TIDMJLEN
RNS Number : 5232T
JLEN Environmental Assets Group Ltd
25 November 2021
25 November 2021
JLEN Environmental Assets Group Limited
Announcement of half-year results for the period to 30 September
2021
The Directors of JLEN Environmental Assets Group Limited (the
"Company" or "JLEN"), the listed environmental infrastructure fund,
are pleased to announce the Company's half-year results to 30
September 2021.
Financial highlights
-- Portfolio valuation as at 30 September 2021 of GBP678.8m (31 March 2021: GBP571.4m)
-- NAV per ordinary share of 98.4 pence as at 30 September 2021
(31 March 2021: 92.2 pence), increase primarily driven by an upward
revision of the power price forecast and above forecast inflation
during the period
-- Further interim dividend of 1.70 pence per share declared
making total dividend declared for the six months to 30 September
2021 of 3.40 pence, in line with the target set out in the 2021
Annual Report. Cash dividend cover of 1.06 times on dividends
declared during the period
-- Share price total return for the period since IPO of 63.6% (6.8% annualised)
Portfolio highlights
-- Three acquisitions completed in the period, giving a total of
39 assets, including investments in new sectors - biomass CHP and
energy-from-waste
-- Diversified portfolio by value: 29% wind, 24% anaerobic
digestion ("AD"), 18% solar, 25% waste and wastewater, 2% hydro and
2% low carbon & energy efficiency
-- Operating performance of the portfolio during the six-month
period was positive from several sectors of the portfolio, with
agri AD, solar, hydro and our network of CNG refuelling stations
all exceeding their generation targets.
-- The main detractor for the period was the wind portfolio,
which was materially below generation target due to low wind
resource
Other highlights
-- Strong pipeline of diversified assets for further growth
-- The Company raised GBP56.9 million in an oversubscribed placing in May 2021
-- Announced a new ESG-linked, GBP170 million revolving credit facility expiring in May 2024
-- Appointment of Alan Bates and Jo Harrison to the Board of Directors, effective 10 June 2021
Dividend Timetable
Ex-dividend date: 2 December 2021
Record date: 3 December 2021
Payment date: 29 December 2021
Richard Morse, Chairman of JLEN, said:
"The portfolio has performed well, in both operational and
financial terms, bolstered by significant increases in projected
power prices and despite some challenges due to exceptionally low
wind speeds during the period. The recent bioenergy acquisitions
provide potential for value enhancement and the pipeline includes
value accretive opportunities. Our portfolio is well positioned to
support the UK's decarbonisation strategy on the back of COP26
while providing attractive returns to shareholders."
Half-year report
A copy of the half-year report has been submitted to the
National Storage Mechanism and will shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The
half-year report will also be available on the Company's website at
www.jlen.com where further information on JLEN can be found.
Details of the conference call for analysts and investors
A webinar for the annual results will be held at 10:00 a.m. (UK
time) on 25 November, hosted by Chris Holmes and Chris Tanner,
Co-lead Investment Advisers to JLEN. To register for the webinar,
please contact SEC Newgate on +44 (0)20 3757 6880 or by email at
JLEN@secnewgate.co.uk.
Presentation materials will be posted on the Company's website,
www.jlen.com, from 9.00am.
For further information, please contact:
Foresight Group +44(0)20 3667 8100
Chris Tanner
Chris Holmes
Winterflood Investment Trusts +44(0)20 3100 0000
Neil Langford
Chris Mills
Newgate Communications +44(0) 20 3757 6880
Elisabeth Cowell
Megan Kovach
OUR PURPOSE
JLEN aims to invest in a diversified portfolio of environmental
infrastructure projects that support more environmentally friendly
approaches to economic activity whilst generating a sustainable
financial return. It seeks to integrate consideration of
sustainability and environmental, social and governance ("ESG")
management into its activities, which help to manage risks and
identify opportunities.
ABOUT US
JLEN Environmental Assets Group Limited ("JLEN", the "Company"
or the "Fund") is an environmental infrastructure investment fund
which aims to provide shareholders with a sustainable, progressive
dividend, paid quarterly, and to preserve the capital value of its
portfolio on a real basis over the long term through the
reinvestment of cash flows not required for the payment of
dividends.
Investment policy
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.
AT A GLANCE AT 30 SEPTEMBER 2021
Our results for the six--month period ended 30 September
2021.
HY 2021 FY 2021 Change
----------------------------- --------- --------- ------
Market capitalisation(1) GBP645.9m GBP612.3m +5.5%
Share price 107.4p 112.0p -4.1%
Net Asset Value GBP591.5m GBP504.2m +17.3%
Net Asset Value per share(1) 98.4p 92.2p +6.7%
Portfolio value GBP678.8m GBP571.4m +18.8%
----------------------------- --------- --------- ------
HY 2021 HY 2020 Change
----------------------------- ------- ------- ------
Half-year dividend per share 3.40p 3.38p +0.6%
----------------------------- ------- ------- ------
-- Dividend of 3.40 pence per share declared for the six months
to 30 September 2021 (six months to 30 September 2020: 3.38 pence).
Cash dividend cover(1) of 1.06x in the period
-- Three acquisitions completed in the period, giving a total of 39 assets
-- NAV per share of 98.4 pence, up from 92.2 pence per share at
31 March 2021, primarily due to the increase in near-term
electricity and gas price forecasts
-- Total shareholder return(1) since IPO (31 March 2014) to 30
September 2021 of 63.6% (6.8% annualised)
-- Profit before tax for the period of GBP51.8 million
(six--month period ended 30 September 2020: GBP10.7 million)
(1) The market capitalisation, Net Asset Value per share, cash
dividend cover and total shareholder return are alternative
performance measures ("APMs"). The APMs within the accounts are
defined on page 65of the JLEN Half-year Report 2021.
Note: Past performance cannot be relied on as a guide to future
performance.
PORTFOLIO AT A GLANCE
JLEN's portfolio comprises a diversified mix of environmental
infrastructure assets.
39(1)
Assets
371.5(1)
MW capacity
(1) Does not include investment into FEIP.
MARKET AND OPPORTUNITIES
The Board believe that the environmental infrastructure market
will continue to develop and that future growth in the Company's
portfolio can come from investing in a wider pool of asset classes,
as allowed for through the recent change to the Company's
investment policy.
The environmental infrastructure markets in which the Fund
operates have experienced a continuous period of growth, supported
by worldwide commitments to decarbonise, increasing focus on the
protection of the natural environment and the treatment and process
of waste, and decreasing capital costs. These trends are expected
to create an attractive environment for further investment into
these markets, in the UK and Europe.
Investment policy Market developments Investment outlook
--------------------------------- ----------------------------------- --------------------------------
The Company invests in Factors including increasing
environmental infrastructure global population, rising
projects, such as infrastructure living standards, increasing
assets, projects and urbanisation, and greater
asset-backed businesses scientific, public and
that utilise natural political focus on the
or waste resources or effects of climate change
support more environmentally have all served to increase
friendly approaches to the importance and scale
economic activity, support of the environmental
the transition to a low infrastructure market
carbon economy or which globally.
mitigate the effects
of climate change.
--------------------------------- ----------------------------------- --------------------------------
Generation of renewable Global investment in Renewable energy continues
energy the energy infrastructure to be supported by the
market has been significant, UK Government, which
with Bloomberg calculating has published the budget
investment into renewable for its fourth Contracts
energy in 2020 totalling for Difference ("CfD")
$303.5 billion (up 2% auction, to allocate
on the prior year). Zero c.GBP265 million to renewables
emission or low carbon development. This will
energy generation continues also allow for onshore
to be central to European wind and solar to access
carbon targets and of some of the CfD funding
the global decarbonisation (previously they could
agenda. not). The UK has also
confirmed its commitment
to close coal--fired
plants by 1 October 2024
(brought forward from
2025).
--------------------------------- ----------------------------------- --------------------------------
Low carbon and energy The UK's national target Low carbon investment
efficiency under the Renewable Energy opportunities could encompass
Directive was, by 2020, combined heat and power
for 15% of gross final systems, battery storage
energy consumption to and flexible generation,
come from renewable sources. low carbon agriculture,
The final outturn was co-location of battery
13.6%, which consisted storage with existing
of 38.7% for electricity, assets, electric vehicle
10.3% for transport and and low carbon transport
6.6% for heat. This implies infrastructure such as
that both the transport biofuels.
and heat sectors need
to make further progress
in order to hit the 2030
target of 32%, with electricity
already meeting this
target.
--------------------------------- ----------------------------------- --------------------------------
Supply and treatment The Climate Change Committee Investment activity into
of water and processing ("CCC") sixth Carbon new waste infrastructure
of waste Budget reflects on the is likely to come from
contribution of GHG emissions private sector led developments
from the waste sector seeking to dispose of
(6% of 2018 UK emissions) residual waste from households
and proposes measures and commercial and industrial
including waste prevention, sectors.
recycling and banning
biodegradable waste from
landfill, reducing residual
waste sent to energy--from--waste
facilities and exploring
Carbon Capture and Storage
installation on these
facilities to aid in
reducing emissions.
--------------------------------- ----------------------------------- --------------------------------
Geographic spread of Opportunities to invest JLEN's mandate supports
investments into environmental infrastructure geographic diversification,
stretch into multiple reducing its exposure
jurisdictions given the to the UK power market,
global demand for assets regulatory framework
that support the transition and weather systems.
to a low carbon economy. The Investment Adviser
Using the Investment can take advantage of
Adviser's in-country in-country presence across
presence across Europe, Europe and Australia
further geographic diversification to generate investment
is anticipated. opportunities outside
of the UK.
--------------------------------- ----------------------------------- --------------------------------
CHAIRMAN'S STATEMENT
The portfolio has performed well, bolstered by significant
increases in projected power prices and despite exceptionally low
wind speeds. The recent bioenergy acquisitions provide potential
for value enhancement and the pipeline includes value--accretive
opportunities.
On behalf of the Board, I am pleased to present the Half-year
Report of JLEN Environmental Assets Group Limited for the six
months ended 30 September 2021.
JLEN timeline
March 2021
-- Paid a dividend of 1.69 pence per share (relating to the
three-month period ended 31 December 2020)
May 2021
-- Acquisition of a 50% stake in Sandridge Battery Storage
Limited, a construction stage 50MW battery storage project located
in Wiltshire, UK
-- Acquisition of a 45% stake in Energie Tecnologie Ambiente
("ETA"), a 16.8MW energy-from-waste power plant located in
Manfredonia, Italy
-- Announced a new ESG-linked GBP170 million revolving credit facility expiring in May 2024
-- Raised GBP56.9 million in an oversubscribed placing
June 2021
-- Paid a dividend of 1.69 pence per share (relating to the
three-month period ended 31 March 2021)
-- Announced the appointment of Alan Bates and Jo Harrison as non--executive Directors
-- Acquisition of a 100% stake in Cramlington Renewable Energy
Developments Limited, a biomass combined heat and power plant
located in Cramlington, UK
September 2021
-- JLEN annual general meeting ("AGM")
-- Announced the resignation of Peter Neville as non--executive Director
-- Paid a dividend of 1.70 pence per share (relating to the
three--month period ended 30 June 2021)
Results
During the period under review, the Net Asset Value ("NAV") per
share at 30 September 2021 was 98.4 pence, up from 92.2 pence at 31
March 2021, mainly as a result of an upward revision of the power
price forecasts, above forecast inflation during the period, and a
decrease in discount rates on the solar assets in line with
observable market evidence.
There has been positive performance from several sectors of the
portfolio, with agri AD, solar, hydro and our network of CNG
refuelling stations all beating budget. The main detractor for the
period was the wind portfolio, which was materially below budget
due to low wind resource. The Company has made three investments
during the period: a construction stage battery storage project
located in the UK, a biomass combined heat and power plant located
in the UK and an energy-from-waste plant located in Italy. These
acquisitions represent further diversification within the portfolio
and the biomass and energy-from-waste plants benefit from long-term
subsidies, providing strong inflation-linked revenue streams.
JLEN's profit before tax for the six-month period to 30
September 2021 was GBP51.8 million (six months to 30 September
2020: GBP10.7 million) and earnings per share for the period were
8.8 pence (six months to 30 September 2020: 2.0 pence). While
noting that the seasonal lack of wind is likely to have an impact
on dividend cover for the year, the Board is maintaining its
determination to deliver targeted dividends to shareholders and
reaffirms its guidance of 6.80 pence for the year to 31 March
2022.
Cash received from the portfolio by way of distributions, which
includes interest, loan repayments and dividends, was GBP26.7
million (six months to 30 September 2020: GBP24.4 million). Net
cash inflows from the investment portfolio (after operating and
finance costs) of GBP21.7 million (six months to 30 September 2020:
GBP20.1 million) cover the interim dividends of GBP20.4 million
paid in the half--year period by approximately 1.06 times (six
months to 30 September 2020: GBP18.3 million; 1.1 times). On a
dividend--declared basis for the half year, dividend cover was 1.06
times.
Dividends
For the year to 31 March 2021, the Company achieved its target
dividend of 6.76 pence per share by the payment of four interim
dividends.
In line with the total target for the year ending 31 March 2022
of 6.80 pence per share set out in our 2021 Annual Report, a
quarterly dividend of 1.70 pence per share was paid in September
2021 for the quarter to 30 June 2021.
The Board has declared an interim dividend of 1.70 pence per
share for the quarter to 30 September 2021, payable on 29 December
2021, to shareholders on the register as at 3 December 2021. The
ex-dividend date will be 2 December 2021. This is in line with our
declared dividend target of 6.80 pence for the year ending 31 March
2022.
Portfolio performance
Total generation for the period from JLEN's diverse renewables
portfolio was 564GWh, 10% below budget. The shortfall is largely
attributable to lower than normal generation from the wind
portfolio which in some areas of the UK, during the summer, saw
their lowest average wind speeds for 20 years and consequently was
32% below budget. Excluding the wind portfolio, generation from the
portfolio was slightly below budget, although agri AD, solar and
hydro all made positive contributions. The recently acquired
thermal bioenergy projects, ETA and Cramlington, have shown good
underlying performance. Recent generation from ETA, an Italian
waste-to-energy project, has been very encouraging, although the
plant experienced some negative effects over the summer due to high
ambient temperatures. The Cramlington combined heat and power
project was bought out of administration with a known backlog of
maintenance tasks and the asset managers continue to work through
these; some variability in performance is to be expected.
Both concession-based projects have continued to perform in line
with expectations. The ELWA waste management project has continued
to exceed its key contractual targets for diversion from landfill.
The Tay wastewater project has experienced flows broadly in line
with expectations for the period as a whole while noting an
increase in high rainfall events which the network will adapt to.
Both projects continue to perform well financially.
The Company's investment into low carbon refuelling stations for
HGVs has also performed well in the period, with good progress
being made on further construction of a pipeline refuelling
stations and gas dispensed being 31% ahead of budget for the
period.
Acquisitions
During the period under review, the Company announced
investments into three new projects:
-- a 50% stake in Sandridge Battery Storage Limited, a 50MW
construction stage battery storage project located in the UK;
-- a 45% stake in Energie Tecnologie Ambiente S.r.l., a 16.8MW
energy-from-waste plant located in Southern Italy; and
-- a 100% stake in Cramlington Renewable Energy Developments, a
biomass combined heat and power plant located in Cramlington, UK.
The plant has a 28MW electrical capacity and 8MW heat capacity.
The new acquisitions bring the total MW capacity of the
portfolio to 371.5MW and bring further diversification to the
portfolio both by technology type and geography.
