REG - JLEN Environmental - Half-year Report
27/11/2023 07:00
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RNS Number : 6694U JLEN Environmental Assets Group Ltd 27 November 2023
27 November 2023
JLEN Environmental Assets Group Limited
("JLEN" or the "Company")
Half-year results for the period to 30 September 2023
JLEN Environmental Assets Group Limited, the listed environmental
infrastructure fund, is pleased to announce the Company's half-year results to
30 September 2023.
Resilient earnings and Net Asset Value
· NAV per ordinary share of 119.7 pence (31 March 2023: 123.1
pence), a decrease of 3.4 pence from 31 March 2023
· NAV total return of 1.4% over the first six months of the year
· NAV total return since IPO of 122.9%, which is 8.8% annualised
(31 March 2023: 119.9% / 9.1% annualised)
· Portfolio valuation remains flat at £898.9m (31 March 2023:
£898.5m)
Healthy cash generation from underlying assets
· Second consecutive period of record distributions received from
investments, underpinning a dividend cover of 1.32 times for the first six
months of the financial year, or 1.54 times before payment of the Electricity
Generator Levy (31 March 2023: 1.51 times)
· Total dividends declared for the six months to 30 September 2023
of 3.78 pence, on track to meet full year target of 7.57 pence set out in the
2023 Annual Report
· Prudent project level gearing of 17.7% and overall fund gearing
of 28.7% after inclusion of JLEN's revolving credit facility (31 March 2023:
18.3% and 27.3% respectively)
Diversified portfolio reduces risk and enhances returns
· 42 assets across ten principal sectors
· Acquisitions in the period include the securing of rights to fund
a second German green hydrogen investment opportunity through JLEN's
development partner, HH2E, with final investment decision due in the coming
months
· Progress made on asset disposals to recycle capital in line with
the Company's approach to capital allocation
· Weighted average discount rate 9.4% (31 March 2023: 8.4%)
following an average increase of 0.75% since 31 March 2023, providing real
return of 6.9% above average long-term inflation assumption
· Good progress made on JLEN's development and construction stage
investments, which now account for at 9.0% of portfolio value and provide
potential for capital growth as they progress through the construction stage
and become operational
· The renewable energy generating portion of the portfolio
delivered 660GWh, an increase year on year (30 September 2022: 655GWh)
Key metrics
As at As at As at
30 September 2023 31 March 2023 30 September 2022
Net Asset Value ("NAV") £792.1m £814.6m £829.6m
NAV per share 119.7p 123.1p 125.4p
Gross Asset Value ("GAV") £1,109.8bn £1,119.8bn £1,111.4bn
Total dividend per share declared for the period 3.78p 7.14p 3.57p
Weighted Average Discount Rate ("WADR") 9.4% 8.4% 8.4%
Overall portfolio gearing 28.7% 27.3% 25.5%
Annualised Total NAV Return since IPO 8.8% 9.14% 9.5%
Dividend timetable
Ex-dividend date 7 December 2023
Record date 8 December 2023
Payment date 29 December 2023
Ed Warner, Chair of JLEN, said:
"As JLEN approaches its tenth anniversary, the Board is encouraged by the
prospects for the portfolio and proud of its track record of delivering
consistent dividend and NAV growth over its life. Our valuation during the
period has been resilient in the face of macro-economic headwinds and cash
generation from our underlying assets has been healthy.
"The Board and the Investment Manager believe that the discount to NAV at
which JLEN's shares are currently trading materially undervalues the Company,
and so represents an attractive investment opportunity. The outlook for
sustainable infrastructure investment remains positive as the UK and European
economies decarbonise to meet net zero emissions targets and find ways to live
more sustainably. We will be suitably cautious in our approach given the
prevailing uncertainties, but considering this is a long-term asset class, we
view the future with confidence."
Half-year report
A copy of the half-year report has been submitted to the National Storage
Mechanism and is available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
The half-year report is available on the Company's website at www.jlen.com
(http://www.jlen.com)
Details of the conference call for analysts and investors
A webinar for the half-year results will be held at 10:00 a.m. (UK time) on
Monday 27 November 2023, hosted by Chris Tanner and Edward Mountney,
Investment Managers to JLEN. To register for the webinar, please contact SEC
Newgate on JLEN@secnewgate.co.uk.
Presentation materials will be posted on the Company's website,
http://www.jlen.com (http://www.jlen.com) , from 9:00am.
Investor results summary video
Please follow this link to view a summary of the results, presented by
Investment Managers Chris Tanner and Edward Mountney:
https://vimeo.com/888003389 (https://vimeo.com/888003389)
This announcement contains information that is inside information for the
purposes of the Market Abuse Regulation (EU) No. 596/2014.
For further information please contact:
Foresight Group +44(0)20 3667 8100
Chris Tanner
Edward Mountney
Wilna de Villiers institutionalir@foresightgroup.eu
Winterflood Securities Limited +44(0)20 3100 0000
Neil Langford
SEC Newgate +44 (0)20 3757 6882
Elisabeth Cowell Jlen@secnewgate.co.uk
Alice Cho
Harry Handyside
Sanne Fund Services (Guernsey) Limited +44 (0)20 3530 3600
Matt Falla
Gemma Berry
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 2024 is 7.57 pence per share(1).
JLEN is an Article 9 fund under the EU Sustainable Finance Disclosure
Regulation and has a transparent and award winning approach to ESG.
Further details of the Company can be found on its website www.jlen.com
(http://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.
JLEN Environmental Assets Group Limited
Half-year Report for the six months ended 30 September 2023
ABOUT JLEN
JLEN Environmental Assets Group Limited ("JLEN" or the "Company") is an
environmental infrastructure investment fund that invests in a diversified
portfolio of assets that support the drive towards decarbonisation, resource
efficiency and environmental sustainability. The Company's portfolio
comprises 42 assets located across the UK and mainland Europe.
JLEN is Guernsey-registered with a premium listing on the London Stock
Exchange and is a constituent of the FTSE 250 index. The Company has an
award‑winning approach to Environmental, Social and Governance ("ESG").
OUR PURPOSE
JLEN aims to invest in a diversified portfolio of environmental infrastructure
that supports more environmentally friendly approaches to economic activity
whilst generating a sustainable financial return. It seeks to integrate
consideration of sustainability and ESG management into its activities, which
help to manage risks and identify opportunities.
View our half-year results highlights here:
https://vimeo.com/888003389 (https://vimeo.com/888003389)
www.jlen.com
This year, as part of our ongoing commitment to sustainability, we have taken
a "digital-first" approach, printing only a small number of copies of the
report.
OUR INVESTMENT CASE
1 Sustainable financial return
2 Diversified Portfolio
3 Expert investment management
4 Award-winning approach to ESG
Read more about our investment case on page 4 in the Annual Report 2023
JLEN provides investors with a unique opportunity to invest in a diversified
portfolio of sustainable infrastructure assets that offer long term growth and
income. The Company aims to provide its shareholders with a sustainable,
progressive dividend, paid quarterly, and to preserve the capital value of its
portfolio.
Dividend progression
2015 6.00p
2016 6.05p
2017 6.14p
2018 6.31p
2019 6.51p
2020 6.66p
2021 6.76p
2022 6.80p
2023 7.14p
2024 7.57p((1))
(1) This is a target only, there can be no guarantee this target will be
met.
JLEN has a track record of delivering predictable, sustainable returns and has
generated a Net Asset Value ("NAV") total return of 122.9% since IPO.
PERFORMANCE HIGHLIGHTS
Our results summary for the six months ended 30 September 2023.
NAV total return since IPO((1))
122.9%
(8.8% annualised)
FY 2023: 119.9%
Net Asset Value
£792.1m
FY 2023: £814.6m
Net Asset Value per share((1))
119.7p
FY 2023: 123.1p
Portfolio value
£898.9m
FY 2023: £898.5m
Dividend cover((1,2))
1.32x
(1.54x pre-EGL)((3))
FY 2023: 1.51x
Half-year dividend per share((4))
3.78p
HY 2022: 3.57p
Renewable energy generated
660GWh
HY 2022: 655GWh
GHG emissions avoided
95,788 tCO(2)e((5))
HY 2022: 96,500 tCO(2)e((5))
Tonnes of waste diverted from landfill
359,428
HY 2022: 351,500
Wastewater treated
17.3 billion litres
HY 2022: 14.5 billion litres
UK homes powered by renewable electricity((6))
123,779
HY 2022: 120,731
Summary of financial performance:
Resilient earnings and Net Asset Value ("NAV"):
· NAV per share of 119.7 pence following payment of dividends to
shareholders in line with annual targets
· Positive NAV total return of 1.4% in the period
· On track to meet full year dividend target of 7.57 pence
Record cash generation from underlying assets:
· Second consecutive period of record distributions received from
investments
· Prudent balance sheet management maintaining low levels of gearing
· £7 million reinvested into the portfolio
Diversified portfolio reduces risk and enhances returns
· Good progress on development and construction assets - unlocking
potential for capital growth
· WADR now 9.4% - providing real return of 6.9% above average
long-term inflation assumption
(1) The NAV total return, Net Asset Value per share and dividend cover are
alternative performance measures ("APMs"). The APMs within the financial
statements are defined on pages 61 to 63 of the Half-year report 2023.
(2) On a paid basis.
(3) The dividend cover is calculated after payment of the first instalment
of the EGL tax of £5.2 million. Comparative dividend cover also shows before
payment of EGL to aid comparison with prior year.
(4) On a declared basis.
(5) Despite overall energy production increasing in 2023, the avoided
emissions figure is lower for the half year 2023 than the half year 2022 -
this decrease in avoided emissions is due to the change in the composition of
the electricity produced.
(6) Excludes anaerobic digestion ("AD") portfolio.
OUR PORTFOLIO AT A GLANCE
JLEN's portfolio comprises a diversified mix of environmental infrastructure
assets.
Portfolio value split by geography
UK 92%
Rest of Europe 8%
Portfolio value split by sector
Wind 28%
Waste & bioenergy 24%
Anaerobic digestion 19%
Solar 14%
Low carbon & sustainable solutions 9%
Controlled environment 5%
Hydro 1%
Portfolio value split by operational status
Operational 91%
Construction 8%
Development 1%
Norway | 1 asset
United Kingdom | 39 assets
Germany | 1 asset
Italy | 1 asset
Total assets
42((1))
See our website for more information:
www.jlen.com/portfolio
(1) Does not include investment into Foresight Energy Infrastructure
Partners ("FEIP").
CHAIR'S STATEMENT
"In spite of a challenging operating environment, JLEN remains in a
strong position to deliver on its operational and financial objectives."
Ed Warner
Chair
On behalf of the Board, I'm pleased to report that JLEN delivered a resilient
NAV performance for the six months ended 30 September 2023.
The period under review has continued to be marked by uncertainty. Persistent
inflation and rising interest rates, both short- and long term, make it
difficult to predict the point at which the peak in the rate tightening cycle
might be reached. While electricity prices, key to the prospects for many of
JLEN's assets, were less volatile than in the preceding 12 months,
geopolitical tensions remained a troubling backdrop against which to forecast
and plan.
In spite of a challenging operating environment, JLEN remains in a strong
position to deliver on its operational and financial objectives. Whilst the
portfolio value was modestly up, NAV per share declined slightly, but the
Company continued to pay a dividend that is well covered by returns from its
diversified portfolio of environmental infrastructure assets.
JLEN's NAV per share declined by 2.8% in the period, from 123.1 pence to 119.7
pence. This is after the payment of two dividends to shareholders in the
period totalling 3.68 pence. Dividend cover in the period was 1.32 times (1.54
times prior to paying the Electricity Generator Levy ("EGL")). The Board is
pleased to be able to reaffirm the dividend target of 7.57 pence per share for
the full year.
The Board is acutely aware of the discount to NAV at which JLEN's shares and
those of its peers continue to trade in the current environment. It is very
disappointing nonetheless that JLEN's shares have dropped below their
underlying asset value. In light of this derating of JLEN's shares, the Board
has worked closely with our Investment Manager, Foresight Group, to establish
a clear, disciplined strategy for the allocation of capital that will ensure
the continued long‑term success of the Company while reflecting the
challenge and opportunity posed by the discount to NAV at which the shares
trade. This capital allocation strategy includes active consideration of
potential asset disposals, should attractive prices be achievable, that would
free up capital for deployment in other ways to benefit shareholders.
In the current market environment, capital generated from JLEN's portfolio and
from future asset sales will likely be prioritised towards existing
commitments, planned follow-on investments and asset enhancements within our
current portfolio, alongside managing the Company's credit facility to
maintain a robust balance sheet, as well as the potential for share buybacks.
The Board and the Investment Manager believe that the discount to NAV at which
JLEN's shares are currently trading materially undervalues the Company, and so
represents an attractive investment opportunity. Share buybacks consequently
form an important part of our capital allocation considerations.
The current discount to NAV has heightened significance because, when the
Company launched, the Board committed to put forward a discontinuation vote if
the Company's shares trade at an average discount of 10% or more over the
course of any financial year. The average discount at which the shares have
traded in the current financial year to date has been approximately 13%. If a
discontinuation vote is triggered, it will be proposed as a special resolution
at the 2024 Annual General Meeting. The Board is actively monitoring the share
price discount, and will be engaging with shareholders in the coming months to
discuss any concerns they may have.
As JLEN approaches its tenth anniversary, the Board is encouraged by the
prospects for the portfolio and proud of its track record of delivering
consistent dividend growth and NAV growth over its life. The outlook for
sustainable infrastructure investment remains positive as the UK and European
economies decarbonise to meet net zero emissions targets and find ways to live
more sustainably.
We will be suitably cautious in our approach given the prevailing
uncertainties, but considering this is a long-term asset class, we view the
future with confidence. Thank you to all shareholders for your continued
support.
Ed Warner
Chair
24 November 2023
THE INVESTMENT MANAGER'S REPORT
JLEN is managed by Foresight Group LLP ("Foresight" or "Foresight Group") as
its external alternative investment fund manager ("AIFM") with discretionary
investment management authority for the Company.
Chris Tanner
Investment Manager
Edward Mountney
Investment Manager
Chris Holmes
Investment Manager
For detailed biographies of the team, please see our website
https://jlen.com/
About Foresight Group
Foresight Group was founded in 1984 and is a leading listed infrastructure and
private equity investment manager with three core investment divisions:
Sustainable Infrastructure; Private Equity; and Foresight Capital Management.
With a long-established focus on ESG and sustainability‑led strategies, it
aims to provide attractive returns to its institutional and private investors
from hard-to-access private markets.
Foresight manages over 400 infrastructure assets with a focus on solar and
onshore wind assets, bioenergy and waste, as well as renewable energy enabling
projects, energy efficiency management solutions, social and core
infrastructure projects and sustainable forestry assets. Its private equity
team manages 11 regionally focused investment funds across the UK and an SME
impact fund supporting Irish SMEs. This team reviews over 2,500 business plans
each year and currently supports more than 250 investments in SMEs. Foresight
Capital Management manages four strategies across seven investment vehicles.
Foresight operates in eight countries across Europe, Australia and the
United States with assets under management ("AUM") of £12.1 billion((1)).
Foresight Group Holdings Limited listed on the Main Market of the London
Stock Exchange in February 2021 and is a constituent of the FTSE 250 index.
www.fsg-investors.com
(1) Based on unaudited AUM as at 30 September 2023.
Performance summary
The portfolio continues to benefit from the Company's diversification
strategy. Solid operational performance combined with elevated revenues from
power sales and RPI-linked cashflows underpinned a dividend cover of 1.32
times for the first six months of the financial year, or 1.54 times before
payment of the Electricity Generator Levy. The resulting cash performance of
the portfolio added 0.3 pence to the NAV this period.
Anaerobic digestion ("AD") and solar performance have been high points, with
above-budget generation, while wind and energy-from-waste have detracted due
to low wind resource and occasional unplanned outages respectively.
Electricity and gas prices have continued to fall back modestly over the
period, although JLEN continues to benefit from the practice of having a
substantial proportion of generation for both electricity and gas on fixed
price arrangements, partially insulating the portfolio from price
fluctuations. The portfolio is fixed 68% for winter 2023 and 50% for summer
2024. In addition to the changes in power prices, flexible generation revenues
available to UK battery storage projects have also reduced. The Company has
also made its first payments under the EGL.
JLEN's construction projects progressed well during the period. West Gourdie,
its first grid-scale battery storage project, started commercial operations.
The controlled environment ("CE") Glasshouse project substantially completed
and started growing the first batch of plants post the period end, and
conversations are underway with pharmaceutical companies interested in offtake
arrangements. The CE Rjukan project is progressing well and on target to begin
partial operations early in the new year.
Ongoing build‑out of construction-stage investments provide potential for
capital appreciation once they become operational and continue to provide
further diversification for the portfolio while balancing the overall risk
profile.
Market and opportunities
The investment thesis for environmental infrastructure remains strong. The
markets and opportunities remain largely unchanged from those discussed on
pages 12 to 16 in the Company's Annual Report 2023.
We continue to be very encouraged by the prospects for the Company's green
hydrogen interests in Germany through its investment in developer HH2E.
Regulatory developments underpin the case for hydrogen in key markets such as
transport and blending with natural gas. Discussions are ongoing with a range
of offtakers and we expect a significant proportion of gas produced to be
under contract at the point of financial close of the first project.
