Foresight Group Stock

Today, Gary and I will take you through Foresight's FY '26 financial results, which describe our delivery of double-digit percentage growth year-on-year across Core EBITDA pre-SBP, EPS and DPS. Since IPO in 2021, core profitability has now nearly tripled, supporting dividends that have already paid out a cumulative total of over GBP 100 million to shareholders over the last 5 years. During and post FY '26, we've also sought to streamline the business through the agreed sale of our public markets division, Foresight Capital Management, which we announced to the market earlier this month. Going forward, Foresight will focus on private markets, leveraging our competitive advantages to deploy long-duration capital across our core Real Assets and Private Equity divisions. I'll now pass to Gary to take you through operational highlights and financial results.

Thank you, Bernard. As I mark my first full year as CEO, I want to be clear about how I see Foresight today. We are a specialist private markets investment manager with a strong platform, attractive market positions and a business model capable of delivering profitable growth. My priorities are deliberately practical. First, growth and distribution, extending our retail and institutional fundraising capability in areas where we have competitive advantages and where the market opportunity is clear. Second, investing ourselves beyond the capital we manage, maintaining discipline across origination, ownership, stewardship and exit so that we continue to earn the trust of clients and create value through the full investment life cycle. Third, operational maturity, scaling the business through a clearer operating model, product focus, strong leadership depth and better technology.

This is about building a platform that can grow without adding unnecessary complexity. Fourth, operating leverage, converting AUM growth into margin expansion, cash generation and returns for shareholders. That requires growth, but it also requires discipline on cost, capital allocation and execution. Following the agreed sale of Foresight Capital Management, Foresight is more clearly focused on specialist private markets. We manage GBP 13 billion of AUM across Real Assets and Private Equity with exposure to institutional and retail investors and all of our AUM and long-duration capital. That matters because it gives the business visibility. Our capital base is diversified across investor channels, real asset themes and private equity strategies, and that diversification reduces reliance on any single product, fundraise or market.

The group now has a sharper focus, a specialist platform built around areas where we have deep capability, market relevance and a credible path to scale. The market opportunity across our 2 divisions remains substantial. We are focused on specific areas where long-term demand, investor need and our capabilities overlap. In real assets, energy security, decarbonization, grid investment and lower clean technology costs continue to support investment demand. The presentation references $296 billion of European clean-energy supply investment in 2025, which illustrates the scale of the market we are addressing. Our fundraising priorities align to those trends, including FEIP II in European energy, ARIF in Australian renewables and our natural capital strategy.

In private equity, the opportunity is different, but equally clear. The U.K. and Ireland SME funding gap remains a structural issue. Our regional model gives us local origination, active ownership and a strong basis for supporting growth companies outside the most crowded parts of the market. We are currently addressing that opportunity through 16 active institutional regional funds and our specialist retail products, including business relief and flagship VCTs. The common thread is our specialist capabilities apply to long-term markets where capital demand is real and where Foresight has a reason to win. Fundraising in FY '26 showed the value of having both institutional and retail routes to market. Retail was a clear strength. We raised GBP 630 million across business relief products and our flagship VCTs and retained our #1 position in annual unquoted business relief fundraising.

That performance reflects adviser relationships, product relevance and our investment track record. Institutional fundraising is progressing, but we are also realistic that the market remains selective and timing can be uneven. FEIP II has raised EUR 595 million to date against a EUR 1.25 billion target, and our regional private equity business launched its 16th active fund. The conclusion is that our fundraising platform is working, but execution remains critical. We need to convert pipeline, deepen investor relationships and maintain investment discipline as we scale. We continue to take a disciplined approach to deployment across both divisions to deliver strong investment performance. In real assets, deployment increased by 96% year-on-year, supported by progress in FEIP II and by a strong pipeline. Around 85% of full year '26 real assets deployment was into energy transition. And looking ahead, we have more than GBP 3.6 billion of future deployment rights in international real assets.

In private equity, deployment remains steady and aligned with our fundraising cadence with GBP 1 billion now deployed over the last 5 years. Our regional presence continues to be an important differentiator in sourcing and supporting businesses. We are deploying into strategies where we understand the market, where our teams have experience and where we believe the risk-adjusted opportunity is attractive. Turning to realisations. Australia is a useful example of the strength of our track record against an evolving market backdrop. We have seen redemption pressure in parts of the Australian LP market. Our response is a planned realization program over at least 3 years designed to meet those redemptions while protecting value and where possible, retaining future exposure through separate managed accounts and continuation structures. The partial sale of Kinetic is a good example. It allowed us to crystallize performance, generate performance fees and retain a 30% stake for future upside.

These are the moments where investment discipline matters. We need to realize value when appropriate, manage investor liquidity requirements responsibly and preserve exposure to assets where we still see long-term value. The underlying Australian energy transition opportunity remains strong. The country has an aging coal fleet and a 2030 target of 82% on grid renewable electricity generation with this figure at 46% today. That supports the long-term relevance of our platform in this market. Turning to our financial highlights. FY '26 has been another year of strong and consistent performance. Overall, these results reflect profitable growth, a high-quality earnings profile and a business that continues to scale effectively. AUM from continuing operations increased by 8% over the year to GBP 13 billion. That growth was driven primarily by record retail inflows and continued institutional progress, partially offset by realizations in Australia.

The retail result is a clear highlight with GBP 630 million of gross inflows across business relief products and flagship VCTs. Institutional fundraising included steady progress on FEIP II and the launch of a regional private equity fund. Exits were largely driven by Australian realisations. These reduced AUM where assets were sold, but also generated performance fees and demonstrated the value created in those strategies. Foreign exchange was also a positive contributor, recovering part of the historical FX reduction since the acquisition of our Australian business. The message is balanced. AUM growth was solid. The retail platform performed strongly. Institutional capital formation continues to progress, and we managed realizations in a disciplined way.