Share capital
In May 2021, the Company raised GBP56.9 million via an
institutional placing, making full use of its tap issuance facility
of 10% of issued share capital. This was at a price of 104 pence
per share, a 12.8% premium to NAV, achieved via a book-building
process. The proceeds were used to pay down amounts outstanding
under its revolving credit facility.
Valuation
The Net Asset Value at 30 September 2021 is GBP591.5 million,
comprising GBP678.8 million portfolio valuation, GBP19.1 million of
cash held by the Group, together with outstanding revolving credit
debt of GBP111.1 million and a positive working capital balance of
GBP4.7 million.
The Investment Adviser has prepared a fair market valuation of
the portfolio as at 30 September 2021. This 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 portfolio
investment.
This valuation uses key assumptions which are recommended by the
Investment Adviser using its experience and judgement, having
considered available comparable market transactions and financial
market data in order to arrive at a fair market value.
To provide assurance to the Board with respect to the valuation,
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 of GBP678.8
million for the portfolio of 39 investments as at 30 September
2021.
The most significant factor to impact the valuation has been the
marked increase in short-term gas and electricity prices, driven by
the Covid--19 recovery and the macro picture for gas where supply
is tight. This added GBP21.6 million to the valuation. Average gas
prices saw a 278% increase over the past six months and the average
index price over the period was up 300% over the same period last
year. The Investment Adviser has been active with PPA
counterparties, fixing prices for seasons up to winter 2023. This
serves to insulate the Fund from future near-term power price
changes, including limiting the upside if prices continue to
climb.
Risks and uncertainties
The principal risks facing the Company are set out in the Annual
Report 2021 and these are all still considered relevant. In the
period under review and in the near term, the Investment Adviser
considers that Covid-19 is an ongoing risk facing the Company with
various indirect additional risks caused by the pandemic to
consider. To date, the Company has proved to be resilient in this
challenging environment and most assets have continued to perform
well. Nevertheless, the effects of further lockdowns on supply
chains and energy prices continue to be a potential risk that will
continue to be monitored.
The Company is protected to some degree from electricity price
volatility by its diversified portfolio, which features several
revenue streams that are not connected to the electricity price.
The Investment Adviser has also hedged against price risk by taking
out short--term fixed price arrangements with PPA providers. The
Company has seasonal fixed price arrangements in place for 100% of
the solar portfolio by generation through March 2023. Likewise,
fixed price arrangements are in place for 100% of the wind
portfolio by generation through March 2022, after which the fixed
volume tapers by season to 87% to September 2022 then 70% to March
2023, 46% to September 2023 and 40% out to March 2024.
The energy price situation has also raised the risk of energy
suppliers that provide PPAs to renewable generators becoming
insolvent. The Investment Adviser has reviewed the whole
portfolio's exposure to this risk and has concluded that it is not
material to the Fund, although it continues to monitor the market
carefully. More information can be found in the risks and risk
management section of the Half-year Report 2021 report.
Finally, the Board and Investment Adviser continue to monitor
the situation in the aftermath of Brexit. While recent issues in
the UK economy on the supply side have not significantly impacted
the portfolio, issues such as shortages of fuel and shortages of
HGV drivers can lead to delays in parts coming to site from the
supply chain. The Investment Adviser has been working with
operators where necessary to identify alternative supply
chains.
Environmental, social and governance
The ESG landscape is developing and gaining recognition at all
levels of society, prompted, in part, by increased awareness of
climate change. The UN's Intergovernmental Panel on Climate Change
("IPCC") recently published a report stating that the world is
expected to pass 2C by the middle of this century in emissions
scenarios that do not feature a strong near--term mitigation.
However, the report also showed that reaching net-zero targets
would work to stabilise and possibly reduce world surface
temperatures.
Also during the period there has been increased scrutiny of
modern slavery practices and supply chain oversight, prompted by
the discovery of links to forced labour in the production of
polysilicon - a major component of solar panels. JLEN's solar parks
were built before polysilicon was linked to forced labour camps;
however, the issue has prompted the Investment Adviser to engage
with an external consultant to review its Modern Slavery Statement.
Further information on the work that Foresight is undertaking in
this regard is available on page 35 of the Half-year Report
2021.
Both of these developments highlight how important the
management of ESG matters is and the Board is proud that the
Company's investment activities are contributing to the transition
to a net-zero economy and of the work that goes on to try to
improve our ESG practices. We are conscious that our assets may not
be perfect from a sustainability perspective, but we are confident
that they all have a part to play in that transition. Further work
on the collection and implementation of JLEN's ESG KPIs that were
announced in the Annual Report 2021 is ongoing and a dedicated ESG
Committee has been set up to sit alongside and complement the work
already done in this area by the Risk and Audit Committees.
Outlook
The Board continues to view the wider market environment as
favourable for the Company's investment policy. The resilience
shown during the Covid-19 pandemic has reinforced the value of
established environmental infrastructure assets and now that
economies have fully embarked on their fiscal and regulatory
stimulus programmes, the outlook continues to appear promising.
Prompted by COP26, market discussions have been dominated by how
pledges can be translated into physical infrastructure. The focus
has fallen on the finance sector to facilitate a greener economy.
The sector is being asked to direct their capital to help solve
environmental issues and it is also being asked to "future-proof"
those investments, to plan for climate change scenarios. The latest
study by Climate Action Tracker ("CAT"), suggest that global
greenhouse gas emissions in 2030 will be double the level needed to
meet the Paris agreement target of limiting heating to 1.5C. This
stresses the need for firm, irrevocable legislation and sets the
tone for the renewable infrastructure market.
During the period, the Climate Change Committee ("CCC") 2021
Progress Report to Parliament has been published. This report notes
that lockdown measures led to a decrease in UK emissions in 2020 of
13% from the previous year, although driving reductions in
emissions requires sustained government leadership, underpinned by
a strong net zero strategy.
Areas the CCC highlight that require particular attention
include:
-- a heat and building strategy;
-- transport, hydrogen, biomass and food; and
-- plans to decarbonise energy from waste.
These are all areas that JLEN has either invested into or has
the potential for future investment. While power price forecasts
have rebounded strongly over the short term, it remains to be seen
how this will feed into market competition for core renewables. It
is anticipated that wind and solar acquisitions will continue to
remain challenging from a yield and return perspective. Bioenergy
assets remain attractive, as shown by the recent acquisitions of
ETA Manfredonia and Cramlington. We anticipate this sector to come
to provide further opportunities for JLEN.
Beyond these sectors, we continue to believe that JLEN's broad
investment mandate provides investors with access to a wider range
of environmental infrastructure opportunities that conform to the
Company's investment targets.
The Investment Adviser and the Board have been assessing
opportunities in sectors such as vertical farming and aquaculture,
which are good examples of new and potentially attractive sectors
for JLEN. Other areas include investments into glasshouses, in
particular opportunities attached to our existing AD assets where
renewable heat, power and CO(2) are readily available.
We continue to view the UK as the Company's main geographical
focus for capital deployment, although good opportunities continue
to present themselves in other jurisdictions. The Company also aims
to continue making selective direct investments into projects that
feature construction risk as a measured way of enhancing
returns.
Board matters
As announced in the Annual Report 2021, Peter Neville did not
stand for re--election at the AGM on 2 September 2021. My fellow
Directors and I wish Peter the best for his future and we are
grateful for the sterling service he has provided to JLEN, having
served as a Director since the Company's launch in 2014.
As part of our succession planning arrangements, Stephanie Coxon
has been appointed Chair of the Audit Committee and we have
formally welcomed Jo Harrison and Alan Bates to the Board. Jo, who
has extensive knowledge of ESG, has been instrumental in setting up
the new ESG sub-committee of the Board and has been appointed the
Chair of this committee. Alan is the CEO of Guernsey Electricity
and a director of the Channel Islands Electricity Grid, and brings
extensive operational experience of electricity, gas and water
infrastructure. Further biographical details on Alan and Jo can be
found on page 103 of the Annual Report 2021.
Richard Morse
Chairman
24 November 2021
THE INVESTMENT ADVISER
JLEN is advised by Foresight Group LLP. Foresight Group is a
listed infrastructure and private equity investment manager with
over GBP8.1 billion of assets under management and employing over
235 people worldwide.
About Foresight Group
Foresight Group was founded in 1984 and is a leading
infrastructure and private equity investment manager. 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
Group manages over 300 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 eight regionally focused
investment funds across the UK, supporting over 120 SMEs. Foresight
Group operates from 12 offices across six countries in Europe and
Australia with AUM of c.GBP8.1 billion as at 30 September 2021.
Foresight Group Holdings Limited listed on the Main Market of the
London Stock Exchange in February 2021. www.fsg-investors.com
Updates over the period
During the period, Foresight reported an estimated AUM of GBP8.1
billion at 30 September 2021 (31 March 2021: GBP7.2 billion), an
annualised increase of 25% in the six--month period, achieved
purely through organic growth.
Also during the period, Foresight closed Foresight Energy
Infrastructure Partners ("FEIP"), at a level that was 70% ahead of
its original target, raising EUR851 million in total. JLEN has
committed EUR20 million to FEIP, equal to a percentage of 2.4% of
total commitments.
Foresight values
We act conscientiously
We invest responsibly
We value sustainable, attractive returns
317(1)
assets managed
>2.9(1)
GW clean energy generating capacity
(1) As at 31 March 2021.
RISKS AND RISK MANAGEMENT
JLEN has a comprehensive risk management framework overseen by
the Risk Committee, comprising independent non-executive
Directors.
The Company's approach to risk governance and its risk review
process are set out in the risks and risk management section of the
Annual Report 2021.
The principal risks to the achievement of the Company's
objectives are unchanged from those reported on pages 42 to 48 of
the Annual Report 2021.
Developments in relation to these principal risks, particularly
those which could potentially have a short to medium-term impact
during the period to 31 March 2022, are outlined below.
Covid-19
Since the start of the first lockdown in March 2020, the Company
has experience of how the assets have performed in light of the
challenges presented by the Covid--19 pandemic. Operationally, the
portfolio has proven to be resilient; however, the pandemic has
presented some specific issues to individual projects such as Bio
Collectors and the Directors are of the view that these risks are
understood and assessed where possible. The longer-term macro risks
associated with Covid-19 are not yet clear but could include
measures such as higher taxes and/or higher inflation to deal with
increased government borrowing incurred to counter the
pandemic.
Energy prices
Since the depths of the Covid-19 lockdowns and the associated
reduction in economic activity that drove down power prices,
wholesale electricity and gas prices have rebounded extremely
strongly. 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. In the recent past,
that has shielded JLEN from low prices; now it prevents JLEN from
fully capitalising from very high spot prices in the short term.
JLEN's strategy continues to be to maintain a high level of rolling
fixes as the emphasis remains on protecting the downside and the
current uplift in energy prices has allowed the Investment Adviser
to capitalise on opportunities to fix future seasons at prices
above previous assumptions.
The energy price situation has also raised the risk of energy
suppliers that provide PPAs to renewable generators becoming
insolvent. JLEN contracts with a range of PPA providers. While the
majority of these providers are utilities or are backed by large
creditworthy institutions, one provider has shown signs of
financial difficulty. The Investment Adviser has reviewed the whole
portfolio and has taken steps to limit exposure to this
counterparty and has concluded that the risk to the Fund is not
material. The Investment Adviser continues to monitor the market
carefully and has developed a plan in the event that a counterparty
is unable to settle its commitments.
Brexit - political risk
Following the UK's exit from the European Union and subsequent
transition period on the 1 January 2021, it is not clear at this
stage what the precise impact on the UK environmental
infrastructure sector will be as the UK replaces EU regulations
with its own versions.. Although in some instances, such as carbon
trading schemes and sustainability taxonomies, new regulations are,
or are expected to be, similar to the EU ones that they replace.
The UK Government remains committed to UK infrastructure
development and whilst the UK Government may not in future be bound
by EU-set renewable obligations, the UK is still bound by national
and international renewable obligations, including the commitment
to "net zero" carbon emissions by 2050.
Supply chain risks - Brexit
The Investment Adviser continues to monitor possible disruptions
to UK and European supply chains, especially considering the recent
fuel crisis and labour shortages in the UK. Most of JLEN's assets
are operational and by the nature of the technology type only need
access to new parts and labour as part of a maintenance programme.
The assets which have more exposure to supply chain risks - for
example the AD and waste assets - have not experienced any material
disruption as a result of supply chain issues over the period.
Supply chain risks - ESG
During the period under review, links to forced labour have been
discovered in the production of polysilicon - a major component of
solar panels. JLEN's solar portfolio consists of 10 ground-mounted
solar plants and a portfolio of rooftop solar installations in the
UK and the solar portfolio accounts for around 20% of the whole
JLEN portfolio by value. All of JLEN's solar assets were acquired
in an operational state and JLEN has made no acquisitions of solar
assets since 2017. JLEN had no involvement in the procurement of
solar panels that feature in its solar assets and all plants were
constructed pre-2016. Industry analysts estimate that in 2016 less
than 10% of the world's solar-grade polysilicon came from Xinjiang.
Nevertheless, in the life of a typical solar farm, a small
proportion of panels will be replaced, in procuring any replacement
panels, the Investment Adviser will endeavour to source the panels
responsibly.
This is a matter which the Investment Adviser, Foresight Group,
and JLEN take seriously and supply chain protocols are continually
under review. Further information can be found page 35 of the
Half-year Report 2021.Foresight Group is a signatory to and is
fully supportive of Solar Energy UK's statement of 12 April 2021
which condemns any human rights abuses taking place anywhere in the
global energy supply chain and which calls for the development of a
supply chain transparency protocol.
Inflation
As the UK economy has recovered from the Covid-19 pandemic,
inflation has been running significantly above the general target
of the Bank of England ("BoE") to maintain price stability. The
most recent 12-month CPI measure is 3.1% against a long-term target
of 2%. RPI, which is more relevant for the Company as its subsidy
revenues and concession-based payments are linked to it, has
reached 4.9%. The underlying causes of this inflation are debated,
with the majority of economists and the BoE Monetary Policy
Committee believing that current inflation is short term in nature,
connected to supply side issues in restarting the economy after
Covid-19, and that the underlying trend will return to a more
modest level after around two years.
Several risks for the Company stem from inflation. The most
direct risk, concerning variability of costs and revenues, is
positively correlated with inflation.
The portfolio has a high proportion of revenues that are linked
to RPI and these will exceed any negative cash flow impacts from
inflation linked costs. If higher than trend inflation is expected,
then the earnings from the Company will increase, everything else
being equal.
If higher inflation assumptions become embedded for the longer
term, such that it becomes appropriate for the Company to revisit
its long-term inflation assumption of 3% until 2030, then this will
also benefit the NAV as future cash flows from the portfolio will
be assumed to be higher.
However, higher long-term inflation expectations may also have
impacts on other risks. If central banks believe that they need to
combat high inflation, we might expect to see interest rates rise.
The large majority of JLEN's debt is project finance at the project
level, fully hedged against interest rate rises and so this risk is
mitigated. However, the Company's RCF is not hedged and so an
increase in interest rates indirectly brought about by inflation
concerns would have a small negative impact on RCF interest costs
depending on the level of borrowing.
Higher inflation expectations may also change investors' views
on what constitutes a reasonable return from assets, including
environmental infrastructure assets. This would typically manifest
in an increase in the discount rates used to value such assets,
causing the value of such assets to decrease, everything else being
equal. The market for infrastructure assets remains very
competitive, and the return differential to gilts (generally used
as a proxy for a "risk free" return on capital) remains high, so
the Company does not expect any material negative movement in
discount rates for the foreseeable future.
