TIDMJLEN
RNS Number : 1537X
John Laing Environmental Assets Grp
22 November 2017
22 November 2017
John Laing Environmental Assets Group Limited
Announcement of half-year results for the period to 30 September
2017
The Directors of John Laing Environmental Assets Group Limited
("JLEN" or the "Company") are pleased to announce the Company's
half-year results to 30 September 2017.
Financial Highlights
-- NAV per ordinary share of 99.0 pence as at 30 September 2017
(31 March 2017: 100.1 pence) the change primarily due to the
decrease in forecast electricity prices during the period
-- Portfolio valuation as at 30 September 2017 of GBP375.9m (31 March 2017: GBP327.6m)
-- Further interim dividend of 1.5775 pence per share declared
making total dividends declared for the six months to 30 September
2017 of 3.16 pence per ordinary share, in line with target set out
in the 2017 Annual Report
-- Share price total return for the period to 30 September 2017
of 2.9% (31.0% since IPO in March 2014)
Portfolio Highlights
-- Operational and financial performance across the portfolio
for the period to 30 September 2017 broadly in line with budget.
Generation for the wind portfolio was 4% ahead of budget. After
allowing for recoverable claims, generation for the solar portfolio
was 6% below budget, mainly due to lower than expected solar
irradiation. Performance at the environmental processing plants was
in line with budget.
-- Three acquisitions totalling GBP53.4m, bringing the number of
investments to 22 and the capacity of the renewable energy assets
in the JLEN portfolio to 230.2MW
-- Strong pipeline of assets for further growth, both under the
First Offer Agreement with the John Laing Group and from third
parties
Financing Activity
-- In July 2017, JLEN successfully raised GBP40m at an issue
price of 103 pence per share. The proceeds, were used to repay the
outstanding balance on the RCF and to fund acquisitions in the
period
-- In June 2017, the fund signed a new three-year facilities
agreement, which provides for a committed revolving credit facility
of GBP130 million, of which GBP15.8 million has been drawn at 30
September 2017. The fund also has an uncommitted 'accordion'
facility of up to GBP60 million
Richard Morse, Chairman of JLEN, said:
"JLEN has made steady progress in the performance and growth of
the Fund's portfolio throughout the six month period to 30
September.
The Board is appreciative of the continuing support of
shareholders, demonstrated during the period by the successful
equity raise in July. We were able to use the funds raised to pay
down debt and fund a healthy level of acquisitions. We continue to
deliver on our commitments to our shareholders and to that end we
have paid and declared interim dividends during the period that
have increased in line with inflation from last year".
Dividend Timetable
Ex-dividend date 30 November 2017
Record date 1 December 2017
Payment date 22 December 2017
Half-year report
A copy of the half-year report has been submitted to the
National Storage Mechanism and will shortly be available at
www.morningstar.co.uk/uk/NSM. The half-year report can also be
found on the Company's website at www.jlen.com where further
information can be found.
Details of the conference call for analysts and investors
There will be a call at 9.30am today for analysts and investors.
To register for the call please contact Redleaf Communications on
+44 (0)20 7382 4769, or by email on JLEN@RedleafPR.com.
Presentation materials will be posted on the Company's website,
www.jlen.com, from 9.00am.
This announcement contains information that is inside
information for the purposes of the Market Abuse Regulation (EU)
No. 596/2014.
For further information, please contact:
John Laing Capital Management
Limited
Chris Tanner
David Hardy +44(0)20 7901 3559
Winterflood Investment Trusts
Joe Winkley
Neil Langford +44(0)20 3100 0000
Readleaf Communications
Charlie Geller +44(0)20 7382 4769
CHAIRMAN'S STATEMENT
On behalf of the Board, I am pleased to present the half--year
report of John Laing Environmental Assets Group Limited for the six
months ended 30 September 2017.
Results
During the period under review, the Company has successfully
grown its portfolio and has made progress in its operations and
asset management. Weakness in future electricity price forecasts
has affected reported profits and net asset value, but cash
generation and dividend cover remain satisfactory and the Company
remains on target to pay dividends of 6.31p per share relating to
the year ending 31 March 2018.
The Company's profit before tax for the six month period to 30
September 2017 was GBP6.3 million (six months to 30 September 2016:
GBP11.3 million) and earnings per share for the period was 1.8
pence (six months to 30 September 2016: 4.5 pence). The lower level
of earnings per share of the Company in the current period is the
result of unrealised valuation movements in the profit and loss due
to lower forecast electricity prices. However, taking account of
the cash generation of the portfolio, the Board continues to
believe that the portfolio is well positioned to deliver the target
returns to shareholders.
The Net Asset Value ("NAV") per share at 30 September 2017 was
99.0 pence, down from 100.1 pence at 31 March 2017.
Cash received from the portfolio by way of distributions, which
includes interest, loan repayments and dividends, was GBP15.4
million (six months to 30 September 2016: GBP12.4 million). Net
cash inflows from the investment portfolio (after operating and
finance costs) of GBP12.1 million (six months to 30 September 2016:
GBP9.0 million) cover the interim dividends paid in the half-year
period of GBP11.2 million by approximately 1.1 times (six months to
30 September 2016: GBP7.5 million; 1.2 times).
Dividend policy
For the year to 31 March 2017, the Company achieved its target
dividend of 6.14 pence per share by the payment of four interim
dividends.
In line with the total inflation adjusted target for the year
ending 31 March 2018 of 6.31 pence per share set out in our 2017
Annual Report, a quarterly dividend of 1.5775 pence per share was
paid in September 2017 for the quarter to 30 June 2017. I am
pleased to announce that the Board has declared an interim dividend
of 1.5775 pence per share for the quarter to 30 September 2017,
payable on 22 December 2017 to shareholders on the register as at 1
December 2017. The ex-dividend date will be 30 November 2017. Based
on the current performance of the portfolio, the Board is targeting
interim dividends for the six months ending 31 March 2018 totalling
3.155 pence per share.
Portfolio performance
During the period, generation from the wind assets was ahead of
budget with a number of the larger wind farms in the portfolio
performing well. The solar assets suffered from a poor UK
summertime. The main asset-specific issue continued to be on the
Branden project, where the plant experienced a number of technical
issues. I am however pleased to report that good progress has been
made with remedial works and availability has now returned to
normal levels.
At our environmental processing assets; ELWA, D&G, Tay and
Vulcan operational performance has been in line with expectations
and volumes have been at or above budgeted levels.
The results from the renewable energy assets within the
portfolio are dependent in part on the weather, which can be
predicted with some degree of confidence over the long term but may
vary over the short term. The Company's exposure to both solar and
wind assets provides a degree of protection against variability and
seasonality in resource as solar tends to be more productive at
times when wind is less productive and vice versa. Production from
our anaerobic digestion plant now adds consistent 'green' base load
gas to our generation mix.
The results from our renewable energy assets are also dependent
in part on the level of electricity prices, which have trended
noticeably lower since the IPO in March 2014. The impact on the
Company of any prolonged period of low prices continues to be
mitigated by the fact that the Company has a relatively low
exposure to commodity prices in its ROC, RHI and FiT operating
projects compared to other portfolios held by peer funds and that
short--term fixed prices have been put in place for a significant
proportion of the assets to lock in pricing for near term future
cash flows. The waste and wastewater processing assets are not
affected by the level of electricity prices.
The resilience of the Company's NAV during the period despite
the reduction in the forecast of future electricity prices
continues to demonstrate the benefits of the Company's portfolio
diversification across a range of environmental infrastructure
projects and its operational resilience.
Acquisitions
During the period under review, the Company announced the
following acquisitions:
Moel Moelogan
As mentioned in the March 2017 report, JLEN acquired the Moel
Moelogan 1 and 2 wind farms in North Wales in April 2017 and May
2017. These have a combined capacity of 14.3MW.
CSGH solar portfolio
In June 2017, JLEN acquired a portfolio of four ground mounted
solar parks with a total generating capacity of 33.5MW. Higher
Tregarne, located in Cornwall, has been operational since March
2014, has a generation capacity of 5MW and is accredited for 1.6
ROCs. The other three solar parks, Crug Mawr, Golden Hill and
Shoals Hook, all located in South Wales, have been operational
since March 2015, and have a total generation capacity of 28.5MW
and are accredited for 1.4 ROCs.
Vulcan Renewables
In August 2017, JLEN diversified the technology exposure already
within the Fund by making its first investment into the anaerobic
digestion sector through Vulcan Renewables. The farm based
anaerobic digestion plant is managed by experienced operator Future
Biogas Ltd and is located in Hatfield Woodhouse near Doncaster. It
was commissioned in October 2013 and was one of the first
commercial biogas-to-grid projects in the UK. It has a capacity of
5MWth and predominantly produces grid injectable biomethane from
its biogas. The plant also has a 0.5MWe CHP engine which supplies
the site's electricity and heat needs. The project is accredited
both under the Renewable Heat Incentive ("RHI") and the Feed-in
Tariff ("FiT").
Following the period under review the Investment Adviser has
continued to explore pipeline opportunities and one additional
transaction was completed.
For the Monksham solar project, JLEN increased its economic
interest to 100% by completing the purchase of the 'A' shares from
the founding EIS shareholders.
