TIDMJLEN
RNS Number : 8108U
JLEN Environmental Assets Group Ltd
27 November 2023
The following amendment has been made to the 'Half-year results
for the period to 30 September 2023' announcement released on 27
November 2023 at 07h00 under RNS No. 6694U.
The original announcement incorrectly stated the NAV total
return for the six-month period as 1.4% and the announcement below
has been updated to state the NAV total return for the period as
0.3%. All other details remain unchanged.
The full amended text is shown below.
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 0.3% 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 GBP898.9m (31 March 2023: GBP898.5m)
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 31 March 30 September
2023 2023 2022
Net Asset Value ("NAV") GBP792.1m GBP814.6m GBP829.6m
-------------- ------------- --------------
NAV per share 119.7p 123.1p 125.4p
-------------- ------------- --------------
Gross Asset Value ("GAV") GBP1,109.8bn GBP1,119.8bn GBP1,111.4bn
-------------- ------------- --------------
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 .
The half-year report is available on the Company's website at
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 , 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
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
Chris Tann er
Edward Mountney +44(0)20 3667 8100
Wilna de Villiers institutionalir@foresightgroup.eu
Winterflood Securities Limited
Neil Langford +44(0)20 3100 0000
SEC Newgate +44 (0)20 3757 6882
Elisabeth Cowell Jlen@secnewgate.co.uk
Alice Cho
Harry Handyside
Sanne Fund Services (Guernsey)
Limited
Matt Falla
Gemma Berry +44 (0)20 3530 3600
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
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
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
GBP792.1m
FY 2023: GBP814.6m
Net Asset Value per share(1)
119.7p
FY 2023: 123.1p
Portfolio value
GBP898.9m
FY 2023: GBP898.5m
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
-- GBP7 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 GBP5.2 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
GBP12.1 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 GBP898.9 million, compared to GBP898.5 million at 31 March
2023. The increase of GBP0.4 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
GBPm GBPm
-------------------------------------------------------------- ----------- -----------
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 GBP30.0 million (including deferred
consideration) and cash receipts from investments of GBP46.2
million, the rebased valuation is GBP882.3 million. The portfolio
valuation at 30 September 2023 is GBP898.9 million (31 March 2023:
GBP898.5 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 GBP17.4 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
Oct 23-Dec Full year
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 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
rates
(2.0%) (1.5%) (1.5%) (1.5%) (1.5%) (1.5%) (1.5%) (1.5%)
-------------------------------------- -------- -------- -------- -------- -------- -------- --------
Corporation 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
tax
(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 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0% 24.0%
tax (IRES)
(24.0%) (24.0%) (24.0%) (24.0%) (24.0%) (24.0%) (24.0%) (24.0%)
-------------------------------------- -------- -------- -------- -------- -------- -------- --------
Regional 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8% 4.8%
tax (IRAP)
(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 EUR1.15/GBP1 at 30 September 2023 (EUR1.14/GBP1 at
31 March 2023).
The overall uplift in value resulting from changes to economic
assumptions in the period is GBP13.5 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 GBP4.2 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
discount rate Gearing
-------------------- ---------------- -------
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 GBP31.4 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 GBP52.6 million.