Climate risk and climate disaster
As a long-term investor, JLEN is able to manage risk with a
long-term perspective. This means it can take long--term views on
climate risk in its portfolio. With altering weather patterns
brought on by climate change, resource availability and security of
the assets is a key area of focus for the Fund. The diversification
of the technologies that the Fund invests in means that the Fund is
not wholly reliant on any one weather resource, which spreads the
climate risk across the portfolio and helps to mitigate
unpredictable weather patterns in both the short and long term. The
period under review highlights the importance of this
diversification, as the wind resource experienced by the wind
portfolio, the largest component of the JLEN portfolio by value,
was very low.
INVESTMENT PORTFOLIO AND VALUATION
Investment portfolio
At 30 September 2021, the Group's investment portfolio comprised
interests in 39 project vehicles:
Total assets
39(1)
Total MW
371.5(1)
Number of assets MW
---------------- ------------------------------ -----
13 Wind 169.0
9 Anaerobic digestion 50.2
6 Solar 80.2
6 Waste & bioenergy 68.3
2 Hydro 3.8
3 Low carbon & energy efficiency n/a
---------------- ------------------------------ -----
Capacity
Asset Location Type Ownership (MW) Commercial operations date
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
Bilsthorpe UK (Eng) Wind 100% 10.2 Mar 2013
Burton Wold Extension UK (Eng) Wind 100% 14.4 Sep 2014
Carscreugh UK (Scot) Wind 100% 15.3 Jun 2014
Castle Pill UK (Wal) Wind 100% 3.2 Oct 2009
Dungavel UK (Scot) Wind 100% 26.0 Oct 2015
Ferndale UK (Wal) Wind 100% 6.4 Sep 2011
Hall Farm UK (Eng) Wind 100% 24.6 Apr 2013
Le Placis Vert France Wind 100% 4.0 Jan 2016
Llynfi Afan UK (Wal) Wind 100% 24.0 Mar 2017
Moel Moelogan UK (Wal) Wind 100% 14.3 Jan 2003 & Sep 2008
New Albion UK (Eng) Wind 100% 14.4 Jan 2016
Plouguernével France Wind 100% 4.0 May 2016
Wear Point UK (Wal) Wind 100% 8.2 Jun 2014
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
Biogas Meden UK (Eng) Anaerobic digestion 100% 5.0(2) Mar 2016
Egmere Energy UK (Eng) Anaerobic digestion 100% 5.0(3) Nov 2014
Grange Farm UK (Eng) Anaerobic digestion 100% 5.0(3) Sep 2014
Icknield Farm UK (Eng) Anaerobic digestion 53% 5.0(2) Dec 2014
Merlin Renewables UK (Eng) Anaerobic digestion 100% 5.0(3) Dec 2013
Peacehill Farm UK (Scot) Anaerobic digestion 49% 5.0(4) Dec 2015
Rainworth Energy UK (Eng) Anaerobic digestion 100% 2.2(5) Sep 2016
Vulcan Renewables UK (Eng) Anaerobic digestion 100% 13.0(3) Oct 2013
Warren Energy UK (Eng) Anaerobic digestion 100% 5.0(3) Dec 2015
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
Amber UK (Eng) Solar 100% 9.8 Jul 2012
Branden UK (Eng) Solar 100% 14.7 Jun 2013
CSGH UK (Eng) Solar 100% 33.5 Mar 2014 & Mar 2015
Monksham UK (Eng) Solar 100% 10.7 Mar 2014
Panther UK (Eng) Solar 100% 6.5 2011-2014
Pylle Southern UK (Eng) Solar 100% 5.0 Dec 2015
Bio Collectors UK (Eng) Waste management 70% 11.7(7) Dec 2013
Codford Biogas UK (Eng) Waste management 100% 3.8(5) 2014
Cramlington Renewable Biomass combined heat and
Energy Developments UK (Eng) power 100% 36.0(8) 2018
ELWA UK (Eng) Waste management 80% n/a 2006
Energie Tecnologie Ambiente
("ETA") Italy Energy-from-waste 45%(6) 16.8 2012
Tay UK (Scot) Wastewater 33% n/a Nov 2001
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
Northern Hydropower UK (Eng) Hydropower 100% 1.8(9) Oct 2011 & Oct 2017
Yorkshire Hydropower UK (Eng) Hydropower 100% 2.0(9) Oct 2015 & Nov 2016
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
CNG Foresight UK (Eng) Low carbon transport 25%(10) n/a Various
Sandridge Battery Storage UK (Eng) Battery storage 50% n/a Under construction
West Gourdie UK (Eng) Battery storage 100% n/a Under construction
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
FEIP Skaftåsen
Vindkraft AB Sweden Wind n/a n/a Under construction
FEIP Torozos Spain Wind n/a n/a Dec 2019
FEIP Puskakorpi Finland Wind n/a n/a Under construction
--------------------------- ---------- ---------------------------- --------- -------- --------------------------
Total 371.5
------------------------------------------------------------------- --------- -------- --------------------------
(1) Does not include investment into FEIP.
(2) MWth (thermal) and an additional 0.4MWe CHP engine for on-site power provision.
(3) MWth (thermal) and an additional 0.5MWe CHP engine for on-site power provision.
(4) MWth (thermal) and an additional 0.25MWe CHP engine for on-site power provision.
(5) Electrical exporting plant measured as MWe.
(6) Not including FEIP's ownership.
(7) 10MWth and an additional 1.7MWe capacity through two CHP engines.
(8) 28MWe (electrical) and 8MWth (thermal).
(9) Includes a 1.2MW battery storage.
(10) JLEN holds 25% of the "A" shares. "A" shares have a
different economic entitlement than "B" shares, including a
priority return.
Acquisitions in the period
1
Cramlington Renewable Energy Developments ("CRED")
CRED owns a biomass combined heat and power plant and its
underlying contracts and is located in Cramlington, UK. The plant
has a 28MW electrical capacity and 8MW of heat capacity.
Ownership interest: 100%
2
Energie Tecnologie Ambiente ("ETA")
ETA is a 16.8MW energy--from--waste power plant which processes
refuse derived fuel, located in the municipality of Manfredonia in
the Apulia region of southern Italy.
Ownership interest: 45%(6)
3
Sandridge Battery Storage Limited ("SBSL")
SBSL holds the development rights to construct the Sandridge
Battery Storage project, a 50MW lithium--ion battery energy storage
plant based in Melksham in Wiltshire, UK.
Ownership interest: 50%
The JLEN portfolio comprises a diversified range of assets
across different geographies, sectors, technologies and revenue
types, as illustrated in the analysis below as at 30 September 2021
(by portfolio value and distributions from projects):
Portfolio value split by sector
Wind 29%
Anaerobic digestion 24%
Solar 18%
Waste & bioenergy 25%
Hydro 2%
Low carbon & energy efficiency 2%
------------------------------- ---
Portfolio value split by geography
UK 95%
Rest of Europe 5%
--------------- ---
Portfolio value split by remaining asset life
Up to 10 years 11%
11 to 20 years 54%
More than 20 years 35%
------------------- ---
Weighted average remaining asset life of the portfolio is 17.4
years.
Portfolio distributions split by inflation linkage(1)
Inflation linked 71%
Non-inflation linked 29%
--------------------- ---
Portfolio value split by operational status
Operational 99%
Construction 1%
------------- ---
Portfolio operator exposure (percentage of portfolio value)
Future Biogas 19%
Siemens Gamesa 18%
ROC Energy 9%
BWSC 7%
Vestas 6%
Other 41%
--------------- ---
(1) Based on project revenues from volumes/generation during the
period and assumes project cash flow distributions reflect revenue
split at each project.
Portfolio valuation
The Investment Adviser 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 Directors' valuation of the portfolio at 30 September 2021
was GBP678.8 million, compared to GBP571.4 million at 31 March
2021. The increase of GBP107.4 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.
The movement in value of investments during the six-month period
ended 30 September 2021 is shown in the table below:
30 Sep 2021 31 Mar 2021
GBPm GBPm
-------------------------------------------------------------------------------------------- ----------- -----------
Valuation of portfolio at opening balance 571.4 537.1
Acquisitions in the period/year (including post-acquisition adjustments and deferred
consideration) 75.1 62.9
Cash distributions from portfolio (26.7) (48.2)
-------------------------------------------------------------------------------------------- ----------- -----------
Rebased opening valuation of portfolio 619.8 551.8
Changes in forecast power prices 21.6 (15.2)
Changes in economic assumptions 8.4 (26.0)
Changes in discount rates 3.4 11.0
Changes in exchange rates (0.1) (0.1)
Balance of portfolio return 25.7 49.9
-------------------------------------------------------------------------------------------- ----------- -----------
Valuation of portfolio 678.8 571.4
Fair value of intermediate holding companies (87.5) (67.3)
-------------------------------------------------------------------------------------------- ----------- -----------
Investments at fair value through profit or loss 591.3 504.1
-------------------------------------------------------------------------------------------- ----------- -----------
Allowing for investments of GBP75.1 million (including
post-acquisition adjustments and deferred consideration) and cash
receipts from investments of GBP26.7 million, the rebased valuation
is GBP619.8 million. The portfolio valuation at 30 September 2021
is GBP678.8 million (31 March 2021: GBP571.4 million), representing
an increase over the rebased valuation of 9.5% during the
period.
Valuation assumptions
The investments in JLEN's portfolio are valued by discounting
the future cash flows forecast by the underlying assets' financial
models.
Each movement between the rebased valuation and the 30 September
2021 valuation is considered below:
Forecast power prices
The project cash flows used in the portfolio valuation at 30
September 2021 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. The Company maintains a
programme of rolling price fixes for its wind and solar projects,
typically having the majority of projects on fixed price
arrangements for the next six to 12 months in order to reduce the
revenue risk from price volatility.
Where generating projects in the portfolio do not have a fixed
price under their PPAs, JLEN has reflected the prices in the table
below (gross of PPA discounts), showing the average seasonal
pricing applied in the two-year period following the valuation date
(comparatives shown in brackets):
Avg. GBP/MWh Winter Summer
------------- -------- -------
Electricity 125 (61) 79 (52)
Gas 42 (17) 24 (14)
------------- -------- -------
At 30 September 2021, 100% of the renewable energy portfolio's
electricity price exposure was subject to a fixed price or a floor
arrangement for the winter 2021/22 season and 90% for the summer
season 2022.
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 Adviser for
project-specific arrangements and price cannibalisation as
required.
JLEN has recognised an increase in lifetime electricity price
expectations across the portfolio. Compared to the assumptions used
in the valuation at 31 March 2021, on a time-weighted average
basis, the net increase in the electricity price assumptions is
approximately 18.6% over the period to 2050 (being an average
increase of 66% over the next three years compared to only 4% per
annum thereafter).
The overall change in forecasts for future electricity and gas
prices compared to forecasts at 31 March 2021 has increased the
valuation of the portfolio by GBP21.6 million.
The graph at the top of page 19 of the Half-year Report 2021
represents the blended weighted power curve used by the Company,
reflecting the forecast of three leading market consultants,
adjusted by the Investment Adviser to reflect 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 middle of page 19 of the Half-year Report 2021
shows the way in which the revenue mix of the renewables portfolio
changes over time, given the assumptions made regarding future
power prices set out above. As one would expect, merchant power
revenues increase in later years as the subsidies that projects
currently enjoy expire.
On a net present value basis (using the discount rate applicable
to each project), the relative significance of each revenue
category (including PFI) is as follows:
Contribution
to
Revenue type portfolio
value
------------------------ ------------
Subsidy 60%
Long-term contracts 7%
Merchant power 23%
Other merchant revenues 10%
------------------------ ------------
The proportion of Fund revenues that come from the sale of
wholesale electricity and gas is 19% and 4% respectively. This is a
low proportion of merchant power revenue relative to peers and
reflects the broader diversification of JLEN's portfolio.
Economic assumptions
The 30 September 2021 valuation reflects relatively stable
assumptions compared to those at 31 March 2021, with uplift in
value primarily driven by a continued recent period of actual
historic RPI remaining in excess of previously modelled
assumptions.
Forecast RPI inflation rates assumed in the valuation at 30
September 2021 are 3% until 2030, reducing to 2.25% from 2031
onwards (31 March 2021: 3% until 2030, reducing to 2.25% from 2031
onwards), whilst CPI inflation rates assumed in the valuation at 30
September 2021 are 2.25% across all years (31 March 2021: 2.25%),
1.5% for the French assets (31 March 2021: 1.5%) and 1% for 2021,
stepping to 2% from 2025, for Italian assets (31 March 2021: not
applicable).
Near--term UK corporation tax rates are 19%, stepping up to 25%
from April 2023 (31 March 2021: 19%, stepping up to 25% from April
2023). The equivalent rate for the French assets is 26.5% in 2021
(31 March 2021: 26.5%) stepping down to 25% from 2022 (31 March
2021: 26.5% in 2021 and stepping down to 25% in 2022) and a
national rate of 24% plus the applicable regional premiums for the
Italian assets (31 March 2021: not applicable).
UK deposit rates assumed in the valuation are 0.25% to 2024 and
1% thereafter (31 March 2021: 0.25% to 2024 and 1% thereafter).
French deposit rates are assumed at 0.5% (31 March 2021: 0.5%) and
0% in Italy (31 March 2021: not applicable).
The euro/sterling exchange rate used to value euro--denominated
investments was EUR1.16/GBP1 at 30 September 2021 (EUR1.17/GBP1 at
31 March 2021).
The overall uplift in value resulting from changes to economic
assumptions in the period is GBP8.4 million.
Discount rates
The discount rates used in the valuation exercise represent the
Investment Adviser's and the Board's assessment of the rate of
return in the market for assets with similar characteristics and
risk profile. The discount rates are reviewed on a regular basis
and updated to reflect changes in the market and in the project
risk characteristics.
During the period since 31 March 2021, there has continued to be
strong demand for income--producing infrastructure assets. The
Investment Adviser, based on its experience of bidding in the
secondary market, has proposed a reduction in the discount rate
used for valuing UK solar assets of 50 basis points. This reduction
reflects market discount rate observations.
The discount rate used for 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.
The overall increase in value resulting from changes to discount
rates in the period is GBP3.4 million.
Taking the above into account and reflecting the change in mix
of the portfolio during the year, the overall weighted average
discount rate ("WADR") of the portfolio remains at 7.3% at 30
September 2021 (31 March 2021: 7.3%).
Balance of portfolio return
This represents the balance of valuation movements in the year
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 revenue assumptions.
The total represents an uplift of GBP25.7 million.
Of this, the key valuation adjustments include an uplift of
GBP1.6 million (0.3 pence per share) arising from a benchmarking
exercise of JLEN's French wind investments against current
transactional data points available to the Investment Adviser, an
uplift of GBP2.4 million (0.4 pence per share) from the continued
deployment of asset upgrade packages across part of the solar and
AD portfolios, a GBP1 million (0.2 pence per share) uplift from
identification of further cost savings secured across the
portfolio, less a GBP3.3 million (0.6 pence per share) shortfall as
a result of poor wind speeds during the period, offset by a GBP5.1
million (0.8 pence per share) uplift from strong operational
performance from the other asset sectors.
Valuation sensitivities
The Net Asset Value of the Company is the sum of the discounted
value of the future cash flows of the underlying asset financial
models, 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 Net
Asset Value 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 Adviser 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 key assumptions are as follows:
Discount rate
The WADR of the portfolio at 30 September 2021 was 7.3% (31
March 2021: 7.3%). 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 GBP20.0 million
(3.3 pence per share) compared to an uplift in value of GBP20.0
million (3.3 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 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 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 and solar
variability means P10 and P90 sensitivity results should be
considered independent. Therefore, whilst the overall P90
sensitivity decreases NAV by 5.6 pence, the impact from solar and
wind separately is only 1.3 pence and 4.3 pence respectively, as
shown in the chart on page 23 of the Half-year Report 2021.
