑party asset managers and other stakeholders. This ensures effective
management of potential risks.
Emerging risks
Emerging risks are characterised by a degree of uncertainty and the Investment
Manager and the Board consider new and emerging risks at the Risk Committee
which takes place quarterly; the risk register is then updated to include
these considerations if required. Furthermore, the Company is advised by
various advisers within the listed infrastructure space and the Investment
Manager, Foresight, considers emerging risks over a wider market arena.
Examples of emerging risks that have been considered by the Board and
Investment Manager during the period include the following:
i) Ongoing uncertainty over energy market reform in the UK, with perhaps
the most critical issue being the extent of reform to locational and
operational signals in the electricity market, with the most drastic action
under consideration being the implementation of zonal pricing across the UK.
This is a topic of fairly fierce debate within central government, with
further updates from DESNZ expected in mid-2025.
ii) The re-election of the Trump administration and the related global
impacts of inflationary policies with the "America First" approach leading to
the risk of heightened geopolitical tensions, and inflationary impacts of the
trade and tariff wars leading to increasing costs across supply chains.
iii) Whilst not during the period, the most recent escalation of the
situation in the Middle East, with direct US involvement in the broader
Iran/Israel conflict, has the potential to heighten geopolitical tension
further and disrupt both energy pricing and global supply chains, amongst
other potential implications.
This risk map shows our assessment of each area of principal risk after
mitigation.
FGEN's risk register covers six main areas of risk:
· Strategic, economic and political
· Operational, business, processes and resourcing
· Financial and taxation
· Compliance and legal
· Asset specific
· ESG
This year we are only detailing the most pertinent principal risks affecting
the Company. We have identified 13 risks within two of the above-mentioned
categories. These risks are summarised below, followed by a detailed
discussion of the mitigating factors.
See more on climate-related risks in our Sustainability and ESG report on
pages 83 to 86 of the 2025 Annual Report.
STRATEGIC, ECONOMIC AND POLITICAL
1 Interest rates
Change in year
Increased with interest rates continuing to be at elevated levels
Potential impact
Interest rate increases may impact on the Fund in several ways:
i. Valuation of the portfolio through the discount rate applied to
perform the DCF calculations.
ii. FGEN cash flows to the extent that interest on borrowings was
determined according to floating rates.
iii. Interest rates and rates of return from other asset classes impact the
relative attractiveness of FGEN returns to investors, which could impact on
investor appetite to invest in the Fund.
Mitigations
· Using interest rate swaps and fixed rate loans, finance costs are
fixed at the time of the contract being signed, substantially reducing
interest rate risk.
· Selection of discount rates based on market intelligence.
· Detailed cash flow modelling to predict the impact of increasing
interest rates.
Controls
· Foresight's Valuation Committee meets quarterly to assess the
valuation of the Company, as prepared by the finance and valuations teams;
which includes assessment of the discount rates.
· This valuation is reviewed and signed off by the FGEN Board at
quarterly valuation meetings that inform the Company's NAV updates.
· An independent verification of the Company's valuation methodology
and assumptions is conducted by PwC.
Link to Fund objectives
Long-term predictable income growth for shareholders
Potential for capital growth
Residual risk
High
2 Access to capital
Change in year
Increased
Potential impact
· The challenging macroeconomic backdrop continued in 2024, with the
Company's share price, as per the wider renewable infrastructure investment
trust sector, continuing to trade at a material discount to NAV, leading to an
inability to raise new equity.
· As a result, there is a risk that FGEN is unable to achieve its
stated ambition of growing the portfolio by acquiring new assets due to a lack
of funding, which could result in long-term NAV decline.
Mitigations
· The Company has maintained a disciplined approach to capital
allocation over the period in order to help address the discount, which has
focused on paying down debt and returning capital to shareholders via
buybacks.
· The Investment Manager has announced its medium-term disposal
programme, targeting exit from its growth assets once sufficiently mature in
order to generate proceeds that can be used under the allocation strategy as
decided by the Board in time, whether that be reinvestment into portfolio
growth, further debt repayment, return to shareholders, or a combination.
Controls
· The FGEN Investment Committee oversees and monitors the discount
controls being applied, with constant evaluation of the best use of available
capital in line with the capital allocation policy.
Link to Fund objectives
Long-term predictable income growth for shareholders
Potential for capital growth
Residual risk
Medium
3 Adverse movement in inflation
Change in year
No change
Potential impact
· The underlying assets in the portfolio, and therefore the returns
expected from them, have some exposure to inflation. This ranges from direct
exposure, such as subsidies and service contracts that increase in line with
RPI annually, to other revenue and cost items where the link to inflation is
not contractual and its effect must be estimated.
· In the current inflation environment, there is greater uncertainty
than previously about the path that inflation will follow. If inflation is
materially lower than the assumptions used in valuations, then there is a risk
that the portfolio value will fall. FGEN has adopted an assumption of 3.5% RPI
inflation for the current year, dropping to 3% until 2030.
· Nominal discount rates are used in the discounted cash flow ("DCF")
valuation methodology used to value portfolio assets. There is a risk that
discount rates increase in a high inflation environment, impacting valuations.
Mitigations
· Monitoring of market forecasts for inflation and input from the
Company's independent valuations specialist regarding inflation assumptions
seen in the market. Returns from the assets in the portfolio are highly
correlated with inflation due to revenues from PFI assets, green benefits for
renewable energy assets and most operational costs being directly linked to an
inflation index. This results in a "natural hedge", removing the need for the
use of derivatives to mitigate inflation risk.
· The adoption of a "progressive" dividend policy rather than an
explicitly "inflation-linked" one gives the Company additional flexibility to
set dividend targets at a sustainable level. Higher inflation rates may
mitigate the impact of higher interest rates.
Controls
· The Foresight Valuation Committee will approve assumptions used in
the valuation and the FGEN Board has ultimate authority over the portfolio
valuation.
· An external review of valuations and valuation methodology is also
undertaken by PwC.
Link to Fund objectives
Long-term predictable income growth for shareholders
Potential for capital growth
Residual risk
Medium
4 Changes in regulation and government support
Change in year
Increased
Potential impact
· Risk that regulatory, legal or contractual change in the general
structure of electricity network charging regime or basis of use leads to
increased costs for FGEN's renewable energy projects or lower revenues than
forecast, negatively impacting cash flow and portfolio valuation (with energy
market reform in the UK as the most acute risk at present).
· FGEN is required to comply with certain regulations, being a
Guernsey company listed on the London Stock Exchange ("LSE"), including those
under the Alternative Investment Fund Managers Directive ("AIFMD") and the
Foreign Account Tax Compliance Act ("FATCA"). There is a risk that failure to
comply with any of the relevant rules could result in a negative reputational
or financial impact on the Company.
· The newly emerging area of climate-related disclosures is changing
rapidly as understanding of what constitutes best practice evolves. There is a
risk that FGEN fails to disclose properly against the new requirements or that
investors consider disclosures to be insufficient.
Mitigations
· Cultivating links with trade bodies and relevant government
departments in order to keep abreast of proposed regulatory changes and lobby
for the Fund's interests.
· Maintaining a diversified portfolio so no one set of regulatory
risks related to a single technology predominates, alongside scenario planning
to inform the Risk Committee on potential impact or likelihood changes.
· The Investment Manager engages with specialist consultants to
assist with developing forecasts reflecting changing network regulations.
Controls
· Through Foresight's comprehensive compliance monitoring programme,
FGEN ensures that it remains well informed as to the legislation, regulation
and guidance relevant to both the Company itself as well as the project
entities in which it invests.
· The Board monitors compliance information provided by the
Administrator, Company Secretary, Investment Manager and legal counsel and
monitors ongoing compliance developments relevant to a Guernsey company listed
on the LSE.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
Medium
5 Reputational
Change in year
Increased
Potential impact
· Risk that something occurs that is perceived by investors or other
market participants to damage FGEN's reputation, such that they do not wish to
do business with FGEN.
· FGEN's activities span a range of environmental infrastructure
sectors with multiple touchpoints with local stakeholders, regulators,
contractual counterparties, local communities and other parties who are active
in the areas in which FGEN operates. As FGEN grows and its operations become
more complex, the risk that FGEN is considered to have acted improperly
increases, leading to reputational damage and investors avoiding the Company's
shares.
· FGEN aims to conduct its business in accordance with ESG principles
and is public in this aim. The ESG landscape is changing rapidly and there is
increased scrutiny of businesses' claims in this area. FGEN could suffer
reputational damage if it is considered to be "greenwashing" or falling short
of ESG standards, leading to investors avoiding the Company's shares.
Mitigations
· FGEN engages its own PR advisers, who would be able to assist in
the event of risk to reputation. It will also need to consider the possibility
of reputational events occurring that effect the Foresight brand.
· The FGEN Investment Committee also has responsibility for approving
investments where risk to reputation is a possibility.
· On sustainability matters, the Company is advised by the Investment
Manager and where appropriate it is advised by external consultants with
specific expertise.
Controls
· Regular monitoring of news sources is conducted by the Foresight
marketing team to identify and address potential issues.
· As a regulated entity, the Investment Manager conducts specific
training on anti‑greenwashing and adherence to the FCA Handbook for its
relevant employees.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
High
OPERATIONAL, BUSINESS, PROCESSES AND RESOURCING
6 Ramp-up risk
Change in year
Increased
Potential impact
· The three growth assets in the FGEN portfolio, i.e. Rjukan, CNG and
the Glasshouse, are all in various stages of ramp-up, with Rjukan targeting
first harvest in the summer, CNG further station rollouts and higher volumes
of dispensed gas, and the Glasshouse further sales and market penetration.
· There is a risk that the operational and sales ramp-up across the
assets does not progress as envisaged due to issues such as delays in timing,
technical issues, production volumes being lower than forecast, infection
risk, pricing and sales volumes.
Mitigations
· Use of suitably experienced contractors.
· Conservative modelling assumptions with respect to pricing and
ramp-up periods, including short-term liquidity monitoring.
· Regular monitoring and oversight of management team for early
identification of issues.
Controls
· The approval of project directors is required for all activities,
meaning that there is constant oversight and early flagging of any potential
risks.
· The Foresight Portfolio Oversight Committee and the FGEN Risk
Committee are kept appraised of all such potential risks, and ensure that the
appropriate processes are in place for comprehensive monitoring, and
application of mitigations.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
Medium
7 Asset exposure to weather resource
Change in year
Increased
Potential impact
· By the very nature of wind, solar and water-related environmental
infrastructure projects, their financial performance is dependent on the
volume of weather resource available over time, whether measured through wind
speeds, irradiance or millimetres of rainfall. These are factors outside the
control of FGEN or the projects themselves, with the risk of a significant
effect on performance if the outcome is significantly different from the
assumptions made in forecasting revenue and costs and hence returns to FGEN.
Mitigations
· For renewable energy projects there is a degree of protection from
this variability in weather resource from portfolio diversification, as solar
is more productive in the summer and wind more productive in the winter, with
the absolute level of resource being weakly negatively correlated.
· On all projects, technical consultants are employed to advise on
the assumptions which should be made regarding volume and its impact on
performance for each individual asset.
· Risks in this area diminish over time as operational track record
provides a stronger base for forecasts than consultants' estimates.
· The Investment Manager periodically reviews the performance of the
asset and adjusts assumptions where necessary.
Controls
· Foresight's Valuation Committee meets quarterly to assess the
valuation of the Company, as prepared by the finance and valuations teams,
which includes assessment of the discount rates.
· This valuation is then reviewed and signed off by the FGEN Board at
quarterly valuation meetings that inform the Company's NAV updates, as well as
an annual review by PwC.
· Foresight Investment Committee (for project financing approach);
FGEN Investment Committee.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
High
8 Climate change - physical risk
Change in year
No change
Potential impact
· Climate-related physical risks are related to the potential
physical impacts of both acute (extreme) weather events and chronic changes to
climate patterns.
· This risk has the potential to impact FGEN's assets, which could
impact portfolio returns.
Mitigations
· The risk is mitigated in part by owning a portfolio that is
diversified by location, technology, resource use and revenue make-up.
· Further information on mitigants is provided in the Sustainability
and ESG report on page 87 of the 2025 Annual Report.
Controls
· Climate-related risks are monitored by the Investment Manager and
reported to the ESG Committee and Risk Committee.
· Disaster recovery planning is in place for loss of systems in the
event of severe physical risks occurring.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
Medium
9 Volume and cost of feedstock resource
Change in year
No change
Potential impact
· For environmental infrastructure assets that need to source
feedstock or analogous resources, there are risks associated with the volume
of feedstock available and the costs or revenues associated with it. If
sufficient feedstock is not available for an asset to operate at its optimum
level, or feedstock is only available at a cost that is more expensive than
the investment case, then FGEN's returns can be materially affected.
Mitigations
· The feedstock assumptions used for valuations are based on recent
experience and the views of dedicated staff who are active in those markets.
· The assets in FGEN's portfolio that rely on supplies of feedstock
benefit from dedicated staff (whether employed by service providers or
directly by the asset) who work to source suitable feedstock at the best price
available.
· For agri-anaerobic digestion sites, it is common to agree feedstock
contracts that adjust for the dry matter content in the biomaterial and relate
pricing to that energy content and volume which is delivered. Should a
shortfall of a particular feedstock be likely, for instance due to a poor
harvest, substitute feedstocks are widely available.
Controls
· The Foresight Valuation Committee will approve assumptions used in
the valuation and the FGEN Board has ultimate authority over the portfolio
valuation. PwC also independently reviews.
Link to Fund objectives
Long-term predictable income growth for shareholders
Potential for capital growth
Residual risk
Medium
10 Cyber risk
Change in year
Increased
Potential impact
· There exists a threat of cyber attack in which a hacker or computer
virus may attempt to access the IT systems of Foresight Group, the Investment
Manager, the Administrator or one of the project companies and attempt to
destroy or use the data for malicious purposes. While FGEN considers that it
is unlikely to be the deliberate target of a cyber attack, there is the
possibility that it could be targeted as part of a random or general act.
Mitigations
· FGEN and the project SPVs' information technology providers have
procedures in place to mitigate cyber attacks and data is separately stored on
multiple servers which is backed up regularly.
· A service provider has been engaged to provide enhanced cyber
security for the wind portfolio including monitoring of all internet traffic
into the wind sites. This is now being rolled out to the rest of the
portfolio.
Controls
· FGEN has no dedicated IT systems and it relies on those of its
service providers, principally the Investment Manager and Administrator, which
have procedures in place to mitigate cyber attacks and have robust business
continuity plans in place.
· Project SPV providers have in place business continuity plans.
Link to Fund objectives
Long-term predictable income growth for shareholders
Residual risk
Medium
11 Exposure to market power prices
Change in year
No change
Potential impact
· The revenues of the renewable energy-generating assets are
dependent to some extent on the market price of electricity and natural gas,
which is out of the control of FGEN. There is a risk that the actual prices
received vary significantly from the model assumptions, leading to a shortfall
in anticipated revenues to FGEN.
· The Company has introduced battery storage assets into the
portfolio. These assets also earn revenues that are determined by electricity
markets, although the business model is more complex than for generators such
as wind and solar assets.
