Foresight Environmental Infrastructure Limited (FGEN) Earnings Call Transcript & Summary

Thanks, Charlie. And thanks, Philip. Very comprehensive but interesting presentation. And I think the level of questions at the end clearly shows the engagement that we get on some of these assets. So it's really encouraging and keep firing them matters throughout the day and afterwards as well. So as Charlie said, I will take you through the few slides we've got on Rjukan, so I can give you the update on that. As you know, Rjukan is our land-based Norwegian aquaculture facility. So we've been building that over the past few years. It's now fully operational, and it is starting to build a reputation as a supplier of high-quality fresh trout to international markets. So this asset is the essential infrastructure needed to support more sustainable food production. Global demand for high-quality protein continues to grow, while conventional seafood production faces environmental and regulatory challenges. Land-based aquaculture is a technology-driven response to those pressures. It offers controlled production, high biosecurity, reduced pollution risk and all year-round production. And that's the strategic rationale for Rjukan. So of course, I started looking at Rjukan back in 2021. And at that point, it became clear that despite global recognition, the food production is one of the major sectors that needs decarbonizing. There was a clear gap between, on the one side, project developers that have high sustainability visions and are equipped with the proven technologies needed to achieve it. And then on the other side, institutional investors that share that vision but are understandably asking questions about financial and commercial viability. So for every year, we work pretty intensively to elevate the project to an investable and bankable state to help fill that gap between an overall desire to decarbonize a mature industry and making something into an attractive investment opportunity. So that included application of project structuring, financing and risk management experience to build a bankable investment case designed to not only provide an attractive risk-adjusted return, but also to encourage additional capital into the sector to support its growth. Fast-forward to now, Rjukan is fully operational. So the question today is not whether the facility can be built, it has been built. The question is how quickly it can ramp up production and demonstrate consistent volumes and pricing. So the structure itself is deliberately straightforward for FGEN. Alongside another Foresight managed fund, it holds controlling stake in the project company, meaning Foresight funds retain majority ownership and control. The structure uses preferred equity instruments with an emphasis on downside protection and alignment of incentives between Foresight, the developer and minority shareholders. Again, that's consistent with our approach to growth assets. We want exposure to the upside created by operational maturity, but we also want the structure to reflect the profile of an asset that's moved through construction and is now in early ramp-up stage. That's important because early-stage operational assets can create meaningful value upside, but only if governance, incentives and capital structures are all aligned. So we have control, we have specialist operating partners, and we have a structure that's designed to support the asset through its ramp-up. As you'd expect, the management team on the ground, they clearly have extensive experience in aquaculture. That's been a major industry in Norway for generations. I won't go through everyone's credentials here, but the key point is that Rjukan is not a project being managed from a spreadsheet. It's an operating business that requires a different set of capabilities, including things like aquaculture operations, biological performance, water control and feeding regimes. Simon Martinsen there on the left, he leads the business as CEO with Geir Inge, the farm manager, his right-hand man and a wider team of around 80 people on the ground behind them. And management there are now focused on the operational disciplines that determine value. So that's stable biomass growth, oxygen management, water treatment, harvest planning. And that's really the lens through which to view the rest of this section because the next phase of value creation is operational execution. And rather than just listening to me talk about the facility from London, we wanted to let you hear directly from the people on the ground. So we do have a short video from Simon, which hopefully gives a sense of the scale of the facility, the progress made since construction was complete and the areas of focus for Rjukan if it ramps up. [Presentation]

So hopefully, from watching that, you can get a feel for -- it's a pretty spectacular place. I think we'd love to have everyone out there and do site visits, but it's not the easiest one to get people across these. So the next best thing is a video on screen. Like we said earlier, we've got some travel here. I can't guarantee it will look like a bit on the screen there, the fine dining. We have a catering company here, but let's be realistic. But anyway, I hope the reason -- sorry, the reason I think that video really helps is because it moves the discussion away from concept and into execution. This is a facility producing fish and selling fish. It's crossed an important line from construction into operations and the video, I think, really brings that message home. So Rjukan is not just a building in some fish tanks. It's a full operating system with specialist counterparties right across the value chain. So here, we look at how the project is structured and who the key counterparties are. So construction was delivered by Totalbetong and Eyvi. SPV Management sits with Hima. Eggs are supplied from a company with Osland, feed comes from Skretting and the water supply itself comes from mountain-fed aquifers. And last but not least, the route to market is through a company called Seafood Brands. Why does all that matter today? Well, because for a land-based aquaculture facility, value is created by the interaction of multiple systems. You need reliable water supply. You need the technology to perform. You need trained operators and you need a credible sales route into the market. So when we talk about ramp-up, we're not just talking about increasing volumes, we are talking about optimizing the full value chain. That's what's going to turn a completed facility into a cash-generative business. Thinking about how this project fits into the broader market. Salmon is a resource-efficient source of high-quality protein and demand is increasingly being met by aquaculture rather than capture fisheries or things being caught in the wild. Supply is forecast to grow at around 3% per annum versus demand that's set to grow at around 7%. So the supply-demand backdrop is