Capital raising
In June 2017, the Fund signed a new three-year facilities
agreement with HSBC, NIBC, ING and Santander which provides for a
committed revolving credit facility of GBP130 million (of which
GBP15.8 million has been drawn at 30 September 2017), and for an
uncommitted "accordion" facility of up to GBP60 million. The
facility incorporates an uncommitted option to extend for a further
year.
This has replaced the previous facility and gives JLEN an
increased source of flexible funding outside of equity raisings at
a lower cost. The facility is periodically paid down from the
proceeds of equity issuance which then allows JLEN to make new
investments with the certainty of funding and on a timely basis,
reducing the performance drag associated with holding excess
cash.
Share capital
In July 2017, JLEN successfully raised GBP40 million via a book
building process following the announcement of the annual results,
with an issue price of 103 pence per share, an estimated 3% premium
to NAV. The proceeds of the share issue were used to repay the
outstanding balance on the RCF, which was then used to finance the
acquisitions of Moel Moelogan and CSGH solar in April and May
respectively.
Valuation
The Net Asset Value at 30 September 2017 is GBP374.7 million,
comprising GBP375.9 million portfolio valuation, GBP14.4 million of
cash held by the Group, together with outstanding revolving credit
debt of GBP15.8 million and a positive working capital balance of
GBP0.2 million.
The Investment Adviser has prepared a fair market valuation of
the portfolio as at 30 September 2017. 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 taken into account available comparable market
transactions and financial market data in order to arrive at a fair
market value. The Directors have satisfied themselves as to the
methodology used and the assumptions adopted and have approved the
valuation of GBP375.9 million for the portfolio of 22 investments
as at 30 September 2017.
The most significant factor impacting NAV per share this period
has been the reduction in the long-term forecasts, informed by our
market consultant, for electricity prices which the portfolio's
energy generating assets receive.
At the D&G waste project, discussions with the Operator,
Renewi UK Services (formerly Shanks Waste Management), and the
Council have been ongoing for some time regarding possible changes
to the scope of services under the project documents resulting from
the impact of Zero Waste Scotland legislation announced in 2012.
Although the day-to-day operations are not affected, there is
significant uncertainty over the outcome of those discussions, and
the Company has increased the discount rate used to value the
project to reflect that uncertainty. As at 30 September 2017, the
project represented c.1% of the portfolio value.
Outlook
The Board continues to work closely with the Investment Adviser
in assessing the risks and opportunities in the environmental
infrastructure market. The Board considers that the principal risks
and uncertainties for JLEN have not materially altered from those
set out in the Prospectus issued in December 2016. The full
Prospectus is available on JLEN's website, and a summary of the
principal risks and uncertainties is included on pages 44 to 48 of
the strategic report in the Annual Report for the year ended 31
March 2017.
A key strength of the Company is its strategy of diversification
across a range of technologies, geographies and revenue sources
within the environmental infrastructure space. As a result, the
Company continues to see an attractive pipeline of opportunities
from John Laing under the First Offer Agreement and in the wider
environmental infrastructure market, even as markets such as
onshore wind and solar have continued to mature. The Board believes
that this breadth will continue to enable the Company to offer
attractive, long--term returns for shareholders without
concentrating exposure to any particular sector risk.
The strong demand for the Company's most recent equity placing,
combined with the success of expanding the Company's borrowing
facilities at lower cost have put the Company in a good position to
capitalise on the opportunities that it currently sees.
The Board, through its Investment Adviser John Laing Capital
Management Limited ("JLCM"), also continues to focus on asset
management of the existing portfolio, and is pleased to note
further progress in this area. This includes software and hardware
upgrades to wind turbines, competitive tendering of service
providers and the improvement in outlook for the Branden solar
project.
As the portfolio grows, the investment advisory team has been
reinforced to support that growth and we are delighted to have
announced the recent appointment of Chris Holmes as joint lead
adviser of the JLCM team advising the Fund. He is due to start in
January 2018.
Richard Morse
Chairman
21 November 2017
INVESTMENT ADVISER'S REPORT
About the Investment Adviser
JLEN is advised by John Laing Capital Management Limited
("JLCM"). JLCM, a wholly-owned subsidiary of John Laing Group plc,
acts as Investment Adviser to the Company. JLCM was incorporated in
England and Wales on 19 May 2004 under the Companies Act 1985
(registered number 5132286) and has been authorised and regulated
in the UK by the FCA (previously FSA) since December 2004.
The portfolio
At 30 September 2017, the Group's investment portfolio comprised
of interests in 22 project vehicles, 20 located in the UK and two
in France:
Commercial
Capacity operations
Asset Location Type Ownership (MWs) date
-------------------- ----------- ------------ ---------- --------- ------------
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&15
Monksham UK (Eng) Solar 87%(1) 10.7 Mar 2014
Pylle Southern UK (Eng) Solar 100% 5.0 Dec 2015
2011 -
Panther UK (Eng) Solar 100% 6.5 2014
Bilsthorpe UK (Eng) Wind 100% 10.2 Mar 2013
Burton
Wold Extension UK (Eng) Wind 100% 14.4 Sept 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
2003 &
Moel Moelogan UK (Wal) Wind 100% 14.3 08
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
Dumfries UK (Scot) Waste 80% n/a 2007
& Galloway mgnt.
ELWA UK (Eng) Waste 80% n/a 2006
mgnt.
Tay UK (Scot) Wastewater 33% n/a Nov 2001
Anaerobic
Vulcan UK (Eng) digestion 100% 5.0(2) Oct 2013
-------------------- ----------- ------------ ---------- --------- ------------
(1) 100% of "B" shares plus 100% of loans to the project. The
"A" shareholders, investors under the Enterprise Investment Scheme,
remain invested in the project. Including the loans, JLEN held an
economic interest over 87% of the value of the project's cash flow
(as calculated at acquisition). Following the reporting period, the
A shares were acquired, increasing the ownership of the project to
100%.
(2) MWth (thermal) also includes 0.5 MW CHP engine for onsite power provision.
Investment performance
The increase in total NAV has been driven by the equity funds
raised while also reflecting the generation of cash from the
portfolio, updates for recent operational performance and changes
in forecast electricity prices. The Directors have considered the
current status of the electricity and gas markets as well as
discount rates seen in the secondary markets for environmental
infrastructure assets in arriving at the forecasts used in the
valuation.
The NAV per share at 30 September 2017 was 99.0 pence, down from
100.1 pence at 31 March 2017.
JLEN has announced an interim dividend of 1.5775 pence per share
for the quarter ended 30 September 2017, payable on 22 December
2017, in line with the full--year target of 6.31 pence per share
for the year ending 31 March 2018 as set out in the 2017 Annual
Report.
Portfolio performance
In general, during the period under review, the performance of
the portfolio as a whole has been satisfactory and has been in line
with expectations. Total electricity generation for the period was
187.8GWh. There were no major incidents in the period.
Generation from the wind assets of 145.0GWh was ahead of budget
by 4%. Availability was robust across the board with many of the
larger projects operating well and posting strong production
figures. A programme of upgrades and enhancements is underway to
drive improvements in availability and power performance of the
wind assets.
The solar assets have generally operated satisfactorily during
the period despite lower than average irradiation during July and
August holding back generation. The solar portfolio has generated
42.8GWh which was 12% below budget, however this included Branden
which has only recently returned to full availability. Excluding
performance from Branden and making an adjustment to account for
recoverable claims, the portfolio was only 6% below budget, mainly
due to lower than average solar irradiation.
A programme of works is ongoing on the Branden Solar Farms which
had experienced a serial defect in DC cable connectors and a number
of unrelated issues attributable to manufacturing and installation
defects. Accordingly, the cost of the rectification works will be
deducted from retention monies under the EPC contracts, and
equipment warranties. Insurance claims are also underway where
applicable in respect of some elements of lost production. As at
the date of this report, the Branden sites have been restored to
expected availability levels and we continue to monitor performance
closely as the rectification programme continues.
The ELWA, D&G and Tay environmental processing plants have
performed in line with expectations during the period, with no
significant operational issues. Volumes of waste and wastewater
respectively have been in line with budget although the
environmental processing projects are relatively insensitive to
volume changes due to the presence of banded payment arrangements
that see little movement in profit for a marginal unit of
waste.
At the D&G waste project discussions with the Operator,
Renewi UK Services (formerly Shanks Waste Management), and the
Council have been ongoing for some time regarding possible changes
to the scope of services under the project documents resulting from
the impact of Zero Waste Scotland legislation announced in 2012,
which represents a change in law for contractual purposes. The
changes are not affecting the day-to-day operations of the project,
but require addressing before the requirements of the legislation
come into force, including reductions in waste going to landfill
from 2021.
Acquisitions
Since 31 March 2017, the Company has acquired three projects for
a consideration of GBP53.2 million. The acquisitions were funded by
the proceeds of the July 2017 shares issue and a drawdown under the
Company's GBP130 million revolving credit facility. The assets were
as follows:
Moel Moelogan
As mentioned in the 2017 Annual Report, JLEN acquired the Moel
Moelogan 1 and 2 wind farms in North Wales in April 2017 and May
2017. These have a combined capacity of 14.3MW and were acquired
for a total consideration of GBP25.7 million.