Mitigations
· The risk of exposure to variations in electricity and gas prices
from assumptions made is mitigated by FGEN in the following ways: i)
short‑term PPAs are used to fix electricity and gas prices for between one
and three years ahead depending on market conditions and many have floor
prices; ii) forward prices based on market rates are used for the first two
years where no fix is in place; and iii) quarterly reports from independent
established market consultants are used to inform the electricity prices over
the longer term used in the financial models. FGEN blends forecasts from three
consultants to reduce volatility in assumed prices from period to period.
· FGEN invests in a diversified portfolio of environmental
infrastructure assets that earn revenues that do not depend on merchant power
sales. At the year end, 72% of the portfolio's underlying lifetime revenues,
on an NPV basis, were not related to sales of merchant power.
Controls
· Foresight's Valuation Committee meets quarterly to assess the
valuation of the Company, as prepared by the finance and valuations teams,
which includes assessment of the power price assumptions. This valuation is
then reviewed and signed off by the FGEN Board at quarterly valuation meetings
that inform the Company's NAV updates, and independently reviewed by PwC.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
Very high
12 Construction and development issues
Change in year
Decreased
Potential impact
· Projects in the pre-construction or construction stages are subject
to risks associated with the underestimation of the time or costs involved in
bringing the project to operations. Projects may also not operate as well in
practice as was assumed in the investment case.
· Given the progression of the construction-stage assets in the
portfolio, this risk is now decreased compared to the previous period, but it
continues to be monitored. There are no development-stage assets currently in
the portfolio.
Mitigations
· The Investment Manager conducts due diligence by suitable external
consultants on material aspects of the project, including, but not limited to,
market, regulatory environment, land and permits, and construction programme.
· Portfolio diversification: at the year end, only 8% of the
portfolio was invested in construction and development-stage assets.
Controls
· The Foresight Investment Committee and the FGEN Investment
Committee assess the opportunity, including the findings from and the adequacy
of the due diligence programme, prior to committing funds.
· Ongoing monitoring of the project by the Investment Manager,
including potential delays and cost overruns as part of its Portfolio
Oversight Committee.
Link to Fund objectives
Long-term predictable income growth for shareholders
Potential for capital growth
Residual risk
Medium
13 Operational risks
Change in year
No change
Potential impact
· There is a risk that a health and safety event at an FGEN-owned
site could lead to increased costs to prevent further occurrences and loss in
revenue. FGEN's reputation could be adversely affected by publicity generated
by a health and safety event.
· There is a risk that poor performance by sub‑contractors, or in
the event of having to replace a sub‑contractor, that a replacement may only
be found at a higher cost, could adversely affect project cash flows.
· In the event of a single project suffering from a material issue,
distributions to the Fund could possibly be impacted absolutely or for a
period of time whilst the issue is resolved. This includes grid outages and
constraints resulting in a project being unable to export power and earn
associated revenues.
· The concession-based assets are approaching handback, with the risk
of unbudgeted costs needed to meet the required standards of the third party.
Mitigations
· Assets are monitored by the Investment Manager to address risks as
they are identified.
· The use of a diverse range of service providers supplying
management, operational and maintenance services ensures any failure of a
single service provider has a minimal impact. This risk is mitigated in part
by the diversification represented by FGEN's portfolio of assets.
· The portfolio has material damage and business interruption
insurance policies in place to cover against potential losses, although these
do not typically cover grid outages. Asset managers mitigate the impact of
this by maintaining a dialogue with network operators and influencing them as
to when such outages occur.
Controls
· The Board has a regime in place overseen by the Audit Committee,
which provides the necessary comfort that the internal control systems at the
Investment Manager, the Administrator and the operating companies are
effective.
· Each project asset has health and safety policies overseen by its
board of directors, with health and safety a standing agenda item. RIDDOR
reports are reviewed at every board meeting, and independent specialists
conduct regular audits.
· Foresight's Valuation Committee meets quarterly to assess the
valuation of the Company, as prepared by the finance and valuations teams;
which includes assessment of the valuation impact of a component failure. This
valuation is then reviewed and signed off by the FGEN Board at quarterly
valuation meetings that inform the Company's NAV updates, with independent
review from PwC.
Link to Fund objectives
Long-term predictable income growth for shareholders
Diversification across sectors and geographies for a more robust,
risk‑adjusted return
Potential for capital growth
Residual risk
Low
INVESTMENT POLICY
The Company seeks to achieve its objectives by investing in a diversified
portfolio of environmental infrastructure.
FGEN defines environmental infrastructure as infrastructure assets, projects
and asset-backed businesses that utilise natural or waste resources or support
more environmentally friendly approaches to economic activity, support the
transition to a low-carbon economy or which mitigate the effects of climate
change.
Environmental infrastructure that the Company invests in typically has one or
more of the following characteristics:
· they have the benefit of long-term, predictable cash flows, which
may be wholly or partially inflation-linked; and/or
· they are supported by long-term contracts or stable and
well‑proven regulatory and legal frameworks; and/or
· they feature well-established technologies and demonstrable
operational performance.
The Company will invest in environmental infrastructure either directly or
through holding or other structures that give the Company an investment
exposure to environmental infrastructure. The Company's investment interests
in environmental infrastructure may include partnership equity, partnership
loans, membership interests, share capital, trust units, shareholder loans
and/or debt interests in or to project entities or any other entities or
undertakings in which the Company invests or may invest.
Whilst there are no restrictions on the amount of the Company's assets that
may be invested in any individual type of environmental infrastructure, the
Company will, over the long term, seek to invest in a diversified spread of
investments both geographically (although the UK will always represent a
minimum of 50% of the portfolio by value) and across different types of
environmental infrastructure in order to achieve a broad spread of risk in the
Company's portfolio.
Whilst the Company invests predominantly in operational assets, it may also
invest in environmental infrastructure which is in its construction or
development phase, which includes investment in developers of environmental
infrastructure or development funding structures relating to environmental
infrastructure.
The Company will also ensure that its investment portfolio comprises a minimum
of five investments at any given time, save that this requirement shall not
apply when the Company is being wound up or dissolved.
As technologies and the markets in which they contract into develop and become
established, future investments may differ from those currently within the
portfolio. These assets may incorporate new technologies that have a
demonstrable track record or traditional infrastructure projects with features
such as greater exposure to merchant markets in feedstock or by‑products.
Investment restrictions
With the objective of achieving a spread of risk, the following investment
restrictions will apply to the acquisition of investment interests in the
portfolio:
· the substantial majority of investments in the portfolio by value
and number will be operational. The Company will not acquire investment
interests in any investment if, as a result of such investment: (i) 5% or more
of the NAV is attributable to environmental infrastructure in the development
phase (including in developers or development funding structures); or (ii) 25%
or more of the NAV is attributable to projects that are either in the
development phase (including in developers or development funding structures)
or are in construction and are not yet fully operational;
· at least 50% of the portfolio (by value) will be based in the UK
and the Company will only invest in environmental infrastructure located in
the UK, member states of the European Union or OECD countries and,
accordingly, the Company will not make any investment if, as a result of such
investment, more than 50% of the NAV immediately post‑acquisition would be
attributable to investments that are not based in the UK; and
· it is intended that interests in any single investment acquired
will not have an acquisition price (aggregated with the value of any existing
investment in the relevant project, asset or business if relevant) greater
than 25% of the NAV immediately post‑acquisition. In no circumstances will a
new acquisition exceed a maximum limit of 30% of the NAV immediately
post‑acquisition.
Borrowing and gearing
The Company intends to make use of short‑term debt financing to facilitate
the acquisition of investments (either by itself or by one of its
subsidiaries). Borrowing may be secured against the assets comprising the
portfolio. It is intended that such debt will be repaid periodically by the
raising of new equity finance by the Company. The level of such debt is
limited to 30% of the Company's Net Asset Value immediately after the
acquisition of any further investment. Such debt will not include (and will be
subordinate to) any project-level gearing or borrowings by assets or
businesses in which the Company may invest which shall be in addition to any
borrowing at Company level.
The Company may acquire investment interests in respect of projects that have
non-recourse project finance in place at the project entity level. The Company
will target aggregate non-recourse financing attributable to renewable energy
generation projects not exceeding 65% of the aggregate gross project value of
such projects. The Company will target aggregate non‑recourse financing
attributable to projects structured as PFI/PPP projects not exceeding 85% of
the aggregate gross project value of such projects. The Company will not
invest in any project that would cause the Company to be in breach of the
targeted limits set out in this paragraph if the Directors do not reasonably
believe that the relevant target leverage limit can be achieved within six
months of the date of investment in that project.
It is therefore possible that the Company may exceed the targeted gearing
limits set out in this paragraph, but only in circumstances where the
Directors reasonably believe that such breach can be cured (by achieving the
relevant target leverage limit) within six months of the date of investment in
the relevant project.
Hedging
Where investments are made in currencies other than pounds sterling, the
Company will consider whether to hedge currency risk in accordance with the
Company's currency and hedging policy as determined from time to time by the
Directors. Interest rate hedging may be carried out to provide protection
against increasing costs of servicing debt drawn down by the Company to
finance investments.
This may involve the use of interest rate derivatives and similar derivative
instruments. Hedging against inflation may also be carried out where
appropriate and this may involve the use of RPI swaps and similar derivative
instruments. The currency, interest rate and any inflationary hedging policies
will be reviewed by the Directors on a regular basis to ensure that the risks
associated with movements in foreign exchange rates, interest rates and
inflation are being appropriately managed.
Any hedging transactions (if carried out) will only be undertaken for the
purpose of efficient portfolio management to enhance returns from the
portfolio and will not be carried out for speculative purposes. The execution
of hedging transactions is at the discretion of the Investment Manager,
subject to the policies set by, and the overall supervision of, the Directors.
Cash balances
Pending reinvestment or distribution of cash receipts or repayments of any
outstanding indebtedness, cash received by the Company will be invested in
cash, cash equivalents, near-cash instruments, money market instruments and
money market funds and cash funds. The Company may also hold derivative or
other financial instruments designed for efficient portfolio management or to
hedge interest, inflation or currency rate risks. The Company and any other
member of the Group may also lend cash which it holds as part of its cash
management policy.
Origination of further investments
Each of the investments comprising the portfolio comply with the Company's
investment policy and further investments will only be acquired if they comply
with the Company's investment policy.
Subject to due diligence and agreement on price, the Company will seek to
acquire those investments that fit the investment objectives and investment
policy of the Company. If, in the opinion of the Investment Manager, the risk
characteristics, valuation and price of the prospective investment are
acceptable and consistent with the Company's investment objective and
investment policy, then (subject to the Company having sufficient sources of
capital and, in respect of certain transactions, the approval of Directors) an
offer will be made (without seeking the prior approval of shareholders) and,
if successful, the investment will be acquired by the Company.
The Investment Manager will be subject to the overall supervision of the
Board, all of whom are independent of the Investment Manager.
Potential disposal of investments
Whilst the Investment Manager may elect to retain investment interests in the
portfolio of investments that the Company acquires, and any other further
investments made by the Company over the long term, the Investment Manager
will regularly monitor the valuations of such investments and any secondary
market opportunities to dispose of investments. The Investment Manager only
intends to dispose of investments where it considers that appropriate value
can be realised for the Company or where it otherwise believes that it is
appropriate to do so. Proceeds from the disposal of investments may be
reinvested or distributed at the discretion of the Directors.
Amendments to and compliance with the investment policy
Material changes to the investment policy of the Company may only be made in
accordance with the approval of the shareholders by way of ordinary resolution
and (for so long as the ordinary shares are listed on the official list
maintained by the Financial Conduct Authority) in accordance with the Listing
Rules. Minor changes to the investment policy must be approved by the
Directors.
The investment restrictions detailed above apply at the time of the
acquisition of investment interests and the values of existing investment
interests shall be as at the date of the most recently published NAV of the
Fund, unless the Directors believe that such valuation materially
misrepresents the value of the Company's investment interests at the time of
the relevant acquisition. The Fund will not be required to dispose of
investment interests and to rebalance its portfolio as a result of a change in
the respective valuations of investment interests.
FINANCIAL REVIEW
Analysis of financial results
The financial statements of the Company for the year ended 31 March 2025 are
set out on pages 152 to 181 of the 2025 Annual Report.
The Company prepared the financial statements for the year ended 31 March 2025
in accordance with UK-adopted international accounting standards as applicable
to companies reporting under those standards. In order to continue providing
useful and relevant information to its investors, the financial statements
also refer to the "Group", which comprises the Company, its wholly owned
subsidiary Foresight Environmental Assets Group (UK) Limited ("UK HoldCo") and
the indirectly held wholly owned subsidiary HWT Limited (which holds the
investment interest in the Tay project).
Basis of accounting
The Company applies IFRS 10 and Investment Entities: Amendments to IFRS 10,
IFRS 12 and IAS 28, which states that investment entities should measure all
their subsidiaries that are themselves investment entities at fair value. The
Company accounts for its interest in its wholly owned direct subsidiary
Foresight Environmental Assets Group (UK) Limited as an investment at fair
value through profit or loss.
The primary impact of this application, in comparison to consolidating
subsidiaries, is that the cash balances, the working capital balances and
borrowings in the intermediate holding companies are presented as part of the
Company's fair value of investments.
The Company's intermediate holding companies provide services that relate to
the Company's investment activities on behalf of the parent which are
incidental to the management of the portfolio. These companies are recognised
in the financial statements at their fair value, which is equivalent to their
net assets.
The Group holds investments in the 40 portfolio assets which make
distributions comprising returns on investments (interest on loans and
dividends on equity) together with repayments of investments (loan repayments
and equity redemptions).
Key investment metrics
Year ended Year ended
All amounts presented in £million (except as noted) 31 Mar 2025 31 Mar 2024
Net assets(1) 678.7 751.2
Portfolio value(2) 765.7 891.9
Operating income and loss on fair value of investments 6.0 (3.8)
Net Asset Value per share(3) 106.5p 113.6p
Distributions, repayments and fees from portfolio 90.4 87.0
Loss before tax (2.8) (13.9)
Gross asset value(3) 951.3 1,091.8
Market capitalisation(3) 457.0 619.9
Share price(3) 71.7p 93.7p
Total shareholder return since inception(3) 41.0% 68.4%
Annualised total shareholder return(3) 3.2% 5.4%
1. Also referred to as "NAV".
2. Classified as investments at fair value through profit or loss in the
statement of financial position.
3. Net Asset Value per share, share price, market capitalisation, gross
asset value, total shareholder return and annualised total shareholder return
are alternative performance measures ("APMs"). The APMs within the accounts
are defined on pages 182 and 183 of the 2025 Annual Report.
Net assets
Net assets decreased from £751.2 million at 31 March 2024 to £678.7 million
at 31 March 2025. The decrease was primarily driven by lower power prices,
cash received from investments and the disposal of two portfolios: 100% of the
rooftop solar assets and a 51% stake in six anaerobic digestion assets.
The net assets of £678.7 million comprise £765.7 million portfolio value of
environmental infrastructure investments and the Company's cash balances of
£2.6 million, partially offset by £87.5 million of intermediate holding
companies' net liabilities and other net liabilities of £2.1 million.
The intermediate holding companies' net liabilities of £87.5 million
comprises a £99.3 million credit facility loan, partially offset by cash
balances of £5.1 million and other net assets of £6.7 million.