Of this, in addition to the discount rate unwind, the key
valuation adjustments include an uplift of GBP11.7 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 GBP5/MWh until 2028 and GBP2/MWh for
the remaining life of the asset (31 March 2023: GBP5/MWh for 2024,
GBP3/MWh for 2025 and GBP0.45/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 GBP19.8 million
(3.0 pence per share) compared to an uplift in value of GBP20.7
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 GBP38.5 million (5.8 pence
per share) compared to a downward movement in value of GBP38.7
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 GBP0/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 GBP22.8 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 GBP14.2 million (2.2
pence per share) compared to a decrease in value of GBP18.7 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 GBP7.6 million (1.1
pence per share) compared to an uplift in value of GBP7.5 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 GBP18.3 million (2.8 pence per
share) compared to a decrease in value of GBP19.5 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 GBP18.0 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 GBP14.6 million
(2.2 pence per share) compared to an uplift in value of GBP14.0
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 GBP 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
Type Asset Location Ownership (MW) operations
date
---------------- ---------------------------- ------------ -------------- -------- ------------------
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
Jan 2003 &
Moel Moelogan Wales 100% 14.3 Sep 2008
New Albion England 100% 14.4 Jan 2016
Wear Point Wales 100% 8.2 Jun 2014
---------------------------- ----------------------------- -------------- -------- ------------------
Total 161.0
---------------------------------------------------------- -------------- -------- ------------------
Waste & Bio Collectors waste
bioenergy 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
Mar 2014 &
CSGH England 100% 33.5 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 West Gourdie battery Scotland 100% n/a June 2023
& sustainable storage
solutions
Clayfords battery Scotland 50% n/a Ready to build
storage
Lunanhead battery Scotland 50% n/a Ready to build
storage
Sandridge battery England 50% n/a Under construction
storage
CNG Foresight low England 25%(8) n/a Various
carbon transport
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 Norway Minority stake n/a Under construction
system
---------------- ---------------------------- ------------ -------------- -------- ------------------
Total n/a
---------------- ---------------------------- ------------ -------------- -------- ------------------
Oct 2011 &
Hydro Northern Hydropower England 100% 2.0(9) Oct 2017
Oct 2015 &
Yorkshire Hydropower England 100% 1.8(9) Nov 2016
---------------------------- ----------------------------- -------------- -------- ------------------
Total 3.8
---------------------------------------------------------- -------------- -------- ------------------
FEIP Avalon solar and Spain n/a n/a Development
green hydrogen
JLEN has
committed
EUR25 million
to FEIP
Carna pumped storage Scotland n/a n/a Under construction
hydro and co-located
wind
Kölvallen wind Sweden n/a n/a Under construction
MaresConnect interconnector Republic n/a n/a Development
of Ireland and under
construction
Puskakorpi wind Finland n/a n/a Under construction
Quartz battery storage England n/a n/a Development
Skaftåsen Vindkraft Sweden n/a n/a Under construction
AB wind
Torozos wind Spain n/a n/a Dec 2019
85 Degrees geothermal Netherlands n/a n/a Operational/under
heat 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 30 Sep 2023 31 Mar 2023
price
------------------------ ------------------- -------------------
Wind GBP140.89 per MWhe GBP383.29 per MWhe
AD electric GBP306.71 per MWhe GBP197.99 per MWhe
AD gas-to-grid GBP142.04 per MWhth GBP128.59 per MWhth
Biomass GBP230.75 per MWhe GBP306.92 per MWhe
Energy-from-waste EUR95.36 per MWhe EUR128.73 per MWhe
Solar GBP243.63 per MWhe GBP241.82 per MWhe
Hydro GBP279.77per MWhe GBP285.66 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 EUR9.2 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 EUR25 million to
Foresight Energy Infrastructure Partners SCSp ("FEIP"), a
Luxembourg limited partnership investment vehicle. At 30 September
2023, EUR14.9 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 GBP170 million
and an uncommitted accordion facility of up to GBP30 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 GBP125.0
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
GBP15.9 million (31 March 2023: GBP18.0 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 GBPmillion (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 GBP814.6 million at 31 March 2023 to
GBP792.1 million at 30 September 2023.
The net assets of GBP792.1 million comprise GBP898.9 million
portfolio value of environmental infrastructure investments and the
Company's cash balances of GBP0.4 million, partially offset by
GBP104.8 million of intermediate holding companies' net liabilities
and other net liabilities of GBP2.4 million.
The intermediate holding companies' net liabilities of GBP104.8
million comprise a GBP125.0 million credit facility loan, partially
offset by cash balances of GBP15.5 million and other net assets of
GBP4.7 million.
Analysis of the Group's net assets at 30 September 2023
At 30 Sep At 31 Mar
All amounts presented in GBPmillion (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 GBP15.9 million (31
March 2023: GBP18.0 million), including GBP0.4 million in the
Company's statement of financial position (31 March 2023: GBP0.1
million) and GBP15.5 million in the intermediate holding companies
(31 March 2023: GBP17.9 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 GBP125.0 million of
its revolving credit facility (31 March 2023: GBP103.5 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 GBPmillion 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
GBP1.9 million (six -- month period ended 30 September 2022:
GBP89.7 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 GBPmillion (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 GBP6.9 million,
including the receipt of GBP15.7 million of interest on the UK
HoldCo loan notes, GBP13.8 million of dividends also received from
UK HoldCo and a net loss on investments at fair value of GBP22.6
million.
The operating expenses included in the income statement for the
period were GBP5.0 million, in line with expectations. These
comprise GBP4.2 million of Investment Manager fees and GBP0.8
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
GBP125.0m
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
GBP0.4 million (31 March 2023: GBP0.1 million). The breakdown of
the movements in cash during the period is shown below.