Although we continue to see opportunities across the spectrum of environmental
infrastructure, further investment into new projects will be limited in light
of the wider market position and the focus on capital allocation. Additional
deployment will be to meet existing firm commitments for construction-stage
assets and into opportunities that support or enhance the Company's
portfolio.
Risks and risk management
The Company's approach to risk governance and its risk review process, as well
as the principal risks to the achievement of the Company's objectives, remain
unchanged to those set out in the risks and risk management section on pages
38 to 48 of the Company's Annual Report 2023.
Developments in relation to those principal risks, particularly those which
could potentially have a short to medium-term impact during the period to 31
March 2024, are outlined below.
Energy prices
Energy prices have fallen back significantly from the extraordinary levels
seen during 2022 and the beginning of 2023. The Company attempts to mitigate
the valuation risks associated with forecasted power prices being different to
the actual prices achieved by using short-term price fixes and assumptions
informed by market forward prices and a blend of three different specialist
forecasters where fixes are not in place. Ongoing global events, including the
war in Ukraine and the developing crisis in Israel and the Gaza Strip which
threatens stability in the region, continue to create volatility for oil and
gas prices, with knock-on implications for wholesale markets that the
Company's assets sell into. Risks to the valuation related to power price
assumptions exist both to the upside and the downside.
Regulation and tax risk
REMA
The UK Government launched a far-ranging consultation about the future of the
GB electricity market ("REMA") in 2022, intended to ensure that market
arrangements promote affordability for consumers and energy security as the GB
system decarbonises. In some scenarios considered in the initial consultation,
the basis on which GB electricity‑generating assets and battery storage
assets in the JLEN portfolio receive revenues could be profoundly changed.
The government issued initial findings in March 2023, including confirmation
that some of the more radical proposals would not be taken forward following
market participants' feedback.
Nevertheless, options representing significant change are still being
explored, including locational pricing and splitting the wholesale market by
technology. The government has said that it will return with a further
consultation during the remainder of 2023. Realistic timelines for adoption
will probably see the current system remaining in place until the late 2020s.
Nevertheless, the assets in the Company's portfolio are long-term
infrastructure assets and there is a risk that the current basis for valuing
the assets over the long term will need to change to reflect the ultimate
outcome of REMA.
Read more about markets and opportunities on pages 12 to 16 in the Annual
Report 2023
Renewables Obligation consultation - Fixed Price Certificates
The UK Government launched a consultation into the practicalities of
introducing Fixed Price Certificates ("FPCs") into the Renewables Obligation
regime in place of Renewable Obligation Certificates ("ROCs") that are issued
to qualifying renewables generators for electricity generated. ROCs are the
primary subsidy mechanism for onshore wind and large-scale solar. While the
introduction of FPCs has always been expected and should be mildly beneficial
for ROC-based assets by removing some uncertainty, the consultation asks for
industry views on some measures that would be detrimental to the valuation of
ROC-based assets. The Investment Manager has engaged with trade bodies and
other interested investors in responding to the consultation and notes
consistent opposition to these measures; consequently the risk is assessed to
be low.
The consultation ended in October 2023 and government has not said when it
will publish its findings.
Electricity Generator Levy
The Company has made the first payments on account for tax due under the new
EGL. In doing so, the Company has taken advice on the way in which the EGL
should apply to its diversified portfolio of assets, including some that pay
for feedstock. The legislation is new and there is a moderate risk that the
calculation of tax due under the Levy is incorrect.
Inflation, interest rates and discount rates
Inflation in the UK economy has remained high over the period, giving rise to
fears for "higher for longer" interest rates to drive inflation down. Higher
inflation taken in isolation is helpful for valuations of JLEN assets as many
of them benefit from revenue streams that are explicitly linked to the Retail
Price Index ("RPI"), including ROCs, Feed-in Tariffs ("FITs") and
biomethane-producing assets under the Renewable Heat Incentive ("RHI").
However, higher interest rates have a negative effect; while the large
majority of JLEN's debt is project-level finance, fully hedged against
interest rate rises, higher interest rates read across into higher discount
rates for valuing infrastructure assets. Since 30 September 2022, the
Directors have increased discount rates for the portfolio by an average 150
bps, leading to the current weighted average discount rate of 9.4%.
Fear of prolonged high interest rates and resulting lower asset valuations is
partly responsible for the discount to NAV at which the listed renewables
infrastructure sector is trading; the current share price implies a WADR of
13.4%. This is the highest implied portfolio return since IPO. It is possible
that the end of the current rising rate cycle will lead to a reassessment of
the appropriate discount rate for assets.
Investment outlook
While the listed renewable infrastructure sector as a whole is facing
headwinds and equity markets are likely to remain closed to JLEN and its peers
for some time, the fundamental growth story for the sector and for JLEN
remains as strong as ever. In the current environment we are focusing our
efforts on laying the foundations for future NAV growth through the Company's
construction-stage assets, currently 9% of the portfolio.
These assets provide potential for capital growth as they pass through the
construction stage and become operational. We are particularly optimistic
about the outlook for green hydrogen and its potential to decarbonise many
carbon-intensive sectors of the economy, with some analysts predicting that
the green hydrogen market will grow exponentially (by 500 times) by 2050((1))
to meet net zero targets. We also remain focused on effective allocation of
capital and so have paused on starting construction of the two remaining
battery energy storage projects given the volatility seen in that market.
Although we see a healthy pipeline of potential investments, for now,
available cash generated through the portfolio will be prioritised to meet
existing capital commitments, earmarked follow-on investments and targeted
enhancements, all with the aim of maintaining and increasing the value of the
current portfolio. The Company has sufficient funding to meet its revolving
credit facility ("RCF") commitments and will consider asset disposals, as it
has successfully done before, where attractive opportunities exist to recycle
capital.
We are cautiously optimistic about the future for JLEN and the sector. We have
a strong team in place and we will continue to focus on our portfolio
management activities to ensure that the Company maximises returns from its
existing portfolio. We have confidence in the investment case, and remain
committed to continue delivering long‑term sustainable financial returns for
shareholders.
(1) The International Energy Agency - https://www.iea.org/.
Read more about risks and risk management on pages 38 to 48 in the Annual
Report 2023
INVESTMENT PORTFOLIO AND VALUATION
Investment portfolio
Diversification continues to play a key role for the Company, reducing
dependency on a single market, technology type or set of climatic conditions,
whilst allowing exposure to a wide opportunity set, as illustrated in the
analysis below at 30 September 2023, according to share of portfolio value:
Sector split
Wind 28%
Waste & bioenergy 24%
Anaerobic digestion 19%
Solar 14%
Low carbon & sustainable solutions 9%
Controlled environment 5%
Hydro 1%
Geography
UK 92%
Rest of Europe 8%
Remaining asset life((1))
Up to 10 years 9%
11 to 20 years 62%
More than 20 years 29%
Weighted average((1)) remaining asset life of the portfolio is 16.8 years.
(1) Based on project revenues from volumes/generation during the period
and assumes project cash flow distributions reflect revenue split at each
project.
Operational status
Operational 91%
Construction 8%
Development 1%
Valuation method
Discounted cash flow 92%
Cost 8%
Operator exposure
SGRE 17%
Future Biogas 16%
BWSC 11%
Brighter Green Engineering 7%
Vestas 6%
Other 43%
Asset concentration
Largest asset 11%
2nd largest asset 6%
3rd largest asset 6%
4th largest asset 5%
5th largest asset 4%
Top 6-10 16%
Other 52%
Portfolio valuation
The Investment Manager is responsible for carrying out the fair market
valuation of the Company's investments, which is presented to the Directors
for their approval and adoption. The valuation is carried out on a quarterly
basis as at 30 June, 30 September, 31 December and 31 March each year.
The valuation is based on a discounted cash flow analysis of the future
expected equity and loan note cash flows accruing to the Group from each
operational portfolio investment. Assets under construction are valued at cost
until such time as the risks associated with construction have substantially
passed. For some technologies with more complex construction activities, this
will be when the asset reaches the start of commercial operations, while for
others this may be during late-stage construction.
This valuation uses key assumptions which are recommended by Foresight using
its experience and judgement, having considered available comparable market
transactions and financial market data in order to arrive at a fair market
value. An independent verification exercise of the methodology and assumptions
applied by Foresight is performed by a leading accountancy firm and an opinion
is provided to the Directors. The Directors have satisfied themselves as to
the methodology used and the assumptions adopted and have approved the
valuation.
The Directors' valuation of the portfolio at 30 September 2023 was £898.9
million, compared to £898.5 million at 31 March 2023. The increase of £0.4
million is the net impact of new acquisitions, cash received from investments,
changes in macroeconomic, power price and discount rate assumptions, and
underlying growth in the portfolio. A reconciliation of the factors
contributing to the growth in the portfolio during the period is shown in the
chart in the Half-year report 2023.
The movement in value of investments during the period ended 30 September 2023
is shown in the table below:
30 Sep 2023 31 Mar 2023
£m £m
Valuation of portfolio at opening balance 898.5 795.4
Acquisitions in the period (including deferred consideration) 30.0 72.1
Cash distributions from portfolio (46.2) (83.6)
Rebased opening valuation of portfolio 882.3 783.9
Changes in forecast power prices (17.4) 57.7
Changes in economic assumptions 13.5 67.7
Changes in discount rates (31.4) (39.1)
Changes in exchange rates (0.7) 1.0
Balance of portfolio return 52.6 27.3
Valuation of portfolio 898.9 898.5
Fair value of intermediate holding companies (104.8) (81.7)
Investments at fair value through profit or loss 794.1 816.8
Allowing for investments of £30.0 million (including deferred consideration)
and cash receipts from investments of £46.2 million, the rebased valuation is
£882.3 million. The portfolio valuation at 30 September 2023 is £898.9
million (31 March 2023: £898.5 million), representing an increase over the
rebased valuation of 1.9% during the period.
Valuation assumptions
Each movement between the rebased valuation and the 30 September 2023
valuation is considered below:
Forecast power prices
The project cash flows used in the portfolio valuation at 30 September 2023
reflect contractual fixed price arrangements under PPAs, 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 by the
Investment Manager for project-specific arrangements and price
cannibalisation.
For the Italian investment, project cash flows assume future electricity
prices informed by a leading independent market consultant's long‑term
projections.
The overall change in forecasts for future electricity and gas prices compared
to forecasts at 31 March 2023, net of the EGL, has decreased the valuation of
the portfolio by £17.4 million.
The graph in the Half-year report 2023 represents the UK blended weighted
power curve used by the Company, reflecting the forecast of three leading
market consultants, adjusted by the Investment Manager to reflect PPA/GPA
discounts as well as its judgement of capture discounts and a normalised view
across the portfolio of expectations of future price cannibalisation resulting
from increased penetration of low marginal cost, intermittent generators on
the GB network.
Revenue analysis
The graph in the Half-year report 2023 shows the way in which the revenue mix
of the portfolio changes over time for future financial years, given the
assumptions made regarding future power prices set out above. As expected,
merchant revenues increase in later years as the subsidies that projects
currently benefit from expire.
On a net present value ("NPV") basis (using the discount rate applicable to
each project), the relative significance of each revenue category illustrated
is as follows:
Revenue NPV
Subsidy 46%
Merchant power 29%
Long term contracts 11%
Flexible generation 4%
Other merchant revenues 10%
Energy generating portfolio
JLEN's energy generating portfolio includes wind, solar, anaerobic digestion,
biomass, EfW and hydropower investments. Revenues in these projects typically
consist of a combination of government-backed inflation-linked subsidies,
short-term price fixes contracted under a PPA, merchant revenue or other
revenues such as those earned from private wire contracts.
Although merchant prices remain elevated compared to long-term projections,
there is clear evidence of a decline since the record highs seen during 2022.
The Company seeks to minimise the impact of power price volatility by
maintaining a programme of rolling price fixes for its energy generating
projects, typically having the majority of projects on fixed price
arrangements in the near term.
At 30 September 2023, 68% of the renewable energy portfolio's electricity and
gas price exposure was subject to fixed prices for the winter 2023/24 season
and 50% for the summer 2024 season. See the power price hedging section in the
operational review of the Half-year report 2023 for more detail about the
latest price fixes in place across the portfolio.
The proportion of Fund revenues that come from the sale of merchant
electricity and gas is 24% and 5%, respectively. Despite elevated energy
prices, merchant power revenue remains a low proportion and reflects the
broader diversification of JLEN's portfolio.
Development-stage investments are not included within the revenue and other
analyses in this section due to the nature of their early stage investment
lifecycle.
Waste and wastewater treatment concessions
This category consists of availability-based assets structured under the
Private Finance Initiative ("PFI")/Public Private Partnership ("PPP")
procurement models, whereby revenue is derived from long-term contracts with
local authorities.
Other non-energy generating portfolio
The desire to mitigate the effects of climate change stimulates not only
opportunities connected to the energy transition but also in wider
environmental infrastructure that has improved sustainability credentials over
traditional infrastructure approaches in sectors such as transport and food
production.
This is reflected in JLEN's diversified portfolio, which includes both
grid-scale batteries and non-energy generating assets such as low carbon
transport (CNG Foresight) and controlled environment projects, CE Glasshouse
(sustainable agriculture) and CE Rjukan (sustainable aquaculture).
Low carbon transport
In the case of JLEN's investment into CNG Foresight, a portfolio of compressed
natural gas ("CNG") refuelling stations for heavy goods vehicles located
across the UK, the sites generate revenue through a specified margin on CNG
dispensed.
Per the terms of the fuel supply contracts, the asset reserves the right to
revise pricing to reflect changes in the wholesale price of natural gas and
fuel duty, and will annually adjust prices (upwards only) in line with
inflation.
Batteries
JLEN's portfolio includes one operational and three c.50MW Battery Energy
Storage Systems at varying stages of construction at 30 September 2023.
Independent market analysis continues to indicate the importance of
prioritising the capture of trading margins over the finite opportunity from
revenues generated by the provision of grid services. Therefore, merchant
revenues are likely to make up the largest part of the revenue model for these
assets.
Whilst these investments do not currently have long-term contractual inflation
linkage, revenues are driven by a margin over costs which is expected to be
sustained regardless of inflation.
Controlled environment
Controlled environment projects typically face a greater level of market risk
than environmental infrastructure projects with subsidy support or long-term
contracts. Therefore, the Company has only invested in projects that enjoy a
privileged market position over competitors, for example due to physical
location, technology or product differentiation.
In the case of JLEN's glasshouse, Foresight's investment is primarily built
around the debt service on its senior secured shareholder loan, with some
equity participation over time from growth of the underlying horticultural
products. The glasshouse is co-located with an existing JLEN anaerobic
digestion facility, which itself will receive an additional source of revenue
via a private wire supplying low carbon heat and power to the glasshouse.
Wastage from the glasshouse produce may also be returned to the AD digester,
creating a circular ecosystem.
In the case of CE Rjukan, revenues will primarily be generated from the
production of approximately 8,000 tonnes of trout annually, once the site is
fully operational in 2025. This will be sold to European and international
salmonid markets via an offtake agreement with an established Norwegian
seafood distribution company with global reach.
The CE Rjukan investment case is built on the premise of achieving average
historic prices evidenced by the Fish Pool Index; however, our experienced
operational partner is targeting sales at levels between c.5% and 50% higher
than this, underpinned by the higher quality of fish production at CE Rjukan
versus the typical fish sold in commodity-based markets.
Whilst these investments do not currently have long-term contractual inflation
linkage, the projects retain pricing power and are able to increase prices to
maintain margins as the underlying cost base inflates.
The degree of contractual inflation linkage of each category illustrated above
is as follows:
The Company's diversification strategy ensures the portfolio benefits from a
significant proportion of contracted revenues and revenues earned by
non-energy generating assets. Under current forecasts, dividend cover is
expected to be healthily covered for the years ahead, with a particularly
strong year forecast next financial year - where the Company will benefit from
several high price fixes secured in recent years.
Useful economic lives
Useful economic lives ("UELs") of assets are based on the Investment Manager's
estimates of the period over which the assets will generate revenue and are
periodically reviewed for continued appropriateness. The assumption used for
the useful life of investments is the lower of lease duration and 35 years for
solar assets, 30 years for wind farms and 20 years for anaerobic digestion
facilities - being the life of the RHI subsidy, after which point the
Investment Manager conservatively assumes that facilities will cease to
operate.
In light of growing evidence to suggest AD facilities may be able to
successfully operate for longer durations, the Investment Manager has provided
a sensitivity on page 17 of the Half-year report 2023 to illustrate the
potential impact on extending the maximum UEL for AD by five years to 25
years.
Economic assumptions
The valuation reflects an uplift in inflation assumptions based on a
combination of actual historic inflation and recent independent economic
forecasts.
Valuation assumptions for operational assets are set out below:
Economic assumptions used in the portfolio valuation (31 March 2023 figures
shown in brackets)
2023
Forecast Full year
Oct 23-Dec 23 equivalent
2024 2025 2026 2027 2028 2029 2030+
UK
RPI 6.5% 6.7% 3.5% 3.0% 3.0% 3.0% 3.0% 3.0% 2.25%
(6.5%) (3.0%) (3.0%) (3.0%) (3.0%) (3.0%) (3.0%) (2.25%)
CPI 4.6% 4.77% 2.5% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25%
(4.4%) (2.25%) (2.25%) (2.25%) (2.25%) (2.25%) (2.25%) (2.25%)
Deposit rates 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
(2.0%) (1.5%) (1.5%) (1.5%) (1.5%) (1.5%) (1.5%) (1.5%)
Corporation tax 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
(25.0%) (25.0%) (25.0%) (25.0%) (25.0%) (25.0%) (25.0%) (25.0%)
Italy
Inflation 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
(5.3%) (2.9%) (2.2%) (1.9%) (1.8%) (2.0%) (2.0%) (2.0%)
Deposit rates - - - - - - - - -
- - - - - - - -
Corporation tax (IRES) 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0%
(24.0%) (24.0%) (24.0%) (24.0%) (24.0%) (24.0%) (24.0%) (24.0%)
Regional tax (IRAP) 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8%
(4.8%) (4.8%) (4.8%) (4.8%) (4.8%) (4.8%) (4.8%) (4.8%)
The euro/sterling exchange rate used to value euro-denominated investments was
€1.15/£1 at 30 September 2023 (€1.14/£1 at 31 March 2023).