CSGH solar portfolio
In June 2017, JLEN acquired a portfolio of four ground mounted
solar parks with a total generating capacity of 33.5MW. Higher
Tregarne, located in Cornwall, has been operational since March
2014, has a generation capacity of 5MW and is accredited for 1.6
ROCs. The other three solar parks, Crug Mawr, Golden Hill and
Shoals Hook, located in South Wales, have been operational since
March 2015, and have a total generation capacity of 28.5MW and are
accredited for 1.4 ROCs. The CSGH solar portfolio was acquired for
a total consideration of GBP12.2 million.
Vulcan Renewables
In August 2017, JLEN made its first investment in the anaerobic
digestion sector through Vulcan Renewables. The plant is rated at
5MWth and predominantly produces grid injectable biomethane from
its biogas. The plant also has a 0.5MWe CHP engine which supplies
the site's needs. The project is accredited both under the
Renewable Heat Incentive ("RHI") and the Feed-in Tariff ("FiT").
The farm based anaerobic digestion plant is managed by experienced
operator Future Biogas Ltd and is located in Hatfield Woodhouse
near Doncaster. It was commissioned in October 2013 and was one of
the first commercial biogas-to-grid projects in the UK. Vulcan was
acquired for a total consideration, including working capital, of
GBP15.3 million.
These acquisitions brought the total capacity of the renewable
energy assets in the JLEN portfolio to 225.2MW and 5.0MWth by 30
September 2017.
Following the period under review, two further acquisitions were
concluded:
Monksham solar
In October 2017, and as originally anticipated, JLEN increased
its interest in the Monksham solar portfolio by completing the
purchase of the 'A' shares for c.GBP2.1 million from founding EIS
shareholders. This takes JLEN's control, economic or otherwise from
87% to 100%.
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 2017
was GBP375.9 million, compared to GBP327.6 million at 31 March
2017. The increase of GBP48.3 million is the net impact of
acquisitions, cash received from investments, changes in
macroeconomic and electricity price assumptions, and underlying
growth in the portfolio.
The total movement of investments during the period ended 30
September 2017 is shown in the table below:
Six
months
ended
30 Sep
2017
(unaudited)
GBPm
--------------------------------------------------- ------------
Valuation of portfolio at beginning of the period 327.6
Acquisitions in the period 53.4
Cash distributions from portfolio (15.4)
Rebased opening valuation of portfolio 365.6
--------------------------------------------------- ------------
Changes in forecast electricity prices (13.1)
Changes in economic assumptions 0.6
Changes in discount rates 6.3
Balance of portfolio return 16.5
--------------------------------------------------- ------------
Valuation of portfolio at end of the period 375.9
Fair value of Intermediate Holding Companies (5.2)
Investments at fair value through profit or loss 370.7
--------------------------------------------------- ------------
Valuation assumptions
The investments in JLEN's portfolio are valued by discounting
the future cash flows forecast by the underlying asset financial
models.
Each movement between the rebased valuation and the 30 September
2017 valuation is considered below:
Forecast electricity and gas prices
The project cash flows used in the portfolio valuation at 30
September 2017 reflect contractual fixed price arrangements under
PPAs where they exist and short--term market forward prices where
they do not, for the next two years. Thereafter, the project cash
flows assume future electricity and gas prices in line with central
forecasts from an established market consultant, adjusted by the
Investment Adviser for project specific arrangements if
required.
JLEN has reflected a decline in mid- to long-term electricity
expectations during the period. Compared to the assumptions used in
the valuation at 31 March 2017, on a time weighted average basis,
the decrease in the electricity price assumptions is approximately
7.7% over a 25-year period (being a simple average decrease over 25
years of approximately 8.0%.
Notwithstanding this decline, in the short term the price of
electricity has increased. Where generating projects in the
portfolio do not have a fixed price under their PPAs, JLEN has
reflected an average of GBP49/MWh (gross of PPA discounts) for
winter seasons, and GBP42/MWh for summer seasons (31 March 2017:
GBP45/MWh and GBP40/MWh respectively).
At 30 September 2017, 77% of the renewable energy portfolios'
electricity price exposure was subject to a fixed price for the
winter 2017 season and 61% for the summer 2018 season.
The overall decrease in forecasts for future electricity prices
compared to forecasts at 31 March 2017, has decreased the valuation
of the portfolio by GBP13.1 million.
Economic assumptions
Macroeconomic assumptions in respect of inflation, corporation
tax and deposit interest rates have remained relatively constant
during the period and the overall movement in valuation is not
significant. RPI inflation rates assumed in the valuation at 30
September 2017 are 3.8% in 2017 (3.7% at 31 March 2017), 3.1% in
2018 (3.3% at 31 March 2017) with 2.75% for all subsequent years
for UK assets, and 1.00% in 2017 (1.5% at 31 March 2017), 1.25% in
2018 (1.5% at 31 March 2017) and 1.50% for all subsequent years for
the French assets. The long--term UK corporation tax rate assumed
is 19%, stepping down to 17% from April 2020 onwards, reflecting
the rates enacted by legislation, which is in line with market
practice. The equivalent rate for the French assets is 28% (33.3%
at 31 March 2017). Deposit rates assumed in the valuation reflect a
range of deposit rates in the UK from 1.5% in 2017 with a gradual
increase to a long--term rate of 2.75% with effect from 2019
onwards. For the French assets the rate assumed is 0.5%. The
euro/sterling exchange rate used to value the euro-denominated
investments in France was EUR1.16/GBP1 (EUR1.17/GBP1 at 31 March
2017).
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, where appropriate, to reflect changes in the market
and in the project risk characteristics.
During the period since 31 March 2017, there has continued to be
strong demand for income--producing infrastructure assets,
including environmental infrastructure projects as the market
matures. The Investment Adviser, based on its experience of bidding
in the secondary market for onshore wind, and as flagged in the
2017 Annual Report, has proposed a reduction in the discount rate
used for valuing UK onshore wind farms that has been adopted by the
Board. Discount rates for the other sectors within the portfolio
remain unchanged from those used at 31 March 2017 (with the
exception of the discount rate used to value the D&G project as
discussed below), although the Investment Adviser notes discount
rate benchmarks for geared UK solar projects are reducing. While
the majority of the solar assets in the portfolio are ungeared, the
read-across from geared to ungeared discount rates (assuming a
market--norm level of gearing) suggests that these too are reducing
and the Investment Adviser will continue to monitor this for future
valuations.
As mentioned in the portfolio performance section, addressing
the issues of all the parties at the D&G project is proving
complex and is likely to involve significant effort and resources
in finding solutions, which JLEN as majority shareholder in the
project company is prepared to do. Although the project company
benefits from contractual protections that govern changes to the
contract, the eventual outcome is subject to significant
uncertainty. To reflect that uncertainty, the Company has increased
the discount rate used to value the project and has assumed that a
proportion of the project's cash flows will be used for adviser
costs connected to the changes. As at 30 September 2017, the
project represented c.1% of the portfolio value after such changes
to its valuation assumptions.
Taking the above into account, and the change in mix of the
portfolio during the period due to new acquisitions, the overall
Weighted Average Discount Rate ("WADR") of the portfolio was 8.2%
at 30 September 2017 (8.2% at 31 March 2017).
Balance of portfolio return
This represents the balance of valuation movements in the period
excluding the factors noted above. The balance of the portfolio
return mostly reflects the impact on the rebased portfolio value,
all other measures remaining constant, of the effect of the
discount rate unwinding and also some additional valuation
adjustments from updates to individual project revenue assumptions.
The total represents an uplift of GBP16.5 million.
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 the Intermediate
Holding Companies, 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 cash inflows and
outflows.
A broad range of assumptions are used in our valuation models.
These assumptions are based on long-term forecasts and are not
affected by short-term fluctuations in inputs, be it 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 2017 was 8.2% (8.2% at
31 March 2017). A variance of plus or minus 0.5% is considered to
be a reasonable range of alternative assumptions for discount
rates.
Volumes
Base case forecasts for 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.
For the waste and wastewater processing projects, forecasts are
based on projections of future flows and are informed by both the
client authorities' own business plans and 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 prices
Electricity price assumptions are based on the following: for
the first two years' cash flows for each project forward
electricity 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 long--term central
case forecasts from an established market consultant and other
relevant information is used, and adjusted by the Investment
Adviser for project specific arrangements. The sensitivity assumes
a 10% increase or decrease in electricity prices relative to the
base case for each year of the asset life after the first two--year
period.
Inflation
The inflation assumptions used in the valuation as at 30
September 2017 are 3.8% in 2017, 3.1% in 2018 with 2.75% for all
subsequent years for UK assets, and 1.00% in 2017, 1.25% in 2018
and 1.50% for all subsequent years for the French assets. Each
project in the portfolio receives a revenue stream which is either
fully or partially inflation--linked.
Euro/sterling exchange rates
As the proportion of the portfolio assets with cash flows
denominated in euros represented less than 1% of the portfolio
value at 30 September 2017, JLCM considers the sensitivity to
changes in euro/sterling exchange rates to be insignificant.
Financing
In June 2017, the Fund signed a new three-year facilities
agreement with HSBC, NIBC, ING and Santander which provides for a
committed revolving credit facility of GBP130 million and for an
uncommitted accordion facility of up to GBP60 million. Furthermore
the facility incorporates an uncommitted option to extend for a
further year. The facility margin is 200 to 225 bps (depending on
the loan-to-value ratio for the Fund) over LIBOR.