Analysis of the Group's net assets at 31 March 2025
At At
All amounts presented in £million (except as noted) 31 Mar 2025 31 Mar 2024
Portfolio value 765.7 891.9
Intermediate holding companies' cash 5.1 17.8
Intermediate holding companies' revolving credit facility (99.3) (159.3)
Intermediate holding companies' other assets 6.7 3.1
Fair value of the Company's investment in UK HoldCo 678.2 753.5
Company's cash 2.6 0.3
Company's other liabilities (2.1) (2.6)
Net Asset Value at 31 March 678.7 751.2
Number of shares 637,443,058 661,531,229
Net Asset Value per share(1) 106.5p 113.6p
1. Net Asset Value per share is an alternative performance measure
("APM"). The APMs within the accounts are defined on pages 182 and 183 of the
2025 Annual Report.
At 31 March 2025, the Group (the Company plus intermediate holding companies)
had a total cash balance of £7.8 million (31 March 2024: £18.0 million).
This included £2.6 million held on the Company's balance sheet (31 March
2024: £0.3 million) and £5.1 million held by the intermediate holding
companies (31 March 2024: £17.8 million). The latter is included in the
Company's balance sheet under "investments at fair value through profit or
loss".
At 31 March 2025, UK HoldCo had drawn £99.3 million of its RCF (31 March
2024: £159.3 million), which is included in the Company's balance sheet
within "investments at fair value through profit or loss".
The movement in the portfolio value from 31 March 2024 to 31 March 2025 is
summarised as follows:
Year ended Year ended
All amounts presented in £million (except as noted) 31 Mar 2025 31 Mar 2024
Portfolio value at start of the year 891.9 898.5
Acquisitions and further investment 30.7 69.2
Asset disposals (89.1) -
Distributions received from investments (90.4) (87.0)
Growth in value of portfolio 22.6 11.2
Portfolio value at 31 March 765.7 891.9
Further details on the portfolio valuation and an analysis of movements during
the year are provided in the investment portfolio and valuation section on
pages 27 to 37 of the 2025 Annual Report.
Income
The Company's loss before tax for the year ended 31 March 2025 was £2.8
million, a loss of 0.4 pence per share (year ended 31 March 2024: loss of 2.1
pence per share), driven by the loss on fair value of investments as a result
of power price forecast contraction, future cash flows and changes in
macroeconomic conditions.
Year ended Year ended
All amounts presented in £million (except as noted) 31 Mar 2025 31 Mar 2024
Interest received on UK HoldCo loan notes 31.1 31.4
Dividend received from UK HoldCo 32.3 28.0
Net loss on investments at fair value (57.4) (63.2)
Operating income and losses on fair value of investments 6.0 (3.8)
Operating expenses (8.8) (10.1)
Loss before tax (2.8) (13.9)
Loss per share (0.4)p (2.1)p
In the year to 31 March 2025, the operating income on fair value of
investments was £6.0 million, including the receipt of £31.1 million of
interest on the UK HoldCo loan notes, £32.3 million of dividends also
received from UK HoldCo and net losses on investments at fair value of £57.4
million.
The operating expenses included in the income statement for the year were
£8.8 million, in line with expectations. These comprise £7.2 million
Investment Manager fees and £1.6 million operating expenses. The details on
how the Investment Manager fees are charged are set out in note 15 to the
financial statements.
Ongoing charges
The ongoing charges ratio(1) is an indicator of the costs incurred in the
day‑to‑day management of the Fund. FGEN uses the AIC-recommended
methodology for calculating this ratio, which is an annual figure.
The ongoing charges percentage for the year to 31 March 2025 was 1.24% (year
ended 31 March 2024: 1.24%).
1. The ongoing charges ratio is an alternative performance measure
("APM"). The APMs within the accounts are defined on pages 182 and 183 of the
2025 Annual Report.
The ongoing charges have been calculated, in accordance with AIC guidance, as
annualised ongoing charges (i.e. excluding acquisition costs and other
non‑recurring items) divided by the average published undiluted Net Asset
Value in the period. The ongoing charges percentage has been calculated on the
consolidated basis and therefore takes into consideration the expenses of UK
HoldCo as well as the Company. Adjusting for the impact of the drawn down
amount under the RCF, the ongoing charges ratio would have been 1.06% (31
March 2024: 1.06%). Foresight believes this to be competitive for the market
in which FGEN operates and the stage of development and size of the Fund,
demonstrating that management of the Fund is efficient with minimal expenses
incurred in its ordinary operation.
Cash flow
The Company had a total cash balance at 31 March 2025 of £2.6 million (31
March 2024: £0.3 million).
The breakdown of the movements in cash during the year is shown below.
Cash flows of the Company for the year (£million):
Year ended Year ended
31 Mar 2025 31 Mar 2024
Cash balance at 1 April 0.3 0.1
Loan repayment from subsidiary 18.0 -
Purchase of treasury shares (19.2) -
Interest on loan notes received from UK HoldCo 31.1 31.4
Dividends received from UK HoldCo 32.3 28.0
Directors' fees and expenses (0.3) (0.3)
Investment Manager fees (7.8) (8.4)
Administrative expenses (1.3) (1.1)
Dividends paid in cash to shareholders (50.5) (49.4)
Company cash balance at 31 March 2.6 0.3
The Group had a total cash balance at 31 March 2025 of £7.8 million (31 March
2024: £18.1 million) and borrowings under the revolving credit facility of
£99.3 million (31 March 2024: £159.3 million).
The breakdown of the movements in cash during the year is shown below.
Cash flows of the Group for the year (£million):
Year ended Year ended
31 Mar 2025 31 Mar 2024
Cash distributions from environmental infrastructure investments 90.4 87.0
Administrative expenses (1.6) (1.3)
Directors' fees and expenses (0.3) (0.3)
Investment Manager fees (7.8) (8.4)
Financing costs (net of interest income) (10.5) (7.3)
Electricity Generator Levy (3.3) (5.5)
Cash flow from operations(1) 66.9 64.2
Debt arrangement fee cost (2.3) (1.0)
Acquisition of investment assets and further investment (30.7) (69.2)
Disposal of assets 88.6 -
Acquisition costs (including stamp duty) (1.6) (0.4)
Short-term project debtors (2.6) (0.9)
Purchase of treasury shares (19.2) -
(Repayment)/drawdown under the revolving credit facility (58.9) 56.8
Dividends paid in cash to shareholders (50.5) (49.4)
Cash movement in the year (10.3) 0.1
Opening cash balance 18.1 18.0
Group cash balance at 31 March 7.8 18.1
During the year, the Group received cash distributions of £90.4 million from
its environmental infrastructure investments, an increase of 3.9% compared to
2024.
Cash received from investments in the year covers the operating and
administrative expenses and financing costs, as well as the dividends declared
to shareholders in respect of the year ended 31 March 2025. Cash flow from
operations of the Group of £66.9 million covers dividends paid in the year to
31 March 2025 of £50.5 million by 1.32x.
The Group anticipates that future revenues from its environmental
infrastructure investments will continue to be in line with expectations and
therefore will continue to cover fully future costs as well as planned
dividends payable to its shareholders(2).
Dividends
During the year, the Company paid a final dividend of 1.89 pence per share in
June 2024 (£12.5 million) in respect of the quarter to 31 March 2024.
Interim dividends of 1.95 pence per share were paid in September 2024 (£12.9
million) in respect of the quarter to 30 June 2024, of 1.95 pence per share in
December 2024 (£12.7 million) in respect of the quarter to 30 September 2024,
and of 1.95 pence per share in March 2025 (£12.5 million) in respect of the
quarter to 31 December 2024. On 29 May 2025, the Company declared a final
dividend of 1.95 pence per share in respect of the quarter ended 31 March
2025 (£12.3 million), which is payable on 27 June 2025.
The target dividend for the year to 31 March 2026 is 7.96 pence per share, a
2.1% increase from the dividend of 7.8 pence per share declared in respect of
the year to 31 March 2025(2).
1. Cash flow from operations is an alternative performance measure
("APM"). The APMs within the accounts are defined on pages 182 and 183 of the
2025 Annual Report.
2. These are targets only and not profit forecasts. There can be no
assurance that these targets will be met.
INDEPENDENT AUDITOR'S REPORT
to the members of Foresight Environmental Infrastructure Limited (formerly
JLEN Environmental Assets Group Limited)
Our opinion is unmodified
We have audited the financial statements of Foresight Environmental
Infrastructure Limited (formerly JLEN Environmental Assets Group Limited) (the
"Company"), which comprise the statement of financial position as at 31 March
2025, the income statement, statement of changes in equity and cash flow
statement for the year then ended, and notes, comprising material accounting
policies and other explanatory information.
In our opinion, the accompanying financial statements:
· give a true and fair view of the financial position of the Company
as at 31 March 2025, and of the Company's financial performance and cash
flows for the year then ended;
· are prepared in accordance with UK-adopted international accounting
standards; and
· comply with the Companies (Guernsey) Law, 2008.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) ("ISAs (UK)") and applicable law. Our responsibilities are described
below.
We have fulfilled our ethical responsibilities under, and are independent of
the Company in accordance with, UK ethical requirements including the FRC
Ethical Standard as required by the Crown Dependencies' Audit Rules and
Guidance. We believe that the audit evidence we have obtained is a sufficient
and appropriate basis for our opinion.
Key audit matters: our assessment of the risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were
of most significance in the audit of the financial statements and include the
most significant assessed risks of material misstatement (whether or not due
to fraud) identified by us, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these
matters. In arriving at our audit opinion above, the key audit matter was as
follows (unchanged from 2024):
The risk Our response
Investments at fair value through profit and loss
£678,157,000 (2024: £753,572,000); Refer to Audit Committee report (pages
132 and 133 of the 2025 Annual Report), note 2 (f) accounting policy and note
9 disclosures
Basis Our audit procedures included:
The Company's investment in its immediate subsidiary (the "UK HoldCo") is
carried at fair value through profit or loss and represents a significant
proportion of the Company's net assets. The UK HoldCo in turn owns investments Internal Controls:
in intermediate holding companies and environmental infrastructure projects.
We have obtained an understanding of the valuation process and tested the
design and implementation of the valuation process control.
The fair value of the investment in the UK HoldCo, which is reflective of its
net asset value, predominantly comprises of the fair value of underlying
environmental infrastructure projects. We performed the procedures below rather than seeking to rely on the control
as the nature of the balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures described.
The fair value of the underlying environmental infrastructure projects has
been primarily determined using the income approach discounting the future
cash flows to be received from the underlying projects (the "Valuations"), for Managements independent valuation specialist valuation report:
which there is no active market. The Valuations incorporate certain
assumptions including generation output assumptions, discount rates, power
price forecasts, inflation rates and other macroeconomic assumptions.
· We assessed the objectivity, capabilities and competence of
management's independent valuation specialist;
Management engages an independent valuation specialist to review the · We assessed the scope of management's independent valuation
Valuations and form an opinion on the appropriateness of the Valuations. specialist review of the Valuations and read their valuation report and the
investment valuation memoranda produced by the Investment Manager; and
· We held discussions with management's independent valuation
Risk: specialist to understand the nature of the procedures performed by them in
arriving at their opinion on the appropriateness of the Valuations.
The Valuations represent both a risk of fraud and error associated with
estimating the timing and amounts of long-term forecasted cash flows alongside
the selection, and application, of appropriate assumptions. Changes to
long-term forecasted cash flows and/or the selection and application of Challenging managements' assumptions and inputs including use of KPMG
different assumptions may result in a materially different valuation of valuation specialists
investments held at fair value through profit or loss.
With the support of KPMG valuation specialists we challenged the
appropriateness of the Company's valuation methodology and key assumptions
such as discount rates, power price forecasts, inflation rates, and other
We therefore have determined that the Valuations have a high degree of macroeconomic assumptions applied, by:
estimation uncertainty giving rise to a potential range of reasonable outcomes
greater than our materiality for the financial statements as a whole.
i) assessing the appropriateness of the valuation methodology applied;
ii) benchmarking the discount rates applied against independent market
data and relevant peer group companies;
iii) assessing the reasonableness of the power price forecasts used by
reference to power price curves supplied to management by external
consultants;
iv) challenging inflation rates and other macroeconomic assumptions used, by
reference to observable market data and market forecasts;
v) agreeing significant additions of operational and non-operational
environmental infrastructure projects to supporting documentation;
vi) comparing, where appropriate, the valuation of the underlying
environmental infrastructure projects to the price of recent transactions and
to any indicative non-binding offers received by management; and
vii) using our KPMG valuation specialists' experience in valuing similar
investments.
For a risk based sample of the cash flow valuation models:
· we tested their mathematical accuracy including, but not limited
to, material formulae errors;
· we challenged the generation output assumptions, by reference to
due diligence reports prepared by third-party engineers or historical
performance, where available;
· we agreed other key inputs, such as contracted revenue to
supporting documentation;
· we assessed the appropriateness of changes to operational
assumptions and cash flows in the underlying models, with reference to
third-party support and historical experience where required; and
· in order to assess the reliability of management's forecasts, we
assessed the historical accuracy of the cash flow forecasts against actual
results and project disposals in the year.
Assessing disclosures:
We considered the appropriateness and adequacy of the disclosures made in the
financial statements (see notes 2(f), 9 and 16) in relation to the use of
estimates and judgements regarding the fair value of investments, the
valuation estimation techniques inherent therein and fair value disclosures
for compliance with UK-adopted international accounting policies.
Our application of materiality and an overview of the scope of our audit
Materiality for the financial statements as a whole was set at £14.4 million,
determined with reference to a benchmark of net assets of £678.7 million, of
which it represents approximately 2% (2024: 2%).
In line with our audit methodology, our procedures on individual account
balances and disclosures were performed to a lower threshold, performance
materiality, so as to reduce to an acceptable level the risk that
individually immaterial misstatements in individual account balances add up to
a material amount across the financial statements as a whole. Performance
materiality for the Company was set at 75% (2024: 65%) of materiality for the
financial statements as a whole, which equates to £10.8 million. We applied
this percentage in our determination of performance materiality because we did
not identify any factors indicating an elevated level of risk.
We reported to the Audit Committee any corrected or uncorrected identified
misstatements exceeding £0.72 million, in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Our audit of the Company was undertaken to the materiality level specified
above, which has informed our identification of significant risks of material
misstatement and the associated audit procedures performed in those areas as
detailed above.
Going concern
The Directors have prepared the financial statements on the going concern
basis as they do not intend to liquidate the Company or to cease its
operations, and as they have concluded that the Company's financial position
means that this is realistic. They have also concluded that there are no
material uncertainties that could have cast significant doubt over its ability
to continue as a going concern for at least a year from the date of approval
of the financial statements (the "going concern period").
In our evaluation of the Directors' conclusions, we considered the inherent
risks to the Company's business model and analysed how those risks might
affect the Company's financial resources or ability to continue operations
over the going concern period.
The risks that we considered most likely to affect the Company's financial
resources or ability to continue operations over this period were:
· availability of capital to meet operating costs and other financial
commitments; and
· the outcome of the upcoming discontinuation vote.
We considered whether these risks could plausibly affect the liquidity in the
going concern period by comparing severe, but plausible downside scenarios
that could arise from these risks individually and collectively against the
level of available financial resources indicated by the Company's financial
forecasts.
We also considered the risk that the outcome of the discontinuation vote could
affect the Company over the going concern period, by considering the outcome
of previous votes held by the Company, inspecting summaries of discussions
held with the broker, and considering key financial metrics including the
discount of the Company's share price against its reported net asset value per
share, in comparison to its peers over the last 12 months.
We considered whether the going concern disclosure in note 2 (b) to the
financial statements gives a full and accurate description of the Directors'
assessment of going concern.
