Jlen Environmental: Net Asset Value, Portfolio Update and Dividend
17/05/2022 07:00
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RNS Number : 6871L JLEN Environmental Assets Group Ltd 17 May 2022
17 May 2022
JLEN ENVIRONMENTAL ASSETS GROUP LIMITED
("JLEN" or the "Company")
Net Asset Value, Portfolio Update and Dividend Declaration
Net Asset Value
JLEN, the listed environmental infrastructure fund, is pleased to announce an
unaudited Net Asset Value as at 31 March 2022 of £762.9 million (115.3 pence
per share), an increase of 14.6 pence per share since the last published NAV
as at 31 December 2021. The key drivers for this uplift are as follows:
NAV at 31 December
2021
100.7
Dividends paid in the
period
(1.7p)
Power prices (excluding assets previously held at acquisition
cost) 5.0p
Power prices (assets previously held at acquisition cost)
8.4p
Inflation
2.6p
Discount rate
changes
1.0p
Other
movements
(0.7p)
NAV at 31 March
2022
115.3p
Power prices
Short term wholesale electricty and gas prices have increased dramatically
over the last 12 months. Electricity prices for the current Summer '22 season
almost tripled from April 2021 to March 2022. Gas prices were even more
volatile with an increase of more than five times from April 2021 to the peak
during March 2022, before falling back in April 2022 to a level still more
than three times higher than a year earlier. Increases in prices across the
wind, solar and anaerobic digestion ("AD") assets, including from the effect
of replacing expiring Power Purchase Agreements ("PPAs") with new fixed price
arrangements, have increased the NAV by 5.0p.
In addition to this, a further 8.4p has been generated from changes in
electricity price assumptions at two bio-energy projects that were previously
held at acquisition cost in the 31 December 2021 valuation. These assets, ETA
Energy-from-Waste in Italy and Cramlington biomass CHP ("Cramlington") in the
UK, were acquired in the summer of 2021, prior to the subsequent significant
increases in prices that have been seen in gas and electricity markets. Both
are baseload generators and had limited fixed price contracts in place at the
time of acquisition, making them well-placed to benefit from recent rises.
JLEN's policy is to reflect contractual fixed price arrangements, where they
exist, and short term market forward prices for the next two years where they
do not. After the initial two-year period, the project cash flows assume
future electricity and gas prices in line with a blended curve informed by the
central forecasts from three established market consultants, adjusted for
project-specific arrangements and price cannibalisation as required. At the
valuation date, the extent of generation subject to fixes is as follows:
Summer '22 Winter '22
Wind 87% 69%
Solar 100% 100%
Thermal 56% 19%
AD - electric 100% 100%
AD - gas 73% 76%
On an equivalent MWh basis across the electricity and gas generating assets,
the portfolio is 76% fixed for Summer '22, 64% fixed for Winter '22 and 47%
fixed for Summer '23. When considered together with the high proportion of
revenues that are derived from subsidies and long term contracts, JLEN has a
high degree of confidence over revenues, subject to operational performance.
Inflation
The portfolio valuation includes actual inflation prior to the valuation date.
RPI inflation (being the key index referenced in subsidy and contractual
mechanisms in JLEN's portfolio) is then assumed to be 5% for the remainder of
2022, before reverting to JLEN's established assumption of 3% until 2030,
dropping to 2.25% thereafter. The combination of higher actual and near term
inflation has added 2.6p to the NAV.
Discount Rates
Discount rates have been reduced for onshore wind projects in line with
observed market benchmarks. The discount rate for JLEN's investment in
low-carbon refuelling infrastructure has also been reduced as the rollout of
new sites has continued satisfactorily. A risk premium has been added to the
discount rate for Cramlington, as this asset is the most sensitive to changes
in near term electricity prices. It is expected that the premium will be
removed progressively as uncertainty around actual prices captured reduces.
Cramlington currently has 50% of merchant revenues fixed for the current
Summer '22 season.
The net effect of changes to discount rates is to increase the NAV by 1.0p.
Portfolio update
During the financial year to 31 March 2022, the renewables portfolio of the
Company was 6% below target in terms of energy generated. Low wind resource
was a primary driver of this as the UK experienced its lowest wind speeds for
20 years over the summer months of 2021. Positive performances against
target generation came from the AD and solar portfolios. The waste and
bioenergy sub-sector, which is now the second largest contributor to
generation on the portfolio, was also below target and the Investment Manager
has been working on installing upgrades to improve resilience and value
enhancements where identified, particularly on the newly acquired assets.
The waste and wastewater concession-based projects continue to deliver
distributions in line with expectations and have performed well against
contractual targets.
The portfolio of CNG refuelling stations acquired in December 2021 performed
extremely well over the financial year and 16% more CNG was dispensed than was
targeted for the year. Two further refuelling stations were successfully
completed over the year, giving a total of eight stations with another station
due to be completed later this year.
Over the course of the year, JLEN has continued to grow its portfolio by
acquiring three new assets. This includes two assets which further diversify
the Company's portfolio into biomass CHP and energy-from-waste and two
investments into battery storage assets.
At the year end, the battery assets, one CNG refuelling station and certain
investments in European renewables projects, held through JLEN's commitment to
FEIP, are in construction and are valued at cost.
Dividend
The Company also announces a quarterly interim dividend of 1.70 pence per
share for the period from 1 January 2022 to 31 March 2022.
Together with the interim dividends paid during the financial year to date of
5.1 pence per share, the Company will have paid total dividends of 6.80 pence
per share in respect of the year ended 31 March 2022, in line with the
dividend target set out in the 2021 Annual Report.
The Company also announces an increase in the target dividend for the upcoming
financial year of 5 per cent to 7.14(1) pence per share for the financial year
to 31 March 2023.
Dividend Timetable
Ex-dividend date 2 June 2022
Record date 3 June 2022
Payment date 24 June 2022
This announcement contains information that is inside information for the
purposes of the Market Abuse Regulation (EU) No. 596/2014.
For further information, please visit www.jlen.com (http://www.jlen.com) or
contact:
Foresight Group +44(0)20 3667 8100
Chris Tanner
Chris Holmes
Winterflood Investment Trusts +44(0)20 3100 0000
Neil Langford
Chris Mills
SEC Newgate +44(0)20 3757 6882
Elisabeth Cowell
Sanne Fund Services +44(0)1481 755530
Matt Falla
Gemma Woods
About JLEN
JLEN's investment policy is to invest in a diversified portfolio of
Environmental Infrastructure. Environmental Infrastructure is defined by the
Company as infrastructure assets, projects and asset-backed businesses that
utilise natural or waste resources or support more environmentally friendly
approaches to economic activity, support the transition to a low carbon
economy or which mitigate the effects of climate change. Such investments will
typically feature one or more of the following characteristics:
· long-term, predictable cash flows, which may be wholly or partially
inflation-linked cash flows;
· long-term contracts or stable and well-proven regulatory and
legal frameworks; or
· well-established technologies, and demonstrable operational
performance.
JLEN's aim is to provide investors with a sustainable, progressive dividend
per share, paid quarterly and to preserve the capital value of the portfolio
over the long term on a real basis. The target dividend for the year to 31
March 2023 is 7.14 pence per share(1). The dividend is payable quarterly.
Further details of the Company can be found on its website www.jlen.com
LEI: 213800JWJN54TFBMBI68
(()(1)) These are targets only and not profit forecasts. There can be no
assurance that these targets will be met or that the Company will make any
distributions at all.
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