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 Adviser 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
after the first two--year period. 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 GBP38.1 million (6.3 pence
per share) compared to a downward movement in value of GBP38.3
million (6.4 pence per share) if prices 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 GBP9.7 million (1.6
pence per share) compared to an uplift in value of GBP9.0 million
(1.5 pence per share) if prices were reduced by the same
amount.
Inflation
Each project in the portfolio receives a revenue stream which is
either fully or partially inflation--linked. The inflation
assumptions are described in the macroeconomic section on page 20
of the Half-year Report 2021. 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 GBP25.9 million (4.3 pence per
share) compared to a decrease in value of GBP25.2 million (4.2
pence per share) if rates were reduced by the same amount.
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 2021, 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 60 of
the Half-year Report 2021. 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 rates of 2% would result
in a downward movement in the portfolio valuation of GBP9.9 million
(1.7 pence per share) compared to an uplift in value of GBP9.6
million (1.6 pence per share) if rates were reduced by the same
amount.
Sensitivities - impact on NAV at 30 September 2021
The chart on page 23 of the Half-year Report 2021 shows the
impact of the key sensitivities on Net Asset Value per share, with
the GBP labels indicating the impact of the sensitivities on
portfolio value.
OPERATIONAL REVIEW
There has been positive performance from several sectors, with
agri AD, solar, hydro and the CNG refuelling portfolio all beating
budget. The main detractor was the wind portfolio, which was
materially below budget due to low wind resource.
Total generation for the period from the portfolio was 564GWh,
10% below budget. This was mainly due to low wind speeds in the
period which caused the wind portfolio to significantly
underperform against its generation target. Excluding this, the
renewable generation portfolio would have performed only slightly
below target. The AD portfolio, which is the largest contributor to
energy generation on a GWh basis, performed ahead of its generation
target, as did the solar portfolio and the hydro portfolio.
Portfolio performance to 30 September 2021
564GWh
green energy produced
31%
above CNG fuel dispensed target
>330,000
waste diverted from landfill (tonnes)
>16.5bn
litres of wastewater treated
Investment performance
The change in total NAV reflects an upward revision of the power
price forecasts, above forecast inflation during the period and a
reduction in solar discount rates.
The NAV per share at 30 September 2021 was 98.4 pence, up from
92.2 pence at 31 March 2021.
JLEN has announced an interim dividend of 1.70 pence per share
for the quarter ended 30 September 2021, payable on 29 December
2021, in line with the full--year target of 6.80 pence per share
for the year ending 31 March 2022 as set out in the 2021 Annual
Report.
Operating performance of the environmental infrastructure
portfolio during the six-month period ended 30 September 2021 was
mixed across the portfolio, with the AD, solar and hydro portfolios
outperforming their generation targets while the wind portfolio
underperformed due to very low wind speeds during the period. The
bioenergy assets, which include the newly acquired Cramlington and
ETA, have experienced some initial operational issues that impacted
performance. During the period, the renewables segment of the
portfolio produced 564GWh (six months to 30 September 2020: 463GWh)
of green energy. The AD portfolio was 2.5% above generation target
(six months to 30 September 2020: 2% above budget). Wind generation
was 32.0% below generation target (six months to 30 September 2020:
2.1% variance from budget) and solar generation was 0.9% above
generation target (six months to 30 September 2020: 6.7% above
budget).
Wind
Electricity generation from the wind assets of 117GWh (which
represents 21% of the JLEN portfolio energy generation for the
period) was 32.0% below budget due to very low wind resource during
the period. Notwithstanding the lack of wind, the portfolio
performed generally well, with contractual availability 2% above
warranted levels and overall availability in line with
expectations.
Spot market power prices increased during the second quarter due
to a combination of low renewables contribution to the grid, a
natural gas shortage and rising carbon prices. These pressures were
also felt across the forward market, leading to significant
increases in prices for future seasons. Power prices across the
wind portfolio were broadly fixed so revenues were not impacted by
this volatility, and the Investment Adviser capitalised on
opportunities to fix future seasons at prices above previous
assumptions. Price fixing arrangements are in place for 100% of the
wind portfolio by generation through March 2022 which then taper
down to 40% by March 2024.
Various value enhancements have taken place during the period;
hardware designed to improve blade aerodynamics has been attached
to all turbines at the Burton Wold site and the Investment Adviser
is in the process of looking at further software upgrades that can
be made.
The Investment Adviser is also systematically working through a
business rates review and appeal process and to date four sites
have been successfully appealed, resulting in a GBP183k rebate on
payments already made and a GBP325k increase in NAV, reflecting the
lower annual cost of business rates for future years.
Anaerobic digestion
The AD portfolio generation for the half year was 254GWh, 2.5%
above budget in energy generation terms (representing 45% of the
JLEN portfolio energy generation), continuing the trend of
outperformance that has been seen since the Fund started to acquire
AD assets in 2017. Notably strong performers were Peacehill Gas,
Icknield and Egmere.
During the half year, wholesale gas prices have been at a record
high and the Investment Adviser has hedged gas volumes for future
winter and summer periods with 75% fixed until March 2022, tapering
to 28% fixed by September 2023.
Following the Environment Agency's release of the regulatory
position statement on the Farming Rules for Water, the AD sites are
investing in additional storage capacity, to be in full compliance
with these rules. New digestate storage tanks and lagoons are due
to be installed in 2022 that will provide greater resilience to
risks associated with digestate storage and removal.
Solar
At 56GWh, generation from the solar assets (which represents 10%
of the JLEN portfolio energy generation for the period) was 0.9%
above budget. Irradiation levels were above forecast levels and
overall the portfolio performed satisfactorily. Notably strong
performances were seen at the Branden sites and at Pylle and Crug
Mawr. Monksham experienced a partial outage, due to delays in
repairing a defect on one of its transformers. Associated lost
revenue was compensated by the engineering, procurement and
construction contractor.
A trial technical enhancement project at Amber has had positive
results and so is now planned to be rolled out across both of the
Amber sites. Work is due to be completed in early 2022 and is
expected to result in a significant uplift in generation
performance.
Waste & wastewater concessions
Waste tonnages 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% contract target due to the introduction of
several recycling improvement initiatives. The tonnage of waste
delivered continues to be greater than that anticipated; this is
thought to be due to increased home working, rather than to
commercial waste being generated in offices. The Investment Adviser
and the operator of the plant have been working on enhanced fire
protection measures to satisfy the requirements of insurers.
Tay Wastewater plant in Scotland has experienced flows broadly
in line with expectations for the period although short periods of
high rainfall have caused some issues within the network, which
will be adapted to accommodate this.
Both projects continue to perform well financially.
Waste processing plants
Bio Collectors waste processing plant saw an output that was
below budget for this half-year period. However, the asset has
shown a strong recovery when compared to last year's position as
food waste tonnages from the hospitality and commercial sectors
have increased following the easing of Covid-19 restrictions. This
resulted in an increase in generation and less reliance on more
expensive alternative feedstocks when compared to the corresponding
period in the previous year. Bio Collectors has also won a
proportion of a new food waste contract that will bring in
additional tonnages from September 2022.
Codford Biogas has performed reasonably well in the period,
following a spate of biological issues within the digesters in
early 2021. Increased competition for food waste has resulted in
further falls in gate fees, although tonnages into the plant remain
stable.
Bioenergy
The Cramlington biomass plant, which was acquired in June 2021,
has seen variable performance since acquisition.
The plant has experienced some equipment failures that have
resulted in extended shutdowns. However, during periods when the
plant has been available, electrical performance has been high and
generally above budget.
The Italian energy-from-waste plant, ETA, that was acquired in
May 2021 has also seen some performance issues, due mainly to
excessively high ambient temperatures in the region. The Investment
Adviser is working alongside the operator of the plant to implement
process changes that will help to alleviate the problem if similar
high temperatures are experienced next summer.
Hydro
The hydro portfolio generated 2GWh, representing a 19.5%
positive variance against budget. Notably strong performances were
seen at Knottingley Hydro in Yorkshire, part of the Northern
Hydropower Limited portfolio, and at the Thrybergh plant, which is
part of the Yorkshire Hydropower Limited portfolio.
Battery storage
The recently acquired construction stage battery storage assets
- Sandridge Battery Storage Limited and West Gourdie Limited - both
signed Engineering, Procurement and Construction contracts and
Operations and Maintenance contracts in August 2021. Both projects
are on track to begin construction in early 2022 and are expected
to begin operating in late 2022.
The two co-located batteries at the hydro plants continue to
perform as anticipated. Commercially, the two projects provided
frequency response services as their exclusive revenue stream
throughout the period.
CNG Foresight
The portfolio of CNG refuelling stations continues to perform
well and was 31% above budget in terms of gas dispensed for this
half-year period. The construction of two new refuelling stations
in Eurocentral (Scotland) and Avonmouth (England) is progressing
well, and these sites are expected to be operational in early 2022.
Although some stations have recently been affected by the shortage
of HGV drivers in the UK, meaning fewer vehicles are on the road,
several major national hauliers including Royal Mail have onboarded
CNG vehicles which has resulted in greater demand for CNG.
Overall, the generation of the renewable energy assets in the
portfolio since IPO is summarised as follows:
HY 2021/22 Total
since
Portfolio generation 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 IPO
------------------------- ------- ------- ------- ------- ------- ------- ------- ---------- ------
Wind portfolio
actual generation
(GWhe/GWhe) 82 184 217 399 406 458 432 117 2,295
Variation from
budget(1) -7% +11% -15% 0% -9% +4% -1% -32% -5%
------------------------- ------- ------- ------- ------- ------- ------- ------- ---------- ------
AD portfolio actual
generation (GWhth/GWhe) - - - 51 262 352 461 254 1,380
Variation from
budget - - - +8% +4% +4% +2% +2% +3%
------------------------- ------- ------- ------- ------- ------- ------- ------- ---------- ------
Solar portfolio
actual generation
(GWhe) 10 30 40 64 79 75 79 56 433
Variation from
budget(1) --1% --2% -12% -9% +2% -3% +2% +1% -3%
------------------------- ------- ------- ------- ------- ------- ------- ------- ---------- ------
Waste & bioenergy
actual generation
(GWhth/GWhe) - - - - - - - 135 135(2)
Variation from
budget - - - - - - - -11% -11%
------------------------- ------- ------- ------- ------- ------- ------- ------- ---------- ------
Hydro portfolio
actual generation
(GWhe)(3) - - - - - 3 5 2 10
Variation from
budget - - - - - -17% -15% +20% -10%
------------------------- ------- ------- ------- ------- ------- ------- ------- ---------- ------
(1) Budgets adjusted to reflect operational energy yield
assessments carried out under contracted true-up mechanisms post
IPO.
(2) Does not include generation in 2020/21.
(3) Includes generation from Northern Hydropower Limited from 31 March 2020.
The average all-in price received by the differing technology
classes in the UK for their energy volumes generated in the
six-month period ended 30 September 2021 was GBP96.78 per MWhe for
onshore wind (year ended 31 March 2021: GBP84.26 per MWhe),
GBP194.3 per MWhe for solar (year ended 31 March 2021: GBP196.8 per
MWhe), GBP109.0 per MWhth for AD gas to grid (year ended 31 March
2021: GBP101 per MWhth), GBP195.5 per MWhe for AD electric and
GBP218.39 per MWhe for hydro (31 March 2021: GBP222.56 per
MWhe).
Acquisitions in the period
3
acquisitions made in the period
52.8MW
capacity added to the portfolio
2
new technology sub-sectors
Acquisitions
Sandridge Battery Storage
In May 2021, JLEN acquired a 50% equity stake in Sandridge
Battery Storage Limited which holds the development rights to
construct the Sandridge Battery Storage project, a 50MW lithium-ion
battery energy storage plant based in Melksham in Wiltshire, UK.
The Sandridge project is fully consented and construction ready.
The project is expected to reach energisation and start commercial
operations in late 2022.
Energie Tecnologie Ambiente
In May 2021, JLEN acquired a 45% equity stake in Energie
Tecnologie Ambiente S.r.l ("ETA"), a 16.8MW energy--from--waste
power plant which processes refuse derived fuel, located in the
municipality of Manfredonia in the Apulia region of southern Italy.
The investment has been made alongside FEIP, which also acquired a
45% equity stake.
Cramlington Renewable Energy Developments
In June 2021, JLEN acquired a 100% equity stake in Cramlington
Renewable Energy Developments Limited, which owns a biomass
combined heat and power plant ("CHP Plant") and its underlying
contracts. The CHP Plant is located to the north west of the town
of Cramlington in Northumberland and utilises proven technology to
process a diversified biomass fuel mix, creating up to 28MW of
electrical power and 8MW of heat for export via private wire to
industrial customers and the grid.
Other investments
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
2021, EUR4 million had been drawn on this commitment (net). To
date, the Fund has invested in four projects - two construction
stage onshore wind projects located in Sweden and Finland
respectively and an operational 94MW wind farm located in Spain.
FEIP also owns a 45% stake in ETA, in which JLEN is also an
investor.
CNG Foresight
JLEN invested GBP2.0 million into CNG Foresight during the
period. The portfolio now has seven natural gas refuelling
stations, including two stations in construction phase. JLEN has
invested a total of GBP8.7 million to date.
Value enhancements
During the period GBP0.4 million was injected into various
projects for value enhancement initiatives.
Financing at 30 September 2021
GBP111.1m
drawn on RCF
32.1%
fund gearing(1)
(1) Gearing is an alternative performance measure ("APM"). The
APMs within the accounts are defined on page 65 of the Half-year
Report 2021.
Financing
On 21 May 2021, JLEN announced that it had signed a new
revolving credit facility with a three-year facility agreement
which provides for a committed multi--currency revolving credit
facility of GBP170 million and an uncommitted accordion facility of
up to GBP30 million. The RCF provides an increased source of
flexible funding outside of equity raisings, with both sterling and
euro drawdowns available at lower rates than the previous facility.
The agreement includes an uncommitted option to extend for a
further year and will be used to make future acquisitions of
environmental infrastructure projects to add to its 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 that also feature as part of JLEN's ESG
KPIs. 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 three of the four previous
lenders (HSBC, ING and NIBC) plus two new participants (National
Australia Bank and Royal Bank of Scotland International). 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 at 30 September 2021, drawings under the RCF were GBP111.1
million. Under its investment policy, JLEN may borrow up to 30% of
its NAV.
In addition to the revolving credit facility, several of the
projects have underlying project-level debt which is not
consolidated in these financial statements, instead it is
recognised under the Investment at fair value through profit or
loss in the Condensed Unaudited Statement of Financial Position.
There is an additional gearing limit in respect of such debt of 85%
of the aggregate gross project value (being the fair market value
of such portfolio companies increased by the amount of any
financing held within the projects) for PFI/PPP projects and 65%
for renewable energy generation projects.
The project-level gearing at 30 September 2021 across the
portfolio was 23.6% (31 March 2021: 28.4%), being 21.9% (31 March
2021: 25.1%) for the renewable energy assets and 51.3% (31 March
2021: 51.2%) for the PFI processing assets. Taking into account the
amount drawn down under the revolving credit facility of GBP111.1
million, the overall fund gearing at 30 September 2021 was 32.1%
(31 March 2021: 36.1%).
As at 30 September 2021, the Group, which comprises the Company
together with its intermediate holding companies, the UK HoldCo and
HWT Limited, had cash balances of GBP19.1 million (31 March 2021:
GBP13.5 million).