The overall uplift in value resulting from changes to economic assumptions in
the period is £13.5 million.
Discount rates
The discount rates used in the valuation exercise represent the Investment
Manager's and the Board's assessment of the rate of return for assets with
similar characteristics and risk profile. The market discount rates are
reviewed on a regular basis and updated to reflect changes in the market and
in the project risk characteristics.
Reflecting the sustained increase in UK gilt yields since the start of the
year, discount rates have been increased by an average of 0.75% since 31 March
2023 - of which 0.50% was applied at the 30 June 2023 valuation and a further
0.25% at the 30 September 2023 valuation date.
In addition to gilt driven changes, the weighted average discount rate has
also increased as a result of continued investment into JLEN's ongoing
construction projects, with discount rates in excess of the portfolio weighted
average.
Mitigating these movements is a reduction in the discount rate applied to
JLEN's controlled environment glasshouse investment, reflecting successful
delivery of key construction milestones as the project nears operational
status. The impact of the change is an uplift in value of £4.2 million (0.6
pence per share).
As in previous valuations, the discount rate used for energy generating asset
cash flows which have received lease extensions beyond the initial investment
period of 25 years retains a premium of 1% for subsequent years, reflecting
the merchant risk of the expected cash flows beyond the initial 25-year
period.
Taking the above into account and including an increase in the number and
value of assets in construction, the overall weighted average discount rate
("WADR") of the portfolio is 9.4% at 30 September 2023 (31 March 2023: 8.4%).
The WADR applied to each of the principal operational sectors within the
portfolio is displayed in the table in the Half-year report 2023, noting this
represents a blend of levered and unlevered investments and therefore the
relevant gearing of each sector is also shown.
Weighted average Gearing
discount rate
Wind 8.7% 35%
Waste & bioenergy 9.9% 11%
Anaerobic digestion 8.6% --
Solar 7.6% 9%
Batteries 10.6% -
Hydropower 8.0% 42%
Aggregate portfolio 9.4% 17.7%
Sectors in which the Investment Manager retains proprietary information, such
as controlled environment and low carbon transport, are not disclosed in the
table above, although discount rates used in these sectors feed into the
portfolio WADR of 9.4%.
The overall decrease in value resulting from changes to discount rates in the
period is £31.4 million.
Balance of portfolio return
This represents the balance of valuation movements in the period excluding the
factors noted above. The balance of the portfolio return mostly reflects the
impact on the rebased portfolio value, all other measures remaining constant,
of the effect of the discount rate unwinding and also some additional
valuation adjustments from updates to individual project assumptions. The
total represents an uplift of £52.6 million.
Of this, in addition to the discount rate unwind, the key valuation
adjustments include an uplift of £11.7 million (1.8 pence per share) arising
from a sustained uplift in pricing for Renewable Energy Guarantees of Origin
("REGO") certificates and Green Gas Certificates ("GGCs") achieved by the
portfolio. REGO prices are now assumed to be £5/MWh until 2028 and £2/MWh
for the remaining life of the asset (31 March 2023: £5/MWh for 2024, £3/MWh
for 2025 and £0.45/MWh thereafter).
In addition to this, the Company has recognised a number of other low-value
cost adjustments and generation reforecasts following the normal course of
ongoing reassessment throughout the period.
Valuation sensitivities
The Net Asset Value ("NAV") of the Company is the sum of the discounted values
of the future cash flows of the underlying asset financial models,
construction and development spend, the cash balances of the Company and UK
HoldCo, and the other assets and liabilities of the Group less Group debt.
The portfolio valuation is the largest component of the NAV and the key
sensitivities are considered to be the discount rate applied in the valuation
of future cash flows and the principal assumptions used in respect of future
revenues and costs.
A broad range of assumptions is used in our valuation models. These
assumptions are based on long‑term forecasts and are not affected by
short‑term fluctuations in inputs, whether economic or technical. The
Investment Manager exercises its judgement in assessing both the expected
future cash flows from each investment based on the project's life and the
financial models produced by each project company and the appropriate discount
rate to apply.
The sensitivities below include the impact of the Electricity Generator Levy.
The key assumptions are as follows:
Discount rate
The WADR of the portfolio at 30 September 2023 was 9.4% (31 March 2023: 8.4%).
A variance of plus or minus 0.5% is considered to be a reasonable range of
alternative assumptions for discount rates.
An increase in the discount rate of 0.5% would result in a downward movement
in the portfolio valuation of £19.8 million (3.0 pence per share) compared to
an uplift in value of £20.7 million (3.1 pence per share) if discount rates
were reduced by the same amount.
Volumes
Base case forecasts for intermittent renewable energy projects assume a "P50"
level of electricity output based on reports by technical consultants. The P50
output is the estimated annual amount of electricity generation (in MWh) that
has a 50% probability of being exceeded - both in any single year and over the
long term - and a 50% probability of being underachieved. Hence the P50 is the
expected level of generation over the long term.
The P90 (90% probability of exceedance over a 10‑year period) and P10 (10%
probability of exceedance over a 10‑year period) sensitivities reflect the
future variability of wind, hydropower and solar irradiation and the
uncertainty associated with the long‑term data source being representative
of the long-term mean.
Separate P10 and P90 sensitivities are determined for each asset and
historically the results presented on the basis they are applied in full to
all wind, hydro and solar assets. This implies individual project
uncertainties are completely dependent on one another; however, a Portfolio
Uncertainty Benefit analysis performed by a third-party technical adviser
identified a positive portfolio effect from investing in a diversified asset
base.
That is to say that the lack of correlation between wind, hydro and solar
variability means P10 and P90 sensitivity results should be considered
independent. Therefore, whilst the overall P90 sensitivity decreases NAV by
5.9 pence per share, the impact from wind, hydro and solar separately is only
4.3 pence per share, 0.2 pence per share and 1.4 pence per share respectively,
as shown in the chart overleaf.
Agricultural anaerobic digestion facilities do not suffer from similar
deviations as their feedstock input volumes (and consequently biogas
production) are controlled by the site operator.
For the waste & bioenergy projects, forecasts are based on projections of
future input volumes and are informed by both forecasts and independent
studies where appropriate. Revenues in the PPP projects are generally not very
sensitive to changes in volumes due to the nature of their payment
mechanisms.
Electricity and gas prices
Electricity and gas price assumptions are based on the following: for the
first two years, cash flows for each project use forward electricity and gas
prices based on market rates unless a contractual fixed price exists, in which
case the model reflects the fixed price followed by the forward price for the
remainder of the two‑year period. For the remainder of the project life, a
long‑term blend of central case forecasts from three established market
consultants and other relevant information is used, and adjusted by the
Investment Manager for project-specific arrangements and price
cannibalisation.
The sensitivity assumes a 10% increase or decrease in power prices relative to
the base case for each year of the asset life. While power markets can
experience movements in excess of +/-10% on a short‑term basis, as has been
the case recently, the sensitivity is intended to provide insight into the
effect on the NAV of persistently higher or lower power prices over the whole
life of the portfolio. The Directors feel that +/-10% remains a realistic
range of outcomes over this very long time horizon, notwithstanding that
significant movements will occur from time to time.
An increase in electricity and gas prices of 10% would result in an uplift in
the portfolio valuation of £38.5 million (5.8 pence per share) compared to a
downward movement in value of £38.7 million (5.9 pence per share) if prices
were reduced by the same amount.
Should electricity and gas prices fall by 50%, the Company would maintain a
resilient dividend cover for the next three financial years, with the dividend
being fully covered for two years if prices fell by 100% to £0/MWh and 95%
covered in the third year.
Useful economic lives
In line with JLEN's original investment case for anaerobic digestion, the
Company continues to apply the conservative valuation assumption that
facilities will simply cease to operate beyond the life of their RHI tariff.
In recent months, the Investment Manager has seen a growing case of evidence,
including several transactional datapoints, pointing towards a positive change
in market sentiment for valuing these assets - including the potential to run
anaerobic digestion facilities on an unsubsidised basis.
In light of this change, the Investment Manager has provided a sensitivity
extending the useful economic lives of its AD portfolio by up to five years -
capped at the duration of land rights already in place. Such an extension
would result in an uplift in the portfolio valuation of £22.8 million (3.5
pence per share).
Uncontracted revenues on non-energy generating portfolio
Non-energy generating assets, such as batteries and controlled environment
agriculture and aquaculture are not materially affected by either scarcity of
natural resource nor power price markets. Therefore, the Investment Manager
has presented a sensitivity illustrating an assumed 10% change in all
uncontracted revenues for each year of the asset lives.
An increase in uncontracted revenues of 10% would result in an upward movement
in the portfolio valuation of £14.2 million (2.2 pence per share) compared to
a decrease in value of £18.7 million (2.8 pence per share) if those revenues
were reduced by the same amount.
Feedstock prices
Feedstock accounts for over half of the operating costs of running an AD
plant. As feedstocks used for AD are predominantly crops grown within existing
farming rotation, they are exposed to the same growing risks as any
agricultural product. The sensitivity assumes a 10% increase or decrease in
feedstock prices relative to the base case for each year of the asset life.
An increase in the feedstock prices of 10% would result in a downward movement
in the portfolio valuation of £7.6 million (1.1 pence per share) compared to
an uplift in value of £7.5 million (1.1 pence per share) if prices were
reduced by the same amount.
No such sensitivity is applicable to JLEN's biomass investment, where fuel
costs are tied under long-term contract.
Inflation
Most projects in the portfolio receive a revenue stream which is either fully
or partially inflation‑linked. The inflation assumptions are described in
the macroeconomic section on page 13 of the Half-year report 2023. The
sensitivity assumes a 0.5% increase or decrease in inflation relative to the
base case for each year of the asset life.
An increase in the inflation rates of 0.5% would result in an uplift in the
portfolio valuation of £18.3 million (2.8 pence per share) compared to a
decrease in value of £19.5 million (2.9 pence per share) if rates were
reduced by the same amount.
In light of the current economic environment, actual near-term inflation may
vary from assumptions applied within the portfolio valuation. For illustrative
purposes, where inflation is higher than JLEN's valuation assumption by 2% for
the next two years, NAV would be expected to increase by £18.0 million (2.7
pence per share).
Euro/sterling exchange rates
As the proportion of the portfolio assets with cash flows denominated in euros
represents a small proportion of the portfolio value at 30 September 2023, the
Directors consider the sensitivity to changes in euro/sterling exchange rates
to be insignificant.
Corporation tax
The UK corporation tax assumptions applied in the portfolio valuation are
outlined in the notes to the accounts on page 56 of the Half-year report 2023.
The sensitivity below assumes a 2% increase or decrease in the rate of UK
corporation tax relative to the base case for each year of the asset life.
An increase in the UK corporation tax rate of 2% would result in a downward
movement in the portfolio valuation of £14.6 million (2.2 pence per share)
compared to an uplift in value of £14.0 million (2.1 pence per share) if
rates were reduced by the same amount.
Sensitivities - impact on NAV at 30 September 2023
The chart in the Half-year report 2023 shows the impact of the key
sensitivities on NAV per share, with the £ labels indicating the impact of
the sensitivities on portfolio value.
Investment portfolio
At 30 September 2023, the Group's investment portfolio comprised interests in
42 investments into several European projects through its investment in FEIP.
Capacity Commercial operations date
Type Asset Location Ownership (MW)
Wind Bilsthorpe England 100% 10.2 Mar 2013
Burton Wold Extension England 100% 14.4 Sep 2014
Carscreugh Scotland 100% 15.3 Jun 2014
Castle Pill Wales 100% 3.2 Oct 2009
Dungavel Scotland 100% 26.0 Oct 2015
Ferndale Wales 100% 6.4 Sep 2011
Hall Farm England 100% 24.6 Apr 2013
Llynfi Afan Wales 100% 24.0 Mar 2017
Moel Moelogan Wales 100% 14.3 Jan 2003 & Sep 2008
New Albion England 100% 14.4 Jan 2016
Wear Point Wales 100% 8.2 Jun 2014
Total 161.0
Waste & bioenergy Bio Collectors waste management England 70% 11.7((1)) Dec 2013
Codford Biogas waste management England 100% 3.8((2)) 2014
ELWA waste management England 80% n/a 2006
Cramlington biomass combined heat and power England 100% 32.0((3)) 2018
Energie Tecnologie Ambiente ("ETA") energy‑from-waste Italy 45%((4)) 16.8 2012
Tay wastewater treatment Scotland 33% n/a Nov 2001
Total 64.3
Anaerobic digestion Biogas Meden England 100% 5.0((5)) Mar 2016
Egmere Energy England 100% 5.0((6)) Nov 2014
Grange Farm England 100% 5.0((6)) Sep 2014
Icknield Farm England 53% 5.0((5)) Dec 2014
Merlin Renewables England 100% 5.0((6)) Dec 2013
Peacehill Farm Scotland 49% 5.0((7)) Dec 2015
Rainworth Energy England 100% 2.2((2)) Sep 2016
Vulcan Renewables England 100% 13((6)) Oct 2013
Warren Energy England 100% 5.0((6)) Dec 2015
Total 50.2
Solar Amber England 100% 9.8 Jul 2012
Branden England 100% 14.7 Jul 2013
CSGH England 100% 33.5 Mar 2014 & Mar 2015
Monksham England 100% 10.7 Mar 2014
Panther England 100% 6.5 2011-2014
Pylle Southern England 100% 5.0 Dec 2015
Total 80.2
Low carbon & sustainable West Gourdie battery storage Scotland 100% n/a June 2023
solutions
Clayfords battery storage Scotland 50% n/a Ready to build
Lunanhead battery storage Scotland 50% n/a Ready to build
Sandridge battery storage England 50% n/a Under construction
CNG Foresight low carbon transport England 25%((8)) n/a Various
HH2E green hydrogen Germany n/a n/a Development phase
Total n/a
Controlled Glasshouse England Minority stake n/a Under construction
environment
Rjukan aquaculture system Norway Minority stake n/a Under construction
Total n/a
Hydro Northern Hydropower England 100% 2.0((9)) Oct 2011 & Oct 2017
Yorkshire Hydropower England 100% 1.8((9)) Oct 2015 & Nov 2016
Total 3.8
FEIP Avalon solar and green hydrogen Spain n/a n/a Development
JLEN has committed €25 million to FEIP
Carna pumped storage hydro and co-located wind Scotland n/a n/a Under construction
Kölvallen wind Sweden n/a n/a Under construction
MaresConnect interconnector Republic of Ireland n/a n/a Development and under construction
Puskakorpi wind Finland n/a n/a Under construction
Quartz battery storage England n/a n/a Development
Skaftåsen Vindkraft AB wind Sweden n/a n/a Under construction
Torozos wind Spain n/a n/a Dec 2019
85 Degrees geothermal heat Netherlands n/a n/a Operational/under construction
Beleolico Italy n/a n/a July 2022
Blue Jay Scotland n/a n/a Development and under construction
Total n/a
Total portfolio Total 359.5
(1) 10MWth and an additional 1.7MWe capacity through two CHP engines.
(2) Electrical exporting plant measured as MWe.
(3) 26MWe (electrical) and 6MWth (thermal).
(4) Not including FEIP's 45% ownership.
(5) MWth (thermal) and an additional 0.4MWe CHP engine for onsite power
provision.
(6) MWth (thermal) and an additional 0.5MWe CHP engine for onsite power
provision.
(7) MWth (thermal) and an additional 0.25MWe CHP engine for onsite power
provision.
(8) JLEN holds 25% of the "A" shares. "A" shares have a different economic
entitlement than "B" shares, including a priority return.
(9) Includes a 1.2MW battery storage.
OPERATIONAL REVIEW
The portfolio has performed well, with financial performance delivering a
covered dividend of 1.32 times for the first six months of the financial year,
or 1.54 times prior to payment of the Electricity Generator Levy, reinforcing
the view that the dividend will be strongly covered by cash generated for the
full financial year.
Investment performance
The NAV per share at 30 September 2023 was 119.7 pence, down from 123.1 pence
at 31 March 2023.
JLEN has announced an interim dividend of 1.89 pence per share for the quarter
ended 30 September 2023, payable on 29 December 2023, in line with the
full‑year target of 7.57 pence per share for the year ending 31 March 2024
as set out in the Annual Report 2023.
The Fund experienced a solid six months of financial performance, narrowly
missing its budget by 4.1%. The portfolio provided good operational
performance, with variances to budget primarily arising from changes in power
prices since the start of the year or temporary working capital fluctuations
which will be recouped prior to the year end.
Financial performance
As the portfolio diversifies and the proportion of non-energy generating
assets increases, the Investment Manager has presented detailed information to
better illustrate the financial performance of all sectors within the
portfolio.