This replaced the existing facility and gives JLEN an increased
source of flexible funding outside of equity raisings at a lower
cost. It will be used to make future acquisitions of environmental
infrastructure projects to add to JLEN's current portfolio of wind,
solar, anaerobic digestion and waste and waste water processing
assets, on a timely basis, reducing the performance drag associated
with holding excess cash. As at the period end, drawings under the
RCF were GBP15.8 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 reflected
in these financial statements. 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 2017 across the
portfolio was 41.9% (31 March 2017: 42.9%) being 34.5% (31 March
2017: 32.7%) for the renewable energy assets and 55.7% (31 March
2017: 59.8%) for the PFI processing assets. The increase in the
gearing for the renewable energy assets during the period reflects
the acquisition of Moel Moelogan and CSGH Solar. Taking into
account the amount drawn down under the revolving credit facility,
the overall fund gearing at 30 September 2017 was 44.2% (31 March
2017: 44.9%).
As at 30 September 2017, the Group, which comprises the Company
and the Intermediate Holding Companies, had cash balances of
GBP14.4 million (31 March 2017: GBP26.1 million).
Share capital
In July 2017, JLEN raised GBP40 million through the issue of
38,834,951 new ordinary shares at a price of 103 pence per share,
an estimated 3% premium to NAV and accretive to existing
shareholders. The placing was significantly oversubscribed and
applications had to be scaled back in accordance with the terms of
the placing. The proceeds of the share issue were used to repay the
outstanding balance on the RCF, which had been drawn to finance the
acquisitions of Moel Moelogan and CSGH solar in April and May
respectively.
Profit before tax
Profit before tax for the period was GBP6.3 million (30
September 2016: GBP11.3 million), generating earnings per share for
the period of 1.8 pence (30 September 2016: 4.5 pence). The
decrease over the period to 30 September 2017 reflects the decrease
in forecast electricity prices assumed in the valuation of the
portfolio.
Six Six
months months
ended ended
30 Sep 30 Sep
2017 2016
(unaudited) (unaudited)
All amounts presented in GBPmillion (except as noted) GBPm GBPm
------------------------------------------------------- ------------ ------------
Interest received on UK HoldCo loan notes 8.9 6.6
Dividends received from UK HoldCo 5.5 3.5
------------------------------------------------------- ------------ ------------
Net (loss)/gains on investments at fair value (5.7) 3.3
------------------------------------------------------- ------------ ------------
Operating income 8.7 13.4
------------------------------------------------------- ------------ ------------
Operating cost (2.4) (2.1)
------------------------------------------------------- ------------ ------------
Profit before tax 6.3 11.3
------------------------------------------------------- ------------ ------------
Earnings per share 1.8p 4.5p
------------------------------------------------------- ------------ ------------
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. The
annualised ratio for the six months to 30 September 2017 was 1.4%
(year ended 31 March 2017: 1.5%). The ongoing charges have been
calculated, in accordance with AIC guidance, as annualised ongoing
charges (i.e. excluding acquisition costs and other non-recurring
items) divided by the average published undiluted NAV in the
period. The ongoing charges percentage has been calculated on the
consolidated basis and therefore takes into consideration the
expenses of UK HoldCo as well as the Company's.
Net assets
Net assets increased from GBP340.0 million at 31 March 2017 to
GBP374.7 million at 30 September 2017, primarily driven by equity
funds raised, which in turn were used to finance acquisitions.
Analysis of the Group's net assets
30 Sep 31 Mar
2017 2017
All amounts presented in GBPmillion (except as noted) (unaudited) (audited)
----------------------------------------------------------- ------------ ------------
Portfolio value 375.9 327.6
Intermediate Holding Companies cash 9.3 21.9
Intermediate Holding Companies revolving credit facility (15.8) (12.5)
Intermediate Holding Companies other assets/(liabilities) 1.3 (0.1)
----------------------------------------------------------- ------------ ------------
Fair value of the Company's investment in UK HoldCo 370.7 336.9
----------------------------------------------------------- ------------ ------------
Company's cash 5.1 4.2
Company's other net liabilities (1.1) (1.1)
----------------------------------------------------------- ------------ ------------
Net Asset Value 374.7 340.0
----------------------------------------------------------- ------------ ------------
Number of shares 378,477,029 339,642,078
Net Asset Value per share 99.0p 100.1p
----------------------------------------------------------- ------------ ------------
The movement in the portfolio value of environmental
infrastructure assets during the period is summarised as
follows:
GBPm
--------------------------------- -------
Value at 31 March 2017
(audited) 327.6
Acquisitions 53.4
Growth in value of portfolio 10.3
Distributions received
from investments (15.4)
--------------------------------- -------
Portfolio value at 30 September
2017 (unaudited) 375.9
--------------------------------- -------
Cash flow
At 30 September 2017, the Group (Company plus Intermediate
Holding Companies) had a total cash balance of GBP14.4 million (31
March 2017: GBP26.1 million), including GBP5.1 million (31 March
2017: GBP4.2 million) in the Company's balance sheet and GBP9.3
million (31 March 2017: GBP21.9 million) in the Intermediate
Holding Companies, which is included in the Company's balance sheet
within "investments at fair value through profit or loss".
At 30 September 2017, UK HoldCo had GBP15.8 million drawn down
(31 March 2017: GBP12.5 million) under its revolving credit
facility.
Cash flows of the Group for the period are summarised as
follows:
Six months Six months
ended ended
30 Sep 2017 30 Sep 2016
(unaudited) (unaudited)
GBPm GBPm
------------------------------------------------------------------------ ------------ -------------
Cash received from environmental infrastructure investments 15.4 12.4
Administrative expenses (0.6) (0.5)
Directors' fees and expenses (0.1) (0.1)
Investment advisory fees (1.8) (1.4)
Financing costs (net of interest income) (0.8) (1.4)
------------------------------------------------------------------------ ------------ -------------
Cash flow from operations 12.1 9.0
------------------------------------------------------------------------ ------------ -------------
Net proceeds from share issues 39.5 49.9
Drawdown under the revolving credit facility 3.3 10.2
Arrangement fee for revolving credit facility (1.2) -
Acquisition of investment assets (52.8)(1) (53.4)
Reduction in acquisition price (as reported in the 2016 Annual Report) - 2.0
Acquisition cost (including stamp duty) (1.4) (0.7)
Dividends paid in cash to shareholders (11.2) (7.5)
------------------------------------------------------------------------ ------------ -------------
Cash movement in the period (11.7) 9.5
------------------------------------------------------------------------ ------------ -------------
Opening cash balance 26.1 6.2
------------------------------------------------------------------------ ------------ -------------
Group cash balance at 30 September 14.4 15.7
------------------------------------------------------------------------ ------------ -------------
(1) Acquisitions of GBP53.4 million in the valuation includes
acquisition costs paid by the acquired company.
During the period, the Group received cash distributions of
GBP15.4 million from its environmental infrastructure investments,
in line with distributions expected by the Group.
The Company has declared an interim dividend of 1.5775 pence per
share for the quarter to 30 September 2017 (estimated based on the
shares in issue at the date of this Half-year Report at GBP6.0
million), which is payable on 22 December 2017.
Investment advisory team changes
Chris Holmes will join JLCM in January 2018 to take on the role
as joint lead adviser to JLEN. Chris Holmes is formerly of Green
Investment Group (part of Macquarie Group), where he was Managing
Director of Waste and Bioenergy.
Outlook
Despite the current political and economic uncertainty in the UK
and Europe, in particular following the continuing Brexit
negotiations and the outcome of the recent elections across Europe
and the US, we believe that the Company's strategy of investing in
a diversified portfolio of assets in the wider environmental
infrastructure sector and of providing consistent long-term income
with NAV resilience remains achievable.
Whilst it will take some time for the exact details of
arrangements post exit from the EU to emerge, government policy
commitments for clean energy continue in the UK and climate change
remains one of the important areas of focus, not only for the UK
but globally. The UK has ambitious domestic targets, with The
Climate Change Act of 2008 establishing a target to reduce its
emissions by at least 80% from 1990 levels by 2050. The Act
established a system of five-yearly carbon budgets, the fifth of
which was formally approved by Parliament on 30 June 2016 and aims
to limit annual emissions to an average of 57% below 1990 levels by
2032.
As an EU member, the UK is required to generate 15% of its
energy from renewables by 2020 under the European Union's Renewable
Energy Directive. Although by leaving the EU the UK may no longer
be obliged to hit these targets or any successor targets (unless
agreed as part of any secession agreement), the renewables projects
required to meet the 2020 target have already been largely built or
are expected to be commissioned. In respect of longer--term
commitments, the Climate Change Act's ambitious carbon reduction
targets will require a substantial and continued contribution from
renewables.
Short-term electricity prices have remained robust, supported by
the ongoing weakness of sterling impacting on the cost of gas
imports for the gas-fired power stations that tend to be the
marginal generators that set the price of electricity. However, the
longer-term outlook for electricity prices has softened, informed
in part by the low prices bid into auctions for new plants seeking
subsidies throughout Europe. In the UK, the most recent CFD auction
for offshore wind delivered the lowest bid strike price of
GBP57.50/MWh, significantly lower than the lowest price in the
previous auction in 2015 of GBP114/MWh. This winter will also be
the first delivery year for the Capacity Market ("CM"), aimed at
ensuring security of electricity supply by providing a payment for
reliable sources of capacity, alongside electricity revenues, to
ensure the delivery of electricity when needed. National Grid's
view of the generation margin for the GB electricity network is
that the position is improved compared to the previous year, and if
this develops into a trend then another factor feeding into future
electricity prices is weakened.