Our conclusions based on this work:
· we consider that the Directors' use of the going concern basis of
accounting in the preparation of the financial statements is appropriate;
· we have not identified, and concur with the Directors' assessment
that there is not, a material uncertainty related to events or conditions
that, individually or collectively, may cast significant doubt on the
Company's ability to continue as a going concern for the going concern
period; and
· we have nothing material to add or draw attention to in relation to
the Directors' statement in the notes to the financial statements on the use
of the going concern basis of accounting with no material uncertainties that
may cast significant doubt over the Company's use of that basis for the going
concern period, and that statement is materially consistent with the financial
statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as
subsequent events may result in outcomes that are inconsistent with judgements
that were reasonable at the time they were made, the above conclusions are not
a guarantee that the Company will continue in operation.
Fraud and breaches of laws and regulations - ability to detect
Identifying and responding to risks of material misstatement due to fraud
To identify risks of material misstatement due to fraud ("fraud risks") we
assessed events or conditions that could indicate an incentive or pressure to
commit fraud or provide an opportunity to commit fraud. Our risk assessment
procedures included:
· enquiring of management as to the Company's policies and procedures
to prevent and detect fraud as well as enquiring whether management have
knowledge of any actual, suspected or alleged fraud;
· reading minutes of meetings of those charged with governance; and
· using analytical procedures to identify any unusual or unexpected
relationships.
As required by auditing standards, and taking into account possible incentives
or pressures to misstate performance and our overall knowledge of the control
environment, we perform procedures to address the risk of management override
of controls, in particular the risk that management may be in a position to
make inappropriate accounting entries, and the risk of bias in accounting
estimates such as valuation of unquoted investments. On this audit we do not
believe there is a fraud risk related to revenue recognition because the
Company's revenue streams are simple in nature with respect to accounting
policy choice, and are easily verifiable to external data sources or
agreements with little or no requirement for estimation from management. We
did not identify any additional fraud risks.
We performed procedures including:
· identifying journal entries and other adjustments to test based on
risk criteria and comparing any identified entries to supporting
documentation;
· incorporating an element of unpredictability in our audit
procedures; and
· assessing significant accounting estimates for bias.
Further detail in respect of valuation of unquoted investments is set out in
the key audit matter section of this report.
Identifying and responding to risks of material misstatement due to
non‑compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected
to have a material effect on the financial statements from our sector
experience and through discussion with management (as required by auditing
standards), and from inspection of the Company's regulatory and legal
correspondence, if any, and discussed with management the policies and
procedures regarding compliance with laws and regulations.
As the Company is regulated, our assessment of risks involved gaining an
understanding of the control environment including the entity's procedures for
complying with regulatory requirements.
The Company is subject to laws and regulations that directly affect the
financial statements including financial reporting legislation and taxation
legislation and we assessed the extent of compliance with these laws and
regulations as part of our procedures on the related financial statement
items.
The Company is subject to other laws and regulations where the consequences of
non-compliance could have a material effect on amounts or disclosures in the
financial statements, for instance through the imposition of fines or
litigation or impacts on the Company's ability to operate. We identified
financial services regulation as being the area most likely to have such
an effect, recognising the regulated nature of the Company's activities and
its legal form. Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to enquiry of
management and inspection of regulatory and legal correspondence, if any.
Therefore if a breach of operational regulations is not disclosed to us or
evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or
regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk
that we may not have detected some material misstatements in the financial
statements, even though we have properly planned and performed our audit in
accordance with auditing standards. For example, the further removed
non-compliance with laws and regulations is from the events and transactions
reflected in the financial statements, the less likely the inherently limited
procedures required by auditing standards would identify it.
In addition, as with any audit, there remains a higher risk of non-detection
of fraud, as this may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal controls. Our audit procedures
are designed to detect material misstatement.
We are not responsible for preventing non-compliance or fraud and cannot be
expected to detect non-compliance with all laws and regulations.
Other information
The Directors are responsible for the other information. The other information
comprises the information included in the Annual Report but does not include
the financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and we do not
express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
Disclosures of emerging and principal risks and longer term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the Directors' disclosures in respect of emerging and
principal risks and the viability statement, and the financial statements and
our audit knowledge. We have nothing material to add or draw attention to in
relation to:
· the Directors' confirmation within the long-term viability
statement (pages 140 and 141 of the 2025 Annual Report) that they have carried
out a robust assessment of the emerging and principal risks facing the
Company, including those that would threaten its business model, future
performance, solvency or liquidity;
· the emerging and principal risks disclosures describing these risks
and explaining how they are being managed or mitigated; and
· the Directors' explanation in the long-term viability statement
(pages 140 and 141 of the 2025 Annual Report) as to how they have assessed the
prospects of the Company, over what period they have done so and why they
consider that period to be appropriate, and their statement as to whether they
have a reasonable expectation that the Company will be able to continue in
operation and meet its liabilities as they fall due over the period of their
assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
We are also required to review the long-term viability statement, set out on
pages 140 and 141 of the 2025 Annual Report under the Listing Rules. Based on
the above procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit knowledge.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the Directors' corporate governance disclosures and the
financial statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is
materially consistent with the financial statements and our audit knowledge:
· the Directors' statement that they consider that the Annual Report
and financial statements taken as a whole is fair, balanced and
understandable, and provides the information necessary for shareholders to
assess the Company's position and performance, business model and strategy;
· the section of the Annual Report describing the work of the Audit
Committee, including the significant issues that the Audit Committee
considered in relation to the financial statements, and how these issues were
addressed; and
· the section of the Annual Report that describes the review of the
effectiveness of the Company's risk management and internal control systems.
We are required to review the part of Corporate Governance Statement
relating to the Company's compliance with the provisions of the UK Corporate
Governance Code specified by the Listing Rules for our review. We have nothing
to report in this respect.
We have nothing to report on other matters on which we are required to report
by exception
We have nothing to report in respect of the following matters where the
Companies (Guernsey) Law, 2008 requires us to report to you if, in our
opinion:
· the Company has not kept proper accounting records; or
· the financial statements are not in agreement with the accounting
records; or
· we have not received all the information and explanations, which to
the best of our knowledge and belief are necessary for the purpose of our
audit.
Respective responsibilities
Directors' responsibilities
As explained more fully in their statement set out on page 144 of the 2025
Annual Report, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give a true and fair
view; such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement,
whether due to fraud or error; assessing the Company's ability to continue as
a going concern, disclosing, as applicable, matters related to going concern;
and using the going concern basis of accounting unless they either intend to
liquidate the Company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue our opinion in an auditor's report. Reasonable
assurance is a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
A fuller description of our responsibilities is provided on the FRC's website
at www.frc.org.uk/auditorsresponsibilities.
The purpose of this report and restrictions on its use by persons other than
the Company's members as a body
This report is made solely to the Company's members, as a body, in accordance
with section 262 of the Companies (Guernsey) Law, 2008. Our audit work has
been undertaken so that we might state to the Company's members those matters
we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company's members, as
a body, for our audit work, for this report, or for the opinions we have
formed.
Barry Ryan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants and Recognised Auditors
Guernsey
23 June 2025
INCOME STATEMENT
for the year ended 31 March 2025
2025 2024
Notes £'000s £'000s
Operating income and loss on fair value of investments 4 5,958 (3,827)
Operating expenses 5 (8,793) (10,110)
Operating loss (2,835) (13,937)
Loss before tax (2,835) (13,937)
Loss for the year (2,835) (13,937)
Loss per share
Basic and diluted (pence) 8 (0.4) (2.1)
The accompanying notes form an integral part of the financial statements.
All results are derived from continuing operations.
There is no other comprehensive income in either the current year or the
preceding year, other than the loss for the year, and therefore no separate
statement of comprehensive income has been presented.
STATEMENT OF FINANCIAL POSITION
as at 31 March 2025
2025 2024
Notes £'000s £'000s
Non-current assets
Investments at fair value through profit or loss 9 678,157 753,572
Total non‑current assets 678,157 753,572
Current assets
Trade and other receivables 10 21 25
Cash and cash equivalents 2,617 271
Total current assets 2,638 296
Total assets 680,795 753,868
Current liabilities
Trade and other payables 11 (2,094) (2,654)
Total current liabilities (2,094) (2,654)
Total liabilities (2,094) (2,654)
Net assets 678,701 751,214
Equity
Share capital account 13 664,401 664,401
Treasury shares 13 (19,156) -
Retained earnings 14 33,456 86,813
Equity attributable to owners of the Company 678,701 751,214
Net assets per share (pence per share) 106.5 113.6
The accompanying notes form an integral part of the financial statements.
The financial statements were approved by the Board of Directors and
authorised for issue on 23 June 2025.
They were signed on its behalf by:
Ed Warner
Chair
Stephanie Coxon
Director
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2025
Year ended 31 March 2025
Share capital Treasury Retained
account shares earnings Total
Notes £'000s £'000s £'000s £'000s
Balance at 1 April 2024 664,401 - 86,813 751,214
Loss for the year - - (2,835) (2,835)
Loss and total comprehensive income/(expense) for the year - - (2,835) (2,835)
Treasury shares purchased 13 - (19,156) - (19,156)
Dividends paid 7 - - (50,522) (50,522)
Balance at 31 March 2025 664,401 (19,156) 33,456 678,701
Year ended 31 March 2024
Share capital Treasury Retained
account shares earnings Total
Notes £'000s £'000s £'000s £'000s
Balance at 1 April 2023 664,401 - 150,167 814,568
Loss for the year - - (13,937) (13,937)
Loss and total comprehensive income/(expense) for the year - - (13,937) (13,937)
Dividends paid 7 - - (49,417) (49,417)
Balance at 31 March 2024 664,401 - 86,813 751,214
The accompanying notes form an integral part of the financial statements.
CASH FLOW STATEMENT
for the year ended 31 March 2025
2025 2024
Notes £'000s £'000s
Cash flows from operating activities
Loss from operations (2,835) (13,937)
Adjustments for:
Investment interest (31,073) (31,401)
Dividends received (32,300) (28,000)
Net loss on investments at fair value through profit or loss 57,415 63,228
Operating cash flows before movements in working capital (8,793) (10,110)
Decrease in receivables 4 118
(Decrease)/increase in payables (560) 136
Net cash outflow used in operating activities (9,349) (9,856)
Investing activities
Loan repayment from subsidiary 18,000 -
Investment interest 31,073 31,401
Dividends received 32,300 28,000
Net cash from investing activities 81,373 59,401
Financing activities
Purchase of treasury shares (19,156) -
Dividends paid 7 (50,522) (49,417)
Net cash used in financing activities (69,678) (49,417)
Net increase in cash and cash equivalents 2,346 128
Cash and cash equivalents at beginning of the year 271 143
Cash and cash equivalents at end of the year 2,617 271
The accompanying notes form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 March 2025
1. General information
Foresight Environmental Infrastructure Limited (the "Company" or "FGEN",
formerly known as JLEN Environmental Assets Group Limited, "JLEN") is a
closed‑ended investment company domiciled and incorporated in Guernsey,
Channel Islands, under Section 20 of the Companies (Guernsey) Law, 2008. The
shares are publicly traded on the London Stock Exchange under a premium
listing. The audited financial statements of the Company are for the year
ended 31 March 2025 and have been prepared on the basis of the accounting
policies set out below. The financial statements comprise only the results of
the Company as its investment in Foresight Environmental Infrastructure (UK)
Limited ("UK HoldCo", formerly known as JLEN Environmental Assets Group (UK)
Limited) is measured at fair value as detailed in the significant accounting
policies below. The Company and its subsidiaries invest in environmental
infrastructure that utilises natural or waste resources or supports more
environmentally friendly approaches to economic activity.
2. Accounting policies
(a) Basis of preparation
The financial statements, which give a true and fair view, were approved and
authorised for issue by the Board of Directors on 23 June 2025. The set of
financial statements included in this financial report has been prepared in
accordance with UK-adopted international accounting standards as applicable to
companies reporting under those standards and complies with the Companies
(Guernsey) Law, 2008.
As a result of adopting the amendments to IFRS 10, IFRS 12 and IAS 28 first
adopted in the Company's Annual Report to 31 March 2015, the Company is
required to hold its subsidiaries that provide investment services at fair
value, in accordance with IFRS 9 Financial Instruments Recognition and
Measurement, and IFRS 13 Fair Value Measurement. The Company accounts for its
investment in its wholly owned direct subsidiary UK HoldCo at fair value. The
Company, together with its wholly owned direct subsidiary UK HoldCo and the
intermediate holding subsidiary HWT Limited, comprise the Group (the "Group")
investing in environmental infrastructure assets.
The net assets of the intermediate holding companies (comprising UK HoldCo and
HWT Limited), which at 31 March 2025 principally comprise working capital
balances, the revolving credit facility ("RCF") and investments in projects,
are required to be included at fair value in the carrying value of
investments.
Consequently, the Company does not consolidate its subsidiaries or apply IFRS
3 Business Combinations when it obtains control of another entity as it is
considered to be an investment entity under UK-adopted international
accounting standards. Instead, the Company measures its investment in its
subsidiary at fair value through profit or loss.
The financial statements incorporate the financial statements of the Company
only.
UK HoldCo is itself an investment entity. Consequently, the Company need not
have an exit strategy for its investment in UK HoldCo.
Each investment indirectly held has a finite life. For the PPP assets, the
shareholder debt will mature towards the end of the concession, and at the end
of the concession the investment will be dissolved. In the case of renewable
energy assets, the life of the project is based on the expected asset life and
the land lease term, after which the investment will also be dissolved. The
exit strategy is that investments will normally be held to the end of the
concession, unless the Company sees an opportunity in the market to dispose of
investments. Foresight Group, the Company's Investment Manager, and the
Company's Board regularly consider whether any disposals should be made.
The Directors continue to consider that the Company demonstrates the
characteristics and meets the requirements to be considered as an investment
entity.
The following relevant standards which have not been applied in these
financial statements were in issue but not yet effective:
· Amendments to the Classification and Measurement of Financial
Instruments - Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial
Instruments: Disclosures (applicable for annual periods beginning on or after
1 January 2026);
· Annual Improvements to IFRS Accounting Standards (applicable for
annual periods beginning on or after 1 January 2026) - Amendments to:
· IFRS 1 First-time Adoption of International Financial Reporting
Standards;
· IFRS 7 Financial Instruments: Disclosures and its accompanying
Guidance on implementing IFRS 7;
· IFRS 9 Financial Instruments;
· IFRS 10 Consolidated Financial Statements; and
· IAS 7 Statement of Cash flows;
· Contracts Referencing Nature-dependent Electricity - Amendments to
IFRS 9 and IFRS 7; and
· IFRS 18 Presentation and Disclosure in Financial Statements
(applicable for annual periods beginning on or after 1 January 2027).
The Company is currently assessing the impact of IFRS 18 on its financial
statements. Particular focus is being given to potential changes in the
structure of the income statement, the statement of cash flows, and the
enhanced disclosure requirements related to management performance measures
("MPMs"). The assessment also includes a review of how information is grouped
and presented within the financial statements.