Revenue increased by 11%, supported by net fundraising of GBP 646 million and higher year-on-year performance fees from real asset realisations. Core administrative costs increased by 8%. That reflects wage inflation, fundraising-linked compensation, selective headcount growth and continued investment in IT infrastructure. We are investing where it supports scale, but we remain focused on cost discipline. As a result, core EBITDA pre share-based payments increased by 10%. The result demonstrates the operating strength of the business and the benefit of a more focused group structure following the agreed sale of FCM. The financial profile remains underpinned by high-quality earnings and a significant recurring revenue base. Looking more closely at revenue, the business continues to benefit from a substantial recurring revenue base. Total revenue increased by 11% and recurring revenue increased by 6%, supported by FUM growth and a doubling of performance fees, largely because of stronger real asset realizations in Australia.

Recurring revenue represented 82% of total revenue in FY '26. While this is below our target range of 85% to 90%, this was because performance fees were higher, not because the recurring revenue base weakened. We continue to target 85% to 90% recurring revenue over time, and the recurring base is supported by effectively all of our AUM being long-duration capital. That gives us visibility, but we also expect performance fees to become more important in years when mature funds realize value. So the revenue model remains resilient with recurring revenues at its core and upside from disciplined realisations. On costs, we've continued to invest in the business while keeping growth in core costs to single digits. Core costs increased by 8% in FY '26. Staff costs remain the largest component of the cost base, representing more than 70% of operating expenses and increased in line with wage inflation, fundraising-linked compensation and selective headcount growth. Other administrative costs increased by 9%, reflecting inflation and continued investment in IT infrastructure.

We are investing where it improves scale, productivity, decision-making and resilience. At the same time, we expect the platform to show operating leverage as AUM and revenues grow. Cost discipline remains key to delivery of our FY '29 guidance. Core EBITDA pre share-based payments is the clearest measure of the operating performance of the continuing group. In FY '26, it increased by 10% to GBP 68.6 million. Over 5 years, it has delivered a 24% compound annual growth rate on a continuing operations basis. The margin remains strong at around 42%, and that reflects the quality of the revenue base, the contribution from performance fees and continued cost control. Looking ahead, our focus is to grow the platform in a way that expands margin rather than simply add scale. For shareholders, the result translated into growth in earnings and dividends.

Adjusted earnings per share increased by 13%, and we have announced a final dividend of 19p per share, bringing the total dividend per share to 27.1p, a 12% increase and consistent with our approach of paying out 60% of adjusted profit. This adds to our strong EPS and DPS track record and reflects the Board's confidence in the cash generation of the business while preserving flexibility to invest in growth and strategic opportunities. Capital allocation remains a core part of how we create value for shareholders. Alongside the FY '26 dividend, we also repurchased a net GBP 9.6 million of shares as part of our buyback program. The agreed sale of FCM is also strategically important. It simplifies the group and allows management to focus capital, people and leadership attention on the private market strategies where we see the strongest long-term opportunity.

We remain open to targeted M&A and corporate activity where it accelerates growth, strengthens capability or improves access to capital and distribution, but our approach will remain disciplined. Our priority is clear, balanced returns to shareholders with the investment in the next phase of profitable growth.

Thank you, Gary. Turning now to guidance and outlook. Our performance in FY '26 reinforces the strength of Foresight's specialist investment platform and the resilience of our earnings model. We delivered double-digit growth in core profitability, earnings per share and dividend per share, whilst continuing to invest in the long-term opportunities most attractive for our investors and shareholders. Our confidence in the medium-term opportunity is underpinned by 4 clear growth drivers. First, we continue to see significant demand for energy transition focused strategies. FEIP II is our flagship European energy infrastructure strategy with a target fund size of EUR 1.25 billion, whilst ARIF provides exposure to attractive renewable infrastructure opportunities in Australia.

The strategic imperative for energy security, decarbonization and enabling infrastructure remains very strong, and Foresight is well positioned to convert that demand into long-duration capital. Second, our specialist retail platform remains a distinctive strength. We're targeting more than GBP 600 million of annual fundraising across tax-efficient products, supported by our distribution capability, investment track record and leading position in the unquoted business relief market. Whilst we remain alert to regulatory developments, demand for private market access, tax efficiency and investment into U.K. growth companies remains robust. Third, in institutional regional private equity, we are targeting approximately GBP 100 million of annual fundraising. The launch of our 16th active regional fund demonstrates the depth of our origination platform and continued ability to support ambitious SMEs across the U.K. and Ireland. Fourth, we expect margin expansion over the guidance period.

The agreed sale of Foresight Capital Management streamlines the group and increases our focus on our core private market, real assets and private equity strategies. As we scale those higher conviction areas, operating leverage, disciplined cost management and product mix should support continued profitable growth. Finally, FY '29 is expected to be a more significant realization year across both real assets and private equity funds. Whilst percentage of recurring revenue could therefore dip to FY '26 levels as performance-related revenues increase, we continue to value and target the visibility that our typical 85% to 90% recurring revenue model range provides. In terms of current trading, the business has made a positive start to the new financial year. Assets under management and funds under management for continuing operations have increased to GBP 13.1 billion and GBP 9.2 billion, respectively, reflecting continued progress across our strategies.

We're also seeing encouraging developments in separately managed account opportunities, particularly in Australia as we realize existing assets. These discussions demonstrate investor appetite for tailored exposure to Foresight's specialist capabilities in energy transition, infrastructure and private equity. We'll update the market as commitments are formally secured. The sale of the FCM division announced earlier this month is expected to complete in Q3 2026. This is an important step for the group and sharpens our focus on private market real assets and private equity. Overall, Foresight enters FY '27 with a streamlined structure, focused leadership priorities, strong positions in attractive private market segments and a clear route to profitable growth. We remain mindful of the external environment, particularly institutional fundraising timing, but the long-term demand drivers remain very compelling.

