TIDMJLEN
RNS Number : 8861P
John Laing Environmental Assets Grp
23 November 2016
23 November 2016
John Laing Environmental Assets Group Limited
Announcement of half-year results for the six months ended 30
September 2016
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 2016.
Financial Highlights
-- NAV per ordinary share of 98.3 pence as at 30 September 2016
(31 March 2016: 96.7 pence) with the positive movement in the
period reflecting primarily an increase in forecast electricity
prices
-- Portfolio valuation as at 30 September 2016 of GBP320.7m (31 March 2016: GBP264.5m)
-- Total dividends declared of 3.07 pence per ordinary share for
the six months to 30 September 2016, in line with target set out in
the 2016 Annual Report and reflecting an inflation uplift from 1
April 2016
-- Share price total return for the period of 7% (17.5% since IPO in March 2014)
Portfolio Highlights
-- Operational and financial performance for the period to 30
September 2016 broadly in line with budget allowing for technical
issues at Branden and Monksham solar parks
-- Three acquisitions totalling GBP52m, bringing the number of
investments to 18 and the capacity of the renewable energy assets
in the JLEN portfolio to 173.4MW
-- Strong pipeline of assets for further growth, both under the
First Offer Agreement with the John Laing Group and from third
parties
Financing Activity
-- Successful equity fund raise in May 2016 raising gross
proceeds of GBP35.2m and used to partially repay the revolving
credit facility and provide for future acquisitions
-- Further GBP16.3m raised to 30 September 2016 and GBP6.6m post
period end under JLEN's tap issuance programme announced in July
2016 in response to increased investor demand
-- Revolving credit facility increased from GBP65m to GBP75m in
July 2016; GBP65m drawn at period end
Richard Morse, Chairman of JLEN, said:
"The Board is encouraged by the progress JLEN has continued to
make during the first half of the year. The operational and
financial performance has been generally encouraging, underlining
the strength of our diversified portfolio.
The Board is appreciative of the continuing support of
shareholders, demonstrated during the period by the successful
equity raise in June and the launch of our tap issuance programme
in July in response to increased investor demand. We were able to
use the funds raised to pay down debt and maintain 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 1 December 2016
Record date 2 December 2016
Payment date 22 December 2016
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 will also be
available on the Company's website at www.jlen.com where further
information on JLEN can be found.
Details of the conference call for analysts and investors
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
David Hardy
Chris Tanner +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 2016.
Results
Encouraging progress has continued to be made in the performance
and enlargement of JLEN's portfolio of environmental infrastructure
assets during the period.
The Company's profit before tax for the six-month period to 30
September 2016 was GBP11.3 million (six months to 30 September
2015: GBP6.2 million) and earnings per share for the period was 4.5
pence (six months to 30 September 2015: 3.3 pence).
The Net Asset Value ("NAV") per share at 30 September 2016 was
98.3 pence, up from 96.7 pence at 31 March 2016.
Cash received from the portfolio by way of distributions, which
includes interest, loan repayments and dividends, was GBP12.4
million. Net cash inflows from the investment portfolio (after
operating and finance costs) of GBP9.0 million cover the declared
interim dividends for the half-year period of 3.07 pence per share
by approximately 1.07 times.
Dividend policy
For the year to 31 March 2016, the Company met its target
dividend of 6.054 pence per share by the payment of three interim
dividends, one of 3.027 pence per share in December 2015 in respect
of the six months ended 30 September 2015 and two quarterly
payments of 1.5135 pence per share in March 2016 and June 2016.
In line with the total inflation--adjusted target for the year
ending 31 March 2017 of 6.14 pence per share set out in our 2016
Annual Report, a quarterly dividend of 1.54 pence per share was
paid in September 2016 for the quarter to 30 June 2016. I am
pleased to announce that the Board has declared an interim dividend
of 1.53 pence per share for the quarter to 30 September 2016,
payable on 22 December 2016 to shareholders on the register as at 2
December 2016. The ex-dividend date will be 1 December 2016. Based
on the current performance of the portfolio, the Board is targeting
interim dividends for the six months ending 31 March 2017 totalling
3.07 pence per share.
Portfolio performance
During the period generation from the wind assets was in line
with budget, but the solar assets achieved overall generation 12%
below budget. 5% of the shortfall was due to low solar irradiation
and 7% due to two asset--specific issues.
For the solar portfolio as a whole, generation was approximately
5% below budget due to lower than the long-term average irradiation
levels during the period and particularly in the key summer months,
despite the assets themselves operating at or above expected
availability and performance levels. This is in line with other
solar asset owners who have also reported lower than forecast solar
resource over similar periods.
The main asset-specific issue was on the Branden project, which
experienced a number of technical issues with inverters and string
connectors over the summer. This led to periods of unavailability
and lower than expected generation intermittently for several
months. Replacement parts were sourced and installed under
warranty, and whilst improvements in performance have been seen, we
continue to monitor progress with the EPC contractor.
Monksham experienced a lightning strike in late August that
initially rendered the whole solar park offline following damage to
switchgear. The asset manager in conjunction with the operations
and maintenance provider managed to bring 75% of the park back to
generation for September pending delivery of replacement
components, and the park continues to operate at 75% capacity at
the current time while the parts are on order. Insurance is
expected to cover substantially all of the costs and losses
associated with the lightning strike.
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.
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 although have shown
some recovery in recent months from the very low levels experienced
during the winter of 2015/16.
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 electricity prices in its ROC 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 improved pricing to
future cash flows. The waste and wastewater processing assets are
not affected by the level of electricity prices.
For the waste and wastewater processing assets, financial
performance has been in line with expectations and volumes have
been at or above expected levels. I am pleased to confirm that the
facilities at the Frog Island facility (part of the ELWA project)
which were affected by a fire in August 2014 returned to full
operations in August 2016.
Acquisitions
During the period under review, the Company announced the
following acquisitions:
Dungavel wind farm
Dungavel wind farm was purchased in June 2016 and is located in
South Lanarkshire, South West Scotland. The wind farm comprises 13
Vestas 2MW V80 turbines with a total generating capacity of 26MW
and is accredited for 0.9 ROCs.
New Albion wind farm
New Albion wind farm was purchased in July 2016 and is located
near Kettering, Northamptonshire. The wind farm comprises seven
Senvion MM92 turbines with a total generating capacity of 14.4MW
and is accredited for 0.9 ROCs.
Both Dungavel and New Albion were purchased from John Laing
under the First Offer Agreement, underlining its continuing
importance to the Company's acquisition pipeline.
Le Placis Vert wind farm
Le Placis Vert wind farm was acquired in July 2016 from its
developer Energiequelle GmbH ("Energiequelle"). The wind farm is
located in the municipality of Saint-Gouéno in Brittany in
northwest France, and comprises five Enercon E-53 turbines with a
total generating capacity of 4MW. The project benefits from a
15-year FiT regime at a fixed rate adjusted annually for
inflation.
These acquisitions were funded by utilising JLEN's existing cash
balances and revolving credit facility and brought the total
capacity of the renewable energy assets in the JLEN portfolio to
173.4 MW.
In September 2016, JLEN entered into an agreement with
Energiequelle to acquire the Plouguernevel wind farm, the second
project JLEN is acquiring from Energiequelle. The project is
located in the municipality of Plouguernevel in Brittany, and
comprises five Enercon E-53 turbines with a total generating
capacity of 4MW. The project benefits from a 15-year FiT regime at
a fixed rate adjusted annually for inflation. The acquisition is
subject to customary consents and is expected to complete
shortly.
The acquisitions from Energiequelle represent an important
milestone for the Company, being its first non-UK acquisitions.
Support from the French government for renewable energy remains
strong and the assets acquired are located in attractive wind
areas. The French acquisitions are consistent with JLEN's strategy
of diversification and, in line with our investment policy, the
Board will continue to look at attractive opportunities in both the
UK and Europe that meet our financial and risk criteria.