The chart in the Half-year report 203 shows the budgeted proportion of cash
distributions forecast to be received from underlying investments at the start
of the financial year, versus the relative over or under-performance during
the period under review.
The average all-in price received by the differing technology classes in the
UK for their energy volumes generated in the six months ended 30 September
2023 is shown in the table below:
Half year ended Year ended
Average all‑in energy price 30 Sep 2023 31 Mar 2023
Wind £140.89 per MWhe £383.29 per MWhe
AD electric £306.71 per MWhe £197.99 per MWhe
AD gas-to-grid £142.04 per MWhth £128.59 per MWhth
Biomass £230.75 per MWhe £306.92 per MWhe
Energy-from-waste €95.36 per MWhe €128.73 per MWhe
Solar £243.63 per MWhe £241.82 per MWhe
Hydro £279.77per MWhe £285.66 per MWhe
Power price hedging
JLEN's exposure to wholesale power prices is mitigated by the practice of
having a substantial proportion of generation for both electricity and gas on
fixed price arrangements for durations ranging from six months out to three
years. The extent of generation subject to fixes at 30 September 2023 is as
follows:
Winter 2023 Summer 2024 Winter 2024 Summer 2025
Wind 98% 79% 74% 38%
Solar 100% 100% 80% -
Biomass - - - -
Energy-from-waste - - - -
AD - electric 100% 63% 63% 26%
AD - gas 72% 46% 48% 23%
Hydro 39% - - -
Weighted average 68% 50% 48% 22%
The Investment Manager continues to monitor the market beyond September 2025
for opportunities to fix prices to mitigate risk across the portfolio.
Renewable energy generating assets
The chart in the Half-year report 2023 shows the forecast generation target
expected to be achieved at the start of the financial year, versus the
relative sector-level over or under-performance against this target during the
period under review.
Over this half-year period the renewables segment of the portfolio produced
660GWh (six months to 30 September 2022: 655GWh) of energy, 1.58% below
target. The negative variance against the target can be attributed to
unseasonably low wind speeds being experienced in the first quarter of the
financial year (April to June 2023). Particularly good performances were
recorded for the agri-AD and hydro portfolios, both being >5% above the
sector targets. All other technologies were at or above the generation targets
for the period.
Anaerobic digestion
The AD portfolio is the largest producer of energy on a GWh basis and
generated 38% of the GWh energy produced by the JLEN portfolio to 30 September
2023. Generation (measured in GWh thermal generated) was 250GWh, 5% ahead of
the sector target, continuing the trend of outperformance that has been seen
since the Fund started to acquire AD assets in 2017.
Notable strong performers were Peacehill Gas and Icknield, which significantly
outperformed their generation targets by more than 10%. All other sites, with
the exception of Grange Farm Energy, exceeded their generation targets.
Due to the optimal growing conditions experienced over the summer, the maize
yields realised in the 2023 harvest have met or exceeded expectations, which
have allowed specific sites to replenish their buffer stocks following the
difficult 2022 harvest. Feedstock prices appear to have stabilised following
the reduction fertiliser prices.
Waste & bioenergy
The renewable energy generating segment of the waste & bioenergy portfolio
is the second largest producer of energy on a GWh basis and generated 32% of
the GWh energy produced by the JLEN portfolio to 30 September 2023. The waste
& bioenergy portfolio generated 210GWh over the period to 30 September
2023, 0.4% below its sector target.
The Cramlington biomass plant has recovered extremely well following the
completion of the remedial works in early 2023. Power generation was 4% above
the generation targets set for this period. Cramlington makes up over 50% of
the waste & bioenergy portfolio's generating capacity.
The minor negative variance is explained by occasional unplanned outages at
the Italian energy-from-waste plant in June. This was a standard piece of
maintenance work required to service the boiler.
Wind
Electricity generation from the wind assets of 142GWh (representing 22% of the
portfolio's energy generation for the period) was 13.6% below its sector
target due to below‑average wind resource during the period. Total
availability for the portfolio was 1.5% below the anticipated levels due to
unrelated mechanical issues experienced at four of the wind assets. One of the
events involved a gearbox failure which is expected to be compensated via the
O&M Liquidated Damages mechanism.
Solar
The solar portfolio generated 55GWh (representing 8% of the portfolio's energy
generation for the period), and was 1.9% above its sector generation target.
Both high irradiance levels and good availability across the portfolio
contributed to the overperformance recorded for this sector. The Amber and
Brandon sites were impacted by Distribution Network Operator ("DNO") outages
and inverter issues resulting in periods of curtailed export. The latter is
being investigated by the asset managers.
Hydro
The hydro portfolio generated 2GWh (which represents less than 1% of the
portfolio's energy generation for the period) and saw a 6.3% positive variance
against its sector target. The overperformance was due to high rainfall levels
in April 2023 and good operational availability throughout the period.
Assets that support the transition to a lower carbon economy
Waste processing assets
Waste tonnages processed at the ELWA waste project have continued at levels
above target. Operational performance targets are consistently exceeded with
diversion from landfill at 99.98%, substantially ahead of the 67% contract
target. Recycling, at 32%, is ahead of the 22% target.
Tay Wastewater plant in Scotland performed well, with no operational or
performance issues in the half‑year period.
Both projects continue to perform well financially.
Low carbon transport
The portfolio of CNG refuelling stations continues to grow and now consists of
11 operational refuelling stations following the completion of sites at Newton
Aycliffe and Corby, plus the acquisition of the existing site at Newark. A
further two sites are currently under construction, bringing the total to 13.
Over the period, the portfolio has performed 3.5% below its fuel dispensed
target, due mainly to problems in the supply chain delaying customer uptake of
CNG fuelled vehicles. The asset manager has however recently reported that
vehicle delivery durations are expected to shorten, resulting in an increase
in the expected number of CNG vehicles to be onboarded in the coming six
months.
Battery storage assets
Operational assets
The operational batteries that are co-located at two of the Company's hydro
assets were traded exclusively in Firm Frequency Response over the period,
receipts for which were in line with expectations.
Construction and development projects
Battery storage assets
JLEN owns three construction-stage 49.9MW battery storage assets in the UK.
While there have been delays to the construction of the two sites acquired in
2021/22 due to increased lead times for components and grid connection delays,
we are pleased that the West Gourdie project concluded its construction phase
in May 2023. Achieving this key project milestone enabled the asset to enter
its operational phase and actively trade.
The Sandridge project continues to progress through its construction phase and
is expected to conclude and commence operations in 2024. The Investment
Manager has paused starting construction of the two remaining battery energy
storage projects, Lunanhead and Clayfords, given the volatility seen in that
market.
Controlled environment
Rjukan project
The CE aquaculture project, Rjukan, is on track to meet its operational
commencement date in 2024.
Glasshouse project
The construction phase of the CE agriculture Glasshouse project substantially
completed. The first batch of plants has been received and the facility is on
track to begin partial operations this year.
Green hydrogen
HH2E development platform
JLEN's first investment into the green hydrogen sector is expected to reach
the Final Investment Decision in the coming months.
Acquisitions
Lubmin green hydrogen investment
In July, the Company announced its second green hydrogen development
opportunity alongside a consortium including other Foresight-managed funds and
its development partner HH2E, a specialist in developing green hydrogen
projects to decarbonise industry. The production site is located in Lubmin,
Germany. The consortium of investors has approved the Preliminary Investment
Decision and the initial investment of up to €9.2 million is being utilised
for detailed engineering designs and the procurement of long lead items. The
Final Investment Decision is expected in the coming months.
Other investments
Given JLEN's broad mandate, its investment activities can overlap with other
Foresight-managed funds. Foresight maintains a clear allocation policy that
sets out the way in which common interest in an investment across funds shall
be managed. In keeping with this policy, JLEN currently is co-invested in
seven projects with other Foresight funds, enabling JLEN to achieve greater
diversification with the same level of funds and amplifying JLEN's influence
on these assets. All co-investments have market-standard shareholder
protections and are ultimately subject to the approval of JLEN's Board, which
will take independent advice as appropriate.
FEIP
In January 2020, JLEN announced a commitment of €25 million to Foresight
Energy Infrastructure Partners SCSp ("FEIP"), a Luxembourg limited partnership
investment vehicle. At 30 September 2023, €14.9 million had been drawn on
this commitment.
Financing
In May 2021, JLEN announced that it had signed a new revolving credit facility
("RCF") with a three-year facility agreement which provides for a committed
multi‑currency RCF of £170 million and an uncommitted accordion facility of
up to £30 million. In April 2023, JLEN announced that it had signed a
one-year extension to its RCF and activated the accordion facility.
The RCF provides an increased source of flexible funding outside of equity
raisings, with both sterling and euro drawdowns available. The facility will
be used to make future acquisitions of environmental infrastructure to add to
the current portfolio, as well as covering any working capital requirements.
The interest charged in respect of the renewed RCF is linked to the Company's
ESG performance, with JLEN incurring a premium or discount to its margin and
commitment fee based on performance against defined targets. Those targets
include:
· environmental: increase in the volume of clean energy produced;
· social: the value of contributions to community funds; and
· governance: maintaining a low number of work‑related accidents,
as defined under the Reporting of Injuries, Diseases and Dangerous Occurrences
("RIDDOR") by the Health and Safety Executive.
Performance against these targets will be measured annually with the cost of
the RCF being amended in the following financial year. Lenders to the facility
include HSBC, ING, National Australia Bank, Royal Bank of Scotland and
Clydesdale Bank. The margin can vary between 195 bps and 205 bps over SONIA
("Sterling Overnight Index Average") for sterling drawings and EURIBOR for
euro drawings, depending on performance against the ESG targets. As reported
in the Company's Annual Report 2023, good progress was made against these ESG
targets and the Board remains committed to further improving performance
against these targets prior to the end of the facility agreement.
As at 30 September 2023, drawings under the RCF were £125.0 million. Under
its investment policy, JLEN may borrow up to 30% of its NAV.
In addition to the RCF, several projects have underlying project-level debt.
The project-level gearing at 30 September 2023 across the portfolio was 17.7%
(31 March 2023: 18.3%). Taking into account the amount drawn down under the
RCF, the overall fund gearing at 30 September 2023 was 28.7% (31 March 2023:
27.3%).
At the half-year mark, the weighted average cost of project-level debt was
4.5%, and the weighted average cost of debt after including the RCF was 5.3%.
As at 30 September 2023, the Group, which comprises the Company and the
intermediate holding companies, had cash balances of £15.9 million (31 March
2023: £18.0 million).
SUSTAINABILITY AND ESG
ESG overview
Sustainability and ESG considerations are at the heart of the Investment
Manager's ethos and operations. They are embedded throughout the investment
process and asset management, from initial investment screening through due
diligence and into ongoing monitoring and reporting. Overall responsibility
for ESG resides with the Board of JLEN, with analysis and reporting against
ESG criteria provided by the Fund's Investment Manager. JLEN's approach to ESG
is based on three core principles: Assess, Monitor and Engage. JLEN has been
focused on progressing each of these principles in order to maintain a robust
ESG framework.
JLEN's three ESG objectives are:
· Promote the efficient use of resources
· Develop positive relationships with the communities in which JLEN
works
· Ensure effective, ethical governance across the portfolio
Read more about JLEN and the Investment Manager's approach to ESG and
sustainability
Read JLEN's 2023 Sustainability and ESG Report
Read Foresight's 2023 Sustainability Report
Developments in the period
JLEN is in the process of developing a Transition Plan in line with the
Transition Plant Taskforce ("TPT") Disclosure Framework. The Transition Plan
is anticipated to be published within the next year. It believes that the
application of the TPT disclosure framework to JLEN is a valuable tool in
developing out the Fund's net zero strategy. While JLEN continues to embed
assessment and monitoring of ESG criteria into its business-as-usual
activities, the Company will review its current ESG KPIs in line with the
Transition Plan to ensure they are fit for purpose.
The Investment Manager is making good progress with its plan to complete
biodiversity assessments across the portfolio by the end of FY 2024. The
majority of sites will benefit from a habitat management plan detailing
biodiversity baseline and suggested enhancements which will be implemented in
line with the recommended timelines. A few sites where JLEN is not the sole
owner are not able to complete the surveys as the works have not yet been
approved by the other owners.
Work is underway across the portfolio to address cyber security
vulnerabilities that were identified through a recent survey conducted by
cyber security specialists, KryptoKloud.
JLEN contributes towards various community benefit funds in the areas where
its assets are located. Funds go towards a variety of academic, cultural,
economic, environmental, recreational or social benefit projects to uplift
communities and provide support where necessary.
Awards
Winner
JLEN is delighted and proud to have been named 'Best Sustainable Alternative
Assets Fund' in the 2023 Investment Week Sustainable Investment Awards. The
awards recognise fund providers, research and ratings teams, service providers
and individuals who have a key part to play in the evolution of
sustainable investing.
Shortlisted
AIC Communication Awards 2023
Best ESG communication
National Sustainability Awards 2023
Sustainable Fund of the Year
Investment Week's 2023 Investment
Company of the Year Awards
Best Renewable Energy Infrastructure fund
IR Society Best Practice Awards 2023
Best communications of sustainability
Corporate Reporting Awards 2023
Best ESG report
ESG PERFORMANCE
Environmental
Objective: Promote the efficient use of resources
HY 2023 660GWh
HY 2022 655GWh
660GWh
Renewable energy generated
HY 2023 359,428
HY 2022 351,500
359,428 tonnes
Waste diverted from landfill
HY 2023 123,779
HY 2022 120,731
123,779
UK homes powered by renewable electricity((4))
HY 2023 95,788
HY 2022 96,500
95,788tCO(2)e((1))
GHG emissions avoided
HY 2023 233,355
HY 2022 231,267((2))
233,355 tonnes((3))
Organic fertiliser produced
HY 2023 17.3
HY 2022 14.5
17.3 billion litres
Wastewater treated
HY 2023 1
HY 2022 0
1
Reportable environmental incident
(1) Despite overall energy production increasing in 2023, the emissions
figure is lower for the half year 2023 than the half year 2022. This decrease
in avoided emissions is due to the change in the composition of the
electricity produced.
(2) Estimate based on the asset production value as this figure was not
reported in H1 2022.
(3) In some instances, the six months of data was not available and in
that case the tonnages were estimates based on the previous year's figures.
(4) Excludes AD portfolio.
Social
Objective: Develop positive relationships with the communities in which JLEN
works
HY 2023 235
FY 2023 201
235
Number of FTE jobs supported((1))
HY 2023 2
HY 2022 0
3
Reportable H&S incidents
Governance
Objective: Ensure effective, ethical governance across the portfolio
HY 2023 14
HY 2022 19
14
H&S audits undertaken
HY 2023 22
FY 2023((2)) 20
22
Site visits conducted by Foresight
Environmental Health and Safety Incidents
JLEN takes its environmental and health and safety responsibilities very
seriously and seeks to ensure effective management of these issues in both its
own operations and in its investment portfolio. JLEN aims to manage risks and
incidents in a fair and transparent manner with appropriate action to reduce
risk wherever possible. This report identifies the reportable environmental
and health and safety incidents in the JLEN portfolio for the six months to 30
September 2023.
H&S incidents (RIDDOR or equivalent)((3)) 2
Environmental incidents (reportable to Environment Agency or equivalent)((4)) 1
(1) Full-time equivalent ("FTE") jobs are calculated using total hours
worked over the course of the year.
(2) This metric was not reported on in HY 2022, as a result, the FY 2023
figure is disclosed instead.
(3) RIDDOR 1: CNG - High pressure gas release - near miss. Action taken:
staff education on proper equipment use.
RIDDOR 2: Cramlington - Finger injury, caused by manual handling. Action
taken: improving staff education on manual handling.
(4) ETA Manfredonia - nitrogen oxides ("NOx") limit exceeded due to
equipment breakage - safety mechanism prevented further release of NOx, action
taken: equipment replaced.
ESG REPORTING
ESG reporting
JLEN continues to embed assessment and monitoring of its ESG KPIs into its
business‑as‑usual activities. Regular monitoring of the portfolio against
the ESG KPIs occurs through monthly management team meetings, which discuss:
· the performance of the investment portfolio against the KPIs; and
· progress made in improving data collection and reporting.
JLEN has mapped its portfolio against the United Nations Sustainable
Development Goals ("SDGs"); it presents quantitative reporting against eight
of the 17 goals. For details, see pages 99 and 100 of the Annual Report
2023.((1))
The Board and the Investment Manager believe that the nature of JLEN's
business and strategy is intrinsically aligned to the goal of a greener and
less carbon intensive future and consider the Task Force on Climate-related
Financial Disclosures ("TCFD") to be a positive step in driving that
direction. As a result, JLEN has voluntarily included climate-related
financial disclosures in its Annual Report 2023. Work is ongoing to further
understand its portfolio risks and opportunities and to further develop its
approach to climate-related issues.
JLEN is proud to be an Article 9 fund under the EU Sustainable Finance
Disclosure Regulation. For recent disclosures, please see our Annex III((2))
and Annex V((2)) disclosures available on the JLEN website: www.jlen.com
Emissions reporting
Although JLEN's investment activities make a significant and quantifiable
contribution to climate change mitigation, there are still emissions
associated with the operation and maintenance of the portfolio.
To minimise its direct carbon footprint, the Company is aiming to increase the
number of its operational sites on renewable tariffs, and update on the
progress thereof will be provided at the year end.
(1) https://jlen.com/investor-relations/publications/.