really supportive. But a key point to note is that trout is already an established market. We're not trying to create demand for a novel product. The product is known, the end market exists, and there's an established route to consumers. And on top of that, the environmental context is changing. Conventional sea-based farming can create negative environmental impacts and is subject to increasingly strict regulation. Buyers are looking for traceable and reliable alternatives. Land-based aquaculture addresses some of those pressures. It offers controlled production, high biosecurity, reduced pollution risk and crucially all year-round production. So like I said earlier, that's the strategic rationale for Rjukan. The asset is not just trying to produce fish, it's trying to produce a consistent, traceable, high-quality product in a way that's more controlled and more sustainable than conventional production methods. And of course, we recognize that market demand alone doesn't create value. Value comes from producing reliably at target volumes at the right size and quality and at a cost base that supports attractive margins. And that's where the next few slides focus. So you saw in the video earlier, the facility. This is a shot of the facility as well, but an artistic impression of the roof off, just to give you an impression for what's going on inside. It has a design capacity of 8,000 tonnes of trout. That's equivalent to about 22 million dinners and the facility is a complete end-to-end process. So it covers the full production cycle from egg right the way through to harvest. The major components are shown on this slide, so starting at the hatchery where the eggs come in. The fish are then transported through increasingly large grow-out tanks as the fish themselves grow in size before coming into the final harvest phases. Some alternative models are different to this. They may focus only on 1 or 2 parts of this cycle, but the reason the full cycle capability matters is control. The more of the production cycle that you control, the more you can manage, biosecurity, growth conditions, quality and timing of harvest. Scale also matters. A facility of this size is designed to be a commercial production asset, but it won't reach full output immediately because biology and process optimization take time. Fish need to move through the cycle, systems need to be calibrated and operating teams need to build repeatability. So the facility is built for scale, but the route to value is a phased ramp-up. And in large part, that's because a trout doesn't become a 4- to 5-kilogram fish overnight. The growth cycle takes around 18 to 24 months as fish move through eggs, smolt, grow-out and then readiness for sale. So following the first harvest in July of last year, Batch 1 completed a full production cycle in the lower end of that range that I just mentioned at around 18 months, and that was an important proof point for us. It demonstrated that the facility can take fish all the way through the cycle and sell products into the market. The commercial objective is now to reach consistent weekly production of trout above 4 kilograms, because put simply, larger fish tend to attract higher prices. That's an important distinction versus many infrastructure assets. So if you take a solar farm, once it's commissioned, the revenue profile starts almost immediately, although obviously remains subject to the sunshine. With Rjukan, there's a biological ramp-up. The asset needs enough biomass in the tanks at the right stages of maturity to support regular weekly harvests. That means there's a lag between physical construction and steady-state economics. But when the tanks are full and harvests are regular, there should be greater forward-looking revenue visibility than an intermittent renewable generator. So the task is now moving from first harvest to consistent production, consistent sizing and repeatable sales. I said earlier, this is a technology-driven response to market and environmental demands, and that's really down to the recirculating aquaculture system or RAS technology behind the facility. So in simple terms, a land-based fish farm using RAS technology is a closed-loop, highly controlled environment where water is continually cleaned and reused. The system, you can see on the screen there, it takes in a small amount of new water, treats it, circulates it through the fish tanks and cleans it up and treats the effluent water before release. So once at steady state, more than 99% of water is recycled with fully treated and disinfected inflows and outflows. That has 2 advantages. The first is environmental. So the facility uses far less new water than alternative models and has a high degree of control over what water leaves the facility. The second is operational. A controlled environment allows management to optimize water quality, oxygen levels, temperature, feeding and biosecurity. The technology itself is based on relatively simple components, but control only creates value if systems are managed properly. That's why operational discipline matters so much. So the risk has shifted. During construction, the question was whether the facility could be delivered. Now the question is whether the team can operate the system consistently, optimize biological performance, convert that into predictable volumes and margins. Once the fish are produced, the next question is, how are they sold? So Rjukan sells through a group called Seafood Brands, which acts as the external sales company and sells the product into the open market. Trout is an established commodity, but pricing isn't automatic. Consistent quality and reliable supply are critical to achieving the best pricing. That's where land-based production can have a real advantage because the environment is controlled, the facility can produce all year round without the same seasonal fluctuations that can affect more conventional production. The customer base is diverse. It balances wholesale, value-add processors and direct fine dining channels. And over time, the objective is to build established supply relationships and longer-term contracts with an opportunity to target premium pricing for a premium product. But again, that depends on evidence. Buyers need consistency in size, quality, timing and volumes. It's not just about moving tons. It's about establishing credibility with buyers and building repeat purchase behavior. At the last half year results, we said the early production was expected to be sold into the commodity market until a steady state is proven, with management then anticipating premium pricing. That's the right sequence, prove volume and consistency first, then optimize pricing. So the route to market is therefore a key part of value creation for us. As I said earlier, growing commenced last year, first harvest in July '25. And as at March '26, we sold 362,000 fish at an average of 3.3 kilograms. So that's over 1,000 tonnes of fish and