The Directors of JLEN Environmental Assets Group Limited (LON:JLEN), the listed environmental infrastructure fund, have announced the Company’s half-year results to 30 September 2022.
Financial highlights
· Portfolio valuation as at 30 September 2022 of £890.2m (31 March 2022: £795.4m)
· The Net Asset Value (“NAV”) as at 30 September 2022 of £829.6m, equating to a NAV per ordinary share of 125.4 pence as at 30 September 2022 (31 March 2022: 115.3 pence)
· Post the balance sheet date the UK government announced plans for its “Electricity Generator Levy” that reduces the NAV to £822.6 million which equates to a NAV per share of 124.4 pence. Further details on this post balance sheet event are provided below
· A second interim dividend of 1.79 pence per share declared for the financial year to 31 March 2023 taking total dividends declared for the six months to 30 September 2022 to 3.57 pence, in line with the target set out in the 2022 Annual Report. Cash dividend cover of 1.64 times on dividends paid during the period
· Share price total return for the period since IPO of 92.4% (8.0% annualised)
· Overall fund gearing as at 30 September 2022 was 25.5% and £98.6m undrawn on RCF
Portfolio highlights
· Four acquisitions completed in the period, giving a total of 41 assets, including two investments in a new sector – controlled environment
· Diversified portfolio: 28% wind, 28% waste & bioenergy, 21% anaerobic digestion, 15% solar, 5% low carbon & sustainable solutions, 2% controlled environment and 1% hydro (% by value)
· The renewable energy generating portion of the portfolio delivered 655 GWh (six months to 30 September 2021: 560GWh)
Board matters
· Appointment of Ed Warner as Chair, effective 2 August 2022
Post balance sheet event
Post the balance sheet date, the UK government has released details of the ‘Electricity Generator Levy’, through which it intends to capture what it sees as excess profits being made in the wholesale electricity market by low carbon generators such as wind and solar. This Levy sees in-scope generators pay 45% of revenues earned on prices in excess of £75/MWh. A £10 million per year allowance will apply, such that revenues below this threshold will be exempt.
This constitutes a non-adjusting post-balance sheet event as the Levy was not known at the balance sheet date. However, there was an expectation that some form of government intervention would be introduced, as well as a recognition that high near-term power prices may not be captured in practice by generators. In the face of such uncertainty, the Directors used their judgement to reduce price forecast curves used in the valuation by 50% across the portfolio for the next 12 months, with this percentage stepping down by 10% per annum to zero over the next five years. This was applied to all UK generating assets including Renewables Obligation Certificate and Feed-in Tariff supported generators and gas assets supported under the Renewable Heat Incentive. Using this approach, the Directors valued the portfolio at £890.2 million as at the 30 September 2022, which results in a NAV per share of 125.4 pence.
The Directors have now assessed the impact of the Levy and have also considered the latest available price forecast curves and actual inflation, as well as removing the discounts that were applied to forecast curves for the valuation at the balance sheet date. This has led to a reduction in the NAV as calculated for the 30 September 2022 of £7.0 million to £822.6 million and equates to a NAV per share of 124.4 pence.
The following table illustrates the key valuation and NAV movements between 31 March 2022 to 30 September 2022 as well as the Company’s assessment of post balance sheet event adjustments described above:
| NAV per share | |
| NAV at 31 March 2022 | 115.3p |
| Payment of shareholder dividends | -3.5p |
| Acquisitions and further investments | – |
| Distributions received from investments | – |
| Forecast power prices | +13.7p |
| Economic assumptions | +5.7p |
| Discount rate changes | -5.5p |
| Change in foreign exchange rate | +0.2p |
| Balance of portfolio return | +0.7p |
| Other fund level movements | -1.2p |
| NAV at 30 September 2022 | 125.4p |
| Add back short term price discounts | +12.8p |
| Application of Levy | -11.9p |
| Post balance sheet event NAV | 126.3p |
| Latest power prices and actual inflation | -1.9p |
| Updated NAV post Autumn Statement | 124.4p |
Dividend Timetable
Ex-dividend date: 8 December 2022
Record date: 9 December 2022
Payment date: 30 December 2022
Ed Warner, Chair of JLEN Environmental Assets Group, said:
“JLEN has delivered strong returns during a period of extraordinary dislocation in the global economy. During the period the Company expanded its portfolio by making four acquisitions and generating a strong pipeline of near-term investment opportunities for further growth. Our diverse portfolio of environmental assets is well placed to benefit from the continued drive for a more sustainable and secure way of living.”