(2) https://jlen.com/sustainability/publications/.
ESG CASE STUDY
Cultivating a circular economy
Bio Collectors((1)) and New Covent Garden Market are
powering towards a greener future together.
Overview
New Covent Garden Market ("NCGM") in Nine Elms London, is the largest fruit,
vegetable and flower market in the United Kingdom. It covers a site of 35
acres and is home to 152 fruit, vegetable and flower wholesalers. The market
provides ingredients to many of London's restaurants, hotels, schools,
prisons, hospitals and catering businesses.
Background
In January 2021, Bio Collectors were contracted to manage food waste
collections from the New Covent Garden Market with the goal to provide a more
sustainable solution for the process of transportation and recycling of the
food waste.
Solution
Bio Collectors implemented daily collections of a bulk trailer, which is
transported on specialist CNG trucks powered by biogas from the food waste
collected from their customers, including NCGM. The use of CNG vehicles
powered by biogas has helped to significantly reduce the carbon footprint and
the reliance on fossil fuels. The food is processed at their AD facility in
Mitcham, which is strategically located within eight miles of the market,
reducing congestion and pollution in central London by limiting the distance
the waste has to travel. The biogas produced from recycling the food waste is
fed directly into the National Grid and used by local homes and businesses as
well as powering Bio Collectors' CNG vehicles, further reducing reliance on
less sustainable sources. Bio Collectors, through its AD facility, produces
electricity which is used to power the plant. The process also produces a
nutrient-rich fertiliser, called digestate, which is provided to local farms
in Surrey, helping to rejuvenate the soil and improve the quality of their
crops without the need for damaging, and environmentally unfriendly, chemical
alternatives.
The partnership delivered((2)):
4,543 tonnes food waste. Bio Collectors waste removal and AD process produced
Enough electricity to potentially power
1,218 homes per year and Gas produced can heat up to 439 homes per year.
Avoid use of 5,000 litres diesel =13 tonnes of CO(2) avoided, 3,453 tonnes
of bio-fertiliser =284 acres of land fertilised, 3,453 tonnes of
bio-fertiliser =284 acres of land fertilised
FINANCIAL REVIEW
Analysis of financial results
The financial statements of the Company for the six‑month period ended
30 September 2023 are set out on pages 38 to 60 of the Half-year report
2023.
The Company prepared the condensed unaudited financial statements for the
six‑month period to 30 September 2023 in accordance with IAS 34 as adopted
by the UK and issued by the International Accounting Standards Board. In order
to continue providing useful and relevant information to its investors, the
financial statements also refer to the "Group", which comprises the Company,
its wholly owned subsidiary (JLEN Environmental Assets Group (UK) Limited ("UK
HoldCo")) and the indirectly held wholly owned subsidiary HWT Limited (which
holds the investment interest in the Tay project).
Key investment metrics
Period ended Period ended Year ended
30 Sep 30 Sep 31 Mar
All amounts presented in £million (except as noted) 2023 2022 2023
Net assets((1)) 792.1 829.6 814.6
Portfolio value((2)) 898.9 890.2 898.5
Operating income and gains on fair value of investments 6.9 94.9 108.4
Net Asset Value per share((3)) 119.7p 125.4p 123.1p
Distributions, repayments and fees from portfolio 46.2 43.5 83.6
Profit before tax 1.9 89.7 98.3
Gross Asset Value((3)) 1,109.8 1,111.4 1,119.8
Market capitalisation((3)) 653.6 787.2 791.2
Share price((3)) 98.8p 119.0p 119.6p
Total shareholder return((3)) 70.1% 92.4% 99.0%
Annualised total shareholder return((3)) 5.7% 8.0% 7.9%
(1) Also referred to as "NAV".
(2) Classified as investments at fair value through profit or loss on the
statement of financial position.
(3) Net Asset Value per share, share price, market capitalisation and
gross asset value are alternative performance measures ("APMs"). The APMs
within the accounts are defined on pages 61 to 63.
Net assets
Net assets decreased from £814.6 million at 31 March 2023 to £792.1 million
at 30 September 2023.
The net assets of £792.1 million comprise £898.9 million portfolio value of
environmental infrastructure investments and the Company's cash balances of
£0.4 million, partially offset by £104.8 million of intermediate holding
companies' net liabilities and other net liabilities of £2.4 million.
The intermediate holding companies' net liabilities of £104.8 million
comprise a £125.0 million credit facility loan, partially offset by cash
balances of £15.5 million and other net assets of £4.7 million.
Analysis of the Group's net assets at 30 September 2023
At 30 Sep At 31 Mar
All amounts presented in £million (except as noted) 2023 2023
Portfolio value 898.9 898.5
Intermediate holding companies' cash 15.5 17.9
Intermediate holding companies' revolving credit facility (125.0) (103.5)
Intermediate holding companies' other assets 4.7 3.9
Fair value of the Company's investment in UK HoldCo 794.1 816.8
Company's cash 0.4 0.1
Company's other net liabilities (excluding cash) (2.4) (2.3)
Net Asset Value 792.1 814.6
Number of shares 661,531,229 661,531,229
Net Asset Value per share 119.7p 123.1p
At 30 September 2023, the Group (the Company plus intermediate holding
companies) had a total cash balance of £15.9 million (31 March 2023: £18.0
million), including £0.4 million in the Company's statement of financial
position (31 March 2023: £0.1 million) and £15.5 million in the
intermediate holding companies (31 March 2023: £17.9 million),
which is included in the Company's statement of financial position within
"investments at fair value through profit or loss".
At 30 September 2023, UK HoldCo had drawn £125.0 million of its revolving
credit facility (31 March 2023: £103.5 million) which is included in the
Company's statement of financial position within "investments at fair value
through profit or loss".
The movement in the portfolio value from 31 March 2023 to 30 September 2023 is
summarised as follows:
Period ended Year ended
30 Sep 31 Mar
All amounts presented in £million 2023 2023
Portfolio value at start of the period/year 898.5 795.4
Acquisitions/further investments (net of post‑acquisition price adjustments) 30.0 72.0
Distributions received from investments (46.2) (83.6)
Growth in value of portfolio 16.6 114.7
Portfolio value 898.9 898.5
Further details on the portfolio valuation and an analysis of movements during
the year are provided in the investment portfolio and valuation section on
pages 9 to 19 of the Half-year 2023 report.
Profit before tax
The Company's profit before tax for the six‑month period was £1.9 million
(six‑month period ended 30 September 2022: £89.7 million), generating
earnings of 0.3 pence per share (six‑month period ended 30 September 2022:
13.6 pence per share).
Six months Six months
ended ended
30 Sep 30 Sep
All amounts presented in £million (except as noted) 2023 2022
Interest received on UK HoldCo loan notes 15.7 15.7
Dividend received from UK HoldCo 13.8 10.2
Net (loss)/gain on investments at fair value (22.6) 69.0
Operating income and gains on fair value of investments 6.9 94.9
Operating expenses (5.0) (5.2)
Profit before tax 1.9 89.7
Earnings per share 0.3p 13.6p
In the six months to 30 September 2023, the operating income and
gains/(losses) on fair value of investments was £6.9 million, including the
receipt of £15.7 million of interest on the UK HoldCo loan notes, £13.8
million of dividends also received from UK HoldCo and a net loss on
investments at fair value of £22.6 million.
The operating expenses included in the income statement for the period were
£5.0 million, in line with expectations. These comprise £4.2 million of
Investment Manager fees and £0.8 million operating expenses. The details on
how the Investment Manager fees are charged are set out in note 14 to the
condensed unaudited financial statements.
Financing at 30 September 2023
£125.0m
drawn on RCF
28.7%
fund gearing((1))
(1) Gearing is an alternative performance measure ("APM"). The APMs within
the accounts are defined on pages 61 to 63 of the Half-year report 2023.
Ongoing charges
The "ongoing charges"((1)) ratio is an indicator of the costs incurred in the
day-to-day management of the Fund. JLEN uses the Association of Investment
Companies ("AIC") recommended methodology for calculating this ratio, which is
an annual figure.
For the year ended 31 March 2023 the ratio was 1.18%. The ongoing charges
percentage is calculated on a consolidated basis and therefore takes into
consideration the expenses of UK HoldCo as well as the Company's.
Cash flow
The Company had a total cash balance at 30 September 2023 of £0.4 million
(31 March 2023: £0.1 million). The breakdown of the movements in cash
during the period is shown below.
Cash flows of the Company for the period (£million):
Six months Six months
ended ended
30 Sep 30 Sep
2023 2022
Cash balance at 1 April 0.1 2.0
Net proceeds from share issue/(expenses from previous issues) - (0.2)
Interest on loan notes received from UK HoldCo 15.7 15.7
Dividends received from UK HoldCo 13.8 10.2
Directors' fees and expenses (0.2) (0.2)
Investment Manager fees (4.1) (3.8)
Administrative expenses (0.6) (0.4)
Dividends paid in cash to shareholders (24.3) (23.0)
Company cash balance at 30 September 0.4 0.3
The Group had a total cash balance at 30 September 2023 of £15.9 million (31
March 2023: £18.0 million) and borrowings under the revolving credit
facility of £125.0 million (31 March 2023: £103.5 million). The breakdown
of the movements in cash during the period is shown in the following table.
Cash flows of the Group for the period (£million):
Six months Six months
ended ended
30 Sep 30 Sep
2023 2022
Cash distributions from environmental infrastructure investments 46.2 43.5
Administrative expenses (0.7) (0.5)
Directors' fees and expenses (0.2) (0.2)
Investment Manager fees (4.1) (3.8)
Financing costs (net of interest income) (3.8) (1.2)
Electricity Generator Levy (5.2) -
Cash flow from operations((2)) 32.2 37.8
Net proceeds from share issues - -
Expenses from previous share issues - (0.2)
Acquisition of investment assets and further investments (30.0) (40.1)
Disposal of asset - 1.6
Acquisition costs (including stamp duty) (0.3) (0.3)
Short-term projects debtors (0.7) (0.2)
Debt arrangement fee cost (1.0) -
Drawdown under the revolving credit facility 22.0 16.6
Dividends paid in cash to shareholders (24.3) (23.0)
Cash movement in the period (2.1) (7.8)
Opening cash balance 18.0 18.0
Exchange (losses)/gains on cash - 0.3
Group cash balance at 30 September 15.9 10.5
(1) The ongoing charges ratio is an alternative performance measure
("APM"). The APMs within the accounts are defined on pages 61 to 63 of the
Half-year report 2023.
(2) "Cash flow from operations" is an alternative performance measure
("APM"). The APMs within the accounts are defined on pages 61 to 63 of the
Half-year report 2023.
During the period, the Group received cash distributions of £46.2 million
from its environmental infrastructure investments.
Cash received from investments in the period covered the operating and
administrative expenses and financing costs, as well as the dividends declared
to shareholders in respect of the six‑month period ended 30 September 2023.
Cash flow from operations of the Group of £32.2 million covered dividends
paid in the six‑month period to 30 September 2023 of £24.3 million by
1.32x.
The Group anticipates that future revenues from its environmental
infrastructure investments will continue to be in line with expectations and
therefore will continue to cover future costs as well as planned dividends
payable to its shareholders.(.(1))
Dividends
During the period, the Company paid a final interim dividend of 1.79 pence per
share in June 2023 (£11.8 million) in respect of the quarter to 31 March
2023. Interim dividends of 1.89 pence per share were paid in September 2023
(£12.5 million) in respect of the quarter to 30 June 2023.
On 24 November 2023, the Board approved an interim dividend of 1.89 pence per
share in respect of the quarter ended 30 September 2023 (£12.5 million),
which is payable on 29 December 2023.
In line with the 2023 Annual Report, the target dividend for the year to 31
March 2024 is 7.57 pence per share.(.(1))
(1) These are targets only and not profit forecasts. There can be no
assurance that these targets will be met.
RESPONSIBILITY STATEMENT
The Directors are responsible for preparing the Half-year Report and unaudited
condensed interim financial statements in accordance with applicable
regulations.
We confirm that to the best of our knowledge:
· the condensed set of unaudited financial statements has been
prepared in accordance with United Kingdom adopted International Accounting
Standard 34 Interim Financial Reporting and in accordance with the accounting
policies set out in the audited Annual Report to 31 March 2023; and
· the Chair's statement and Investment Manager's report meet the
requirements of an interim management report and include a fair review of the
information required by:
a) DTR 4.2.7R, being an indication of important events during the first
six months of the financial year and their impact on the condensed set of
unaudited financial statements and a description of principal risks and
uncertainties for the remaining six months of the year; and
b) DTR 4.2.8R, being the disclosure of related parties' transactions that
have taken place during the first six months of the financial year and that
have materially affected the financial position or performance of the Company
during that period; and any changes in the related party transactions
described in the last annual report that could do so.
The Board is responsible for the maintenance and integrity of the corporate
and financial information included on the Company's website, and for the
preparation and dissemination of financial statements. Legislation in Guernsey
governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
This responsibility statement was approved by the Board of Directors on 24
November 2023 and is signed on its behalf by:
Ed Warner
Chair
24 November 2023
INDEPENDENT REVIEW REPORT
to JLEN Environmental Assets Group Limited
Conclusion
We have been engaged by JLEN Environmental Assets Group Limited (the
"Company") to review the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 September 2023 of the
Company, which comprises the condensed unaudited statement of financial
position, the condensed unaudited income statement, the condensed unaudited
statement of changes in equity, the condensed unaudited statement of cash
flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 September 2023 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting and the Disclosure Guidance and Transparency Rules ("the DTR") of
the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued by the Financial
Reporting Council for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures.
We read the other information contained in the half-yearly financial report
and consider whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Scope of review section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the Company to cease to
continue as a going concern, and the above conclusions are not a guarantee
that the Company will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
interim financial report in accordance with the DTR of the UK FCA. As
disclosed in note 2 (a), the annual financial statements of the Company are
prepared in accordance with UK-adopted international accounting standards. The
Directors are responsible for preparing the condensed set of financial
statements included in the half‑yearly financial report in accordance with
IAS 34 Interim Financial Reporting.
In preparing the half-yearly financial report, the Directors are responsible
for assessing the Company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless they either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the scope of review paragraph of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement letter to assist the Company in meeting the requirements of the DTR
of the UK FCA. Our review has been undertaken so that we might state to the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work,
for this report, or for the conclusions we have reached.
Barry Ryan
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants, Guernsey
24 November 2023
CONDENSED UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2023
Six months Six months
ended ended
30 Sep 2023 30 Sep 2022
(unaudited) (unaudited)
Notes £'000s £'000s
Operating income 8 6,884 94,918
Operating expenses 4 (5,018) (5,170)
Operating profit 1,866 89,748
Profit before tax 1,866 89,748
Tax 5 - -
Profit for the period 1,866 89,748
Earnings per share
Basic and diluted (pence) 7 0.3 13.6
The accompanying notes form an integral part of the condensed set of financial
statements.
All results are derived from continuing operations.
There are no items of other comprehensive income in either the current or
preceding period, other than the profit for the period, and therefore no
separate statement of comprehensive income has been presented.
CONDENSED UNAUDITED STATEMENT OF FINANCIAL POSITION
as at 30 September 2023
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
Notes £'000s £'000s
Non-current assets
Investments at fair value through profit or loss 8 794,140 816,800
Total non-current assets 794,140 816,800
Current assets
Trade and other receivables 9 105 143
Cash and cash equivalents 401 143
Total current assets 506 286
Total assets 794,646 817,086
Current liabilities
Trade and other payables 10 (2,557) (2,518)
Total current liabilities (2,557) (2,518)
Total liabilities (2,557) (2,518)
Net assets 792,089 814,568
Equity
Share capital account 12 664,401 664,401
Retained earnings 13 127,688 150,167
Equity attributable to owners of the Company 792,089 814,568
Net assets per share (pence per share) 119.7 123.1
The accompanying notes form an integral part of the condensed set of financial
statements.
The condensed set of unaudited financial statements were approved by the Board
of Directors and authorised for issue on 24 November 2023.
They were signed on its behalf by:
Ed Warner
Chair
Stephanie Coxon
Director
CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2023
Six months ended 30 Sep 2023 (unaudited)
Share capital Retained
account earnings Total
Notes £'000s £'000s £'000s
Balance at 1 April 2023 664,401 150,167 814,568
Profit and total comprehensive income for the period - 1,866 1,866
Dividends paid 6, 13 - (24,345) (24,345)
Balance at 30 September 2023 664,401 127,688 792,089
Six months ended 30 Sep 2022 (unaudited)
Share capital Retained
account earnings Total
Notes £'000s £'000s £'000s
Balance at 1 April 2022 664,401 98,504 762,905
Profit and total comprehensive income for the period - 89,748 89,748
Dividends paid 6 - (23,021) (23,021)
Balance at 30 September 2022 664,401 165,231 829,632
The accompanying notes form an integral part of the condensed set of financial
statements.