The following relevant standards became effective during the year and did not
have a material impact on the Company's reported results:
· Lease Liability in a Sale and Leaseback - Amendments to IFRS 16
Leases (applicable for annual periods beginning on or after 1 January 2024);
· Classification of Liabilities as Current or Non-Current and
Non-current Liabilities with Covenants - Amendments to IAS 1 Presentation of
Financial Statements (applicable for annual periods beginning on or after 1
January 2024);
· Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures - Supplier Finance Arrangements (applicable for
annual periods beginning on or after 1 January 2024); and
· Lack of Exchangeability - Amendments to IAS 21 The Effects of
Changes in Foreign Exchange Rates (applicable for annual periods beginning on
or after 1 January 2025).
(b) Going concern
The Directors, in their consideration of going concern, have reviewed
comprehensive cash flow forecasts prepared by the Company's Investment
Manager, Foresight Group, which are based on prudent market data and a
reasonable worst case scenario, and believe, based on those forecasts and an
assessment of the Company's subsidiary's banking facilities, that it is
appropriate to prepare the financial statements of the Company on the going
concern basis.
In reaching their decision, the Directors considered several key risks,
including the volatility of energy prices and the potential impact of the
principal risks (as documented in the strategic report).
Additionally, the Directors have assessed sustainability-related risks,
including environmental, social and governance ("ESG") factors, with a
particular focus on climate change. In line with the recommendations of the
Task Force on Climate-related Financial Disclosures ("TCFD"), which is
integrated throughout the Sustainability and ESG report, the Investment
Manager has reviewed the portfolio's exposure to these risks. The conclusion
is that such risks are not currently material to the Company, although they
continue to be monitored closely.
The Board considers the going concern assessment period of 18 months to 30
September 2026 to be appropriate. A longer period than the typical requirement
of 12 months has been adopted to factor in the full payment of the declared
dividend in year 2025/26.
The Directors also considered that the Company has adequate financial
resources, and were mindful that the Group had unrestricted cash of £7.8
million as at 31 March 2025. Additionally, the Group had an RCF and
uncommitted accordion facility in total of £180 million, available until June
2027 with an uncommitted option to extend for a further year, for investment
in new or existing projects and working capital. As at 31 March 2025, the
Company's wholly owned subsidiary UK HoldCo had borrowed £99.3 million under
the facility, leaving £50.7 million undrawn under the current committed
amount. All key financial covenants under this facility are forecast to
continue to be complied with for the duration of the going concern assessment
period.
The RCF provides the Fund with the flexibility to meet its existing funding
commitments to portfolio assets. Additionally, the Company has sufficient
headroom in its RCF to finance its hard commitments related to construction
assets within the portfolio.
The RCF covenants have been stress-tested under downside risk scenarios. These
scenarios include a 10% reduction in power price projections relative to the
base case, lower generation levels assuming a P90, a portion of the portfolio
not yielding, and combinations of these factors. In all scenarios, including
the combined downside case, the Company remained compliant with its key
covenants.
At the Annual General Meeting ("AGM") in September 2024, shareholders were
presented with a discontinuation vote, triggered by the Company's shares
trading at an average discount of more than 10% to the Net Asset Value ("NAV")
per share during the financial year under review. The Directors are pleased
with the overwhelming support from shareholders, who voted against the
proposed discontinuation of the Company.
The Company will face another discontinuation vote at the September 2025 AGM
after trading at a discount of more than 10% during the 2024/25 financial
year. There have been no indications of concern from shareholders that the
vote will pass and the Investment Manager and the Directors have no reason to
believe that the special resolution (75% of the total voting members) will be
passed by the shareholders.
Following the September 2024 vote, both the Investment Manager and the
Directors are confident that FGEN's discount to NAV is not attributable to the
individual performance of FGEN, its Investment Manager, or its Board of
Directors.
In light of this, the Directors are satisfied that the Company has sufficient
resources to continue operating for the foreseeable future, defined as a
period of no less than 12 months from the date of this report. Accordingly,
they have continued to adopt the going concern basis in the preparation of
these financial statements.
(c) Revenue recognition - Operating income and loss on fair value of
investments
Operating income and loss on fair value of investments in the income statement
represents gains or losses that arise from the movement in the fair value of
the Company's investment in UK HoldCo, dividend income and interest received
from UK HoldCo. Dividends from UK HoldCo are recognised when the Company's
right to receive payment has been established. Interest income is accrued by
reference to the loan principal outstanding, applicable interest rate and in
accordance with the loan note agreement. Refer to note 9 for details.
(d) Taxation
Under the current system of taxation in Guernsey, the Company itself is exempt
from paying taxes on income, profits or capital gains. Dividend income and
interest income received by the Company may be subject to withholding tax
imposed in the country of origin of such income. The underlying intermediate
holding companies and project companies in which the Company invests provide
for and pay taxation at the appropriate rates in the countries in which they
operate. This is taken into account when assessing the fair value of the
Company's investments.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash balances, deposits held on call with
banks and other short‑term highly liquid deposits with original maturities
of three months or less. Bank overdrafts that are repayable on demand are
included as a component of cash and cash equivalents for the purpose of the
cash flow statements. Deposits held with original maturities of greater than
three months are included in other financial assets.
(f) Financial instruments
Financial assets and financial liabilities are recognised on the Company's
statement of financial position when the Company becomes a party to the
contractual provisions of the instrument. Financial assets are derecognised
when the contractual rights to the cash flows from the instrument expire or
the asset is transferred and the transfer qualifies for derecognition in
accordance with IFRS 9 Financial Instruments.
I) Financial assets
The Company classifies its financial assets as either investments at fair
value through profit or loss or financial assets at amortised cost. The
classification depends on the results of the "solely payments of principal and
interest" and the business model test. The Company determines the business
model at a level that reflects how groups of financial assets are managed
together to achieve a particular business objective. This assessment includes
judgement reflecting all relevant evidence including how the performance of
the assets is evaluated and their performance measured, the risks that affect
the performance of the assets and how these are managed and how management are
compensated. Monitoring is part of the Company's continuous assessment of
whether the business model, for which the remaining financial assets are held,
continues to be appropriate and, if it is not appropriate, whether there has
been a change in business model and so a prospective change to the
classification of those assets.
i) Investments at fair value through profit or loss
Investments at fair value through profit or loss are recognised upon initial
recognition as financial assets at fair value through profit or loss in
accordance with IFRS 10. In these financial statements, investments at fair
value through profit or loss is the fair value of the Company's subsidiary, UK
HoldCo, which comprises the fair value of UK HoldCo and HWT Limited and the
environmental infrastructure investments.
The intermediate holding companies' net assets (UK HoldCo and HWT Limited) are
mainly composed of cash, working capital balances and borrowings under the
Company's wholly owned direct subsidiary's RCF, and are recognised at fair
value, which is equivalent to their net assets. Although the working capital
and the RCF outstanding balance are measured at amortised cost, their fair
values do not materially differ from their amortised costs.
The Company's investment in UK HoldCo comprises both equity and loan notes.
Both elements are exposed to the same primary risk, being performance risk.
This performance risk is taken into consideration when determining the
discount rate applied to the forecast cash flows.
In determining fair value, the Board considered observable market transactions
and has measured fair value using assumptions that market participants would
use when pricing the asset, including assumptions regarding risk. The loan
notes and equity are considered to have the same risk characteristics. As
such, the debt and equity form a single class of financial instrument for the
purposes of disclosure. The Company measures its investment as a single class
of financial asset at fair value in accordance with IFRS 13 Fair Value
Measurement.
ii) Financial assets at amortised cost
Trade receivables, loans and other receivables that are non‑derivative
financial assets and that have fixed or determinable payments that are not
quoted in an active market are classified as "loans and other receivables".
Loans and other receivables are measured at amortised cost using the effective
interest method, less any impairment. They are included in current assets,
except where maturities are greater than 12 months after the reporting date,
in which case they are classified as non‑current assets. The Company's loans
and receivables comprise "trade and other receivables" and "cash and cash
equivalents" in the statement of financial position.
The loan notes issued by the Company's wholly owned subsidiary UK HoldCo are
held at fair value, which is included in the balance of the investments at
fair value through profit or loss in the statement of financial position.
II) Financial liabilities and equity
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement.
i) Equity instruments
Ordinary shares are classified as equity. Costs directly attributable to the
issue of new shares that would otherwise have been avoided are written off
against the balance of the share capital account as permitted by Companies
(Guernsey) Law, 2008.
ii) Financial liabilities
Financial liabilities are classified as other financial liabilities,
comprising:
· loans and borrowings which are recognised initially at the fair
value of the consideration received, less transaction costs. Subsequent to
initial recognition, loans and borrowings are stated at amortised cost, with
any difference between cost and redemption value being recognised in the
income statement over the period of the borrowings on an effective interest
basis; and
· other non‑derivative financial instruments, including trade and
other payables, which are measured at amortised cost using the effective
interest method less any impairment losses.
In accordance with IFRS 9, financial guarantee contracts are recognised as a
financial liability. The liability is measured at fair value and subsequently
in accordance with the expected credit loss model under IFRS 9.
The fair value of financial guarantees is determined based on the present
value of the difference in cash flows between contracted payments required
under the debt instrument and the payments that would be required without the
guarantee, or the estimated amount that would be payable to a third party for
assuming the obligations.
III) Effective interest method
The effective interest rate is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of the financial
instrument to the relevant asset's carrying amount.
IV) Fair value estimation for investments at fair value
The Company's investments at fair value are not traded in active markets.
Fair value is calculated by discounting at an appropriate discount rate future
cash flows expected to be received by the Company's intermediate holdings,
from investments in both equity (dividends and equity redemptions),
shareholder and inter-company loans (interest and repayments). The discount
rates used in the valuation exercise represent the Investment Manager's and
the Board's assessment of the rate of return in the market for assets with
similar characteristics and risk profile. The discount rates are reviewed on a
regular basis and updated, where appropriate, to reflect changes in the market
and in the project risk characteristics. The discount rates that have been
applied to the financial assets at 31 March 2025 were in the range of 7.0% to
18.4% (31 March 2024: 7.0% to 17.7%). Refer to note 9 for details of the areas
of estimation in the calculation of the fair value.
For subsidiaries which provide management/investment‑related services, the
fair value is estimated to be the net assets of the relevant companies, which
principally comprise cash, loans and working capital balances.
(g) Segmental reporting
The Board is of the opinion that the Company is engaged in a single segment of
business, being investment in environmental infrastructure to generate
investment returns while preserving capital. The financial information used by
the Board to allocate resources and manage the Company presents the business
as a single segment comprising a homogeneous portfolio.
(h) Statement of compliance
Pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 2020, the
Company is a registered closed‑ended investment scheme. As a registered
scheme, the Company is subject to certain ongoing obligations to the Guernsey
Financial Services Commission, and is governed by the Companies (Guernsey)
Law, 2008, as amended.
(i) Seasonality
Neither operating income nor profit are impacted significantly by seasonality.
While meteorological conditions resulting in fluctuation in the levels of wind
and sunlight can affect revenues of the Company's environmental infrastructure
projects, due to the diversified mix of projects, these fluctuations do not
materially affect the Company's operating income or profit.
3. Critical accounting judgements, estimates and assumptions
In the application of the Company's accounting policies, which are described
in note 2, the Directors are required to make judgements, estimates and
assumptions about the fair value of assets and liabilities that affect
reported amounts. Actual results may differ from these estimates.
Key sources of estimation uncertainty
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
Investments at fair value through profit or loss
The fair value of environmental infrastructure investments is calculated by
discounting at an appropriate discount rate future cash flows expected to be
received by the Company's intermediate holdings, from investments in both
equity (dividends and equity redemptions), shareholder and inter-company loans
(interest and repayments). Estimates such as the cash flows are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgements about the fair value of assets not readily available from
other sources. Actual results may differ from these estimates.
The project cash flows used in the portfolio valuation at 31 March 2025
reflect contractual fixed price arrangements under PPAs, where they exist, and
short‑term market forward prices for the next two years where they do not.
After the initial two-year period, the project cash flows assume future
electricity and gas prices in line with a blended curve informed by the
central forecasts from three established market consultants, adjusted by the
Investment Manager for project-specific arrangements and price
cannibalisation.
For the Italian investment, project cash flows assume future electricity
prices informed by a leading independent market consultant's long‑term
projections.
The power price assumptions, including the discount to the near-term power
price assumptions, are a key source of estimation and uncertainty. Information
on the sensitivity of the portfolio to movement in power price is disclosed in
note 16.
Discount rates used in the valuation represent the Investment Manager's and
the Board's assessment of the rate of return in the market for assets with
similar characteristics and risk profile. The discount rate is deemed to be
one of the most significant unobservable inputs and any change could have a
material impact on the fair value of investments. Underlying assumptions and
discount rates are disclosed in note 9 and sensitivity analysis is disclosed
in note 16.
Due to the current economic environment, the Investment Manager and the Board
believe that the rate of inflation should also be considered a key source of
estimation uncertainty. Information on the sensitivity of the portfolio
valuation to movements in inflation rates is disclosed in note 16.
Critical accounting judgements
Equity and debt investment in UK HoldCo
In applying their judgement, the Directors have satisfied themselves that the
equity and debt investments in UK HoldCo share the same investment
characteristics and, as such, constitute a single asset class for IFRS 7
disclosure purposes. Please refer to the accounting policies in note 2 for
further detail.
Investment entities
The Directors consider that the Company demonstrates the characteristics and
meets the requirements to be considered as an investment entity. Please refer
to the accounting policies in note 2 for further detail.
4. Operating income and loss on fair value of investments
Year ended Year ended
31 Mar 2025 31 Mar 2024
£'000s £'000s
Interest income 31,073 31,401
Dividend income 32,300 28,000
Net loss on investments at fair value through profit or loss (57,415) (63,228)
5,958 (3,827)
5. Operating expenses
Year ended Year ended
31 Mar 2025 31 Mar 2024
£'000s £'000s
Investment management fee 7,208 8,468
Directors' fees and expenses 327 343
Administration fee 124 104
Other expenses 1,134 1,195
8,793 10,110
The Company had no employees during the year (31 March 2024: nil). There was
no Directors' remuneration for the year other than Directors' fees as detailed
in note 15 (31 March 2024: £nil).
Included within other expenses is an amount of £197,000 to KPMG Channel
Islands Limited for the audit of the Company for the year ended 31 March 2025
(year ended 31 March 2024: £170,775).
The Company paid £48,904 during the year for non‑audit services to KPMG
Channel Islands Limited, all in relation to the Half-year Report (year ended
31 March 2024: £54,532).
6. Tax
Income tax expense
The Company has obtained exempt status from income tax in Guernsey under the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. FGEN is charged an
annual exemption fee of £1,600 (year ended March 2024: £1,600).
The income from its investments is therefore not subject to any further tax in
Guernsey, although the investments provide for and pay taxation at the
appropriate rates in the countries in which they operate. The underlying tax
within the subsidiaries and environmental infrastructure assets, which are
held as investments at fair value through profit or loss, is included in the
estimate of the fair value of these investments.
7. Dividends
Year ended Year ended
31 Mar 2025 31 Mar 2024
£'000s £'000s
Amounts recognised as distributions to equity holders during the year (pence
per share):
Final dividend for the year ended 31 March 2024 of 1.89 (31 March 2023: 1.79) 12,503 11,841
Interim dividend for the quarter ended 30 June 2024 of 1.95 (30 June 2023: 12,858 12,503
1.89)
Interim dividend for the quarter ended 30 September 2024 of 1.95 (30 September 12,667 12,503
2023: 1.89)
Interim dividend for the quarter ended 31 December 2024 of 1.95 (31 December 12,494 12,569
2023: 1.90)
50,522 49,417(1)
1. Total may not cast due to rounding.
A dividend for the quarter ended 31 March 2025 of 1.95 pence per share was
approved by the Board on 29 May 2025 and is payable on 27 June 2025.