a big operational milestone. The facility is producing, harvesting and selling. But the near-term focus remains on ramp-up. To get towards that design capacity of 8,000 tonnes, the management are focusing on refining several critical systems over the year ahead. That includes transportation, feeding and oxygen; in other words, looking at the key factors that determine biological performance and cost efficiency. The objective is stable production and regular weekly harvests with consistent sizing to maximize sales and pricing. So the message here from us is balanced today. We have clear evidence of progress, first harvest, operational data and an established route to market. But the value case is still dependent on ramp-up discipline over the next phase. Volumes are expected to gradually increase over the next 3 years, with the facility reaching steady state by the end of 2028 and target revenues of around EUR 60 million to EUR 70 million. As we saw earlier, the ramp-up is gradual because the systems are being optimized alongside ongoing fish production. You have live biomass in the system. So optimization has to be disciplined and continuous. EBITDA breakeven is expected to be around 5,000 tonnes, and that's also a key milestone, obviously. But the way that we look at it, it shifts the asset into financial self-sufficiency. And once the business moves to that point, the conversation around exit potential really changes. Interested buyers can see actual profitable operating performance rather than relying on forecasts. In terms of valuation, listed sea-based aquaculture comparables suggest EBITDA multiples of anywhere between 8x to 24x. We should be careful with listed comparables because efficiency, stage of development, technology and risk profile can vary significantly. But nonetheless, it's still a very encouraging range. And we believe that a mature land-based asset with stable operations should attract a premium versus sea-based alternatives. But what this hopefully shows is that the key value driver is not an unrealistic or heroic multiple assumption. It's the progression from first production to repeatable performance. The better the evidence on volume, feed conversion, quality and pricing, the stronger the asset becomes as a realization candidate. This is consistent with the valuation approach we've followed so far. So we moved Rjukan from cost to DCF only after the first harvest last summer, recognizing a modest valuation uplift from cost. That's the discipline. Value follows evidence, not aspiration. And we'll remain measured in how value is recognized going forward. We want to reflect progress, as it's evident, but the direction of travel is positive. Lastly, here, we've got a slide on buyer universe, just like Charlie covered on CNG. And what we see is that while the buyer pool is still evolving, we believe there are a number of credible and increasingly relevant routes to exit. Strategic aquaculture players, both land-based and sea-based, have traditionally been the dominant acquirers in core aquaculture grow-out. Trout is a smaller market than salmon, but that can make it an attractive entry point for certain buyers looking for growth or diversification. Financial investors have historically been more active in aquaculture suppliers than direct farming, although there are examples of investors taking exposure to land-based grow-out. Adjacent industries and international corporates may also be relevant, particularly where they're focused on vertical integration, food security, cross-border expansion or differentiated premium protein supply. So the conclusion on Rjukan is straightforward. The value creation pathway is to move from early harvest to regular production from spot sales to deeper customer relationships and from forecasts to demonstrated cash flow generation. If that progression is delivered, Rjukan has the potential to become a meaningful source of capital growth FGEN. Right. So I'll now introduce the third of our growth assets. So that's the glasshouse operated by Glass Pharms. Good news this time, I'll just do the intro and then hand over to someone else, and then you can hear them talk rather than me droning on. So this investment is a great example of how FGEN's mandate allows us to originate opportunities across the 3 pillars of investment, and in this case, showing how those pillars can work together. So we first came across this opportunity while looking at ways for one of our AD facilities to make better use of surplus heat and power that it could generate above what it was able to inject through its grid connection. That led us to this opportunity, the funding of a construction of a large 2.4-hectare advanced glasshouse next door to the AD, connected by a private wire and therefore able to use and monetize that heat and power that otherwise would have been wasted. So we partnered with the excellent team at Glass Pharms to use the facility to cultivate pharmaceutical-grade cannabis-based products for medicinal use under strict Home Office license, a market that's really been growing rapidly in recent years. We invested in September 2022. Construction was completed just 1 year later, and now the business is in its operational ramp-up phase. And I'm sure those of you that managed to come to the site visit with us last year will agree that now it's built, we have a truly fantastic facility. Like with Rjukan, the business benefits from a highly controlled growing environment, but also has a clear healthcare-led demand backdrop and a structural cost advantage through access to that low-cost heat and power from the co-located AD. And that's exactly why we regard this as an infrastructure-based proposition. It has long-life physical asset base, strong operational control and supports an important supply chain. It's also effectively perpetual in nature. No reliance on government subsidies, and that gives it a resilience consistent with FGEN'S broader investment philosophy. And for those of you that don't know what 2.4 hectares look like, picture a 3.5 football pitches, 19 Olympic swimming pools or a car park with 2,000 spaces in it. Thanks, Copilot. As with the other investments that you've heard about today, we've deliberately structured this investment to balance downside protection with upside participation. The majority of our capital is deployed through a combination of senior secured lending and convertible loan notes alongside a 10% equity stake. That gives us 3 important benefits. First, the senior debt provides capital protection and contractual income, which is consistent with our core infrastructure approach. Second, the convertible loan notes give us the ability to increase equity exposure as the business derisks and value is created. And third, the direct equity holding ensures we retain board-level participation and we remain aligned with the long-term growth of the platform. So overall, this is a disciplined investment structure protected on the downside through the debt while retaining meaningful upside through conversion rights and valuation growth. And that's very much how we approach these sorts of growth opportunities across the FGEN portfolio. So lastly, before I hand over to James to take you through the business and its outlook in more detail, we've got a brief video of the facility itself. And then after that, James will do his bit and then come back and wrap up again with thoughts on buyer universe, potential exit strategies. And we'll leave some time for Q&A. [Presentation]