Capital raising
In May 2016, JLEN successfully raised further equity under its
then existing placing programme, raising gross proceeds of GBP35.2
million through the issue of 36 million ordinary shares at 97.75
pence per share. This enabled JLEN to reduce the balance
outstanding on its revolving credit facility in order to fund the
Dungavel acquisition noted above.
The Company's revolving credit facility gives it the flexibility
to acquire further assets on a timely basis, reducing the
performance drag associated with holding excess cash. This
facility, originally secured in October 2014 at a level of GBP50
million and increased to GBP65 million in March 2016, was further
increased in July 2016, on the same terms, to GBP75 million,
reflecting the increased asset base of the Company following the
recent equity fundraising and to assist in the acquisitions of the
New Albion and Le Placis Vert wind farms.
On 28 July 2016, in light of the premium at which the ordinary
shares of the Company were then trading, JLEN announced a tap
issuance programme to satisfy excess demand in the secondary
market, with issuance being subject to JLEN's short--term capital
requirements. New shares issued under the tap issuance programme
were issued at a premium to NAV (net of costs) and were accretive
to existing shareholders. The net proceeds from the issue of new
shares were used to repay the Company's revolving credit facility.
At the date of this report, 22,435,643 shares have been issued
under the programme at an average issue price of 102.1 pence per
share, raising gross proceeds of GBP22.9 million.
Following the success of the tap issuance programme, the Company
is now limited in the number of new shares it is able to issue
under the shareholder authorities granted at the AGM in August this
year and without issuing a prospectus. Given the significant
pipeline of acquisition opportunities, both from John Laing and
third parties, the Company wishes to ensure that it is in a
position to capitalise on these opportunities as and when they come
to fruition. The Company is therefore considering a placing
programme under which it will be able to issue new shares to take
advantage of investment opportunities as they arise, either by way
of a series of subsequent placings, further tap issuance or a
combination of both. The Board intends to make a further
announcement in due course.
Valuation
The Net Asset Value at 30 September 2016 is GBP271.6 million,
comprising GBP320.7 million portfolio valuation, GBP15.7 million of
cash held by the Group, working capital of GBP0.2 million less the
outstanding revolving credit debt balance of GBP65 million.
The Investment Adviser has prepared a fair market valuation of
the portfolio as at 30 September 2016. 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 GBP320.7 million for the portfolio of 18 investments
as at 30 September 2016.
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 June 2015. The full Prospectus
is available on JLEN's website, and a summary of the principal
risks and uncertainties is included on pages 38 to 43 of the
strategic report in the Annual Report for the year ended 31 March
2016.
A key strength of the Company is its strategy of diversification
across a range of geographies, sectors and revenue sources within
the environmental infrastructure space. This strategy has enabled
the Company to continue to offer attractive, long--term returns for
shareholders and the portfolio has continued to demonstrate
resilience since launch in the light of seasonal weather volatility
and, until more recent months, a downward shift in electricity
prices.
In implementing its strategy, the Board is conscious of the
volatility in UK and global financial markets, particularly in
light of the UK EU referendum vote outcome and the US election.
While it may take some time for the exact details of arrangements
relating to the UK's 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 under The Climate
Change Act of 2008 and whilst by leaving the EU the UK may no
longer be obliged to hit the current or any successor targets under
the EU Energy Directive (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.
The Chancellor's first Autumn Statement on 23 November 2016 will
outline his priorities for taxes and spending in the wake of the
referendum vote, and we await with interest the widely anticipated
fiscal stimulus to boost infrastructure spending.
The success of the Company's recent tap issuance programme has
demonstrated that good demand exists for yielding infrastructure
assets and that a tap issuance programme can be a flexible and cost
effective tool in the Company's financing options.
The Board, through its Investment Adviser JLCM, actively
continues to seek suitable projects to add to its portfolio both
from John Laing and third parties. JLEN has the benefit of a First
Offer Agreement with John Laing over a significant pipeline of
environmental infrastructure projects which supports its growth
plans in the next few years. And despite current market
uncertainties, the Company continues to see attractive acquisition
opportunities in the market and will continue with its cautious
approach to growth to support its long-term targets for its
shareholders.
The Board is appreciative of the continuing support of
shareholders and is confident that the availability of further
capital and the revolving credit facility will enable the Company
to fund the strong pipeline of environmental infrastructure
opportunities available as we continue to build the portfolio.
Richard Morse
Chairman
22 November 2016
Investment Adviser's report
JLEN's Net Asset Value as at 30 September 2016 increased to
GBP271.6 million from GBP216.9 million at 31 March 2016, driven by
share issues in the period to fund acquisitions. On a per share
basis it increased to 98.3 pence from 96.7 pence.
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 2016, the Group's investment portfolio comprised
of interests in 18 project vehicles, 17 located in the UK and one
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
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
Sept
Burton Wold Extension UK (Eng) Wind 100% 14.4 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
New Albion UK (Eng) Wind 100% 14.4 Jan 2016
Wear Point UK (Wal) Wind 100% 8.2 Jun 2014
Dumfries & Galloway UK (Scot) Waste 80% n/a 2007
mgnt.
ELWA UK (Eng) Waste 80% n/a 2006
mgnt.
Tay UK (Scot) Wastewater 33% n/a Nov 2001
---------------------- ---------- ----------- --------- -------- -----------
(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
effective economic interest over 87% of the value of the project's
cash flow (as calculated at acquisition).
Investment performance
The uplift in NAV has been primarily driven by the acquisition
of investments and 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 2016 was 98.3 pence, up from
96.7 pence at 31 March 2016.
JLEN has announced an interim dividend of 1.53 pence per share
for the quarter ended 30 September 2016, payable on 22 December
2016, in line with the full--year target for the year ending 31
March 2017 as set out in the Annual Report for 2016.
Portfolio performance
In general, during the period under review, the performance of
the portfolio has been robust and has been in line with
expectations.
Generation from the wind assets of 99GWh was in line with budget
and ahead of the comparative period in 2015 of 59GWh, due to the
impact of new acquisitions during the last 12 months and improved
wind speeds over the summer period compared to the same period last
year.
Generation from the solar assets during the period at 28.9GWh
was 12% below budget, due to a combination of low solar irradiation
(5% of the shortfall) and two asset-specific issues (7% of the
shortfall).
For the solar portfolio as a whole, generation was 5% below
budget due to lower than the long-term average irradiation levels
during the period and particularly in the key summer months,
despite the assets themselves operating at or above expected
availability and performance levels. This is in line with other
solar asset owners who have also reported lower than forecast solar
resource over similar periods.
The main asset-specific issue was on the Branden project, which
experienced a number of technical issues with inverters and string
connectors over the summer. This led to periods of unavailability
and lower than expected generation intermittently for several
months while replacement parts were sourced and installed under
warranty. The Investment Adviser has been discussing the issues
with the relevant contractual parties and the lost generation will
be mitigated to some extent by contractual protections and business
interruption insurance where applicable, with a programme to
replace affected connectors at Branden during the lower generation
winter period.
Monksham experienced a lightning strike in late August that
initially rendered the whole solar park offline following damage to
switchgear. The asset manager, in conjunction with the operations
and maintenance provider, managed to bring 75% of the park back to
generation for September pending delivery of replacement
components, and the park continues to operate at 75% capacity at
the current time while the parts are on order. Insurance is
expected to cover substantially all of the costs and losses
associated with the lightning strike.
Apart from the issues noted at Branden and Monksham, which are
now in the process of being resolved, the wind farms and the solar
parks have achieved high levels of technical and operational
availability during the period, with no significant operational
disruption being experienced.
The environmental processing plants have achieved full
availability during the period, save for the Frog Island Mechanical
Biological Treatment facility at the ELWA waste project which was
affected by a fire in August 2014. We updated on the progress of
reinstatement in the 2016 Annual Report and are pleased to confirm
that the facilities which were affected returned to full operations
in August 2016. During the period of disruption, the contract with
East London Waste Authority continued to be fulfilled and operated,
diversion from landfill targets met and the project continued to
make distributions in line with budgets.