8. (Loss)/earnings per share
Earnings per share is calculated by dividing the profit attributable to equity
shareholders of the Company by the time weighted average number of ordinary
shares in issue during the year:
Year ended Year ended
31 Mar 2025 31 Mar 2024
£'000s £'000s
(Loss)/earnings
(Loss)/earnings for the purposes of basic and diluted earnings per share, (2,835) (13,937)
being net profit attributable to owners of the Company
Number of shares
Time weighted average number of ordinary shares for the purposes of basic and 653,841,890 661,531,229
diluted earnings per share
The denominator for the purposes of calculating both basic and diluted
earnings per share is the same, as the Company has not issued any share
options or other instruments that would cause dilution. Shares held in
treasury are excluded from the calculation.
Pence Pence
Basic and diluted (loss)/earnings per share (0.4) (2.1)
9. Investments at fair value through profit or loss
As set out in note 2, the Company accounts for its interest in its 100% owned
subsidiary UK HoldCo as an investment at fair value through profit or loss. UK
HoldCo in turn owns investments in intermediate holding companies and
environmental infrastructure projects.
The table below shows the movement in the Company's investment in UK HoldCo as
recorded on the Company's statement of financial position:
31 Mar 2025 31 Mar 2024
£'000s £'000s
Fair value of environmental infrastructure investments 765,674 891,927
Fair value of intermediate holding companies (87,517) (138,355)
Total fair value of investments 678,157 753,572
Reconciliation of movement in fair value of portfolio of assets
The table below shows the movement in the fair value of the Company's
portfolio of environmental infrastructure assets. These assets are held
through other intermediate holding companies. The table also presents a
reconciliation of the fair value of the asset portfolio to the Company's
statement of financial position as at 31 March 2025, by incorporating the fair
value of these intermediate holding companies.
Cash, working Cash, working
capital and capital and
debt in debt in
Portfolio intermediate Portfolio intermediate
value holdings Total value holdings Total
31 Mar 2025 31 Mar 2025 31 Mar 2025 31 Mar 2024 31 Mar 2024 31 Mar 2024
£'000s £'000s £'000s £'000s £'000s £'000s
Opening balance 891,927 (138,355) 753,572 898,539 (81,739) 816,800
Acquisitions
Portfolio of assets acquired 30,722 - 30,722 69,221 - 69,221
Disposal of assets (89,137) - (89,137) - - -
(58,415) - (58,415) 69,221 - 69,221
Growth in portfolio(1) 22,585 - 22,585 11,181 - 11,181
Yields from portfolio to intermediate holding companies (90,423) 90,423 - (87,014) 87,014 -
Yields from intermediate holding companies
Interest on loan notes(1) - (31,073) (31,073) - (31,401) (31,401)
Dividend payments from UK HoldCo to the Company(1) - (32,300) (32,300) - (28,000) (28,000)
- (63,373) (63,373) - (59,401) (59,401)
Other movements
Movement in working capital in UK HoldCo - (19,512) (19,512) - (13,425) (13,425)
Expenses borne by intermediate holding companies(1) - (16,626) (16,626) - (15,008) (15,008)
Repayment/(drawdown) of UK HoldCo revolving credit facility borrowings - 59,926 59,926 - (55,796) (55,796)
Fair value of the Company's investment in UK HoldCo 765,674 (87,517) 678,157 891,927 (138,355) 753,572
1. The net loss on investments at fair value through profit or loss for
the year ended 31 March 2025 is £57,415,000 (31 March 2024: net loss of
£63,228,000). This, together with interest received on loan notes of
£31,073,000 (31 March 2024: £31,401,000) and dividend income of £32,300,000
(31 March 2024: £28,000,000) comprises operating income and gains/(losses) on
fair value of investments in the income statement.
The balances in the table above represent the total net movement in the fair
value of the Company's investment. The "cash, working capital and debt in
intermediate holdings" balances reflect investment in, distributions from or
movements in working capital and are not value generating.
Fair value of portfolio of assets
The Investment Manager has carried out fair market valuations of the
investments as at 31 March 2025. The Directors have satisfied themselves as
to the methodology used and the discount rates applied for the valuation.
Investments are all investments in environmental infrastructure projects and
are valued using a discounted cash flow methodology, being the most relevant
and most commonly used method in the market to value similar assets to the
Company's. The Company's holding of its investment in UK HoldCo represents its
interest in both the equity and debt instruments. The equity and debt
instruments are valued as a whole using a blended discount rate and the value
attributed to the equity instruments represents the fair value of future
dividends and equity redemptions in addition to any value enhancements arising
from the timing of loan principal and interest receipts from the debt
instruments, while the value attributed to the debt instruments represents the
principal outstanding and interest due on the loan at the valuation date.
The valuation techniques and methodologies have been applied consistently with
the valuations performed since the launch of the Fund in March 2014.
Discount rates applied to the portfolio of assets range from 7.0% to 18.4% (31
March 2024: 7.0% to 17.7%). The weighted average discount rate of the
portfolio at 31 March 2025 is 9.7% (31 March 2024: 9.4%).
The following economic assumptions have been used in the discounted cash flow
valuations:
31 Mar 2025 31 Mar 2024
UK - inflation rates 3.5% for 2025, decreasing to 3% until 2030, decreasing to 2.25% from 2031 3.5% for 2024, decreasing to 3% until 2030, decreasing to 2.25% from 2031
Italy - inflation rates 2.0% from 2025 onwards 2.0% from 2024 onwards
UK - deposit interest rates 2.0% from 2025 onwards 2.0% from 2024 onwards
Italy - deposit rates 0% 0%
UK - corporation tax rates 25% from April 2025 onwards 25% from April 2024 onwards
Italy - corporation tax rates National rate of 24%, plus applicable regional premiums National rate of 24%, plus applicable regional premiums
Euro/sterling exchange rate 1.19 1.17
Refer to note 16 for details of the sensitivity of the portfolio to movements
in the discount rate and economic assumptions.
The assets in the intermediate holding companies substantially comprise
working capital, cash balances and the outstanding RCF debt; therefore, the
Directors consider the fair value to be equal to the amortised cost.
% holding at 31 Mar 2025 % holding at 31 Mar 2024
Shareholder Shareholder
Project name Equity loan Equity loan
Amber 100% 100% 100% 100%
Bilsthorpe 100% 100% 100% 100%
Bio Collectors 100% 100% 100% 100%
Biogas Meden 49% 49% 100% 100%
Branden 100% 100% 100% 100%
Burton Wold Extension 100% 100% 100% 100%
Carscreugh 100% 100% 100% 100%
Castle Pill 100% 100% 100% 100%
Clayfords 50% 50% 50% 50%
CNG Foresight 25% 25% 25% 25%
Codford 100% 100% 100% 100%
Cramlington 100% 100% 100% 100%
CSGH 100% 100% 100% 100%
Dungavel 100% 100% 100% 100%
Egmere Energy 49% 49% 100% 100%
ELWA 80% 80% 80% 80%
ETA Manfredonia 45% 45% 45% 45%
Ferndale 100% 100% 100% 100%
Glasshouse 10% 100% 10% 100%
Grange Farm 49% 49% 100% 100%
Hall Farm 100% 100% 100% 100%
Icknield 53% 100% 53% 100%
Llynfi 100% 100% 100% 100%
Lunanhead 50% 50% 50% 50%
Merlin Renewables 49% 49% 100% 100%
Moel Moelogan 100% 100% 100% 100%
Monksham 100% 100% 100% 100%
New Albion Wind Farm 100% 100% 100% 100%
Northern Hydro 100% n/a 100% n/a
Panther - - 100% 100%
Peacehill 49% 100% 49% 100%
Pylle Southern 100% 100% 100% 100%
Rainworth 100% 100% 100% 100%
Rjukan 25% 33% 25% 33%
Sandridge 50% 50% 50% 50%
Tay 33% 33% 33% 33%
Thierbach 36% 25% 36% 25%
Lubmin 30% 5% 30% 5%
Vulcan 49% 49% 100% 100%
Warren 49% 49% 100% 100%
Wear Point 100% 100% 100% 100%
West Gourdie 100% 100% 100% 100%
Yorkshire Hydro 100% n/a 100% n/a
Additionally, the fair value of the portfolio of assets includes the Fund's
investment into FEIP, details of which can be found on page 45 of the 2025
Annual Report.
Details of investments made during the year
During the year, £2.4 million was injected into CNG Foresight Limited. As at
31 March 2025, the portfolio held 16 natural gas refuelling stations,
including the sites in construction phase.
The Group funded a capital call of €5.3 million to Foresight Energy
Infrastructure Partners SCSp ("FEIP"), in line with its existing commitment to
the fund.
The Group also invested £14.2 million into Rjukan Holdings Limited, £2.9
million into Cramlington, £2.3 million into Sandridge Battery Storage, £1.1
million into Vulcan Renewables Limited, £0.9 million into the Glasshouse
project, and £2.5 million to various other projects.
10. Trade and other receivables
31 Mar 2025 31 Mar 2024
£'000 £'000
Prepayments 19 25
Other debtors 2 -
Balance at 31 March 21 25
11. Trade and other payables
31 Mar 2025 31 Mar 2024
£'000 £'000
Accruals 2,094 2,654
Balance at 31 March 2,094 2,654
12. Loans and borrowings
The Company had no outstanding loans or borrowings at 31 March 2025 (31 March
2024: £nil), as shown in the Company's statement of financial position.
As at 31 March 2025, the Company held loan notes of £330.9 million which were
issued by UK HoldCo (31 March 2024: outstanding amount of £348.9 million).
As at 31 March 2025, UK HoldCo had an outstanding balance of £99.3 million
under a revolving credit facility (31 March 2024: £159.3 million). The loan
bears interest of SONIA + 205 to 215 bps.
There were no other outstanding loans and borrowings in either the Company, UK
HoldCo or HWT at 31 March 2025.
13. Share capital account
Number of 31 Mar 2025 31 Mar 2024
shares £'000 £'000
Opening balance at 1 April 661,531,229 664,401 664,401
Treasury shares (24,088,171) (19,156) -
Balance at 31 March 637,443,058 645,245 664,401
The number of voting shares at 31 March 2025 was 637,443,058 and 24,088,171
shares were kept in treasury as a result of the share buyback programme that
started on 30 August 2024.
14. Retained earnings
31 Mar 2025 31 Mar 2024
£'000 £'000
Opening balance 86,813 150,167
Loss for the year (2,835) (13,937)
Dividends paid (50,522) (49,417)
Balance at 31 March 33,456 86,813
15. Transactions with the Investment Manager and related parties
Transactions between the Company and its subsidiaries, which are related
parties of the Company, are fair valued and are disclosed within note 9.
Details of transactions between the Company and related parties are disclosed
below. This note also details the terms of the Company's engagement with
Foresight Group as Investment Manager.
Transactions with the Investment Manager
Foresight Group ("Foresight") is the Company's Investment Manager. Foresight's
appointment as Investment Manager is governed by an Investment Management
Agreement.
For the first half of the financial year Foresight was entitled to a base fee
equal to:
a) 1.0% per annum of the Adjusted Portfolio Value(1) of the Fund(2) up to
and including £500 million; and
b) 0.8% per annum of the Adjusted Portfolio Value of the Fund in excess of
£500 million.
The Board approved a reduction in the management fee payable to Foresight
Group LLP by changing the basis of calculating the fee from adjusted NAV to
NAV.
With effect from 1 October 2024, the management fee was calculated as follows:
a) 0.95% per annum of the portfolio Net Asset Value of the Fund(2) up to
and including £500 million;
b) 0.80% per annum of the portfolio Net Asset Value of the Fund on the
balance above £500 million up to and including £1 billion; and
c) 0.75% per annum of the portfolio Net Asset Value of the Fund in excess
of £1 billion.
The total Investment Manager fee charged to the income statement for the year
ended 31 March 2025 was £7,208,000 (31 March 2024: £8,468,000), of which
£1,530,000 remained payable as at 31 March 2025 (31 March 2024: £2,147,000).
In addition, the Investment Manager charged a fee of £125,000 in respect of
additional management obligations, of which £62,500 remained payable as at 31
March 2025 (31 March 2024: £nil).
1. "Adjusted Portfolio Value" is defined in the Investment Management
Agreement as:
a. the fair value of the investment portfolio; plus
b. any cash owned by or held to the order of the Fund; plus
c. the aggregate amount of payments made to shareholders by way of
dividend in the quarterly period ending on the relevant valuation day, less:
i. any other liabilities of the Fund (excluding borrowings); and
ii. any uninvested cash.
2. "Fund" means the Company and Foresight Environmental Infrastructure
(UK) Limited together with their wholly owned subsidiaries or subsidiary
undertakings (including companies or other entities wholly owned by them
together, individually or in any combination, as appropriate) but excluding
project entities.
Transactions with related parties
During the year, the Directors of the Company, who are considered to be key
management, received fees of £323,335 (31 March 2024: £334,500) for their
services. The Directors of the Company were also paid £3,780 of expenses (31
March 2024: £8,495).
The Directors held the following shares:
Ordinary Ordinary
shares shares
of no par of no par
value each value each
held at held at
31 Mar 2025 31 Mar 2024
Ed Warner 75,000 60,000
Alan Bates 25,000 12,500
Stephanie Coxon 45,000 15,000
Jo Harrison 8,066 8,066
Hans Joern Rieks - 95,000
Nadia Sood - -
All of the above transactions were undertaken on an arm's length basis. Hans
Joern Rieks retired from the Board on 13 September 2024.
The Directors were paid dividends in the year of £8,811 (31 March 2024:
£14,235).
16. Financial instruments
Financial instruments by category
The Company held the following financial instruments at 31 March 2025. There
have been no transfers of financial instruments between levels of the fair
value hierarchy. There are no non‑recurring fair value measurements.
31 Mar 2025
Financial Financial
assets assets Financial
held at at fair value liabilities
Cash and amortised through profit at amortised
bank balances cost or loss cost Total
£'000s £'000s £'000s £'000s £'000s
Non‑current assets
Investments at fair value through profit or loss (Level 3) - - 678,157 - 678,157
Current assets
Trade and other receivables - 21 - - 21
Cash and cash equivalents 2,617 - - - 2,617
Total financial assets 2,617 21 678,157 - 680,795
Current liabilities
Trade and other payables - - - (2,094) (2,094)
Total financial liabilities - - - (2,094) (2,094)
Net financial instruments 2,617 21 678,157 (2,094) 678,701
31 Mar 2024
Financial Financial
assets assets Financial
held at at fair value liabilities
Cash and amortised through profit at amortised
bank balances cost or loss cost Total
£'000s £'000s £'000s £'000s £'000s
Non‑current assets
Investments at fair value through profit or loss (Level 3) - - 753,572 - 753,572
Current assets
Trade and other receivables - 25 - - 25
Cash and cash equivalents 271 - - - 271
Total financial assets 271 25 753,572 - 753,868
Current liabilities
Trade and other payables - - - (2,654) (2,654)
Total financial liabilities - - - (2,654) (2,654)
Net financial instruments 271 25 753,572 (2,654) 751,214
The Company's investments at fair value through profit or loss are classified
at Level 3 within the IFRS fair value hierarchy.
