In the face of a persistent discount [common to all renewable energy companies], Foresight Environmental Infrastructure’s board has talked to advisers and evaluated a full range of strategic alternatives for the company, including a managed wind-down, a targeted divestment approach, the continuation of the current investment strategy, and potential mergers and acquisitions.
The board’s decision is to refocus the portfolio on core infrastructure assets and businesses that offer long term stable cash flows, secured revenues and inflation linkage. That means renewable energy generation – solar, wind, anaerobic digestion, biomass and hydro – and other energy infrastructure including long and short duration storage, low-carbon heat, cleaner transportation, and sustainable resource management across the waste and water sectors.
The existing assets that do not fit that goal are the controlled environment projects – fish farming at Rjukan in Norway and the glasshouse asset – and the compressed natural gas distribution business.
Rjukan is now in the final stages of construction, with the first harvest targeted for July, and further offtake agreements have been signed at the glasshouse facility. FGEN also says that the Refuels deal announced on 20 March better positions the CNG platform for growth, as the rollout of stations continues and volumes of gas dispensed increase.
[Simplifying Foresight Environmental Infrastructure’s portfolio should make the investment proposition easier to understand and we can see how that could help narrow the discount. Hopefully, as projects mature, we will see positive NAV progress again too. The new dividend target puts the trust on a 10.5% prospective dividend yield. Given the high dividend cover, that feels very attractive.]
Quarterly/full-year update
The trust’s end March NAV was 106.5p (down from 107.4p at end December). The main driver of the NAV fall was increased maintenance budgets at its foodwaste anaerobic digestion facilities at Bio Collectors and Codford Biogas. this took 0.7p off the NAV. Lower energy prices took off 0.1p. Share buybacks added 0.5p.
Solar irradiance and wind speeds were under budget in the quarter and there was an unplanned outage at the Italian energy-from-waste investment. This took off about 0.6p.
31 March is FGEN’s financial year end. Despite the problems described above, the financial year saw a tenth consecutive year of record cash distributions received from the portfolio – driving a full year dividend cover of 1.32x (ahead of expectations). The 7.8p full-year dividend was line with target. The dividend target for the current financial year has been set at 7.96p (up 2%).
Since its inception on 15 August 2024, the initial buyback programme had returned £19.2m to shareholders by 31 March 2025. On 31 March 2025, FGEN extended its buyback programme, upping the total maximum to £30m.
Gearing at 31 March stood at 28.7%, with £99.3m drawn down on the revolving credit facility. As reported on 25 April, the size of the facility has been shrunk to £150m, saving about £400,000 a year.
We will get the full year results announcement on 24 June. 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. 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
FGEN : Foresight Environmental Infrastructure to refocus on long-term stable cash flows