We are confident in our ability to deliver against our medium-term ambitions and create sustainable value for shareholders. That confidence is grounded in delivery. Over the last 5 years, Foresight has built a strong track record through significant macroeconomic market and regulatory change. Over that period, AUM increased by 1.8x, recurring revenue by 2.4x and profitability by 3x. Reflecting the strength of our specialist platform, investor relationships and exposure to attractive growth markets. Importantly, this was disciplined growth, focused on high-quality recurring revenues, deeper specialist capability and the entrepreneurial culture that enables differentiated origination. The business has also proved resilient, navigating higher interest rates, changing investor sentiment, evolving regulation and tougher fundraising condition whilst continuing to grow, generate attractive margins and return capital through a compelling dividend.

That track record supports the outlook we just discussed. Our message is one of continuity and focus, delivering sustainable growth for our investors and shareholders. Thank you for listening. We're now happy to take your questions.

Good afternoon, and welcome to the Foresight Group Holdings Limited Investor Presentation. [Operator Instructions] Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Gary Fraser. Good afternoon to you, sir.

Good afternoon, and thank you for that, Alex. My name is Gary Fraser. I'm the Chief Executive of Foresight Group. And I'm here today to present the interim results for the half year to 30th September 2025.

So I take the first slide on Foresight to give you a little bit of a flavor for Foresight's strengths. Foresight is well renowned for its high-quality earnings. So on an annual basis, we see about 85% to 90% recurring annual revenue, and that's as a result of the number of funds that Foresight has. So unlike many of our competitors, Foresight has got over 40 funds generating management fees. So every year, we start off knowing pretty much what our minimum amount of recurring revenue is going to be, and we're able to build on that as we raise new funds during the year.

Specialist capabilities, the second thing. So Foresight really has three key verticals. One is private equity. The second is real assets or infrastructure as it was previously known. And the third one is Foresight Capital Management, where we invest in listed stocks with a sustainability bias. In terms of market opportunity, within those verticals, we target areas where we think that we can achieve maximized returns for shareholders and raise money for those market opportunity strategies.

So within private equity, we're very well known for our regional PE strategy across the U.K., which totals about GBP 1.8 billion. Within real assets, we're well known for renewable energy and energy transition strategies, which is about GBP 10 billion of total AUM. And within Foresight Capital Management, the listed side, sustainability product is about GBP 1.1 billion of AUM. Within each of those different verticals, we have a number of products. And as I said earlier, we've got over 40 funds within those products. So a combination of being able to raise money and invest for not only retail investors, but also institutional investors as well. So we're one of very few asset managers in the alternative space that invests money for both retail and institutional investors.

If I move on to the next slide. So since IPO, so we IPO-ed, listed in February 2021. So during that period, we've achieved our assets under management, 15% CAGR, compound annual growth rate, from GBP 7.2 billion up to GBP 13.7 billion. As I said on the previous slide, recurring revenue is 87%. So a very high proportion of revenues are recurring on an annual basis. Within that, management fee has increased from 1.1% to 1.2%, which considering the three different product lines is a very attractive management fee rate indeed. And over 90% of our capital, so the GBP 13.7 billion that we have under management is long-duration capital, which benefits not only Foresight but investors because we're able to take a long-term view in terms of investment decisions, and that helps us maximize potential profit on realizations for investors.

In terms of -- during that period, how have we done in terms of the bottom line? Well, core EBITDA pre share-based payments has gone from GBP 23.9 million to GBP 62.2 million. So 2.6x increase in profits during that period. And consensus views has about GBP 68 million in the current period to 31 March 2026. So again, probably a trebling of profitability during that 4-year period.

If I move on to the next slide, financial results. So I've mentioned, AUM continues its healthy growth to GBP 13.7 billion. Clearly, I'd like that to go up more quickly, but who wouldn't? I think the fact of the matter is we're raising amounts across both private equity and institutional real assets on a regular basis. So we're gradually increasing that in what has been a tough market for fundraising.

FUM showed stable growth at just over 1% at GBP 9.6 billion. But revenues we were able -- because of the product mix between retail and institutional, we were able to deliver an 11% growth in revenue to GBP 81.5 million in the first half of the year. And that flowed through to a core EBITDA pre-SBP of GBP 30.6 million or plus 6% during the period, up from GBP 29 million a year earlier.

Finally, the FY '26 interim dividend per share will be 8.1p, which is 9% up on the prior year. That formula is based on 60% payout ratio of adjusted profitability. And so it's based on roughly 1/3 of the previous year's dividend, which was 24.2p, which is why we're seeing 8.1p this year, with the final dividend usually paid in early October.

Moving on. So the AUM bridge, as you can see, fairly stable during the period. Inflows and outflows, not that different with some other movements effectively debt on assets making up the balance, taking us from GBP 13.2 billion to GBP 13.5 billion. And then we have some FX movements because Foresight is not only a U.K. company, it also has distinct operations not only in Europe, but in Australia as well, making up the overall group, which takes us to GBP 13.6 billion or GBP 13.7 billion.

During that period, we saw GBP 223 million raised into higher-margin retail vehicles. So that's a combination of both VCTs, but also business relief, where we're trying to address the SME gap in terms of investment within the U.K. and beyond. We also completed the EUR 505 million first phase of fundraising for FEIP II, which was very pleasing indeed. That one has a target of EUR 1.25 billion. And the fundraising environment is tough, but we expect to complete that by June 2027.

Foresight Capital Management, the listed part of the business, delivered positive investment performance of GBP 56 million, with net outflows of GBP 155 million. So net-net, down about GBP 99 million, GBP 100 million during the period. Again, listed funds are tending to see outflows within that sustainability space. But I expect that to turn around in time, but it's very difficult right here right now to be able to put an exact timeline on it.