Waste and wastewater flows have been broadly in line with budget
for the period. 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.
Acquisitions
Since 31 March 2016, the Company has acquired three projects for
a cash consideration of GBP52 million, including working capital.
The acquisitions were funded by a drawdown under the Company's
GBP75 million revolving credit facility. The assets were as
follows:
Dungavel wind farm
Dungavel wind farm was purchased in June 2016 from John Laing
for a cash consideration, including working capital, of GBP38.2
million. The wind farm is located in South Lanarkshire, South West
Scotland and comprises 13 Vestas 2MW V80 turbines with a total
generating capacity of 26MW and is accredited for 0.9 ROCs. The
site has been operational since October 2015.
New Albion wind farm
New Albion wind farm was purchased in July 2016 from John Laing
for a cash consideration, including working capital, of GBP11.8
million. The wind farm is located near Kettering, Northamptonshire
and comprises seven Senvion MM92 turbines with a total generating
capacity of 14.4MW and is accredited for 0.9 ROCs. The site has
been operational since January 2016.
The acquisitions were agreed in accordance with the First Offer
Agreement between John Laing and JLEN.
Le Placis Vert wind farm
Le Placis Vert wind farm was acquired in July 2016 for EUR2.5
million from its developer Energiequelle GmbH ("Energiequelle").
The wind farm is located in the municipality of Saint-Gouéno in
Brittany in northwest France and comprises five Enercon E-53
turbines with a total generating capacity of 4MW. The project
benefits from a 15-year FiT regime at a fixed rate adjusted
annually for inflation. The site has been fully operational since
January 2016, and Energiequelle continues to provide technical and
commercial management services for the project.
These acquisitions brought the total capacity of the renewable
energy assets in the JLEN portfolio to 173.4 MW.
In September 2016, JLEN entered into an agreement with
Energiequelle to acquire the Plouguernevel wind farm, the second
project JLEN is acquiring from Energiequelle, for EUR2.1 million.
The project is located in the municipality of Plouguernevel in
Brittany and comprises five Enercon E-53 turbines with a total
generating capacity of 4MW. The project benefits from a 15-year FiT
regime at a fixed rate adjusted annually for inflation. The site
has been fully operational since May 2016, and Energiequelle will
continue to provide the technical and commercial management
services for the project. The acquisition is subject to the
customary consents and is expected to complete shortly.
The acquisitions from Energiequelle represent an important
milestone for the Company, being its first non-UK acquisitions.
Support from the French government for renewable energy remains
strong and the assets acquired are located in attractive wind
areas. The French acquisitions are consistent with JLEN's strategy
of diversification and in line with its investment policy.
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 2016
was GBP320.7 million, compared to GBP264.5 million at 31 March
2016. The increase of GBP56.2 million is the net impact of
acquisitions, cash received from investments, changes in
macroeconomic and electricity price assumptions, and underlying
growth in the portfolio. (A reconciliation of the factors
contributing to the growth in the portfolio during the period is
shown in the chart on page 15 of the half-year report).
The total movement of investments during the period ended 30
September 2016 is shown in the table below:
Six month
period ended
30 Sep 2016
(unaudited)
GBPm
--------------------------------------------------------------------- -------------
Valuation of portfolio at beginning of the period 264.5
Acquisitions in the period (including post--acquisition adjustments) 53.4
Cash distributions from portfolio (12.4)
--------------------------------------------------------------------- -------------
Rebased opening valuation of portfolio 305.5
Changes in forecast electricity prices 3.7
Changes in economic assumptions (0.3)
Changes in discount rates -
Balance of portfolio return 11.8
--------------------------------------------------------------------- -------------
Valuation of portfolio at end of the period 320.7
Fair value of Intermediate Holding Companies (60.1)
Investments at fair value through profit or loss 260.6
--------------------------------------------------------------------- -------------
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 31 March
2016 valuation is considered below:
Forecast electricity prices
The project cash flows used in the portfolio valuation at 30
September 2016 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 prices in line with central
forecasts from an established market consultant, adjusted by the
Investment Adviser for project specific arrangements if
required.
In common with generators selling into the wholesale market,
following a period of declining electricity prices JLEN has
experienced an improvement in both actual and forecast electricity
prices during the period. Compared to the assumptions used in the
valuation at 31 March 2016, on a time weighted average basis, the
increase in the electricity price assumptions is approximately 3%
over a 25-year period (being a simple average increase over 25
years of approximately 1.2%, including an increase in market
forward prices (gross of any discounts under PPAs) over the next
two years of nearly 20%, up to an average of GBP44/MWh for winter
(31 March 2016: GBP37/MWh) and GBP38/MWh (31 March 2016: GBP32/MWh)
for summer). JLEN has taken advantage of the improvement in
short--term price forecasts during the period by fixing prices
under existing PPA arrangements for a significant proportion of the
renewable energy portfolio for periods of up to 24 months. At 30
September 2016, 85% of the renewable energy portfolio's electricity
exposure was subject to a price fix for the winter 2016 season and
65% for the summer 2017 season, with the generation weighted
average price fixes achieved, gross of any PPA discounts, being
GBP44/MWh for winter 2016 and GBP39/MWh for summer 2017.
The increase in forecasts for future electricity prices compared
to forecasts at 31 March 2016, has increased the valuation of the
portfolio by GBP3.7 million.
Economic assumptions
Macroeconomic assumptions in respect of inflation, corporation
tax and deposit interest rates have remained relatively constant
during the period and the movement in valuation is therefore not
significant. Inflation rates assumed in the valuation at 30
September 2016 are 2.1% in 2016 with 2.75% for all subsequent years
for UK assets, and 1.5% in 2016 and for all subsequent years for
the French assets. The long--term UK corporation tax rate assumed
is 20%, stepping down to 19% in April 2017 and 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 33.3%. Deposit rates assumed in the valuation reflect a
range of deposit rates in the UK from 1.00% in 2016 with a gradual
increase to a long--term rate of 3.25% 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
investment in France was EUR1.16/GBP1 (31 March 2016: n/a)
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 2016, 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, solar PV and waste
processing projects and the discount rates achieved on transactions
in those sectors, has maintained the discount rates applied to the
half-year portfolio valuation, although it notes the continuing
reducing trend in discount rates, particularly in the onshore wind
sector, and will continue to monitor this for future
valuations.
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 8.4%
at 30 September 2016 (8.2% at 31 March 2016).
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
and the benefit of the refinancing of the wind assets acquired
during the period into the wind asset portfolio facility. The total
represents an uplift of GBP11.8 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 UK HoldCo, other
assets and liabilities of the Group less Group debt.
The portfolio valuation is the largest component of the Net
Asset Value and the key sensitivities are considered to be the
discount rate applied in the valuation of future cash flows and the
principal assumptions used in respect of future revenues and
costs.
A broad range of assumptions 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 2016 was 8.4% (8.2% at
31 March 2016). 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 2016 are 2.1% for 2016 and 2.75% (31 March 2016: 2.75%)
for the long term for the UK assets, and 1.5% for both 2016 and the
long term (31 March 2016: n/a) 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 2016, JLCM considers the sensitivity to
changes in euro/sterling exchange rates to be insignificant.
The chart on page 18 (of the half-year report) shows the impact
of the key sensitivities on NAV per share, with the GBP labels
indicating the impact of the sensitivities on portfolio value.
Financing
In May 2016, JLEN successfully raised further equity under its
then existing placing programme, raising gross proceeds of GBP35.2
million through the issue of 36 million ordinary shares at 97.75
pence per share. This enabled JLEN to reduce the balance
outstanding on its revolving credit facility and to consequently
free up the facility in order to fund the Dungavel acquisition
noted above.
The Company's revolving credit facility with HSBC and NIBC gives
it the flexibility to acquire further assets on a timely basis,
reducing the performance drag associated with holding excess cash.
This facility, originally secured in October 2014 at a level of
GBP50 million and increased to GBP65 million in March 2016, was
further increased in July 2016, on the same terms, to GBP75
million, reflecting the increased asset base of the Company
following the recent equity fundraising and to assist in the
acquisitions of the New Albion and Le Placis Vert wind farms.