Good afternoon, everyone. My name is James Duckenfield. I'm the CEO of Glass Pharms. I'm going to talk to you about the product that we're providing to market, which has now helped tens of thousands of patients in the U.K. I'm going to talk to you about how we grow it and how we manage it, some of the market dynamics and our performance thus far and then tantalize you with how we're going to fulfill our potential going forward. All right. So this is the management team. We're not in pajamas. We are in surgical scrubs. We take biosecurity very importantly at the site. So actually, when we're on the site, we will change from outdoor clothes to indoor clothes to make sure that we're not bringing any plant pathogens into the facility. We're very lucky to have Adam George as our Chairman. Adam was the CFO of GW Pharmaceuticals, now Jazz Pharmaceuticals, which is the largest licensed cannabis business in the world. They sold out for around $8 billion a few years ago. I am a chemist by training. I've been in technology most of my career and somehow ended up running a cannabis business. But you'll see that this is a very technical facility. And actually, I'm loving getting back into chemistry, which there's a lot of it in this particular product. Steve is here with me today. Steve and I have worked together for about 10 years. In my previous business, we ran a group of different companies, and he's come on this journey now. And then Richard Lewis is the Managing Director who runs the facility. And for him, this is a baby greenhouse, even though it's absolutely enormous. His last glasshouse was a tomato glasshouse, which was 8.4 hectares. So an absolute whopper compared to this, albeit this is a much more sophisticated version. So this is our history to date. We set up in 2020. We had been working on a high-THC cultivation license for some time. We were the first since 1998 to get a high-THC cultivation license. The Home Office do not like giving these. It was extraordinarily difficult. There are still -- there are now 3 operators in the U.K. with a cultivation license for a commercial sale. And then we ran around the city with our license and a plan, and FGEN were kind enough to fund the business. We then went about building the facility, which was designed specifically for growing medical cannabis. And it was based on 2 years of bad growing in a low-tech glasshouse, which taught us lots of lessons on how not to do it, which has been distilled into how to do it with excellence. And then we started growing in October 2023. This month actually marks our second anniversary of supply, and you'll see what we've done in the 2 years of supply thus far. And we were the first to bring a cannabis flower to market as an unlicensed medicine in the U.K. in June 2024. Then we've got a nice milestone in February of 2026, our 100th shipment. We tend to ship our products every week on a continuous supply basis. And in fact, the whole of the cultivation process is continuous. So every day, we're planting. Every day, we're pruning. Every day, we're harvesting. Every day, we're doing processing jobs. So it's like a modern commercial bakery where you've got a bit of dough at one end, and it goes through an oven and then cools down, and it gets packed at the other end on a pretty seamless basis. And then in March this year, we were granted a patent for the facility, which means that we can benefit from Patent Box tax relief. And as you'll see, unusually for a cannabis business, we are actually making profit. This is what we are producing. I'm very sorry about the disappointing contents of the tins that we provided. They are simply mints, but they are -- it's a packaging that the medicine is dispensed in. So we have 3 different types of flower, and these are laid out in the British Pharmacopoeia. Cannabis was actually a medicine in the British Pharmacopoeia up to 1932. And then during the prohibitionist period, it was removed and returned to the British Pharmacopoeia in 2024. And it lays out these 3 types of cannabis plants: Type I, which is high THC, which is most of what we do; Type II, which is very difficult to grow. We have 2 of these products. And then Type III, which is a CBD flower with a small amount of THC, which we have one flower in that category. This is the typical patient journey. A patient will seek help for their condition. The most described ailments are around pain, anxiety, MS, a number of other conditions. But the patient seeks help. Their eligibility is then assessed. And under the guidelines, they need to have had 2 other medical interventions prior to having access to medical cannabis. They have to see a specialist physician. They can't just go to their local GP, physician on specialist register. There are a number of categories of patients where this is not a suitable medicine. So you're under 25, this is not really -- apart from particular problems like childhood epilepsy, intractable epilepsy, this can be transformative particularly, but that's a CBD product with a small amount of THC. But generally, under 25s, it should be treated with caution. Anyone with a history of drug addiction, anyone with a history of mental health, particularly psychosis, it is not the medicine for you. And like lots of other medicines, if this is mis-prescribed, it's bad news. If it's properly prescribed, it's actually a very safe drug and actually safer in many cases than the alternatives which are prescribed for pain, things like pregabalin, tramadol, the opioids that have caused an epidemic in the U.S. So a specialist physician will write the prescription. That is then typically sent to an online pharmacy who then will send it to the person's house by recorded delivery. And then on a monthly basis, they have a follow-up, and the second prescription can be either back with the initial physician or under a shared care arrangement with a GP or a prescribing pharmacist. So this is a schematic of -- you've seen how big it is, but this is -- it's a miniature to explain the situation. So we -- this is a patented design, which is incredibly energy efficient. This is the FGEN anaerobic digester that supplies us with energy. And in fact, it's a real symbiosis because we get our energy from the anaerobic digester less expensively than we could possibly buy it from the grid, but also more expensively than FGEN could sell it to the grid. So it's that -- we're sat in