Despite this backdrop, we see no indication that pricing is
softening in core UK wind and solar markets, and competition
remains fierce. The Investment Adviser continues to see good levels
of potential transactions in the market and participates on
occasion, but remains committed to observing the Company's
investment requirements and not overpaying for assets. Similarly,
while the investment mandate covers OECD countries, finding
opportunities in stable, well-understood markets that meet the
investment requirements while offering an acceptable risk profile
is a challenge. The Investment Adviser does not believe that
overseas markets will be a significant focus in the short term,
although it will continue to monitor opportunities and elements of
these markets may become more significant in the future.
Although smaller in number, the Investment Adviser has been
pleased with the level of environmental infrastructure
opportunities outside of wind and solar that it has seen. During
the period, JLEN made its first anaerobic digestion investment when
it acquired Vulcan Renewables. These projects present a different
risk/return profile to wind and solar projects, often with
relatively high proportions of indexed-linked subsidy revenue. The
Investment Adviser believes that the Company is an attractive
counterparty for developers and early--stage investors seeking to
recycle capital from environmental infrastructure projects, and
will continue to analyse opportunities in the space. The impending
arrival of Chris Holmes, formerly head of waste and bioenergy at
the Green Investment Bank, as co--head of the investment advisory
team will assist with this activity.
JLEN has the benefit of a First Offer Agreement with John Laing
over a pipeline of environmental infrastructure projects which
supports its growth plans in the next few years. The Company
expects that, pursuant to the First Offer Agreement, environmental
infrastructure projects that are in accordance with its investment
policy with a combined investment value for the Fund of
approximately GBP270 million (as estimated by John Laing) will
become available for acquisition by the Fund within the period to
31 December 2019. This includes wider environmental infrastructure
projects, including biomass and energy-from-waste.
The Investment Adviser will also continue to seek opportunities
to improve the performance of the portfolio assets ahead of target
through the delivery of additional operational scale efficiencies
and through prudent portfolio and financial management. The
Investment Adviser is currently pursuing a number of avenues which
should boost the value of the portfolio, including upgrades to
equipment, rationalisation of service providers and ancillary
revenues from generation assets. We consider that these
opportunities should increase in number and value as the portfolio
grows and innovation continues in environmental infrastructure
sectors where the Company invests.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
-- the condensed set of unaudited financial statements has been
prepared in accordance with IAS 34 'Interim Financial Reporting'
and in accordance with the accounting policies set out in the
audited Annual Report to 31 March 2017; 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:
-- 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
-- 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 21 November 2017 and is signed on its behalf by:
Richard Morse
Chairman
21 November 2017
INDEPENT REVIEW REPORT
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 2017 which comprises the
condensed income statement, the 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.
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 Auditing Practices
Board. 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.
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 are prepared in accordance with IFRS as adopted by the
European Union. The condensed set of financial statements included
in this half--yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
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 Auditing Practices Board 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 Ireland) 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 2017 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor,
Guernsey, Channel Islands
21 November 2017
CONDENSED UNAUDITED INCOME STATEMENT FOR THE SIX MONTHSED 30
SEPTEMBER 2017
Six Six
months months
ended ended
30 Sep 30 Sep
2017 2016
(unaudited) (unaudited)
Notes GBP'000s GBP'000s
---------------------------- ------ ------------ ------------
Operating income 8 8,756 13,426
Operating expenses 4 (2,412) (2,108)
---------------------------- ------ ------------ ------------
Operating profit 6,344 11,318
---------------------------- ------ ------------ ------------
Profit before tax 6,344 11,318
Tax 5 - -
---------------------------- ------ ------------ ------------
Profit for the period 6,344 11,318
---------------------------- ------ ------------ ------------
Earnings per share
From continuing operations
Basic and diluted (pence) 7 1.8 4.5
---------------------------- ------ ------------ ------------
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 2017
30 Sep 31 Mar
2017 2017
(unaudited) (audited)
Notes GBP'000s GBP'000s
-------------------------------------------------- ------ ------------ ----------
Non-current assets
Investments at fair value through profit or loss 8 370,708 336,921
-------------------------------------------------- ------ ------------ ----------
Total non-current assets 370,708 336,921
-------------------------------------------------- ------ ------------ ----------
Current assets
Trade and other receivables 9 24 32
Cash and cash equivalents 5,125 4,150
Total current assets 5,149 4,182
-------------------------------------------------- ------ ------------ ----------
Total assets 375,857 341,103
-------------------------------------------------- ------ ------------ ----------
Current liabilities
Trade and other payables 10 (1,200) (1,055)
-------------------------------------------------- ------ ------------ ----------
Total current liabilities (1,200) (1,055)
-------------------------------------------------- ------ ------------ ----------
Total liabilities (1,200) (1,055)
-------------------------------------------------- ------ ------------ ----------
Net assets 374,657 340,048
-------------------------------------------------- ------ ------------ ----------
Equity
Share capital account 12 374,307 334,858
Retained reserves 13 350 5,190
-------------------------------------------------- ------ ------------ ----------
Equity attributable to owners of the Company 374,657 340,048
-------------------------------------------------- ------ ------------ ----------
Net assets per share (pence per share) 99.0 100.1
-------------------------------------------------- ------ ------------ ----------
The accompanying notes form an integral part of the condensed
set of financial statements.
The condensed set of unaudited financial statements were
approved by the Board of Directors and authorised for issue on 21
November 2017.
They were signed on its behalf by:
Richard Morse
Chairman
Christopher Legge
Director
CONDENSED UNAUDITED STATEMENT OF CHANGES IN EQUITY FOR THE SIX
MONTHSED 30 SEPTEMBER 2017
Six months ended
30 Sep 2017 (unaudited)
-------------------------------
Share
capital Retained
account reserves Total
Notes GBP'000s GBP'000s GBP'000s
------------------------------------------------------ ------ --------- --------- ---------
Balance at 1 April 2017 334,858 5,190 340,048
------------------------------------------------------ ------ --------- --------- ---------
Profit and total comprehensive profit for the period - 6,344 6,344
Issue of share capital 12 40,000 - 40,000
Expenses of issue of equity shares 12 (551) - (551)
Dividends paid 6, 13 - (11,184) (11,184)
------------------------------------------------------ ------ --------- --------- ---------
Balance at 30 September 2017 374,307 350 374,657
------------------------------------------------------ ------ --------- --------- ---------
Six months ended
30 Sep 2016 (unaudited)
-------------------------------
Share
capital Retained
account reserves Total
Notes GBP'000s GBP'000s GBP'000s
------------------------------------------------------ ------ --------- --------- ---------
Balance at 1 April 2016 221,122 (4,231) 216,891
------------------------------------------------------ ------ --------- --------- ---------
Profit and total comprehensive income for the period - 11,318 11,318
Issue of share capital 12 51,543 - 51,543
Expenses of issue of equity shares 12 (664) - (664)
Dividends paid 6, 13 - (7,483) (7,483)
------------------------------------------------------ ------ --------- --------- ---------
Balance at 30 September 2016 272,001 (396) 271,605
------------------------------------------------------ ------ --------- --------- ---------
The accompanying notes form an integral part of the condensed
set of financial statements.
CONDENSED UNAUDITED CASH FLOW STATEMENT FOR THE SIX MONTHSED 30
SEPTEMBER 2017
Six Six
months months
ended ended
30 Sep 30 Sep
2017 2016
(unaudited) (unaudited)
Notes GBP'000s GBP'000s
--------------------------------------------------------------------- ------ ------------ ------------
Profit from operations 6,344 11,318
Adjustments for:
Interest received (8,969) (6,571)
Dividends received (5,500) (3,500)
Net loss/(gain) on investments at fair value through profit or loss 5,713 (3,355)
--------------------------------------------------------------------- ------ ------------ ------------
Operating cash flows before movements in working capital (2,412) (2,108)
Decrease/(increase) in receivables 8 (1,006)
Increase in payables 145 150
--------------------------------------------------------------------- ------ ------------ ------------
Net cash outflow from operating activities (2,259) (2,964)
--------------------------------------------------------------------- ------ ------------ ------------
Investing activities
Investments in subsidiaries (17,500) (8,300)
Loans to subsidiaries 11 (22,000) (34,500)
Interest received 8,969 6,571
Dividends received 5,500 3,500
--------------------------------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (25,031) (32,729)
--------------------------------------------------------------------- ------ ------------ ------------
Financing activities
Gross proceeds on issue of share capital 12 40,000 51,543
Expenses relating to issue of shares 12 (551) (664)
Dividends paid 6 (11,184) (7,483)
--------------------------------------------------------------------- ------ ------------ ------------
Net cash from financing activities 28,265 43,396
--------------------------------------------------------------------- ------ ------------ ------------
Net increase in cash and cash equivalents 975 7,703
Cash and cash equivalents at beginning of period 4,150 3,312
--------------------------------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of period 5,125 11,015
--------------------------------------------------------------------- ------ ------------ ------------
The accompanying notes form an integral part of the condensed
set of financial statements.