So in terms of the financial summary, very healthy in terms of the flows during the period. As I said, we've got GBP 81.5 million of revenue after all costs and expenses, core EBITDA pre-SBP was GBP 30.6 million. Margin suffered slightly due to higher costs in the period, and that was primarily as a result of an acquisition made during the period. So the acquisition of WHEB Ventures within the Foresight Capital Management division saw shave a little bit of margin, but I expect that to level out during the second half and start to push ahead again during FY '27 and beyond. And our medium-term target for margin is to get up to the mid-40s, so up to 45% by 2029 and beyond.

So in terms of high-quality revenue model, as I mentioned earlier, we have a number of funds in Foresight, over 40 funds in total, which gives a real resilience to the revenue generation, but also the quality of revenue that we see on an annual basis. And during the last 4 years since IPO, new fundraising has increased management fees by over GBP 50 million during that period. So it's a huge increase, and we continue to see that year-on-year increasing. And it really gives us confidence, underlying confidence in the value that we're creating for not only for shareholders, but value within Foresight as a business as well. And the locked-in nature of long-duration capital provides us for a really strong revenue base for further growth, but also in making the right decisions from a resourcing perspective as well.

In terms of staff costs or costs more generally, we did see higher-than-average inflation in costs during the period, but that's explicable. There are several reasons behind the 10% increase. Principally, 4% was due to the acquisition of WHEB within the FCM division, 3% was down to normal inflation in terms of wages, but also the national insurance increase from the government and 3% was due to additional headcount. So at Foresight, I would say, right now, we're about 475 FTE. And I would say we're probably rightsized as a business now. Now we may have some people in the wrong positions and some people in the right positions.

So within that, you might see some movement between positions. But I think right here right now, 475 feels like the right number. And it really rightsizes us for the next stage of growth within Foresight and a number of areas that we're targeting. And I think over time, as I say, we might shift people in certain areas into different areas. But right here right now, as I say, we're the right number of people.

In terms of core EBITDA pre share-based payments, generally, there's a weighting driven by retail fundraising dynamics in the second half of the year. So we tend to see more flows, especially in the specialist retail like VCTs towards the tax year-end. And that does increase revenues in the second half compared to the first half. And as that part of the business has grown over the years, that's become more pronounced than it was in previous years.

But generally, the trend since IPO in 2021, where we're at just over GBP 23 9 million. You've seen the increase grow over period. So up to GBP 31 million, up to GBP 50 million, up to GBP 59 million, GBP 62 million and now consensus at about GBP 68 million for the current year. So incrementally, we're improving the profitability of the business. We're growing the assets and funds under management. And there's nothing to suggest, given the strategy that we've got right now and the distribution capabilities that we have that, [we'll continue] to do that going forward, and there's a high degree of confidence that we'll see that. And we'll come on to that a little bit later on.

So in terms of dividends, again, we've seen a gradual increase in the progressive dividend policy. As I said earlier, it's 60% of adjusted profitability. And because profitability has continued to increase year-on-year, we're starting to see that increase in terms of absolute amounts as well. And as we continue to grow profits, that will continue to be the case. Over the first 4 years since IPO, roughly speaking, I think that's about 83p in dividends with an 8.1p per share dividend coming. So that will be about 90p -- just over 90p over the 4.5 years since we IPO-ed. So very attractive yield on the stock, especially given where the price is right now.

In terms of capital allocation, there's three key areas here: Dividend being one, which is the 60% payout ratio, as I mentioned. Share buyback, so during the course of this year, earlier in April, we announced a 3-year share buyback program of up to GBP 50 million, which is a significant number. Over the period since then, we've bought back about GBP 8.2 million worth. So there's still a huge amount of capacity within the GBP 50 million capability. Now why have we done that?

Well, the real reason or the reality of the situation is because Foresight is trading on a multiple of about 7x, it's much more attractive for us to use our excess money, because we're a very cash-generative business, to buy our own shares than it would be to buy expensive acquisitions. Public to private, the differential in multiples is enormous at the moment. Public can be trading on 7 or 8x, whereas private or expecting vendors or private companies are expecting anywhere between 14 and 18x. We're not going to be using excess cash to be buying -- to be making acquisitions that are dilutive to the business. And therefore, we'll continue to utilize our share buyback program unless we see opportunistic or strategic M&A that is attractive at the pricing level that we can justify to our shareholders.

It's worth saying as well that during the period, of the shares that we bought back, we sold about 2 million shares out of treasury to some institutional shareholders that were attracted by the Foresight story. So probably net-net, as we sit here today, we haven't used much of the buyback program at all. I think since the GBP 8.2 million at the half year, we've probably spent another couple of million pounds of share buybacks. But when we take the shares issued off of that, we're probably only GBP 1 million into the GBP 50 million share buyback program.

Additionally, in addition to using that cash to buy our own shares, what we found is that stimulated additional liquidity in the stock. So liquidity over the last 18 months to 2 years has gone from an average daily volume probably in the -- very much close to 100,000 up to somewhere closer to 250,000. So it certainly had the right impact in demonstrating that we can increase liquidity within the stock, which is one of the things that I think helps not only institutional shareholders, but retail shareholders as well.

In terms of operational update, Real Assets, which is principally our infrastructure business. So we've seen a number of funds increase in terms of fundraising progress. So the first phase of FEIP II, Foresight Energy Infrastructure Partners, which is our energy transition fund, Pan-European, has raised about EUR 505 million to date. As I said earlier, that target size is about EUR 1.25 billion, but we remain confident of raising that. We're already seeing re-ups from a number of existing investors and expect to achieve that total by FY '27, so June 2027.

We're also seeing a number of operational successes within that part of the business. So FEIP II, combined with another Foresight fund to invest GBP 210 million into the U.K. battery storage company, HEIT. That on its own was 30% of the 2-hour battery storage capabilities of the whole of the U.K. and early progress within that acquisition has been very good, and we're very pleased with that acquisition.