the middle in a place where it's really a win-win. We also benefit from the waste heat from the facility. And we use that waste heat either to heat the glasshouse during the winter, but also we send it to an ingenious contraption called an absorption chiller. And the absorption chiller will take hot water in one end and cool water in the other. And the waste heat drives a chilling cycle, which means that we can turn 12-degree water into 6-degree water. And we use that chilled water to do dehumidification. And if you look at most other cannabis cultivation facilities, they are -- on our scale, they will be consuming about 1 megawatt of power just to do dehumidification. So this is -- this really offsets the higher energy costs of operating in the U.K. And that, along with a lot of automation means that we're competitive on a global basis. We use about 40% to 45% of the energy of a comparable indoor grower. So our plants travel. So they don't just sit in the glasshouse and stay there for their entire life. They travel like a nonlinear conveyor belt. So they start here as baby plants in a spring-like environment. And then as they mature, they go into different climate chambers. There's 3 climate chambers that we run, a spring environment, which has 18 hours of lighting. They then get moved into summer where they get only 12 hours of lighting, and that triggers the flowering process. And then they move into late flower where they have very low humidity and they're under some stress, which really makes them focus on developing the flowers and improves our yield. And through optimization of this process, we -- well, we originally thought that this facility would be able to produce in this phase about 1 tonne a month. And through optimization, we now have proven that we can generate about 1.5 tonne. So it's a very efficient environment. Part of the reason that we have the plants traveling by themselves is that we don't have workers working in the glasshouse. So we treat people as vectors, which isn't very polite to the people. Perhaps like -- I suppose with the infected cruise ship that we've seen recently with the rats. We treat humans unfortunately as vectors like the rats. And so we keep them away from the plants, and the plants have to travel to the people to be worked on. And then once they've been worked on, they go through a decontamination tunnel and then back into the glasshouse. So this facility has got fanatical attention to detail around microbial control, and that allows us to produce a medical-grade product without irradiation, whereas our competitors quite often have to ship their products overseas to get irradiated, to reimport it to allow it to access the marketplace. So sustainability is something I've been personally very keen on since I was very nerdy into school competition on problems in the environment when I was 17, and it's something I've been passionate about. But I've always maintained that sustainability without it being a good business case is never going to fly with anybody. And this particular example of sustainability really makes commercial sense. It's not just some tree-hugging activity. And so this is a really synergistic relationship with FGEN, as I mentioned. Electricity is a really significant part of our overheads, at least 20% of our overheads. And therefore, we're very sensitive to electricity prices. And that's why being energy efficient is also very, very important for us. And you can see here, our -- there's a comparison between our facility versus an indoor growing. And we save huge amounts of energy on things like lighting versus an indoor grow because we get about 40% of our light for free from the sun. We are not using anywhere near the same amount on dehumidification because we're using waste heat to drive dehumidification. So it's a repeatable model, which we could put in another country and expand our capacity in the future. So the U.K. market has grown quickly, but relatively slowly compared to some other countries. Medical cannabis was legalized in November 2018. It's growing quite quickly. Patient numbers are around 100,000 now and set to double by this time next year. This chart here shows the imports. So imports -- the data is not particularly reliable, which is why it's a bit choppy. The data has come from the Home Office. But you can see, back in 2024, which is where this data is from, the 3% is all us. So we're still, I would say, at least 90% of the domestic marketplace. We're supplying 8 out of 10 of the clinics, a big -- top 10 clinics in the U.K., including Releaf, which is a very key partner for us. It's nearly all driven -- the market base in U.K. is nearly all driven by private practice, not NHS. I don't think that's going to change in the near future. But what is happening is that there are new entrants coming into this marketplace, which have no interest in cannabis as a topic, but they do see it as an adjacent space to move into with telemedicine platforms that they've already developed in areas like GLP-1 clinics, for example. So we do see this year being a very interesting year with new entrants driving growth and starting to accelerate the rate of growth rather than it starting to peter off. If you look at Canada, Canada is the most mature cannabis marketplace in the world. They're by far the biggest exporter. We have 1.7x their population. So although it seems like a very big country, there's lots of wilderness, which we don't have. And it's -- clearly, it's the patients that are consuming the product rather than anything else. So you can see, by 2016, they were approaching 150,000 patients. And what happened in 2018 is that adult use was legalized. And so you saw a reduction in volume of medical to about 10% of the overall market, but it's still about a $2.7 billion market in Canada with a much smaller population than our own. So there is a huge amount of growth potential in the U.K., albeit that we don't see legalization for recreational use anytime in the next 10 years in the U.K. So we're very focused on medical and medical only. So we're not expecting to see this down ramp. The other lessons from Canada are that over time, the format of medicine changes away from flower to other formats. So at the moment, the U.K. is about 75% flower and the remaining portion is about 50-50 between oil and vaporizers. And so this year, we are working on our own oil product and our own metered dose product so that we can diversify to more medical forms of the medicine rather than the raw form. Germany, by contrast, legalized about the same time as us and has grown much, much faster because of a much more permissive environment, including the reimbursement of medical cannabis through their healthcare system. So about 30% of medical cannabis in Germany is reimbursed. Doctors have been trained, and that has really driven growth to what we now think to be somewhere between 1 million and 1.3 million patients in Germany. So it has