CONDENSED UNAUDITED CASH FLOW STATEMENT
for the six months ended 30 September 2023
Six months Six months
ended ended
30 Sep 2023 30 Sep 2022
(unaudited) (unaudited)
Notes £'000s £'000s
Profit for the period 1,866 89,748
Adjustments for:
Interest received (15,701) (15,744)
Dividends received (13,800) (10,200)
Net loss/(gain) on investments at fair value through profit or loss 22,617 (68,974)
Operating cash flows before movements in working capital (5,018) (5,170)
Decrease in receivables 38 35
Increase in payables 82 677
Net cash outflow from operating activities (4,898) (4,458)
Investing activities
Investments in subsidiaries - -
Interest received 15,701 15,744
Dividends received 13,800 10,200
Net cash generated from investing activities 29,501 25,944
Financing activities
Proceeds on issue of share capital - -
Expenses relating to issue of shares - (150)
Dividends paid 6 (24,345) (23,021)
Net cash outflow from financing activities (24,345) (23,171)
Net increase/(decrease) in cash and cash equivalents 258 (1,685)
Cash and cash equivalents at beginning of period 143 2,022
Cash and cash equivalents at end of period 401 337
The accompanying notes form an integral part of the condensed set of financial
statements.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
for the six months ended 30 September 2023
1. General information
JLEN Environmental Assets Group Limited (the "Company" or "JLEN") is a
closed‑ended investment company domiciled and incorporated in Guernsey,
Channel Islands, under Section 20 of the Companies (Guernsey) Law, 2008. The
shares are publicly traded on the London Stock Exchange under a premium
listing. The condensed unaudited financial statements of the Company are for
the six‑month period ended 30 September 2023 and have been prepared on the
basis of the accounting policies set out below. The financial statements
comprise only the results of the Company as its investment in JLEN
Environmental Assets Group (UK) Limited ("UK HoldCo") is measured at fair
value as detailed in the significant accounting policies below. The Company
and its subsidiaries invest in environmental infrastructure projects that
utilise natural or waste resources or support more environmentally friendly
approaches to economic activity.
2. Significant accounting policies
(a) Basis of preparation
The condensed set of unaudited financial statements were approved and
authorised for issue by the Board of Directors on 24 November 2023. The
condensed set of unaudited financial statements included in this Half‑year
Report have been prepared in accordance with United Kingdom adopted
International Accounting Standard 34 "Interim Financial Reporting".
As a result of adopting the amendments to IFRS 10, IFRS 12 and IAS 28 first
adopted in the Company's Annual Report to 31 March 2015, the Company is
required to hold its subsidiaries that provide investment services at fair
value, in accordance with IFRS 9 Financial Instruments.
The Company accounts for its investment in its wholly owned direct subsidiary
UK HoldCo at fair value. The Company, together with its wholly owned direct
subsidiary UK HoldCo and the intermediate holding subsidiary HWT Limited,
comprise the Group (the "Group") investing in environmental infrastructure
assets.
The net assets of the intermediate holding companies (comprising UK HoldCo and
HWT Limited), which at 30 September 2023 principally comprise working capital
balances, the RCF loan and investments in projects, are required to be
included at fair value in the carrying value of investments.
Consequently, the Company does not consolidate its subsidiaries or apply IFRS
3 Business Combinations when it obtains control of another entity as it is
considered to be an investment entity under IFRS. Instead, the Company
measures its investment in its subsidiary at fair value through profit or
loss.
The condensed unaudited financial statements incorporate the financial
statements of the Company only.
The accounting policies and significant judgements are consistent with those
used in the latest audited financial statements to 31 March 2023 and should be
read in conjunction with the Company's annual audited financial statements for
the year ended 31 March 2023.
The following standards became effective during the period and did not have a
material impact on the Company's reported results:
· IFRS 17 Insurance Contracts (applicable for annual periods
beginning on or after 1 January 2023);
· Definition of Accounting Estimates - Amendments to IAS 8
(applicable for annual periods beginning on or after 1 January 2023);
· Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS
Practice Statement 2 (applicable for annual periods beginning on or after 1
January 2023);
· Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes (applicable for annual
periods beginning on or after 1 January 2023); and
· Initial Application of IFRS 17 and IFRS 9 - Comparative Information
(Amendments to IFRS 17) (applicable for annual periods beginning on or after 1
January 2023).
Key sources of estimation uncertainty
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods.
The fair value of environmental infrastructure investments is calculated by
discounting at an appropriate discount rate future cash flows expected to be
received by the Company's intermediate holdings, from investments in both
equity (dividends and equity redemptions), shareholder and inter-company loans
(interest and repayments).
Estimates such as the cash flows are believed to be reasonable under the
circumstances, the results of which form the basis of making judgements about
the fair value of assets not readily available from other sources. Actual
results may differ from these estimates.
The project cash flows used in the portfolio valuation at 30 September 2023
reflect contractual fixed price arrangements under PPAs, 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 by the
Investment Manager for project-specific arrangements and price
cannibalisation.
For the Italian investment, project cash flows assume future electricity
prices informed by a leading independent market consultant's long‑term
projections.
The power price assumptions, including the discount to the near-term power
price assumptions, are a key source of estimation and uncertainty. Information
on the sensitivity of the portfolio to movement in power price is disclosed in
note 15.
The discount rates used in the valuation exercise represent the Investment
Manager's and the Board's assessment of the rate of return in the market for
assets with similar characteristics and risk profile. The discount rate is
deemed to be one of the most significant unobservable inputs and any change
could have a material impact on the fair value of investments. Underlying
assumptions and discount rates are disclosed in note 8 and sensitivity
analysis is disclosed in note 15.
Due to the current economic environment, the rate of inflation is also
considered a key source of estimation uncertainty. Information on the
sensitivity of the portfolio valuation to movements in the inflation rate is
disclosed in note 15.
(b) Going concern
The Directors, in their consideration of going concern, have reviewed
comprehensive cash flow forecasts prepared by the Company's Investment
Manager, Foresight Group, which are based on prudent market data, a reasonable
worst case and a stress test scenario and believe, based on those forecasts
and an assessment of the Company's subsidiary's banking facilities, that it is
appropriate to prepare the financial statements of the Company on the going
concern basis.
In arriving at their conclusion, the Directors assessed the potential risks of
the continued energy market disruption, volatility of energy prices and the
potential triggering of a discontinuation vote. In addition to these risks,
the Directors have also considered the sustainability-related risks covering
environmental, social and governance factors, including climate change (in
line with the recommendations of the Task Force on Climate-related Financial
Disclosures ("TCFD"), outlined in the financial disclosures in the Annual
Report 2023). The Investment Manager has reviewed the portfolio's exposure to
these risks in the period under review and has concluded that it is currently
not material to the Company, although it continues to monitor the market
attentively.
The Board considers the going concern assessment period of 15 months to 31
December 2024 to be appropriate. A longer period than the typical requirement
of 12 months has been adopted to factor in the full payment of the September
2024 dividend.
The Company has sufficient headroom in its revolving credit facility to
finance its hard commitments relating to construction assets held within the
portfolio.
The Directors also considered that the Company has adequate financial
resources, and were mindful that the Group had unrestricted cash of £15.9
million (including £0.4 million in the Company) as at 30 September 2023 and
a revolving credit and accordion facility (available for investment in new or
existing projects and working capital) of £200 million. As at 30 September
2023, the Company's wholly owned subsidiary UK HoldCo had borrowed £125.0
million under the facility, leaving £75.0 million undrawn, of which £2.4
million (€2.8 million) was allocated to letters of credit due to expire
during FY 2024. All key financial covenants under this facility are forecast
to continue to be complied with for the duration of the going concern
assessment period.
The Manager and Directors have assessed the headroom available to meet the
revolving credit covenants. The covenants have been tested on downside risk
scenarios, with the assumption of 10% lower power price projections compared
to the base case, reduced generation levels assuming a P90, a proportion of
the portfolio not yielding and a combination of these scenarios. In all
scenarios run, including the combined downside case, the Company remained
compliant with its key covenants.
The Directors are satisfied that the Company has sufficient resources to
continue to operate for the foreseeable future, a period of not less than 12
months from the date of this report. Accordingly, they continue to adopt the
going concern basis in preparation of these financial statements.
(c) Segmental reporting
The Board is of the opinion that the Company is engaged in a single segment of
business, being investment in environmental infrastructure to generate
investment returns while preserving capital. The financial information used by
the Board to allocate resources and manage the Company presents the business
as a single segment comprising a homogeneous portfolio.
(d) Statement of compliance
Pursuant to the Protection of Investors (Bailiwick of Guernsey) Law, 2020 the
Company is a registered closed-ended investment scheme. As a registered
scheme, the Company is subject to certain ongoing obligations to the Guernsey
Financial Services Commission, and is governed by the Companies (Guernsey)
Law, 2008 as amended.
3. Seasonality
Neither operating income nor profit are impacted significantly by seasonality.
While meteorological conditions resulting in fluctuation in the levels of wind
and sunlight can affect revenues of the Company's environmental infrastructure
projects, due to the diversified mix of projects, these fluctuations do not
materially affect the Company's operating income or profit.
4. Operating expenses
Six months Six months
ended ended
30 Sep 2023 30 Sep 2022
(unaudited) (unaudited)
£'000s £'000s
Investment management fees 4,227 4,237
Directors' fees and expenses 172 160
Administration fee 56 55
Other expenses 563 718
5,018 5,170
5. Tax
Income tax expense
The Company has obtained exempt status from income tax in Guernsey under the
Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. JLEN is charged an
annual exemption fee of £1,200.
The income from its investments is therefore not subject to any further tax in
Guernsey, although the investments provide for and pay taxation at the
appropriate rates in the jurisdictions in which they operate. The underlying
tax within the subsidiaries and environmental infrastructure assets, which are
held as investments at fair value through profit or loss, is included in the
estimate of the fair value of these investments.
6. Dividends
Six months Six months
ended ended
30 Sep 2023 30 Sep 2022
(unaudited) (unaudited)
£'000s £'000s
Amounts recognised as distributions to equity holders during the period (pence
per share):
Final dividend for the year ended 31 March 2023 of 1.79 (31 March 2022: 1.70) 11,842 11,246
Interim dividend for the quarter ended 30 June 2023 of 1.89 (30 June 2022: 12,503 11,775
1.78)
24,345 23,021
A dividend for the quarter to 30 September 2023 of 1.89 pence per share was
approved by the Board on 24 November 2023 and is payable on 29 December 2023.
The dividend has not been included as a liability at 30 September 2023.
7. Earnings per share
Earnings per share is calculated by dividing the profit attributable to equity
shareholders of the Company by the weighted average number of ordinary shares
in issue during the period:
Six months Six months
ended ended
30 Sep 2023 30 Sep 2022
(unaudited) (unaudited)
£'000s £'000s
Earnings
Earnings for the purposes of basic and diluted earnings per share, being net 1,866 89,748
profit attributable to owners of the Company
Number of shares
Weighted average number of ordinary shares for the purposes of basic and 661,531,229 661,531,229
diluted earnings per share
The denominator for the purposes of calculating both basic and diluted
earnings per share is the same, as the Company has not issued any share
options or other instruments that would cause dilution.
Six months Six months
ended ended
30 Sep 2023 30 Sep 2022
(unaudited) (unaudited)
£'000s £'000s
Basic and diluted earnings per share (pence) 0.3 13.6
8. Investments at fair value through profit or loss
As set out in note 1, the Company accounts for its interest in its 100% owned
subsidiary UK HoldCo as an investment at fair value through profit or loss. UK
HoldCo in turn owns investments in intermediate holding companies and
environmental infrastructure projects.
The table below shows the movement in the Company's investment in UK HoldCo as
recorded on the Company's statement of financial position:
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
£'000s £'000s
Fair value of environmental infrastructure investments 898,941 898,539
Fair value of intermediate holding companies (104,801) (81,739)
Total fair value of investments 794,140 816,800
Reconciliation of movement in fair value of portfolio of assets
The table shows the movement in the fair value of the Company's portfolio of
environmental infrastructure assets. These assets are held through other
intermediate holding companies. The table also presents a reconciliation of
the fair value of the asset portfolio to the Company's condensed unaudited
statement of financial position as at 30 September 2023, by incorporating the
fair value of these intermediate holding companies.
Six months to 30 Sep 2023 (unaudited) Year to 31 Mar 2023 (audited)
Cash, working Cash, working
capital and debt capital and debt
in intermediate in intermediate
Portfolio holding Portfolio holding
value companies Total value companies Total
£'000s £'000s £'000s £'000s £'000s £'000s
Opening balance 898,539 (81,739) 816,800 795,408 (32,553) 762,855
Acquisitions
Portfolio of assets acquired/further investment 29,954 - 29,954 72,050 - 72,050
Disposal of assets - - - - - -
29,954 - 29,954 72,050 - 72,050
Growth in portfolio((1)) 16,680 - 16,680 114,690 - 114,690
Cash yields from portfolio to intermediate holding companies (46,232) - (83,609) 83,609 -
Yields from intermediate holding companies
Interest on loan notes((1)) - (15,701) (15,701) - (31,401) (31,401)
Dividends from UK HoldCo to the Company((1)) - (13,800) (13,800) - (23,100) (23,100)
- (29,501) (29,501) - (54,501) (54,501)
Other movements
Investment in working capital in UK HoldCo - (8,512) (8,512) - (22,145) (22,145)
Administrative expenses borne by intermediate holding companies((1,2)) - (9,796) (9,796) - (6,245) (6,245)
Drawdown of UK HoldCo revolving credit facility borrowings - (21,485) (21,485) - (49,904) (49,904)
Fair value of the Company's investment in UK HoldCo 898,941 (104,801) 794,140 898,539 (81,739) 816,800
(1) The net loss on investments at fair value through profit or loss for
the period ended 30 September 2023 is £22,617,000 (year ended 31 March 2023:
gain of £53,944,000, six-month period ended 30 September 2022: gain of
£68,974,000). This, together with interest received on loan notes of
£15,701,000 (year ended 31 March 2023: £31,401,000, six-month period ended
30 September 2022: £15,744,000) and dividend income of £13,800,000 (year
ended 31 March 2023: £23,100,000, six-month period ended 30 September 2022:
£10,200,000) comprises operating income in the condensed income statement.
(2) Administrative expenses borne by intermediate holding companies
includes the payment of the Electricity Generator Levy.
The balances in the table above represent the total net movement in the fair
value of the Company's investment. The "cash, working capital and debt in
intermediate holding companies" balances reflect investment in, distributions
from or movements in working capital and are not value generating.
Fair value of portfolio of assets
The Investment Manager has carried out fair market valuations of the
investments as at 30 September 2023. The Directors have satisfied themselves
as to the methodology used and the discount rates applied for the valuation.
Investments are all investments in environmental infrastructure projects and
are valued using a discounted cash flow methodology, being the most relevant
and most commonly used method in the market to value similar assets to the
Company's. The Company's holding of its investment in UK HoldCo represents its
interest in both the equity and debt instruments. The equity and debt
instruments are valued as a whole using a blended discount rate and the value
attributed to the equity instruments represents the fair value of future
dividends and equity redemptions in addition to any value enhancements arising
from the timing of loan principal and interest receipts from the debt
instruments, while the value attributed to the debt instruments represents the
principal outstanding and interest due on the loan at the valuation date.
The valuation techniques and methodology have been applied consistently with
the valuation performed in the Company's latest annual audited financial
statements.
Discount rates applied to the operating portfolio of assets range from 7.0% to
18.4% (weighted average 9.4%) (at 31 March 2023: from 5.75% to 10.30% -
weighted average 8.4%).
The following economic assumptions were used in the discounted cash flow
valuations:
30 Sep 2023 (unaudited) 31 Mar 2023 (audited)
UK - RPI inflation rates 6.7% in 2023, decreasing to 3.5% for 2024, 3% to 2030 and 2.25% thereafter 6.5% for 2023, decreasing to 3% until 2030, decreasing to 2.25% from 2031
Italy - inflation rates 2% flat rate 5.3% for 2023, stepping to 2.9% for 2024, decreasing to 2.2% for 2025,
decreasing to 1.9% for 2026, decreasing to 1.8% for 2027, increasing to 2.00%
from 2028
UK - deposit interest rates 2.0% for the life of each asset 2.0% for 2023, decreasing to 1.5% from 2024
Italy - deposit rates 0% 0%
UK - corporation tax rates 25% from April 2023 onwards 25% from April 2023 onwards
Italy - corporation tax rates National rate of 24%, plus applicable regional premiums National rate of 24%, plus applicable regional premiums
Euro/sterling exchange rate 1.15 1.14
Refer to note 15 for details of the sensitivity of the portfolio to movements
in the discount rate and economic assumptions.
The assets in the intermediate holding companies substantially comprise
working capital, cash balances and the outstanding revolving credit facility
debt; therefore, the Directors consider the fair value to be equal to the book
values.
Details of investments made during the period
In July 2023, the Company announced its second green hydrogen development
opportunity alongside a consortium including other Foresight managed funds and
its development partner HH2E, a specialist in developing green hydrogen
projects to decarbonise industry. The production site is located in Lubmin,
Germany. The consortium of investors has approved the Preliminary Investment
Decision and the initial investment of up to €9.2 million. As at 30
September 2023, the amount invested was €8.1 million.
During the period, £5.9 million was invested in CNG Foresight Limited. The
portfolio holds 13 natural gas refuelling stations, 2 of which are in
construction phase.
The Group invested €2.0 million into the Thierbach green hydrogen
development project during the period.
The Group also invested £7.2 million into the CE Rjukan project, £2.3
million into the Sandridge battery construction asset, £2.0 million into FS
West Gourdie battery construction asset, £1.9 million into the CE Glasshouse
project, €1.3 million into FEIP and £0.9 million to various other
projects.
9. Trade and other receivables
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
£'000s £'000s
Prepayments 105 143
Closing balance 105 143
10. Trade and other payables
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
£'000s £'000s
Accruals 2,557 2,518
Closing balance 2,557 2,518
11. Loans and borrowings
The Company had no outstanding loans or borrowings at 30 September 2023
(31 March 2023: none), as shown in the Company's condensed unaudited
statement of financial position.