The Level 3 fair value measurements derive from valuation techniques that
include inputs to the asset or liability that are not based on observable
market data (unobservable inputs).
In the tables above, financial instruments are held at carrying value as an
approximation to fair value unless stated otherwise.
Reconciliation of Level 3 fair value measurement of financial assets and
liabilities
An analysis of the movement between opening and closing balances of the
investments at fair value through profit or loss is given in note 9.
The fair value of the investments at fair value through profit or loss
includes the use of Level 3 inputs. Please refer to note 9 for details of the
valuation methodology.
Sensitivity analysis of the portfolio
The sensitivities below include the impact of the EGL.
The sensitivity of the portfolio to movements in the discount rate is as
follows:
31 March 2025
Discount rate Minus 0.5% Base 9.7% Plus 0.5%
Change in portfolio valuation Increases £18.0m £765.7m Decreases £17.2m
Change in NAV per share Increases 2.8p 106.5p Decreases 2.7p
31 March 2024
Discount rate Minus 0.5% Base 9.4% Plus 0.5%
Change in portfolio valuation Increases £20.7m £891.9m Decreases £19.8m
Change in NAV per share Increases 3.1p 113.6p Decreases 3.0p
The sensitivity of the portfolio to movements in long‑term inflation rates
is as follows:
31 March 2025
Inflation rates Minus 0.5% Base 3.5% (2025), then 3% to 2030, then 2.25% Plus 0.5%
Change in portfolio valuation Decreases £20.4m £765.7m Increases £20.6m
Change in NAV per share Decreases 3.2p 106.5p Increases 3.2p
31 March 2024
Inflation rates Minus 0.5% Base 3.5% (2024), then 3% to 2030, then 2.25% Plus 0.5%
Change in portfolio valuation Decreases £18.9m £891.9m Increases £19.3m
Change in NAV per share Decreases 2.9p 113.6p Increases 2.9p
The fair value of the investments is based on a "P50" level of electricity
generation for the renewable energy assets, being the expected level of
generation over the long term.
Wind, solar and hydro assets are subject to electricity generation risks.
The sensitivity of the portfolio to movements in energy yields based on an
assumed "P90" level of electricity generation (i.e. a level of generation that
is below the "P50", with a 90% probability of being exceeded) and an assumed
"P10" level of electricity generation (i.e. a level of generation that is
above the "P50", with a 10% probability of being achieved) is as follows:
31 March 2025
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £21.8m £765.7m Increases £21.2m
Change in NAV per share Decreases 3.4p 106.5p Increases 3.3p
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £7.9m £765.7m Increases £8.1m
Change in NAV per share Decreases 1.2p 106.5p Increases 1.3p
Energy yield: hydro P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £1.2m £765.7m Increases £1.3m
Change in NAV per share Decreases 0.2p 106.5p Increases 0.2p
31 March 2024
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £28.3m £891.9m Increases £27.0m
Change in NAV per share Decreases 4.3p 113.6p Increases 4.1p
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £9.3m £891.9m Increases £9.5m
Change in NAV per share Decreases 1.4p 113.6p Increases 1.4p
Energy yield: hydro P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £1.3m £891.9m Increases £1.4m
Change in NAV per share Decreases 0.2p 113.6p Increases 0.2p
Agricultural anaerobic digestion facilities do not suffer from similar
deviations as their feedstock input volumes (and consequently biogas
production) are controlled by the site operator.
For the waste & bioenergy projects, forecasts are based on projections of
future input volumes and are informed by both forecasts and independent
studies where appropriate. Revenues in the PPP projects are generally not very
sensitive to changes in volumes due to the nature of their payment mechanisms.
Electricity and gas price assumptions are based on the following: for the
first two years, cash flows for each project use forward electricity and gas
prices based on market rates unless a contractual fixed price exists, in which
case the model reflects the fixed price followed by the forward price for the
remainder of the two‑year period. For the remainder of the project life, a
long‑term blend of central case forecasts from three established market
consultants and other relevant information is used, and adjusted by the
Investment Manager for project-specific arrangements and price
cannibalisation.
The sensitivity assumes a 10% increase or decrease in power prices relative to
the base case for each year of the asset life after the first two‑year
period. While power markets can experience movements in excess of +/-10% on a
short‑term basis, as has been the case recently, the sensitivity is intended
to provide insight into the effect on the NAV of persistently higher or lower
power prices over the whole life of the portfolio. The Directors feel that
+/-10% remains a realistic range of outcomes over this very long time horizon,
notwithstanding that significant movements will occur from time to time.
The sensitivity of the portfolio to movements in electricity and gas prices is
as follows:
31 March 2025
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases £35.3m £765.7m Increases £35.9m
Change in NAV per share Decreases 5.5p 106.5p Increases 5.6p
31 March 2024
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases £37.4m £891.9m Increases £37.0m
Change in NAV per share Decreases 5.7p 113.6p Increases 5.6p
Waste & bioenergy assets (excluding Bio Collectors) do not have
significant volume and price risks and therefore are not included in the above
volume and price sensitivities.
The sensitivity of the portfolio to movements in AD feedstock prices is as
follows:
31 March 2025
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases £6.8m £765.7m Decreases £6.5m
Change in NAV per share Increases 1.1p 106.5p Decreases 1.0p
31 March 2024
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases £8.7m £891.9m Decreases £8.9m
Change in NAV per share Increases 1.3p 113.6p Decreases 1.3p
No such sensitivity is applicable to FGEN's biomass investment, where fuel
costs are tied under long-term contract.
The sensitivity of the portfolio to movements in corporation tax rate is as
follows:
31 March 2025
Corporation tax Minus 2% Base 25% Plus 2%
Change in portfolio valuation Increases £11.4m £765.7m Decreases £11.3m
Change in NAV per share Increases 1.8p 106.5p Decreases 1.8p
31 March 2024
Corporation tax Minus 2% Base 25% Plus 2%
Change in portfolio valuation Increases £13.6m £891.9m Decreases £13.9m
Change in NAV per share Increases 2.1p 113.6p Decreases 2.1p
Euro/sterling exchange rate sensitivity
As the proportion of the portfolio assets with cash flows denominated in euros
represents a small proportion of the portfolio value at 31 March 2025, the
Directors consider the sensitivity to changes in euro/sterling exchange rates
to be insignificant.
The Directors consider that the carrying value amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statements
are approximately equal to their fair values.
Uncontracted revenues on non-energy generating portfolio sensitivity
Non-energy generating assets, such as batteries and controlled environment
agriculture and aquaculture, make up a growing proportion of the portfolio.
These assets are not materially affected by either scarcity of natural
resource nor power price markets. Therefore the Investment Manager has
presented a sensitivity illustrating an assumed 10% increase or decrease on
all uncontracted revenues for each year of the asset lives.
An increase in uncontracted revenues of 10% would result in an upward movement
in the portfolio valuation of £23.6 million (3.7 pence per share) (2024:
£17.9 million, 2.7 pence per share) compared to a decrease in value of £23.4
million (3.7 pence per share) (2024: £20.2 million, 3.0 pence per share) if
those revenues were reduced by the same amount.
Capital risk management
Capital management
The Group, which comprises the Company and its non‑consolidated
subsidiaries, manages its capital to ensure that it will be able to continue
as a going concern while maximising the return to shareholders through the
optimisation of the debt and equity balances. The capital structure of the
Group principally consists of the share capital account and retained earnings
as detailed in notes 13 and 14, and debt as detailed in note 12. The Group
aims to deliver its objective by investing available cash and using leverage
whilst maintaining sufficient liquidity to meet ongoing expenses and dividend
payments.
Gearing ratio
The Company's Investment Manager reviews the capital structure of the Company
and the Group on a semi‑annual basis. The Company and its subsidiaries
intend to make prudent use of leverage for financing acquisitions of
investments and working capital purposes. Under the Company's Articles, and in
accordance with the Company's investment policy, the Company's outstanding
borrowings, excluding the debts of underlying assets, will be limited to 30%
of the Company's Net Asset Value ("NAV").
As at 31 March 2025, the Company had no outstanding debt. However, as set out
in note 12, as at 31 March 2025, the Company's subsidiary UK HoldCo had an
outstanding balance of £99.3 million under a revolving credit facility (31
March 2024: £159.3 million).
Financial risk management
The Group's activities expose it to a variety of financial risks: capital
risk, liquidity risk, market risk (including interest rate risk, inflation
risk and power price risk) and credit risk. The Group's overall risk
management programme focuses on the unpredictability of financial markets and
seeks to minimise potential adverse effects on the Group's financial
performance.
For the Company and the intermediate holding companies, financial risks are
managed by the Investment Manager, which operates within the Board-approved
policies. For the environmental infrastructure investments, due to the nature
of the investments, certain financial risks (typically interest rate and
inflation risks) are hedged at the inception of a project. All risks continue
to be managed by the Investment Manager. The various types of financial risk
are managed as follows:
Financial risk management - Company only
The Company accounts for its investments in its subsidiaries at fair value.
Accordingly, to the extent there are changes as a result of the risks set out
below, these may impact the fair value of the Company's investments.
Capital risk
The Company has implemented an efficient financing structure that enables it
to manage its capital effectively. The Company's capital structure comprises
equity only (refer to the statement of changes in equity). As at 31 March
2025, the Company had no recourse debt, although as set out in note 17, the
Company is a guarantor for the RCF of UK HoldCo.
Liquidity risk
The Directors monitor the Company's liquidity requirements to ensure there is
sufficient cash to meet the Company's operating needs.
The Company's liquidity management policy involves projecting cash flows and
forecasting the level of liquid assets necessary to meet these. Due to the
nature of its investments, the timing of cash outflows is reasonably
predictable and, therefore, is not a major risk to the Company.
The Company was in a net cash position and had no outstanding debt at the
balance sheet date. At the balance sheet date, the Group had debt of £99.3
million, being the amount drawn on the RCF.
Market risk - foreign currency exchange rate risk
As the proportion of the portfolio assets with cash flows denominated in euros
represents a small proportion of the portfolio value at 31 March 2025, the
Directors consider the sensitivity to changes in the euro/sterling exchange
rate to be insignificant.
Where investments are made in currencies other than pounds sterling, the
Company will consider whether to hedge currency risk in accordance with the
Company's currency and hedging policy as determined from time to time by the
Directors. A portion of the Company's underlying investments may be
denominated in currencies other than pounds sterling. However, any dividends
or distributions in respect of the ordinary shares will be made in pounds
sterling and the market prices and NAV of the ordinary shares will be reported
in pounds sterling.
Currency hedging may be carried out to seek to provide some protection for the
level of pounds sterling dividends and other distributions that the Company
aims to pay on the ordinary shares, and in order to reduce the risk of
currency fluctuations and the volatility of returns that may result from such
currency exposure. Such currency hedging may include the use of foreign
currency borrowings to finance foreign currency assets and forward foreign
exchange contracts.
Financial risk management - Company and non‑consolidated subsidiaries
The following risks impact the Company's subsidiaries and in turn may impact
the fair value of investments held by the Company.
Market risk - interest rate risk
Interest rate risk arises in the Company's subsidiaries on the RCF borrowings
and floating rate deposits. Borrowings issued at variable rates expose those
entities to variability of interest payment cash flows. Interest rate hedging
may be carried out to seek to provide protection against increasing costs of
servicing debt drawn down by UK HoldCo as part of its RCF. This may involve
the use of interest rate derivatives and similar derivative instruments.
Each infrastructure investment hedges their interest rate risk at the
inception of a project. This will either be done by issuing fixed rate debt or
variable rate debt which will be swapped into fixed rate by the use of
interest rate swaps.
Market risk - inflation risk
Some of the Company's investments will have part of their revenue and some of
their costs linked to a specific inflation index at inception of the project.
In most cases this creates a natural hedge, meaning a derivative does not need
to be entered into in order to mitigate inflation risk.
Market risk - power price risk
The wholesale market price of electricity and gas is volatile and is affected
by a variety of factors, including market demand for electricity and gas, the
generation mix of power plants, government support for various forms of power
generation, as well as fluctuations in the market prices of commodities and
foreign exchange. Whilst some of the Company's renewable energy projects
benefit from fixed prices, others have revenue which is in part based on
wholesale electricity and gas prices.
A decrease and/or prolonged deterioration in economic activity in the UK, for
any reason, could result in a decrease in demand for electricity and gas in
the market. Short‑term and seasonal fluctuations in electricity and gas
demand will also impact the price at which the investments can sell
electricity and gas. The supply of electricity and gas also impacts wholesale
electricity and gas prices. Supply of electricity and gas can be affected by
new entrants to the wholesale power market, the generation mix of power plants
in the UK, government support for various generation technologies, as well as
the market price for fuel commodities.
Volume risk - electricity generation risk
Meteorological conditions poorer than forecast can result in generation of
lower electricity volumes and lower revenues than anticipated.
Credit risk
Credit risk is the risk that a counterparty of the Company or its subsidiaries
will default on its contractual obligations it entered into with the Company
or its subsidiaries. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and financial
institutions, as well as credit exposures to customers. The Company and its
subsidiaries mitigate their risk on cash investments and derivative
transactions by only transacting with major international financial
institutions with high credit ratings assigned by international credit rating
agencies.
The Company's infrastructure investments receive regular, long‑term, partly
or wholly index‑linked revenue from government departments, local
authorities or clients under the Renewables Obligation Certificates and
Feed‑in Tariff regimes. The Directors believe that the Group is not
significantly exposed to the risk that the customers of its investments do not
fulfil their regular payment obligations because of the Company's policy to
invest in jurisdictions with satisfactory credit ratings.
Given the above factors, the Board does not consider it appropriate to present
a detailed analysis of credit risk.
The Company's maximum exposure to credit risk is the £330.9 million owed by
HoldCo, detailed in note 12.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. The Group adopts a prudent approach to
liquidity management by ensuring it maintains adequate reserves and banking
facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of financial assets and liabilities.
The Directors monitor the Company's liquidity requirements to ensure there is
sufficient cash to meet the Company's operating needs.
The Company's liquidity management policy involves projecting cash flows and
forecasting the level of liquid assets required to meet its obligations. Due
to the nature of its investments, the timing of cash outflows is reasonably
predictable and, therefore, is not a major risk to the Group.
Debt raised by asset investments from third parties is without recourse to the
Group.
17. Guarantees and other commitments
As at 31 March 2025, the Company provided a guarantee over the Company's
wholly owned subsidiary UK HoldCo's obligations under the £200 million RCF.
On 13 June 2024, UK HoldCo refinanced the £200 million revolving credit
facility with a three-year agreement with ING, HSBC, National Australia Bank,
Royal Bank of Scotland International and Clydesdale Bank. The contract
includes an uncommitted accordion facility of up to £30 million and an
uncommitted option to extend for a further year. Subsequently, the committed
facility of £200 million was voluntarily reduced to £150 million with
effect from 25 April 2025 with no change on the accordion facility.
As at 31 March 2025, the Group has the following future investment obligations
over a 12-month horizon: £2.1 million to Cramlington, £1.6 million to
Sandridge battery storage, €1.2 million (equivalent to £1.0 million) to
FEIP, 12.7 million NOK (equivalent to £0.9 million) to the Rjukan project and
£0.5 million in other projects. The Company had no other commitments or
guarantees.