massively grown there with about the same population as the U.K. In Australia, they have about 40% of our population, and there are already at about 1 million patients. So where there is a more tolerant approach, and our Home Office is not particularly tolerant, there is -- more growth is seen versus a good growth that we've seen in the U.K. So we see steady growth in the U.K. As we've seen in other markets, we've got no reason to think that that growth won't continue. We see growth through new product development, which also allows us to adjust for the price pressure that we'll inevitably see as the market grows. So our new products will be higher margin than simply flower. And we're also looking at export opportunities, particularly Germany and France. France has started their process of legalization in a very, very medical way, which is great for us because that's the nature of our business. They will have the medical cannabis properly legalized by October, but they will not allow flower in its raw form. They will only allow it in a metered dose format, which was perfect timing for us because that is exactly what we're developing. They will have it reimbursed and you will have to go to a hospital to initiate your care with medical cannabis and then follow-on care through your local GP. So it won't be at all a private clinic market in France. It will be direct negotiation between the producer of the medicine and the ministry of health, which I'm sure will be a delightful negotiation. So for those of you who came to the glasshouse last year, we put some projections up. I'm very happy to say that we have performed essentially in line with our projections. And actually, we have -- for the last financial year, we've done better. So we've done better on revenue and done better on EBITDA. There are not very many cannabis companies in the world who are profitable. So I'm very proud that we've achieved it in our second year of operation. So this is how volume has grown quarter-on-quarter since we started. So really good quarter-on-quarter growth. We're expecting our profit to double again from the position from last year, and we're expecting the following year to have a similar performance. So how do we fulfill our entire -- we've got an enormous facility to fill. How are we going to do that? Well, this represents our FY 2027 budget. We see U.K. market growth filling about half of our overall capacity. We see increased market share as it becomes more difficult for importers to import products of a recreational nature into the U.K. as regulations tighten. And we also see increased market share as we bring innovative formats to market, which other companies won't have access to. And then we also see growth from international expansion, Germany and France, France being particularly exciting and Germany just being absolutely enormous. And the prices in Germany are much more aggressive. But if you were to look at the price distribution in the German marketplace, it's very tough in the middle with THC concentrations in the 20s. But the stronger products and the weaker products that were particularly the ones which have more medicinal focus have much more similar prices to that of the U.K., and that's really where we're going to focus.

Hopefully, everyone sort of agrees. As always, when I hear James present, it's pretty fascinating. It's a different world, but James is very, very experienced. He's got the chemistry down. He's got the business side of it down, and things are going really well there. So we're very pleased with that investment. Let me just cover how we're thinking about buyer universe for this type of asset. From the outset, we have always been clear that we invested here initially as a way of enhancing value around that adjacent AD facility while also backing the high-quality standalone growth opportunity. We don't see FGEN as a natural long-term owner of a scaled, global medical cannabis platform, but we do believe that if the market continues to develop as expected, Glass Pharms could become a strategically valuable business in an increasingly important healthcare segment. So the investment has a broad range of buyers. That's really indicative of the pace of sector growth in the U.K. and also the fact that, as James said, the U.K. is majorly playing catch-up to an already huge international market. So buyers include established North American cannabis operators looking for new early mover growth opportunities in Europe and backed by significant capital, also large-cap pharma and healthcare platforms as medical cannabis becomes more well recognized, more widely recognized and specialist mid-market healthcare and cannabis funds with experience in the sector and ability to build platforms through bolt-on acquisitions. Also extends to strategic investors, and that's where we're seeing big tobacco and alcohol companies being particularly active in M&A as well as institutional investors and even some consumer wellness brands. What links these groups is a desire to secure positions in a structurally growing market, often through platform-building strategies and selective acquisitions. So a useful and interesting recent example is a company called Organigram's acquisition of Sanity Group, that's a German medical cannabis producer, at an estimated multiple of around 14x EBITDA. Now Organigram is a major Canadian cannabis group, backed by British American Tobacco. And the transaction highlights exactly the dynamic that we are focused on, well-funded strategic buyers seeking access to fast-growing regulated European medical cannabis markets. While every asset and market context is different, that type of valuation evidence is encouraging, and it demonstrates that well-capitalized strategic buyers are prepared to pay meaningful premiums for established platforms that provide access to attractive regulated medical cannabis markets. So in summary, we believe the glasshouse represents a high-quality infrastructure-based proposition with strong growth characteristics and a credible route to future value realization. So before we end this part of the session and move on, I'd just like to say thanks again to James and to Philip and [ Bevan ] from earlier. Really interesting presentations and hopefully leaves everyone with a sense of not only what's happening on the ground, but also why we're really optimistic about what these investments can deliver. So each of these companies operate in very different markets, but they share the common vision of becoming market leaders with a reputation for consistent quality supply alongside strong, stable routes to market. So now before we finish, I'll go back to Charlie. He'll build on the introductory comments made earlier around outlook for cash generation, confidence in delivering a sustainable dividend, and crucially, what we see as opportunities for FGEN to demonstrate why this unique set of assets is already capable of delivering organic NAV growth.