On 28 July 2016, in light of the premium at which the ordinary
shares of the Company were then trading, JLEN announced a tap
issuance programme to satisfy excess demand in the secondary
market, subject to JLEN's capital requirements. New shares issued
under the tap issuance programme were issued at a premium to NAV
(net of costs) and were accretive to existing shareholders. The net
proceeds from the issue of new shares were used to repay the
Company's revolving credit facility. At the date of this report,
22,435,643 shares have been issued under the programme at an
average issue price of 102.1 pence per share, raising gross
proceeds of GBP22.9 million.
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 2016 across the
portfolio was 43.4% (31 March 2016: 43.6%) being 32.0% (31 March
2016: 27.1%) for the renewable energy assets and 61.2% (31 March
2016: 62.2%) for the PFI processing assets. The increase in the
gearing for the renewable energy assets during the period reflects
the acquisitions of Dungavel, New Albion and Le Placis Vert wind
farms, all of which have project level debt. Taking into account
the amount drawn down under the revolving credit facility, the
overall fund gearing at 30 September 2016 was 53.7% (31 March 2016:
53.9%).
As at 30 September 2016, the Group, which comprises the Company
and the Intermediate Holding Companies, had cash balances of
GBP15.7 million (31 March 2016: GBP6.2 million).
Profit before tax
Profit before tax for the period was GBP11.3 million (30
September 2015: GBP6.2 million), generating earnings per share for
the period of 4.5 pence (30 September 2015: 3.3 pence).
The increase over the period to 30 September 2015 reflects
higher distributions as the portfolio grows plus an uplift in the
fair value of the portfolio.
Six month Six month
period ended period ended
30 Sep 2016 30 Sep 2015
(unaudited) (unaudited)
All amounts presented in GBPmillion (except as noted) GBPm GBPm
------------------------------------------------------ ------------- -------------
Interest received on UK HoldCo loan notes 6.6 4.7
Dividends received from UK HoldCo 3.5 2.0
Net gains on investments at fair value 3.3 0.9
------------------------------------------------------ ------------- -------------
Operating income 13.4 7.6
------------------------------------------------------ ------------- -------------
Operating cost (2.1) (1.4)
------------------------------------------------------ ------------- -------------
Profit before tax 11.3 6.2
------------------------------------------------------ ------------- -------------
Earnings per share 4.5p 3.3p
------------------------------------------------------ ------------- -------------
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 2016 was 1.5%
(year ended 31 March 2016: 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 GBP216.9 million at 31 March 2016 to
GBP271.6 million at 30 September 2016, primarily driven by equity
funds raised, which in turn were used to finance acquisitions.
An analysis of the net assets at 30 September 2016 is set out in
the table below.
Analysis of the Group's net assets
30 Sep 2016 31 Mar 2016
All amounts presented in GBPmillion (except as noted) (unaudited) (audited)
--------------------------------------------------------- ------------- -----------
Portfolio value 320.7 264.5
Intermediate Holding Companies cash 4.7 2.9
Intermediate Holding Companies revolving credit facility (65.0) (54.8)
Intermediate Holding Companies other assets 0.2 1.8
--------------------------------------------------------- ------------- -----------
Fair value of the Company's investment in UK HoldCo 260.6 214.4
--------------------------------------------------------- ------------- -----------
Company's cash 11.0 3.3
Company's other assets/(liabilities) - (0.8)
--------------------------------------------------------- ------------- -----------
Net Asset Value 271.6 216.9
--------------------------------------------------------- ------------- -----------
Number of shares 276,356,435 224,356,435
Net Asset Value per share 98.3p 96.7p
--------------------------------------------------------- ------------- -----------
The movement in the portfolio value of environmental
infrastructure assets during the period is summarised as
follows:
GBPm
------------------------------------------------- ------
Value at 31 March 2016 (audited) 264.5
Acquisitions 53.4
Growth in value of portfolio 15.2
Distributions received from investments (12.4)
------------------------------------------------- ------
Portfolio value at 30 September 2016 (unaudited) 320.7
------------------------------------------------- ------
Cash flow
At 30 September 2016, the Group (Company plus Intermediate
Holding Companies) had a total cash balance of GBP15.7 million (31
March 2016: GBP6.2 million), including GBP11.0 million (31 March
2016: GBP3.3 million) in the Company's balance sheet and GBP4.7
million (31 March 2016: GBP2.9 million) in the Intermediate Holding
Companies, which is included in the Company's balance sheet within
"investment at fair value through profit or loss".
At 30 September 2016, UK HoldCo had GBP65.0 million drawn down
(31 March 2016: GBP54.8 million) under its revolving credit
facility.
Cash flows of the Group for the period are summarised as
follows:
Six month Six month
period ended period ended
30 Sep 2016 30 Sep 2015
(unaudited) (unaudited)
GBPm GBPm
--------------------------------------------------------------- ------------- -------------
Cash received from environmental infrastructure investments 12.4 9.1
Administrative expenses (0.5) (0.3)
Directors' fees and expenses (0.1) (0.2)
Investment Advisory fees (1.4) (1.0)
Financing costs (net of interest income) (1.4) (0.5)
--------------------------------------------------------------- ------------- -------------
Cash flow from operations 9.0 7.1
--------------------------------------------------------------- ------------- -------------
Net proceeds from share issues 49.9 63.8
Drawdown/(repayment) under the revolving credit facility 10.2 (43.7)
Acquisition of investment assets (53.4) (20.5)
Reduction in acquisition price (as reported in the 2016 Annual
Report) 2.0 -
Acquisition cost (including stamp duty) (0.7) (0.5)
Dividends paid in cash to shareholders (7.5) (4.8)
--------------------------------------------------------------- ------------- -------------
Cash movement in the period 9.5 1.4
--------------------------------------------------------------- ------------- -------------
Opening cash balance 6.2 8.6
--------------------------------------------------------------- ------------- -------------
Group cash balance at 30 September 15.7 10.0
--------------------------------------------------------------- ------------- -------------
During the period, the Group received cash distributions of
GBP12.4 million from its environmental infrastructure investments,
in line with distributions expected by the Group after adjusting
for acquisitions during the period.
Cash flow from operations of the Company of GBP9.0 million
(which is after debt amortisation at project level of GBP7.5
million during the period) covers the dividend paid in the period
of GBP7.5 million by 1.2 times and the dividend declared in the
period of GBP8.4 million by 1.07 times.
The Company has declared an interim dividend of 1.53 pence per
share for the quarter to 30 September 2016 (estimated based on the
shares in issue at the date of this half-year report at GBP4.3
million), which is payable on 22 December 2016.
Outlook
Despite the current political and economic uncertainty in the UK
and Europe, in particular following the outcome of the UK
referendum on membership of the EU in June 2016 and the recent US
election result, 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 robust.
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.
In addition, electricity capacity margins remain especially
tight in the UK, compounded now by increased uncertainty as to
whether planned additional electricity interconnector capacity with
Europe will be built following the UK's exit from the EU.
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.
In the 2016 Annual Report, we commented on the fact that the UK
and European renewables markets in 2015 and 2016 had continued to
be affected by low electricity prices, mainly driven by
consistently falling oil and gas prices since the end of 2014. In
recent months, and particularly since the EU referendum result,
spot electricity prices have recovered and we have also seen an
increase in forecast electricity prices, particularly over the
short term. This has largely been driven by the movement in
sterling exchange rates, with higher import prices for
dollar/euro--denominated coal and gas inputs for the electricity
market. As gas-fired power stations tend to set the marginal cost
of electricity in the UK, natural gas price rises tend to result in
higher electricity prices. Increases in electricity price forecasts
in turn increase the valuation of JLEN's portfolio as currently
about 31% of the project-level revenues are exposed to electricity
prices. This is achieved by either "locking-in" improved market
conditions by fixing electricity prices for periods up to 24 months
under existing PPAs or reflecting higher short--term forecasts in
our cash flows where no fix is in place in line with our valuation
policy.