SUSTAINABILITY AND ESG
At a glance(1)
ESG performance 2021/22: half-year results
>560,000
MWh renewable energy generated by our portfolio
New assets are forecast to avoid
>41,500tCO(2) e emissions per year
>78,000
waste recycled (tonnes)
>330,000
waste diverted from landfill (tonnes)
>16.5bn
wastewater treated (litres)
3
new investments since 31 March 2021
26
SPV health and safety audits
(1) These statistics exclude FEIP.
Shortlisted at the IR Society Best Practice Awards 2021 for Best
Communication of ESG in the Small Cap category
ESG KPIs
Further to the announcement of JLEN's ESG KPIs in the Annual
Report 2021, each asset is now expected to report regularly on the
below ESG metrics. Asset managers at Foresight have started to
collate the necessary data so that these metrics can be reported on
in the Annual Report 2022. As part of the process to embed the data
collection in the quarterly process, workshops have been held with
the Foresight asset managers and external asset managers in the UK
and internationally; Operations and Maintenance contractors have
also been made aware of these requirements where appropriate.
Environmental Social Governance
-------------------- --------------------- -----------------------
Portfolio audits
Renewable energy of health and
generated Community funding safety practices
-------------------- --------------------- -----------------------
GHG emissions Health and safety Diversity of
avoided incidents SPV directors(1)
-------------------- --------------------- -----------------------
Tonnes of waste Community engagement Portfolio audits
treated procedures(1) of tax and financial
practices(1)
-------------------- --------------------- -----------------------
Litres of wastewater FTE jobs supported(1) Inclusion of
treatment ESG in SPV board
agendas(1)
-------------------- --------------------- -----------------------
Environmental Accessibility Governance oversight(1)
incidents of community
fund documents(1)
-------------------- --------------------- -----------------------
Purchased energy Assessment of Assessment of
originating major contractors major contractors
from renewable against ESG against ESG
sources(1) criteria(1) criteria(1)
-------------------- --------------------- -----------------------
Management of
biodiversity(1)
-------------------- --------------------- -----------------------
Assessment of
major contractors
against ESG
criteria(1)
-------------------- --------------------- -----------------------
Over 2021/22 the Investment Adviser intends to collect baseline
data to inform these KPIs, to help with tracking and reporting
going forward.
(1) New KPI for 2021.
Mapping JLEN's portfolio against the United Nations Sustainable
Development Goals
The United Nations Sustainable Development Goals ("SDGs") are a
set of 17 goals for sustainable development.
To be achieved by 2030, they recognise that ending poverty must
go hand-in-hand with strategies that build economic growth and
address a range of social needs including education, health, social
protection and job opportunities, while tackling climate change and
environmental protection. JLEN has mapped its portfolio against the
SDGs and the results of this analysis are set out below.
SDG Target JLEN's performance
---------------------------------------- ---------------------------------------- ----------------------------------
6 Clean water and sanitation 6.3 Improve water quality by >16.5 billion litres of wastewater
reducing pollution, eliminating treated in the six-month period
dumping and minimising release to 30 September 2021.
of hazardous chemicals and
materials, halving the proportion
of untreated wastewater and
substantially increasing recycling
and safe reuse globally.
---------------------------------------- ---------------------------------------- ----------------------------------
7 Affordable and clean energy 7.2 Increase substantially 371.5MW capacity renewable
the share of renewable energy energy assets.
in the global energy mix.
---------------------------------------- ---------------------------------------- ----------------------------------
8 Decent work and economic growth 8.4 Improve progressively global JLEN's portfolio is optimised
resource efficiency in consumption to make the most of naturally
and production and endeavour available resources such as
to decouple economic growth wind power. As an example,
from environmental degradation, by maximising the power produced
in accordance with the 10-year by each turbine, JLEN ensures
framework of programmes on that its assets are operating
sustainable consumption and as efficiently as they can.
production, with developed JLEN's KPI tracking jobs in
countries taking the lead. the portfolio as full time
8.5 Achieve full and productive equivalent ("FTE") will inform
employment and decent work this target going forward.
for all women and men, including
for young people and persons
with disabilities, and equal
pay for work of equal value.
---------------------------------------- ---------------------------------------- ----------------------------------
9 Industry, innovation and 9.1 Develop quality, reliable, 371.5MW capacity contributing
infrastructure sustainable and resilient renewable energy to the local
infrastructure, grid.
including regional and transborder
infrastructure, to support
economic development and human
wellbeing, with a focus on
affordable and equitable access
for all.
---------------------------------------- ---------------------------------------- ----------------------------------
15 Life on land 15.5 Take urgent and significant JLEN's KPI tracking biodiversity
action to reduce the degradation management plans across its
of natural habitats, halt the portfolio will inform this
loss of biodiversity and, by target going forward.
2020, protect and prevent the
extinction of threatened species.
---------------------------------------- ---------------------------------------- ----------------------------------
Updates in the period
UK Government's Greening Finance: a roadmap to sustainable
investing
In October, post the period end, the UK Government published a
new policy document to serve as a roadmap to green the UK's finance
activities. The document includes new policy measures and clarity
on several areas of green finance and set the tone, ahead of COP26,
for the role that the finance sector will play in addressing issues
of climate risk and transparency to maintain momentum in the shift
to a net-zero future. Key takeaways relevant to JLEN involve:
-- development of the UK's Sustainability Disclosure
Requirements ("SDR") to build on the UK's Task Force on
Climate-Related Financial Disclosures ("TCFD") implementation. The
SDR will integrate new and existing sustainability and climate risk
reporting requirements into one comprehensive framework and aims to
clarify the extent to which economic activities are sustainable.
The timeframe for the SDR is relatively open-ended but the
government intends to legislate the framework and regulators will
set out sector--specific requirements with these coming into force
starting in 2022; and
-- clarity around the UK's green taxonomy, that will be based on
the EU taxonomy, and is expected to be legislated by the end of
2022. The taxonomy will focus on the outcomes of economic
activities through the lens of a contribution to environmental
objectives.
Foresight is monitoring these developments closely and updates
will be provided in the Annual Report 2022.
EU Taxonomy
As part of the Investment Adviser's ongoing aim to improve its
transparency and improve the quality of its disclosures, Foresight
has undertaken an internal exercise to map JLEN's assets to the EU
Taxonomy. The results of this process will be published in the
Annual Report 2022.
Task Force on Climate-Related Financial Disclosures
JLEN has committed to providing full climate-related disclosures
in its Annual Report due to be published in June 2022. In
considering the TCFD recommendations, JLEN is largely dependent on
the organisation-level strategic approaches taken by the Investment
Adviser. Foresight is in the process of developing its approach and
formalising its responses to the 11 recommended disclosures of the
TCFD. In the interim period, Foresight has been developing its
in-house capabilities and working with an external consultant to
generate a TCFD reporting gap-analysis at the Group level. Also
during the period, Foresight has increased its resourcing with the
recruitment of a new Head of Risk, who will be responsible for
co-ordinating the climate-related risk management activities at
Group level, and is in the process of hiring a further
sustainability professional to maintain and enhance Foresight's
capabilities in these areas as they become increasingly
complex.
ENVIRONMENTAL
Objective: Promote the efficient use of resources
Portfolio electricity and carbon performance
This year, JLEN's portfolio projects have generated 564GWh
electricity, equivalent to the annual electricity demand of 151,247
households. Detailed information on portfolio energy performance is
provided on page 27 of the Half-year Report 2021.
A summary of the greenhouse gas benefits delivered by the new
assets in which JLEN has invested this year is provided in the
table below.
Greenhouse gas emissions reduction tCO(2)
e
-------------------------------------------
Average annual Remaining lifetime
emissions avoided emissions avoided
--------------------------------- -------------------- ---------------------
New assets: forecast performance 41,969 1,259,058
--------------------------------- -------------------- ---------------------
New assets are forecast to avoid
>41,500
tCO(2) e emissions per year
equivalent to
>17,975
cars off the road per annum
New assets are forecast to deliver
>277,000
MWh electricity equivalent per year
New assets are forecast to avoid
>1,259,000
tCO(2) e lifetime emissions
Forecasts are not a reliable indicator of future
performance.
The carbon avoidance associated with all of JLEN's assets is
independently assessed and these reports are available on the JLEN
website.
Methodology
JLEN's calculations of CO(2) savings are provided by Aardvark
Certification Limited and are based on the IFI Approach to GHG
Accounting for Renewable Energy Projects. Baseline emission factors
used in this analysis for UK assets are taken directly from the
Department for Business, Energy & Industrial Strategy
greenhouse gas reporting which prevailed at the time the asset was
individually analysed. Baseline emission factors used in the
analysis of the Italian asset are taken directly from the European
Environment Agency.
Energy usage statistics are taken from Ofgem. Mileage travelled
per vehicle in the UK was taken from the RAC Foundation.
SOCIAL
Objective: Develop positive relationships with the communities
in which JLEN works
The following social criteria are typically considered during
due diligence and ongoing monitoring of assets:
-- health and wellbeing;
-- local economic impact;
-- local social impact; and
-- legal, employment and human rights compliance.
JLEN contributes upwards of GBP350k to community benefit funds
in the areas in which it works, on an annual basis. During the
period, particular attention has been paid to improving the
accessibility of community benefit funds arising from the AD
portfolio and, as a result, greater uptake of funds has been
seen.
Case study
Reducing the risk of forced labour in our supply chain
During the period, there has been increased scrutiny of modern
slavery practices and supply chain oversight, prompted by the
discovery of links to forced labour in the production of
polysilicon - a major component of solar panels.
Although JLEN's portfolio of solar assets were built pre-2016 -
before polysilicon was extensively sourced from the Xinjiang region
of China, which has links to forced labour - this is an issue which
Foresight is taking very seriously.
In response to this, Foresight has signed a statement issued by
the trade association, Solar Energy UK. This statement condemns any
human rights abuses taking place anywhere in the global energy
supply chain and calls for the development of a supply chain
transparency protocol. Signed by many of the UK's leaders in solar
energy, the aim is to raise the profile of this issue and encourage
greater transparency throughout the broader supply chain. Foresight
is also a member of Solar Energy UK's "Responsible Sourcing Task
Group".
Foresight has developed a questionnaire requesting information
directly around modern slavery policies, practices and responsible
procurement processes. This will be sent to all key counterparties
with the intention to identify risk areas and suppliers that
require further support to ensure that their processes are more
robust.
In addition to this, Foresight is engaging with two external
agencies which offer ESG due diligence across the supply chain.
Where risks or poor performance from counterparties is identified,
further information is requested so that Foresight can make an
informed decision as to how to rectify the issue. In cases where a
counterparty either cannot, or will not, address a concern
regarding the ethical treatment of its supply chain, JLEN is
prepared to replace that counterparty.
GOVERNANCE
Objective: Ensure effective, ethical governance across the
portfolio
The Fund's principles and governance are aligned with the UK
Corporate Governance Code (the "UK Code"), via the Company
reporting against the Code of Corporate Governance (the "AIC
Code"), issued by the Association of Investment Companies. The FRC
has confirmed that AIC member companies who report against the AIC
Code will be meeting their obligations in relation to the UK Code.
Third-party service providers are required to provide confirmation
that appropriate controls are in place to promote effective
governance across the Fund's investments.
JLEN holds Board positions for each of its assets, which are
fulfilled by Foresight on its behalf. The Board members work to
promote good governance as part of the Fund's active engagement
with projects.
JLEN expects its third-party service providers to implement, and
to regularly review, anti-bribery policies and practices for each
asset within its portfolio.
JLEN typically considers the following governance criteria
during due diligence and ongoing monitoring of assets:
-- anti-bribery and corruption;
-- modern slavery;
-- audit and tax practices; and
-- Board composition.
Additionally, JLEN commissions independent audits and reviews of
core governance processes such as tax and health and safety
management.
Case study
Foresight's ongoing monitoring of ESG risk
At an investment level, Foresight assesses the sustainability
credentials and performance of all assets under management in
accordance with a set of 12 assessment parameters underlying the
five key areas of Foresight's proprietary Sustainability Evaluation
Tool ("SET"):
1. sustainable development contribution: the contribution
towards the global sustainability agenda;
2. environmental footprint: the environmental impacts of an investment;
3. social welfare: the interaction with local communities and the welfare of employees;
4. governance: the compliance with relevant laws and regulations; and
5. third -- party interactions: the sustainability of key
counterparties and the broader supply chain.
The SET draws on IRIS+ indicators, which are an aggregation of
several widely recognised, external sustainability and ESG-focused
frameworks.
Foresight adopts an active approach to asset management and ESG
risk is managed in the following ways:
-- performance against the SET is assessed and monitored on an
annual basis by Foresight asset managers;
-- the asset management team work closely with key
counterparties to promote management of ESG risks and to encourage
engagement with Foresight's sustainability strategy;
-- regular site visits by the Foresight asset management team;
-- regular third-party health and safety audits of all assets and key counterparties;
-- ESG as an agenda item at all SPV board meetings to identify and monitor any risks arising;
-- dedicated portfolio management system that tracks operational
and financial KPIs, insurance, contractual management, H&S and
ESG performance; and
-- ongoing monitoring of potential performance and management enhancements to the assets.
Environmental and health and safety compliance
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 material
environmental and health and safety incidents in the JLEN portfolio
in the half-year period 2021/22.
During the period under review, there has been one reportable
health and safety event. This involved an operator at one of JLEN's
waste plants who required time off work when an improperly secured
lever struck him on the head.
30 Sep 2021
------------------------
H&S incidents 1
------------------------
Environmental incidents 0
------------------------
26
health and safety audits have been carried out on JLEN's assets
in the first half of the year
FINANCIAL REVIEW
Analysis of financial results
The financial statements of the Company for the six--month
period ended 30 September 2021 are set out on pages 44 to 63 of the
Half-year Report 2021.
The Company prepared the condensed unaudited financial
statements for the six--month period to 30 September 2021 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).
Net assets
Net assets increased from GBP504.2 million at 31 March 2021 to
GBP591.5 million at 30 September 2021.
The net assets of GBP591.5 million comprise GBP678.8 million
portfolio value of environmental infrastructure investments and the
Company's cash balances of GBP1.9 million, partially offset by
GBP87.5 million of intermediate holding companies' net liabilities
and other net liabilities of GBP1.7 million.
The intermediate holding companies' net liabilities of GBP87.5
million comprise a GBP111.1 million credit facility loan, partially
offset by cash balances of GBP17.2 million and other net assets of
GBP6.4 million.
Analysis of the Group's net assets at 30 September 2021
At 30 Sep At 31 Mar
All amounts presented in GBPmillion (except as noted) 2021 2021
---------------------------------------------------------- ----------- -----------
Portfolio value 678.8 571.4
Intermediate holding companies' cash 17.2 11.6
Intermediate holding companies' revolving credit facility (111.1) (82.0)
Intermediate holding companies' other assets 6.4 3.1
---------------------------------------------------------- ----------- -----------
Fair value of the Company's investment in UK HoldCo 591.3 504.1
---------------------------------------------------------- ----------- -----------
Company's cash 1.9 1.9
Company's other liabilities (1.7) (1.8)
---------------------------------------------------------- ----------- -----------
Net Asset Value 591.5 504.2
---------------------------------------------------------- ----------- -----------
Number of shares 601,392,027 546,720,025
Net Asset Value per share 98.4p 92.2p
---------------------------------------------------------- ----------- -----------
At 30 September 2021, the Group (the Company plus intermediate
holding companies) had a total cash balance of GBP19.1 million (31
March 2021: GBP13.5 million), including GBP1.9 million in the
Company's statement of financial position (31 March 2021: GBP1.9
million) and GBP17.2 million in the intermediate holding companies
(31 March 2021: GBP11.6 million), which is included in the
Company's statement of financial position within "investments at
fair value through profit or loss".
