FGEN Delivers Resilient Half-Year Results with Strong Dividend Cover and NAV Growth

FGEN’s half-year: steady cash, covered dividend, and a plan to grow without new equity

Foresight Environmental Infrastructure (FGEN) has posted a resilient set of half-year numbers in a testing market for listed renewables. The dividend remains firmly on track, cash generation is healthy, and the portfolio mix is doing exactly what it says on the tin – smoothing bumps from weaker wind and outages elsewhere.

Management is leaning into active portfolio work, small but targeted follow-on investments, and buybacks to accrete NAV while the shares sit on a wide discount. There’s policy noise to watch, but the quantified impact looks manageable given FGEN’s diversification.

Key numbers you’ll care about

Metric	Result
NAV per share	104.7p (30 September 2025)
NAV total return (period)	2.0% after dividends
Annualised NAV TR since IPO	7.2%
Dividend target (FY to 31 Mar 2026)	7.96p per share
Dividends paid in the half	3.94p per share
Dividend cover	1.22x
Profit before tax	£9.5 million
Portfolio value	£751.9 million
Net assets	£652.7 million
Share price / Market cap	70.0p / £436.4 million
Gearing (incl. RCF)	30.6% (RCF drawn £121.3 million)
Weighted average discount rate	10.1%

What moved NAV: the bridge in plain English

NAV per share moved from 106.5p at 31 March to 104.7p at 30 September. The bridge is useful:

• Dividends paid: -4.0p
• Power price forecasts: -1.0p
• Battery updates: -0.2p
• Inflation: +0.8p
• Portfolio performance: +0.1p
• Share buyback accretion: +0.7p
• Other (discount rate unwind less fund overheads): +1.8p

Translation: lower forward power prices and green certificate assumptions were a headwind, but buybacks, inflation uplift and discount rate unwind did the heavy lifting. Importantly, cash continues to flow – £39.7 million of distributions from the portfolio supported a 1.22x dividend cover.

Operational pulse: AD shines, solar good, wind light; outages contained

Generation is a touch above budget once expected compensation is included. Highlights and lowlights:

• Anaerobic digestion (crop): 7.4% ahead of target, contributing 48% of total energy. Vulcan’s Pressure Reduction System is already driving higher gas injection and revenue.
• Solar: 6.2% above target on solid irradiation and 98% availability.
• Wind: 6.5% below target on resource, not availability – a softer period for wind speeds.
• Biomass/EfW: extended outages at Cramlington and ETA, with liquidated damages and insurance expected to partially offset.
• Hydro: weak river levels and a mechanical issue meant underperformance, but this is a very small slice of NAV.

Hedging helps. For 2026, 66% of total revenues are fixed through a mix of subsidies, PPAs and contracted non-generation income. Within power, fixing levels vary by technology, but the approach is selective rather than dogmatic as prices stabilise.

Growth assets are progressing – and starting to add value

The three “growth” assets that don’t fund the dividend today are moving the right way:

• CNG Fuels: more trucks, more gas dispensed, and higher RTFC pricing. FGEN added £0.7 million during the half and holds exposure via both equity and preferred instruments. Valuation uplift of £2.2 million in the period.
• Rjukan aquaculture (Norway): first trout harvests achieved; moved from cost to DCF with a £2.9 million uplift. Targeting c.1,700 tonnes by year-end as it ramps.
• The Glasshouse: onboarding new customers and on track for cash flow breakeven later this year, backed by an undrawn £2 million convertible loan note facility.

Strategically, FGEN expects to consider targeted disposals of growth assets in two to three years once they mature, recycling proceeds into income-plus-growth opportunities – crucially without relying on new equity issuance.

Dividends, buybacks and balance sheet discipline

FGEN is “on track” to pay 7.96p for the year to 31 March 2026, with cover guided at 1.20–1.30x. The £30 million buyback programme is being used while the shares trade at a wide discount, adding 0.7p to NAV this half alone. Gearing nudged up to 30.6% as the RCF supported follow-ons; the Board still characterises gearing as “among the lowest” versus peers.

Ongoing charges are trending down: 1.15% annualised for the period, with a revised fee from 1 October where 50% is based on NAV and 50% on market capitalisation – a welcome nudge toward alignment while the sector sits at discounts.

About that discount: why it matters now

The Chair calls out a c.38% discount to NAV as “very disappointing”. With a 70.0p share price against a 104.7p NAV, investors today are being paid a double-digit yield – 12% on the report date – to wait for discount closure. Execution on the strategy, consistent cash cover, and progress on growth assets are the levers in FGEN’s control; rates, sector flows and policy sit outside it.

Policy watch: RO/FiT indexation consultation quantified

DESNZ’s consultation on moving RO/FiT indexation to CPI is the big swing factor across the UK renewables complex. FGEN has modelled both options:

• Option 1 (bring forward CPI from 2030 to 2026): estimated -0.5p NAV per share.
• Option 2 (freeze until CPI catches up, then CPI thereafter): estimated -6.6p NAV per share.

Management does not expect a material impact on near-term dividend cover under either scenario. The diversified revenue mix – including non-generation assets – helps here.

Valuation sensitivities: what could move the dial

• ±0.5% discount rate: ±£19.4 million/£18.2 million (±3.1p/∓2.9p per share).
• ±10% power and gas prices: ±£33.8 million/£33.1 million (±5.4p/∓5.3p).
• ±0.5% inflation: ±£14.1 million/£13.3 million (±2.3p/∓2.1p).
• AD feedstock ±10%: ∓£7.1 million/£7.4 million (∓1.1p/1.2p).

Worth noting: there’s potential upside if AD assets can operate beyond current RHI life assumptions; management illustrates a possible £10–£20 million uplift (1.6–3.2p per share) in that scenario.

My take: balanced progress with clear catalysts

Positives that stand out

• Cash generation is doing its job: 1.22x cover, despite lower power price assumptions.
• Active management is adding value (Vulcan uplift, buyback accretion) and limiting outage pain through claims.
• Growth assets are turning the corner with tangible milestones and valuation uplifts.
• Fee structure tweaks and one of the lower gearing profiles in the sector support long-term compounding.

Watch-outs to keep on your radar

• Power price and green certificate headwinds clipped valuation this half.
• Operational issues at biomass/EfW need continued remediation and recovery of claims.
• Gearing rose to 30.6%; sensible for follow-ons, but there’s less headroom if conditions worsen.
• Policy uncertainty (RO/FiT indexation) remains until the consultation lands, even if quantified impacts look manageable.

What could re-rate the shares

• Confirmation of the 7.96p dividend with cover at or above guidance.
• Further progress at CNG, Rjukan, and The Glasshouse – and any value-accretive partial disposals.
• Sandridge 50MW battery reaching takeover and contributing.
• Clarity on RO/FiT indexation and continued hedging discipline.
• Continued NAV accretion from buybacks while the discount persists.

Bottom line: this is a solid, cash-led update that supports the income case while the longer-term growth levers quietly build. If management keeps executing and policy risk resolves close to Option 1, FGEN looks well placed to keep paying you to wait for that discount to narrow.