In terms of additional operational updates, Zenith Energy, part of the DIT portfolio in Australia, was sold at a very attractive valuation, AUD 1.7 billion, to a large private equity company earlier this year. And we've recently sold a share in Kinetic, which is the go-ahead bus company, for approximately AUD 4 billion as well. And what we've managed to do there is take that sale. We were 50% shareholders along with an Ontario pension fund and potentially taking some of those assets and putting them into a single managed account for the future. So we're looking at that in ways that we can maximize shareholders' return by being innovative in terms of what we do in terms of exits.

In terms of Harmony Energy Income Trust, it's quite an interesting story this one. In addition to it being one of the largest 2-hour battery storage companies in the U.K., it was very much a competitive process. So it was a listed company. We made a bid for it. We were -- this is all public knowledge. We were trumped in our bid by Drax Energy. And then we bid again to ultimately win the company. As part of that, we delisted it. We've got those assets. They were already operational, and we're able to see additional revenue streams that we can source from those assets going forward.

So I think in an early review of that process, we only completed it earlier this year, but it's been a very good acquisition for both FEIP and the retail investment fund from Foresight that have acquired it. We're very pleased with how it's gone and looking forward to driving more investor performance from that asset in the future.

In terms of retail U.K. tax-efficient products, we continue to be very big and perform well in VCTs. Fundraising progress has been good within business property relief, where we've seen a total of GBP 223 million raised in the first half of the year, and we're on track to raise GBP 600 million plus during the rest of the year. As said, business relief products demand is up somewhere between 30% and 40%, perhaps even more since last year. And they're consistently meeting or exceeding our target returns with flagship VCTs also providing best-in-class returns.

We've recently launched a new business relief product that facilitates access to private credit for U.K. SMEs as well. And that's seen a really good uptake so far. When I compare it to the launch of our original BR fund back in 2012, it's only been launched within the last year, and it's already at 3 or 4x funds raised compared to what we raised the original business relief fund, which is now about GBP 2.1 billion. So we've had some early success in terms of that private credit fund. In terms of the U.K. budget, last week, no material impact to the business relief and VCT products, but some significant tailwinds remain following the 2024 announcements. It's probably worth me just tackling VCT because there were changes. So although not necessarily material, there were changes both to the companies that can be invested in, but also the tax rate.

So the tax rate for investors has fallen from 30% to 20% from the 6th of April next year. I still think that's a very attractive tax rate for investing in VCT. So I don't anticipate that having a material impact on the amount of funds raised, certainly for Foresight and probably not for the market more generally. In terms of the qualification for investments within VCTs, the government has made some changes there, which effectively means that more money can be invested in investments and the investment size can be larger than it's previously been.

And I think that opens up a much bigger market for VCT investments. So that's very good to see. I mean, Foresight's two main VCT funds raised a total of GBP 25 million and GBP 30 million last year. One of them closed within 10 days and the other within 5 days. The reason that we don't raise more money or haven't raised more money is not because we can't, it's because it's very difficult to make quality investments if you're raising more than that amount because the universe of companies is relatively small. With these changes to the investment universe, I think we can raise more money but also continue to invest in quality investments. So we're not going to dilute the quality of what we're doing by raising and investing more money in the future than we might have done in the past because of these changes to the rules.

Also, in terms of the budget, we saw no material changes in business relief. Most of those changes were last year. The only real change was the ability from husband and wife to effectively toggle the GBP 1 million limit into each other's allowances on the death of another. So that made a lot of sense and it's quite a practical thing to do from the government's perspective. So I think that was a slight positive for individuals as opposed to the fundraising piece. But I think overall, it was a generally positive budget for wealth management and wealth management investment.

In terms of regional private equity, we continue to raise money for our regional private equity strategy. Post period end, we raised a Northwest Fund III, the third vintage, GBP 90 million, if I compare it to the second vintage 2 or 3 years ago, that's a 35% increase in terms of the first close. It's our 16th regional fund, and we've now got 12 regional offices. So we pretty much cover the whole of the country. I think we're one-off, if not the largest player, in regional private equity. And I think the fact that we're in the regions, we hire local people, and we're investing in local companies, has been a real USP for us as a business. And it's one of the reasons I think that we're targeting local businesses. We often do these deals on a bilateral basis, and it means that we get really attractive returns for our investors as well.

In terms of operational success and supporting fundraising and delivery, we've deployed over GBP 83 million across the growth private equity during the period in private credit. And the pipeline for H2 is even stronger. Track record of returning 3.5x in terms of the average multiple on exit from growth companies and buyout investments. So that's excellent as well. And boots on the ground regional coverage has expanded with 3 new office taking us to the 12, I mentioned earlier, with new office opening in Bristol, Sheffield and Exeter.

So in terms of current trading and outlook, I think post period end, the multi-vintage rollout of the group's regional private equity strategy has continued, as I mentioned, with a GBP 90 million fundraising. And I'd expect to see more of that in the second half of the year as well with either top-ups or additional funds being raised or launched. DIT agreed the partial sale of Kinetic, the go-ahead bus company, to TPG at a premium to holding value. And I expect to see more of those types of deals in the future as well.

Foresight Natural Capital made its first afforestation exit with Banc Woodland at 1.8x MOIC. And I expect that we'll see more of those types of transactions. But what that really tells us is that rather than just buying and selling forestry, our afforestation is really one of the critical factors in unlocking attractive returns within the natural capital space. I'd also expect it to see raise more money for natural capital over the next 6 to 12 months, either in Foresight Natural Capital I or Foresight Natural Capital II once Foresight Natural Capital I has completed its fundraising piece. So I think very good news there.

And finally, tailwinds remain, as I said earlier, for tax-efficient products due to the recent U.K. autumn budget, where I think that the stability that's been created around SME investing will be a positive for Foresight more generally, but also for investors who invest with Foresight. And we remain on track to double as a business to double core EBITDA pre-SBP in the 5 years to FY '29. So all in all, I think it's been a positive 6 months to the year, first 6 months of the year to the end of September. And we look forward to delivering another set of positive results for the year ended 31 March 2026.