As at 30 September 2023, the Company held loan notes of £348.9 million which
were issued by UK HoldCo (31 March 2023: outstanding amount of £348.9
million).
As at 30 September 2023, UK HoldCo had an outstanding balance of £125.0
million under a revolving credit facility (31 March 2023: £103.5 million).
The loan bears interest of SONIA + 195 to 205 bps and is intended to be repaid
by proceeds from future capital raises.
There were no other outstanding loans or borrowings in either UK HoldCo or HWT
at 30 September 2023.
12. Share capital account
30 Sep 2023 (unaudited) 31 Mar 2023 (audited)
Number of Number of
shares £'000s shares £'000s
Opening balance 661,531,229 664,401 661,531,229 664,401
Closing balance 661,531,229 664,401 661,531,229 664,401
All new shares issued rank pari passu and include the right to receive all
future dividends and distributions declared, made or paid.
13. Retained earnings
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
£'000s £'000s
Opening balance 150,167 98,504
Profit for the period/year 1,866 98,300
Dividends paid (24,345) (46,637)
Closing balance 127,688 150,167
14. Transactions with Investment Manager and related parties
Transactions between the Company and its subsidiaries, which are related
parties of the Company, are fair valued and are disclosed within note 8.
Details of transactions between the Company and related parties are disclosed
below.
This note also details the terms of the Company's engagement with Foresight
Group as Investment Manager.
Transactions with the Investment Manager
Foresight Group is the Company's Investment Manager. Foresight's appointment
as Investment Manager is governed by an Investment Management Agreement.
Foresight Group is entitled to a base fee equal to:
a) 1.0% per annum of the Adjusted Portfolio Value((1)) of the Fund((2)) up
to and including £500 million; and
b) 0.8% per annum of the Adjusted Portfolio Value of the Fund in excess of
£500 million.
The total Investment Manager fee charged to the condensed unaudited income
statement for the six months ended 30 September 2023 was £4,227,425
(six-month period ended 30 September 2022: £4,237,233) of which £2,137,494
remained payable as at 30 September 2023 (31 March 2023: £2,057,000).
(1) Adjusted Portfolio Value is defined in the Investment Management
Agreement as:
a) the fair value of the investment portfolio; plus
b) any cash owned by or held to the order of the Fund; plus
c) the aggregate amount of payments made to shareholders by way of
dividend in the quarterly period ending on the relevant valuation day, less
i. any other liabilities of the Fund (excluding borrowings); and
ii. any uninvested cash.
(2) Fund means the Company and JLEN Environmental Assets Group (UK)
Limited together with their wholly owned subsidiaries or subsidiary
undertakings (including companies or other entities wholly owned by them
together, individually or in any combination, as appropriate) but excluding
project entities.
Other transactions with related parties
The Directors of the Company, who are considered to be key management,
received fees for their services for the six‑month period of £167,250
(six-month period ended 30 September 2022: £154,879). The Directors were
paid expenses of £4,907 in the six‑month period (six-month period ended 30
September 2022: £5,959).
The Directors held the following shares:
Total number of shares Total number of shares
held at 30 Sep 2023 held at 31 Mar 2023
(unaudited) (audited)
Ed Warner 60,000 60,000
Alan Bates 12,500 12,500
Stephanie Coxon 15,000 15,000
Jo Harrison 8,066 8,066
Hans Joern Rieks 95,000 95,000
Nadia Sood - -
Richard Ramsay (retired effective 1 April 2023) - 53,813
All of the above transactions were undertaken on an arm's length basis.
The Directors were paid dividends in the period of £7,013 (six-month period
ended 30 September 2022: £8,529).
15. Financial instruments
Financial instruments by category
The Company held the following financial instruments at fair value at 30
September 2023. There are no non‑recurring fair value measurements.
30 Sep 2023 (unaudited)
Financial
Financial assets at fair Financial
Cash and assets held at value through liabilities at
cash balances amortised cost profit or loss amortised cost Total
£'000s £'000s £'000s £'000s £'000s
Non-current assets
Investments at fair value through profit or loss (Level 3) - - 794,140 - 794,140
Current assets
Trade and other receivables - 105 - - 105
Cash and cash equivalents 401 - - - 401
Total financial assets 401 105 794,140 - 794,646
Current liabilities
Trade and other payables - - - (2,557) (2,557)
Total financial liabilities - - - (2,557) (2,557)
Net financial instruments 401 105 794,140 (2,557) 792,089
31 Mar 2023 (audited)
Financial
Financial assets at fair Financial
Cash and assets held at value through liabilities at
cash balances amortised cost profit or loss amortised cost Total
£'000s £'000s £'000s £'000s £'000s
Non-current assets
Investments at fair value through profit or loss (Level 3) - - 816,800 - 816,800
Current assets
Trade and other receivables - 143 - - 143
Cash and cash equivalents 143 - - - 143
Total financial assets 143 143 816,800 - 817,086
Current liabilities
Trade and other payables - - - (2,518) (2,518)
Total financial liabilities - - - (2,518) (2,518)
Net financial instruments 143 143 816,800 (2,518) 814,568
The Company's investments at fair value through profit or loss are classified
at Level 3 within the IFRS fair value hierarchy.
The Level 3 fair value measurements derive from valuation techniques that
include inputs to the asset or liability that are not based on observable
market data (unobservable inputs).
In the tables above, financial instruments are held at carrying value as an
approximation to fair value unless stated otherwise.
Reconciliation of Level 3 fair value measurement of financial assets and
liabilities
An analysis of the movement between opening to closing balances of the
investments at fair value through profit or loss is given in note 8.
The fair value of the investments at fair value through profit or loss
includes the use of Level 3 inputs. Please refer to note 8 for details on the
valuation methodology.
Sensitivity analysis of the portfolio
The sensitivity of the portfolio to movements in the discount rate is as
follows:
30 Sep 2023 (unaudited)
Discount rate Minus 0.5% Base 9.4% Plus 0.5%
Change in portfolio valuation Increases £20.7m £898.9m Decreases £19.8m
Change in NAV per share Increases 3.1p 119.7p Decreases 3.0p
31 Mar 2023 (audited)
Discount rate Minus 0.5% Base 8.4% Plus 0.5%
Change in portfolio valuation Increases £21.7m £898.5m Decreases £20.7m
Change in NAV per share Increases 3.3p 123.1p Decreases 3.1p
In light of the current economic environment, actual near-term inflation may
vary from assumptions applied within the portfolio valuation. For illustrative
purposes, where inflation is higher than JLEN's valuation assumption by 2% for
the next two years, NAV would be expected to increase by £18.0 million (2.7
pence per share). The sensitivity of the portfolio to movements in long‑term
inflation rates is as follows:
30 Sep 2023 (unaudited)
Inflation rates Minus 0.5% Base 6.7% (2023), 3.5% (2024), then 3% (to 2030) then 2.25% thereafter, Plus 0.5%
Change in portfolio valuation Decreases £19.5m £898.9m Increases £18.3m
Change in NAV per share Decreases 2.9p 119.7p Increases 2.8p
31 Mar 2023 (audited)
Inflation rates Minus 0.5% Base 6.5% (2023), then 3% to 2030 then 2.25% Plus 0.5%
Change in portfolio valuation Decreases £21.1m £898.5m Increases £21.4m
Change in NAV per share Decreases 3.2p 123.1p Increases 3.2p
The fair value of the investments is based on a "P50" level of electricity
generation for the renewable energy assets, being the expected level of
generation over the long term.
Wind, solar and hydro assets are subject to electricity generation risks.
The sensitivity of the portfolio to movements in energy yields based on an
assumed "P90" level of electricity generation (i.e. a level of generation that
is below the "P50", with a 90% probability of being exceeded) and an assumed
"P10" level of electricity generation (i.e. a level of generation that is
above the "P50", with a 10% probability of being achieved) is as follows:
30 Sep 2023 (unaudited)
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £28.1m £898.9m Increases £27.1m
Change in NAV per share Decreases 4.3p 119.7p Increases 4.1p
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £9.5m £898.9m Increases £9.6m
Change in NAV per share Decreases 1.4p 119.7p Increases 1.4p
Energy yield: hydro P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £1.3m £898.9m Increases £1.4m
Change in NAV per share Decreases 0.2p 119.7p Increases 0.2p
31 Mar 2023 (audited)
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £27.3m £898.5m Increases £26.2m
Change in NAV per share Decreases 4.1p 123.1p Increases 4.0p
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £10.7m £898.5m Increases £10.5m
Change in NAV per share Decreases 1.6p 123.1p Increases 1.6p
Energy yield: hydro P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases £1.4m £898.5m Increases £1.7m
Change in NAV per share Decreases 0.2p 123.1p Increases 0.3p
Electricity and gas price assumptions are based on the following: for the
first two years, cash flows for each project use forward electricity and gas
prices based on market rates unless a contractual fixed price exists, in which
case the model reflects the fixed price followed by the forward price for the
remainder of the two‑year period. For the remainder of the project life, a
long‑term blend of central case forecasts from three established market
consultants and other relevant information is used, and adjusted by the
Investment Manager for project-specific arrangements and price
cannibalisation.
The sensitivity assumes a 10% increase or decrease in power prices relative to
the base case for each year of the asset life. While power markets can
experience movements in excess of +/-10% on a short‑term basis, as has been
the case recently, the sensitivity is intended to provide insight into the
effect on the NAV of persistently higher or lower power prices over the whole
life of the portfolio. The Directors feel that +/-10% remains a realistic
range of outcomes over this very long time horizon, notwithstanding that
significant movements will occur from time to time.
The sensitivity of the portfolio to movements in electricity and gas prices is
as follows:
30 Sep 2023 (unaudited)
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases £38.7m £898.9m Increases £38.5m
Change in NAV per share Decreases 5.9p 119.7p Increases 5.8p
31 Mar 2023 (audited)
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases £40.9m £898.5m Increases £40.4m
Change in NAV per share Decreases 6.2p 123.1p Increases 6.1p
Waste & bioenergy assets (excluding Bio Collectors) do not have
significant volume and price risks and therefore are not included in the above
volume and price sensitivities.
In line with JLEN's original investment case for anaerobic digestion, the
Company continues to apply the conservative valuation assumption that
facilities will simply cease to operate beyond the life of their RHI tariff.
In recent months, the Investment Manager has seen a growing case of evidence,
including several transactional datapoints, pointing towards a positive change
in market sentiment for valuing these assets - including the potential to run
anaerobic digestion facilities on an unsubsidised basis.
In light of this change, the Investment Manager has provided a sensitivity
extending the useful economic lives of its AD portfolio by up to five years -
capped at the duration of land rights already in place. Such an extension
would result in an uplift in the portfolio valuation of £22.8 million (3.5
pence per share).
The sensitivity of the portfolio to movements in AD feedstock prices is as
follows:
30 Sep 2023 (unaudited)
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases £7.5m £898.9m Decreases £7.6m
Change in NAV per share Increases 1.1p 119.7p Decreases 1.1p
31 Mar 2023 (audited)
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases £7.3m £898.5m Decreases £7.8m
Change in NAV per share Increases 1.1p 123.1p Decreases 1.2p
The sensitivity of the portfolio to movements in corporation tax rates is as
follows:
30 Sep 2023 (unaudited)
Corporation tax Minus 2% Base 25% Plus 2%
Change in portfolio valuation Increases £14.0m £898.9m Decreases £14.6m
Change in NAV per share Increases 2.1p 119.7p Decreases 2.2p
31 Mar 2023 (audited)
Corporation tax Minus 2% Base 25% Plus 2%
Change in portfolio valuation Increases £15.0m £898.5m Decreases £15.3m
Change in NAV per share Increases 1.8p 123.1p Decreases 1.7p
Euro/sterling exchange rate sensitivity
As the proportion of the portfolio assets with cash flows denominated in euros
represents a small proportion of the portfolio value at 30 September 2023, the
Directors consider the sensitivity to changes in euro/sterling exchange rates
to be insignificant.
The Directors consider that the carrying value amounts of financial assets and
financial liabilities recorded at amortised cost in the financial statements
are approximately equal to their fair values.
Uncontracted revenues on non-energy generating portfolio sensitivity
Non-energy generating assets, such as batteries and controlled environment
agriculture and aquaculture are not materially affected by either scarcity of
natural resource nor power price markets. Therefore, the Investment Manager
has presented a sensitivity illustrating an assumed 10% change in all
uncontracted revenues for each year of the asset lives. An increase in
uncontracted revenues of 10% would result in an upward movement in the
portfolio valuation of £14.2 million (2.2 pence per share) compared to a
decrease in value of £18.7 million (2.8 pence per share) if those revenues
were reduced by the same amount.
16. Guarantees and other commitments
As at 30 September 2023, the Company has provided a guarantee over the
Company's wholly owned subsidiary UK HoldCo's obligations under the £170
million RCF signed on 21 May 2021, the one-year extension to its existing
£170 million RCF signed in March 2023 and the £30 million accordion facility
activated in March 2023.
As at 30 September 2023, the Group has the following future investment
obligations over a 12-month horizon: €8.6 million (equivalent to £7.5
million) to FEIP, £4.7 million to the CNG Foresight project, 187.1 million
NOK (equivalent to £15.9 million) to the CE Rjukan project, £3.8 million to
the CE Glasshouse project, £4.5 million to Sandridge battery storage, £2.0
million to West Gourdie, €2.4 million (equivalent to £2.1 million) to HH2E
Werk Thierbach GmbH and €1.2 million (equivalent to £1.1 million) to the
Lubmin green hydrogen investment.
The Company had no other commitments or guarantees.
17. Subsidiaries
The following subsidiaries have not been consolidated in these financial
statements as a result of applying the requirements of "Investment Entities:
Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS
27)":
Name Category Place of business Registered office Ownership interest Voting rights
JLEN Environmental Assets Group (UK) Limited((1)) Intermediate holding UK A 100% 100%
HWT Limited Intermediate holding UK B 100% 100%
JLEAG Solar 1 Limited Operating subsidiary UK C 100% 100%
Croft Solar PV Limited Dormant UK C 100% 100%
Cross Solar PV Limited Dormant UK C 100% 100%
Domestic Solar Limited Dormant UK C 100% 100%
Ecossol Limited Dormant UK C 100% 100%
Hill Solar PV Limited Dormant UK C 100% 100%
Share Solar PV Limited Dormant UK C 100% 100%
Residential PV Trading Limited Dormant UK C 100% 100%
Angel Solar Limited Dormant UK C 100% 100%
Easton PV Limited Project holding company UK D 100% 100%
Pylle Solar Limited Project holding company UK D 100% 100%
Second Energy Limited Operating subsidiary UK D 100% 100%
ELWA Holdings Limited Project holding company UK E 80% 80%
ELWA Limited((2)) Operating subsidiary UK E 80% 81%((2))
JLEAG Wind Holdings Limited Project holding company UK A 100% 100%
JLEAG Wind Limited Project holding company UK A 100% 100%
Amber Solar Parks (Holdings) Limited Project holding company UK D 100% 100%
Amber Solar Park Limited Operating subsidiary UK D 100% 100%
Fryingdown Solar Park Limited Operating subsidiary (dormant) UK D 100% 100%
Five Oaks Solar Parks Limited Operating subsidiary (dormant) UK D 100% 100%
Bilsthorpe Wind Farm Limited Operating subsidiary UK F 100% 100%
Ferndale Wind Limited Project holding company UK F 100% 100%
Castle Pill Wind Limited Project holding company UK F 100% 100%
Wind Assets LLP Operating subsidiary UK F 100% 100%
Hall Farm Wind Farm Limited Operating subsidiary UK F 100% 100%
Branden Solar Parks (Holdings) Limited Project holding company UK D 100% 100%
Branden Solar Parks Limited Operating subsidiary UK D 100% 100%
KS SPV 3 Limited Operating subsidiary UK D 100% 100%
KS SPV 4 Limited Operating subsidiary UK D 100% 100%
Carscreugh Renewable Energy Park Limited Operating subsidiary UK F 100% 100%
Wear Point Wind Limited Operating subsidiary UK F 100% 100%
Monksham Power Ltd Project holding company UK D 100% 100%
Frome Solar Limited Operating subsidiary UK D 100% 100%
BL Wind Limited Operating subsidiary UK F 100% 100%
Burton Wold Extension Limited Operating subsidiary UK F 100% 100%
New Albion Wind Limited Operating subsidiary UK F 100% 100%
Dreachmhor Wind Farm Limited Operating subsidiary UK F 100% 100%
France Wind GP Germany GmbH((3)) Project holding company DE G 100% 100%
France Wind Germany GmbH & Co. KG((3)) Project holding company DE G 100% 100%
CSGH Solar Limited Project holding company UK A 100% 100%
CSGH Solar (1) Limited Project holding company UK A 100% 100%
sPower Holdco 1 (UK) Limited Project holding company UK D 100% 100%
sPower Finco 1 (UK) Limited Project holding company UK D 100% 100%
Higher Tregarne Solar (UK) Limited Operating subsidiary UK D 100% 100%
Crug Mawr Solar Farm Limited Operating subsidiary UK D 100% 100%
Golden Hill Solar (UK) Limited Project holding company UK D 100% 100%
Golden Hill Solar Limited Operating subsidiary UK D 100% 100%
Shoals Hook Solar (UK) Limited Operating subsidiary UK D 100% 100%
CGT Investment Limited Project holding company UK H 100% 100%
CWMNI GWYNT TEG CYF Operating subsidiary UK H 100% 100%
Moelogan 2 (Holdings) Cyfyngedig Project holding company UK H 100% 100%
Moelogan 2 C.C.C. Operating subsidiary UK H 100% 100%
Vulcan Renewables Limited Operating subsidiary UK I 100% 100%
Llynfi Afan Renewable Energy Park (Holdings) Limited Dormant UK A 100% 100%
Llynfi Afan Renewable Energy Park Limited Operating subsidiary UK A 100% 100%
Bio Collectors Holdings Limited Project holding company UK M 70% 70%
Bio Collectors Limited Operating subsidiary UK M 70% 70%
Riverside Bio Limited Operating subsidiary UK M 70% 70%
Riverside AD Limited Operating subsidiary UK M 70% 70%
Green Gas Oxon Limited Project holding company UK J 52.6% 52.6%
Icknield Gas Limited Operating subsidiary UK J 52.6% 52.6%
Egmere Energy Limited Operating subsidiary UK I 100% 100%
Grange Farm Energy Limited Operating subsidiary UK I 100% 100%
Biogas Meden Limited Operating subsidiary UK I 100% 100%
Yorkshire Hydropower Holdings Limited Project holding company UK F 100% 100%
Yorkshire Hydropower Limited Operating subsidiary UK F 100% 100%
Northern Hydropower Holdings Limited Project holding company UK F 100% 100%
Northern Hydropower Limited Operating subsidiary UK F 100% 100%
Warren Power Limited Project holding company UK I 100% 100%
Warren Energy Limited Operating subsidiary UK I 100% 100%
Merlin Renewables Limited Operating subsidiary UK I 100% 100%
Codford Biogas Limited Operating subsidiary UK K 100% 100%
Rainworth Energy Limited Operating subsidiary UK L 100% 100%
FS West Gourdie Limited Operating subsidiary UK D 100% 100%
Spruce Bioenergy Limited Project holding company UK A 100% 100%
Cramlington Renewable Energy Developments Limited Operating subsidiary UK N 100% 100%
(1) JLEN Environmental Assets Group (UK) Limited is the only entity
directly held by the Company.