NOTES TO THE CONSDENSED UNAUDITED FINANCIAL STATEMENTS FOPR THE
SIX MONTHSED 30 SEPTEMBER 2017
1. General information
John Laing 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. The shares are publicly traded on the
London Stock Exchange under a Premium Listing. The condensed set of
financial statements of the Company are for the six month period
ended 30 September 2017 and have been prepared on the basis of the
accounting policies set out in the Company's latest annual audited
financial statements. The condensed set of financial statements
comprise the Company and its investment in John Laing Environmental
Assets Group (UK) Limited ("UK HoldCo"). 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.
During the six month period ended 30 September 2017, the Company
successfully raised gross proceeds of GBP40.0 million through the
issue of ordinary shares and continued to manage its investment in
UK HoldCo adding two further wind assets, a solar asset and an
environmental processing asset to its portfolio of environmental
infrastructure assets.
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 21 November
2017.
The condensed set of financial statements included in this
half-year report have been prepared in accordance with IAS 34
Interim Financial Reporting. The accounting policies are consistent
with those used in the latest audited financial statements to 31
March 2017 and should be read in conjunction with the Company's
annual audited financial statements for the year ended 31 March
2017.
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 IAS 39
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, the intermediate holding subsidiary HWT Limited and JLEAG
Solar 1 Limited, comprise the Group (the "Group") investing in
environmental infrastructure assets.
The net assets of the intermediate holding companies (comprising
UK HoldCo, HWT Limited and JLEAG Solar 1 Limited), which at 30
September 2017 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.
(b) Going concern
The Directors, in their consideration of going concern have
reviewed comprehensive cash flow forecasts prepared by the
Company's Investment Adviser, which are based on prudent market
data and consider, 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 that the
Company has adequate financial resources, the Directors were
mindful that the Group had unrestricted cash of GBP14.4 million as
at 30 September 2017 and a banking facility available for
investment in new or existing projects and for working capital of
GBP130.0 million. GBP114.2 million of this facility was undrawn at
the period end and the facility is repayable in June 2020.
As at 30 September 2017, the Company's wholly-owned subsidiary
UK HoldCo had borrowed GBP15.8 million under the banking facility
to finance the cost and the acquisition of environmental
infrastructure projects.
All key financial covenants are forecast to continue to be
complied with at least 12 months from the date of signing these
financial statements.
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
preparing 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 the
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 Six
months months
ended ended
30 Sep 30 Sep
2017 2016
(unaudited) (unaudited)
GBP'000s GBP'000s
------------------------------ ------------ ------------
Investment advisory fees 1,977 1,605
Directors' fees and expenses 137 134
Administration fee 44 47
Other expenses 254 322
------------------------------ ------------ ------------
2,412 2,108
------------------------------ ------------ ------------
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.
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, are included in the estimate
of the fair value of these investments.
6. Dividends
Six Six
months months
ended ended
30 Sep 30 Sep
2017 2016
(unaudited) (unaudited)
GBP'000s GBP'000s
------------------------------------------------------------------------------------------ ------------ ------------
Amounts recognised as distributions to equity holders during the period:
Dividend for the quarter ended 31 March 2017 of 1.535 pence per share (for the six--month
period ended 31 March 2016: 1.5135 pence per share) 5,214 3,396
Interim dividend for the quarter ended 30 June 2017 of 1.5775 pence per share (June 2016:
1.54 pence per share) 5,970 4,087
------------------------------------------------------------------------------------------ ------------ ------------
11,184 7,483
------------------------------------------------------------------------------------------ ------------ ------------
A dividend for the quarter to 30 September 2017 of 1.5775 pence
per share was approved by the Board on 21 November 2017 and is
payable on 22 December 2017. The dividend has not been included as
a liability at 30 September 2017.
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Six Six
months months
ended ended
30 Sep 30 Sep
2017 2016
(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 6,344 11,318
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings
per share 357,892,383 251,896,599
------------------------------------------------------------------------------------------ ------------ ------------
The denominator for the purposes of calculating both basic and
diluted earnings per share is the same as the Company had not
issued any share options or other instruments that would cause
dilution.
Six Six
months months
ended ended
30 Sep 30 Sep
2017 2016
---------------------------------------------- -------- --------
Basic and diluted earnings per share (pence) 1.8 4.5
---------------------------------------------- -------- --------
8. Investments at fair value through profit or loss
As set out in note 1, the Company accounts for its interest in
its 100% wholly--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 in the Company's statement of financial
position:
30 Sep 31 Mar
2017 2017
GBP'000s GBP'000s
(unaudited) (audited)
-------------------------------------------------------- ------------ ----------
Fair value of environmental infrastructure investments 375,899 327,647
Fair value of Intermediate Holding Companies (5,191) 9,274
-------------------------------------------------------- ------------ ----------
Total fair value of investments 370,708 336,921
-------------------------------------------------------- ------------ ----------
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 2017, by incorporating the
fair value of these Intermediate Holding Companies.
Six months to 30 Year to 31 Mar
Sep 2017 (unaudited) 2017 (audited)
----------------------------- ------------------------------------------ -------------------------------------------
Cash, Cash,
working 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 327,647 9,274 336,921 264,486 (50,086) 214,400
Acquisitions
Portfolio of assets acquired 53,373 - 53,373 53,948 - 53,948
Post-acquisition price
adjustments - - - 1,358 - 1,358
----------------------------- ---------- ----------------- ----------- ---------- ----------------- ------------
53,373 - 53,373 55,306 - 55,306
Growth in portfolio(1) 10,326 - 10,326(1) 33,248 - 33,248(1)
Cash yields from portfolio
to Intermediate Holding
Companies (15,447) 15,447 - (25,393) 25,393 -
----------------------------- ---------- ----------------- ----------- ---------- ----------------- ------------
Yields from Intermediate
Holding Companies
Interest on loan notes(1) - (8,969) (8,969)(1) - (14,170) (14,170)(1)
Dividends from UK HoldCo to
the Company(1) - (5,500) (5,500)(1) - (7,000) (7,000)(1)
----------------------------- ---------- ----------------- ----------- ---------- ----------------- ------------
- (14,469) (14,469) - (21,170) (21,170)
Other movements
Investment in working
capital in UK HoldCo - (10,573) (10,573) - 16,274 16,274
Administrative expenses
borne by Intermediate (1,570)
Holding Companies(1) - (1,570) (1) - (3,457) (3,457)(1)
Drawdown of UK HoldCo credit
facility borrowings - (3,300) (3,300) - 42,320 42,320
----------------------------- ---------- ----------------- ----------- ---------- ----------------- ------------
Fair value of the Company's
investment in UK HoldCo 375,899 (5,191) 370,708 327,647 9,274 336,921
----------------------------- ---------- ----------------- ----------- ---------- ----------------- ------------
(1) The net loss on investments at fair value through profit or
loss for the period ended 30 September 2017 is GBP5,713,000 (31
March 2017: gain of GBP8,621,000, 30 September 2016: gain of
GBP3,355,000). This, together with interest received on loan notes
of GBP8,969,000 (31 March 2017: GBP14,170,000, 30 September 2016:
GBP6,571,000) and dividend income of GBP5,500,000 (31 March 2017:
GBP7,000,000, 30 September 2016: GBP3,500,000) comprises operating
income in the condensed income statement.
The balances in the above table 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 movement 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 2017. 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 methodologies have been applied
consistently with the valuation performed since the launch of the
Fund in March 2014.
Discount rates applied to the portfolio of assets range from
6.5% to 13.2% (weighted average 8.2%) (at 31 March 2017: from 6.5%
to 9.3% - weighted average 8.2%).
The following economic assumptions were used in the discounted
cash flow valuations:
30 Sep 2017 31 Mar 2017
------------------------ ------------------------ -------------------------
UK - inflation 3.8% for 2017 gradually 3.7% for 2017 decreasing
rates reducing to 2.75% to 2.75% from 2019
from 2019
1% for 2017 gradually
France - inflation increasing to 1.5%
rates from 2019 1.5%
UK - deposit interest 1.5% for 2017 gradually 1.5% for 2017,
rates rising to 2.75% gradually rising
from 2019 to 2.75% from 2019
France - deposit
rates 0.5% 0.5%
Euro/sterling exchange
rate 1.16 1.17
------------------------ ------------------------ -------------------------
The long--term UK corporation tax rate assumed in the 30
September 2017 portfolio valuation is 19% stepping down to 17% in
April 2020 (in line with market practice). The equivalent rate for
the French assets is 28%.
Fair value of Intermediate Holding Companies
The assets in the Intermediate Holding Companies substantially
comprise working capital, cash balances and the outstanding credit
facility debt, therefore the Directors consider the fair value to
be equal to the book values.
Details of investments made during the period
On 30 April 2017 the Group acquired the Moel Moelogan 2 wind
farm in North Wales and on 22 May 2017 completed a further
acquisition of the Moel Moelogan 1 wind farm for a total
consideration, including working capital of GBP25.7 million.
On 6 June 2017 the Group acquired the CSGH solar portfolio for a
total consideration, including working capital of GBP11.8
million.
On 29 August 2017 the Group acquired Vulcan Renewables Limited
for a total consideration of GBP15.9 million including working
capital.