At 30 September 2021, UK HoldCo had drawn GBP111.1 million of
its revolving credit facility (31 March 2021: GBP82.0 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 2021 to 30
September 2021 is summarised as follows:
Six months
ended Year ended
All amounts presented in GBPmillion (except as noted) 30 Sep 2021 31 Mar 2021
----------------------------------------------------------------------------- ----------- -----------
Portfolio value at start of the period/year 571.4 537.1
Acquisitions/further investments (net of post-acquisition price adjustments) 75.1 62.9
Distributions received from investments (26.7) (48.2)
Growth in value of portfolio 59.0 19.6
----------------------------------------------------------------------------- ----------- -----------
Portfolio value 678.8 571.4
----------------------------------------------------------------------------- ----------- -----------
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 14 to 23 of the Half-year Report
2021.
Profit before tax
The Company's profit before tax for the six--month period was
GBP51.8 million (six--month period ended 30 September 2020: GBP10.7
million), generating earnings of 8.8 pence per share (six--month
period ended 30 September 2020: 2.0 pence per share).
Six months Six months
ended ended
All amounts presented in GBPmillion (except as noted) 30 Sep 2021 30 Sep 2020
------------------------------------------------------ ----------- -----------
Interest received on UK HoldCo loan notes 14.4 14.4
Dividend received from UK HoldCo 10.1 7.2
Net gains/(losses) on investments at fair value 31.1 (7.7)
------------------------------------------------------ ----------- -----------
Operating income 55.6 13.9
------------------------------------------------------ ----------- -----------
Operating expenses (3.8) (3.2)
------------------------------------------------------ ----------- -----------
Profit before tax 51.8 10.7
------------------------------------------------------ ----------- -----------
Earnings per share 8.8p 2.0p
------------------------------------------------------ ----------- -----------
In the six months to 30 September 2021, the operating income was
GBP55.6 million, including the receipt of GBP14.4 million of
interest on the UK HoldCo loan notes, GBP10.1 million of dividends
also received from UK HoldCo and a net gain on investments at fair
value of GBP31.1 million.
The operating expenses included in the income statement for the
period were GBP3.8 million, in line with expectations. These
comprise GBP3.2 million of Investment Adviser fees and GBP0.6
million operating expenses. The details on how the Investment
Adviser fees are charged are set out in note 14 to the condensed
unaudited financial statements.
Ongoing charges
The "ongoing charges" 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 2021, the ratio was 1.24% and it is
anticipated that the full-year ratio for the year ended 31 March
2022 will continue to decrease. 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 2021 of
GBP1.9 million (31 March 2021: GBP1.9 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 2021 30 Sep 2020
-------------------------------------------------------------- ----------- -----------
Cash balance at 1 April 1.9 1.8
Net proceeds from share issue/(expenses from previous issues) 55.9 (0.2)
Investment in UK HoldCo (equity and loan notes) (56.1) -
Interest on loan notes received from UK HoldCo 14.4 14.4
Dividends received from UK HoldCo 10.1 7.2
Directors' fees and expenses (0.1) (0.1)
Investment Adviser fees (3.0) (2.7)
Administrative expenses (0.8) (0.5)
Dividends paid in cash to shareholders (20.4) (18.3)
-------------------------------------------------------------- ----------- -----------
Company cash balance at 30 September 1.9 1.6
-------------------------------------------------------------- ----------- -----------
The Group had a total cash balance at 30 September 2021 of
GBP19.1 million (31 March 2021: GBP13.5 million) and borrowings
under the revolving credit facility of GBP111.1 million (31 March
2021: GBP82.0 million). The breakdown of the movements in cash
during the period is shown overleaf.
Cash flows of the Group for the period (GBPmillion):
Six months Six months
ended ended
30 Sep 2021 30 Sep 2020
----------------------------------------------------------------- ----------- -----------
Cash distributions from environmental infrastructure investments 26.7 24.4
Administrative expenses (0.6) (0.6)
Directors' fees and expenses (0.1) (0.1)
Investment Adviser fees (3.0) (2.7)
Financing costs (net of interest income) (1.3) (0.9)
----------------------------------------------------------------- ----------- -----------
Cash flow from operations(1) 21.7 20.1
Net proceeds from share issues 55.9 -
Expenses from previous share issues - (0.2)
Acquisition of investment assets and further investments (75.6) (22.6)
Acquisition costs (including stamp duty) (1.7) (0.7)
Short-term projects debtors (1.1) (0.5)
Debt arrangement fee cost (2.2) -
Proceeds from borrowings under the revolving credit facility 29.0 13.0
Dividends paid in cash to shareholders (20.4) (18.3)
----------------------------------------------------------------- ----------- -----------
Cash movement in the period 5.6 (9.2)
Opening cash balance 13.5 22.0
----------------------------------------------------------------- ----------- -----------
Group cash balance at 30 September 19.1 12.8
----------------------------------------------------------------- ----------- -----------
During the period, the Group received cash distributions of
GBP26.7 million from its environmental infrastructure investments,
in line with the distributions expected by the Group after
adjusting for acquisitions during the period.
Cash received from investments in the period adequately 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 2021. Cash flow from
operations of the Group of GBP21.7 million covered dividends paid
in the six--month period to 30 September 2021 of GBP20.4 million by
1.06x. The dividend cover based on dividends declared in respect of
the six--month period to 30 September 2021 was 1.06x.
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(2)
.
Dividends
During the period, the Company paid a final dividend of 1.69
pence per share in June 2021 (GBP10.2 million) in respect of the
quarter to 31 March 2021. Interim dividends of 1.70 pence per share
were paid in September 2021 (GBP10.2 million) in respect of the
quarter to 30 June 2021.
On 24 November 2021, the Company declared an interim dividend of
1.70 pence per share in respect of the quarter ended 30 September
2021 (GBP10.2 million), which is payable on 29 December 2021.
In line with the 2021 Annual Report, the target dividend for the
year to 31 March 2022 is 6.8 pence per share(2) .
(1) "Cash flow from operations" is an alternative performance
measure ("APM"). The APMs within the accounts are defined on page
65 of the Half-year Report 2021.
(2) These are targets only and not profit forecasts. There can
be no assurance that these targets will be met.
RESPONSIBILITY STATEMENT
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 as issued by the
IASB and in accordance with the accounting policies set out in the
audited Annual Report to 31 March 2021; and
-- the Chairman's statement and Investment Adviser'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 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 and changes therein.
This responsibility statement was approved by the Board of
Directors on 24 November 2021 and is signed on its behalf by:
Richard Morse
Chairman
24 November 2021
INDEPENT REVIEW REPORT
to the members of JLEN Environmental Assets Group Limited
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 September 2021 which comprises the condensed
income statement, condensed statement of financial position, the
condensed statement of changes in equity, the condensed cash flow
statement and related notes 1 to 18. We have read the other
information contained in the half--yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
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 half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Company will be prepared in accordance with United Kingdom adopted
IFRS as issued by the IASB. The condensed set of financial
statements included in this half-yearly financial report has been
prepared in accordance with United Kingdom adopted International
Accounting Standard 34 Interim Financial Reporting as issued by the
IASB.
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.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. 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.
Conclusion
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 2021 is not prepared, in all material respects, in
accordance with United Kingdom adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the Company those matters we are required to state to it
in an independent review 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 formed.
Deloitte LLP
Recognised Auditor
Guernsey, Channel Islands
24 November 2021
CONDENSED UNAUDITED INCOME STATEMENT
for the six months ended 30 September 2021
Six months Six months
ended ended
30 Sep 2021 30 Sep 2020
(unaudited) (unaudited)
Notes GBP'000s GBP'000s
-------------------------- ----- ----------- -----------
Operating income 8 55,615 13,879
Operating expenses 4 (3,831) (3,164)
-------------------------- ----- ----------- -----------
Operating profit 51,784 10,715
-------------------------- ----- ----------- -----------
Profit before tax 51,784 10,715
Tax 5 - -
-------------------------- ----- ----------- -----------
Profit for the period 51,784 10,715
-------------------------- ----- ----------- -----------
Earnings per share
Basic and diluted (pence) 7 8.8 2.0
-------------------------- ----- ----------- -----------
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 2021
30 Sep 2021 31 Mar 2021
(unaudited) (audited)
Notes GBP'000s GBP'000s
------------------------------------------------- ----- ----------- -----------
Non-current assets
Investments at fair value through profit or loss 8 591,318 504,093
------------------------------------------------- ----- ----------- -----------
Total non-current assets 591,318 504,093
------------------------------------------------- ----- ----------- -----------
Current assets
Trade and other receivables 9 242 14
Cash and cash equivalents 1,884 1,874
------------------------------------------------- ----- ----------- -----------
Total current assets 2,126 1,888
------------------------------------------------- ----- ----------- -----------
Total assets 593,444 505,981
------------------------------------------------- ----- ----------- -----------
Current liabilities
Trade and other payables 10 (1,914) (1,780)
------------------------------------------------- ----- ----------- -----------
Total current liabilities (1,914) (1,780)
------------------------------------------------- ----- ----------- -----------
Total liabilities (1,914) (1,780)
------------------------------------------------- ----- ----------- -----------
Net assets 591,530 504,201
------------------------------------------------- ----- ----------- -----------
Equity
Share capital account 12 604,780 548,848
Retained earnings 13 (13,250) (44,647)
------------------------------------------------- ----- ----------- -----------
Equity attributable to owners of the Company 591,530 504,201
------------------------------------------------- ----- ----------- -----------
Net assets per share (pence per share) 98.4 92.2
------------------------------------------------- ----- ----------- -----------
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 2021.
They were signed on its behalf by:
Richard Morse
Chairman
Stephanie Coxon
Director
CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2021
Six months ended 30 Sep 2021
(unaudited)
---------------------------------
Share capital Retained
account earnings Total
Notes GBP'000s GBP'000s GBP'000s
----------------------------------------------------- ----- ------------- -------- --------
Balance at 1 April 2021 548,848 (44,647) 504,201
----------------------------------------------------- ----- ------------- -------- --------
Profit and total comprehensive income for the period - 51,784 51,784
Issue of share capital 12 56,859 - 56,859
Expenses of issue of equity shares 12 (927) - (927)
Dividends paid 6, 13 - (20,387) (20,387)
----------------------------------------------------- ----- ------------- -------- --------
Balance at 30 September 2021 604,780 (13,250) 591,530
----------------------------------------------------- ----- ------------- -------- --------
Six months ended 30 Sep 2020
(unaudited)
---------------------------------
Share capital Retained
account earnings Total
Notes GBP'000s GBP'000s GBP'000s
----------------------------------------------------- ----- ------------- -------- --------
Balance at 1 April 2020 548,943 (15,929) 533,014
----------------------------------------------------- ----- ------------- -------- --------
Profit and total comprehensive income for the period - 10,715 10,715
Expenses of issue of equity shares 12 (95) - (95)
Dividends paid 6, 13 - (18,343) (18,343)
----------------------------------------------------- ----- ------------- -------- --------
Balance at 30 September 2020 548,848 (23,557) 525,291
----------------------------------------------------- ----- ------------- -------- --------
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 2021
Six months Six months
ended ended
30 Sep 2021 30 Sep 2020
(unaudited) (unaudited)
Notes GBP'000s GBP'000s
--------------------------------------------- ----- ----------- -----------
Profit from operations 51,784 10,715
Adjustments for:
Interest received (14,390) (14,390)
Dividends received (10,100) (7,200)
Net (gain)/loss on investments at
fair value through profit or loss (31,125) 7,711
---------------------------------------------- ----- ----------- -----------
Operating cash flows before movements
in working capital (3,831) (3,164)
Increase in receivables (228) (11)
Increase/(decrease) in payables 134 (184)
---------------------------------------------- ----- ----------- -----------
Net cash outflow from operating activities (3,925) (3,359)
---------------------------------------------- ----- ----------- -----------
Investing activities
Investments in subsidiaries (56,100) -
Interest received 14,390 14,390
Dividends received 10,100 7,200
---------------------------------------------- ----- ----------- -----------
Net cash generated from investing activities (31,610) 21,590
---------------------------------------------- ----- ----------- -----------
Financing activities
Proceeds on issue of share capital 56,859 -
Expenses relating to issue of shares 12 (927) (95)
Dividends paid 6 (20,387) (18,343)
---------------------------------------------- ----- ----------- -----------
Net cash outflow from financing activities 35,545 (18,438)
---------------------------------------------- ----- ----------- -----------
Net decrease in cash and cash equivalents 10 (207)
Cash and cash equivalents at beginning of
period 1,874 1,762
---------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at end of period 1,884 1,555
---------------------------------------------- ----- ----------- -----------
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 2021
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 2021 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 financial statements were approved and
authorised for issue by the Board of Directors on 24 November 2021.
The condensed set of 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 issued by the IASB.
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: Recognition and Measurement, and IFRS 13
Fair Value Measurement.
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 2021 principally
comprise working capital balances, the bank loan and investments in
projects, are required to be included at fair value in the carrying
value of investments.
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 2021 and should be read in conjunction with
the Company's annual audited financial statements for the year
ended 31 March 2021.
The following standards became effective during the period and
did not have a material impact on the Company's
reported results:
-- Interest Rate Benchmark Reform - Phase 2 - Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
Key sources of estimation uncertainty
The estimates and underlying assumptions are reviewed on an
ongoing basis. 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.
Discount rates used in the valuation represent the Investment
Adviser'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.
The forward-looking power price forecasts are also a source of
key estimation uncertainty. The Board uses a blended forward curve
from three market consultants with an adjustment for price
cannibalisation.
As a significant proportion of the revenue received in the
portfolio is either fully or partially inflation--linked, the
Directors deem it appropriate to add the inflation rates used in
calculating the investment at fair value as a key source of
estimation uncertainty.
Underlying assumptions and discount rates are disclosed in note
8 and sensitivity analysis for these key sources of estimation
uncertainty 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 Adviser, Foresight Group, which are based on
prudent market data, a reasonable worst case and a reverse 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
impact of the Covid-19 pandemic on operations, the potential risks
of the recent energy market disruption that has led to very high
energy prices and the risk of energy suppliers that provide PPAs to
renewable generators becoming insolvent. The Investment Adviser has
reviewed the portfolio's exposure to this risk and has concluded
that it is not material to the Fund, although it continues to
monitor the market attentively.
The Directors also considered that the Company has adequate
financial resources, and were mindful that the Group had
unrestricted cash of GBP19.1 million (including GBP1.9 million in
the Company) as at 30 September 2021 and a revolving credit
facility (available for investment in new or existing projects and
working capital) of GBP170 million. As at 30 September 2021, the
Company's wholly owned subsidiary UK HoldCo had borrowed GBP111.1
million under the facility, and as such GBP58.9 million is
available to draw. All key financial covenants under this facility
are forecast to continue to be complied with for at least 12 months
from the date of signing of the condensed unaudited financial
statements.
As at 30 September 2021, the Group has the following future
investment obligations: EUR21 million to Foresight Energy
Infrastructure Partners SCSp ("FEIP"), a Luxembourg limited
partnership investment vehicle; and GBP11.3 million to the CNG
Foresight project to fund the construction of a further pipeline of
CNG refuelling stations as part of a national network.
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, 1987 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 2021 30 Sep 2020
(unaudited) (unaudited)
GBP'000s GBP'000s
----------------------------- ----------- -----------
Investment advisory fees 3,213 2,672
Directors' fees and expenses 149 133
Administration fee 57 52
Other expenses 412 307
----------------------------- ----------- -----------
3,831 3,164
----------------------------- ----------- -----------
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 2021 30 Sep 2020
(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 2021 of 1.69 (31 March 2020: 1.665) 10,164 9,103
Interim dividend for the quarter ended 30 June 2021 of 1.70 (30 June 2020: 1.690) 10,224 9,240
------------------------------------------------------------------------------------------- ----------- -----------
20,387 18,343
------------------------------------------------------------------------------------------- ----------- -----------
A dividend for the quarter to 30 September 2021 of 1.70 pence
per share was approved by the Board on 24 November 2021 and is
payable on 29 December 2021. The dividend has not been included as
a liability at 30 September 2021.