Cash flows of the Company for the period (GBPmillion):
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
GBP15.9 million (31 March 2023: GBP18.0 million) and borrowings
under the revolving credit facility of GBP125.0 million (31 March
2023: GBP103.5 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 (GBPmillion):
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
GBP46.2 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 GBP32.2 million covered dividends paid in the six --
month period to 30 September 2023 of GBP24.3 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 (GBP11.8 million) in respect of
the quarter to 31 March 2023. Interim dividends of 1.89 pence per
share were paid in September 2023 (GBP12.5 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 (GBP12.5 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
INDEPENT 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 GBP'000s GBP'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 GBP'000s GBP'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 GBP'000s GBP'000s GBP'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 GBP'000s GBP'000s GBP'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 GBP'000s GBP'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 GBP15.9 million (including GBP0.4 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 GBP200 million. As at 30 September
2023, the Company's wholly owned subsidiary UK HoldCo had borrowed
GBP125.0 million under the facility, leaving GBP75.0 million
undrawn, of which GBP2.4 million (EUR2.8 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)
GBP'000s GBP'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 GBP1,200.
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)
GBP'000s GBP'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: 1.78) 12,503 11,775
------------------------------------------------------------------------------------------- ----------- -----------
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)
GBP'000s GBP'000s
-------------------------------------------------------------------------------------------- ----------- -----------
Earnings
Earnings for the purposes of basic and diluted earnings per share, being net profit
attributable
to owners of the Company 1,866 89,748
-------------------------------------------------------------------------------------------- ----------- -----------
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings
per share 661,531,229 661,531,229
-------------------------------------------------------------------------------------------- ----------- -----------
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)
GBP'000s GBP'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)
GBP'000s GBP'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
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'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 GBP22,617,000 (year
ended 31 March 2023: gain of GBP53,944,000, six-month period ended
30 September 2022: gain of GBP68,974,000). This, together with
interest received on loan notes of GBP15,701,000 (year ended 31
March 2023: GBP31,401,000, six-month period ended 30 September
2022: GBP15,744,000) and dividend income of GBP13,800,000 (year
ended 31 March 2023: GBP23,100,000, six-month period ended 30
September 2022: GBP10,200,000) 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 6.5% for 2023, decreasing
to 3.5% for 2024, 3% to 3% until 2030, decreasing
to 2030 and 2.25% thereafter 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 2.0% for the life of 2.0% for 2023, decreasing
rates each asset to 1.5% from 2024
Italy - deposit rates 0% 0%
------------------------- ----------------------------- -----------------------------
UK - corporation tax 25% from April 2023 25% from April 2023 onwards
rates onwards
------------------------- ----------------------------- -----------------------------
Italy - corporation tax National rate of 24%, National rate of 24%,
rates plus applicable regional plus applicable regional
premiums 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 EUR9.2 million. As at
30 September 2023, the amount invested was EUR8.1 million.
During the period, GBP5.9 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 EUR2.0 million into the Thierbach green
hydrogen development project during the period.
The Group also invested GBP7.2 million into the CE Rjukan
project, GBP2.3 million into the Sandridge battery construction
asset, GBP2.0 million into FS West Gourdie battery construction
asset, GBP1.9 million into the CE Glasshouse project, EUR1.3
million into FEIP and GBP0.9 million to various other projects.
9. Trade and other receivables
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
GBP'000s GBP'000s
---------------- ----------- -----------
Prepayments 105 143
---------------- ----------- -----------
Closing balance 105 143
---------------- ----------- -----------
10. Trade and other payables
30 Sep 2023 31 Mar 2023
(unaudited) (audited)
GBP'000s GBP'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 GBP348.9
million which were issued by UK HoldCo (31 March 2023: outstanding
amount of GBP348.9 million).
As at 30 September 2023, UK HoldCo had an outstanding balance of
GBP125.0 million under a revolving credit facility (31 March 2023:
GBP103.5 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 GBP'000s shares GBP'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)
GBP'000s GBP'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 GBP500 million; and
b) 0.8% per annum of the Adjusted Portfolio Value of the Fund in excess of GBP500 million.
The total Investment Manager fee charged to the condensed
unaudited income statement for the six months ended 30 September
2023 was GBP4,227,425 (six-month period ended 30 September 2022:
GBP4,237,233) of which GBP2,137,494 remained payable as at 30
September 2023 (31 March 2023: GBP2,057,000).