The timing and extent of changes to electricity prices will
depend on a range of factors, including the impact of continued
pressure on the UK capacity margin due to planned closures of
coal--fired generation plants and the continued delay in the
commissioning of new nuclear plants. In addition, the current
review by Ofgem into the charging arrangements for embedded
generation may result in future changes to the levels of 'embedded
benefits' received. Exact details will not be known until the
consultation is concluded and detailed proposals announced. The
Board and the Investment Adviser will continue to monitor markets
and forecasts quarterly and reflect this in the reported NAV as
appropriate.
The secondary market for environmental infrastructure projects
remains both active and significant. The Investment Adviser
continues to investigate potential markets and investments and has
seen a steady flow of opportunities across all JLEN's asset classes
during the period.
Whilst activity in UK solar has inevitably tailed off following
the removal of ROC incentives, opportunities still remain and will
be pursued, where attractive. As for wind, the early removal of
green subsidy support has impacted developers but there remains a
large number of existing operational projects and projects to be
completed under existing transitional arrangements to provide a
strong secondary market in the short to medium term.
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. 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.
The Investment Adviser continues to monitor European markets
with stable regulatory frameworks as permitted under the Fund's
investment policy. During the period, JLEN made its first non-UK
acquisition when it acquired the Le Placis Vert wind farm in
France. We have seen a number of opportunities in onshore wind,
both in the UK and Europe, which we will continue to evaluate.
JLEN has the benefit of a First Offer Agreement with John Laing
over a significant 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 GBP420 million (as estimated by John Laing) will
become available for acquisition by the Fund within the period to
31 December 2019.
JLEN invests in environmental infrastructure assets which are
long term in nature. Whilst the Investment Adviser expects to see
the sort of short--term variability in performance witnessed over
the last 18 months, the outlook for the portfolio remains good and,
other than the changes in valuation assumptions noted above, there
are no changes to our long--term assumptions underlying the cash
flow projections and valuation of the portfolio. A key feature of
JLEN is its diversified portfolio and the spread of risks across a
variety of technologies.
The Chancellor's first Autumn Statement on 23 November 2016 will
outline his priorities for taxes and spending in the wake of the
referendum vote. It is anticipated that a fiscal stimulus to boost
infrastructure spending will be introduced, together with
clarification on the proposals to implement the OECD's Base Erosion
and Profit Shifting measures which have been subject to
consultation during 2016.
Based on the current outlook for the portfolio and the markets
in which it operates, JLEN is well--positioned to continue to
deliver the target returns of the Company, although it should be
noted that delivery of the long--term IRR targets will depend, to
an extent, on the continued recovery of electricity price forecasts
from current levels. 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.
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 2016; and
-- the Chairman's statement and Investment Adviser's report meet
the requirements of an interim management
-- report and include a fair review of the information required by:
a) DTR 4.2.7R, being an indication of important events during
the first six months of the financial year and a description of
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R, being the disclosure of related parties' transactions and changes therein.
This responsibility statement was approved by the Board of
Directors on 22 November 2016 and is signed on its behalf by:
Richard Morse
Chairman
22 November 2016
Independent review report
to John Laing Environmental Assets Group Limited
We have been engaged by the Company to review the condensed set
of financial statements in the half--yearly financial report for
the six months ended 30 September 2016 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 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 2016 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountant Guernsey, Channel Islands
22 November 2016
Condensed unaudited income statement
for the six months ended 30 September 2016
Six months Six months
ended ended
30 Sep 30 Sep
2016 2015
(unaudited) (unaudited)
Notes GBP'000s GBP'000s
--------------------------- ----- ------------ ------------
Operating income 8 13,426 7,649
Operating expenses 4 (2,108) (1,421)
--------------------------- ----- ------------ ------------
Operating profit 11,318 6,228
--------------------------- ----- ------------ ------------
Profit before tax 11,318 6,228
Tax 5 - -
--------------------------- ----- ------------ ------------
Profit for the period 11,318 6,228
--------------------------- ----- ------------ ------------
Earnings per share
From continuing operations
Basic and diluted (pence) 7 4.5 3.3
--------------------------- ----- ------------ ------------
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 2016
30 Sep 2016 31 Mar 2016
(unaudited) (audited)
Notes GBP'000s GBP'000s
------------------------------------------------- ----- ------------ -----------
Non-current assets
Investments at fair value through profit or loss 8 260,555 214,400
------------------------------------------------- ----- ------------ -----------
Total non-current assets 260,555 214,400
------------------------------------------------- ----- ------------ -----------
Current assets
Trade and other receivables 9 1,037 31
Cash and cash equivalents 11,015 3,312
------------------------------------------------- ----- ------------ -----------
Total current assets 12,052 3,343
------------------------------------------------- ----- ------------ -----------
Total assets 272,607 217,743
------------------------------------------------- ----- ------------ -----------
Current liabilities
Trade and other payables 10 (1,002) (852)
------------------------------------------------- ----- ------------ -----------
Total current liabilities (1,002) (852)
------------------------------------------------- ----- ------------ -----------
Total liabilities (1,002) (852)
------------------------------------------------- ----- ------------ -----------
Net assets 271,605 216,891
------------------------------------------------- ----- ------------ -----------
Equity
Share premium account 12 272,001 221,122
Retained reserves 13 (396) (4,231)
------------------------------------------------- ----- ------------ -----------
Equity attributable to owners of the Company 271,605 216,891
------------------------------------------------- ----- ------------ -----------
Net assets per share (pence per share) 98.3 96.7
------------------------------------------------- ----- ------------ -----------
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 22
November 2016.
They were signed on its behalf by:
Richard Morse Christopher Legge
Chairman Director
Condensed unaudited statement of changes in equity
for the six months ended 30 September 2016
Six months ended
30 Sep 2016 (unaudited)
------------------------------------------ ----- -------------------------------
Share
premium 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 13 - (7,483) (7,483)
------------------------------------------ ----- --------- --------- ---------
Balance at 30 September 2016 272,001 (396) 271,605
------------------------------------------ ----- --------- --------- ---------
Six months ended
30 Sep 2015 (unaudited)
------------------------------------------ ------ -------------------------------
Share
premium Retained
account reserves Total
Notes GBP'000s GBP'000s GBP'000s
------------------------------------------ ------ --------- --------- ---------
Balance at 1 April 2015 157,352 4,557 161,909
-------------------------------------------------- --------- --------- ---------
Profit and total comprehensive income for
the period - 6,228 6,228
Issue of share capital 65,000 - 65,000
Expenses of issue of equity shares (1,230) - (1,230)
Dividends paid - (4,800) (4,800)
-------------------------------------------------- --------- --------- ---------
Balance at 30 September 2015 221,122 5,985 227,107
-------------------------------------------------- --------- --------- ---------
The accompanying notes form an integral part of the condensed
set of financial statements.
Condensed unaudited cash flow statement
for the six months ended 30 September 2016
Six months Six months
ended ended
30 Sep 30 Sep
2016 2015
(unaudited) (unaudited)
GBP'000s GBP'000s
------------------------------------------------------------- ------------ ------------
Profit from operations 11,318 6,228
Adjustments for:
Investment interest received (6,571) (4,688)
Dividends received (3,500) (2,000)
Net gain on investments at fair value through profit or loss (3,355) (961)
------------------------------------------------------------- ------------ ------------
Operating cash flows before movements in working capital (2,108) (1,421)
Increase in receivables (1,006) (5)
Increase/(decrease) in payables 150 (49)
------------------------------------------------------------- ------------ ------------
Net cash outflow from operating activities (2,964) (1,475)
------------------------------------------------------------- ------------ ------------
Investing activities
Investments in subsidiaries (8,300) (30,750)
Loans to subsidiaries (34,500) (33,000)
Investment interest received 6,571 4,688
Dividends received 3,500 2,000
------------------------------------------------------------- ------------ ------------
Net cash used in investing activities (32,729) (57,062)
------------------------------------------------------------- ------------ ------------
Financing activities
Gross proceeds on issue of share capital 51,543 65,000
Expenses relating to issue of shares (664) (1,230)
Dividends paid (7,483) (4,800)
------------------------------------------------------------- ------------ ------------
Net cash from financing activities 43,396 58,970
------------------------------------------------------------- ------------ ------------
Net increase in cash and cash equivalents 7,703 433
Cash and cash equivalents at beginning of period 3,312 3,622
------------------------------------------------------------- ------------ ------------
Cash and cash equivalents at end of period 11,015 4,055
------------------------------------------------------------- ------------ ------------
Notes to the condensed unaudited financial statements
for the six months ended 30 September 2016
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 2016 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 2016, the Company
successfully raised gross proceeds of GBP51.5 million through the
issue of ordinary shares and continued to manage its investment in
UK HoldCo, adding three stakes in wind projects 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 22 November 2016.