9. Trade and other receivables
31 Mar 30 Sep
2017 2017
(audited) (unaudited)
GBP'000s GBP'000s
----------------- ---------- ------------
Prepayments 24 32
----------------- ---------- ------------
Closing balance 24 32
----------------- ---------- ------------
10. Trade and other payables
30 Sep 31 Mar
2017 2017
(unaudited) (audited)
GBP'000s GBP'000s
----------------- ------------ ----------
Accruals 1,200 1,055
----------------- ------------ ----------
Closing balance 1,200 1,055
----------------- ------------ ----------
11. Loans and borrowings
The Company had no outstanding loans or borrowings at 30
September 2017 (31 March 2017: none), as shown in the Company's
condensed statement of financial position.
The Company's immediate subsidiary, UK HoldCo as Borrower and
the Company, as Guarantor, benefit from a three--year revolving
credit facility with HSBC, ING, NIBC and Santander. On 14 June
2017, the Fund signed a new three-year facilities agreement which
provides for a committed revolving credit facility of GBP130
million and an uncommitted accordion facility of up to GBP60
million. Furthermore the facility incorporates an uncommitted
option to extend for a further year. The facility margin is 200 to
225 bps (depending on the loan-to-value ratio for the Fund) over
LIBOR. The facility will be used to finance the acquisitions of
environmental infrastructure projects and to cover working capital
requirements.
As at 30 September 2017, UK HoldCo had an outstanding balance of
GBP15.8 million under the facility (31 March 2016: GBP12.5
million). The loan bears interest of LIBOR +200 to 225 bps and will
be repaid by proceeds from future capital raises.
As at 30 September 2017, the Company held loan notes of GBP213.9
million which were issued by UK HoldCo (31 March 2017: outstanding
amount of GBP191.9 million).
There were no other outstanding loans and borrowings in either
the Company, UK HoldCo, HWT or JLEAG Solar 1 at 30 September
2017.
12. Share capital account
30 Sep 31 Mar
2017 2017
(unaudited) (audited)
GBP'000s GBP'000s
------------------------------------ ------------ ----------
Opening balance 334,858 221,122
Shares issued in the period 40,000 115,572
Expenses of issue of equity shares (551) (1,836)
------------------------------------ ------------ ----------
Closing balance 374,307 334,858
------------------------------------ ------------ ----------
On 7 July 2017, the Company raised gross proceeds of GBP40.0
million by way of a placing of 38.8 million new ordinary shares at
a price of 103 pence per new ordinary share to institutional
investors pursuant to the placing programme dated 15 June 2017.
Following the placing, at 30 September 2017, the Company's share
capital comprises 378,477,029 ordinary shares of no par value.
All new shares issued rank pari passu and include the right to
receive all future dividends and distributions declared or
paid.
13. Retained reserves
30 Sep 31 Mar
2017 2017
(unaudited) (audited)
GBP'000s GBP'000s
---------------------------- ------------ ----------
Opening balance 5,190 (4,231)
Profit for the period/year 6,344 25,600
Dividends paid (11,184) (16,179)
---------------------------- ------------ ----------
Closing balance 350 5,190
---------------------------- ------------ ----------
14. Transactions with Investment Adviser and other related
parties
Transactions between the Company and its subsidiaries, which are
related parties of the Company, are transacted at arm's length and
are disclosed within this note. Details of transactions between the
Company and other related parties are disclosed below. This note
also details the terms of the Company's engagement with John Laing
Capital Management Limited as Investment Adviser, together with the
details of investment acquisitions from John Laing Group plc, of
which JLCM is a wholly-owned subsidiary.
Transaction with the Investment Adviser
JLCM is the Company's Investment Adviser. JLCM's appointment as
Investment Adviser is governed by an Investment Advisory Agreement
which may be terminated after an initial four--year term, starting
31 March 2014, by either party giving one year's written
notice.
JLCM 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 income statement
for the six months ended 30 September 2017 was GBP1,977,000 (30
September 2016: GBP1,605,000) of which GBP1,038,000 remained
payable as at 30 September 2017 (31 March 2017: GBP850,000).
Adjusted Portfolio Value is defined in the Investment Advisory
Agreement as:
-- the fair value of the investment portfolio; plus
-- any cash owned by or held to the order of the Fund; plus
-- the aggregate amount of payments made to shareholders by way
of dividend in the quarterly period ending on the relevant
valuation day, less
-- any other liabilities of the Fund (excluding borrowings); and
-- any uninvested cash.
Fund means the Company and John Laing 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.
(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 John Laing 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 GBP135,500 (30 September 2016: GBP132,500 of which nil
remained payable as at 30 September 2017 (31 March 2017: nil)). The
Directors were paid expenses of GBP1,055 in the six month period
(30 September 2016: GBP1,348) of which GBP412 remained payable as
at 30 September 2017 (31 March 2017: nil).
The Directors held the following shares:
Total Total
number number
of of
shares shares
held held
at at
30 Sep 30 Sep
2017 2016
------------------- -------- --------
Richard Morse 83,042 83,042
Christopher Legge 29,896 29,896
Denise Mileham 28,160 28,160
Peter Neville 29,896 29,896
Richard Ramsay 53,813 53,813
------------------- -------- --------
All of the above transactions were undertaken on an arm's length
basis.
The Directors were paid dividends in the period of GBP6,962 (30
September 2016: GBP6,865).
15. Financial instruments
Financial instruments by category
The Company held the following financial instruments at fair
value at 30 September 2017. There have been no transfers of
financial instruments between levels of the fair value hierarchy.
There are no non-recurring fair value measurements.
30 Sep 2017 (unaudited)
------------------------------------------------------------
Financial Financial
assets liabilities
Cash at fair at
and Loans value
bank and through amortised
profit
balances receivables or loss cost Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
----------------------------- --------- ------------ ---------- ------------ ---------
Levels 1 1 3 1
Non-current assets
Investments at fair
value through profit
or loss (Level 3) - - 370,708 - 370,708
Current assets
Trade and other receivables - 24 - - 24
Cash and cash equivalents 5,125 - - - 5,125
----------------------------- --------- ------------ ---------- ------------ ---------
Total financial assets 5,125 24 370,708 - 375,857
----------------------------- --------- ------------ ---------- ------------ ---------
Current liabilities
Trade and other payables - - - (1,200) (1,200)
----------------------------- --------- ------------ ---------- ------------ ---------
Total financial liabilities - - - (1,200) (1,200)
----------------------------- --------- ------------ ---------- ------------ ---------
Net financial instruments 5,125 24 370,708 (1,200) 374,657
----------------------------- --------- ------------ ---------- ------------ ---------
31 Mar 2017 (audited)
------------------------------------------------------------
Financial Financial
Cash assets liabilities
and at fair at
Loans value
bank and through amortised
profit
balances receivables or loss cost Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------------------------- --------- ------------ ---------- ------------ ---------
Levels 1 1 3 1
Non-current assets
Investments at fair value through profit or loss (Level
3) - - 336,921 - 336,921
Current assets
Trade and other receivables - 32 - - 32
Cash and cash equivalents 4,150 - - - 4,150
-------------------------------------------------------- --------- ------------ ---------- ------------ ---------
Total financial assets 4,150 32 336,921 - 341,103
-------------------------------------------------------- --------- ------------ ---------- ------------ ---------
Current liabilities
Trade and other payables - - - (1,055) (1,055)
-------------------------------------------------------- --------- ------------ ---------- ------------ ---------
Total financial liabilities - - - (1,055) (1,055)
-------------------------------------------------------- --------- ------------ ---------- ------------ ---------
Net financial instruments 4,150 32 336,921 (1,055) 340,048
-------------------------------------------------------- --------- ------------ ---------- ------------ ---------
The tables above provide an analysis of financial instruments
that are measured subsequent to their initial recognition at fair
value as follows:
-- Level 1: fair value measurements are those derived from
quoted prices (unadjusted) in active markets for identical assets
or liabilities;
-- Level 2: fair value measurements are those derived from
inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3: fair value measurements are those derived from
valuation techniques that include inputs to the asset or liability
that are not based on observable market data (unobservable
inputs).
There were no transfers between Level 1 and 2, Level 1 and 3, or
Level 2 and 3 during the period.
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 discount rate is considered the most significant
unobservable input through which an increase or decrease would have
a material impact on the fair value of the investments at fair
value through profit or loss.