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 2021 30 Sep 2020
(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 51,784 10,715
-------------------------------------------------------------------------------------------- ----------- -----------
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings
per share 586,753,076 546,720,025
-------------------------------------------------------------------------------------------- ----------- -----------
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 2021 30 Sep 2020
(unaudited) (unaudited)
GBP'000s GBP'000s
--------------------------------------------- ----------- -----------
Basic and diluted earnings per share (pence) 8.8 2.0
--------------------------------------------- ----------- -----------
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 2021 31 Mar 2021
(unaudited) (audited)
GBP'000s GBP'000s
------------------------------------------------------- ----------- -----------
Fair value of environmental infrastructure investments 678,842 571,414
Fair value of intermediate holding companies (87,524) (67,321)
------------------------------------------------------- ----------- -----------
Total fair value of investments 591,318 504,093
------------------------------------------------------- ----------- -----------
Reconciliation of movement in fair value of portfolio of
assets
The table below 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 below 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 2021, by incorporating the
fair value of these intermediate holding companies.
Six months to 30 Sep 2021 Year to 31 Mar 2021 (audited)
(unaudited)
------------------------------------ ------------------------------------
Cash, working Cash, working
capital capital and
and debt 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 571,414 (67,321) 504,093 537,094 (4,153) 532,941
Acquisitions
Portfolio of assets acquired/further
investment 75,091 - 75,091 62,962 - 62,962
------------------------------------------ --------- --------------- -------- --------- --------------- --------
75,091 - 75,091 62,962 - 62,962
Growth in portfolio(1) 58,993 - 58,993 19,588 - 19,588
Cash yields from portfolio to intermediate
holding companies (26,656) 26,656 - (48,230) 48,230 -
------------------------------------------ --------- --------------- -------- --------- --------------- --------
Yields from intermediate holding companies
Interest on loan notes(1) - (14,390) (14,390) - (28,701) (28,701)
Dividends from UK HoldCo to the Company(1) - (10,100) (10,100) - (14,900) (14,900)
------------------------------------------ --------- --------------- -------- --------- --------------- --------
- (24,490) (24,490) - (43,601) (43,601)
Other movements
Investment in working capital in UK HoldCo - 10,118 10,118 - (10,327) (10,327)
Administrative expenses borne by
intermediate holding companies(1) - (3,378) (3,378) - (4,835) (4,835)
Drawdown of UK HoldCo revolving credit
facility borrowings - (29,109) (29,109) - (52,635) (52,635)
------------------------------------------ --------- --------------- -------- --------- --------------- --------
Fair value of the Company's investment in
UK HoldCo 678,842 (87,524) 591,318 571,414 (67,321) 504,093
------------------------------------------ --------- --------------- -------- --------- --------------- --------
(1) The net gain on investments at fair value through profit or
loss for the period ended 30 September 2021 is GBP31,125,000 (year
ended 31 March 2021: loss of GBP28,848,000, six-month period ended
30 September 2020: loss of GBP7,711,000). This, together with
interest received on loan notes of GBP14,390,000 (year ended 31
March 2021: GBP28,701,000, six-month period ended 30 September
2020: GBP14,390,000) and dividend income of GBP10,100,000 (year
ended 31 March 2021: GBP14,900,000, six-month period ended 30
September 2020: GBP7,200,000) comprises operating income in the
condensed income statement.
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 Adviser has carried out fair market valuations of
the investments as at 30 September 2021. 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 portfolio of assets range from
5.0% to 13.0% (weighted average 7.3%) (at 31 March 2021: from 5.5%
to 13.0% - weighted average 7.3%).
The following economic assumptions were used in the discounted
cash flow valuations:
30 Sep 2021 (unaudited) 31 Mar 2021 (audited)
---------------------------- ---------------------------- ----------------------------
UK - inflation rates 3% for 2021, decreasing to 3% for 2021, decreasing to
2.25% from 2031 2.25% from 2031
France - inflation rates 1.5% 1.5%
Italy - inflation rates 1% for 2021, increasing to n/a
2% from 2025
UK - deposit interest rates 0.25% for 2021, rising to 1% 0.25% for 2021, rising to 1%
from 2025 from 2025
France - deposit rates 0.5% 0.5%
Italy - deposit rates 0.0% n/a
Euro/sterling exchange rate 1.16 1.17
---------------------------- ---------------------------- ----------------------------
The UK corporation tax rate assumed in the 30 September 2021
portfolio valuation is 19%, stepping up to 25% from 2023 (31 March
2021: 19%, stepping up to 25% from 2023). The equivalent rate for
the French assets is 26.5%, stepping down to 25% from 2022 (31
March 2021: 26.5% in 2021, stepping down to 25% in 2022) and a
national rate of 24% plus the applicable regional premiums for the
Italian assets (31 March 2021: not applicable).
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 May 2021, the Group acquired a 50% equity stake in Sandridge
Battery Storage Limited, which holds the development rights to
construct a 50MW lithium-ion battery energy storage plant based in
Wiltshire, UK. The acquisition will see JLEN invest up to GBP12.7
million over the next 12-18 months.
In May 2021, the Group acquired a 45% equity stake in Energie
Tecnologie Ambiente S.r.l. ("ETA"). ETA is a 16.8MW
energy-from-waste power plant which processes refuse derived fuel,
located in the municipality of Manfredonia, Italy. The total
consideration paid was EUR26.8 million.
In June 2021, the Group acquired a 100% equity stake in
Cramlington Renewable Energy Developments Limited, a biomass
combined heat and power plant project, based in Northumberland,
UK.
During the period, GBP2.0 million was injected into CNG
Foresight Limited. The portfolio now holds seven natural gas
refuelling stations, of which two are in construction phase.
The Group also invested GBP0.9 million into the Vulcan
Renewables upgrade and GBP0.4 million to various projects for value
enhancement initiatives.
9. Trade and other receivables
30 Sep 2021 31 Mar 2021
(unaudited) (audited)
GBP'000s GBP'000s
---------------- ----------- -----------
Prepayments 242 14
---------------- ----------- -----------
Closing balance 242 14
---------------- ----------- -----------
10. Trade and other payables
30 Sep 2021 31 Mar 2021
(unaudited) (audited)
GBP'000s GBP'000s
---------------- ----------- -----------
Accruals 1,914 1,780
---------------- ----------- -----------
Closing balance 1,914 1,780
---------------- ----------- -----------
11. Loans and borrowings
The Company had no outstanding loans or borrowings at 30
September 2021 (31 March 2021: none), as shown in the Company's
condensed statement of financial position.
As at 30 September 2021, the Company held loan notes of GBP318.9
million which were issued by UK HoldCo (31 March 2021: outstanding
amount of GBP318.9 million).
On 21 May 2021, the UK HoldCo successfully refinanced its
revolving credit facility with a three-year agreement with ING,
HSBC, RBSI, NAB and NIBC which provides for a committed facility of
GBP170 million. The consortium of lenders includes three existing
lenders (ING, HSBC and NIBC) and two new participants (RBSI and
NAB). The margin can vary between 195 bps and 205 bps over SONIA
("Sterling Overnight Index Average") for sterling drawings, and
over EURIBOR for euro drawings, depending on the Company's
performance against pre-defined ESG targets. The facility will be
used to finance the acquisitions of environmental infrastructure
projects and to cover working capital requirements.
As at 30 September 2021, UK HoldCo had an outstanding balance of
GBP111.1 million under the facility (31 March 2021: GBP82.0
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 and borrowings in either
UK HoldCo or HWT at 30 September 2021.
12. Share capital account
30 Sep 2021 (unaudited) 31 Mar 2021 (audited)
------------------------- -----------------------
Number of Number of
shares GBP'000s shares GBP'000s
----------------------------------- -------------- --------- ------------- --------
Opening balance 546,720,025 548,848 546,720,025 548,943
Shares issued in the period/year 54,672,002 56,859 - -
Expenses of issue of equity shares - (927) - (95)
----------------------------------- -------------- --------- ------------- --------
Closing balance 601,392,027 604,780 546,720,025 548,848
----------------------------------- -------------- --------- ------------- --------
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 2021 31 Mar 2021
(unaudited) (audited)
GBP'000s GBP'000s
---------------------------------- ----------- -----------
Opening balance (44,647) (15,929)
Profit/(loss) for the period/year 51,784 8,104
Dividends paid (20,387) (36,822)
---------------------------------- ----------- -----------
Closing balance (13,250) (44,647)
---------------------------------- ----------- -----------
14. Transactions with Investment Adviser 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 Adviser.
Transactions with the Investment Adviser
The Investment Adviser, 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 Adviser fee charged to the condensed
unaudited income statement for the six months ended 30 September
2021 was GBP3,213,284 (six-month period ended 30 September 2020:
GBP2,672,000) of which GBP1,675,156 remained payable as at 30
September 2021 (31 March 2021: GBP1,440,832).
(1) Adjusted Portfolio Value is defined in the Investment Advisory 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 GBP148,420 (six-month period ended 30 September 2020:
GBP132,254). The Directors were paid expenses of GBP368 in the
six-month period (six-month period ended 30 September 2020:
GBP355).
The Directors held the following shares:
Total number Total number
of shares of shares
held held
at 30 Sep at 31 Mar
2021 2021
(unaudited) (audited)
--------------------------------------------- ------------ ------------
Richard Morse 103,535 103,535
Peter Neville (resigned on 2 September 2021) n/a 29,896
Richard Ramsay 53,813 53,813
Hans Joern Rieks - -
Stephanie Coxon - -
Alan Bates - n/a
Jo Harrison - n/a
--------------------------------------------- ------------ ------------
All of the above transactions were undertaken on an arm's length
basis.
The Directors were paid dividends in the period of GBP5,839
(six-month period ended 30 September 2020: GBP7,367).
15. Financial instruments
Financial instruments by category
The Company held the following financial instruments at fair
value at 30 September 2021. There are no non--recurring fair value
measurements.
30 Sep 2021 (unaudited)
----------------------------------------------------------------
Financial Financial
Financial assets at liabilities
fair at
Cash and assets held value through amortised
at
bank balances amortised profit or cost Total
cost loss
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Non-current assets
Investments at fair value through profit or loss - - 591,318 - 591,318
Current assets
Trade and other receivables - 242 - - 242
Cash and cash equivalents 1,884 - - - 1,884
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Total financial assets 1,884 242 591,318 - 593,444
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Current liabilities
Trade and other payables - - - (1,914) (1,914)
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Total financial liabilities - - - (1,914) (1,914)
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Net financial instruments 1,884 242 591,318 (1,914) 591,530
------------------------------------------------- ------------- ----------- ------------- ----------- --------
31 Mar 2021 (unaudited)
----------------------------------------------------------------
Financial Financial
Financial assets at liabilities
fair at
Cash and assets held value through amortised
at
bank balances amortised profit or cost Total
cost loss
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Non-current assets
Investments at fair value through profit or loss - - 504,093 - 504,093
Current assets
Trade and other receivables - 14 - - 14
Cash and cash equivalents 1,874 - - - 1,874
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Total financial assets 1,874 14 504,093 - 505,981
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Current liabilities
Trade and other payables - - - (1,780) (1,780)
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Total financial liabilities - - - (1,780) (1,780)
------------------------------------------------- ------------- ----------- ------------- ----------- --------
Net financial instruments 1,874 14 504,093 (1,780) 504,201
------------------------------------------------- ------------- ----------- ------------- ----------- --------
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 2021 (unaudited)
----------------------------- ------------------ --------- ------------------
Discount rate Minus 0.5% Base 7.3% Plus 0.5%
Change in portfolio valuation Increases GBP20.0m GBP678.8m Decreases GBP20.0m
Change in NAV per share Increases 3.3p 98.4p Decreases 3.3p
----------------------------- ------------------ --------- ------------------
31 Mar 2021 (audited)
----------------------------- ------------------- --------- ------------------
Discount rate Minus 0.5% Base 7.3% Plus 0.5%
Change in portfolio valuation Increases GBP18.8m GBP571.4m Decreases GBP17.8m
Change in NAV per share Increases 3.4p 92.2p Decreases 3.3p
----------------------------- ------------------- --------- ------------------
The sensitivity of the portfolio to movements in long-term
inflation rates is as follows:
30 Sep 2021 (unaudited)
----------------------------- ------------------ ------------------ ------------------
Inflation rates Minus 0.5% Base 3% then 2.25% Plus 0.5%
Change in portfolio valuation Decreases GBP25.2m GBP678.8m Increases GBP25.9m
Change in NAV per share Decreases 4.2p 98.4p Increases 4.3p
----------------------------- ------------------ ------------------ ------------------
31 Mar 2021 (audited)
----------------------------- ------------------ ------------------ ------------------
Inflation rates Minus 0.5% Base 3% then 2.25% Plus 0.5%
Change in portfolio valuation Decreases GBP19.0m GBP571.4m Increases GBP19.7m
Change in NAV per share Decreases 3.5p 92.2p Increases 3.6p
----------------------------- ------------------ ------------------ ------------------
Wind and solar assets are subject to electricity price and
electricity generation risks. The sensitivities of the investments
to movements in the level of electricity output and electricity
price are as follows:
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.
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 2021 (unaudited)
----------------------------- ------------------ --------- ------------------
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP26.0m GBP678.8m Increases GBP26.4m
Change in NAV per share Decreases 4.3p 98.4p Increases 4.4p
----------------------------- ------------------ --------- ------------------
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP7.8m GBP678.8m Increases GBP8.1m
Change in NAV per share Decreases 1.3p 98.4p Increases 1.4p
----------------------------- ----------------- --------- -----------------
31 Mar 2021 (audited)
----------------------------- ------------------ --------- ------------------
Energy yield: wind P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP24.4m GBP571.4m Increases GBP25.0m
Change in NAV per share Decreases 4.5p 92.2p Increases 4.6p
----------------------------- ------------------ --------- ------------------
Energy yield: solar P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP6.4m GBP571.4m Increases GBP7.1m
Change in NAV per share Decreases 1.2p 92.2p Increases 1.3p
----------------------------- ----------------- --------- -----------------
The sensitivity of the portfolio to movements in electricity and
gas prices is as follows:
The Directors have assessed that a reasonable possible long-term
movement of energy prices continues to be +/-10% given the
long-term nature of the portfolio, notwithstanding that significant
short-term energy price movements have occurred in the period due
to the recent energy market disruption.
30 Sep 2021 (unaudited)
----------------------------- ------------------ --------- ------------------
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP38.3m GBP678.8m Increases GBP38.1m
Change in NAV per share Decreases 6.4p 98.4p Increases 6.3p
----------------------------- ------------------ --------- ------------------
31 Mar 2021 (audited)
----------------------------- ------------------ ---------- ------------------
Energy prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP24.8m GBP571.4m Increases GBP25.0m
Change in NAV per share Decreases 4.5p 92.2p Increases 4.6p
----------------------------- ------------------ ---------- ------------------
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.