So our central objective is, of course, maintaining the progressive dividend alongside long-term organic NAV growth. And it's not realistic to rely on issuing new equity in the current market environment. So the strategy, therefore, has to work from the capital already inside the company. Cash generation from the operational portfolio, selective follow-on reinvestment and potential realizations from asset sales. And that is the point here. We are not simply waiting for the listed market to reopen. The company needs to keep creating value from the assets it already owns or allocating capital in a way that protects dividend cover and extends the life of the portfolio. So in the short term, the priority is to maintain the high-performing operational portfolio. That means availability, production, cost control, contract management, prudent debt management and selective reinvestments where we see attractive returns. And this is the part of the portfolio that supports dividend cover today. We also want to continue delivering a compelling and balanced mix of growth, high dividend cover and low gearing. We don't want to chase growth at the expense of the dividend, and we don't want to over-lever the balance sheet to manufacture returns. So looking to the medium term, the strategy is opportunistic divestment and capital recycling. And potential areas of focus obviously include the growth assets, but timing and value are critical. The objective would be to realize value when an asset has reached the right point in its maturity curve and when the buyer universe is prepared to pay appropriately for that. And the growth assets are important because they can mature into realization candidates without having to sell the cash-generating core of the portfolio, and that is a subtle but important distinction. Many funds that want to recycle capital have to sell yielding assets and then rebuild dividend cover, whereas FGEN already has that growth component where the primary purpose is capital appreciation and strategic flexibility, while the operational portfolio continues to carry the income objective. And then longer term, the ambition is a unique and scalable company, providing both income and NAV growth with a self-sustaining model that does not rely on equity fundraising. The target shown here is a minimum 8% to 10% NAV total return per annum. That is an ambition, not a guarantee, and it depends on disciplined execution. But the pathway for us is clear, resilient cash generation, asset level value creation, selective realizations and reinvestment into the next generation of core environmental infrastructure assets. Now looking at how capital allocation has evolved over the last few years. Now this slide is obviously busy, but it's one of the most important slides in the deck because it shows how FGEN has already changed its capital allocation in response to the market conditions. So the top half shows sources of capital and the bottom half uses. And across the earlier years after IPO, the company was able to raise equity and deploy it into new investments. The shares traded well. The pipeline was attractive, and equity issuance helped scale the company. As we all know, the market today is very different, and so capital allocation has had to adapt. There is no single silver bullet for a discounted share price, but there are disciplined actions that management and the Board can take and are taking. First, the portfolio continues to generate cash. The project yields shown above the line have grown materially since IPO and now provide a strong base for dividends and selective reinvestment. And that cash generation is the starting point for our self-funded growth. Second, FGEN has shown it can recycle capital through asset sales. So in FY '25, we had significant asset sales with proceeds realized above NAV for the sale of our solar rooftop portfolio and a majority shareholding in part of our AD portfolio, demonstrating that assets can be sold at attractive prices where the market recognizes their value. Third, you can see shareholder returns have increased. The company has returned capital through dividends and buybacks while still continuing to invest selectively in value-accretive opportunities within the existing portfolio. And that balance matters and is something we are continually reviewing alongside the Board. We recognize the market backdrop, but we also recognize the importance in protecting the long-term value creation capability of the company. Of course, debt has been managed prudently. The company has not used leverage as a substitute for equity issuance. Gearing remains low relative to both the sector and also to what many of the assets could actually sustain. So the broader message here is that capital allocation is not static. When equity is available on attractive terms, it can support growth. And when equity is not available, the model needs to rely on cash generation, recycling and disciplined capital allocation. And that is exactly the model we are setting out today and have confidence in for the long term. And so here, we introduce a 5-year creation pathway. Now on the advice of our lawyers, I have to emphasize that this is an illustrative case, indicative only, not a forecast or a guarantee of performance or a commitment to sell any particular asset at any particular time. The purpose is simply to show how the strategy can work in practice based on a sensible and credible set of assumptions. And in this regard, we will draw your attention in particular to the important information on Slide 84 at the back of the deck, which our lawyers have noted should be read in full. So with that out of the way, cash flow and NAV growth over the next 5 years can be driven by 3 sources: portfolio performance, increasing cash flow generation from growth assets as they mature and potential disposals and capital recycling across those growth assets. And the important point is strategic flexibility. We can tailor the extent of disposal and recycling based on value, timing, buyer appetite and the needs of the portfolio. We do not need to sell all the growth assets. Equally, we do not need to hold everything indefinitely if a sale can crystallize value and release capital for better opportunities. The self-sustaining model for FGEN is designed to be flexible rather than binary, and it is built around reinvestment of surplus cash and potential exit proceeds. In a market where equity issuance is not available, that growth has to be earned internally. And the illustrative indicative case we will show here, it focuses on a disposal and recycling scenario across the growth assets with material