(2) ELWA Holdings Limited holds 81% of the voting rights and a 100% share
of the economic benefits in ELWA Limited.
(3) Underlying French wind assets were disposed of in January 2022.
Registered offices
A. C/O Foresight Group LLP, The Shard, 32 London Bridge Street, London
SE1 9SG, United Kingdom
B. 50 Lothian Road, Festival Square, Edinburgh, Midlothian EH3 9WJ
C. C/O Freetricity, 1 Filament Walk, Suite 203, Suite 216, Wandsworth,
London SW18 4GQ, United Kingdom
D. Long Barn, Manor Farm, Stratton-on-the-Fosse, Radstock BA3 4QF
E. Dunedin House, Auckland Park, Mount Farm, Milton Keynes MK1 1BU
F. C/O Res Limited, Beaufort Court, Egg Farm Lane, Kings Langley,
Hertfordshire WD4 8LR
G. Steinweg 3-5, Frankfurt am Main, 60313, Germany
H. Cae Sgubor Ffordd Pennant, Eglwysbach, Colwyn Bay, Conwy LL28 5UN
I. 10-12 Frederick Sanger Road, Guildford, Surrey GU2 7YD
J. Friars Ford, Manor Road, Goring, Reading RG8 9EL
K. C/O External Services Limited, 20 Central Avenue, St Andrews
Business Park, Norwich NR7 OHR, United Kingdom
L. C/O Material Change, The Watering Farm, Creeting St. Mary, Ipswich,
Suffolk IP6 8ND
M. 10 Osier Way, Mitcham, Surrey CR4 4NF
N. 8 White Oak Square, London Road, Swanley BR8 7AG
18. Events after balance sheet date
A dividend for the quarter ended 30 September 2023 of 1.89 pence per share was
approved by the Board on 24 November 2023. Please refer to note 6 for further
details.
ALTERNATIVE PERFORMANCE MEASURES ("APMs")
APM Purpose Calculation APM value Reconciliation to IFRS
Total shareholder return (since IPO and annualised) Measure of financial performance, indicating the amount an investor reaps from Since IPO: closing share price as at 30 September 2023 plus all dividends 70.1% Calculation for total shareholder return since IPO: closing share price as at
investing since IPO and expressed as a percentage (annualised or total since since IPO assumed reinvested, divided by the share price at IPO, expressed as 30 September 2023, as per key investments metrics on page 32 of the Half-year
IPO of the Company) a percentage report 2023 plus all dividends since IPO assumed reinvested, divided by the
share price at IPO, expressed as a percentage
Annualised: closing share price as at 30 September 2023 plus all dividends 5.7% annualised Calculation for annualised total shareholder return: closing share price as at
since IPO assumed reinvested, divided by the share price at IPO, to the power 30 September 2023 as per key investment metrics on page 32 of the Half-year
of one over the number of years since IPO, expressed as a percentage report 2023 plus all dividends since IPO assumed reinvested, divided by the
share price at IPO, to the power of one over the number of years since IPO,
expressed as a percentage
Net Asset Value per share Allows investors to gauge whether shares are trading at a premium or a The net assets divided by the number of ordinary shares in issuance 119.7 pence The calculation divides the net assets as per the statement of financial
discount by comparing the Net Asset Value per share with the share price position on page 39 of the Half-year report 2023 by the closing number of
ordinary shares in issue as per note 12 page 48 of the Half-year report 2023
Market capitalisation Provides an indication of the size of the Company Closing share price as at 30 September 2023 multiplied by the closing number £653.6 million The calculation uses the closing share price as at 30 September 2023 as per
of ordinary shares in issuance the key investment metric table on page 32 of the Half-year report 2023 and
the closing number of ordinary shares as per note 12 of the financial
statements on page 48 of the Half-year report 2023
Gross Asset Value ("GAV") A measure of the value of the Company's total assets The sum of total assets of the Company as shown on the statement of financial £1,109.8 million This is the total debt (RCF drawn: £125.0 million plus project level debt:
position and the total debt of the Group and underlying investments £192.8 million) plus the Net Asset Value as per statement of financial
position on page 39 of the Half-year report 2023
Gross Asset Value on investment basis including debt held at SPV level
Gearing Ascertain financial risk in the Group's balance sheet Total debt of the Group and underlying investments as a percentage of GAV 28.7% The calculation uses the total debt (RCF drawn: £125.0 million plus project
level debt: £192.8 million) and shows this as a percentage of the GAV
Distributions, repayments and fees from portfolio A measure of performance from the underlying portfolio Total cash received from investments in the period £46.2 million As per "Cash flows of the Group for the period", also titled "Cash
distributions from environmental infrastructure investments" on page 34 of the
Half-year report 2023
Cash flow from operations of the Group Gauges operating revenues and expenses of the Group As per the "Cash flows of the Group for the period" table on page 34 of the £32.2 million Detailed breakdown as per page 34 of the Half-year report 2023 in the "Cash
Half-year report 2023, the calculation takes the cash distributions from flows of the Group for the period"
environmental infrastructure investments and subtracts the following:
administrative expenses, Directors' fees and expenses, Investment Manager
fees, financing costs (net of interest income)
Cash dividend cover Investors can gauge the ability of the Group to generate cash surplus after Cash flow from operations of the Group divided by dividend paid within the 1.32x The calculation uses the cash flows from operations as per "Cash flows of the
payment of dividend reporting period Group for the period" on page 34 of the Half-year report 2023 and the
dividends paid in cash to shareholders as per the cash flow statement on page
41 of the Half-year report 2023.
Ongoing charges ratio A measure of the annual reduction in shareholder returns due to operational The ongoing charges have been calculated, in accordance with AIC guidance, as 1.18% Annualised ongoing charges for the year ended 31 March 2023 have been
expenses, based on historical data annualised ongoing charges (i.e. excluding acquisition costs and other calculated as £9.7 million. The ongoing charges ratio divides this by the
non-recurring items) divided by the average published undiluted Net Asset published average Net Asset Value over the last four quarters to the
Value in the period. Total annualised ongoing charges include Investment calculation date (including 31 March 2023)
Manager fees, legal and professional fees, administration fees, Directors'
fees
NAV total return since IPO Measure of financial performance (annualised), which indicates the movement of Closing NAV per ordinary share as at 30 September 2023 plus all dividends 122.9% Calculated as the closing NAV per ordinary share as per the Statement of
the value of the Company since IPO since IPO assumed reinvested, divided by the NAV at IPO, to the power of 1, Financial Position on page 39 of the Half-year report 2023.
over the number of years since IPO
GLOSSARY OF KEY TERMS
AD
anaerobic digestion
AIFM
Alternative Investment Fund Manager
AIFM Directive
the EU Alternative Investment Fund Managers Directive (No. 2011/61/EU)
APMs
alternative performance measures are financial measures that are not currently
defined or specified in the applicable financial reporting framework
bps
basis points
business day
means any day (other than a Saturday, Sunday or bank holiday) on which
commercial banks are open for non automated business in London and Guernsey
the Company or JLEN or the Fund
JLEN Environmental Assets Group Limited (formerly John Laing Environmental
Assets Group Limited)
controlled environment
refers to the science of cultivating human-grade produce in a contained
structure that is precisely regulated to ensure control over environmental
conditions such as lighting, temperature, humidity, water supply, air quality,
nutrient content etc.
discontinuation vote
As part of the Company's discount management policies, the Board intends to
propose a discontinuation vote if the ordinary shares trade at a significant
discount to Net Asset Value per share for a prolonged period of time. If, in
any financial year, the ordinary shares have traded, on average, at a discount
in excess of 10% to the Net Asset Value per share, the Board will propose a
special resolution at the Company's next annual general meeting that the
Company ceases to continue in its present form. If such vote is passed, the
Board will be required to formulate proposals to be put to shareholders within
four months to wind up or otherwise reconstruct the Company, bearing in mind
the illiquid nature of the Company's underlying assets. The discount
prevailing on each business day will be determined by reference to the
closing market price of ordinary shares on that day and the Net Asset Value
per share
DNO
Distribution Network Operator
EGL
Electricity Generator Levy
ESG
Environmental, Social and Governance
EU
European Union
FEIP
Foresight Energy Infrastructure Partners
Foresight Group or Foresight
Foresight Group LLP
FPCs
Fixed Price Certificates
GHG
greenhouse gas
GPA
gas purchase agreement
Group
JLEN Environmental Assets Group Limited and its intermediate holding companies
UK HoldCo and HWT Limited
GWh
gigawatt hour
intermediate holding companies
companies within the Group which are used as pass-through vehicles to invest
in underlying environmental infrastructure assets, namely UK HoldCo and HWT
Limited
Investment Manager
Foresight Group
IPO
Initial Public Offering
MWe
megawatt electric
MWh
megawatt hour
MWhth
megawatt hours of heat
NAV
Net Asset Value
Net Asset Value per share
The net assets of the Company divided by the number of ordinary shares in
issuance
NOx
nitrogen oxides
ordinary shares
means ordinary shares of no par value each in the capital of the Company
portfolio
the 42 assets in which JLEN had a shareholding as at 30 September 2023
portfolio valuation
the sum of all the individual investments' net present values
PPAs
Power Purchase Agreements
PPP/PFI
the Public Private Partnership procurement model
PRI
Principles for Responsible Investment
price cannibalisation
the depressive influence on the wholesale power price at timings of high
output from intermittent weather-driven generation such as solar and wind
RCF
revolving credit facility
REMA
review of electricity market arrangements
RIDDOR
Reporting of Injuries, Diseases and Dangerous Occurrences Regulations
ROCs
Renewables Obligation Certificates
RPI
Retail Price Index
SFDR
Sustainable Finance Disclosure Regulation
SONIA
Sterling Overnight Index Average
SPV
special purpose vehicle
TCFD
Task Force on Climate-related Financial Disclosures
total shareholder return
total shareholder return combines the share price movement and dividends since
IPO expressed as an annualised percentage
UK HoldCo
JLEN Environmental Assets Group (UK) Limited, wholly owned subsidiary of JLEN
Environmental Assets Group Limited
WADR
weighted average discount rate
KEY COMPANY DATA
Company information JLEN Environmental Assets Group Limited is a Guernsey‑registered
closed‑ended investment company (registered number 57682) with a premium
listing on the London Stock Exchange and a constituent of the FTSE 250 index
Registered address 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL
Ticker/SEDOL JLEN/BJL5FH8
Company year end 31 March
Dividend payments Quarterly in March, June, September and December
Investment Manager Foresight Group LLP, No OC300878, registered in England and Wales and
authorised and regulated by the Financial Conduct Authority
Company Secretary and Administrator Sanne Fund Services Limited, a company incorporated in Guernsey on 13 April
2005 (registered number 43046)
Market capitalisation £653.6 million at 30 September 2023
Investment Manager fees 1.0% per annum of the Adjusted Portfolio Value of the investments up to £0.5
billion, falling to 0.8% per annum for investments above £0.5 billion. No
performance or acquisitions fees
Investment Manager term Rolling one-year notice
ISA, PEP and SIPP status The ordinary shares are eligible for inclusion in PEPs and ISAs (subject to
applicable subscription limits) provided that they have been acquired in the
market, and they are permissible assets for SIPPs
AIFMD status The Company is classed as an externally managed Alternative Investment Fund
under the Alternative Investment Fund Managers Regulations 2013 and the AIFM
Directive. The Investment Manager acts as the Company's AIFM
Non-mainstream pooled investment status The Board conducts the Company's affairs, and intends to continue to conduct
the Company's affairs, such that the Company would qualify for approval as an
investment trust if it were resident in the United Kingdom. It is the Board's
intention that the Company will continue to conduct its affairs in such a
manner and that independent financial advisers should therefore be able to
recommend its ordinary shares to ordinary retail investors in accordance with
the FCA's rules relating to non‑mainstream pooled investment products
FATCA The Company has registered for FATCA and has a GIIN number 2BN95W.99999.SL.831
Investment policy The Company's investment policy is set out on pages 29 to 31 of the Annual
Report 2023
Website www.jlen.com (http://www.jlen.com)
DIRECTORS AND ADVISERS
Directors
Ed Warner (Chair)
Stephanie Coxon (Senior Independent Director)
Alan Bates
Jo Harrison
Hans Joern Rieks
Nadia Sood
Administrator to the Company, Company Secretary and registered office
Sanne Fund Services (Guernsey) Limited (formerly Praxis Fund Services)
1 Royal Plaza
Royal Avenue
St Peter Port
Guernsey GY1 2HL
Channel Islands
Registrar
Link Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
UK transfer agent
Link Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent B43 4TU
United Kingdom
Auditor
KPMG Channel Islands Limited
Glategny Court
Glategny Esplanade
St Peter Port
Guernsey GY1 1WR
Channel Islands
Investment Manager
Foresight Group LLP
The Shard
32 London Bridge Street
London SE1 9SG
United Kingdom
Public relations
SEC Newgate
14 Greville Street
London EC1N 8SB
United Kingdom
Corporate broker
Winterflood Securities Limited
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Corporate bankers
HSBC
PO Box 31
St Peter Port
Guernsey GY1 3AT
Channel Islands
CAUTIONARY STATEMENT
The inside front cover to page 35 of the Half-year report 2023, including
about JLEN, our purpose, our investment case, performance highlights, our
portfolio at a glance, the Chair's statement, the Investment Manager's report,
investment portfolio and valuation, operational review, sustainability and
ESG, and the financial review (together, the review section) have been
prepared solely to provide additional information to shareholders to assess
JLEN's strategies and the potential for those strategies to succeed. These
should not be relied on by any other party or for any other purpose.
The review section may include statements that are, or may be deemed to be,
"forward-looking statements". These forward‑looking statements can be
identified by the use of forward‑looking terminology, including the terms
"believes", "estimates", "anticipates", "forecasts", "projects", "expects",
"intends", "may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology.
These forward‑looking statements include all matters that are not historical
facts. They appear in a number of places throughout this report and include
statements regarding the intentions, beliefs or current expectations of the
Directors and the Investment Manager concerning, amongst other things, the
investment objectives and investment policy, financing strategies, investment
performance, results of operations, financial condition, liquidity, prospects,
opportunities and distribution policy of the Company and the markets in which
it invests.
These forward‑looking statements reflect current expectations regarding
future events and performance and speak only as at the date of this report. By
their nature, forward‑looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not
occur in the future.
Forward‑looking statements are not guarantees of future performance or
results and will not necessarily be accurate indications of whether or not or
the times at or by which such performance or results will be achieved. The
Company's actual investment performance, results of operations, financial
condition, liquidity, prospects, opportunities, distribution policy and the
development of its financing strategies may differ materially from the
impression created by the forward‑looking statements contained in this
report.
Subject to their legal and regulatory obligations, the Directors and the
Investment Manager expressly disclaim any obligations to update or revise any
forward‑looking statement contained herein to reflect any change in
expectations with regard thereto or any change in events, conditions or
circumstances on which any statement is based.
In addition, the review section may include target figures for future
financial periods. Any such figures are targets only and are not forecasts.
This Half‑year Report has been prepared for the Group as a whole and
therefore gives greater emphasis to those matters which are significant to
JLEN Environmental Assets Group Limited and its subsidiary undertakings when
viewed as a whole.
ENDS
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