And I'll just pause there.

That's great, Gary. Thank you very much indeed for your presentation today. [Operator Instructions] I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via investor dashboard. And Ben, at this point, if I may hand back to you to moderate the Q&A, and I'll pick up from you at the end. Thank you.

Thank you, Alex, and thank you, everyone, for submitting your questions. Gary, maybe if we start with the real asset side of the business. One question we've had is, are any Foresight funds impacted by the proposal to change renewable energy indexing to CPI from RPI?

I mean there's three key funds that are impacted by that. So first of all, I would say that, that change is going to happen, I think, in 2030 anyway. So the government's proposal is to move that from 2030 to 2026. So some of these numbers are approximate because until it happens and the mechanics around it. But I -- off the top of my head, I would say Foresight Solar Fund Limited would be impacted by it probably about 1.6p, 1.7p per share. Foresight FGen would be impacted by about 0.6p, 0.7p per share. And then if I look at our business relief fund, which is obviously a much bigger fund at GBP 2.1 billion, but it doesn't have that much exposure. So that would be about a quarter of a penny in terms of NAV impact. So those would be the three core funds that would be impacted by it, but relatively modest impact in terms of that change if and when it happens.

Great. Thank you, Gary. One other real asset question is how do you view the downward trend in renewable energy asset valuations? And are you also seeing any margin compression in this space?

So I think we're seeing downward trend in valuations because interest rates have remained higher for longer. And I think when you look at the cash flows that you're seeing from these businesses, they're being discounted at a higher rate because you have a risk premium on top of the general interest rate in the market. So it's no surprise that we've seen those assets and the valuations trend downwards. I think what I would say is that where we've seen companies within -- whether it's Foresight companies or external funds managed by other managers, selling, these assets have been selling at or above NAV.

So I think although you might be seeing a NAV valuation trending down, I think there's definitely inherent value in these companies. And where we see assets being sold, they're generally at or above NAV. So I think moving down in terms of valuations is always a temporary thing. I think one of the key reasons in addition to the discount rate is obviously the valuation around energy prices in the future and what people might think is going to happen to energy prices. Now those forecasts are just that, they're forecasts. But the -- if we look at the expansion of data centers or electrification of the car network in the future, then I think that will support energy prices in the long term. And therefore, these assets are going to remain valuable. And I would imagine that we won't see the downward trend continuing.

Thanks, Gary. Next is moving to Australia and what does the investment landscape look like for you in Australia as compared to the U.K.?

I think -- I mean, the investment landscape is great in Australia, if anything, because they're a little bit further behind in terms of moving towards renewables. There's still a lot of coal-fired energy generation in Australia, and they're looking at ways that they can move towards renewable energy generation in a sustainable way. So there's still a lot of opportunity, not only in Australia but internationally for Foresight. I think we tend to be more focused now on energy transition rather than pure renewables because that's where we see the most attractive risk balanced returns for investors within the real asset space. But that's not to say we wouldn't do renewable energy if the returns were attractive enough.

Great. Thanks, Gary. Moving on to private equity. Could you provide any color on the sector exposure of the private equity regional funds? And where is the inflow growth coming from?

So I mean, it's very much a diverse exposure. So support service -- business support services, software, digital, it's probably easier to say the areas we don't invest in. So we don't invest in pharma, and we've got a limited exposure to retail, specifically retail where we see real growth opportunity, then we'll continue to invest in that. But those are key areas where we wouldn't invest, but it's very much spread across a really wide range of investment opportunities. And that's partly because of the regional network, we see 3,000 deals a year on the private equity side. And so we filter through those deals in a tried and trusted way. But the fact that we -- the sheer scale of that number gives us a wide diversification in terms of opportunities to invest.

Great. Thanks, Gary. And maybe just a broader question now. Do you see consolidation in the industry? And would you be happy to be a part of that?

Do you mean in the asset management industry?

Yes, I believe that's right.

So I think we are seeing that. I think if I look at it more specifically, I think you're seeing more consolidation within the infrastructure space than you're probably seeing within private equity and FCM. And I think the reason behind that is because a lot of the very large managers see infrastructure real assets as a big investment opportunity in the future. And because they don't have those capabilities in-house, they either have to grow that from scratch, which can take quite a period of time or they buy seasoned teams or asset managers with that expertise already.

And we've seen that over the last 2 years. So I think that will continue. There's no question that, that will be the case. Would I be happy to be part of that consolidation work? I think I'd rather be a consolidator than a consolidatee. But in saying that, I think as a true private equity person would say everything is for sale at the right price.

Great. Thanks, Gary. One question was just in relation to the share price reaction following the half year results release on Tuesday. And just wanting to know some thoughts in terms of what could have driven that and whether anything has changed since the last update in October.

So I mean, you would expect me to say this, but we don't focus purely on share price. We're focusing on driving profits and returns for investors and doing the day-to-day work of the business. But in saying that, I was shocked by the share price reaction if I'm being perfectly honest. We're still within the consensus range very much so even at that, we're still 10% year-on-year growth in profitability, which I think is a great achievement in a tough market.

If you look at the trend since we IPO-ed, it's been consistently increasing profits over that period, which will be 5 years in February. So overall, I felt it was a good set of interim results. I thought it was business as usual. So I was surprised by the share price reaction. But the market reacts the way it reacts and it would be a fool to try and change the market. But I do think our shares offer a very good opportunity for investment in terms of both the yield and potential growth prospects.

Great. And maybe one final question. I know you touched on the growth guidance earlier, but we had a question in terms of, could you please step us through the bridge of how you anticipate to achieve your published growth guidance of doubling core EBITDA pre-SBP in the 5 years to FY '29?

Yes. I mean I think there's 5 key elements to delivering that type of what is exceptional performance to double over that period when a lot of our competitors are going backwards. So the first one is continued volume through specialist retail. I think I mentioned the number earlier, GBP 600 million this year. I think over the period to FY '29, it will be closer to GBP 3 billion. So in the outer years, it will be higher than GBP 600 million.