(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 GBP167,250 (six-month period ended 30 September 2022:
GBP154,879). The Directors were paid expenses of GBP4,907 in the
six -- month period (six-month period ended 30 September 2022:
GBP5,959).
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 GBP7,013
(six-month period ended 30 September 2022: GBP8,529).
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 Financial
fair
Cash and assets held value through liabilities
at at
cash balances amortised profit or amortised Total
cost loss cost
GBP'000s GBP'000s GBP'000s GBP'000s GBP'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 Financial
fair
Cash and assets held value through liabilities
at at
cash balances amortised profit or amortised Total
cost loss cost
GBP'000s GBP'000s GBP'000s GBP'000s GBP'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 GBP898.9m Decreases
GBP20.7m GBP19.8m
Change in NAV per share Increases 119.7p Decreases
3.1p 3.0p
----------------------------- ---------- --------- ---------
31 Mar 2023 (audited)
----------------------------- ---------- --------- ---------
Discount rate Minus 0.5% Base 8.4% Plus 0.5%
Change in portfolio valuation Increases GBP898.5m Decreases
GBP21.7m GBP20.7m
Change in NAV per share Increases 123.1p Decreases
3.3p 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 GBP18.0 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% Plus 0.5%
(2023), 3.5%
(2024), then
3% (to 2030)
then 2.25%
thereafter,
Change in portfolio valuation Decreases GBP898.9m Increases
GBP19.5m GBP18.3m
Change in NAV per share Decreases 119.7p Increases
2.9p 2.8p
----------------------------- ---------- ------------- ---------
31 Mar 2023 (audited)
----------------------------- ---------- ------------- ---------
Inflation rates Minus 0.5% Base 6.5% Plus 0.5%
(2023), then
3% to 2030
then 2.25%
Change in portfolio valuation Decreases GBP898.5m Increases
GBP21.1m GBP21.4m
Change in NAV per share Decreases 123.1p Increases
3.2p 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 Base P50 P10 (10
year) year)
Change in portfolio valuation Decreases GBP898.9m Increases
GBP28.1m GBP27.1m
Change in NAV per share Decreases 119.7p Increases
4.3p 4.1p
----------------------------- --------- --------- ---------
Energy yield: solar P90 (10 Base P50 P10 (10
year) year)
Change in portfolio valuation Decreases GBP898.9m Increases
GBP9.5m GBP9.6m
Change in NAV per share Decreases 119.7p Increases
1.4p 1.4p
----------------------------- --------- --------- ---------
Energy yield: hydro P90 (10 Base P50 P10 (10
year) year)
Change in portfolio valuation Decreases GBP898.9m Increases
GBP1.3m GBP1.4m
Change in NAV per share Decreases 119.7p Increases
0.2p 0.2p
----------------------------- --------- --------- ---------
31 Mar 2023 (audited)
----------------------------- ------------- --------- -------------
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP898.5m Increases
GBP27.3m GBP26.2m
Change in NAV per share Decreases 123.1p Increases
4.1p 4.0p
----------------------------- ------------- --------- -------------
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP898.5m Increases
GBP10.7m GBP10.5m
Change in NAV per share Decreases 123.1p Increases
1.6p 1.6p
----------------------------- ------------- --------- -------------
Energy yield: hydro P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP898.5m Increases
GBP1.4m GBP1.7m
Change in NAV per share Decreases 123.1p Increases
0.2p 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 GBP898.9m Increases
GBP38.7m GBP38.5m
Change in NAV per share Decreases 119.7p Increases
5.9p 5.8p
----------------------------- --------- --------- ---------
31 Mar 2023 (audited)
----------------------------- --------- --------- ---------
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP898.5m Increases
GBP40.9m GBP40.4m
Change in NAV per share Decreases 123.1p Increases
6.2p 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 GBP22.8 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 GBP898.9m Decreases
GBP7.5m GBP7.6m
Change in NAV per share Increases 119.7p Decreases
1.1p 1.1p
----------------------------- --------- --------- ---------
31 Mar 2023 (audited)
----------------------------- --------- --------- ---------
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases GBP898.5m Decreases
GBP7.3m GBP7.8m
Change in NAV per share Increases 123.1p Decreases
1.1p 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 GBP898.9m Decreases
GBP14.0m GBP14.6m
Change in NAV per share Increases 119.7p Decreases
2.1p 2.2p
----------------------------- --------- --------- ---------
31 Mar 2023 (audited)
----------------------------- --------- --------- ---------
Corporation tax Minus 2% Base 25% Plus 2%
Change in portfolio valuation Increases GBP898.5m Decreases
GBP15.0m GBP15.3m
Change in NAV per share Increases 123.1p Decreases
1.8p 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 GBP14.2 million (2.2 pence per share) compared to a
decrease in value of GBP18.7 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 GBP170 million RCF signed on 21 May 2021, the one-year