The sensitivity of the portfolio to movements in AD feedstock
prices is as follows:
30 Sep 2021 (unaudited)
----------------------------- ----------------- --------- -----------------
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases GBP9.0m GBP678.8m Decreases GBP9.7m
Change in NAV per share Increases 1.5p 98.4p Decreases 1.6p
----------------------------- ----------------- --------- -----------------
31 Mar 2021 (audited)
----------------------------- ----------------- --------- -----------------
Feedstock prices Minus 10% Base Plus 10%
Change in portfolio valuation Increases GBP8.9m GBP571.4m Decreases GBP9.3m
Change in NAV per share Increases 1.6p 92.2p Decreases 1.7p
----------------------------- ----------------- --------- -----------------
The sensitivity of the portfolio to movements in corporation tax
rates is as follows:
30 Sep 2021 (unaudited)
----------------------------- ----------------- ----------------- -----------------
Corporation tax Minus 2% Base 19% then 25% Plus 2%
Change in portfolio valuation Increases GBP9.6m GBP678.8m Decreases GBP9.9m
Change in NAV per share Increases 1.6p 98.4p Decreases 1.7p
----------------------------- ----------------- ----------------- -----------------
31 Mar 2021 (audited)
----------------------------- ----------------- ----------------- -----------------
Corporation tax Minus 2% Base 19% then 25% Plus 2%
Change in portfolio valuation Increases GBP8.4m GBP571.4m Decreases GBP8.3m
Change in NAV per share Increases 1.5p 92.2p Decreases 1.5p
----------------------------- ----------------- ----------------- -----------------
Euro/sterling exchange rate sensitivity
As the proportion of the portfolio assets with cash flows
denominated in euros represented 5% of the portfolio value at 30
September 2021, the Directors consider the sensitivity to changes
in the euro/sterling exchange rate 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.
16. Guarantees and other commitments
As at 30 September 2021, the Company has provided a guarantee
under the Company's wholly owned subsidiary UK HoldCo's GBP170
million revolving credit facility. The facility was successfully
refinanced in May 2021 and is now due to expire in May 2024.
As at 30 September 2021, the Company's wholly owned subsidiary
UK HoldCo has future investment obligations of EUR21 million to
FEIP and GBP11.3 million to the CNG Foresight project.
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)":
Place of Registered Ownership Voting
Name Category business office interest 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 Operating subsidiary UK C 100% 100%
Cross Solar PV Limited Operating subsidiary UK C 100% 100%
Domestic Solar Limited Operating subsidiary UK C 100% 100%
Ecossol Limited Operating subsidiary UK C 100% 100%
Hill Solar PV Limited Operating subsidiary UK C 100% 100%
Share Solar PV Limited Operating subsidiary UK C 100% 100%
Tor Solar PV Limited Operating subsidiary UK C 100% 100%
Residential PV Trading Limited Operating subsidiary UK C 100% 100%
South-Western Farms Solar Limited Operating subsidiary UK C 100% 100%
Angel Solar Limited Operating subsidiary UK C 100% 100%
Easton PV Limited Project holding company UK D 100% 100%
Pylle Solar Limited Project holding company UK D 100% 100%
Second Energy Limited Operating subsidiary UK D 100% 100%
ELWA Holdings Limited Project holding company UK E 80% 80%
ELWA Limited(2) Operating subsidiary UK E 80% 81%(2)
JLEAG Wind Holdings Limited Project holding company UK A 100% 100%
JLEAG Wind Limited Project holding company UK A 100% 100%
Amber Solar Parks (Holdings) Limited Project holding company UK F 100% 100%
Amber Solar Park Limited Operating subsidiary UK F 100% 100%
Fryingdown Solar Park Limited Operating subsidiary (dormant) UK F 100% 100%
Five Oaks Solar Parks Limited Operating subsidiary (dormant) UK F 100% 100%
Bilsthorpe Wind Farm Limited Operating subsidiary UK G 100% 100%
Ferndale Wind Limited Project holding company UK G 100% 100%
Castle Pill Wind Limited Project holding company UK G 100% 100%
Wind Assets LLP Operating subsidiary UK G 100% 100%
Hall Farm Wind Farm Limited Operating subsidiary UK G 100% 100%
Branden Solar Parks (Holdings) Limited Project holding company UK F 100% 100%
Branden Solar Parks Limited Operating subsidiary UK F 100% 100%
KS SPV 3 Limited Operating subsidiary UK F 100% 100%
KS SPV 4 Limited Operating subsidiary UK F 100% 100%
Carscreugh Renewable Energy Park Limited Operating subsidiary UK G 100% 100%
Wear Point Wind Limited Operating subsidiary UK G 100% 100%
Monksham Power Ltd Project holding company UK F 100% 100%
Frome Solar Limited Operating subsidiary UK F 100% 100%
BL Wind Limited Operating subsidiary UK G 100% 100%
Burton Wold Extension Limited Operating subsidiary UK G 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.
Place of Registered Ownership Voting
Name Category business office interest rights
------------------------ --------------------- --------- ----------- --------- ------
New Albion Wind
Limited Operating subsidiary UK G 100% 100%
Dreachmhor Wind
Farm Limited Operating subsidiary UK G 100% 100%
France Wind GP Project holding
Germany GmbH company DE K 100% 100%
France Wind Germany Project holding
GmbH & Co. KG company DE K 100% 100%
Parc Eolien Le
Placis Vert SAS Operating subsidiary FR I 100% 100%
Energie Eolienne
de Plouguernével
SAS Operating subsidiary FR J 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 Project holding
1 (UK) Limited company UK D 100% 100%
sPower Finco Project holding
1 (UK) 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 L 100% 100%
CWMNI GWYNT TEG
CYF Operating subsidiary UK L 100% 100%
Moelogan 2 (Holdings) Project holding
Cyfyngedig company UK L 100% 100%
Moelogan 2 C.C.C. Operating subsidiary UK L 100% 100%
Vulcan Renewables
Limited Operating subsidiary UK M 100% 100%
Llynfi Afan Renewable
Energy Park (Holdings)
Limited Dormant UK G 100% 100%
Llynfi Afan Renewable
Energy Park Limited Operating subsidiary UK G 100% 100%
Bio Collectors Project holding
Holdings Limited company UK H 70% 70%
Bio Collectors
Limited Operating subsidiary UK H 70% 70%
Riverside Bio
Limited Operating subsidiary UK H 70% 70%
Riverside AD
Limited Operating subsidiary UK H 70% 70%
Green Gas Oxon Project holding
Limited company UK N 52.6% 52.6%
Icknield Gas
Limited Operating subsidiary UK N 52.6% 52.6%
Egmere Energy
Limited Operating subsidiary UK M 100% 100%
Grange Farm Energy
Limited Operating subsidiary UK M 100% 100%
Biogas Meden
Limited Operating subsidiary UK M 100% 100%
Yorkshire Hydropower Project holding
Holdings Limited company UK G 100% 100%
Yorkshire Hydropower
Limited Operating subsidiary UK G 100% 100%
Northern Hydropower Project holding
Holdings Limited company UK G 100% 100%
Northern Hydropower
Limited Operating subsidiary UK G 100% 100%
Warren Power Project holding
Limited company UK M 100% 100%
Warren Energy
Limited Operating subsidiary UK M 100% 100%
Merlin Renewables
Limited Operating subsidiary UK M 100% 100%
JLEN Holdings
(Sky Blue) Limited Dormant UK A 100% 100%
FS 3 Holdco Limited Dormant UK A 100% 100%
Codford Biogas
Limited Operating subsidiary UK O 100% 100%
Rainworth Energy
Limited Operating subsidiary UK P 100% 100%
FS West Gourdie
Limited Operating subsidiary UK F 100% 100%
Spruce Bioenergy Project holding
Limited company UK A 100% 100%
Cramlington Renewable
Energy Developments
Limited Operating subsidiary UK Q 100% 100%
------------------------ --------------------- --------- ----------- --------- ------
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, United Kingdom
C. C/O Freetricity, 1 Filament Walk, Suite 203, Wandsworth, London SW18 4GQ, United Kingdom
D. Long Barn, Manor Farm, Stratton-on-the-Fosse, Radstock BA3 4QF, United Kingdom
E. Dunedin House, Auckland Park, Mount Farm, Milton Keynes MK1 1BU, United Kingdom
F. Long Barn, Manor Courtyard, Stratton-on-the-Fosse, Radstock BA3 4QF, United Kingdom
G. C/O Res White Limited, Beaufort Court, Egg Farm Lane, Kings
Langley WD4 8LR, United Kingdom
H. 10 Osier Way, Mitcham, Surrey CR4 4NF, United Kingdom
I. Parc Eolien le Placis Vert, Rue du Pre Long 35770 Vern Sur Seiche, France
J. 3 Rue Benjamin Delessert, 56104 Lorient Cedex 04, France
K. Steinweg 3-5, Frankfurt am Main, 60313, Germany
L. Cae Sgubor Ffordd Pennant, Eglwysbach, Colwyn Bay, Conwy LL28 5UN, United Kingdom
M. 10-12 Frederick Sanger Road, Guildford, Surrey GU2 7YD,
United Kingdom
N. Friars Ford, Manor Road, Goring, Reading RG8 9EL, United Kingdom
O. Upton Wold, Moreton-in-Marsh, Gloucestershire GL56 9TR,
United Kingdom
P. C/O Material Change, The Watering Farm, Creeting St. Mary,
Ipswich, Suffolk IP6 8ND, United Kingdom
Q. 8 White Oak Square, London Road, Swanley BR8 7AG, United
Kingdom
18. Events after balance sheet date
A dividend for the quarter ended 30 September 2021 of 1.70 pence
per share was approved by the Board on 24 November 2021. Please
refer to note 6 for further details.
There are no other significant events since the period end which
would require to be disclosed.
GLOSSARY OF KEY TERMS
AD
anaerobic digestion
agri AD
anaerobic digestion plant that accepts agricultural feedstocks
such as grain and/or animal manure
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
Brexit
the withdrawal of the UK from the EU on 31 January 2020
the Company or JLEN or the Fund
JLEN Environmental Assets Group Limited (formerly John Laing
Environmental Assets Group Limited)
CPI
Consumer Price Index
EU
European Union
Foresight Group or Foresight
Foresight Group LLP
gross project value
the fair market value of the investment interests held in a
project as increased by the amount of any financing in the relevant
project entity
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 Adviser
Foresight Group (since 1 July 2019)
IPO
Initial Public Offering
MWe
megawatt electric
MWh
megawatt hour
MWth
megawatt thermal
NAV
Net Asset Value
portfolio
the 39 assets in which JLEN had a shareholding as at 30
September 2021
portfolio valuation
the sum of all the individual investments' net present
values
PPAs
Power Purchase Agreements
PPP/PFI
the Public Private Partnership procurement model
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
PV
Photovoltaic
RCF
revolving credit facility
RPI
Retail Price Index
SPV
special purpose vehicle
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
the weighted average discount rate
ALTERNATIVE PERFORMANCE MEASURES ("APMS")
APM Purpose Calculation
------------------------- ---------------------------- ------------------------------
Total shareholder return Measure of financial Since IPO: closing share
(since IPO & annualised) performance, indicating price as at 30 September
the amount an investor 2021 plus all dividends
reaps from investing since IPO assumed reinvested,
since IPO and expressed divided by the share
as a percentage (annualised price at IPO, expressed
or total since IPO of as a percentage
the Fund) Annualised: closing share
price as at 30 September
2021 plus all dividends
since IPO assumed reinvested,
divided by the share
price at IPO, to the
power of 1 over the number
of years since IPO, expressed
as a percentage
------------------------- ---------------------------- ------------------------------
Net Asset Value per share Allows investors to gauge The net assets divided
whether shares are trading by the number of ordinary
at premium or a discount shares in issuance
by comparing the Net
Asset Value per share
with the share price
------------------------- ---------------------------- ------------------------------
Market capitalisation Provides an indication Closing share price as
of the size of the Company at 30 September 2021
multiplied by closing
number of ordinary shares
in issuance
------------------------- ---------------------------- ------------------------------
Gearing Ascertain financial risk Total debt in the Company
in the Group's balance and its Group as a percentage
sheet of the sum of the Company's
and its Group net asset
plus debt
------------------------- ---------------------------- ------------------------------
Cash flow from operations Gauge operating revenues Cash flow of the Group.
and expenses Breakdown can be observed
of the Group on page 41 of the Half-year
report 2021 (financial
review)
------------------------- ---------------------------- ------------------------------
Cash dividend cover Investors can gauge the Net operating cash flow
ability of the Group divided by dividend declared
to generate cash surplus within the reporting
after payment of dividend period
------------------------- ---------------------------- ------------------------------
COMPANY SUMMARY
Below are the Company key facts, advisers and other
information.
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
--------------------- -----------------------------------------------------------------------------------------------
Registered address Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR
--------------------- -----------------------------------------------------------------------------------------------
Ticker/SEDOL JLEN/BJL5FH8
--------------------- -----------------------------------------------------------------------------------------------
Company year 31 March
end
--------------------- -----------------------------------------------------------------------------------------------
Dividend payments Quarterly in March, June, September and December
--------------------- -----------------------------------------------------------------------------------------------
Investment Adviser Foresight Group LLP, No OC300878, registered in England and Wales and authorised and regulated
by the Financial Conduct Authority
--------------------- -----------------------------------------------------------------------------------------------
Company Secretary Praxis Fund Services Limited, a company incorporated in Guernsey on 13 April 2005 (registered
and Administrator number 43046)
--------------------- -----------------------------------------------------------------------------------------------
Market capitalisation GBP645.9 million at 30 September 2021
--------------------- -----------------------------------------------------------------------------------------------
Investment Adviser 1.0% per annum of the Adjusted Portfolio Value of the investments up to GBP0.5 billion, falling
fees to 0.8% per annum for investments above GBP0.5 billion. No performance or acquisitions fees
--------------------- -----------------------------------------------------------------------------------------------
Investment Adviser Rolling one-year notice
term
--------------------- -----------------------------------------------------------------------------------------------
ISA, PEP and The ordinary shares are eligible for inclusion in PEPs and ISAs (subject to applicable
SIPP status 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 internally managed Alternative Investment Fund under the
Alternative
Investment Fund Managers Regulations 2013 and the European Union's Alternative Investment
Fund Managers Directive
--------------------- -----------------------------------------------------------------------------------------------
Non-mainstream The Board conducts the Company's affairs, and intends to continue to conduct the Company's
pooled investment affairs, such that the Company would qualify for approval as an investment trust if it were
status 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 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 52 to 55 of the 2021 Annual Report
--------------------- -----------------------------------------------------------------------------------------------
Website www.jlen.com
--------------------- -----------------------------------------------------------------------------------------------
DIRECTORS AND ADVISERS
Directors
Richard Morse (Chairman)
Alan Bates (appointed on 10 June 2021)
Stephanie Coxon
Jo Harrison (appointed on 10 June 2021)
Peter Neville (resigned on 2 September 2021)
Richard Ramsay
Hans Joern Rieks
Administrator to the Company, Company Secretary and registered
office
Praxis Fund Services Limited
Sarnia House
Le Truchot
St Peter Port
Guernsey GY1 1GR
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
Deloitte LLP
Regency Court
Glategny Esplanade
St Peter Port
Guernsey GY1 3HW
Channel Islands
Investment Adviser
Foresight Group LLP
The Shard
32 London Bridge Street
London SE1 9SG
United Kingdom
Public relations
SEC Newgate
Sky Light City Tower
50 Basinghall Street
London EC2V 5DE
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
Pages 01 to 41 of the Half-year Report 2021, including about us,
our purpose, at a glance, portfolio at a glance, market and
opportunities, the Chairman's statement, the Investment Adviser,
risks and risk management, 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
Adviser 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 Adviser 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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For further information about how RNS and the London Stock Exchange
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END
IR FZLLLFFLXFBF
(END) Dow Jones Newswires
November 25, 2021 02:00 ET (07:00 GMT)
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