The sensitivity of the portfolio to movements in the discount
rate is as follows:
30 Sep 2017 (unaudited)
------------------------------ ----------- ---------- ----------
Discount rate Minus 0.5% Base 8.2% Plus 0.5%
Change in portfolio valuation Increases GBP375.9m Decreases
GBP14.8m GBP13.9m
Change in NAV per share Increases 99.0p Decreases
3.9p 3.7p
------------------------------ ----------- ---------- ----------
31 Mar 2017 (audited)
------------------------------ ----------- ---------- ----------
Discount rate Minus 0.5% Base 8.2% Plus 0.5%
Change in portfolio valuation Increases GBP327.6m Decreases
GBP13.1m GBP12.3m
Change in NAV per share Increases 100.1p Decreases
3.8p 3.6p
------------------------------ ----------- ---------- ----------
The sensitivity of the portfolio to movements in long--term
inflation rates is as follows:
30 Sep 2017 (unaudited)
------------------------------ ----------- ---------- ----------
Inflation rates Minus 0.5% Base 2.0% Plus 0.5%
Change in portfolio valuation Decreases GBP375.9m Increases
GBP16.0m GBP17.2m
Change in NAV per share Decreases 99.0p Increases
4.2p 4.5p
------------------------------ ----------- ---------- ----------
31 Mar 2017 (audited)
------------------------------ ----------- ----------- ----------
Inflation rates Minus 0.5% Base 2.75% Plus 0.5%
Change in portfolio valuation Decreases GBP327.6m Increases
GBP14.3m GBP15.5m
Change in NAV per share Decreases 100.1p Increases
4.2p 4.6p
------------------------------ ----------- ----------- ----------
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 output 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 output (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 output (i.e. a level of
generation that is above the "P50", with a 10% probability of being
achieved) is as follows:
30 Sep 2017 (unaudited)
------------------------------ ---------- ---------- ----------
Energy yield P90 (10 Base P50 P10 (10
year) year)
Change in portfolio valuation Decreases GBP375.9m Increases
GBP34.9m GBP34.8m
Change in NAV per share Decreases 99.0p Increases
9.2p 9.2p
------------------------------ ---------- ---------- ----------
31 Mar 2017 (audited)
------------------------------ ---------- ---------- ----------
Energy yield P90 (10 Base P50 P10 (10
year) year)
Change in portfolio valuation Decreases GBP327.6m Increases
GBP33.6m GBP33.6m
Change in NAV per share Decreases 100.1p Increases
9.9p 9.9p
------------------------------ ---------- ---------- ----------
The sensitivity of the portfolio to movements in electricity
prices is as follows:
30 Sep 2017 (unaudited)
------------------------------ ---------- ---------- ----------
Electricity prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP375.9m Increases
GBP21.1m GBP21.0m
Change in NAV per share Decreases 99.0p Increases
5.6p 5.6p
------------------------------ ---------- ---------- ----------
31 Mar 2017 (audited)
------------------------------ ---------- ---------- ----------
Electricity prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP327.6m Increases
GBP16.9m GBP17.1m
Change in NAV per share Decreases 100.1p Increases
5.0p 5.0p
------------------------------ ---------- ---------- ----------
Waste and wastewater assets do not have significant volume and
price risks.
Euro/sterling exchange rates sensitivity
As the proportion of the portfolio assets with cash flows
denominated in euros represented less than 1% of the portfolio
value at 30 September 2017, 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 2017, the Company has provided a guarantee
under the Company's wholly--owned subsidiary UK HoldCo's GBP130
million revolving credit facility which is due to expire on 14 June
2020.
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
------------------------ ----------------------- ---------- ------------ ---------- -------
John Laing
Environmental
Assets Group Intermediate
(UK) Limited holding UK A 100% 100%
Intermediate
HWT Limited holding UK B 100% 100%
JLEAG Solar Intermediate
1 Limited holding UK A 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%
Project holding
Easton PV Limited company UK D 100% 100%
Pylle Solar Project holding
Limited company UK D 100% 100%
Second Energy
Limited Operating subsidiary UK D 100% 100%
ELWA Holdings Project holding
Limited company UK E 80% 80%
ELWA Limited(1) Operating subsidiary UK E 80% 81%
JLEAG Wind Project holding
Holdings Limited company UK A 100% 100%
JLEAG Wind Project holding
Limited company UK A 100% 100%
Amber Solar
Parks (Holdings) Project holding
Limited company UK F 100% 100%
Amber Solar
Park Limited Operating subsidiary UK F 100% 100%
Fryingdown
Solar Park Operating subsidiary
Limited (dormant) UK F 100% 100%
Five Oaks Solar Operating subsidiary
Parks Limited (dormant) UK F 100% 100%
Bilsthorpe
Wind Farm Holdings Project holding
Limited company UK F 100% 100%
Bilsthorpe
Wind Farm Limited Operating subsidiary UK F 100% 100%
Ferndale Wind Project holding
Limited company UK F 100% 100%
Castle Pill Project holding
Wind Limited company UK F 100% 100%
Wind Assets
LLP Operating subsidiary UK F 100% 100%
Shanks Dumfries
and Galloway Project holding
Holdings Limited company UK G 80% 80%
Shanks Dumfries
and Galloway
Limited Operating subsidiary UK G 80% 80%
JL Hall Farm Project holding
Holdings Limited company UK F 100% 100%
Hall Farm Wind
Farm Limited Operating subsidiary UK F 100% 100%
Branden Solar
Parks (Holdings) Project holding
Limited 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
(Holdings) Project holding
Limited company UK F 100% 100%
Carscreugh
Renewable Energy
Park Limited Operating subsidiary UK F 100% 100%
Wear Point
Wind Holdco Project holding
Limited company UK F 100% 100%
Wear Point
Wind Limited Operating subsidiary UK F 100% 100%
Monksham Power Project holding
Ltd company UK D (2) (2)
Frome Solar
Limited Operating subsidiary UK D (2) (2)
BL Wind (Holdings) Project holding
Limited company UK F 100% 100%
BL Wind Limited Operating subsidiary UK F 100% 100%
Burton Word
Extension Limited Operating subsidiary UK F 100% 100%
New Albion
Wind Farm (Holdings) Project holding
Limited company UK F 100% 100%
New Albion
Wind Limited Operating subsidiary UK F 100% 100%
Dreachmhor
Wind (Holdings) Project holding
Limited company UK F 100% 100%
Dreachmhor
Wind Farm Limited Operating subsidiary UK F 100% 100%
France Wind
GP Germany Project holding
GmbH company DE K 100% 100%
France Wind
Germany GmbH Project holding
& 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%
CSGH Solar Project holding
Limited company UK A 100% 100%
CSGH Solar Project holding
(1) Limited company UK A 100% 100%
Catchment Tay Project holding
Holdings Limited company UK H 100% 100%
Catchment Tay
Limited Operating subsidiary UK H 100% 100%
sPower Holdco
1 (UK) Limited Operating subsidiary UK D 100% 100%
sPower Finco
1 (UK) Limited Operating subsidiary UK D 100% 100%
Higher Tregarne
Solar (UK)
Limited Operating subsidiary UK D 100% 100%
Crug Mawr Solar
(UK) Limited Operating subsidiary UK D 100% 100%
Golden Hill
Solar (UK)
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%
Vulcan Renewables
Limited Operating subsidiary UK M 100% 100%
------------------------ ----------------------- ---------- ------------ ---------- -------
(1) ELWA Holdings Limited holds 81% of the voting rights and
100% share of the economic benefits in ELWA Limited.
(2) 100% of "B" shares plus 100% of loans to the project. The
"A" shareholders, investors under the Enterprise Investment Scheme,
remain invested in the project. Including the loans, JLEN held an
economic interest over 87% of the value of the project's cash flow
(as calculated at acquisition). The "A" shares were acquired by
JLEN after the period end taking JLEN's ownership and control to
100%, further details are provided in note 18.
Registered office
A) 1 Kingsway, London WC2B 6AN
B) 50 Lothian Road, Festival Square, Edinburgh, Midlothian EH3 9WJ
C) Calder & Co, 16 Charles II Street, London SW1Y 4NW
D) Long Barn, Manor Farm, Stratton-on-the-Fosse, Radstock BA3 4QF
E) Dunedin House, Auckland Park, Mount Farm, Milton Keynes MK1 1BU
F) 8 White Oak Square, London Road, Swanley, Kent BR8 7AG
G) 16 Charlotte Square, Edinburgh EH2 4DF
H) Infrastructure Managers Limited, 2nd floor, 11 Thistle Street, Edinburgh EH2 1DF
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
M) 10-12 Frederick Sanger Road, Guildford, Surrey GU2 7YD
18. Events after the reporting period
In October 2017, and as originally anticipated, JLEN increased
its interest in the Monksham Solar portfolio by completing the
purchase of the 'A' shares for c.GBP2.1 million. This takes JLEN's
control, economic or otherwise from 87% to 100%.
A dividend for the quarter ended 30 September 2017 of 1.5775
pence per share was approved by the Board on 21 November 2017.
Please refer to note 6 for further details.
There are no other significant events since the period end which
would require to be disclosed.
DIRECTORS AND ADVISERS
Directors
Richard Morse (Chairman)
Christopher Legge
Denise Mileham
Peter Neville
Richard Ramsay
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 (formerly Capita Asset
Services)
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
UK Transfer Agent
Link Asset Services (formerly Capita Asset Services)
65 Gresham Street London EC2V 7NQ United Kingdom
Auditor
Deloitte LLP
Regency Court Glategny Esplanade St Peter Port
Guernsey GY1 3HW
Channel Islands
Investment Adviser
John Laing Capital Management Limited
1 Kingsway
London WC2B 6AN
United Kingdom
Public Relations
Redleaf Communications
First Floor
4 London Wall Buildings
Blomfield Street
London EC2M 5NT
United Kingdom
Joint Corporate Brokers
Winterflood Securities Limited
The Atrium Building
Cannon Bridge House
25 Dowgate Hill
London EC4R 2GA
United Kingdom
Barclays
5 The North Colonnade
Canary Wharf
London E14 4BB
United Kingdom
Corporate Bankers
HSBC
PO Box 31
St Peter Port
Guernsey GY1 3AT
Channel Islands
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR KMMZMVMKGNZM
(END) Dow Jones Newswires
November 22, 2017 02:00 ET (07:00 GMT)
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