Foresight Environmental Infrastructure (FGEN) has reported its annual results for the year ended 31 March 2025, during which the company continued to generate robust income from its diversified portfolio despite a volatile macroeconomic environment for listed infrastructure trusts.
For the tenth consecutive year, FGEN achieved record cash receipts from its underlying investments, totalling £90.4m, which comfortably supported the dividend and enabled a 2.1% increase in the dividend target for FY2026 to 7.96p. The dividend for FY2025 was fully covered 1.32x by operating cashflow. Since IPO in 2014, the company has delivered consistent annual dividend growth, underpinned by strong portfolio performance and disciplined capital management.
FGEN’s net asset value (NAV) per share declined by 6.3% over the reporting period, from 113.6p to 106.5p. This was primarily driven by write-downs – most notably on its investment in hydrogen platform HH2E – and weaker performance from certain assets. However, these were partially offset by NAV-accretive share buybacks and a £1.3m gain from asset disposals. The NAV total return for the year was modest at +0.6%, while the company has delivered an annualised NAV total return of 7.3% since IPO.
During the year, the company completed £88.6m of asset disposals (equivalent to approximately 10% of its portfolio), all at or above carrying value. The proceeds were used to repay floating rate debt and fund a £30m share buyback programme, of which £24.3m had been deployed by the end of March. Gearing was reduced to 28.7% from 31.2%, maintaining FGEN’s position among the least leveraged funds in the sector.
The company also concluded a comprehensive strategic review during the period, following consultation with shareholders and independent advisers. The board concluded that a refocused strategy centred on proactive asset management and disciplined capital allocation would best serve shareholders. FGEN will prioritise new investments in core environmental infrastructure sectors – including renewables, energy storage, and sustainable resource management – that offer long-term, stable, inflation-linked revenues. Investments in higher-risk growth assets will be limited, with the intention to monetise existing positions in platforms such as the Glasshouse, Rjukan, and CNG Fuels when they reach maturity and can command premium valuations.
Notably, the board confirmed that no new standalone investments will be made in controlled environment agriculture assets. The portfolio will instead focus on income-generative assets and value enhancement at operational sites.
In a move to improve alignment with shareholders, the board has proposed changes to the investment manager’s fee structure. From 1 October 2025, the base management fee will be calculated on a blended metric of 50% NAV and 50% market capitalisation (capped at NAV), replacing the previous NAV-only basis. The company believes this change will better reflect shareholder value and prevailing market sentiment, particularly in light of the persistent discount.
Given that the shares traded at an average discount of more than 10% over the past year, a continuation vote will be put to shareholders at the 2025 AGM in line with the company’s articles. The board is recommending shareholders vote against discontinuation and has committed to making future continuation votes more accessible by reducing the required approval threshold to a simple majority from 2026 onward.
FGEN’s portfolio now comprises 40 assets across the UK and Europe, diversified across renewable energy generation (73% by value), sustainable resource management (17%), and other energy infrastructure (10%). Key holdings include the Cramlington biomass plant, the Rjukan aquaculture facility in Norway, and wind, solar, and anaerobic digestion projects in the UK.
The board and manager remain confident in the long-term prospects for environmental infrastructure. They note that structural drivers – including the global energy transition, supportive policy frameworks, and increased demand for sustainability-led solutions – continue to underpin attractive investment opportunities across the sector. FGEN’s revised strategy aims to harness these tailwinds while delivering stable returns and a progressive dividend policy for investors.
[QD comment Matthew Read: FGEN’s results reinforce the value of its diversified, income-focused strategy during what remains a difficult time for listed infrastructure funds. While the NAV total return of just 0.6% reflects sector-wide headwinds and specific portfolio challenges – including the HH2E write-down – the company’s ability to deliver record cashflows and sustain dividend growth stands out.
Importantly, FGEN has listened to shareholder feedback: the strategy reset signals a pivot towards core, lower-risk assets, and the revised fee structure is a welcome step towards better alignment. With a well-covered dividend yielding around 10% and a credible plan to exit growth assets over time, FGEN looks well-positioned to rebuild investor confidence – particularly if sentiment improves and it can begin to narrow its wide discount.]