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 2016 and should be read in conjunction with
the Company's annual audited financial statements for the period
ended 31 March 2016.
In 2015, the Company adopted the narrow-scope amendments to IFRS
10 'Consolidated Financial Statements', IFRS 12 'Disclosure of
Interests in Other Entities' and IAS 28 'Investments in Associates
and Joint Ventures' which became mandatory for annual periods
beginning on or after 1 January 2016.
The Company accounts for its investment in its wholly-owned
direct subsidiary UK HoldCo at fair value. The Company, together
with its wholly-owned direct subsidiary UK HoldCo and the
intermediate holding subsidiary HWT Limited ("HWT") comprise the
group (the "Group") investing in environmental infrastructure
assets.
The net assets of the Intermediate Holding Companies (comprising
UK HoldCo and HWT), which at 30 September 2016 principally comprise
working capital balances, any revolving credit facility loan
balance and investments in projects, are required to be included at
fair value when calculating 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 believe, based on those forecasts and an assessment of the
Company's subsidiary's banking facilities, that it is appropriate
to prepare the financial statements of the Company on the going
concern basis. In arriving at their conclusion that the Company has
adequate financial resources, the Directors were mindful that the
Group had unrestricted cash of GBP15.7 million as at 30 September
2016 and a banking facility available for investment in new or
existing projects and for working capital of GBP75 million. GBP10
million of this facility was undrawn at the period end and the
facility is repayable in October 2018.
As at 30 September 2016, the Company's wholly-owned subsidiary
UK HoldCo had borrowed GBP65 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 throughout the next 12 months.
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.
The Company has an investment in one environmental
infrastructure asset in France which represents less than 1% of the
value of the portfolio.
During the period, all revenues received by the Company from its
investment assets were generated in the UK.
(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
fluctuations in the levels of wind and sunlight can affect revenues
of the Company's environmental infrastructure projects, with solar
projects typically more productive in summer months and wind assets
in winter, due to the diversified mix of projects, these
fluctuations do not materially affect the overall pattern of the
Company's operating income or profit.
4. Operating expenses
Six months Six months
ended ended
30 Sep 30 Sep
2016 2015
(unaudited) (unaudited)
GBP'000s GBP'000s
----------------------------- ------------ ------------
Investment advisory fees 1,605 1,083
Directors' fees and expenses 134 102
Administration fee 47 34
Other expenses 322 202
----------------------------- ------------ ------------
2,108 1,421
----------------------------- ------------ ------------
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 months Six months
ended ended
30 Sep 30 Sep
2016 2015
(unaudited) (unaudited)
GBP'000s GBP'000s
------------------------------------------------------------- ------------ ------------
Amounts recognised as distributions to equity holders during
the period:
Dividend for the quarter ended 31 March 2016 of 1.5135 pence
per share (for the six--month period ended 31 March 2015:
3.0 pence per share) 3,396 4,800
Interim dividend for the quarter ended 30 June 2016 of 1.54
pence per share 4,087 -
------------------------------------------------------------- ------------ ------------
7,483 4,800
------------------------------------------------------------- ------------ ------------
A dividend for the quarter to 30 September 2016 of 1.53 pence
per share was approved by the Board on 22 November 2016 and is
payable on 22 December 2016. The dividend has not been included as
a liability at 30 September 2016.
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Six months Six months
ended ended
30 Sep 30 Sep
2016 2015
(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 11,318 6,228
Number of shares
Weighted average number of ordinary shares for the purposes
of
basic and diluted earnings per share 251,896,599 186,727,263
------------------------------------------------------------ ------------ ------------
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 months Six months
ended ended
30 Sep 30 Sep
2016 2015
--------------------------------------------- ---------- ----------
Basic and diluted earnings per share (pence) 4.5 3.3
--------------------------------------------- ---------- ----------
8. Investments at fair value through profit or loss
As set out in note 1, the Company accounts for its interest in
its 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
2016 2016
(unaudited) (audited)
GBP'000s GBP'000s
------------------------------------------------------- ------------ ----------
Fair value of environmental infrastructure investments 320,695 264,486
Fair value of Intermediate Holding Companies (60,140) (50,086)
------------------------------------------------------- ------------ ----------
Fair value 260,555 214,400
------------------------------------------------------- ------------ ----------
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 2016, by incorporating the
fair value of these Intermediate Holding Companies.
30 Sep 2016 (unaudited) 31 Mar 2016 (audited)
------------------------------------ ----------------------------------------
Cash,
working Cash,
capital working
and debt capital
in and debt
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 264,486 (50,086) 214,400 197,717 (38,674) 159,043
Acquisitions
Portfolio of
assets acquired 52,011 - 52,011 75,506 - 75,506
Post-acquisition
price adjustments 1,358 - 1,358 (1,835) - (1,835)
---------------------- --------- ------------- ---------- --------- ---------------- -----------
53,369 - 53,369 73,671 - 73,671
Growth in portfolio 15,204 - 15,204(1) 11,692 - 11,692(1)
Cash yields
from portfolio
to Intermediate
Holding Companies (12,364) 12,364 - (18,594) 18,594 -
---------------------- --------- ------------- ---------- --------- ---------------- -----------
Yields from
Intermediate
Holding Companies
Interest on
loan notes(1) - (6,571) (6,571)(1) - (10,210) (10,210)(1)
Dividends from
UK HoldCo to
the Company(1) - (3,500) (3,500)(1) - (7,500) (7,500)(1)
---------------------- --------- ------------- ---------- --------- ---------------- -----------
- (10,071) (10,071) - (17,710) (17,710)
Other movements
Investment
in working
capital in
UK HoldCo - (389) (389) - (766) (766)
Increase in
debtor related
to the agreed
settlement
on updated
energy yield
assessments
under Sale
and Purchase
Agreements - - - - 1,985 1,985
Administrative
expenses borne
by Intermediate
Holding Companies(1) - (1,778) (1,778)(1) - (2,375) (2,375)(1)
Drawdown of
UK HoldCo credit
facility borrowings - (10,180) (10,180) - (11,140) (11,140)
---------------------- --------- ------------- ---------- --------- ---------------- -----------
Fair value
of the Company's
investment
in UK HoldCo 320,695 (60,140) 260,555 264,486 (50,086) 214,400
---------------------- --------- ------------- ---------- --------- ---------------- -----------
(1) The net gain on investments at fair value through profit or
loss for the period ended 30 September 2016 is GBP3,355,000 (31
March 2016: loss of GBP8,393,000, 30 September 2015: gain of
GBP961,000). This, together with interest received on loan notes of
GBP6,571,000 (31 March 2016: GBP10,210,000) and dividend income of
GBP3,500,000 (31 March 2016: GBP7,500,000) 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 2016. 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 9.5% (weighted average 8.4%) (at 31 March 2016: from 6.5%
to 9.6% - weighted average 8.2%).