extension to its existing GBP170 million RCF signed in March 2023
and the GBP30 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: EUR8.6 million
(equivalent to GBP7.5 million) to FEIP, GBP4.7 million to the CNG
Foresight project, 187.1 million NOK (equivalent to GBP15.9
million) to the CE Rjukan project, GBP3.8 million to the CE
Glasshouse project, GBP4.5 million to Sandridge battery storage,
GBP2.0 million to West Gourdie, EUR2.4 million (equivalent to
GBP2.1 million) to HH2E Werk Thierbach GmbH and EUR1.2 million
(equivalent to GBP1.1 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%
Project holding
Easton PV Limited company UK D 100% 100%
Project holding
Pylle Solar Limited company UK D 100% 100%
Second Energy
Limited Operating subsidiary UK D 100% 100%
ELWA Holdings Project holding
Limited company UK E 80% 80%
ELWA Limited(2) Operating subsidiary UK E 80% 81%(2)
JLEAG Wind Holdings Project holding
Limited company UK A 100% 100%
Project holding
JLEAG Wind Limited company UK A 100% 100%
Amber Solar Parks Project holding
(Holdings) Limited company UK D 100% 100%
Amber Solar Park
Limited Operating subsidiary UK D 100% 100%
Fryingdown Solar Operating subsidiary
Park Limited (dormant) UK D 100% 100%
Five Oaks Solar Operating subsidiary
Parks Limited (dormant) UK D 100% 100%
Bilsthorpe Wind Farm
Limited Operating subsidiary UK F 100% 100%
Ferndale Wind Project holding
Limited company UK F 100% 100%
Castle Pill Wind Project holding
Limited 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 Project holding
(Holdings) Limited 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%
Project holding
Monksham Power Ltd 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 Project holding
Germany GmbH(3) company DE G 100% 100%
France Wind Germany Project holding
GmbH & Co. KG(3) company DE G 100% 100%
Project holding
CSGH Solar Limited company UK A 100% 100%
CSGH Solar (1) Project holding
Limited company UK A 100% 100%
sPower Holdco 1 (UK) Project holding
Limited company UK D 100% 100%
sPower Finco 1 (UK) Project holding
Limited 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 Project holding
(UK) Limited 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 Project holding
Limited company UK H 100% 100%
CWMNI GWYNT TEG CYF Operating subsidiary UK H 100% 100%
Moelogan 2
(Holdings) Project holding
Cyfyngedig 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 Project holding
Holdings Limited 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 Project holding
Limited 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 Project holding
Holdings Limited company UK F 100% 100%
Yorkshire Hydropower
Limited Operating subsidiary UK F 100% 100%
Northern Hydropower Project holding
Holdings Limited company UK F 100% 100%
Northern Hydropower
Limited Operating subsidiary UK F 100% 100%
Project holding
Warren Power Limited 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 Project holding
Limited 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 Measure of financial Since IPO: closing 70.1% Calculation
return (since performance, share price for total shareholder
IPO and annualised) indicating the as at 30 September return since
amount an investor 2023 plus all IPO: closing
reaps from investing dividends since share price
since IPO and IPO assumed as at 30 September
expressed as reinvested, 2023, as per
a percentage divided by the key investments
(annualised share price metrics on page
or total since at IPO, expressed 32 of the Half-year
IPO of the Company) as a percentage report 2023
plus all dividends
since IPO assumed
reinvested,
divided by the
share price
at IPO, expressed
as a percentage
--------------------- ---------------------
Annualised: 5.7% annualised Calculation
closing share for annualised
price as at total shareholder
30 September return: closing
2023 plus all share price
dividends since as at 30 September
IPO assumed 2023 as per
reinvested, key investment
divided by the metrics on page
share price 32 of the Half-year
at IPO, to the report 2023
power of one plus all dividends
over the number since IPO assumed
of years since reinvested,
IPO, expressed divided by the
as a percentage share price
at IPO, to the
power of one
over the number
of years since
IPO, expressed
as a percentage
--------------------- --------------------- ----------------------- ------------------ ----------------------
Net Asset Value Allows investors The net assets 119.7 pence The calculation
per share to gauge whether divided by the divides the
shares are trading number of ordinary net assets as
at a premium shares in issuance per the statement
or a discount of financial
by comparing position on
the Net Asset page 39 of the
Value per share Half-year report
with the share 2023 by the
price closing number
of ordinary
shares in issue
as per note
12 page 48 of
the Half-year
report 2023
--------------------- --------------------- ----------------------- ------------------ ----------------------
Market capitalisation Provides an Closing share GBP653.6 million The calculation
indication of price as at uses the closing