The second thing is continue to expand with second and third vintages of our regional private equity strategy. So continuing to push hard there. Private equity is currently GBP 1.7 billion. I think we can easily, over the next few years, 5 years, achieve doubling that up to GBP 4 billion plus. So I think there's a lot more to go at in terms of regional private equity and the new funds that we're launching there.

The third thing is pushing ahead with FEIP II, EUR 505 million to date, we're getting that up to scale, EUR 1.25 billion plus over the next couple of years to June '27. Foresight Natural Capital, I mentioned, we're looking to see some fundraising come in there, which will then give us momentum into the fundraising for Foresight Natural Capital too.

I think then in Australia, we're also looking, as I mentioned a little bit earlier, pushing ahead with fundraising there in our ARIF strategy. So I think those -- that's the third thing, I think, will help drive that. I think the fourth thing is, as we raise more institutional money for real assets, that drives margin expansion because we're doing bigger deals with the same number of people. So that will then push through margin expansion business. So 38% in the first half, but as we get that money coming through that fundraising and those deals done, that will push into the 40s and up to the mid-40s between now and 2029 and beyond.

And the final thing is, over the last few years, our performance fees have been generated principally through private equity realizations. But as I mentioned earlier, we started to see performance fees coming through on the real asset infrastructure side as well, principally in Australia so far. So -- but when we get both of those joining together, driving really good exits for investors that deliver performance fees, we get both firing at the same time, then those additional performance fees will be part of the bridge to GBP 118 million from GBP 59 million between now and 2029. So those are the 5 key things that underpin my confidence in that growth over the next few years.

Great. Thank you, Gary. And that concludes all the questions we've received. So Gary, I pass back to you for any closing remarks.

I'd just like to say thank you to everyone for taking the time to listen to me today going through the interim results. If there's any questions that haven't been answered or people would like to ask or come to you at the end or after we finish today, please feel free to reach out to me or to Ben or the team, and we would be more than happy to answer any additional follow-ups that you may have. But again, thank you for listening.

Fantastic, Gary, Ben, thank you for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the Board can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be valued by the company.

On behalf of the management team of Foresight Group Holdings Limited, we would like to thank you for attending today's presentation, and good afternoon to you all.

Good morning. I'm Bernard Fairman, Co-Founder and Executive Chairman of Foresight Group. I'm delighted to welcome you to Foresight's half year results for the period ended September 2025, which I'm presenting today with our CEO, Gary Fraser. We offer institutional and retail investors a diverse range of private and listed investment solutions in real assets located in the U.K., Europe and Australia and growth capital for SME businesses across the U.K. and Ireland.

Before addressing the group's performance over the last 6 months, I want to provide you with a reminder of our core strengths. The group delivers high-quality earnings with 85% to 90% recurring revenue and over 90% of long-duration capital within our LP and evergreen vehicles. This provides considerable revenue visibility each year and results in compounding growth that underwrites the group's performance.

We take a boots on the ground approach in the U.K. and internationally, enabling us to build deep local relationships that support a strong investment and investor pipeline across all of our strategies. These seek to address the significant investment opportunities within rapidly growing markets, driven by structural shifts in the global energy mix, increasing electricity consumption, national initiatives to increase energy security and also by the SME funding gap in the U.K. and Ireland.

Reinforced by our leadership in tax-efficient investing, this diversified investment platform of strategies and funds across 3 business divisions of real assets, private equity and Foresight Capital Management provides us with resilience through economic cycles and positions us uniquely within the sector.

It is these key strengths of the group that have combined to build our significant track record of profitable growth, nearly tripling our profits since IPO in 2021. Performance that has been driven by both organic and inorganic growth and the average management fee rate benefiting from a mix shift following successful fundraising across our highly profitable U.K. tax-efficient and regional private equity products.

This shift bugs the trend of reducing fee margins across the broader asset management industry and is a key benefit of our specialized skill set. I'll now pass to Gary to take you through the financials and our operational updates.

Thanks, Bernard. In H1, our key financial metrics were in line with expectations. AUM over the last 6 months was up 4% with retail and institutional fundraising alongside strategic activity over the last 12 months, delivering an 11% H1 on H1 revenue increase to GBP 81.5 million.

Recurring revenue remained within our 85% to 90% target range and the core EBITDA pre-SBP growth of 6% has supported a 9% increase in our interim dividend to 8.1p per share. Firstly, turning to the key movements in AUM during the period, which increased by 4% from GBP 13.2 billion to GBP 13.7 billion.

Demand for our higher-margin retail products remains strong with our retail sales team successfully raising GBP 223 million via a wide range of IFA relationships, whilst the second vintage of Foresight's flagship energy transition strategy, FEIP II, also concluded its first phase of fundraising with EUR 505 million of commitments secured to date.

These retail and institutional inflows were partially offset by net outflows within our Public Markets division despite recording positive performance of GBP 56 million. Moving on to the group's profitability. We have delivered an 11% increase in revenue, driven by our fundraising achievements over the last 12 months, with the continued success of our U.K. tax-efficient products also leading to a higher average management fee rate.

Cost of sales increased due to the inclusion of GBP 900,000 of DIT-related performance fees payable to the investment team following strong exits with the balance of this increase due to additional fund costs principally from AUM acquired through the WHEB acquisition.

Whilst core EBITDA pre-SBP grew by a healthy 6%, margin compression to 38% was driven by the negative contribution of our Foresight Capital Management division. We expect to remain stable at this level for the remainder of the year with institutional real asset fundraising being the key catalyst to future margin expansion.

Turning now to Slide 9. Our consistent performance is driven by a high-quality revenue model. We remain focused on generating high-quality earnings with the recurring revenue staying within our guided 85% to 90% range and long-duration capital within closed-ended vehicles representing over 90% of AUM, providing us with excellent awareness of future revenues.