The following economic assumptions were used in the discounted
cash flow valuations:
30 Sep 2016 31 Mar 2016
---------------------- ------------------------------------------------------------- ----------------------
UK - inflation rates 2.1% for 2016 and 2.2% for 2016 and
2.75% from 2017 2.75% from 2017
France - inflation 1.5% N/A
rates
UK - deposit interest 1% for 2016, gradually 1% for 2016, gradually
rates rising to 3.25% rising to 3.25%
from 2019 from 2019
France - deposit 0.5% N/A
rates
Euro/sterling exchange EUR1.16/GBP1 N/A
rate
---------------------- ------------------------------------------------------------- ----------------------
The long--term UK corporation tax rate assumed in the 30
September 2016 portfolio valuation is 20% stepping down to 19% in
April 2017 and 17% from April 2020 (31 March 2016: 20%), in line
with market practice. The equivalent rate for the French assets is
33.3%.
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 June 2016, the Group acquired the Dungavel wind farm
project from John Laing Group plc for a cash consideration,
including working capital, of GBP38.2 million.
On 4 July 2016, the Group completed the acquisition of Le Placis
Vert wind farm for a total consideration of EUR2.5 million.
On 22 July 2016, the Group acquired New Albion wind farm from
John Laing Group plc for a cash consideration, including working
capital, of GBP11.8 million.
Subsequent to the investment in Pylle Southern solar park in
March 2016, GBP1.3 million of the consideration was paid in the
period on 24 May 2016 under the terms of the sale and purchase
agreement.
9. Trade and other receivables
30 Sep 31 Mar
2016 2016
(unaudited) (audited)
GBP'000s GBP'000s
---------------- ------------ ----------
Prepayments 25 31
Other debtors 1,012 -
---------------- ------------ ----------
Closing balance 1,037 31
---------------- ------------ ----------
Other debtors relate to proceeds held by the Company's brokers
for shares issued on 30 September 2016 as part of the tap issuance
programme.
10. Trade and other payables
30 Sep 31 Mar
2016 2016
(unaudited) (audited)
GBP'000s GBP'000s
---------------- ------------ ----------
Accruals 1,002 852
---------------- ------------ ----------
Closing balance 1,002 852
---------------- ------------ ----------
11. Loans and borrowings
The Company had no outstanding loans or borrowings at 30
September 2016 (31 March 2016: 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 and NIBC. The facility, originally
secured on 9 October 2014 was increased to GBP65 million in March
2016 and was further increased in July 2016 to GBP75 million and
extended to 9 October 2018. The facility is used to finance the
acquisitions of environmental infrastructure projects and to cover
working capital requirements. As at 30 September 2016, UK HoldCo
had an outstanding balance of GBP65.0 million under the facility
(31 March 2016: GBP54.8 million). In October 2016, UK HoldCo repaid
GBP12 million under the facility and at the date of this report had
an outstanding balance of GBP53 million. The loan bears interest of
LIBOR + 2.5% and will be repaid by proceeds from future capital
raises.
As at 30 September 2016, the Company held loan notes of GBP157.5
million which were issued by UK HoldCo (31 March 2016: outstanding
amount of GBP123.0 million). Following the period end, on 21
October 2016, the Company subscribed for additional loan notes of
GBP14.4 million which were also issued by UK HoldCo. At the date of
this report, the Company held total loan notes amounting to
GBP171.9 million.
There were no other outstanding loans and borrowings in either
the Company, UK HoldCo or HWT at 30 September 2016.
12. Share premium account
30 Sep 31 Mar
2016 2016
(unaudited) (audited)
GBP'000s GBP'000s
----------------------------------- ------------ ----------
Opening balance 221,122 157,352
Shares issued in the period 51,543 65,000
Expenses of issue of equity shares (664) (1,230)
----------------------------------- ------------ ----------
Closing balance 272,001 221,122
----------------------------------- ------------ ----------
On 27 May 2016, the Company raised gross proceeds of GBP35.2
million by way of a placing of 36 million new ordinary shares to
institutional investors pursuant to the then existing placing
programme dated 4 June 2015.
In the period ended 30 September 2016, and pursuant to the
Company's tap issuance programme announced on 28 July 2016, the
Company had issued a total of 16 million new ordinary shares of no
par value at an average price of 102.2 pence per share, raising
gross proceeds of GBP16.3 million.
Following these issues, at 30 September 2016, the Company's
share capital is comprised of 276,356,435 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, made or
paid.
Further ordinary shares were issued by the Company after the
reporting period. More detail can be found in note 18.
13. Retained reserves
30 Sep 31 Mar
2016 2016
(unaudited) (audited)
GBP'000s GBP'000s
--------------------------- ------------ ----------
Opening balance (4,231) 4,557
Profit for the period/year 11,318 6,199
Dividends paid (7,483) (14,987)
--------------------------- ------------ ----------
Closing balance (396) (4,231)
--------------------------- ------------ ----------
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 note 8. 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 2016 was GBP1,605,000 (30
September 2015: GBP1,083,000) of which GBP824,000 remained payable
as at 30 September 2016 (31 March 2016: GBP659,000).
(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
During the period, the Company's wholly--owned subsidiary UK
HoldCo completed the acquisition of the Dungavel wind farm and the
New Albion wind farm projects from John Laing Group plc, as
detailed in note 8.
The Directors of the Company, who are considered to be key
management, received fees for their services for the six-month
period of GBP132,500 (30 September 2015: GBP100,000) of which
GBPnil remained payable as at 30 September 2016 (31 March 2016:
GBPnil). The Directors were paid expenses of GBP1,348 in the
six-month period (30 September 2015: GBP2,267) of which GBPnil
remained payable as at 30 September 2016 (31 March 2016:
GBPnil).
The Directors held the following shares:
Total Total
number number
of shares of shares
held held
at 30 at 31
Sep 2016 Mar 2016
------------------ ---------- ----------
Richard Morse 83,042 83,042
Richard Ramsay 53,813 53,813
Christopher Legge 29,896 29,896
Denise Mileham 28,160 28,160
Peter Neville 29,896 29,896
------------------ ---------- ----------
All of the above transactions were undertaken on an arm's length
basis.
The Directors were paid dividends in the period of GBP6,865 (30
September 2015: GBP4,950).