18. Subsidiaries and associates
The following subsidiaries and associates have not been consolidated in these
financial statements as a result of applying the requirements of "Investment
Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12
and IAS 27)":
Place of Registered Ownership
Name Category business office interest Voting rights
Foresight Environmental Infrastructure (UK) Limited(1) Intermediate holding UK A 100% 100%
HWT Limited Intermediate holding UK B 100% 100%
Easton PV Limited Project holding company UK A 100% 100%
Pylle Solar Limited Project holding company UK A 100% 100%
Second Energy Limited Operating subsidiary UK A 100% 100%
JLEAG Wind Holdings Limited Project holding company UK A 100% 100%
JLEAG Wind Limited Project holding company UK A 100% 100%
Amber Solar Parks (Holdings) Limited Project holding company UK C 100% 100%
Amber Solar Park Limited Operating subsidiary UK C 100% 100%
Bilsthorpe Wind Farm Limited Operating subsidiary UK D 100% 100%
Ferndale Wind Limited Project holding company UK K 100% 100%
Castle Pill Wind Limited Project holding company UK K 100% 100%
Wind Assets LLP Operating subsidiary UK D 100% 100%
Hall Farm Wind Farm Limited Operating subsidiary UK D 100% 100%
Branden Solar Parks (Holdings) Limited Project holding company UK A 100% 100%
Branden Solar Parks Limited Operating subsidiary UK A 100% 100%
KS SPV 3 Limited Operating subsidiary UK A 100% 100%
KS SPV 4 Limited Operating subsidiary UK A 100% 100%
Carscreugh Renewable Energy Park Limited Operating subsidiary UK D 100% 100%
Wear Point Wind Limited Operating subsidiary UK D 100% 100%
Monksham Power Ltd Project holding company UK A 100% 100%
Frome Solar Limited Operating subsidiary UK A 100% 100%
BL Wind Limited Operating subsidiary UK D 100% 100%
New Albion Wind Limited Operating subsidiary UK D 100% 100%
Dreachmhor Wind Farm Limited Operating subsidiary UK D 100% 100%
France Wind GP Germany GmbH(2) Project holding company DE E 100% 100%
France Wind Germany GmbH & Co. KG(2) Project holding company DE E 100% 100%
CSGH Solar Limited Project holding company (dormant) UK A 100% 100%
CSGH Solar (1) Limited Project holding company (dormant) UK A 100% 100%
sPower Holdco 1 (UK) Limited Project holding company (dormant) UK C 100% 100%
sPower Finco 1 (UK) Limited Project holding company (dormant) UK C 100% 100%
Higher Tregarne Solar (UK) Limited Operating subsidiary UK A 100% 100%
Crug Mawr Solar Farm Limited Operating subsidiary UK A 100% 100%
Golden Hill Solar (UK) Limited Project holding company (dormant) UK C 100% 100%
Golden Hill Solar Limited Operating subsidiary UK A 100% 100%
Shoals Hook Solar (UK) Limited Operating subsidiary UK A 100% 100%
CGT Investment Limited Project holding company UK F 100% 100%
CWMNI GWYNT TEG CYF Operating subsidiary UK F 100% 100%
Moelogan 2 (Holdings) Cyfyngedig Project holding company UK F 100% 100%
Moelogan 2 C.C.C. Operating subsidiary UK F 100% 100%
Llynfi Afan Renewable Energy Park Limited Operating subsidiary UK D 100% 100%
Bio Collectors Holdings Limited Project holding company UK I 100% 100%
Bio Collectors Limited Operating subsidiary UK I 100% 100%
Riverside Bio Limited Operating subsidiary UK I 100% 100%
Riverside AD Limited Operating subsidiary UK I 100% 100%
Yorkshire Hydropower Holdings Limited Project holding company UK D 100% 100%
Yorkshire Hydropower Limited Operating subsidiary UK D 100% 100%
Northern Hydropower Holdings Limited Project holding company UK D 100% 100%
Northern Hydropower Limited Operating subsidiary UK D 100% 100%
Codford Biogas Limited Operating subsidiary UK L 100% 100%
Rainworth Energy Limited Operating subsidiary UK J 100% 100%
FS West Gourdie Limited Operating subsidiary UK A 100% 100%
Spruce Bioenergy Limited Project holding company UK A 100% 100%
Cramlington Renewable Energy Developments Limited Operating subsidiary UK K 100% 100%
Fryingdown Solar Park Limited Non-trading entity UK C 100% 100%
Five Oaks Solar Parks Limited Non-trading entity UK U 100% 100%
Warren Power Limited Project holding company UK G 100% 100%
ELWA Holdings Limited Project holding company UK K 80% 80%
ELWA Limited(3) Operating subsidiary UK K 80% 81%
Green Gas Oxon Limited Project holding company UK H 52.6% 52.6%
Icknield Gas Limited Operating subsidiary UK H 52.6% 52.6%
Foresight Biomass Holding Italy S.r.l. Project holding company IT M 45% 45%
Energie Tecnologie Ambiente S.r.l. Operating associate IT M 45% 45%
Foresight Rjukan Holding Limited Project holding company UK A 43% 43%
Catchment Tay Holdings Limited Project holding company UK N 33.3% 33.3%
Catchment Tay Limited Operating associate UK N 33.3% 33.3%
Foresight Hydrogen HoldCo GmbH Project holding company DE O 40.1% 40.1%
Hima Seafood Rjukan AS Operating associate NO P 25% 25%
HH2E Werk Thierbach GmbH Operating associate DE Q 23% 23%
HH2E Werk Lubmin GmbH Operating associate DE Q 23% 23%
HH2E AG Project holding company DE Q 23% 23%
Foresight Battery Storage Holding Limited Project holding company UK A 50% 50%
Sandridge Battery Storage Limited Operating associate UK A 50% 50%
Clayfords Energy Storage Limited Operating associate UK R 50% 50%
AD Holdco 1 Limited Project holding company UK G 49% 49%
Egmere Energy Limited Operating associate UK G 49% 49%
Warren Energy Limited Operating associate UK G 49% 49%
Vulcan Renewables Limited Operating associate UK G 49% 49%
Grange Farm Energy Limited Operating associate UK G 49% 49%
Merlin Renewables Limited Operating associate UK G 49% 49%
Biogas Meden Limited Operating associate UK G 49% 49%
Foresight Battery Storage Holdings Limited Project holding company UK A 50% 50%
Lunanhead Energy Storage Limited Operating associate UK A 50% 50%
JLEAG AD Limited Project holding company UK A 49% 49%
Peacehill Gas Limited Operating associate UK S 49% 49%
CNG Foresight Holdings Limited Project holding company UK A 25% 25%
CNG Foresight Limited Operating associate UK T 25% 25%
CNG Newton Aycliffe Limited Operating associate UK T 25% 25%
CNG Eurocentral Limited Operating associate UK T 25% 25%
CNG Avonmouth North Limited Operating associate UK T 25% 25%
CNG Corby Limited Operating associate UK T 25% 25%
CNG Doncaster Limited Operating associate UK T 25% 25%
CNG Bracknell Limited Operating associate UK T 25% 25%
CNG Bangor Limited Operating associate UK T 25% 25%
CNG Aylesford Limited Operating associate UK T 25% 25%
CNG Station Holdings Limited Operating associate UK T 25% 25%
CNG Leyland Limited Operating associate UK T 25% 25%
CNG Knowsley Limited Operating associate UK T 25% 25%
CNG Castleford Limited Operating associate UK T 25% 25%
Lavant Down Northampton Limited Operating associate UK T 25% 25%
Oxford Erdington Limited Operating associate UK T 25% 25%
Hams Warrington Limited Operating associate UK T 25% 25%
Nexus Newark Limited Operating associate UK T 25% 25%
1. Foresight Environmental Infrastructure (UK) Limited ("UK HoldCo",
formerly known as JLEN Environmental Assets Group (UK) Limited).
2. Underlying French wind assets were disposed of in January 2022.
3. ELWA Holdings Limited holds 81% of the voting rights and a 100% share
of the economic benefits in ELWA Limited.
Registered offices
A) The Shard, 32 London Bridge Street, London SE1 9SG
B) 50 Lothian Road, Festival Square, Edinburgh, Midlothian EH3 9WJ
C) Long Barn, Manor Farm, Stratton-On-The-Fosse, Radstock, England, BA3 4QF
D) C/O RES White Limited, Beaufort Court, Egg Farm Lane, Kings Langley,
Hertfordshire, England, WD4 8LR
E) Steinweg 3-5, Frankfurt Am Main, 60313, Germany
F) Cae Sgubor Ffordd Pennant, Eglwysbach, Colwyn Bay, Conwy LL28 5UN
G) 10-12 Frederick Sanger Road, Guildford, Surrey GU2 7YD
H) Friars Ford, Manor Road, Goring, Reading RG8 9EL
I) 10 Osier Way, Mitcham, Surrey CR4 4NF
J) C/O Material Change, The Amphenol Building 46-50 Rutherford Drive, Park
Farm Industrial Estate, Wellingborough, England, NN8 6AX
K) 8 White Oak Square, London Road, Swanley, England, BR8 7AG
L) 20 Central Avenue, St Andrews Business Park, Norwich, England, NR7 0HR
M) Piazza Barberini 52, 00187, Rome, Italy
N) C/O Infrastructure Managers Limited, 2nd Floor Drum Suite, Saltire Court,
20 Castle Terrace, Edinburgh, United Kingdom, EH1 2EN
O) C/O Intertrust (Deutschland) GmbH Eschersheimer Landstraße 14, 60322
Frankfurt am Main
P) Skriugata 26, 3660, Rjukan
Q) Kaiser-Wilhelm-Straße 93, 20355 Hamburg
R) Foresight Group LLP, Clarence House, 133 George Street, Edinburgh,
Scotland, EH2 4JS
S) Peacehill Farm, Wormit, Fife, Scotland, Scotland, DD6 8PJ
T) C/O FLB Accountants LLP, 1010 Eskdale Road, Winnersh Triangle,
Wokingham, United Kingdom, RG41 5TS
U) 2 Fitzroy Place, 8 Mortimer Street, London, England, W1T 3JJ
19. Events after balance sheet date
A dividend for the quarter ended 31 March 2025 of 1.95 pence per share,
amounting to £12.3 million, was approved by the Board on 29 May 2025 for
payment on 27 June 2025.
On 25 April 2025, FGEN announced that it had reduced the size of its
multi-currency revolving credit facility ("RCF") from £200 million to £150
million.
On 3 June 2025, FGEN announced an update to the Investment Manager fee
structure. From 1 October 2025, investment management fees will be
calculated 50% based on Net Asset Value and 50% on market capitalisation (the
latter element capped at Net Asset Value).
ALTERNATIVE PERFORMANCE MEASURES ("APMs")
APM Purpose Calculation APM value Reconciliation to IFRS
Total shareholder return (since IPO and annualised) Measure of financial performance, indicating the amount an investor reaps from Since IPO: closing share price as at 31 March 2025 plus all dividends since 41.0% Calculation for total shareholder return since IPO: closing share price as at
investing since IPO and IPO assumed reinvested, divided by the share price at IPO, expressed as a 31 March 2025, as per key investment metrics on page 110 of the 2025 Annual
percentage Report plus all dividends since IPO assumed reinvested, divided by the share
expressed as a percentage (annualised or total since IPO of the Fund) price at IPO, expressed as a percentage
Annualised: closing share price as at 31 March 2025 plus all dividends since 3.2% annualised Calculation for annualised total shareholder return: closing share price as at
IPO assumed reinvested, divided by the share price at IPO, to the power of one 31 March 2025 as per key investment metrics on page 110 of the 2025 Annual
over the number of years since IPO, expressed as a percentage Report plus all dividends since IPO assumed reinvested, divided by the share
price at IPO, to the power of one over the number of years since IPO,
expressed as a percentage
Net Asset Value per share Allows investors to gauge whether shares are trading at a premium or a The net assets divided by the number of ordinary shares in issuance 106.5 pence The calculation divides the net assets as per the statement of financial
discount by comparing the Net Asset Value per share with the share price position on page 153 of the 2025 Annual Report by the closing number of
ordinary shares in issue as per note 13 on page 166 of the 2025 Annual Report.
Shares held in treasury are excluded from the calculation
Market capitalisation Provides an indication of the size of the Company Closing share price as at 31 March 2025 multiplied by closing number of £457.0 million The calculation uses the closing share price as at 31 March 2025 as per the
ordinary shares in issuance key investment metric table on page 110 of the 2025 Annual Report and closing
number of ordinary shares as per note 13 of the financial statements on page
166 of the 2025 Annual Report. Shares held in treasury are excluded from the
calculation
Gross Asset Value ("GAV") A measure of the value of the Company's total assets The sum of total assets of the Company as shown on the statement of financial £951.3 million This is the total debt (RCF drawn: £99.3 million plus project-level debt:
position and the total debt of the Group and underlying investments £173.3 million) plus the Net Asset Value as per the statement of financial
position on page 153 of the 2025 Annual Report
Gross Asset Value on investment basis including debt held at SPV level
Gearing Ascertain financial risk in the Group's balance sheet Total debt of the Group and underlying investments as a percentage of GAV 28.7% The calculation uses the total debt (RCF drawn: £99.3 million plus
project-level debt: £173.3 million) and shows this as a percentage of the GAV
Distributions, repayments and fees from portfolio A measure of performance from the underlying portfolio Total cash received from investments in the period £90.4 million As per "Cash flows of the Group for the year", also titled "Cash distributions
from environmental infrastructure investments" on page 113 of the 2025 Annual
Report
Cash flow from operations of the Group Gauge operating revenues and expenses of the Group As per the "Cash flows of the Group for the year" table on page 113 of the £66.9 million Detailed breakdown as per page 113 of the 2025 Annual Report in the "Cash
2025 Annual Report, the calculation takes the cash distributions from flows of the Group for the year"
environmental infrastructure investments and subtracts the following:
administrative expenses, Directors' fees and expenses, Investment Manager's
fees, financing costs (net of interest income), Electricity Generator Levy
Cash dividend cover Investors can gauge the ability of the Group to generate cash surplus after Cash flow from operations of the Group divided by dividend paid within the 1.32x The calculation uses the cash flows from operations as per "Cash flows of the
payment of dividend reporting period Group for the year" on page 113 of the 2025 Annual Report and the dividends
paid in cash to shareholders as per the cash flow statement on page 155 of the
2025 Annual Report
Ongoing charges ratio A measure of the annual reduction in shareholder returns due to operational The ongoing charges have been calculated, in accordance with AIC guidance, as 1.24% Annualised ongoing charges for the year ended 31 March 2025 have been
expenses, based on historical data annualised ongoing charges (i.e. excluding acquisition costs and other calculated as £8.8 million. The ongoing charges ratio divides this by the
non‑recurring items) divided by the average published undiluted Net Asset published average Net Asset Value over the last four quarters (including 31
Value in the period. Total annualised ongoing charges include Investment March 2025)
Manager fees, legal and professional fees, administration fees, Directors'
fees
Annualised NAV total return since IPO Measure of financial performance (annualised), which indicates the movement of Closing NAV per ordinary share as at 31 March 2025 plus all dividends since 7.3% Calculated using the closing NAV per ordinary share as per the statement of
the value of the Company since IPO IPO assumed reinvested, divided by the NAV at IPO, to the power of one, over financial position on page 153 of the 2025 Annual Report
the number of years since IPO
ENDS
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