reinvestment of those exit proceeds into opportunities that balance long-term delivery of income and growth and maintaining a consistent risk profile within the fund. So here, we set out the assumptions behind what an illustrative disposal and recycling case could look like over the next 5 years. And here, we listed the assumptions. So first of all, the disposals of the growth assets are across '28 to '29 at projecting holding NAV at the time of exit and not assuming an immediate premium to NAV. It assumes that value is recognized through the ramp-up period and that sale proceeds are achieved at the holding value at the time. So those proceeds trigger new investment from FY '28 onwards across development, construction and operations, allowing us to refresh the asset base, extend the opportunity set and preserve the ability to deliver both income and capital growth over the long term. Now clearly, the hurdle for any new investment would be subject to capital allocation considerations at the time and compete with the alternatives such as paying down debt or returning capital to shareholders. But in this illustrative scenario, we assume that new investment is the primary application. Now initially, there is a focus on development and construction because following disposals of growth assets, the portfolio would have capacity to reallocate some capital back into growth to support extension of the fund and then investment into yielding assets to support dividend cover, so maintaining that balance of income and growth. In terms of what new investment would look like, it would clearly depend on the market opportunity at the time. But potential areas of focus could include biomethane, low-carbon heat, energy and grid infrastructure and water and waste management, targeting returns within the 10% to 12% range. Now those are sectors where Foresight sees plenty of active deal flow, where FGEN's mandate is relevant and where infrastructure-like characteristics can be found as we committed to focus on in our strategy last year. We also assume that some capital is allocated to pay down the RCF over time using it as a source of flexibility and repaying it when proceeds allow and maintaining the balance sheet strength that has been one of FGEN'S advantages. And the charts help illustrate the mechanics. On the left -- sorry, on the right, you can see investments into assets by stage, so operational, construction and development. And on the left, you can see the use of cash and key balances, investments into assets, RCF repayments, dividends and cash generation, the RCF balance. And the message here is that the model can fund dividends, reinvestment and balance sheet management from internal sources, provided we execute the ramp-ups and capital recycling properly. And that is the core of the organic growth thesis. And so here, we talk about the conclusions about what this illustrative case really shows. So firstly, cash flow generation remains robust. The operational portfolio continues to provide the foundation, while disposals and new investment change the composition of cash generation over time. And secondly, the model does not require disposals to be above holding NAV at the time of exit to work, and that is important. Of course, we will seek to maximize proceeds and we welcome any premium where we can get it. But the base case is not dependent on a heroic exit assumption. It is dependent on disciplined value recognition, realization and reinvestment. Thirdly, the illustrative dividend cover remains in the 1.2x to 1.3x range, which is obviously central to our proposition and remains backed by cash generation, not selling yielding assets. And fourthly, compounded NAV growth -- per share growth is driven by sector rotation and capital recycling. So mature operational asset that generates cash is obviously valuable, but the point -- but there is a point at which selling it and reinvesting it into a higher returning opportunity could create better long-term value. And the chart on high-level sector cash generation on the right shows how that mix can change over time. Core renewables, AD and biomass remain important cash generators. Concessions, energy storage and growth assets contribute in different ways. And new investment then becomes an increasing contributor as proceeds are redeployed. And the fund-level cash flow chart shows the same idea from a shareholder perspective. Income from assets, operational costs, dividends declared and free cash flow. So at a high level, the objectives are relatively simple: keep the operational portfolio producing cash, mature the growth assets to validate value, recycle capital without diluting dividend cover and target new investments that meet the return and risk profile we require. It is not easy to deliver, and it will depend on execution, but the portfolio is now set up to make that possible, a progressive dividend with comfortable cover, organic NAV growth, low gearing and a disciplined risk and return profile. And so to now wrap things up because I can see the drinks and the trouts being laid out at the back. There are 3 takeaways which we would want to leave you with. The first is that FGEN's operational portfolio provides resilient cash generation and dividend support. That is the foundation of the investment case. The dividend is backed by a diversified operational portfolio, not by a single technology, a single power price assumption or a single subsidy regime. Secondly, the growth assets are now operational and moving from construction risk to ramp-up and value realization. They have all reached important milestones. The work is not finished, and we should not pretend it is, but the nature of the risks has changed. We are now focused on utilization, production volumes, customer relationships, pricing, cash generation and exit optionality. And third, disciplined capital allocation creates a pathway to organic NAV growth without relying on equity issuance. That is critical in the current market. FGEN can use cash generation, select the disposals and reinvestment to keep the portfolio moving forward while maintaining dividend cover and a prudent balance sheet. And that is really the whole strategy in one sentence. Use the operational portfolio as the resilient income base, use of growth assets to create capital growth and strategic flexibility and use disciplined capital allocation to renew the portfolio without relying on equity issuance. It's that combination, which is what differentiates FGEN, resilient income today, visible operational progress across the growth assets and a credible route to self-funded NAV growth over the medium term.