15. Financial instruments
Financial instruments by category
The Company held the following financial instruments at fair
value at 30 September 2016. 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 2016 (unaudited)
----------------------------------------------------------------
Financial
assets
at fair Financial
value liabilities
through at
Cash and Loans and profit amortised
bank 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) - - 260,555 - 260,555
Current assets
Trade and other receivables - 1,037 - - 1,037
Cash and cash equivalents 11,015 - - - 11,015
---------------------------------- -------------- ------------ --------- ------------ ---------
Total financial assets 11,015 1,037 260,555 - 272,607
---------------------------------- -------------- ------------ --------- ------------ ---------
Current liabilities
Trade and other payables - - - (1,002) (1,002)
---------------------------------- -------------- ------------ --------- ------------ ---------
Total financial liabilities - - - (1,002) (1,002)
---------------------------------- -------------- ------------ --------- ------------ ---------
Net financial instruments 11,015 1,037 260,555 (1,002) 271,605
---------------------------------- -------------- ------------ --------- ------------ ---------
31 Mar 2016 (audited)
---------------------------------------------------------------------
Financial
assets at Financial
fair liabilities
value through at
Cash and Loans and profit or amortised
bank balances receivables 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) - - 214,400 - 214,400
Current assets
Trade and other receivables - 31 - - 31
Cash and cash equivalents 3,312 - - - 3,312
---------------------------------- -------------- ------------ -------------- ------------ ---------
Total financial assets 3,312 31 214,400 - 217,743
---------------------------------- -------------- ------------ -------------- ------------ ---------
Current liabilities
Trade and other payables - - - (852) (852)
---------------------------------- -------------- ------------ -------------- ------------ ---------
Total financial liabilities - - - (852) (852)
---------------------------------- -------------- ------------ -------------- ------------ ---------
Net financial instruments 3,312 31 214,400 (852) 216,891
---------------------------------- -------------- ------------ -------------- ------------ ---------
The above table provides 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 table 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 2016 (unaudited)
----------------------------- ------------------ --------- ------------------
Discount rate Minus 0.5% Base 8.4% Plus 0.5%
Change in portfolio valuation Increases GBP12.7m GBP320.7m Decreases GBP11.9m
Change in NAV per share Increases 4.6p 98.3p Decreases 4.3p
----------------------------- ------------------ --------- ------------------
31 Mar 2016 (audited)
----------------------------- ------------------ --------- ------------------
Discount rate Minus 0.5% Base 8.2% Plus 0.5%
Change in portfolio valuation Increases GBP10.9m GBP264.5m Decreases GBP10.3m
Change in NAV per share Increases 4.9p 96.7p Decreases 4.6p
----------------------------- ------------------ --------- ------------------
The sensitivity of the portfolio to movements in long--term
inflation rates is as follows:
30 Sep 2016 (unaudited)
----------------------------- ------------------ ---------- ------------------
Inflation rates Minus 0.5% Base 2.75% Plus 0.5%
Change in portfolio valuation Decreases GBP13.7m GBP320.7m Increases GBP14.5m
Change in NAV per share Decreases 5.0p 98.3p Increases 5.2p
----------------------------- ------------------ ---------- ------------------
31 Mar 2016 (audited)
----------------------------- ------------------ ---------- ------------------
Inflation rates Minus 0.5% Base 2.75% Plus 0.5%
Change in portfolio valuation Decreases GBP10.9m GBP264.5m Increases GBP11.5m
Change in NAV per share Decreases 4.9p 96.7p Increases 5.1p
----------------------------- ------------------ ---------- ------------------
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 2016 (unaudited)
----------------------------- ------------------ --------- ------------------
Energy yield P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP30.9m GBP320.7m Increases GBP31.0m
Change in NAV per share Decreases 11.2p 98.3p Increases 11.2p
----------------------------- ------------------ --------- ------------------
31 Mar 2016 (audited)
----------------------------- ------------------ --------- ------------------
Energy yield P90 (10 year) Base P50 P10 (10 year)
Change in portfolio valuation Decreases GBP21.6m GBP264.5m Increases GBP21.7m
Change in NAV per share Decreases 9.6p 96.7p Increases 9.7p
----------------------------- ------------------ --------- ------------------
The sensitivity of the portfolio to movements in electricity
prices is as follows:
30 Sep 2016 (unaudited)
----------------------------- ------------------ --------- ------------------
Electricity prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP14.5m GBP320.7m Increases GBP14.5m
Change in NAV per share Decreases 5.2p 98.3p Increases 5.2p
----------------------------- ------------------ --------- ------------------
31 Mar 2016 (audited)
----------------------------- ----------------- --------- -----------------
Electricity prices Minus 10% Base Plus 10%
Change in portfolio valuation Decreases GBP9.6m GBP264.5m Increases GBP9.5m
Change in NAV per share Decreases 4.3p 96.7p Increases 4.2p
----------------------------- ----------------- --------- -----------------
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 2016, 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 2016, the Company has provided a guarantee
under the Company's wholly--owned subsidiary UK HoldCo's GBP75
million revolving credit facility due to expire on 9 October
2018.
In September 2016 the Company entered into an agreement to
acquire the Plouguernevel wind farm for EUR2.1 million. Completion
of the acquisition is subject to customary consents.
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 Ownership Voting
Name Category business interest rights
------------------------- --------------------- ---------- --------- -------
John Laing Environmental
Assets Group (UK) Intermediate Holding
Limited Company UK 100% 100%
Intermediate Holding
HWT Limited Company UK 100% 100%
Project holding
JLEAG Solar 1 Limited company UK 100% 100%
Croft Solar PV
Limited Operating subsidiary UK 100% 100%
Cross Solar PV
Limited Operating subsidiary UK 100% 100%
Domestic Solar
Limited Operating subsidiary UK 100% 100%
Ecossol Limited Operating subsidiary UK 100% 100%
Hill Solar PV Limited Operating subsidiary UK 100% 100%
Share Solar PV
Limited Operating subsidiary UK 100% 100%
Tor Solar PV limited Operating subsidiary UK 100% 100%
Residential PV
trading Limited Operating subsidiary UK 100% 100%
South-Western Farms
Solar Limited Operating subsidiary UK 100% 100%
Angel Solar Limited Operating subsidiary UK 100% 100%
Project holding
Easton PV Limited company UK 100% 100%
Project holding
Pylle Solar Limited company UK 100% 100%
Second Energy Limited Operating subsidiary UK 100% 100%
Project holding
ELWA Holdings Limited company UK 80% 80%
ELWA Limited(1) Operating subsidiary UK 80% 81%
JLEAG Wind Holdings Project holding
Limited company UK 100% 100%
Project holding
JLEAG Wind Limited company UK 100% 100%
Amber Solar Parks Project holding
(Holdings) Limited company UK 100% 100%
Amber Solar Park
Limited Operating subsidiary UK 100% 100%
Fryingdown Solar
Park Limited Non-trading entity UK 100% 100%
Five Oaks Solar
Parks Limited Non-trading entity UK 100% 100%
Bilsthorpe Wind Project holding
Farm Holdings Limited company UK 100% 100%
Bilsthorpe Wind
Farm Limited Operating subsidiary UK 100% 100%
Project holding
Ferndale Wind Limited company UK 100% 100%
Castle Pill Wind Project holding
Limited company UK 100% 100%
Wind Assets LLP Operating subsidiary UK 100% 100%
Shanks Dumfries
and Galloway Holdings Project holding
Limited company UK 80% 80%
Shanks Dumfries
and Galloway Limited Operating subsidiary UK 80% 80%
JL Hall Farm Holdings Project holding
Limited company UK 100% 100%
Hall Farm Wind
Farm Limited Operating subsidiary UK 100% 100%
Branden Solar Parks Project holding
(Holdings) Limited company UK 100% 100%
Branden Solar Parks Project holding
Limited company UK 100% 100%
KS SPV 3 Limited Operating subsidiary UK 100% 100%
KS SPV 4 Limited Operating subsidiary UK 100% 100%
BL Wind (Holdings) Project holding
Limited company UK 100% 100%
BL Wind Limited Operating subsidiary UK 100% 100%
Burton Wold Extension
Limited Operating subsidiary UK 100% 100%
Carscreugh (Holdings) Project holding
Limited company UK 100% 100%
Carscreugh Renewable
Energy Park Limited Operating subsidiary UK 100% 100%
Wear Point Wind Project holding
HoldCo Limited company UK 100% 100%
Wear Point Wind
Limited Operating subsidiary UK 100% 100%
New Albion Wind Project holding
(Holdings) Limited company UK 100% 100%
New Albion Wind
Limited Operating subsidiary UK 100% 100%
Dreachmhor Wind
Farm (Holdings) Project holding
Limited company UK 100% 100%
Dreachmhor Wind
Farm Limited Operating subsidiary UK 100% 100%
France Wind GP Project holding
Germany GmbH company DE 100% 100%
France Wind Germany Project holding
GmbH & Co. KG company DE 100% 100%
Parc Eolien Le
Placis Vert SAS Operating subsidiary FR 100% 100%
Monksham Power Project holding
Limited company UK (2) (2)
Frome Solar Limited Operating subsidiary UK (2) (2)
------------------------- --------------------- ---------- --------- -------
(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
effective economic interest over 87% of the value of the project's
cash flow (as calculated at acquisition).
18. Events after the reporting period
A dividend for the quarter ended 30 September 2016 of 1.53 pence
per share was approved by the Board on 22 November 2016. Please
refer to note 6 for further details.
Pursuant to the Company's tap issuance programme announced on 28
July 2016, the Company issued between 3 October 2016 and 7 October
2016 a further 6,435,643 ordinary shares of no par value at a price
of 102 pence per share, raising gross proceeds of GBP6.6 million.
The total number of ordinary shares in issue at the date of this
report is 282,792,078.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ZMMZMGZDGVZZ
(END) Dow Jones Newswires
November 23, 2016 02:00 ET (07:00 GMT)
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