In the full 4 years post IPO, the compounding effect of this focus on locked-in revenue has resulted in an additional GBP 50 million of recurring annual management fees from funds raised, providing a strong base upon which to deliver further growth. Turning now to costs.

Core staff costs increased by 10% compared to the prior period. 4% of this increase related to the FY '25 acquisition of the trade and assets of WHEB Asset Management and the Liontrust Diversified Real Assets Fund, a 3% increase related to wage inflation that included U.K. employer NI requirements. And the remaining 3% primarily related to the retail sales and IR headcount growth to support our strong recent and future retail fundraising achievements as well as continued investment in our tech capabilities.

And turning to Slide 11. The resulting core EBITDA pre-SBP of GBP 30.6 million is in line with expectations and builds upon the strong growth track record delivered post IPO with profitability typically H2 weighted when we usually see increased fundraising before the U.K. tax year-end.

Continuing profitable growth enables strong and growing dividends to be delivered in line with the group's policy, which targets a dividend payout ratio of 60% of adjusted profit. Post IPO, the growth in total dividends has delivered a 21% 3-year CAGR and returned a total of over GBP 90 million to shareholders.

Given our performance in the period, the Board is pleased to declare an increased interim dividend of 8.1p per share, which is calculated as 33% of the prior year total dividend. Alongside our 60% dividend payout ratio, we seek to be efficient stewards of capital.

Free cash flow not utilized for earnings accretive M&A will be substantially returned to shareholders. During the half, we bought back GBP 8.2 million of our shares as we commenced an up to GBP 50 million share buyback program to be carried out over the 3 years to FY '28. The shares purchased by the program and subsequently held in treasury have been utilized to satisfy demand for the company's shares from both institutional investors and our performance share plan awards.

Shares sold from treasury returned GBP 9.1 million of cash in the period. Now moving on to key operational updates from across the business in the half. Within institutional real assets, it is our specialist investment origination combined with our asset management capabilities that provide us with confidence in our ability to successfully launch multi- vintages of our fee, natural capital and our strategies.

This multi-vintage approach should drive scale for the group over time. It's been a good half for the FEIP strategy, completing the first phase of fundraising for a second vintage with a total of EUR 505 million secured to date.

We remain confident this second vintage will achieve its target fund size of EUR 1.25 billion by mid-2027. The extended fundraising period should have little P&L impact over the fund's life as a result of equalization fees payable for a later entry into the fund.

FEIP II also made its first investment through the GBP 210 million acquisition of Harmony Energy Income Trust plc alongside one of Foresight retail funds. This provides a platform to deliver future fundraising and deployment in the coming years.

In Australia, we expect our growth prospects to benefit from the strong track record of our investment team, which was further enhanced by the exit of leading independent power producer, Zenith Energy, and a valuation materially above the fund's power holding value, which generated performance fees for the group.

Now taking a closer look at a key deployment example from the half, namely FEIP II's acquisition of HGIT. This was the fund's first step in developing a pan-European battery storage platform by investing in one of the most mature storage markets with a high-quality portfolio.

The 8 battery storage assets across both England and Scotland are fully operational and grid connected and represent 30% of U.K. operational to our battery energy storage system capacity. This portfolio has performed strongly since acquisition, generating stable inflation-linked revenues and the team are actively exploring further optimization opportunities.

Following the acquisition of HCIT, the FEIP II team are also pursuing additional deployment opportunities across energy generation, storage and grid flexibility. Turning now to Slide 17. We continue to offer a number of retail products that preserve wealth and drive investment into U.K. SMEs across infrastructure such as student housing, fiber broadband and natural capital as well as private credit.

Demand for these products has continued to increase after we became the #1 investment manager in annual fundraising for the unquoted business relief product in 2025. This followed the certainty provided at the 2024 U.K. budget with regards to business relief rules and allowances with the unquoted markets retaining full 100% relief. With no material changes announced at the 2025 U.K. autumn budget last week, pensions are also due to fall into chargeable estates from April 2027 with fiscal drag continuing.

As a result, we expect the business relief fundraising market to remain buoyant. We are confident in being able to remain #1 in annual fundraising due to the strength of our excellent investment performance and the quality of our distribution capabilities, expecting to raise over GBP 600 million gross per annum over the remainder of our guidance period to FY '29.

Finally, turning to private equity. We continue to expand our regional strategy with the launch of a third vintage focused on the Northwest. This fund delivered a first close of GBP 90 million, a 35% increase on the second vintage and clearly evidencing investor confidence in the strategy.

Whilst we already have a significant presence in the Northwest, we were particularly delighted to open 2 offices in the Southwest being Bristol and Exeter, which has long been a target for the private equity team. We anticipate launching further follow-on vintages of our regional funds in the coming years, underpinned by our performance track record and strong regional LP relationships.

I will now pass you back to Bernard to take you through the current trading and outlook. Bernard?

Thanks, Gary. Post period end, we have achieved further exit success within our Real Assets division. Our diversified infrastructure trust agreed the sale of QinetiQ at a premium to holding value, further building on the track record of our Australian team.

As part of the transaction, Foresight will retain a 30% stake through an SMA or continuation fund structure, continuing our support for QinetiQ's long-term growth. Foresight Natural Capital also successfully made its first afforestation exit Bank Woodland at a 1.8 multiple on invested capital.

This validates our natural capital development model, demonstrating strong returns even in a high interest rate environment. Turning to the outlook. The recent U.K. budget reinforces the strong tailwinds supporting our business relief products as we continue to lead the market in fundraising, channeling further investments into U.K. SMEs.

Against the backdrop of rising personal tax burdens in the U.K., demand for tax-efficient products is significant. As one of the key strategies within our diversified business model, this increasing demand alongside the expansion of our multi-vintage institutional products keeps us on track to deliver on our target to double core EBITDA pre-SBP in the 5 years to FY '29.