the size of 30 September share price
the Company 2023 multiplied as at 30 September
by the closing 2023 as per
number of ordinary the key investment
shares in issuance 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 A measure of The sum of total GBP1,109.8 million This is the
Value ("GAV") the value of assets of the total debt (RCF
the Company's Company as shown drawn: GBP125.0
total assets on the statement million plus
of financial project level
Gross Asset position and debt: GBP192.8
Value on investment the total debt million) plus
basis including of the Group the Net Asset
debt held at and underlying Value as per
SPV level investments statement of
financial position
on page 39 of
the Half-year
report 2023
--------------------- --------------------- ----------------------- ------------------ ----------------------
Gearing Ascertain financial Total debt of 28.7% The calculation
risk in the the Group and uses the total
Group's balance underlying investments debt (RCF drawn:
sheet as a percentage GBP125.0 million
of GAV plus project
level debt:
GBP192.8 million)
and shows this
as a percentage
of the GAV
--------------------- --------------------- ----------------------- ------------------ ----------------------
Distributions, A measure of Total cash received GBP46.2 million As per "Cash
repayments and performance from investments flows of the
fees from portfolio from the underlying in the period Group for the
portfolio period", also
titled "Cash
distributions
from environmental
infrastructure
investments"
on page 34 of
the Half-year
report 2023
--------------------- --------------------- ----------------------- ------------------ ----------------------
Cash flow from Gauges operating As per the "Cash GBP32.2 million Detailed breakdown
operations of revenues and flows of the as per page
the Group expenses of Group for the 34 of the Half-year
the Group period" table report 2023
on page 34 of in the "Cash
the Half-year flows of the
report 2023, Group for the
the calculation period"
takes the cash
distributions
from environmental
infrastructure
investments
and subtracts
the following:
administrative
expenses, Directors'
fees and expenses,
Investment Manager
fees, financing
costs (net of
interest income)
--------------------- --------------------- ----------------------- ------------------ ----------------------
Cash dividend Investors can Cash flow from 1.32x The calculation
cover gauge the ability operations of uses the cash
of the Group the Group divided flows from operations
to generate by dividend as per "Cash
cash surplus paid within flows of the
after payment the reporting Group for the
of dividend period 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 A measure of The ongoing 1.18% Annualised ongoing
ratio the annual reduction charges have charges for
in shareholder been calculated, the year ended
returns due in accordance 31 March 2023
to operational with AIC guidance, have been calculated
expenses, based as annualised as GBP9.7 million.
on historical ongoing charges The ongoing
data (i.e. excluding charges ratio
acquisition divides this
costs and other by the published
non-recurring average Net
items) divided Asset Value
by the average over the last
published undiluted four quarters
Net Asset Value to the calculation
in the period. date (including
Total annualised 31 March 2023)
ongoing charges
include Investment
Manager fees,
legal and professional
fees, administration
fees, Directors'
fees
--------------------- --------------------- ----------------------- ------------------ ----------------------
NAV total return Measure of financial Closing NAV 122.9% Calculated as
since IPO performance per ordinary the closing
(annualised), share as at NAV per ordinary
which indicates 30 September share as per
the movement 2023 plus all the Statement
of the value dividends since of Financial
of the Company IPO assumed Position on
since IPO reinvested, page 39 of the
divided by the Half-year report
NAV at IPO, 2023.
to the power
of 1, 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 Sanne Fund Services Limited, a company incorporated
Administrator in Guernsey on 13 April 2005 (registered number
43046)
------------------------ -------------------------------------------------------
Market capitalisation GBP653.6 million at 30 September 2023
------------------------ -------------------------------------------------------
Investment Manager fees 1.0% per annum of the Adjusted Portfolio Value
of the investments up to GBP0.5 billion, falling
to 0.8% per annum for investments above GBP0.5
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 The Board conducts the Company's affairs, and
investment status 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
------------------------ -------------------------------------------------------
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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END
IR PPGBWGUPWGQM
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November 27, 2023 11:42 ET (16:42 GMT)
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